Emerging markets- by lso20334

VIEWS: 336 PAGES: 56

									viewpoint
the magazine for Chelsea investors                          issue 24 • September 2009




Emerging markets –
guiding you through
the key economies


Inflation or deflation –
take a look at the impact
of each scenario


Fund manager survey –
Chelsea’s top managers’ views
on the year ahead




               WRITTEN BY            THE UK’S LEADING DISCOUNT BROKER
                   Welcome
                   Welcome to our Autumn Viewpoint. I am pleased                            Fixed interest investments have outperformed quite
                   to say that markets and global economies look far                        substantially since the end of last year and many of our
                                                                                            investors are more dependent than ever on the income
                   less shaky than when I last wrote to you. Volatility
Dr John M Holder                                                                            these funds provide, so we thought it would be useful
                   has reduced and we have seen a reasonably
        Chairman                                                                            to have some insight into the outlook for this asset class.
                   steady upwards trend in the FTSE 100 since its low                       Jenna Barnard, co-manager of Henderson Strategic Bond,
                   in March. But what can we expect from markets                            does this and examines the factors that affect the various
                   and economies from here? Market View looks at                            different classes of bonds (pages 28 -29). There is also
                   the issues facing us in these unprecedented times.                       a glossary (page 27) to help navigate you through the
                                                                                            technical terms used in corporate bond investing.
                   One big question, which seems to have fund managers
                   divided, is whether we should worry more about inflation                 For those of you who will feel the effects of the new
                   or deflation. John Greenwood, Invesco’s eminent economist,               50% tax rate after April 2010, we have highlighted a
                   discusses this and the impact of each scenario on pages 34               couple of products which should enable you to maximize
                   and 35. With confusion over the outlook for economies, we                your tax allowances (page 36). Alternatively, you could
                   decided to take a poll of fund managers’ views of the world              use the Chelsea SIPP (page 37) to receive up to 40%
                   and the direction in which we are heading and the results                income tax relief.
                   of our survey can be found on page 32.
                                                                                            Finally, don’t forget that all our usual information can
                   Emerging markets have become of increasing interest to                   be found within Viewpoint – our Chelsea Easy ISAs,
                   our investors over the last few years and the trend seems                Chelsea Leaders and Premier League, and all the
                   set to continue. So we have included a focus on this                     application forms you need.
                   area of investment and dedicated four pages (38-41)
                                                                                            I hope you find Viewpoint both informative and useful.
                   to examining the various economies that comprise
                   this diverse area of investment.                                         With best wishes,




                                                                                            Dr John M Holder Chairman, Chelsea Financial Services Plc
 contents




                   03     Market View                                                        40      Russia
                   04     ISA Update                                                         41      Latin America
                   06     The Chelsea Easy ISA                                               42      Premier League
                   08     Spotlight                                                          44      Relegation Zone
                   10     The Chelsea Leaders                                                46      Cofunds Key Features
                   18     The Benefits of our Fund Supermarket
                   19     Consolidate your Portfolio                                           Emerging Markets
                   21     Investment ISA Application Form
                   23     Investment ISA Transfer Authority Form
                   25     Investment Funds Application Form
                   27     Corporate Bond Glossary                                                                                                          38
                   28     Corporate Bond Investing
                   30     Funds Focus                                                                                                             Inflation or
                   32     Fund Manager Survey                                                                                                      Deflation?
                   33     Monthly Investing
                   34     Inflation or Deflation?
                   36
                   37
                          Tax Update
                          Chelsea funds-only SIPP
                                                                                               34
                   38     Emerging Markets
                                                                                                    Freephone Brochure Line: 0800 071 3333
                   38     China
                                                                                                          Main Office: 020 7384 7300
                   39     Asia

                   Important Notice
                   Past performance is not necessarily a guide to the future. The value of investments and the income from them can fall as well as rise as
                   a result of market and currency fluctuations and you may not get back the amount originally invested. All the investments in this Viewpoint
                   should be regarded as medium to long-term investments. Tax assumptions are subject to statutory change and the value of any tax relief
                   will depend on your individual circumstances.
                   Chelsea Financial Services offers a direct offer/execution-only service. If you require individual investment guidance you should seek expert
                   advice. Whilst we may draw attention to certain investment products we cannot know which of them, if any, is best for your particular
                   circumstances and must leave that judgement to you. Nor can we accept liability to clients who purchase two ISAs in one fiscal year,
                   or otherwise do not comply with ISA rules.
                   Discounts are subject to receipt of commission and may be subject to change if commission levels are altered. Chelsea Financial Services
                   is authorised and regulated by the Financial Services Authority. Cofunds is the ISA Plan Manager for the Chelsea Portfolio.



 2           Viewpoint issue 24 • September 2009
                        MarketView
                        In our last Viewpoint, when I discussed how compelling equity valuations had become, the
                        FTSE 100 was bottoming. On March 3rd it closed at 3512. It has since rallied over 30% to
Darius McDermott        stand, as I write, at 4692. So those of you who were brave enough to take advantage of those
 Managing Director      compelling valuations will have experienced considerable gains, affording you at least some
                        consolation for the previous year’s losses.

  In discussing the economic outlook with fund managers, I have             to 7%, whilst in the UK it stands at a meagre 0.1%. We do need
  never before come across such a divergence of views from highly           to increase our level of saving, or at least pay back much of our
  respected investors. Opinion is divided between those concerned           debt, but whilst we do so consumption will be muted.
  about inflation and those who worry about the threat of deflation.
                                                                            Now we to come to our country’s age-old obsession – house
  This has led to two features in Viewpoint: The Fund Manager
                                                                            prices. Statistics seem to show that they are on the rise again,
  Survey (page 32) and the Inflation vs Deflation article on page 34.
                                                                            but I don’t see how this is sustainable. Prices are still too high,
  I think there is so much of interest to discuss that I will concentrate
                                                                            mortgages are not so readily available and greater deposits are
  solely on the UK here.
                                                                            required at a time when salaries are not rising significantly.
  Unprecedented times                                                       What is Quantitative Easing?
  We are undoubtedly living through economic history. The shocks            The Bank of England initially seemed reluctant to employ QE,
  to the economy and the remedies applied have been unique.                 which means injecting money into the system by buying assets
  The financial system was on the brink of collapse, happily avoided        such as gilts. However, in a surprise move they have recently
  by the eventual co-operation of global governments in reducing            decided to go further with QE. Whether this will have the desired
  interest rates and launching rescue packages for beleaguered              effect of increasing liquidity is unknown – banks may simply use
  banks. The question is, have we come out on the other side                these funds to restore their balance sheets rather than to increase
  or do we still have difficult issues to tackle?                           lending. Again, we find ourselves in unfamiliar territory: pouring
  The fundamental problem is that we are overly indebted, both              money into the system could result in considerably higher inflation,
  government and individuals alike. Growth in recent years has              or banks and consumers could simply refuse to spend, despite
  largely been financed by debt and the reality is that as such it          having increasing amounts of cash thrown at them.
  was entirely unsustainable. Banks are now having to repair their          So what is fuelling the stock-market rally and is it sustainable?
  balance sheets and so have dramatically reduced their lending.            As we mentioned last time, markets had become oversold,
  This leaves us with a population used to easy credit, struggling          due to panic and now that the worst case scenario seems
  to fund the level of consumption to which it has become                   highly unlikely, the relief was enough to push markets upwards.
  accustomed. Add to this increasing unemployment and                       Furthermore, better than expected company results helped to
  pay freezes, as companies try desperately to cut costs, and               boost market morale. However, these were largely down to
  consumption (and hence growth) is likely to be severely curtailed.        heavy cost-cutting rather than any improvement in sales.
  At the moment, many are being bailed out by low interest rates,           The reality is that destocking has bottomed but the jury is
  which I think we are likely to see at least until the next election.      out over any increase in consumption.
  Consumption would appear to be resuming, but I suspect that               Markets have stabilised and volatility has reduced. In March,
  this may well just be a blip. In the US                                   we anticipated a bounce in markets but have been surprised
  the savings rate has risen                                                by its length and height. Cyclical stocks have outperformed as
                                                                            investors take on more risk and the FTSE 100 was up over 8%
                                                                            in July alone. I believe that we may well see some profit taking
                                                                            from here. Nevertheless, good stock-picking managers are still
                                                                            finding stocks that they believe can outperform despite the
                                                                            economic headwinds. If you are worried about markets rising
                                                                            too rapidly, then monthly saving is the best way to ensure that
                                                                            you are participating in markets, without the worry that you are
                                                                            investing at a possible market high (see page 33). Don’t forget
                                                                            that when the real green shoots sprout, not just those spun by
                                                                            politicians, it will be reflected in markets and then the real risk
                                                                            will be that you have underinvested.




                                                                                             Viewpoint issue 24 • September 2009                  3
                     ISA Update
                     ISA investing at zero initial charge
    Sam Holder
        Head of
                     Market-leading discounts – save £££s
      Operations
                     You don’t have to be an MP to get a good deal!
We are pleased to announce that we have been negotiating hard on your behalf and are now
able to offer every fund on the Chelsea Leaders (pages 10 -17) within an ISA at zero initial charge.
This represents a considerable saving and will help your ISAs to grow faster.

At last – increased ISA limit                                          Transfer your Cash ISA into a Stocks
You can currently invest a total of £7,200 in each tax year. This      and Shares ISA
will go up to £10,200 for the over-fifties from October 6th. This      An increasing number of our clients are taking advantage
higher limit will apply to all savers from April 6th 2010, the start   of the new ISA rules and transferring their Cash ISAs to
of the new tax year.                                                   Stocks and Shares ISAs. With interest rates likely to remain
                                                                       low for the coming months corporate bond and equity
How will the new limits work in practice?                              income funds are becoming more and more attractive for
Anyone who is 50 on or before April 6th 2010 can top up their          those who can forgo capital security.
ISA to the new limits from October 6th, so you don’t have to
                                                                       The transfer is done without the loss of your ISA wrapper and
wait for your 50th birthday.
                                                                       will not affect your annual ISA allowance. Simply complete the
We will be ready to accept the increased contribution from             ISA transfer form on page 23 and return it to us.
6th October. If you have already opened your ISA this tax
                                                                       NB: Once you have transferred to a Stocks and Shares
year you do not need to complete another application form.
                                                                       ISA, you cannot transfer back to a Cash ISA.
                                                                                                                                        ✂
Would you like to receive £25 worth
of Marks & Spencer vouchers?
Many of our clients have come to us having been recommended by an existing client. We are very pleased that many of you are
so happy with our service that you feel confident enough to recommend us to your friends and family, so we would like to thank
you. If you recommend a friend (someone new to Chelsea Financial Services), we will send them details of our services and if they
invest over £5,000* before the end of the tax year (5/4/10) we will send you £25 worth of Marks & Spencer vouchers.

All you need to do is fill in the form below and return it to us. If you wish to recommend more people, simply attach and return
along with the form below.

 Your details                                                           Friend’s details
Name:                                                                  Title:                  First name:
Address:                                                               Surname:
                                                                       Address:


                         Postcode:                                                             Postcode:

                                                                       *Retaining that investment with us for at least 12 months
 Friend’s details
Title:                   First name:
Surname:
Address:


                         Postcode:




4            Viewpoint issue 24 • September 2009
  Three easy ways to buy your ISA through CFS

    1
                           Over the telephone                        Easy to manage
                           Simply call 020 7384 7300.                • Manage your ISA online or via the post.
                           Please have your debit card to hand.      • Online valuations available 24 hours a day,
                                                                       7 days a week.
    2                      Online
                                                                     • Two clear statements a year with brief comments
                           Visit our website, www.chelseafs.co.uk,     and analysis on many of the investments you hold.
                           and click on ‘Invest Online’.

    3                      By Post
                           Complete the form on page 21.




Concerned about market volatility –                                  Estate Planning
Invest monthly
You can set up a regular savings plan starting from just £50 a       If your investments are consolidated within Cofunds it
month for both ISA and investment fund investments. Investing        is much easier for your executors to administer your estate:
monthly is currently one of the most popular ways to invest and      1. The death certificate and grant of probate only has
is an affordable route to building up an investment portfolio.          to be sent to one place.
The great thing about investing monthly is that you can budget       2. The investments do not have to be sold. Your funds
for it and you can increase or decrease your contribution at            will remain invested and can be moved into the
any time.                                                               beneficiaries names at no charge.
                                                                     3. You can have multiple beneficiaries.
How to manage your monthly saving
                                                                     4. There are no time restrictions (within reason).
• You simply fill in the ISA form on page 21, or, if you wish to     5. Chelsea Financial Services will assist the executors or
  invest outside an ISA, complete the Investment Fund form on           solicitors with the probate valuations and stock transfer.
  page 25.

• You can keep up to date with how your investments are
  growing via our website – www.chelseafs.co.uk

• If you wish to alter your monthly savings, either increasing
  /decreasing them or changing funds, just send us a letter with
  your instruction. You do not need to fill out another form.

For more information on monthly saving, please take a look
at page 33.




                                                                                  Viewpoint issue 24 • September 2009                5
The Chelsea                                             Easy ISA
Investing made easy...
When it comes to considering funds for your ISA,
                                                                                              Easy ISA Changes
the range is vast and the task of choosing just a
few for your portfolio can be daunting. So we have                                            Cautious Growth – CF Miton Special Situations Portfolio
                                                                                              replaces Jupiter Income.
selected funds for the Chelsea Easy ISA and put
them together within four different portfolios. All                                           Balanced Growth – Jupiter European Special Situations
                                                                                              replaces Baring European Growth; J O Hambro UK
you have to do is choose one of the four options                                              Opportunities replaces Rensburg UK Select Growth.
based upon your own requirements and attitude                                                 Aggressive Growth – Neptune European Opportunities
to risk: Cautious; Balanced; Aggressive or Income.                                            replaces Jupiter European Special Situations; Neptune US
Your ISA investment will then be spread equally                                               Opportunities replaces UBS US Equity.
across the corresponding six funds, within our                                                Income – Invesco Perpetual Monthly Income Plus replaces
                                                                                              Henderson Strategic Bond.
fund supermarket the Chelsea Portfolio
(for more details see page 18).

Once you have selected your preferred Easy ISA option,                                        Please Note
simply fill in the ISA application on page 21, ticking one
box only to select either Cautious, Balanced, Aggressive                                      We are not able to manage these portfolios for you.
or Income, and send the application back to us in the                                         It is up to you to switch funds if you wish, either online or by
                                                                                              simply writing to us. You may wish to sign up to our regular
pre-paid envelope enclosed.
                                                                                              e-Viewpoint to keep in touch with any fund manager
•   The Chelsea Easy ISA is also available                                                    changes or simply check the portfolios to see if we have
    for ISA transfers.                                                                        made any alterations each time a new Viewpoint comes out.
•   If you would like to know more about the funds we have                                    We select the funds for the Chelsea Easy ISA, but it is up to
    chosen, details are provided on pages 10 -17.                                             you to decide whether this selection will suit your investment
                                                                                              requirements. Returns cannot be guaranteed, and your
•   Please note that the minimum investment is £3,000 lump                                    attention is drawn to the Important Notice on page 2.
    sum or £200 per month into any Easy ISA.




    Cautious Growth
    (Average Chelsea Risk Rating 3.66)*
    Application form on page 21                                                                                                               BlackRock Continental European
    Cautious Growth is for those who feel uncomfortable with
    a higher level of risk. This aims to provide a steady level                                                                               BlackRock UK Absolute Alpha**
    of growth with limited volatility. Approximately one third
    of the portfolio is in corporate bonds, which lowers the                                                                                  Henderson Strategic Bond
    exposure to equities and thus stock-market volatility.
    A large proportion of your investment will be in the UK,                                                                                  Invesco Perpetual High Income
    thereby reducing any fluctuations in foreign markets and
    there is a bias towards large-cap stocks, which tend to be                                                                                Legal & General Dynamic Bond
    less volatile.
                                                                                                                                              CF Miton Special
                                                                                                                                              Situations Portfolio
    Average initial charge after discount: 0.00%
    Average annual management charge: 1.46%

                                                   Note: * The Chelsea Risk Rating denotes a fund‘s risk profile, where 1 is the least risky and 10 has the highest risk.
                                                         **Small performance fee may be applied – See page 11 for more details.




6              Viewpoint issue 24 • September 2009
Balanced Growth
(Average Chelsea Risk Rating 5.00)*
Application form on page 21
                                                                                                                                       AEGON Investment Grade Bond
This offers you a medium level of risk. It gives broader
exposure to developed foreign markets to provide                                                                                       Artemis UK Special Situations
diversification outside the UK and has a slightly more
aggressive UK stance, with exposure to smaller                                                                                         J O Hambro UK Opportunities
companies. This is balanced with lower risk corporate
bond and equity income holdings. With almost 60%                                                                                       Jupiter European Special Situations
in the UK, foreign exposure is limited to approximately
18% in the US and 18% in Europe.                                                                                                       Martin Currie North American


                                                                                                                                       M&G Recovery
Average initial charge after discount: 0.00%
Average annual management charge: 1.42%




Aggressive Growth
(Average Chelsea Risk Rating 7.08)*
Application form on page 21                                                                                                          AXA Framlington UK Select Opps
If you have a sufficiently long time horizon and feel
comfortable with a certain amount of risk, you may                                                                                   First State Asia Pacific Leaders

wish to choose Aggressive Growth. This encompasses
                                                                                                                                     Jupiter Financial Opportunities
a greater degree of volatility with the prospect of
higher long-term growth. It offers a broad-based
                                                                                                                                     Neptune European Opportunities
portfolio, with global exposure enabling you to take
advantage of any upturn in markets worldwide.
                                                                                                                                     Neptune US Opportunities
It combines large, medium and small-cap companies.
                                                                                                                                     Schroder UK Alpha Plus

Average initial charge after discount: 0.00%
Average annual management charge: 1.54%




Income
(Average Chelsea Risk Rating 2.83)*
Application form on page 21                                                                                                            AEGON Investment Grade Bond

If your priority is income, the Chelsea Easy ISA Income
option could suit your requirements. A combination of                                                                                  Artemis Income

corporate bond and equity income funds provides a                                                                                      Invesco Perpetual Monthly
regular income with an element of capital appreciation.                                                                                Income Plus
This should enable you to maintain the real value of
both your capital and income. The average yield for                                                                                    M&G Optimal Income

this portfolio is 6.77%†.
                                                                                                                                       Schroder Income Maximiser
Yield†
AEGON Investment Grade Bond                        8.21%                                                                               Standard Life UK Equity
Artemis Income                                     5.50%                                                                               High Income
Invesco Perpetual Monthly Income Plus              8.70%
M&G Optimal Income                                 5.27%                                                                Average initial charge after discount: 0.00%
Schroder Income Maximiser                          7.00%                                                                Average annual management charge: 1.38%
                                                                                                                        †
Standard Life UK Equity High Income                5.94%                                                                 Source: Financial Express 6th August 2009.

                                               Note: * The Chelsea Risk Rating denotes a fund‘s risk profile, where 1 is the least risky and 10 has the highest risk.
                                                     Returns cannot be guaranteed – please read the Important Notice on page 2.




                                                                                                             Viewpoint issue 24 • September 2009                        7
Here we take a more in-depth look
at some of our Chelsea Leaders.
Fund managers talk about their
investment process and their asset class,
to give you a more comprehensive
view of how your money is managed.



Artemis UK Special Situations
                     Derek Stuart has managed the fund since its         What is a special situation?
                     launch in March 2000. Before he helped to
                                                                         In the current climate, we are finding many ‘special situations’.
                     found Artemis in 1997, Derek was a fund
                                                                         A high number of re-financings and re-structurings are offering
                     manager at Ivory & Sime. In May this year
                                                                         opportunity. Some re-financings are for companies that can
                     Ruth Keattch became co-manager of the fund.
                                                                         exploit the problems of their competitors. A classic example is
                     The aim of Artemis UK Special Situations            Debenhams, whose recent fund-raising not only improves its
                     has been the same since launch: long-term           balance sheet but also gives the management funds to exploit
                     capital gain through exploiting special             the problems within the retail sector.
  Derek Stuart
  Fund Manager
                     situations. The investment approach is
                                                                         Or take consumer goods firm Unilever, a core holding, almost
     Artemis UK      pragmatic: we don’t restrict ourselves to ‘value’
Special Situations                                                       half of its business is in emerging markets, which are always as
                     or ‘growth’. Instead, we pick stocks on their
                                                                         quick to recover as they are fast to fall. It’s seen as a staid old
                     fundamentals. The portfolio reflects different
                                                                         lady (with no disrespect to ladies, staid, old or otherwise) and the
                     stages of the economic cycle. We spend most
                                                                         market dislikes it. Yet under new senior management, the firm is
                     of our time meeting management to identify
                                                                         reinvigorating itself. It shows the type of appetite for change and
                     the people who can change businesses and
                                                                         self-help that characterise many of the fund’s investments.
                     improve returns.
                                                                         And banks or financial services? No way, many still say. But
                     Identifying opportunities                           look at Close Brothers, another company we believe has great
                 A key focus is to identify businesses which,            promise. Bid approaches in late 2007 and early 2008 prompted
  Ruth Keattch   although fundamentally sound, have been                 a re-think for the group. Close has been quietly refocusing
  Fund Manager
     Artemis UK  through a period of disruption or poor trading.         under strengthened management, de-emphasising volatile
Special Situations
                 Often these situations require new management           transaction-related activities in favour of more stable lending
to sort out these difficulties. An important element to the              and wealth management. The business is strongly capitalised
investment is therefore a degree of self-help. If much of the            with a healthy deposit base and a risk-averse approach to
expected return is based on what the management can control,             lending. And in the meantime, it’s paying investors a very
then returns become more realistic as they are not dependant             handsome 7% yield. These factors explain the fund’s 3%
on the vagaries of the economy.                                          overweight in the stock, versus the market.

It is therefore very important to understand the dynamics                These are just three of many companies whose potential is
of a company – the risks. For instance the combination                   great. In these testing times of corporate Darwinism, some
of operational and financial gearing is the ‘death spot’ for             companies will not just survive: they will thrive.
companies – whatever sector or market a company is in.
Financial leverage is fine in a company with predictable cashflow.        Artemis UK Special Situations
It is very dangerous in a company with a more cyclical earnings
stream. So in our stock selection, we spend a lot of time on a
business’s cashflow and balance sheet. By focusing on the
                                                                                               300           Artremis UK Special Situations R Acc (MF)
downside risks, we hope to avoid the ‘torpedoes’ that really                                                 FTSE All Share TR (IN)
affect a portfolio’s performance.                                                              250           IMA UK All Companies (IN)
                                                                           Percentage growth




                                                                                               200

    We spend a lot of time on                                                                  150

    a business’s cashflow and                                                                  100

    balance sheet                                                                              50

                                                                                                0
Historically, the fund has been highly focused on the smaller
company area of the stock market. But as value has appeared in                                 -50
                                                                                                     Jan     Jan     Jan    Jan     Jan     Jan    Jan   Jan   Jan
larger companies and as the economic climate has impacted on                                         01      02      03     04      05      06     07    08    09

the smaller company sector, the fund has moved up the size                                                 3400 days from, 9/3/2000 to 30/6/2009
scale over the past two years. At the moment the fund is split
equally between the FTSE 100 Index and the rest of the market.           Source: Lipper



8             Viewpoint issue 24 • September 2009
Jupiter Japan Income
                                      I joined Jupiter in 2005 as joint head of the            exacerbated by the strength of the yen. As a result, exporters’
                                      Far Eastern Equity Team and have managed                 earnings were hit by sharp sales falls. By contrast, I think the
                                      Jupiter Japan Income since its launch in                 domestic sector in Japan is holding up relatively well.
                                      September 2005.                                          Japanese banks have only a small exposure to credit
                                                                                               problems in the West, while the government’s stimulus
                   A common myth about income funds is                                         measures are beginning to support consumer spending.
                   that they only invest in stocks that pay high
                   dividends but do not deliver much share price
            Simon growth. However, my principal approach is to
                                                                                                The Japanese equity market
      Somerville target companies with strong and improving
   Fund Manager
                                                                                                has recently rebounded strongly
     Jupiter Japan cashflow. They should be in a better position
           Income to pay dividends, although in some cases they
may use this cashflow to help grow their business. Having                                      Also, unemployment remains relatively low in Japan –
identified good targets, the trickier assessment is what price to                              currently 5.2% compared with the UK’s 7.6% and 9.5%
pay for them. My style here is GARP: growth at a reasonable                                    for the US – because Japanese companies are reluctant to
price. What this means is that I look for companies with                                       shed full-time employees at home. So long as unemployment
prospects of strong earnings growth but I am also conscious                                    remains subdued, domestic consumption should stay firm.
of the price I pay.                                                                            Meanwhile, the inability of exporters to restructure their
                                                                                               expensive operations in Japan will put their margins under
                                                                                               pressure. So, until the status quo changes, domestic
Company contact
                                                                                               companies look more attractive.
I travel to Japan several times a year in order to meet
company management and gain first-hand knowledge of
                                                                                               Japan’s election
the market, the economy and earnings drivers. The country
has one of the world’s biggest stock markets, offering a large                                 Another important factor is that Japan is holding a general
investment universe. Our benchmark, the Topix (the Tokyo                                       election on 30 August. The opposition Democratic Party of
Stock Exchange First Section index), alone encompasses                                         Japan (DPJ) is likely to beat the incumbent Liberal Democratic
1,700 companies across diverse sectors. In a typical year,                                     Party (LDP) which has been in power for nearly all of the past
I make contact with more than 250 companies.                                                   53 years. The DPJ is committed to raising Japan’s disposable
                                                                                               income with policies much more focused on the domestic
After falling to a 25-year low in early March, the Japanese                                    economy. With the DPJ also pledging not to raise the
equity market has recently rebounded strongly. The Topix                                       consumption tax, their election victory should boost
has gained more than 30% in yen terms (as at 27 July 2009)                                     consumer confidence.
from its March low. Exporters such as car manufacturers and
electronics companies, which had been hit hard in the falling                                  Following the recent market rebound, equity valuations have
market, led this recovery as investors became more optimistic                                  recovered somewhat, especially for exporters. But on the
about their earnings prospects. However, I do not expect                                       whole, valuations remain attractive. The Topix is still 20%
exporters to continue to outperform as although their                                          below the level seen before the collapse of Lehman Brothers.
inventories have been cleared, underlying global demand                                        Many smaller companies in particular remain undervalued.
and earnings prospects both remain subdued.                                                    The TSE Second Section index now has an average price
                                                                                               book ratio (which measures a company’s
Japan’s recent recession was driven almost entirely by                                         share price against its assets) of around
a sudden contraction in western demand for its exports,                                        0.7x. This means that these companies’
                                                                                               asset values may not be properly
                                                                                               reflected in their share prices and so
 Jupiter Japan Income                                                                          they may be trading on extremely
                                                                                               low valuations. As a GARP investor,
                                                                                               I think the Japanese market
                      40%                          A – Jupiter – Japan Income TR (3.80%)       currently offers plenty of attractive
                                                   B – TOPIX TR in GB (-5.03%
                                                                                               opportunities, which could prove
                      30%
                                                                                               beneficial as the economy improves.
  Percentage growth




                      20%

                      10%

                        0

                      -10%

                  -20%

                  -30%
                             Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
                             05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09
                                              15/09/2005 to 30/07/2009


Source: Data provided by Financial Express 2009



                                                                                                              Viewpoint issue 24 • September 2009            9
                         The Chelsea Leaders


UK Aggressive funds
  Artemis UK Special Situations
 Derek Stuart, one of the founders of Artemis, manages this                                      Yield*                                                 2.30%
 fund with the flexibility to invest within the UK stock market                                  Standard and Poor’s fund rating                        –
 without size or sector restrictions. Stuart looks for companies                                 OBSR fund rating                                       AAA
                                                                                                 Standard initial charge                                5.25%
 where there has been a change of management, companies
                                                                                                 Lump sum Chelsea ISA discount                          5.00%
 currently unpopular with the market or those in recovery.
                                                                                                 Initial charge after discount                          Creation
 See page 8 for more details.                                                                    Annual management charge                               1.50%
                                                                                                 Chelsea Risk Rating†                                   7
                                                                                                 Unit type                                              Acc


  AXA Framlington UK Select Opportunities
 Nigel Thomas employs a stock–picking approach, actively                                         Yield*                                                 1.60%
 managing his circa 80 stocks, with a small/mid-cap bias.                                        Standard and Poor’s fund rating                        –
 Select Opportunities has no benchmark constraints and                                           OBSR fund rating                                       AAA
                                                                                                 Standard initial charge                                5.25%
 focuses on companies with new management, those
                                                                                                 Lump sum Chelsea ISA discount                          5.00%
 implementing new technologies/products etc.
                                                                                                 Initial charge after discount                          Creation
                                                                                                 Annual management charge                               1.50%
                                                                                                 Chelsea Risk Rating†                                   7
                                                                                                 Unit type                                              Acc/Inc


  Fidelity Special Situations
 Managed by Sanjeev Shah since January 2008, this fund of around                                 Yield*                                                 0.69%
 150 stocks aims to achieve growth using a combination of top-down                               Standard and Poor’s fund rating                        A
 and bottom-up stock-picking. His contrarian approach enables him                                OBSR fund rating                                       A
                                                                                                 Standard initial charge                                3.50%
 to invest in stocks that go against the main market trend, whereby
                                                                                                 Lump sum Chelsea ISA discount                          3.50%
 he identifies stocks in these categories: recovery situations;
                                                                                                 Initial charge after discount                          NAV
 unrecognised growth; corporate activity potential and hidden jewels.                            Annual management charge                               1.50%
 He is also able to draw upon Fidelity’s extensive research team.                                Chelsea Risk Rating†                                   6
                                                                                                 Unit type                                              Acc


  Marlborough Special Situations
 Giles Hargreave has managed this fund for 10 years. He aims                                     Yield*                                                 0.81%
 to achieve capital growth via investment in smaller companies,                                  Standard and Poor’s fund rating                        –
 and those experiencing difficulties that are deemed to have                                     OBSR fund rating                                       –
                                                                                                 Standard initial charge                                5.00%
 good recovery prospects. The portfolio is well diversified with
                                                                                                 Lump sum Chelsea ISA discount                          4.75%
 over 200 stocks, of which no single holding can make up
                                                                                                 Initial charge after discount                          Creation
 more than 3% of the fund.                                                                       Annual management charge                               1.50%
                                                                                                 Chelsea Risk Rating†                                   8
                                                                                                 Unit type                                              Inc


  Schroder UK Alpha Plus
 This concentrated fund (20-40 stocks) is managed on a top-down                                  Yield*                                                 1.40%
 thematic basis. The manager, Richard Buxton, analyses                                           Standard and Poor’s fund rating                        –
 macroeconomic themes and combines this with rigorous                                            OBSR fund rating                                       AA
                                                                                                 Standard initial charge                                5.25%
 stock selection. He tends to invest with a 2-3 year view,
                                                                                                 Lump sum Chelsea ISA discount                          5.00%
 with a large and mid-cap bias.
                                                                                                 Initial charge after discount                          Creation
                                                                                                 Annual management charge                               1.50%
                                                                                                 Chelsea Risk Rating†                                   7
                                                                                                 Unit type                                              Acc/Inc

                                                                                                                                All discounts quoted are to the nearest 0.05%
                                                                                                                        For performance statistics please refer to pages 42-43.



Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV. You can see from our table of funds
         that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers will also attract the same discounts.
         Please telephone 020 7384 7300 for further details. OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09



10            Viewpoint issue 24 • September 2009
                                                                                      The Chelsea Leaders


UK Core funds
  Artemis Income
 Artemis’ SmartGARP technology is used as a screening for stocks,                           Yield*                                              5.50%
 although company visits are also an integral part of the process.                          Standard and Poor’s fund rating                     –
 This is a multi-cap fund and managers Adrian Frost and Adrian                              OBSR fund rating                                    AAA
                                                                                            Standard initial charge                             5.25%
 Gosden will shift the portfolio up and down the cap scale
                                                                                            Lump sum Chelsea ISA discount                       5.00%
 wherever they find the best value. Furthermore, they have the
                                                                                            Initial charge after discount                       Creation
 capability to place 10% into bonds and 10% into Europe if they                             Annual management charge                            1.50%
 find better value there.                                                                   Chelsea Risk Rating†                                4
                                                                                            Unit type                                           Acc/Inc


  BlackRock UK Absolute Alpha
 This is an absolute return fund, which means it aims to achieve                            Yield*                                              0.99%
 a positive return with capital growth in all market conditions.                            Standard and Poor’s fund rating                     AA
 This is achieved by the manager ‘shorting’ stocks that he                                  OBSR fund rating                                    A
                                                                                            Standard initial charge                             5.00%
 believes will fall in value as well as buying stocks which he
                                                                                            Lump sum Chelsea ISA discount                       4.75%
 hopes will appreciate. This combination allows the manager
                                                                                            Initial charge after discount                       Creation
 to reduce risk within the portfolio and potentially capitalise                             Annual management charge                            1.50%^
 on falling markets.                                                                        Chelsea Risk Rating†                                5
                                                                                            Unit type                                           Acc


  Invesco Perpetual High Income
 Neil Woodford’s investment style combines a top-down view                                  Yield*                                              4.70%
 of the economy with industry and company analysis. A large                                 Standard and Poor’s fund rating                     AAA
 number of holdings helps to mitigate any risk associated with                              OBSR fund rating                                    AAA
                                                                                            Standard initial charge                             5.00%
 the aggressive sector weightings.
                                                                                            Lump sum Chelsea ISA discount                       5.00%
                                                                                            Initial charge after discount                       NAV
                                                                                            Annual management charge                            1.50%
                                                                                            Chelsea Risk Rating†                                4
                                                                                            Unit type                                           Acc/Inc


  J O Hambro UK Opportunities
 This fund is managed by John Wood who joined JOHCM                                         Yield*                                              3.67%
 from Newton, where he managed a fund by the same name.                                     Standard and Poor’s fund rating                     A
 Its portfolio of around 40 stocks, with a large-cap bias, aims to                          OBSR fund rating                                    AA
                                                                                            Standard initial charge                             5.00%
 achieve attractive absolute returns over the long term, through
                                                                                            Lump sum Chelsea ISA discount                       5.00%
 a combination of a top-down thematic overlay and bottom-up
                                                                                            Initial charge after discount                       NAV
 stock-picking approach.                                                                    Annual management charge                            1.25%
                                                                                            Chelsea Risk Rating†                                5.5
                                                                                            Unit type                                           Acc/Inc


  Jupiter Income
 Anthony Nutt employs a bottom-up stock-picking approach,                                   Yield*                                              5.20%
 via a diversified portfolio of approximately 90 holdings.                                  Standard and Poor’s fund rating                     AAA
 Some bonds may be held when Nutt perceives them to                                         OBSR fund rating                                    AAA
                                                                                            Standard initial charge                             5.00%
 add value. He invests without strong stock/sector constraints,
                                                                                            Lump sum Chelsea ISA discount                       4.75%
 thus this portfolio may differ considerably from the benchmark
                                                                                            Initial charge after discount                       Creation
 and may have a mid/small-cap bias.                                                         Annual management charge                            1.50%
                                                                                            Chelsea Risk Rating†                                4
                                                                                            Unit type                                           Inc

                                                                                                                         All discounts quoted are to the nearest 0.05%
                                                                                                                 For performance statistics please refer to pages 42-43.



Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         ^
          The fund has class P units and therefore a performance fee will be incurred. The fund aims to beat the cash
         rate of three-month LIBOR, over which any returns will be subject to a 20% performance fee.
         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09                                                                                Viewpoint issue 24 • September   2009            11
                         The Chelsea Leaders


UK Core funds (Continued)
  M&G Recovery
 As the name implies, this fund invests in companies that are                                    Yield*                                               1.74%
 in recovery, for instance those which are out of favour with                                    Standard and Poor’s fund rating                      AAA
 the market, have been experiencing difficulties or had a                                        OBSR fund rating                                     AAA
                                                                                                 Standard initial charge                              4.00%
 management change. The fund has a multi-cap approach
                                                                                                 Lump sum Chelsea ISA discount                        4.00%
 where investments are made with a long-term view and
                                                                                                 Initial charge after discount                        NAV
 hence turnover is extremely low.                                                                Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 5
                                                                                                 Unit type                                            Acc/Inc


  Rathbone Income
 Carl Stick’s investment process is based firstly on the identification                          Yield*                                               6.11%
 of correct sectors, industries and businesses and secondly,                                     Standard and Poor’s fund rating                      AA
 locating specific companies. There is a clear focus on businesses                               OBSR fund rating                                     A
                                                                                                 Standard initial charge                              5.50%
 that offer both value and dividend yield. A buy and hold strategy
                                                                                                 Lump sum Chelsea ISA discount                        5.25%
 is followed, with a small and mid-cap stock bias, although recently
                                                                                                 Initial charge after discount                        Creation
 FTSE 100 weightings have increased.                                                             Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 4.5
                                                                                                 Unit type                                            Acc/Inc


  Rensburg UK Select Growth
 Mark Hall focuses on absolute returns through investment across                                 Yield*                                               2.82%
 the market capitalisation range, he generally holds 1/3 of the                                  Standard and Poor’s fund rating                      AAA
 portfolio in each of the cap weightings: large, mid and small.                                  OBSR fund rating                                     AAA
                                                                                                 Standard initial charge                              5.25%
 The investment process concentrates on bottom-up analysis.
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 He takes a long-term view and has a larger number of holdings,
                                                                                                 Initial charge after discount                        Creation
 which helps reduce the volatility of the fund.                                                  Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 5
                                                                                                 Unit type                                            Inc


  Schroder Income Maximiser
 This fund is a direct derivative of the Schroder Income fund and                                Yield*                                               7.00%
 invests in stocks and selling ‘covered call options’, with the aim                              Standard and Poor’s fund rating                      A
 of producing a high level of income compared with the original                                  OBSR fund rating                                     –
                                                                                                 Standard initial charge                              5.25%
 equity income fund. In flat markets this style of investment has
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 the potential to outperform. However, in a strongly rising market
                                                                                                 Initial charge after discount                        Creation
 it may underperform. It invests in a carefully selected high                                    Annual management charge                             1.50%
 quality portfolio of 30-40 UK large-cap stocks.                                                 Chelsea Risk Rating†                                 4
                                                                                                 Unit type                                            Acc/Inc


  Standard Life UK Equity High Income
 Karen Robertson has been managing this fund for over                                            Yield*                                               5.94%
 10 years. She invests predominantly in the FTSE 350 and                                         Standard and Poor’s fund rating                      AA
 typically holds 50-65 stocks. Robertson draws on the expertise                                  OBSR fund rating                                     AAA
                                                                                                 Standard initial charge                              4.00%
 of a strong UK team and sector analysts. Change in company
                                                                                                 Lump sum Chelsea ISA discount                        4.00%
 expectations drives stock selection and, as a best ideas fund,
                                                                                                 Initial charge after discount                        NAV
 stock and sector weightings may deviate considerably from                                       Annual management charge                             1.50%
 the benchmark.                                                                                  Chelsea Risk Rating†                                 4
                                                                                                 Unit type                                            Acc/Inc

                                                                                                                                All discounts quoted are to the nearest 0.05%
                                                                                                                        For performance statistics please refer to pages 42-43.



Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09

12            Viewpoint issue 24 • September 2009
                                                                                           The Chelsea Leaders


European funds
  Baring European Growth
 Fund manager James Buckley focuses on investing in                                              Yield*                                               1.65%
 major European markets, however he is not prevented                                             Standard and Poor’s fund rating                      A
 from moving into smaller markets should the opportunity                                         OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              5.00%
 arise. Growth at a reasonable price (GARP) is the main
                                                                                                 Lump sum Chelsea ISA discount                        4.75%
 focus of this concentrated portfolio, which has around
                                                                                                 Initial charge after discount                        Creation
 50 stocks and tends to have a large-cap bias.                                                   Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 6
                                                                                                 Unit type                                            Inc


  BlackRock Continental European
 This team-managed fund is run by Vincent Devlin, alongside team                                 Yield*                                               0.75%
 head Nigel Bolton, who both joined from Scottish Widows in                                      Standard and Poor’s fund rating                      AA
 2008. The fund is multi-cap and holds around 40 stocks today.                                   OBSR fund rating                                     A
                                                                                                 Standard initial charge                              5.00%
 Its flexible mandate also allows the fund to look for restructuring
                                                                                                 Lump sum Chelsea ISA discount                        4.75%
 and turnaround opportunities.
                                                                                                 Initial charge after discount                        Creation
                                                                                                 Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 6
                                                                                                 Unit type                                            Acc/Inc


  Jupiter European Special Situations
 Fund manager Cedric de Fonclare spends the majority of his time                                 Yield*                                               1.50%
 analysing companies with a strong operating niche, looking for                                  Standard and Poor’s fund rating                      AA
 specific criteria such as a good track record, innovative products                              OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              5.25%
 and services and high barriers to entry. He has a distinct bottom-up
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 stockpicking approach, with a large-cap bias and is aided by a
                                                                                                 Initial charge after discount                        Creation
 team of 6 fund mangers and 3 analysts headed by Alex Darwall.                                   Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 6
                                                                                                 Unit type                                            Acc


  Neptune European Opportunities
 Fund manager Rob Burnett focuses on generating capital growth                                   Yield*                                               1.34%
 by investing in a concentrated portfolio of around 50 stocks.                                   Standard and Poor’s fund rating                      –
 Neptune’s investment process of forming positive views on asset                                 OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              5.00%
 classes and screening equities by global industry sectors is
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 combined with both top-down and bottom-up stock-picking.
                                                                                                 Initial charge after discount                        NAV
 This can result in a wide divergence from the benchmark,                                        Annual management charge                             1.75%
 however Burnett seeks to spread risk across a range of sectors.                                 Chelsea Risk Rating†                                 7
                                                                                                 Unit type                                            Acc/Inc


  Schroder European Alpha Plus
 Leon Howard-Spink, former manager of Jupiter European                                           Yield*                                               0.71%
 Special Situations concentrates firmly on stock selection in                                    Standard and Poor’s fund rating                      –
 this circa 60 stock portfolio, keeping turnover very low.                                       OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              5.25%
 It is a multi-cap fund and risk is controlled via diversification,
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 so that the fund is not unduly exposed to any theme,
                                                                                                 Initial charge after discount                        Creation
 sector or style.                                                                                Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 6
                                                                                                 Unit type                                            Acc/Inc

                                                                                                                                All discounts quoted are to the nearest 0.05%
                                                                                                                        For performance statistics please refer to pages 42-43.



Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09

                                                                                                                       Viewpoint issue 24 • September 2009                        13
                         The Chelsea Leaders

Specialist funds
These offer interesting opportunities for more specialised areas of investment
but should only represent a small percentage of a balanced portfolio.


  Allianz RCM BRIC Stars
 Managed by Michael Kostantinov, investment is predominantly                                     Yield*                                               0.31%
 concentrated in Brazil, Russia, India and China. The benchmark                                  Standard and Poor’s fund rating                      –
 is split 25% in each country, however the fund manager can                                      OBSR fund rating                                     –
                                                                                                 Standard initial charge                              4.00%
 under/overweight where he finds value. The fund holds a
                                                                                                 Lump sum Chelsea ISA discount                        4.00%
 relatively concentrated portfolio of approximately 50-80 stocks.
                                                                                                 Initial charge after discount                        NAV
                                                                                                 Annual management charge                             1.75%
                                                                                                 Chelsea Risk Rating†                                 10
                                                                                                 Unit type                                            Acc


  Ignis HEXAM Global Emerging Markets
 Hexam was formed as a joint venture with Ignis Asset Management                                 Yield*                                               –
 in 2006, and is an investment boutique specialising in emerging                                 Standard and Poor’s fund rating                      AA
 markets. This team-managed fund, headed by Bryan Collings,                                      OBSR fund rating                                     –
                                                                                                 Standard initial charge                              5.25%
 focuses on a concentrated portfolio of approximately 30-50 stocks.
                                                                                                 Lump sum Chelsea ISA discount                        5.25%
 The team’s best ideas are selected from the following regions;
                                                                                                 Initial charge after discount                        NAV
 Emerging Europe, Latin America, Europe, Asia, Middle East and Africa.                           Annual management charge                             1.50%
 A blended approach of bottom-up and top-down analysis is used.                                  Chelsea Risk Rating†                                 10
                                                                                                 Unit type                                            Acc

  JPM Natural Resources
 Managed by JPM’s specialist resources team, this fund provides                                  Yield*                                               –
 exposure to commodities via various mining and energy stocks.                                   Standard and Poor’s fund rating                      –
 The portfolio’s split is approximately 30% energy, 30% gold                                     OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              4.25%
 and precious metals and 30% base metals. It offers a way
                                                                                                 Lump sum Chelsea ISA discount                        4.25%
 of participating in emerging market growth and is therefore
                                                                                                 Initial charge after discount                        NAV
 a volatile area of investment.                                                                  Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 10
                                                                                                 Unit type                                            Acc


  Jupiter Emerging European Opportunities
 This fund is largely concentrated in Russia, with circa 30% invested                            Yield*                                               –
 in Turkey, Poland and the Czech Republic. The fund also consists                                Standard and Poor’s fund rating                      A
 of a small holding in other small emerging European countries.                                  OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              5.50%
 Economic growth in this region far outpaces that of Western Europe.
                                                                                                 Lump sum Chelsea ISA discount                        5.25%
 However, it should be noted that there are greater risks associated
                                                                                                 Initial charge after discount                        Creation
 with investment in this area.                                                                   Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 10
                                                                                                 Unit type                                            Acc


  Jupiter Financial Opportunities
 Phillip Gibbs has been managing this fund since its launch in May                               Yield*                                               1.00%
 1997, during which he has produced good, consistent returns                                     Standard and Poor’s fund rating                      AAA
 throughout a variety of market conditions. He has a mid-cap bias                                OBSR fund rating                                     AAA
                                                                                                 Standard initial charge                              5.25%
 and invests in some banks but is overweight in non-life insurance
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 companies such as Prudential. Due to its flexibility and global
                                                                                                 Initial charge after discount                        Creation
 mandate, the fund can invest in cash, index futures, government                                 Annual management charge                             1.50%
 bonds and forward foreign exchange contracts, which suits Gibbs’                                Chelsea Risk Rating†                                 6
 absolute return approach.                                                                       Unit type                                            Inc




Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09

14            Viewpoint issue 24 • September 2009
                                                                                      The Chelsea Leaders

Specialist funds (Continued)
 CF Miton Special Situations Portfolio
 Co-fund managers Martin Gray and James Sullivan focus on                                  Yield*                                               0.00%
 returns with low volatility. Its circa 50 stock portfolio is picked on                    Standard and Poor’s fund rating                      –
 a conviction led basis, with the flexibility to invest in different                       OBSR fund rating                                     A
                                                                                           Standard initial charge                              5.00%
 asset classes such as equities, fixed interest, investment trusts,
                                                                                           Lump sum Chelsea ISA discount                        5.00%
 property and cash. This global balanced fund uses a top-down
                                                                                           Initial charge after discount                        NAV
 investment process, concentrating on special situations using a                           Annual management charge                             1.50%
 fund selection process that is both qualitative and quantitative.                         Chelsea Risk Rating†                                 4
                                                                                           Unit type                                            Acc

                                                                                                                              All discounts quoted are to the nearest 0.05%
                                                                                                                      For performance statistics please refer to pages 42-43.

Far East and Japan funds
 First State Asia Pacific Leaders
 Angus Tulloch, who has over 20 years Asian investment                                     Yield*                                               1.17%
 experience, and his extensive and experienced team aim                                    Standard and Poor’s fund rating                      AAA
 to find reasonably valued growth stocks throughout the                                    OBSR fund rating                                     AAA
                                                                                           Standard initial charge                              4.00%
 Far East, excluding Japan. Their relatively concentrated
                                                                                           Lump sum Chelsea ISA discount                        4.00%
 portfolio (approximately 45 stocks) invests in large and
                                                                                           Initial charge after discount                        NAV
 mid-cap companies with a long-term view.                                                  Annual management charge                             1.50%
                                                                                           Chelsea Risk Rating†                                 7.5
                                                                                           Unit type                                            Acc

 First State Greater China Growth
 Co-fund managers Martin Lau and Ho Hsiu Mei draw                                          Yield*                                               0.86%
 upon the extensive Asian investing expertise at First State.                              Standard and Poor’s fund rating                      AAA
 The 40-60 stock portfolio has a small and mid-cap bias.                                   OBSR fund rating                                     A
                                                                                           Standard initial charge                              4.00%
 Rigorous research and extensive company visits are combined
                                                                                           Lump sum Chelsea ISA discount                        4.00%
 with considerable macroeconomic analysis when selecting
                                                                                           Initial charge after discount                        NAV
 stocks. A long-term view is taken and hence the portfolio                                 Annual management charge                             1.75%
 turnover is remarkably low.                                                               Chelsea Risk Rating†                                 10
                                                                                           Unit type                                            Acc

 Jupiter Japan Income
 Manager Simon Somerville aims to achieve long-term                                        Yield*                                               2.50%
 capital growth and income growth with this multi-cap fund.                                Standard and Poor’s fund rating                      AA
 It aims to invest largely in companies participating in the                               OBSR fund rating                                     A
                                                                                           Standard initial charge                              5.25%
 growing dividend culture, although it should be noted that
                                                                                           Lump sum Chelsea ISA discount                        5.00%
 the yield is not comparable to UK equity income funds.
                                                                                           Initial charge after discount                        Creation
 It has a concentrated portfolio of approximately 45 holdings,                             Annual management charge                             1.50%
 which focuses on domestic-orientated stocks.                                              Chelsea Risk Rating†                                 9.5
 See page 9 for more details.                                                              Unit type                                            Acc/Inc

 Martin Currie Asia Pacific
 This team-managed fund is headed by Jason McCay and                                       Yield*                                               0.90%
 focuses on large and mid-cap companies, in a concentrated                                 Standard and Poor’s fund rating                      AA
 portfolio. Stock selection is driven by the idea that the markets                         OBSR fund rating                                     AA
                                                                                           Standard initial charge                              5.00%
 underestimate change and this value can be exploited.
                                                                                           Lump sum Chelsea ISA discount                        5.00%
 Turnover in the fund is relatively low, with the average
                                                                                           Initial charge after discount                        NAV
 holding at one year. It holds between 40-60 stocks.                                       Annual management charge                             1.50%
                                                                                           Chelsea Risk Rating†                                 8
                                                                                           Unit type                                            Acc

                                                                                                                              All discounts quoted are to the nearest 0.05%
                                                                                                                      For performance statistics please refer to pages 42-43.
Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09                                                                                Viewpoint issue 24 • September   2009           15
                         The Chelsea Leaders


Corporate Bond funds
  AEGON Investment Grade Bond
 This fund is primarily investment grade and government bonds,                                   Yield*                                               8.21%
 with a maximum of 20% in high yield bonds and some cash.                                        Standard and Poor’s fund rating                      –
 The fund may also comprise holdings in deposits, money market                                   OBSR fund rating                                     –
                                                                                                 Standard initial charge                              4.50%
 instruments and derivative instruments. There is no limit on global
                                                                                                 Lump sum Chelsea ISA discount                        4.50%
 exposure, provided that all non-UK investments are hedged back
                                                                                                 Initial charge after discount                        NAV
 into sterling.                                                                                  Annual management charge                             1.25%
                                                                                                 Chelsea Risk Rating†                                 1
                                                                                                 Unit type                                            Acc/Inc


  Henderson Strategic Bond
 This fund shifts between investment grade and high yield                                        Yield*                                               7.87%
 bonds, generally with a combination of the two but with                                         Standard and Poor’s fund rating                      AA
 the flexibility to move wherever the best value is found.                                       OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              4.00%
 It invests in the UK and Europe and tends to hold some
                                                                                                 Lump sum Chelsea ISA discount                        4.00%
 unrated bonds too. The emphasis is on providing both
                                                                                                 Initial charge after discount                        NAV
 a high yield and some capital growth.                                                           Annual management charge                             1.25%
                                                                                                 Chelsea Risk Rating†                                 1.5
                                                                                                 Unit type                                            Inc


  Invesco Perpetual Monthly Income Plus
 This distinct fund holds a minimum of 80% in bonds but may                                      Yield*                                               8.70%
 also hold up to a maximum of 20% in equities. The bond                                          Standard and Poor’s fund rating                      AA
 element is managed by Paul Causer and Paul Read and is                                          OBSR fund rating                                     AAA
                                                                                                 Standard initial charge                              5.00%
 focused upon high yield debt (50-70%). The equity element
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 (up to 20% of the portfolio) is managed by Neil Woodford.
                                                                                                 Initial charge after discount                        NAV
                                                                                                 Annual management charge                             1.25%
                                                                                                 Chelsea Risk Rating†                                 2.5
                                                                                                 Unit type                                            Acc/Inc


  Legal & General Dynamic Bond
 This fund has an extremely flexible global mandate, which                                       Yield*                                               5.60%
 allows for shifts between investment grade, high yield bonds,                                   Standard and Poor’s fund rating                      A
 equities, derivatives and collective investment schemes.                                        OBSR fund rating                                     A
                                                                                                 Standard initial charge                              3.00%
 Although it benefits from a strong fixed income team,
                                                                                                 Lump sum Chelsea ISA discount                        3.00%
 fund manager Richard Hodges is responsible for portfolio
                                                                                                 Initial charge after discount                        NAV
 construction and has a top-down stock-picking approach.                                         Annual management charge                             1.25%
                                                                                                 Chelsea Risk Rating†                                 1.5
                                                                                                 Unit type                                            Acc/Inc


  M&G Optimal Income
 This fund provides fund manager Richard Woolnough with a                                        Yield*                                               5.27%
 flexible mandate, allowing him to make investment allocations                                   Standard and Poor’s fund rating                      AA
 between investment grade corporate bonds, high yield bonds,                                     OBSR fund rating                                     A
                                                                                                 Standard initial charge                              4.00%
 government debt, convertible and preference stocks, equities,
                                                                                                 Lump sum Chelsea ISA discount                        4.00%
 derivatives and money market instruments. He primarily adopts
                                                                                                 Initial charge after discount                        NAV
 a top-down approach and draws on M&G’s specialist teams                                         Annual management charge                             1.25%
 for stock selection ideas. There is no limit on global exposure,                                Chelsea Risk Rating†                                 1.5
 provided that at least 80% is hedged back into sterling.                                        Unit type                                            Acc/Inc

                                                                                                                                All discounts quoted are to the nearest 0.05%
                                                                                                                        For performance statistics please refer to pages 42-43.



Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09

16            Viewpoint issue 24 • September 2009
                                                                                           The Chelsea Leaders


US funds
 Investec American
 Managed by Bill Fries, Connor Browne and Ed Maran,                                              Yield*                                               0.15%
 this fund focuses on a relatively concentrated portfolio of                                     Standard and Poor’s fund rating                      AA
 40-50 stocks. The managers buy promising companies with                                         OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              4.50%
 sound business fundamentals that are priced at a discount
                                                                                                 Lump sum Chelsea ISA discount                        4.50%
 to their intrinsic value. Performance is driven by a bottom-up
                                                                                                 Initial charge after discount                        NAV
 stock-picking process, consistently applied since inception.                                    Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 7
                                                                                                 Unit type                                            Acc


 M&G American
 Manager Aled Smith takes an active bottom-up investment                                         Yield*                                               0.00%
 approach. The fund holds between 40-70 stocks with                                              Standard and Poor’s fund rating                      AA
 a standard weighting of 2% for each holding. The core                                           OBSR fund rating                                     A
                                                                                                 Standard initial charge                              4.00%
 focus of the fund is on companies in the process of capital
                                                                                                 Lump sum Chelsea ISA discount                        4.00%
 allocation change, as well as looking at thematic changes
                                                                                                 Initial charge after discount                        NAV
 in the corporate environment.                                                                   Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 7
                                                                                                 Unit type                                            Acc/Inc


 Martin Currie North American
 A focused portfolio of 40 stocks keeps fund manager                                             Yield*                                               0.00%
 Tom Walker focused on his best ideas. He will also invest                                       Standard and Poor’s fund rating                      –
 in Canada (on average 10% of the portfolio) when he has                                         OBSR fund rating                                     AA
                                                                                                 Standard initial charge                              5.00%
 strong stock conviction. The fund has a low turnover and
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 is predominantly large cap. Fundamental proprietary research
                                                                                                 Initial charge after discount                        NAV
 is conducted by a strong team of global sector analysts.                                        Annual management charge                             1.50%
                                                                                                 Chelsea Risk Rating†                                 7
                                                                                                 Unit type                                            Acc


 Neptune US Opportunities
 Manager Felix Wintle aims to generate capital growth by                                         Yield*                                               0.21%
 investing in a concentrated portfolio of around 50 stocks with                                  Standard and Poor’s fund rating                      –
 a mid/large cap bias. His process is in line with Neptune’s                                     OBSR fund rating                                     A
                                                                                                 Standard initial charge                              5.00%
 investment approach, which is to form positive views on asset
                                                                                                 Lump sum Chelsea ISA discount                        5.00%
 classes, global sectors and stocks – this can lead to marked sector
                                                                                                 Initial charge after discount                        NAV
 weightings. A bottom-up screening process is used, having                                       Annual management charge                             1.60%
 identified the most promising sectors, where he selects market                                  Chelsea Risk Rating†                                 8
 leading stocks that he believes will grow more profitably.                                      Unit type                                            Acc

                                                                                                                                All discounts quoted are to the nearest 0.05%
                                                                                                                        For performance statistics please refer to pages 42-43.




Notes:   We always strive to reduce your costs to a minimum. Units bought with No Initial Charge are described as being bought at the Creation/NAV.
         You can see from our table of funds that we have secured this Creation/NAV on many of the funds and these are highlighted in the tables.
         † The Chelsea Risk Rating denotes a fund’s risk profile, where 1 is the least risky and 10 has the highest risk.

         Standard & Poor’s and Micropal ratings taken from Money Management, August 2009.
         Fund charges are taken from Cofunds Consolidation Service Key Features Schedule, August 2009.
         These discounts apply to new ISA purchases only, although the majority of ISA/PEP transfers
         will also attract the same discounts. Please telephone 020 7384 7300 for further details.
         OBSR ratings taken from website, August 2009.
         *Yield Financial Express 06/08/09

                                                                                                                       Viewpoint issue 24 • September 2009                        17
The Benefits of our

Fund Supermarket
Our fund supermarket, the Chelsea Portfolio, is administered by Cofunds, which is a
separate, independent company. We strongly believe that holding all your investments
on one platform is the best way to invest. It’s not just what we recommend to you,
the staff at Chelsea Financial Services also invest via the Chelsea Portfolio. Once you
have looked through the following advantages, we think you’ll agree that, whether
you are starting out with £50/month into your first ISA or you have a large portfolio,
using our fund supermarket is the easiest way to manage your investments.

• Monthly investing made easy                                            • Independence
  it attracts the same leading discounts as lump sum investing               unlike its closest rival,
  (often not the case outside the Chelsea Portfolio), with a                 our fund supermarket is
  minimum of just £50/month.                                                 independent, with six major
                                                                             shareholders – Jupiter,
• Large fund selection                                                       Legal & General, Newhouse Capital,
  access to more than 1,000 funds from 75 different providers.               Prudential, Threadneedle and IFDS.
• Fund Review                                                            • No added costs from Cofunds
  we are now providing fund commentary on over 500 of the                    for re-registration and no double charging.
  most popular funds within the Chelsea Portfolio. If you hold
  any of these funds, our commentary, Chelsea Risk Rating                •   Annual ISA allowance
  (from 1 to 10) and the buy/hold/switch rating will be enclosed             can be invested across different funds and fund providers
  with your statement. If you register on our website you can                in the same tax year giving you more choice and enabling
  read every individual review of the top 500 funds.                         you to spread the risk of your investments.

• Less paperwork                                                         • SIPP/Pension
                                                                             you can now manage your pension as you do your ISA
  you receive one statement, every six months, detailing all your
                                                                             on the same platform. See page 37 for further details.
  investments during that period. Investments outside an ISA
  will receive a consolidated tax voucher in June each year.             • Cash Account
                                                                             for those looking to switch non-ISA monies into cash,
• Fantastic discounts                                                        currently paying 0.4% below the Bank of England base rate.
  we are able to offer at least the same discount as if you were             Please note, the only way to switch into the Cash Account is
  investing via ourselves with a single provider and in some                 via postal applications.
  cases the discount is greater.
                                                                         Is there a downside?
• Cash Reserve                                                           You will not receive the annual reports for the underlying
  our supermarket offers a temporary Cash Reserve facility               funds (though these are available on our website) and income
  (currently paying interest 0.4% below the Bank of England base         payment dates will vary slightly from those of the underlying
  rate) for ISAs. Whilst the interest rate is currently low, this is a   fund providers.
  valuable facility which allows you to switch in and out of cash
  without losing your ISA status. It is also free to switch to cash.
  Furthermore, there are a number of cash funds available
  outside an ISA.                                                            How can I move my current holdings into
• Online access                                                              the Chelsea Portfolio fund supermarket?
  you are now able to buy, switch, top up and check valuations               Re-registration is the process of consolidating all your ISAs,
  and transaction histories online.                                          OEICs and unit trusts under one umbrella. Administration
  Just go to www.chelseafs.co.uk to register.                                is by the Chelsea Portfolio, in association with Cofunds,
• Telephone dealing – simply call 020 7384 7300                              but your funds are managed in exactly the same way
  we can now offer telephone dealing for purchases within                    by each fund manager. There are no charges from us,
  Cofunds. You will need to have a valid debit card, (we cannot              or from Cofunds, for re-registration and your funds are
  accept credit cards). Please note that we cannot guarantee                 not sold, so you are never out of the market.
  dealing times within Cofunds.
                                                                             How do I re-register?
• Cheap switching charges
  all fund switches are charged at a maximum of creation/NAV                 Please fill in the re-registration form opposite, with
  + 0.25%. Switches into funds with no initial charge are free               details of all your holdings purchased outside Cofunds,
  (including the Cash Reserve). Switches can be conducted                    and return it to us. We will then send you completed
  online or via post.                                                        forms, which you merely need to sign and date.
• Income reinvested for free                                                 In most circumstances, the process will take
  all income and dividends can be either paid out or reinvested              approximately six weeks.
  for free. Most fund managers charge for this service outside
  the supermarket. This can make a big difference over time,
  especially on income funds.

18          Viewpoint issue 24 • September 2009
Consolidate your Portfolio
Re-registration Form
Move all your fund investments to ONE account! This will reduce the amount of paperwork you currently receive, provide you
with ONE valuation statement twice yearly, and give you the information necessary to CONTROL your portfolio.
Please list below all your ISA and/or unit trust/OEIC investments that were purchased outside Cofunds and return to Chelsea Financial Services.
We can then print the necessary transfer forms and send them to you for your review and signature.

Personal Details               – Please complete this section in full and in block capital letters

Full name
of unit holder(s)                                                                                                                              Title

Current address

                                                                      Postcode                                            Time at current address*                  yrs                      mths

Previous address

e-mail address                                                                                                                                                  Male            Female
                                                                                                       National Insurance
Date of birth                                                                                          number
                                                                                                       Existing Cofunds
Daytime telephone                                                                                      number (if applicable)

* If at current address less than two years, please supply previous address and time there. If more than one previous address in the last two years, please provide full details including
  the time at each address on a separate sheet of paper and staple securely to this form.



ISA investments                – Please complete in block capital letters

Fund Manager                                   Fund Name                                                     Account Number/           Unit Type        Tick if              Tick if
                                                                                                             Plan Reference            ACC/INC          current tax year     saving monthly

 SAMPLE FUND MANAGERS LIMITED                    SAMPLE HIGH INCOME FUND                                            12345               INC




Unit Trusts/OEICs outside an ISA wrapper                                       – Please complete in block capital letters

Fund Manager                                         Fund Name                                             Account Number/           Account designation          No of           Unit Type
                                                                                                           Plan Reference            (if applicable)              Units           ACC/INC

 SAMPLE FUND MANAGERS LIMITED                         SAMPLE UK GROWTH FUND                                 56789                                                  ALL             ACC




Please photocopy this form if you require additional space.                                                                                                                        CFSFLF 08.03
Issued by Chelsea Financial Services, which is authorised and regulated by the Financial Services Authority. Registered Office: St James’ Hall, Moore Park Road,
London SW6 2JS. Registered in England No. 1728085.

                                                                                                                       Viewpoint issue 24 • September 2009                        19
Consolidate your Portfolio
Fund Managers available
                            for re-registration
Please note that ALL fund groups can re-register direct fund holdings (i.e. outside an ISA) but the groups
below additionally offer ISA re-registration. There is no charge for re-registration and you will not be out
of the market at any time.

        •   Aberdeen                        •   F&C                             •   Lincoln           •   RAB
        •   AEGON                           •   Fidelity*                       •   Liontrust         •   Rathbone
        •   Allianz                         •   First State                     •   LV                •   Rensburg
                                                                                           †
        •   Artemis                         •   Gartmore                        •   M&G               •   Royal London
        •   Aviva (Norwich Union)           •   GLG                             •   Macquarie         •   Sarasin
        •   AXA                             •   Henderson New Star              •   Marlborough       •   Schroder
        •   AXA Framlington                 •   HSBC                            •   Martin Currie     •   SWIP
        •   Barclays                        •   Ignis                           •   MFM               •   Seven
        •   Baring                          •   iimia                           •   Midas             •   Skandia**
        •   BlackRock                       •   Impax                           •   Miton             •   SVM
        •   BNY Mellon (Newton)             •   Insight                         •   Neptune           •   Tactica
        •   Cazenove                        •   Invesco Perpetual               •   Noble             •   T Bailey
        •   CIS                             •   Investec                        •   Octopus           •   Thames River
        •   City Financial                  •   JM Finn                         •   Old Mutual        •   Threadneedle
        •   Clerical Medical                •   JO Hambro                       •   OPM               •   UBS
        •   Cornelian                       •   JP Morgan                       •   PH                •   Wise
        •   Credit Suisse                   •   Jupiter                         •   Pictet
        •   Cru                             •   Legal & General                 •   Premier
        •   Eclectica                       •   Legg Mason                      •   Psigma

The following fund managers currently do not offer ISA re-registration. However, they are available to transfer#,
which involves a sale and buy back – a transfer application form can be found on pages 23-24.

                                                             Please return your completed application form in the enclosed
    •   Baillie Gifford
                                                             envelope addressed to:
    •   Close Fund Management
                                                             Chelsea Financial Services PLC, St James’ Hall,
    •   Franklin Templeton
                                                             Moore Park Road, London SW6 2JS.
    •   Lazard
    •   Prudential
    •   Standard Life
    •   State Street


*       Excluding the Extra Income and Moneybuilder UK Index.
#       Mostly with no initial charge. Please call 020 7384 7300 for details.
†       X shares: only those funds purchased more than 5 years ago
        are eligible for re-registration (i.e. those without exit penalties).
** Please telephone for specific details.
VALID AS AT September 2009




20              Viewpoint issue 24 • September 2009
                                 The Chelsea Portfolio, in association with
         Investment ISA (stocks and shares) 2009/10
    The Key Features of the Cofunds Platform and Fund Key Features that accompanies this application form is:                           1 1 0 8
    Cofunds Intermediary Authorisation Code             7 7           Intermediary Client/Deal Ref.                               VP24             % Initial Commission waived                                 100%
    I wish to subscribe to an Investment ISA (stocks and shares) for the tax year 2009/2010 and for each subsequent tax year until further notice (Maximum investment £7,200 per tax year for
    those under 50 years of age). By completing this application, you agree to subscribing to a 2009/10 tax year stocks and shares ISA and each subsequent year until further notice. You are
    entitled to invest with Cofunds in the tax year stated and subsequent tax years without having to complete additional application forms. You are not obliged to invest in subsequent tax years
    although you may choose to do so. Please ensure you have read the accompanying Key Features and Terms and Conditions document (see pages 46-51).

     New ISA limits for over 50s! From 6 October 2009, the ISA allowance will increase to £10,200 for investors who are 50 years of age or over in the 2009/2010 tax year. The £7,200 limit
     will remain in place for all investors under 50 years of age in this tax year, but will increase to £10,200 for all investors for the 2010/2011 tax year. Refer to the “Addendum to the Cofunds
     Platform Key Features – Important Information about your ISA annual allowance” for details.
    Please complete using black ink and BLOCK CAPITALS and return to: Chelsea Financial Services PLC, St James’ Hall, Moore Park Road, London SW6 2JS.

1         Personal Details                  Please complete this section in full
    Existing Cofunds Client Reference                                                                               Current Permanent Residential Address

    Did you receive advice from an Intermediary in relation to this investment?

            Advised        ✓     Not Advised

     Mr/Mrs/Ms/Miss/Other                                                                                                                                        Postcode

     Surname                                                                                                     Time at this Address                                                     yrs                       mths

     Full First Name(s)
                                                                                                                    If at current address for less than 2 years, please supply previous address and time there
     Daytime Tel No.

    Male              Female                       /_ _ /_ _ _ _
                                           Date of Birth _ _
                                                         D D              M     M       Y     Y     Y     Y

    National Insurance Number           _ _ /_ _ /_ _ /_ _ /_                                                                                                    Postcode


    If you do NOT have a National Insurance Number, please tick here.                                            Time at this Address                                                     yrs                      mths

    You should be able to find your NI number on a payslip, form P45 or P60, a letter from the                   (If more than one previous address in the last 2 years, please provide full details including the time at
    HM Revenue & Customs, a letter from the DWP, or pension order book.                                          each address on a separate sheet of paper and staple securely to this application form.)

2         Investment Selection
    Maximum Investment £7,200 or £10,200 if you are 50 years of age or over by 5 April 2010. See page 4 for more details.
    I wish to invest in the Chelsea Easy ISA (please choose one of the portfolios below). See pages 6 & 7 for details.                                            Lump Sum                       Monthly
                                                                                                                                                                  Min portfolio                  Min investment
    Minimum Portfolio investment lump sum £3,000; Minimum regular savings £200 per month.                                                                         investment £3,000              £200 per month
     Either        Cautious Growth Easy ISA                                                                                                                      £                              £
     Or            Balanced Growth Easy ISA                                                                                                                     £                               £
     Or            Aggressive Growth Easy ISA                                                                                                                   £                               £
     Or            Income Easy ISA (please complete income payment overleaf)                                                                                    £                               £
    Or select your own funds and complete this section below:
    I wish to invest in the funds indicated (for further details of the funds available, please refer to the Fund Key Features Schedule).      Type of
    If investing in an OEIC fund, your investment will be made in the Retail Share Class of the fund.                                          Unit/Share
                                                                                                                                               (Delete as        Lump Sum                Monthly
    Fund Manager and Fund Name                                                                                                                 appropriate)*     (Minimum £500 per fund) (Minimum £50 per fund)
                                                                                                                                                ACC / INC        £                              £
                                                                                                                                                ACC / INC        £                              £
                                                                                                                                                ACC / INC        £                              £
                                                                                                                                                ACC / INC        £                              £
                                                                                                                                                ACC / INC        £                              £
                                                                                                                                                ACC / INC        £                              £
                                                                                                                                                ACC / INC        £                              £
     †
      Cash Reserve (if required)                                                                                                                                 £                              £
      TOTAL INVESTMENT AMOUNT                                                                                                                                 £                            £


                                                                                                                                                                                                                             ✁
    *If you do not specify ACC or INC in this column, and/or have not completed Section 3 and, if applicable, Section 4, Cofunds will invest into accumulation units/shares where applicable.
    †
      Cash Reserve Monies may be held for short periods in the Cash Reserve. Such holdings are deemed ‘destined for investment’.

    Investment by Direct Debit for Monthly Savers
    Instruction to your Bank or Building Society to pay Direct Debits
    Please fill in the whole form and send it to: Chelsea Financial Services PLC, St James’ Hall, Moore Park Road, London SW6 2JS.
    Name and full postal address of your Bank or Building Society                                                 Name(s) of Account Holder(s)
     To the Manager                                                           Bank or Building Society
                                                                                                                  Branch Sort Code                                     Bank/Building Society Account Number
         Address
                                                                                                                                 _               _

                                                                                                                  Reference Number (office use only)

                                                    Postcode
                                                                                                                  Originator’s Identification No. (office use only)
    Instruction to your Bank or Building Society
    Please pay Cofunds Limited Direct Debits from the account detailed on this instruction subject to               6      0      0     2      6      7
    the safeguards assured by The Direct Debit Guarantee. I understand that this instruction may remain
    with Cofunds Limited and, if so, will be passed on electronically to my Bank/Building Society.                  Signature                                                         Date
    Banks and Building Societies may not accept Direct Debit instructions for some types of account.
                                                                                                                                            Viewpoint issue 24 • September 2009                             21
    Investment ISA (stocks and shares) 2009/10                                                                                    Continued

3      Nominated Bank Account
    Complete this section if you have not provided us with your nominated bank account details. If you are an existing customer, only complete this section if you would like to change your nominated bank account
    details. Any change to your nominated bank account will not be applied to your regular monthly investments.
    You can only have one nominated bank account at any given time.
    Name(s) of Account Holder(s)                                                                                   Branch Sort Code
                                                                                                                                  _                _

    Bank or Building Society Name and Address
                                                                                                                   Bank/Building Society Account Number




                                                                                                                   Building Society Roll Number
                                               Postcode


4      Income
    Please only complete this section if you have chosen income units/shares (‘INC’). Your chosen income instruction will be applied across all ISA and Investment Funds investments held within your platform account.
    You do not need to select an income option if you would like to continue an income instruction previously provided (for ISA and Investment Funds within your platform account).
    Please refer to the Questions and Answers section of the Key Features of the Cofunds Platform for more information.
    Please tick one option
    Income options:                                                                                                                                      OR if you wish to reinvest:
          Consolidated Natural Income                                                Cofunds Cash Account                                                       Retain in the fund
          Income generated from your platform account will be                        Income generated will be paid to your cash account                         Income generated will be retained in the fund.
          consolidated into your Cofunds Cash Account and paid to                    to be held on platform for withdrawals or future investment.
          your Nominated Bank Account on a monthly basis.


5      Declaration and Authorisation
    I declare that:                                                                                                to assist other companies for verification purposes. A record of the search will be retained as an
    • All investment subscriptions made now and in the future belong to me.                                        identity search. I declare that the information contained in this application form is correct to the best of
    • I am aged 18 years or over.                                                                                  my knowledge and belief.
    • I have not subscribed and will not subscribe to more than my overall subscription limit in total to a
      cash ISA and a stocks and shares ISA in the same tax year.                                                     Signature                                                                Date
    • I have not subscribed and will not subscribe to another stocks and shares ISA in the same tax year
      that I subscribe to this stocks and shares ISA.
    • I am resident and ordinarily resident in the United Kingdom for tax purposes, or, if not so resident,        Data Protection
      either perform duties which, by virtue of Section 28 of Income Tax (Earnings & Pensions) Act 2003            Cofunds Limited will use your information for the administration and servicing of your investments and
      (Crown employees serving overseas), are treated as being performed in the United Kingdom, or I am            other related activities. We may disclose your information to our agents and service providers for these
      married to or in a civil partnership with a person who performs such duties. I will inform Cofunds           purposes. We may also disclose your information to organisations for compliance with legal and
      Limited if I cease to be so resident and ordinarily resident or to perform such duties, or be married to     regulatory requirements.
      or in a civil partnership with a person who performs such duties.                                            With the exception of the preceding provisions, we will not pass on your information to any other third
                                                                                                                   party without your permission, but we will disclose information concerning your investment to your
    I authorise Cofunds Limited to:                                                                                Nominated Intermediary.
    • Hold my cash subscription, ISA investments, interest, dividends and any other rights or proceeds in          Cofunds may transfer your information to countries outside of the EEA for the servicing of your
      respect of those investments and any other cash.                                                             investments. In such cases, contracts will be put in place to ensure that the service providers protect
    • Make on my behalf any claims to relief from tax in respect of my ISA investments.                            your information in accordance with the requirements of the Data Protection Act.
                                                                                                                   If you require a fund prospectus, please contact your Intermediary or Fund Manager directly.
    I confirm that:
    • I agree to be bound by the terms within the Key Features of the Cofunds Platform, Fund Key                   If you wish to attend/vote at unit holder or shareholder meetings, please tick this box.
      Features and the Terms and Conditions of the Cofunds Platform.
    My signed application form (provided that my application is accepted by Cofunds), together with the            If you wish to receive report and accounts, please tick this box.
    Key Features and Terms, constitute my customer agreement with Cofunds Limited. I understand that
    the commencement of my ISA may be delayed or rejected if this application form is not complete in all          To receive report and accounts or attend/vote at unit holder or shareholder meetings, these services
    respects. You may undertake a search with a reference agency for the purposes of verifying my                  are subject to a charge of £20.00 per communication. However, report and accounts can be obtained
    identity. To do so, the reference agency may check the details I supply against any particulars on any         free of charge from the Cofunds website at www.cofunds.co.uk.
    database (public or otherwise) to which they have access. They may also use my details in the future
    Your cheque payment Cheques must either be drawn on your own or your joint account. The cheque must be made payable to Cofunds Limited. For a Building Society cheque or banker’s draft your name
    must appear on the front of the cheque, or on the back of the cheque accompanied by the Building Society’s or bank’s official stamp and signature. We do not accept payments from other third parties.
    We do not accept payment by any other method.
    Your monthly savings For monthly savings we will automatically collect on or just after the 25th day of each month. For applications received up until the last day in any month, the first direct debit collection will
    be made on or just after the 25th day of the following month.
    Direct Debit Guarantee Please refer to the Key Features for details of the Direct Debit Guarantee.

    The funds included in the application form represent a selection of funds                                      Issued and approved by Cofunds Limited,
    available in a Cofunds ISA. Neither Cofunds nor Chelsea Financial                                              First Floor, 1 Minster Court, Mincing Lane, London EC3R 7AA
    Services can advise on which funds to choose or whether the funds                                              Registered in England and Wales No. 3965289.
    selected are appropriate for you.                                                                              Authorised and regulated by the Financial Services Authority (FSA)
    Please note that no advice has been given in this offer. If you are                                            under FSA Registration No. 194734
    in any doubt about the suitability of this investment for you, please
    contact an expert adviser.



6      Completed Application Forms Check List
    Completed Application Forms should be returned to: Chelsea Financial Services PLC, St. James’ Hall, Moore Park Road, London SW6 2JS.
    Have you:

                   Completed your National Insurance number?                                                                      Completed your Bank/Building Society details if you have chosen
                                                                                                                                  to receive income payments?
                   Completed your date of birth?
                   (This will be necessary to validate your Plan)                                                                 Enclosed your personal cheque(s) made payable to Cofunds
                                                                                                                                  Limited if investing a lump sum? – for full details of acceptable
                   Completed the investment selection section?
                                                                                                                                  forms of payment please refer to the Cofunds Key Features.
                   Completed the Direct Debit mandate if saving monthly?
                                                                                                                                  Signed the declaration?




                 22               Viewpoint issue 24 • September 2009                                                                                                                                         CO068 08/09
                                 The Chelsea Portfolio, in association with
       Investment ISA (stocks and shares) Transfer Application
    The Key Features of the Cofunds Platform that accompanies this application form is:                        1 1 0 8
    Cofunds Intermediary Authorisation Code              7 7           Intermediary Client/Deal Ref.                               VP24              % Initial Commission waived                                100%
    Please ensure you have read the accompanying ISA Terms & Conditions and Key Features document (see pages 46-51) before completing this application form.
    Please complete using black ink and BLOCK CAPITALS and return to: Chelsea Financial Services PLC, St James’ Hall, Moore Park Road, London SW6 2JS.

1      Personal Details                      Please complete this section in full
    Existing Cofunds Client Reference
                                                                                                                    Current Permanent Residential Address
    Did you receive advice from an Intermediary in relation to this investment?

           Advised         ✓     Not Advised

     Mr/Mrs/Ms/Miss/Other                                                                                                                                         Postcode

     Surname                                                                                                      Time at this Address                                                     yrs                       mths

     Full First Name(s)
                                                                                                                    If at current address for less than 2 years, please supply previous address and time there
     Daytime Tel No.


    Male            Female                         /_ _ /_ _ _ _
                                           Date of Birth _ _
                                                         D D               M     M       Y     Y     Y     Y

    National Insurance Number           _ _ /_ _ /_ _ /_ _ /_                                                                                                     Postcode


    If you do NOT have a National Insurance Number, please tick here.                                             Time at this Address                                                     yrs                      mths

    You should be able to find your NI number on a payslip, form P45 or P60, a letter from the                    (If more than one previous address in the last 2 years, please provide full details including the time at
    HM Revenue & Customs, a letter from the DWP, or pension order book.                                           each address on a separate sheet of paper and staple securely to this application form.)

2      Nominated Bank Account
    Complete this section if you have not provided us with your nominated bank account details. If you are an existing customer, only complete this section if you would like to change your nominated bank account
    details. Any change to your nominated bank account will not be applied to your regular monthly investments.
    You can only have one nominated bank account at any given time.
    Name(s) of Account Holder                                                                                      Branch Sort Code
                                                                                                                                 _                   _

    Bank or Building Society Name and Address
                                                                                                                   Bank/Building Society Account Number




                                                                                                                   Building Society Roll Number
                                               Postcode

3      Income
    Please only complete this section if you have chosen income units/shares (‘INC’). Your chosen income instruction will be applied across all ISA and Investment Funds investments held within your platform account.
    You do not need to select an income option if you would like to continue an income instruction previously provided (for ISA and Investment Funds within your platform account).
    Please refer to the Questions and Answers section of the Key Features of the Cofunds Platform for more information.
    Please tick one option
    Income options:                                                                                                                                      OR if you wish to reinvest:
         Consolidated Natural Income                                                  Cofunds Cash Account                                                      Retain in the fund
         Income generated from your platform account will be                          Income generated will be paid to your cash account                        Income generated from this investment
         consolidated into your Cofunds Cash Account and paid                         to be held on platform for withdrawals or future investment.              will be retained in the fund.
         to your Nominated Bank Account on a monthly basis.


4      Declaration and Authorisation
    I declare that:                                                                                                They may also use my details in the future to assist other companies for verification purposes. A record
                                                                                                                   of the search will be retained as an identity search. I declare that the information contained in this
    • All investment subscriptions made now and in the future belong to me. (Delete if you will not be             application form is correct to the best of my knowledge and belief.
      subscribing to this ISA).
    • I am aged 18 years or over.
    • I have not subscribed and will not subscribe to more than my overall subscription limit in total to a          Signature                                                                Date
      cash ISA and a stocks and shares ISA in the same tax year. The 2009/2010 tax year ISA
      subscription limit is £7,200 (or £10,200 if you were born before 05/04/1960).
    • I have not subscribed and will not subscribe to another stocks and shares ISA in the same tax year           Data Protection
      that I subscribe to this stocks and shares ISA. (Delete if you will not be subscribing to this ISA).         Cofunds Limited will use your information for the administration and servicing of your investments and
    • This application is to transfer my existing ISA and, if applicable, entitles me to subscribe to a stocks     other related activities. We may disclose your information to our agents and service providers for these
      and shares ISA in the current tax year and each subsequent year until further notice. I understand           purposes. We may also disclose your information to organisations for compliance with legal and
      that this does not mean that I am obliged to invest with Cofunds in the following or future tax years.       regulatory requirements.
      However, if I wish to do so, I may not be required to complete a further application form.                   With the exception of the preceding provisions, we will not pass on your information to any other third
    • I am resident and ordinarily resident in the United Kingdom for tax purposes, or, if not so resident,        party without your permission, but we will disclose information concerning your investment to your
      either perform duties which, by virtue of Section 28 of Income Tax (Earnings & Pensions) Act 2003            Nominated Intermediary.
      (Crown employees serving overseas), are treated as being performed in the United Kingdom, or I am            Cofunds may transfer your information to countries outside of the EEA for the servicing of your
      married to or in a civil partnership with a person who performs such duties. I will inform Cofunds           investments. In such cases, contracts will be put in place to ensure that the service providers protect
      Limited if I cease to be so resident and ordinarily resident or to perform such duties, or be married to     your information in accordance with the requirements of the Data Protection Act.
      or in a civil partnership with a person who performs such duties.
      (Delete if you will not be subscribing to this ISA)                                                          If you require a fund prospectus, please contact your Intermediary or Fund Manager directly.
                                                                                                                   If you wish to attend/vote at unit holder or shareholder meetings, please tick this box
    I authorise Cofunds Limited to:
    • Hold my cash subscription, ISA investments, interest, dividends and any other rights or proceeds in          If you wish to receive report and accounts, please tick this box
      respect of those investments and any other cash.
    • Make on my behalf any claims to relief from tax in respect of my ISA investments.                            To receive report and accounts or attend/vote at unit holder or shareholder meetings, these services
                                                                                                                   are subject to a charge of £20.00 per communication. However, report and accounts can be obtained
    I confirm that:                                                                                                free of charge from the Cofunds website at www.cofunds.co.uk.
    • I agree to be bound by the terms within the Key Features of the Cofunds Platform, Fund Key Features
      and the Terms and Conditions of the Cofunds Platform.                                                        Issued and approved by Cofunds Limited, First Floor, 1 Minster Court, Mincing Lane, London EC3R 7AA
                                                                                                                   Registered in England and Wales No. 3965289. Authorised and regulated by the Financial Services
    My signed application form (provided that my application is accepted by Cofunds), together with the            Authority (FSA) under FSA Registration No. 194734
    Key Features and Terms, constitute my customer agreement with Cofunds Limited. I understand that
    instructions may be delayed or rejected if this application form is not complete in all respects. You may
    undertake a search with a reference agency for the purposes of verifying my identity. To do so, the                                     Viewpoint issue 24 • September 2009                              23
    reference agency may check the details I supply against any particulars on any database (public or
    otherwise) to which they have access.
    ISA Transfer Authority
    This transfer authority should only be used for either the transfer of a stocks and shares ISA or a cash ISA into a Cofunds stocks and shares ISA. Please note that a
    separate authority will be required for each Plan/Account Manager. If transferring from more than one Plan/Account Manager, please request more Transfer
    Authority Forms from your Intermediary. Please ensure that you have signed both the Transfer Application Form and the Transfer Authority Form.
                                                                                                                 I hereby instruct my current ISA Manager to either transfer my holdings to Cofunds Nominees
    Existing Client reference                                                                                    Limited or liquidate the assets within my ISA with immediate effect, and forward the proceeds
                                                                                                                 as specified below to my new Plan/Account Manager at Cofunds Limited, PO Box 1103,
    Please complete all details requested                                                                        Chelmsford CM99 2XY. This transfer should include, where relevant, all former ISA and
        Name of Plan/Account Manager (from whom you wish to transfer)                                            PEP investments. I confirm that the re-registration of the funds listed will not change the
                                                                                                                 beneficial ownership from the current holder. I confirm that this transaction is exempt from
                                                                                                                 SDRT by virtue of paragraph 6 of Schedule 19 of the Finance Act 1999.

        Address                                                                                                    Mr/Mrs/Ms/Miss/Other

                                                                                                                   Surname

                                                                                                                   Full First Name(s)

                                                                                                                   Signature
                                                      Postcode                                                                                                                         Date


1           Funds that you wish to KEEP via re-registration (stock transfer)
    Please list all funds that you hold with the above Plan/Account Manager that you wish to retain when you transfer your investment to Cofunds.                                                  Please tick if
                                                                                                                                                                                                   subscriptions
                                                                                                                                         A/C or Plan Nos.                Type of Unit/Share         made this
    Fund Manager and Fund Name                                                                                                      (This must be completed)           (delete as appropriate)*      tax year
                                                                                                                                                                           ACC / INC

                                                                                                                                                                           ACC / INC

                                                                                                                                                                           ACC / INC

                                                                                                                                                                           ACC / INC

                                                                                                                                                                           ACC / INC
    *If you do not specify ACC or INC in this column, Cofunds will not be able to process your application. If you have chosen income units/shares, please ensure you complete
     Section 2 and, if applicable, Section 3 of the ISA Transfer Application Form if you wish the income to be paid to you.

2           Funds that you wish to SELL (cash transfer)
    Please list all funds that you hold with the above Plan/Account Manager that you wish to sell and transfer the proceeds to Cofunds. Please also complete
    Section 3 and, if applicable, Section 4 to tell us which funds you wish to reinvest into. Please ensure the funds you choose are available through Cofunds.                                    Please tick if
                                                                                                                                                                                                   subscriptions
                                                                                                                                                                      A/C or Plan Nos.              made this
    Fund Manager and Fund Name                                                                                                                                   (This must be completed)            tax year




3           Cash ISA Transfer
    If applicable, please indicate either of the following to be transferred
    into your Cofunds stocks and shares ISA:                                                        A/C or Plan Nos. (This must be completed)

                                                                                    £                     .                                                                                                    Days
    All my cash ISA                      OR        An amount of my cash ISA                                                  Is there any notice period for you to transfer your cash ISA?

4           Transfer Investment Choices                                Please refer to the fund charge schedule and complete in full
    I wish to transfer the proceeds of my existing ISAs into the Chelsea Easy ISA (please tick one of the portfolios below).
    Minimum Transfer of £3,000. See pages 12 & 13 for details.                                                                                                                                                      (✔)
        Cautious Growth Easy ISA

        Balanced Growth Easy ISA

        Aggressive Growth Easy ISA

        Income Easy ISA (please complete income payment overleaf)

    Or select your own funds and complete this section below: (Minimum Transfer of £1,000 per fund)
                                                                                                                                                          Type of Unit/Share
    Fund Manager and Fund Name                                                                                                                               (ACC/INC)*                           Transfer %

                                                                                                                                                             ACC / INC

                                                                                                                                                             ACC / INC

                                                                                                                                                             ACC / INC

                                                                                                                                                             ACC / INC

                                                                                                                                                             ACC / INC
        †
            Cash Reserve (if required)
    * If you do not specify ACC or INC in this column, and/or have not completed Section 2 and, if applicable, Section 3 of the ISA Transfer Application form,                       Total 100%
            Cofunds will invest into accumulation units/shares where applicable.
    †       Cash Reserve Monies may be held for short periods in the Cash Reserve. Such holdings are deemed ‘destined for investment’.
                                                                                                                                                                                                      CO068 08/09
                     24              Viewpoint issue 24 • September 2009
                                 The Chelsea Portfolio, in association with
       Investment Funds Application Form (non-ISA)
    The Key Features of the Cofunds Platform and Fund Key Features that accompanies this application form is:                               1 1 0 8
    Cofunds Intermediary Authorisation Code               7 7           Intermediary Client/Deal Ref.                                VP24
    Please ensure you have read the accompanying Customer Agreement for Investment Funds and Key Features document (see pages 46-51) before completing this application form.
    Please complete using black ink and BLOCK CAPITALS and return to: Chelsea Financial Services PLC, St. James’ Hall, Moore Park Road, London SW6 2JS.

1      Personal Details                      Please complete this section in full
    First named (‘Primary’) holder. (Please see section 6 to add an additional holder)
                                                                                                                       Current Permanent Residential Address
    Existing Cofunds Client Reference

    Did you receive advice from an Intermediary in
    relation to this investment?                                                                    ✓
                                                                                              Not Advised                                                                Postcode
                                                                           Advised

     Mr/Mrs/Ms/Miss/Other                                                                                            Time at this Address                                                               yrs                mths

     Surname
                                                                                                                      If at current address for less than 2 years, please supply previous address and time there
     Full First Name(s)

    Male            Female                  Date of Birth _ _            /_ _ /_ _ _ _                                                                                   Postcode

     Daytime Tel No. (inc STD)                                                                                       Time at this Address                                                               yrs                mths
    (If more than one previous address in the last 2 years, please provide full details including the time at        (If more than one previous address in the last 2 years, please provide full details including the time at
    each address on a separate sheet of paper and staple securely to this application form.)                         each address on a separate sheet of paper and staple securely to this application form.)

2      Designations                     You can designate an account here using a maximum of 8 alpha/numeric characters
    If you wish to specify a unique designation for this account, please ensure that the designation reference does not make a meaningful word. Only the
    named applicants of this investment will be recognised as owners. If this section is not completed we will not designate this account. If you are funding
    this investment from a Cofunds Cash Account please ensure this designation is identical to that of the Cash Account.

3      Funding your investment
    I will be funding my investment by (tick all that apply):
                                                                                        Cofunds                                                                      Monthly Direct Debit (please ensure you
            Cheque          £                      .          Amount                    Cash
                                                                                        Account
                                                                                                        £                      .           Amount                    complete the ‘Investment by Direct Debit for
                                                                                                                                                                     Monthly Savers’ on below).
                                                                                Please ensure that all the joint holders and the designation
                                                                                (if specified) on this application form match this Cash Account.

4      Investment Selection
    I wish to invest in the fund(s) indicated (for further details of the funds available, please refer to the Fund Key Features Schedule). Minimum Lump Sum Investment £500 per
    fund. Minimum Monthly Investment £50 per fund. If investing in an OEIC fund, your investment will be made in the Retail Share Class of the fund.
                                                                                                                                                   Type of
                                                                                                                                                   Unit/Share       Lump Sum                       Monthly
                                                                                                                                                   (Delete as       Minimum £500                   Minimum £50
    Fund Manager and Fund Name                                                                                                                     appropriate)*    per fund                       per fund
                                                                                                                                                    ACC / INC        £                              £
                                                                                                                                                    ACC / INC        £                              £
                                                                                                                                                    ACC / INC        £                              £
                                                                                                                                                    ACC / INC        £                              £
                                                                                                                                                    ACC / INC        £                              £
                                                                                                                                                    ACC / INC        £                              £
                                                                                                                                                    ACC / INC        £                              £
     TOTAL INVESTMENT AMOUNT                                                                                                                                        £                               £
    *If you do not specify ACC or INC in this column, and/or have not completed Section 5 and,                      Your monthly savings For monthly savings we will automatically collect on or just after the
    if applicable, Section 6, Cofunds will invest into accumulation units/shares where applicable.                  25th day of each month. For applications received up until the last day in any month, the first direct
    Your cheque Cheques must be drawn on your own or your joint account. The cheque must be                         debit collection will be made on or just after the 25th day of the following month.
    made payable to Cofunds Limited. For a Building Society cheque or bankers draft your name must                  Direct Debit Guarantee Please refer to the Key Features document
    appear on the front of the cheque, or on the back of the cheque accompanied by the Building                     for details of the Direct Debit Guarantee.
    Society’s or bank’s official stamp and signature. We do not accept payments by any other method.
                                                                                                                    Issued and approved by Cofunds Limited, First Floor, 1 Minster Court,

                                                                                                                                                                                                                                 ✁
    If joint holder, cheques should be drawn by the individual joint primary holder or a named additional
    holder. We can only accept direct debit forms from the primary holder’s account.                                Mincing Lane, London EC3R 7AA Registered in England and Wales No. 3965289.
                                                                                                                    Authorised and regulated by the Financial Services Authority (FSA) under FSA Registration No. 194734


    Investment by Direct Debit for Monthly Savers
    Instruction to your Bank or Building Society to pay Direct Debits
    Please fill in the whole form and send it to: Chelsea Financial Services PLC, St. James’ Hall, Moore Park Road, London SW6 2JS.
    Name and full postal address of your Bank or Building Society                                                    Name(s) of Account Holder(s)
     To the Manager                                                             Bank or Building Society

      Address                                                                                                        Branch Sort Code
                                                                                                                                    _                 _                    Bank/Building Society Account Number

                                                                                                                     Reference Number (office use only)

                                                       Postcode
                                                                                                                     Originator’s Identification No. (office use only)
    Instruction to your Bank or Building Society
    Please pay Cofunds Limited Direct Debits from the account detailed on this instruction subject to the              6      0      0     2        6     7
    safeguards assured by The Direct Debit Guarantee. I understand that this instruction may remain
    with Cofunds Limited and, if so, will be passed on electronically to my Bank/Building Society. Banks               Signature                                                         Date
    and Building Societies may not accept Direct Debit instructions for some types of account.

                                                                                                                                               Viewpoint issue 24 • September 2009                               25
    Investment Funds Application Form (non-ISA)                                                                        Continued

5     Nominated Bank Account
    Complete this section if you have not provided us with your nominated bank account details. If you are an existing customer, only complete this section if you would like to change
    your nominated bank account details. Any change to your nominated bank account will not be applied to your regular monthly investments.
    You can only have one nominated bank account at any given time.
    Name of Account Holder                                                                         Branch Sort Code
                                                                                                              _              _

    Bank or Building Society Name and Address                                                      Bank/Building Society Account Number



                                                                                                   Building Society Roll Number
                                        Postcode

6     Income
    Please only complete this section if you have chosen income units/shares (‘INC’). Your chosen income instruction will be applied across all ISA and Investment Funds investments
    held within your platform account.
    You do not need to select an income option if you would like to continue an income instruction previously provided (for ISA and Investment Funds within your platform account).
    Please refer to the Questions and Answers section of the Key Features of the Cofunds Platform for more information.
    Please tick one option:
    Income options:                                                                                                                        OR if you wish to reinvest:
         Consolidated Natural Income                                      Cofunds Cash Account                                                   Retain in the fund
         Income generated from your platform account will                 Income generated will be paid to your cash                             Income generated from this investment
         be consolidated into your Cofunds Cash Account                   account to be held on platform for withdrawals or                      will be retained in the fund.
         and paid to your Nominated Bank Account on a                     future investment.
         monthly basis.

7     Joint Holders                You can nominate one additional holder
    Please include the full name and address of this additional holder. All Correspondence will be sent to the ‘Primary’ holder.
    Second named holder
     Mr/Mrs/Ms/Miss/Other                                                                         Date of Birth _ _
                                                                                                                D D
                                                                                                                                 /_ _ / _ _ _ _
                                                                                                                                    M    M          Y     Y      Y     Y
                                                                                                                                                                                Male               Female
     Surname
                                                                                                   If at current address for less than 2 years, please supply previous address and time there
     Full First Name(s)
     Current Permanent Residential Address

                                                                                                                                               Postcode

                                        Postcode                                                  Time at this Address                                                                 yrs                   mths

                                                                                                  (If more than one previous address in the last 2 years, please provide full details including the time at each
    Time at this Address                                               yrs                mths
                                                                                                  address on a separate sheet of paper and staple securely to this application form.)

8     Declaration and Authorisation
    I/We confirm that:                                                                            Please note that all joint holders must sign this application.
    I/We agree to be bound by the terms within the Key Features of the Cofunds Platform,          Where there are two signatories for a corporate investor, please delete reference to
    Fund Key Features and the Terms and Conditions of the Cofunds Platform. My/Our                primary and second holder.
    signed application form (provided that my/our application is accepted by Cofunds),            Data Protection
    together with the Key Features and Terms, constitute my/our Agreement with                    Cofunds Limited will use your information for the administration and servicing of your
    Cofunds Limited.                                                                              investments and all other related activities. We may disclose your information to our
    I/We understand that instructions may be delayed or rejected if this application form         agents and service providers for these purposes. We may also disclose your information
    is not complete in all respects.                                                              to organisations for compliance with legal and regulatory requirements.
    You may undertake a search with a reference agency for the purposes of verifying              With the exception of the above provisions, we will not pass on your details to any other
    my/our identity. To do so, the reference agency may check the details I/we supply             third party without your permission, but we will disclose information concerning your
    against any particulars on any database (public or otherwise) to which they have              investment to your Nominated Intermediary.
    access. They may also use my/our details in the future to assist other companies              Cofunds may transfer your information to countries outside the EEA for the servicing
    for verification purposes. A record of the search will be retained as an identity search.     of your investments. In such cases, contracts will be put in place to ensure that the
    I/We declare that the information contained in this application form is correct to the        service providers protect your information in accordance with the requirements of the
    best of my/our knowledge and belief.                                                          Data Protection Act.
    I am/We are aged 18 or over.                                                                  If you require a Fund prospectus, please contact your Intermediary or Fund Manager directly.

     Primary Holder Signature                                          Date                        Third Holder Signature                                                              Date
     Capacity (if applicable)                                                                      Capacity (if applicable)
                                                                                                                                                                                                                    CO004 08/09




     Second Holder Signature                                           Date                        Fourth Holder Signature                                                             Date
     Capacity (if applicable)                                                                      Capacity (if applicable)
    If you are completing this as a company you must include a copy of the Articles of Association.




               26               Viewpoint issue 24 • September 2009
    Corporate
    Bond Glossary
    Corporate bond investments form a large part of many investors’ portfolios,
    but we also understand that the terminology can be confusing. So we begin
    our feature with a glossary for your reference.
    Alpha                                                            Emerging Market Debt
    The return of a bond or a portfolio taking into account          Debt issued by both companies and governments in
    its market risk; often used to assess an active manager’s        emerging countries.
    performance e.g. a negative alpha indicates it has
    underperformed and a positive alpha indicates                    Federal (Fed) Funds rate
    outperformance.                                                  The most widely quoted American interest rate. This rate is
                                                                     determined by the Federal Reserve’s Federal Open Market
    Beta                                                             Committee (FOMC).
    A measure of a security’s or portfolio’s volatility in
    comparison to the market as a whole. A beta above 1 is           Gilt
    more volatile than the overall market, while a beta below        A bond issued by the British Government – the equivalent
    1 is less volatile.                                              of US Treasury securities.

    Basis points (bps)                                               High yield
    Taking into account its market risk; one one-hundredth           Lower rated (see credit rating), higher yielding securities
    of one percent, commonly used for calculating changes            issued by corporations and generally rated below
    in yield of a fixed-income security, interest rates and          investment grade by bond rating agencies eg any bond
    equity indices eg a 25 basis points increase in interest         rated below BBB-.
    rates = 0.25% rise.
                                                                     Investment grade
    Bid                                                              Bonds that have a high credit rating such as BBB or above
    The highest price any buyer is willing to pay for a given        eg one issued by a stable blue chip company. These bonds
    security at a given time; also called bid price.                 are viewed as less risky and hence pay a lower yield/coupon.

    Offer                                                            Leverage
    The lowest price that any investor or dealer has declared        The use of various financial instruments or borrowed
    that he/she will sell a given security or commodity for.         capital to increase the potential return of an investment.

    Convertible bond                                                 Liquidity
    A company issued bond that may be converted into                 The degree to which an asset or security can be bought
    shares in that company during the life of the bond for a         or sold in the market without affecting the asset’s price.
    pre-stated price. The decision to convert may rest with either   Liquidity is characterised by a high level of trading activity.
    the issuer of the bond or the investor but is not obligatory.
                                                                     Redemption Yield
    Corporate bond                                                   The Redemption Yield shows what the total return on a
    A bond issued by a company to an investor as a means of          bond would be if held to its maturity date. It reflects not
    raising money. The par value, otherwise known as face            only the interest payments a bondholder will receive, but
    value, of the bond is repaid when the bond matures.              also the gain/loss they will make when it matures.
    In addition, interest is paid at set intervals and the bonds
                                                                     Running Yield
    can be traded on major exchanges.
                                                                     Used to describe the income investors get from their portfolio
    Coupon                                                           as a percentage of market value of the securities. Note that
    The interest rate stated on a bond when it’s issued.             as the market price of a bond drops, its yield goes up.
    Typically, the coupon is paid twice-yearly.
                                                                     Spread
    Credit ratings                                                   The extra yield achieved from holding a corporate bond
    Assess the probability and likelihood that a company will        over a government bond of similar maturity.
    default on a bond. Many ratings companies offer their
                                                                     Yield curve
    own ratings systems including Moody’s, Standard & Poor’s
                                                                     A curve which plots current yields of fixed interest
    and Fitch.
                                                                     securities against their times to redemption (maturity).
    Bonds with ratings from AAA (the highest rating) to BBB-         This enables investors to compare the yields of short,
    are deemed to be ‘investment grade’ while BB+ and below          medium and long-term securities at a given time. The yield
✃




    are known as ‘speculative grade’ or ‘high yield’.                curve often refers to this relation for government bonds
                                                                     (gilts). Whilst the curve is often sloping upwards (i.e. higher
    Duration                                                         yields for longer maturities), it is not unusual to observe
    The average time to payment measured in years.                   other shapes (inverted, U-shaped, etc...).
    The longer the duration the more sensitive the bond
    price to interest rates.                                                             Viewpoint issue 24 • September 2009           27
Corporate
Bond Investing
Corporate bonds have provided exceptional returns over the last six months and are increasingly
popular as one of the few ways in which to obtain a reasonable level of income. Jenna Barnard,
co-manager of Henderson Strategic Bond, discusses this diverse asset class, the factors that affect it
and the outlook for fixed interest investment. A glossary of terminology can be found on the previous
page, so you may wish to take a look at this first or refer to it as you read the following article.
                          The fixed income market has traditionally             Those funds with a truly strategic approach are able to take
                          been divided into three core asset classes;           advantage of the variances between the different asset classes.
                          government bonds, investment grade and high           In fact, strategic bond funds can actively target returns in those
                          yield. However, increasing numbers of fund            better performing sectors of the market, while switching
                          management companies have realised the                out of the underperforming areas or where the outlook
                          inherent benefits of actively managing their          is less favourable.
                          asset allocation by including a combination of
                          all three assets within the same portfolio. This      Not all strategic bond funds are the same
 Jenna Barnard            ‘strategic approach’ has much to recommend            Naturally within such a broad sector (the Strategic Bond sector
       Co-manager         it, both from a greater diversification standpoint    contains 67 funds) there is room for different management
         Henderson
      Stategic Bond
                          within the asset class itself and also as a           approaches and investment strategies, and the differences
                          genuine driver of portfolio returns.                  between them can make a significant impact on returns. The
                                                                                Henderson Strategic Bond fund is managed with the view that
Fixed income assets within the economic cycle
                                                                                the best way to generate returns is to be able to express both
Different fixed income asset classes perform differently                        positive and negative views on markets and alter portfolio and
depending on the economic cycle, the anticipated number                         asset allocation accordingly. The fund is UCITS III compliant,
of corporate defaults and the outlook for interest rates. The                   which we believe offers an investment advantage over more
returns between these asset classes can fluctuate significantly                 traditional funds. Such funds are able to implement flexible and
from year to year. Investors with exposure to only one asset                    diverse investment strategies for both interest rate and credit
type may be disappointed with the level of returns when the                     risk management, all within a tightly controlled risk framework.
market becomes more favourable towards a different asset type.                  Derivatives can be used to increase or decrease exposure to
The chart below illustrates the variation in performance                        certain areas of the market depending on the fund manager’s
from the three main fixed income asset classes since 1999.                      level of conviction. Both interest rate futures and credit default
Clearly past performance is no guarantee of future returns                      swaps are used to manage the two main risks associated with
and being in the right asset class at the right time can often                  fixed income investing; interest rate risk and default risk.
be a more significant determiner of portfolio returns than
                                                                                The outlook for fixed income
fund manager performance.
                                                                                While the signs are there to demonstrate that markets are
 Annual returns from different                                                  stabilising, the outlook for fixed income funds has shifted
   New Star types
 fixed income Higher Income                                                     enormously as we have moved through this economic crisis.
                                                                                Cast your minds back to February, when several market
                                                                                commentators declared the US banking sector insolvent and
     40
             High Yield      Investment Grade   Gilt                            forecast the impending nationalisation of the UK and US
     30
                                                                                financial systems. Predictably, bond market investors reacted
     20
                                                                                by running for the nearest exit. The nadir was reached in
     10                                                                         March, at which point the landscape altered dramatically. The
% 0                                                                             tentative credit market rally that began in January for defensive
  -10                                                                           areas such as utilities, telecoms and tobacco spread to financials,
  -20                                                                           when a number of banks (notably RBS and Lloyds in the UK)
  -30                                                                           offered bondholders the opportunity to buy back some of their
  -40                                                                           bonds at a premium to their trading value. This helped to
          1999 2000 2001 2002 2003 2004 2005 2006 2007 2008            YTD      provide the market with some much-needed stability and from
                                                                     (31 May)
                                                                                this point investor confidence improved dramatically.
Source: Bloomberg, as at 31 May 2009. Merrill Lynch European
High Yield Index (100% hedged to GBP), Merrill Lynch Sterling
IG, Merrill Lynch Gilt.




28             Viewpoint issue 24 • September 2009
The unwanted side effect of policy efforts to bolster the banks,
                                                                               What factors can affect the price
and the economy, has been effectively to transfer systemic risk
from the financial sector to the sovereign state itself, leaving the           of a bond before it reaches maturity?
gilt market with a decidedly uncertain outlook. Record fiscal
deficits equal a massive increase in the supply of gilts, while                Government bonds
pumping record amounts of money into markets through                           The price at which UK government bonds (or gilts) are traded
quantitative easing (£125 billion at the time of writing) has                  can rise or fall, depending on interest rates, inflation and supply
the potential to store up inflation risk further down the line.                and demand determined by the outlook for the UK economy.
In addition, should the Bank withdraw its support of the gilt                  In general, if interest rates are expected to rise the price of
market this would put pressure on government bonds, causing                    government bonds will fall, and vice versa. Prices have also
their yields to rise and prices to fall. It is not just the gilt market        been affected by the record level of gilt issuance witnessed
that would suffer from rising government bond yields though,                   this year, which the Government has used to help refinance
but also those fixed income assets with a high sensitivity to                  troubled UK banks. Many of these gilts have been bought
interest rate risk (also known as duration), including longer-dated            by the Bank of England as part of their quantitative easing
investment grade portfolios. We expect the more credit-sensitive               programme, but the concern remains that once the Bank
areas of the market to outperform going forward, while the                     withdraws from quantitative easing, an oversupply of gilts
interest rate sensitive areas experience something of a decline.               and a lack of investor demand would force prices sharply lower.
This risk is currently being managed within the portfolio by                   Looking towards the longer term, the threat of rising inflation
hedging out a large part of the interest rate risk with the use                brought about by quantitative easing also poses a significant
of interest rate futures, financial contracts that allow buyers                threat to government bonds. Inflation erodes the real value of
and sellers to ‘lock-in’ the price of an asset for future delivery,            the fixed return offered by government bonds, making them
depending on their outlook for interest rates.                                 less attractive for investors.
As fixed income has forced itself into the investment
foreground over the last couple of years, the case for a
                                                                               Investment grade corporate bonds
managed fixed income fund has grown even more compelling.                      Investment grade bonds, particularly from the most stable high
However, fixed income investors need to be mindful of the                      quality companies, tend to outperform when credit conditions
various risks present in all asset classes and make sure that                  improve, as investors are attracted by the additional yield (or
their portfolios are capable of evolving and adjusting in sync                 spread) that investment grade corporate bonds offer over gilts.
with the rest of market. Going forward, an all-weather approach                The current low interest rate environment remains positive for
will continue to be vital. We therefore believe that a strategic               investment grade bonds although the outlook will grow less
bond portfolio should be considered as the cornerstone of any                  favourable should interest rates start to rise.
well-diversified investment portfolio.
                                                                               High yield bonds
 Strategic Bond Fund performance                                               High yield assets are more closely correlated with equity
  New Star Higher Income
 versus IMA Strategic Bond sector                                              investments than other fixed income asset classes. They tend
                                                                               to perform better in periods when the economy is improving
 130                                                                           and the rate of corporate defaults is falling. Improving company
 125                                                                           earnings and stronger balance sheets mean investors are
 120                                                                           increasingly attracted by the relatively high yields on offer and
 115                                                                           this tends to drive the price of existing bonds higher as the
 110                                                                           yield spread over gilts narrows. The higher yields available also
 105                                                                           offer some cushioning against higher interest rates. Due to their
 100
                                                                               high coupons and shorter maturities, high yield bonds have
           Mstar (MA) £ Strategic Bond (NX) 4.14                               lower interest rate risk than investment grade bonds and suffer
 95
           Henderson Strategic Bond A Inc (UT) 16.29                           less from rising inflation, although the threat of default is higher.
 90
  Jun-04         Jun-05         Jun-06             Jun-07   Jun-08   Jun-09


Source: Morningstar, as at 30 June 2009, mid-mid, UK sterling,
net income reinvested                                                         For further fund details see page 16.




                                                                                              Viewpoint issue 24 • September 2009              29
     Henderson New Star
 The integration of New Star into Henderson is now well               What has been central
 under way. And while we have yet to see full transition, we          to the success of the integration
 at Chelsea have been impressed with the progress thus far.           has been the retention of key
                                                                      managers from New Star, namely
 There were some major concerns about a potential flight of
                                                                      Richard Pease (European Growth), James Gledhill
 investors from New Star’s funds, given the uncertainty
                                                                      (High Yield Bond), Guy de Blonay (Global Financials).
 surrounding the investment house’s future, but outflows
 proved to be relatively meagre compared with the deluge              However, things have not run smoothly in all areas. It will have
 expected by the market. Another positive has been the                come as a blow that Henderson New Star’s head of property
 pick-up in performance: 26% of New Star assets under                 Roger Dossett is to leave the firm later this year (Dossett had
 management are now ranked in the top quartile as opposed             agreed to join the combined group in April to ensure a steady
 to 8% in December 2008.                                              transition). As he is a very experienced manager this is a
                                                                      negative, but Henderson have a large pool of property
 When the deal was finalised in 2008, Henderson CEO,
                                                                      expertise they can draw from and they have already
 Andrew Formica was quick to have dialogue with all the
                                                                      announced that the former director of Henderson Mark
 major stakeholders and lay out the road map for integration.
                                                                      Carpenter will take over from Dossett. Carpenter has over
 Indeed, Chelsea’s managing director, Darius McDermott, met
                                                                      20 years of property-investing experience.
 with Mr Formica personally and had a detailed consultation,
 putting to him the principal concerns of Chelsea investors.          Taking into account the point at which the integration process
 Darius left the consultation confident that not only were unit       has reached thus far, and its relative success, we see no reason
 holders interests being looked after but that Mr Formica was         to downgrade any New Star or Henderson funds. Below we
 putting in place measures that would improve the Henderson           have listed the key funds and their current rating.
 New Star range through the consolidation of expertise
 and experience.


      FUND NAME                          RATING         COMMENT

      New Star Global Financials         Buy            Manager Guy de Blonay has remained.

      New Star European Growth           Buy            Manager Richard Pease has remained.

      New Star High Yield Bond           Hold           Manager James Gledhill remains; this fund continues to be a hold.

      New Star Technology                Buy            We are impressed with new managers Stuart O’Gorman & Ian Warmerdam,
                                                        who have considerable experience and a strong track record.

      New Star UK Alpha                  Hold           Post-acquisition new manger Stephen Peak is a solid replacement for
                                                        Tim Steer; we maintain a watching brief and the fund remains as a hold.

      New Star Property                  Hold           Manager Roger Dossett has left but we are confident that Henderson
                                                        will draw from their considerable pool of property experts.

      New Star UK Growth                 Hold           Manager Trevor Green remains.

      New Star Higher Income             Hold           Toby Thompson is replaced by Graham Kitchen & Andrew Jones.
                                                        We will watch their progress.

      New Star Fixed Interest            Hold           New Star’s incumbent manager, James Gledhill, teams up with Henderson
                                                        bond experts John Pattullo and Jenna Barnard: we await to see if the trio
                                                        will create some synergy.


 This has been a difficult period for Chelsea investors with holdings in New Star funds; we thank you for your continued patience.




30           Viewpoint issue 24 • September 2009
Credit Suisse
In January, Credit Suisse sold their fund range to Aberdeen.      The income funds returning to Mr Mott’s team (with Neil Cumming
Later, in July, we learnt that Aberdeen Asset Management          as named manager) are the following: Aberdeen Income, Aberdeen
agreed to sell on these funds to Premier Asset Management         Monthly Income and Aberdeen Alpha Income. Given our
(retaining their Asian and Global Emerging Market products).      confidence in Mott and the fact that he will be running these funds
                                                                  utilising his usual investment process, we will maintain these funds
The deal will see Premier take ownership of the 10 UK
                                                                  as a hold and watch their progress through this transition.
funds. Chief among the funds sold to Premier by Aberdeen
are the group’s income mandates, which a number of                The remaining funds moving from Aberdeen will be passed
Chelsea clients hold. The management of these funds will          to key members of the Premier investment team including
be outsourced by Premier to Bill Mott and his team at             CIO Paul Branigan, head of fixed income Paul Smith and
income firm Psigma.                                               head of global equities Mike Jennings. These funds also
                                                                  remain on hold.
Mott will be a familiar name to many of you. A star income
manager, he ran these funds for Credit Suisse in the early
2000s, so it is really a case of events turning full circle. We
are happy Mott is being re-united with these funds: firstly,
the Aberdeen investment process did not suit the running of
these funds; secondly Mott remains an excellent fund              The funds came under Premier’s management on
manager with a strong track record.                               August 1, and the deal with be finalised in October.




Gartmore European Selected Opportunities
Gartmore star manager Roger Guy, along with co-manager            has a wealth of experience and a long-standing track record
Guillaume Rambourg, are stepping down from managing               of success. At GAM he managed an equivalent vehicle to the
this fund. They were always going to be a hard act to             Gartmore fund, the GAM Star Continental European Equity
follow – under their stewardship, the fund has displayed          fund, which is ranked first quartile over one, three, five, seven
considerable outperformance – over 5 years it has returned        and 10 years, and the GAM Star European Equity fund which
56% compared with the sector average of 40%. However,             is ranked first quartile over three, five, seven and 10 years.
the stepping of John Bennett into the breach has gone a           The handover will not take place for another six months, and
long way to ease our concerns.                                    having not met the new fund manager we have placed this
Bennett has proved himself a very successful fund manager         fund on hold. That said, we envisage upgrading the fund to
with a similarly impressive record to Roger Guy. He also          a buy due to Bennett’s reputation and good track record.
follows a blended investment process focused on large-cap
stocks similar to the process Guy operates; this, we hope,
should amount to a relatively seamless transfer. Bennett also     Chelsea Rating: Hold




                                                                                  Viewpoint issue 24 • September 2009             31
   Fund Manager Survey
                          In the course of interviewing fund managers and reading research notes, I have never
                          before come across such divergent views on the economy and markets. I am fortunate
                          enough to speak to many highly respected managers, who have considerable experience in
                          assessing the macroeconomic environment in order to make informed stock selection. It is
                          always interesting to cross reference their views and previously I would have found that
                          managers would differ in something like the anticipated rate of inflation. However, now
Juliet Schooling Latter
                          I find that some are anticipating inflation and some deflation in 2010. Some believe in the
     Head of Research     green shoots and some are forecasting a fairly gloomy picture over the next few years.


    Whatever your own thoughts on the difficulties we face in the
    current economic downturn, I thought you would like to know            1   Will the FTSE 100 end the year up or down
    the thoughts of those who spend much of their time analysing               from here (4630)?
    the macroeconomic outlook. So we compiled some questions                   86% believe markets will end the year up, with just
    that we thought you would like the answers to and surveyed                 14% expecting the FTSE to end the year down.
    many of our Chelsea Leaders’ panel (largely UK and fixed               2   At the beginning of 2010 will we be facing inflation
    interest). As these are extraordinarily busy people, whom we               or deflation?
    did not wish to distract from the business of running your                 Interestingly, opinion was divided between those
    money, we chose 10 of the most pertinent questions.                        anticipating inflation (39%) and those concerned about
                                                                               deflation (48%) and 13% believing that we will be seeing
    On the whole, the results were more positive than I anticipated.           very little of either.
    I was surprised that so many were expecting the FTSE to
    rise, given it has already gone up over 30% from its low this
                                                                           3   Will the Bank of England raise interest rates
                                                                               within the next 12 months?
    year, and that equities were almost universally favoured.
                                                                               48% anticipate a rate rise, whilst 52% do not.
    The favoured areas for investment were more as I expected,
    with the UK, emerging markets and Japan the most popular               4   Will house prices go down, go up or stay
    and Europe clearly lagging the field. Japan, as ever, was an               the same within the next 12 months?
    anomaly coming in third as a preferred region in which to be               40% expect a rise in house prices, with 20% believing a
    invested, but then coming in first as a region managers would              fall is likely and 40% do not expect to see any movement
    prefer to avoid.                                                           in either direction.
                                                                           5   Which region would you prefer to invest in
    Most interesting was the question over inflation versus deflation,
                                                                               over the next year – UK, US, Europe, emerging
    on which opinion is clearly divided. This is backed up by the
                                                                               markets, Asia or Japan?
    division of opinion on the likelihood of an interest rate rise.
                                                                               32% UK          23% emerging markets
    Therefore the anticipation of a rise in gilt yields is clearly not
                                                                               16% Japan       13% Asia
    due to the spectre of inflation, but could be more in anticipation
                                                                               13% US          3% Europe
    of greater gilt issuance or a move towards equities.
                                                                           6   Which region would you prefer not to be
    There are still a few investment bears out there expecting more            invested in over the next year – UK, US,
    bank nationalisations. Although, a definite majority believe we            Europe, emerging markets, Asia or Japan?
    will be out of recession by the beginning of next year. Finally,           37% Japan       32% Europe
    that thorny question of house prices and here again the results            11% UK          10% emerging markets
    are somewhat divided. Fewer believe that there will be a fall,             5% Asia         5% US
    however, those who expect a rise are matched by those who
                                                                           7   Will bonds or equities perform better over
    do not expect to see any movement.                                         the next 12 months?
    With grateful thanks to those fund managers who took the time              Just 12% preferred bonds, with 88% opting
    to complete our survey: David Roberts (Aegon); Phil Milburn                for equities.
    (Aegon); Derek Stuart (Artemis); Adrian Gosden (Artemis);              8   Will 10-year gilt yields go up or down
    Peter Saacke (Artemis); AXA Framlington; Mark Lytlleton                    over the next 12 months?
    (BlackRock); Vincent Devlin (BlackRock); Sanjeev Shah (Fidelity);          71% expect gilt yields to rise, with 24% anticipating
    John Pattullo (Henderson); Neil Woodford (Invesco Perpetual);              a fall and 5% do not expect any change.
    Paul Causer (Invesco Perpetual); Paul Read (Invesco Perpetual);        9   Will we see further nationalisation of UK banks?
    John Wood (J O Hambro); Tony Nutt (Jupiter); Elena Shaftan                 87% state that we won’t see further bank nationalisations
    (Jupiter); Cedric de Fonclare (Jupiter); Simon Somerville (Jupiter);       and just 13% believe we will.
    Richard Hodges (L&G); Giles Hargreave (Marlborough);
                                                                           10 Will we still be in recession in the UK at
    James Fairweather (Martin Currie); James Sullivan (Miton);
                                                                              the beginning of 2010?
    M&G; Carl Stick (Rathbones); Ian Lance (Schroder);
                                                                               78% think we will no longer be in recession, whilst 22%
    Karen Robertson (Standard Life).
                                                                               believe we will still be facing recession.




    32             Viewpoint issue 24 • September 2009
Monthly Investing –
                                                          helping you to benefit
                                                          from a turbulent market
                                                          The global credit crunch has dominated stock markets over the last
                                                          18 months and we have experienced one of the worst bear markets
                                                          in history. 2008 was one of the toughest years on record with extreme
                                                          volatility causing global markets to go from peak to trough very quickly.
                                                          This has led to many investors asking; how is it possible to think about
                                                          investing right now?

                      Although prospects for markets are rife with         170.92p** per unit. However, if you had invested monthly
                      volatility at present, do you want your savings      between June 2008 and May 2009 the average price paid
                      to be in the bank with interest rates close to       would have been 111.53p**. With the current price at
                      zero? Looking back, some significant                 125.85p**, if you had invested monthly you would have
                      downturns in markets have been followed              made a gain of 12.8%, in comparison with a loss of 26.4%
                      by large gains. Indeed, in recent months we          if you had made a lump sum investment.
                      have seen some strong gains, with the average
                                                                           Monthly investing promotes the discipline of saving, whereby
                      UK All Companies fund being up 7.3%* over
                                                                           a small amount invested every month over several years can
          Beryl Ofori the last 3 months. In the past many investors
             Research have missed out on the first phase of the
                                                                           build into a sizeable nest egg. You may diversify your monthly
          Department                                                       investment into several funds with a relatively small amount of
                      stock-market recovery, which has led to a
                                                                           capital and build an investment portfolio that meets your
                      significant effect on their long-term
                                                                           attitude to risk. With a balanced and diversified portfolio, you
                      investment returns.
                                                                           can enjoy a more sustained potential return in the long run.
The solution is to maintain some stock-market exposure in a
                                                                           Cofunds have the added bonus of offering the same discount
controlled way, to avoid missing out on a ‘cheap’ market. By
                                                                           on monthly savings as lump sum investments and have
investing on a monthly basis you can build positions gradually,
                                                                           reduced their minimum monthly investment to £50 per fund.
enabling you to take advantage of current low valuations and
reducing the volatility of your portfolio.                                 Although it is difficult to keep calm in the current turbulent
                                                                           environment, now is the time start a regular savings plan to
If you put a fixed amount into a fund every month, regardless of
                                                                           ride out the volatility of current markets and to grow your
market behaviour and the unit price, this is known as ‘pound-cost
                                                                           savings in an affordable way.
averaging’. This means that as the market drops your cash has not
lost its value and you can purchase more units in the fund at a
                                                                             New Star Higher
                                                                             Monthly Investing Tips Income
reduced price. As markets fall you are able to curtail your losses
and when they rise, your purchasing power goes down but the                  • Keep an eye on the funds in which you are investing.
overall value of your portfolio will increase.                                 It is easy to lose track of how they are performing
                                                                               (utilising your twice-yearly valuation statement and
The statistical effect becomes more obvious over time, especially
                                                                               Fund Review; and viewing an up-to-date valuation
in volatile markets. This is illustrated in the graph below. If you
                                                                               via our website, www.chelseafs.co.uk.)
had invested a lump sum in June 2008 you would have paid
                                                                             • Ensure you have a good spread of funds. The secret
  New Star Higher Income
 Allianz BRIC Stars Monthly                                                    is to diversify your holdings – the greater the spread
                                                                               of funds, the more you reduce your risk and the better
 Monthly Investment from 25th June 2008 to 25th May 2009                       you can benefit from any upswings in sectors or regions.
 through CFS via Cofunds, with 4% discount.
                                                                             • Be aware of the volatility of the funds you hold.
          200
                                                                               There can be a huge divergence of volatility even
                                                                               within a particular sector or region.
          150
                                                                             • To start a monthly savings ISA, simply fill out the
  pence




          100                                                                  application form on page 21.

                                                                             • Thereafter to alter monthly payments, simply pop
           50
                                                                               a letter in the post to us.
            0
                Jun   Jul Aug Sep Oct Nov Dec Jan   Feb Mar Apr May
                08    08 08 08 08 08 08 09          09 09 09 09            * Source: Investment Week 27/07/2009
                                                                           ** Source: Cofunds 22/07/2009




                                                                                           Viewpoint issue 24 • September 2009              33
                      Inflation or Deflation?
                      That is the question
            John      John Greenwood, who is Chief Economist of Invesco, kindly agreed to explain to us the arguments
   Greenwood          for both inflation and deflation and take a look at the impact that each scenario would have on
 Chief Economist
       of Invesco     your investments. John has been economic adviser to the Hong Kong Government and is currently
                      a member of the Shadow Monetary Policy Committee.


Central banks and governments are combining their efforts to
get the global economy out of recession. Will these drastic        There are three widely quoted theories about what causes
measures lead to an upsurge in inflation, or will the              inflation (or deflation):
underlying economic forces that caused the current downturn
                                                                   1. The quantity or monetary theory of inflation
prove so great that the authorities are powerless to prevent
the onset of deflation? Furthermore, how will various asset        2. The output gap theory of inflation
classes behave in such environments?
                                                                   3. The cost-push theory of inflation
Firstly, before answering these questions, it is necessary to
define our terms:
                                                                  The quantity or monetary theory of inflation holds that,
GDP (Gross Domestic Product) – is the total market value
                                                                  in the words of Milton Friedman, “Inflation is always and
of goods and services produced by a nation.
                                                                  everywhere a monetary phenomenon”. It can therefore
Inflation – is defined as a persistent, substantial rise in the   normally be explained by a sustained and significant or
general level of price, which erodes the value of the currency.   abnormal increase in the quantity of money in an economy.
Disinflation – is defined as a period or process of slowing       But currently bank lending in the US and the eurozone
the rate of inflation.                                            is slowing or falling, while in the UK it has fallen sharply.
                                                                  Consequently, monetary growth in the US, the UK, and the
Deflation – is defined as a persistent, substantial fall in the
                                                                  eurozone is also slowing down, and seems likely to continue
general price level, which boosts the value of the currency.
                                                                  to do so as long as there is little appetite to borrow among
                                                                  businesses or consumers. At face value, therefore, the
                                                                  evidence suggests slowing inflation or possibly even deflation
                                                                  if current trends continue.


                                                                    New Star Declines (year-on-year %)
                                                                   Bank LendingHigher Income
                                                                   15

                                                                   12

                                                                    9

                                                                    6
                                                                                  US
                                                                    3             EUROZONE
                                                                                  UK
                                                                    0

                                                                   -3

                                                                   -6
                                                                     Apr    Nov      Jun     Jan    Aug     Mar      Oct    May
                                                                     05     05       06      07      07     08       08     09



                                                                  Source: Datastream, January 2005 – June 2009

                                                                  The output gap theory of inflation rests on the idea that
                                                                  inflation is directly related to the difference between potential
                                                                  GDP and actual GDP. If the potential GDP exceeds actual
                                                                  GDP, this suggests an economy with room to expand without
                                                                  inflation – i.e. there are resources that can be brought into
                                                                  use without putting upward pressure on the overall level of
                                                                  prices. Conversely, if the actual GDP exceeds potential GDP,
                                                                  this suggests an economy with no further room to expand
                                                                  without putting upward pressure on prices.




34            Viewpoint issue 24 • September 2009
One of the defining characteristics of a recession is that the     Cash is generally only a good investment when most other
total output of the economy falls below potential output,          risky assets such as equities, commodities and real estate are
with unemployment rising and capital equipment such as             falling in value. This tends to happen only on relatively rare
machinery, factories, warehouses and offices left idle. Given      occasions – as in periods during 2008 – giving rise to the
the severity of the current economic downturn, the output          catch-phrase “Cash is king!”. Under deflation cash or deposits
gap is generally projected to be unusually large in most           will hold their value, and even increase in real terms
major economies over the next two years, hence far from            (as prices fall), but under inflation their returns tend to lag
suggesting any inflation risk, output gap theory suggests          behind the inflation rate and investors tend to lose money
deflation in 2010.                                                 in real terms.

The cost-push theory of inflation typically starts with            Bonds generally require falling interest rates to perform well.
a “supply shock” which may be caused by a decline in               They therefore tend to perform best in recessions (when the
aggregate supply. This may be due to a natural disaster,           demand for credit is weakening and/or central banks are
or the increased price of a major input such as oil. According     lowering interest rates), or in deflation when the expectation
to the theory, increased oil prices would lead to higher costs     of falling prices in the future causes investors to be happy with
for producers and manufacturers (especially those for whom         lower yields on their investments. Conversely, bonds tend to
oil is a large part of their costs), which would be passed on      perform poorly when interest rates are rising, which is typically
to consumers in the form of increased prices. In turn,             due to a strengthening economy (rising demand for credit
wage-earners or trade unions would demand higher wages             and/or the central bank raising interest rates), or in inflation
to compensate for the higher prices of goods and services,         when the expectation of rising prices causes investors to
driving a generalised wage-price spiral.                           demand a higher yield on their investments to compensate
                                                                   for the loss on their (fixed nominal) principal due to inflation.
The problem with this theory is that commodities are only a
small proportion of final costs. Many commodity price surges       Generally speaking, share prices rise most in the early stages
– especially at the start of a business cycle upswing – have       of an economic recovery when renewed optimism pushes up
never shown up in consumer prices, either because they are         PE (price to earnings ratio) multiples and earnings expectations.
offset by declines in other components of the CPI, or because      This is typically a period when inflation is low or falling. Later
they are absorbed in producers’ or manufacturers’ margins.         in the business cycle when inflation and interest rates rise,
Consequently there is no clear link between commodity price        PE multiples tend to decline – which often offsets the earnings
increases and CPI changes.                                         gains. In deflation, the problem for equities is that although
                                                                   interest rates tend to fall (potentially raising PE multiples),
The other potential source of cost-push inflation, namely
                                                                   earnings growth tends to be very weak, with the result that
wage increases, seems likely to remain very subdued over the
                                                                   equities generally do not perform well under deflation (just
next year or two while unemployment is either rising or while
                                                                   look at Japanese equities over the last 20 years).
it remains at a high level. The conclusion is that the risk of
inflation from either commodity-based cost-push factors or         To sum up, inflation or deflation is the end-result of the
from any sudden upswing in wage demands remains very               transmission of monetary policy through the money markets,
remote at the present time.                                        the security markets and the real economy. Only in the final
                                                                   stages does inflation or deflation emerge. It is therefore
Inflation or Deflation ahead?                                      important for investors to consider the likely outcome –
According to any of these three theories, it seems unlikely that   inflation or deflation – well ahead of the emergence of either.
inflation will be a serious problem in the developed economies
                                                                   Where John Greenwood, Invesco Chief Economist, has expressed
over the next year or two, although inflation in some of the
                                                                   views and opinions, these may change and are not necessarily
emerging economies – where conditions are very different –
                                                                   representative of Invesco Perpetual views.
could become a problem over a two-year time horizon.

Turning to the various asset classes, I will discuss the
prospects for cash, bonds and equities under inflation
and deflation scenarios.




                                                                                   Viewpoint issue 24 • September 2009            35
                      Tax Update –
                      50% income tax rate announced!
                      Since the Chancellor declared war on high earners in his latest Budget, clients have
       Matthew
     Woodbridge       been asking us for details of structured products where any profits are subject to
           Head of
Investment Products   capital gains tax, rather than income tax. This is due to the punitive tax changes
                      which will come into effect from April 2010 for some higher rate tax payers when:

•   There will be an additional higher rate of 50% for taxable           •   Available for direct investment where returns are taxed as
    income above £150,000. Tax on dividends within this band                 a capital gain; any gain would be assessed in the tax year
    of income will be increased from 32.5% to 42.5%.                         2014/15 with latest payment for tax due 31 January 2016
•   For those individuals with taxable income over £100,000 their        •   Minimum investment: £3,600
    personal allowance will reduce by £1 for every £2 of taxable         •   Closing date: 2nd October 2009 (18th September for
    income over £100,000, thereby wiping out any personal                    ISA transfers)
    allowance where taxable income exceeds £112,900.                     •   1.5% discount from Chelsea Financial Services

What can you do?                                                         Cater Allen Capital Guaranteed Defined
Firstly, it is sensible to take full advantage of the increased          Return Plan 3
ISA allowances and once these have been used, it is worth                This plan will return your original capital together with a small
remembering that for the 2009/10 tax year there is an                    fixed return if held for the full term (subject to the counterparty,
individual annual exemption for the first £10,100 of gains.              Abbey National plc, remaining solvent). It also offers a fixed
Furthermore, since April 2008, any gains made over £10,100               coupon if the FTSE 100 has risen or stayed at the same level at
are subject to a flat rate of 18% tax. Don’t forget you can put          maturity. There are two options available – 3.75 years or 5.5 years.
existing unit trusts within an ISA wrapper to take advantage             The plan will appeal to cautious investors who are seeking capital
of your ISA allowance.                                                   growth and prepared to give up potential interest on the monies
Many structured products are designed to produce all of their            for an attractive potential reward.
returns in the form of capital gains, thereby maximising the             If you select the 3.75 year term, you will get back your original
disparity between income taxed at a potential rate of 50% and            capital plus:
capital gains which is taxed at a flat rate of 18%. Below are
details of a couple of structured products which may be of               •18% of your original investment if the FTSE 100 has stayed
interest to you where any returns are subject to capital gains            the same or increased by any amount.
rather than income tax.                                                  Or

Barclays Target Growth Plan                                              •  0.25% of your original investment if the FTSE 100 has
                                                                            gone down.
The Target Growth Plan gives investors the opportunity to                If you select the 5.5 year term, you will get back your original
receive a high fixed return, provided that the FTSE 100 Index            capital plus:
is at or above 50% of its starting level at maturity.
The Target Growth Plan is not a guaranteed investment
                                                                         •40% of your original investment if the FTSE 100 has stayed
                                                                          the same or increased by any amount.
and both payment of the fixed return and repayment of the
                                                                         Or
capital are conditional on the Index not breaching the 50%
safety barrier on the maturity date so the FTSE 100 could be             •   0.5% of your original investment if the FTSE 100 has
49% below the starting level and still pay out your original                 gone down.
capital and the 45% coupon (subject to the counterparty,
Barclays Bank plc, remaining solvent).
                                                                         Summary of the plan
The product is therefore likely to appeal to investors seeking
                                                                         •   Eligible for ISA investment including transfers – although the
                                                                             capital gains tax treatment of the plan gives you the option of
some protection from the decline of the FTSE 100 whilst
                                                                             using your ISA allowance elsewhere
making a decent return if the protection level is not breached.
Here is a summary of the plan:                                           •   Invests in assets issued by Abbey National plc which is part of
                                                                             the Santander Group, one of the 10 largest banks in the
•   Five-year investment term                                                world and rated AA by Standard & Poor’s
•   Offers an investment return of 45% and full repayment                •   Minimum investment: £7,200
    of investors’ capital, unless the FTSE 100 is more than 50%
    below its starting level at maturity – in which case both
                                                                         •   Closing date – 5 October 2009

    capital and the return will reduce 1:1 with the Index                •   1.5% discount from Chelsea Financial Services

•   Although this is a ‘capital at risk’ investment, the Plan works to   For information about either of the products, please telephone
    offset potential losses using a combination of return and capital    our main office on 020 7384 7300.




36             Viewpoint issue 24 • September 2009
Chelsea
funds-only
SIPP
Significant changes to pension legislation were announced in this year’s Budget, particularly
in relation to high earners. However, a point that seems to have been overlooked is that if
you have a total income of less than £150,000, you will be unaffected by these changes
and can continue to claim full tax relief on your pension contributions.

Hence, you can still receive up to 40% income tax relief on         aware of any guarantees you are giving up by moving the
your pension contributions, provided you have paid enough in        plan(s) as well as any surrender penalties your current provider
tax. Indeed, it would be prudent to consider using the annual       may levy. If you are still unsure of whether to make a transfer
allowances currently available before any possible changes to       after making these checks give us a call to see if we can help.
the tax treatment of future contributions.
                                                                    To apply for the Chelsea Flexible Retirement Plan, please call us
If you have earned £150,000 or more in this tax year, or in         on 0800 071 3333 for an application form and the Key Features.
the tax years from 2007/08, then you could be affected by
the new rules. Please refer to www.hmrc.gov.uk for
further details.                                                      Here are the benefits of transferring
If you are thinking of making a pension contribution this tax         your existing personal pensions to the
year then you should consider the Chelsea Flexible Retirement         Chelsea Flexible Retirement Plan:
Plan. It is a low-cost, funds-only SIPP that can accept transfers
of existing personal pensions, including those containing
Protected Rights. The plan offers access to over1,600 funds on        •   NO initial charges on all funds, saving you up to 5.5%
the Cofunds platform, including funds such as Invesco                 •   NO charge for switching between funds
Perpetual High Income, Allianz BRIC Stars and BlackRock UK
Absolute Alpha – all at no initial charge. Furthermore, if you
                                                                      •   NO set-up charge (usually £120)

are an existing Cofunds user and invested in the SIPP, you            •   Online valuations via the Chelsea Financial
would receive a half-yearly statement detailing your ISA funds,           Services website
investment funds and funds held within your SIPP enabling
you to keep track of your investments more easily.
                                                                      •   Ability to consolidate – you may have personal
                                                                          pensions with more than one provider
Here at Chelsea, we feel that a pension is just another
                                                                      •   Able to make asset allocation decisions in one place.
investment vehicle and should be managed as such and so
you can control your pension fund in the same way you                 •   Reduce paperwork and time taken to
run your ISA investments with all the added flexibility and               monitor performance
control not normally associated with pensions.                        •   Likely to be a wider choice of funds available than
Lump sums (minimum £5,000), regular savings (minimum                      within your existing contract
£250 per month) and transfers from other personal pension             •   Potentially lower charges, especially on larger amounts
plans are accepted. Many of you will have accumulated a
number of different private pensions run by various insurance         •   Consolidated bi-annual statements together with your
                                                                          ISAs and investment funds (if held on Cofunds)
companies over your working life, many of which offer just a
limited range of funds, often with high charges. However,             •   Access to the Chelsea Fund Review – commentary on
please remember it is best to check before transferring that              funds held by you on Cofunds with Buy/Hold/Switch
there isn’t a comparable investment choice for the same cost              recommendations.
where your Protected Rights currently are or a stakeholder
plan that may suit your needs better. In addition, please be



                                                                                     Viewpoint issue 24 • September 2009            37
Emerging Markets
Developed markets suffering from
huge debt burdens
At both government and personal levels, there is little or no economic growth, although some emerging markets
are weathering this economic downturn considerably better than others, with very little debt and continued growth.
Can we as investors really afford to ignore these economies? Over the next four pages, four different managers
discuss the market in which they invest and explain how they are coping with the credit crunch. We believe these
areas of investment have much to recommend them as part of a diversified portfolio, although they can still be
volatile and so do carry a higher risk rating.



                   China                                             Take Chinese auto sales for example. While we have seen a
                                                                     slump in the global demand for cars, for the first time more cars
                                                                     are being bought in China than in the US. China’s Association
                   While the global economy contends with
                                                                     of Automobile Manufacturers expects total vehicle sales to
                   recession, China continues to head towards
                                                                     exceed 11 million units this year following tax cuts on small
                   becoming the world’s next economic colossus.
                                                                     cars and the introduction of vehicle subsidies to rural areas.
                   The Chinese economy looks on course to grow
                   by another 8% this year. And while others
                   nurse huge budget deficits, China has               Gartmore China Opportunities
 Charlie Awdry
  Fund Manager     accumulated more than $US2 trillion in foreign     • Managed by Charlie Awdry, with the aid of Gartmore’s
 Gartmore China    exchange reserves. That should help the              experienced London-based team, since June 2006
   Opportunities
                   authorities to ensure the growth continues.
                                                                      • ’A’ rated by Standard and Poor’s and OBSR
One concern is that exports have fallen sharply as the rest of
the world has retrenched. Over the last year, exports are down        • A strong investment process, which includes both
by a quarter. However, China’s domestic markets are growing             top-down (macro) and bottom-up factors
quickly enough to ensure the overall economy keeps                    • Invests purely in China itself
expanding. China’s middle class is expected to double in size
in the next five years. They’re spending more too – retail sales      • Flexibility to invest across the cap scale
grew 15% in the first six months of this year.

Other data released in July confirms that the performance gap        Critically for China’s stock market, the outlook for corporate profits
between China and the rest of the world just keeps growing:          is improving. Stock valuations are no longer as low as they were
according to China’s National Bureau of Statistics, the Chinese      earlier this year, however, the Hang Seng China Enterprise Index,
economy grew by an impressive annualised rate of 7.9% in the         which tracks 43 state-owned enterprises traded on the Hong Kong
second quarter. That’s after growth slipped to a ‘tepid’ 6.1%        Stock Exchange, continues to look good value compared with
during the previous three-month period.                              history and with other world markets. The key point for us is that
                                                                     there is good scope for further gains before we reach the point
The Chinese government has shown it is prepared to step in           where valuations become a handicap.
to ensure the economy continues to expand at a healthy clip.
Last November, it announced a package worth $US586 billion           Overall, we would say that the stock-market rally this year is
to stimulate economic activity. In contrast to what we have seen     justified. From here, we expect to see improvements in areas
in most other parts of the world, banks are playing their part       such as the property market and auto sales feeding through
too, being quite prepared to maintain lending to businesses          to the economy as a whole. This, taken in conjunction with the
and consumers.                                                       prospect of a global economic recovery in 2010, would suggest
                                                                     that China’s economic renaissance is set to continue.
Sustainable expansion?                                               Chelsea Risk Rating: 10
The question is how sustainable is this expansion? The critics
                                                                     Standard initial charge: 5%
may say that it’s not, because recent growth has been artificially   ISA initial charge after discount: 0%
engineered by the government. They may be right to                   Annual management fee: 1.5%
have doubts, but there are signs now that the effects of
government-related expenditure are beginning to cascade
through the broader economy. With the property market now
improving and a number of industries beginning to produce more
again, the recovery is looking like more than a temporary blip.




38          Viewpoint issue 24 • September 2009
                    Asia                                              Growth rates of China, India
                                                                      and the US
                The region has changed a great deal since
                the late 90s. Much progress has been made                                                  14
                                                                                                                       China   India*     US
                in terms of regulatory reform, restructuring of
                                                                                                           12
                the banking system and control of public debt.




                                                                       GDP (real, % change year-on-year)
                The net result is a stronger Asia which went                                               10
      Allan Liu into this downturn in better shape than many
  Fund Manager western economies.                                                                          8
   Fidelity South
        East Asia  Ten years ago, Asian GDP was around 30% of                                              6
                   that of the US. Today it is 60%. In a decade or
so, China and India are likely to match that 60% on their own.                                             4
Much of that growth is coming from within the region. Over
the past seven years, trade within Asia has increased 75% faster                                           2

than trade with Europe and the US. The west now accounts for
                                                                                                           0
just half of the value accumulated through intra-Asian trade as                                                 2000    2001   2002     2003   2004   2005   2006   2007   2008
Asian economies start to view each other as end markets in
their own right, rather than as simply another link in the           Source: Bloomberg, June 2009 (* fiscal year)
global supply chain.

China and India are home to 38% of the world’s population
and represent the largest consuming population in the world.
                                                                      China and India are home to 38%
The middle-income population in Asia is estimated to grow by          of the world’s population
some 850 million over the next ten years. Behind those statistics
lies a huge opportunity for companies, both local and
                                                                     However, most Asian economies are in a healthy fiscal position
international, that can tap into this new source of demand.
                                                                     and have been well-positioned to implement pro-growth policies
And, as the demographic structure of the region changes, so          to compensate for the short-term slowing of demand. Since
too does its social organisation. The young, educated population     November 2008, around $US950 billion has been pledged
is increasingly moving towards the city. 350 million people          across the region in the form of tax rebates, infrastructure
will be added to China’s urban population by 2025.                   expenditure, loan waivers and enhanced public services.
The infrastructure to support that population migration must         Regulatory reform is also under way and trading procedures
be built. Retailing habits will change. Mass transit systems will    are being relaxed so that the Asian economy can become
be rolled out. New homes, offices and shops will be built. This      even more self-sustaining.
has created an internal demand that has helped lessen the
                                                                     These efforts ease pressures on the economy today but also
impact of the global slowdown.
                                                                     take a step towards building the internal demand that helps
                                                                     leave decoupling theories open to fewer questions.
 Fidelity South East Asia                                            While US GDP growth remains weak, China
                                                                     continues to expand by low single digits, fuelling
 • The fund invests in companies throughout south-east
                                                                     the growth of the wider Asian region. India
   Asia, excluding Japan. Manager Allan Liu has a growth
                                                                     and Indonesia have also reported healthy
   bias and tends to focus on mid-to-large cap companies
                                                                     GDP expansion.
 • Allan is supported by over 40 Asia Pacific
                                                                     The shift in economic and market power to
   ex Japan investment professionals based
                                                                     the east has barely begun. Today, less than
   around the region
                                                                     a tenth of the market capitalisation of global
 • ‘AA’ rated by Standard and Poor’s and OBSR                        stock markets can be found in Asia. I suspect
                                                                     that may not be the case in ten years’ time.
 • Allan has run this fund since 2003 and
   has over 22 years of Asia Pacific equity                          Chelsea Risk Rating: 8.5
   fund management experience
                                                                     Standard initial charge: 3.5%
                                                                     ISA initial charge after discount: 0%
                                                                     Annual management fee: 1.5%
That’s not to say that the global economic slowdown has not
had a pronounced impact on the region. A cutback in demand
from the US has proved detrimental to the exports that are still
an important contributor to the region’s GDP. Furthermore, the
depreciation of many of the region’s currencies has been made
worse by the repatriation of foreign funds to the west.

These external factors have then produced knock-on effects for
domestic demand and investment. Consumers and businesses
have become noticeably more cautious. Global economic
uncertainty doesn’t help to change the mindset of local consumers
who prefer to save more than their western counterparts.



                                                                                                                          Viewpoint issue 24 • September 2009                39
                                                                     the second quarter of this year will be stronger than expected
                     Russia                                          because of the recovery in the oil price and the stability of the
                                                                     rouble. Like the oil companies, the mining companies in general
                  Russia’s transition from communism to capitalism   also benefit from a weaker rouble, which offsets much of the
                  under Boris Yeltsin, following the dissolution     stall in gold and metal prices.
                  of the Soviet Union in 1991, was disastrous,
                  with asset-grabbing by a small minority of
                                                                       Neptune Russia and Greater Russia
                  opportunists; impoverishing inflation; and a
   Robin Geffen one-third contraction in output between 1991          • Managed since launch in December 2004, by Robin
    Fund Manger and 1998. The climax was a humiliating forced           Geffen, who has invested in the region for over 15 years
   Neptune Russia devaluation of the rouble in August 1998.
and Greater Russia                                                    • Concentrated portfolio of approximately 30 stocks
                   The devaluation, however, acted as a pressure
                                                                      • Utilises Neptune’s team-based, global macro research
release-valve for the economy which bounced back in 1999,
growing by 6.4%. Between 2000-08, under Vladimir Putin, the           • Focuses on large, liquid stocks
Russian economy grew at an average rate of 7% per year –
utilising idle capacity, raising living standards and leading to
the emergence of a Russian middle-class consumer market*.            The months of March and April saw a rapid rise in the Russian
Revenues from the country’s endowment of natural resources           stock market as the oil price rose. The stabilisation of the rouble
were saved by the government to invest in public infrastructure      underpinned domestic and international confidence that Russia
and to help the economy mitigate periods of turbulence.              was well placed to cope with the current global financial
                                                                     difficulties and whilst the market, after its sharp rise, underwent
Russian recovery                                                     a correction in June of about 14%, the Russian government is
The ongoing global recession has seen Russia draw on these           building up its foreign currency reserves at a very healthy rate.
revenues in recent months. The world-wide “flight-to-safety”
                                                                     Looking forward, Russia must continue to broaden the economy
in the second half of last year meant that foreign credit was
                                                                     to incorporate a larger industrial base. This will reduce the
suddenly withdrawn from the Russian economy, causing it to
                                                                     economy’s reliance on energy revenues and raise average
contract. However, government policies to ease credit conditions
                                                                     productivity. To achieve this, the focus must be on infrastructure
are now under way and we believe that Russia can soon begin
                                                                     investment to make Russian industry more competitive, and to
the road to a strong recovery.
                                                                     raise the capacity of the economy to grow without generating
                                                                     inflation. “Soft” infrastructure (education, welfare) must be part
  March and April saw a rapid rise in                                of the strategy too to help foster innovation and reduce
                                                                     inequality. In order to facilitate these objectives, it is vital that
  the Russian stock market as the oil                                the Russian government does more to help foreign investors
  price rose                                                         understand its objectives.

                                                                     We retain our strong belief that investors in Russia should
There are two key reasons why. First, the government is able         continue to be well rewarded for their patience in investing
to draw on its savings from oil revenues during recent years to      in this market, which has seen the RTS return over 650%
deal with the banking sector. Furthermore, inflation – Russia’s      over the past decade**.
perennial problem – is now falling, which means that the central
bank will be able to help out by loosening monetary policy.          *Source: IMF
Second, unlike the US and much of Europe, Russia is                  **Source: Lipper Hindsight based
experiencing a temporary credit squeeze caused by global risk          in sterling. Period: 30.06.1999
aversion, not a fundamental one resulting from the saturation          to 30.06.2009
of the economy with debt. As a result, we expect Russia to
rebound more strongly than those parts of the world. Over the        Chelsea Risk Rating: 10
longer term we believe in Russia’s economic emergence                Standard initial charge: 5%
alongside the other BRIC economies of China, India and Brazil,       ISA initial charge after discount: 0%
and the exciting investment opportunities that this presents.        Annual management fee: 1.5%

A recent research trip to Russia was most encouraging and
showed a good step forward from the more difficult period that
Russia was experiencing in January this year. The stabilisation of
the rouble, particularly against the US dollar, and the recovery
in the oil price has given the Russian stock market a stable
platform from which to go forward. Remaining overweight in
the consumer sector tends to be less volatile than that of the
mining, oil and gas sectors whilst offering a good long-term
exposure to the wealthy middle class that is emerging in Russia.

With regard to the energy sector, one of the striking things
about Russia’s oil and gas companies is how well they have kept
their costs under control over the last year, even when the oil
and gas prices were relatively weak. The oil company’s profits in




40            Viewpoint issue 24 • September 2009
                  Latin America                                         A particular problem in some countries has been persuading
                                                                        potential tax payers to hand their money over to the
                                                                        government. Mexico’s tax revenue was below 15% of GDP in
                      We believe there are a number of                  2007 and the Latin American average only 17%. Further fiscal
                      developments across Latin America which           reform will be required to boost these low levels. The situation
                      suggest that the region is in a virtuous cycle    is better in Brazil, however, where the level of tax revenue to
                      which should propel growth over the long          GDP of 35% is close to the OECD average.
                      term. As a result Latin America should no
Jonathan Asante
                      longer be viewed as a purely cyclical play on
                                                                         First State Latin America
    Fund Manager commodity prices. The recent market declines
          First State provide investors with an excellent opportunity
                                                                         • Launched in April 2009
     Latin America
                      to gain exposure to the region.
                                                                         • Invests across large, mid and small caps, with a current
The key positive for Latin America is the increasing number of             bias towards mid and small caps
quality listed companies available that now meet our investment
                                                                         • Managed by Jonathan Asante, who is supported by Latin
criteria. A significant expansion in the investment universe has
                                                                           American specialists, Millar Mathieson and Alan Nesbit
occurred over the last few years driven by a wave of initial
public offerings (IPOs), particularly in 2006 and 2007. In Brazil        • Aims to diversify across Latin American countries, beyond
they are often mid-cap stocks outside the traditional government           the traditional markets of Brazil and Mexico
companies which have dominated indices in the past.
                                                                         • Concentrated portfolio, currently 29 stocks
The investment case for Latin America is underpinned by
broader economic developments. Budget deficits and interest
rates have dropped substantially over the last decade.                  The region still suffers from an over reliance on commodities:
For example the Brazilian budget deficit has decreased from             oil and gas, iron ore and copper remain very significant exports.
8% of GDP in 1998 to only 1.7% in 2008. In Mexico, interest             Lack of economic diversity has made Latin America vulnerable
rates have collapsed from 33.7% to 8.1%. Improvement in                 to slowing global growth and falling commodity prices, which
government finances and robust economic growth has                      undermine trade balances and government tax revenue.
significantly boosted the spending power of Latin                       Nevertheless, we believe that Latin America is in the early
American consumers.                                                     stages of a long-term growth trajectory driven by political and
                                                                        economic reform. Increasing numbers of quality companies,
 Latin America is in the early stages                                   many outside the resource sectors, offer attractive long-term
                                                                        opportunities from a ‘bottom-up’ perspective. The journey is
 of a long-term growth trajectory                                       likely to be volatile as there are still obstacles to be overcome.
                                                                        However, for those who are willing to apply a disciplined
The emergence of Brazil as an economic powerhouse is an                 investment philosophy focused on quality companies, the
important feature of the last decade and sustains our positive          returns should be very positive over the long term.
view of the region. This has been driven by the government              Chelsea Risk Rating: 10
of President Lula which has delivered sensible economic
management. Brazil, which is the largest economy in Latin               Standard initial charge: 4%
America, has accumulated foreign exchange reserves in excess            ISA initial charge after discount: 0%
of $200 billion, providing a buffer during the present economic         Annual management charge: 1.75%
crisis. Exports are only about 12% of GDP, making it less
vulnerable to a global slowdown.
Despite a history of debt binges, Latin America does not share
the present high levels of consumer indebtedness of developed
countries. Banks are in a much healthier condition with credit
penetration low compared with other regions. Private credit to
GDP is significantly below other emerging markets in Eastern
Europe and Asia.

Regional risks
There are of course risks associated with investment in
the region. Political instability has always been the bane
of the Latin American equity investor. However,
in recent years democracy has spread throughout
Latin America and put down relatively strong roots.
Corruption continues to be a concern and drug-related crime
remains a significant problem, especially in Colombia and
Mexico. Latin America is still one of the most socially divided
areas of the world, with high levels of poverty.




                                                                                         Viewpoint issue 24 • September 2009                 41
The Chelsea
Premier League
                                                Chelsea
                                                Portfolio  Direct Lump Lump Sum                   1 YEAR             2 YEAR           3 YEAR            5 YEAR            10 YEAR
                                               Lump Sum     Sum ISA     Unit Trust    Fund       %                 %                 %                 %                 %
                                              ISA Discount DiscountA   Discount^      size*    Growth Position   Growth Position   Growth Position   Growth Position   Growth Position

 UK ALL COMPANIES
 Artemis UK Special Situations                    5            5          4      856.2         -3.99    23       -20.23      78       -5      40     34.42     49         –       –
 AXA Framlington UK Select Opps                   5            5          4      1179.8       -10.97    134      -21.04      95    -10.03     79     34.83     47      69.88       7
 BlackRock UK Dynamic                            4.75        4.75        3.75    1382.5       -19.36    294        -21.5    107    -11.92    106      40.1     34         –        –
 BlackRock UK Special Situations                 4.75        4.75        3.75     653.2       -16.13    262      -24.13     170     -8.75     65     46.78     16       71.61      6
 Fidelity Special Situations                     3.5          3.5        2.5      2265          2.73      9      -12.64      18      1.35     13     53.22      8      177.79      1
 JOHCM UK Opportunities                           5            –          4        358          -11.2   150      -12.51      16     -0.05     20       –        –         –       –
 Jupiter UK Growth                               4.75        4.75        3.75      816        -13.16    201      -29.22     243    -16.42    181     39.18     37      25.61      28
 Legal & General Growth                          4.75        4.75        3.75      88.5       -10.25    104      -23.09     148     -0.63     25     48.36     14         –        –
 Legal & General UK Index                         0         0.25CB       0.5     2923.5       -10.14    100       -21.07     96    -12.82    114     26.29     90       8.36      70
 M&G Recovery                                     4            4          3      3266.3         -3.16    21      -13.95      24       4.7      8     64.84      6      60.41       9
 Newton Income                                    4            4          3       969.7        -11.18   149       -13.15     22     -1.81     29     33.64     51       31.21     23
 Rensburg UK Select Growth Trust                  5            5          4      304.9        -14.62    231      -28.38     235    -16.96    193     29.24     75         –       –
 Schroder UK Alpha Plus                           5            5          4      1392.8        -6.97     47      -18.52      57     -4.45     38     51.81      9         –       –
 Sector average and number in sector                –          –          –            –      -11.82    325      -24.93 312        -14.85 291        22.21    244       8.93     154

 UK EQUITY INCOME
 Artemis Income                                   5            5          4      2384.7        -7.29     19      -19.99      15       -9.5   10      34.48      6        –         –
 Invesco Perp High Income                         5            5          4      7907.1        -9.13      7      -18.43       6     -6.76     5      52.69     2       101.65      2
 JOHCM UK Equity Income                           5            –          4       149.1         5.42      5      -18.54       9    -10.04    11         –       –        –         –
 Jupiter Income                                  4.75        4.75        3.75     2616         -8.76     28      -26.92      45     -19.14   44      23.07     17      43.46      13
 Marlborough UK Equity Income                    4.75        4.25        3.75      66.1       -16.85     69      -28.31      52    -13.37    22       6.33     51      20.33      26
 Neptune Income                                   5            5          4       702.4        -9.95      9      -19.99       7    -10.83     7      35.13     6         –         –
 Rathbone Income                                  5            5          4       483.1       -17.42     70      -33.72      66    -26.57    61      10.42     47      66.39       5
 Schroder Income Maximiser                        5            5          4       327.9        6.62       2       -8.51       2       3.9     1        –       –         –        –
 Stan Life Inv UK Equity High Income              4           4           3       715.1       -12.69     49      -22.22      21    -15.08    27      32.56     8       44.83      12
 Threadneedle UK Equity Alpha Income             3.75        3.75        2.75     187.4       -10.43     39      -18.56      10      -7.43    5         –       –        –         –
 UBS UK Equity Income                             4            4          3        37.8       -18.78     72       -29.6      58        –      –        –       –         –         –
 Sector average and number in sector                –          –          –            –      -10.01     77      -25.87      77    -17.78    70      19.05     61      18.19      51

 UK SMALLER COMPANIES
 BlackRock UK Smaller Companies                  4.75        4.75        3.75        248.2    -20.96     50       -32.5      26    -13.13     17     45.11      7      142.48      5
 Investec UK Smaller Companies                   4.5          4.5        3.5          87.7     -5.41      8      -25.83       6    -4.54       7     57.39      3      134.45      6
 Marlborough Special Situations                  4.75        4.25        3.75        132.5    -19.82     47      -37.02      40     -11.8     12     32.49     13      321.24      2
 Old Mutual UK Select Smaller Companies           4            4          3          292.6     -9.07     14      -25.66      5      0.74      3      77.39     1         –         –
 Stan Life Inv UK Smaller Companies               4            4          3          319.9    -13.47     30      -24.91      3      0.06       4     68.61      2      127.34      7
 Sector average and number in sector                –          –          –            –      -12.77     60      -34.27      59    -17.61    55      21.27     48      48.23      39

 FIXED INCOME CORPORATE
 AEGON Investment Grade Bond                     4.25        4.25        3.25        126.2     1.99      30       -1.88      36     -3.08    34        –        –        –        –
 AEGON Sterling Corporate Bond                   4.25        4.25        3.25         311.3    -7.8      77       -12.4      73    -13.62    69      -1.09     60      31.88      19
 Invesco Perpetual Corporate Bond                  5           5           4         4507.7   5.56       12       6.57       10      7.3     6       19.28     7       66.01      1
 M&G Strategic Corporate Bond                      3           3           2         1175.4    19.2      1       23.29       1     22.54     1       38.87     1         –        –
 Old Mutual Corporate Bond                        3.5         3.5         2.5        588.9    -9.49      80      -16.68      78    -16.64    75      -2.91     64        –        –
 Sector average and number in sector                –          –          –            –      -0.04      85      -2.53       83    -3.87     80      7.96      73      33.35      37

 FIXED INCOME HIGH YIELD
 AEGON High Yield Bond                           4.25        4.25        3.25          114    -1.55       8       -5.83      11    -1.37      11     18.19      6         –        –
 JPM Global High Yield Bond                      3.5         3.5         2.5           97.3   -3.04      12       -0.19      5     3.77       4      15.78      9         –        –
 Legal & General High Income                       3          3           2          1503.3   -3.33      13       -3.09      9     -0.01      9      15.58     10         –        –
 Threadneedle High Yield Bond                    3.75        3.75        2.75         478.4    3.98       4        0.32       4     4.2        3     24.99      1         –        –
 Sector average and number in sector                –          –          –            –      1.24       18      -2.01       18    0.69      18      17.64     17      44.54       –

 FIXED INCOME STRATEGIC
 Artemis Strategic Bond                            5           5          4          370.4    -3.48      40      -5.79       33     -2.3     20        –        –        –         –
 Henderson Strategic Bond                          4           4          3          476.9     1.54      21      -0.41       19     2.11     13      22.55      3        –         –
 Invesco Perp Monthly Income Plus                  5           5          4          2164.1    0.31      27       -3.5       28     0.13     17      25.29      2      68.34       1
 Investec Sterling Bond                           3.5         3.5        2.5         188.3     6.52      10       7.99        9     6.87      9       19        8      45.27       5
 Legal & General Dynamic Bond                      3           3          2          259.8    28.58       1      28.58        1      –        –        –        –        –         –
 M&G Optimal Income                                4           4          3          806.4    17.01       2      19.26        2      –        –        –        –        –         –
 Sector average and number in sector                –          –          –            –      -1.17      60      -3.21       55    -2.65     47      10.69     37      39.44      19




42            Viewpoint issue 24 • September 2009
                                                            Chelsea
                                                            Portfolio  Direct Lump Lump Sum                   1 YEAR             2 YEAR             3 YEAR             5 YEAR            10 YEAR
                                                           Lump Sum     Sum ISA     Unit Trust    Fund       %                 %                   %                  %                 %
                                                          ISA Discount DiscountA   Discount^      size*    Growth Position   Growth Position     Growth Position    Growth Position   Growth Position

  EUROPE EX UK
  Baring European Growth                                      4.75        4.75       3.75        111.1    -19.65     97      -25.96      77      -10.02    73      48.01      40       2.06      52
  BlackRock Continental European                              4.75        4.75       3.75        186.3     -7.66     24        -7.77      5        6.33     8      70.15       8       50.6      16
  BlackRock European Dynamic                                  4.75        4.75       3.75         72.2     -4.32      7       -5.29       2      12.42      3      92.21       2         –        –
  Fidelity European Opportunities                              3           3          2           515     -11.75     56      -18.59      39       -1.47    33      64.77      12      68.44      10
  Fidelity European                                            3           3          2          3083     -19.22     94      -22.34      63       -8.68    68       49.2      36      154.09      3
  Henderson New Star European Growth                           5           5          4          565.8     -6.72     17      -19.67      46       -2.04    35      59.09      15        –        –
  Ignis Argonaut European Alpha                               4.75        4.75       3.75        192.8     -5.65     10      -15.36      16        1.34    19        –         –        –        –
  Ignis Argonaut European Income                              4.75        4.75       3.75        303.7    -11.64     55      -16.35      22       -2.37    37        –         –        –        –
  Jupiter European Income                                      5           5          4            18      -7.07     20       -17.38     29          –      –        –         –        –        –
  Jupiter European Special Situations                          5           5          4           377      -6.12     13      -12.54      11       6.54     7       80.63      3       205.8      1
  Neptune European Opportunities                               5           5          4          858.9    -10.44     38      -11.22       6        16.1     1      133.4       1        –        –
  Schroder European Alpha Plus                                 5           5          4          524.7     -9.28     32       -17.96     32       -1.27    32      58.47      16        –        –
  Sector average and number in sector                          –           –          –            –      -12.6     105      -20.84      97      -4.98     89      46.56      80      35.85      56

  JAPAN EX UK
  GLG Japan Core Alpha                                        5.25        5.25       4.25        577.5    22.79       4      22.35        3      14.06       3     57.01       2         –        –
  Invesco Perpetual Japan                                       5           5         4          223.3    29.81       2      24.06        2      14.65       3     42.63       4       -2.64      5
  Jupiter Japan Income                                        5.25        5.25       4.25         159      2.19      20       -6.83      11      -10.31      7       –         –         –       –
  Legal & General Japan Index                                  5          4.5        3.5         365.3    -1.32      31      -13.72      18      -16.75     17     12.88       8      -18.37     13
  Neptune Japan Opportunities                                  5           5          4          26.5     87.96      1       88.77       1        79.16     1      141.15      1         –       –
  Sector average and number in sector                          –           –          –            –      1.78       58      -14.51      57      -19.8     54      4.09       46      -21.19     35

  NORTH AMERICA
  Gartmore US Opportunities                                   4.75        4.75       3.75        176.3    -13.41     71      -17.92      53      -8.74     40      -0.16      49       15.57      4
  Investec American                                           4.5         4.5        3.5         383.2     -0.22      8      -14.58      35      -4.73     27      19.78       8          –       –
  M&G American                                                 4           4          3          793.1     -5.29     34      -14.78      40       -8.2     39      16.04      15      -25.68     28
  Martin Currie North American                                 5           5          4           540     -15.52     75      -15.97      48      -5.22     30      18.67      13       -6.25     11
  Neptune US Opportunities                                     5           5          4          185.2     10.41      1      12.44       1       30.89     1       81.36      1          –       –
  Schroder US Small & Mid Cap                                  5           5          4          197.7     0.59      10       1.29       3       13.08     2         –        –          –       –
  Threadneedle American Select                                3.75        3.75       2.75        972.1      0.77      8      -10.24      18       2.54      7      25.68       3        3.24      8
  Sector average and number in sector                          –           –          –            –      -5.65      79      -14.19      74      -7.46     69       7.45      61      -22.2      47

  ASIA PACIFIC EX JAPAN
  Fidelity South East Asia                                    3.5         3.5        2.5          1161    22.05       5        2.9       17      64.68      5      190.36     1       170.66     7
  First State Asia Pacific Leaders                             4           4          3          2591     12.15      20       14.3       1       59.36     7       159.06     5          –       –
  Martin Currie Asia Pacific                                   5           5          4           328     0.58       66      -10.53      59      32.39     40      119.85     23      138.58     15
  Newton Oriental                                              4           4          3          633.2     7.84      36       3.26       15      36.13     30      120.85     21       200.8      3
  Sector average and number in sector                          –           –          –            –      9.09       74      -2.89       69      38.8      64      116.62     55      118.89 43

  EMERGING MARKETS
  Allianz RCM BRIC Stars                                        4           4          3         465.8 -18.4 65/80           -16.45    39/69     32.32 5/54     –             –         –      –
  First State Greater China Growth                              4           4          3          265   16.51 10/74           10.57     3/69     82.96 1/64 187.61          2/55        –      –
  Gartmore China Opportunities                                  5           5          4         658.6 10.82 31/74             -1.5    27/69      81.16 2/64 171.64         4/55      269.37 1/43
  Ignis HEXAM Global Emerging Markets                         5.25        5.25       4.25        120.5    –     –                –        –         –     –     –             –         –      –
  Jupiter Emerging European Opportunities                     5.25        5.25       4.25         369 -39.26 80/80           -39.15    60/69     -21.58 47/54 76.28         12/31       –      –
  Lazard Emerging Markets                                     3.75        3.75       2.75         403   -4.17 17/28             1.4     8/69     36.95 9/26 165.34          4/24      203.92 5/17
  Neptune Russia & Greater Russia                               5           5          4         246.7 -29.48 75/80          -24.71    46/69       3.6 20/54    –             –         –      –
  Threadneedle Latin American                                 3.75        3.75       2.75        646.7 -14.6 57/80            -2.71    19/69     39.71 2/54 219.6            2/31     415.01 3/16

  MISCELLANEOUS**
  Artemis Strategic Assets                                      5           5          4           207       –         –        –          –        –        –        –     –           –         –
  BlackRock Gold & General                                    4.75        4.75       3.75        1787.2    2.44     18/80     21.23      4/63     37.11    3/54    163.02 4/31        664.84    1/16
  BlackRock UK Absolute Alpha                                 4.75        4.75       3.75        1633.7    0.73     19/29     13.43     10/22     28.12    2/11       –     –           –         –
  CF Eclectica Agriculture                                      5           5          4          113.4   -37.67    78/80    -24.68     45/63       –       –         –     –           –         –
  JPM Natural Resources                                       4.25        4.25         3         1275.5   -14.55    55/80    -20.15     43/63      9.71   15/54    140.76 6/31        520.68    2/16
  Jupiter Financial Opportunities                               5          5          4           946.1   24.64     3/80       8.41      9/63    22.76    11/54    106.49 7/31        328.02    5/16
  M&G Global Basics                                             4           4          3         2792.1   -15.52   163/189    -12.2    38/171     5.65    13/154    91.95 1/134       128.76    1/81
  CF Miton Special Situations Portfolio                        5           5          4           227.3    11.13    1/142     13.23     2/123     23.18   2/109      78.3 2/92        158.87    1/63
  Premier Pan European Property                               5.25        5.25       4.25         24.9    -25.57    24/36    -44.47     23/32    -40.76   14/24    -10.92 1/5           –         –
  Rathbone Global Opportunities                               5.25        5.25       4.25         62.7    -17.55   172/189   -27.62    157/171    -2.81   54/154    64.94 8/134         –         –
  Schroder Global Property Securities                           5          5          4          285.4    -10.98     7/36    -27.87      7/32    -18.78    3/21       –     –           –         –

* Fund sizes (£m) are collected one month in arrears                                                                                                        Source: Financial Express Analytics
** Position in sector omitted due to insufficient sector size                                                                                                                1st August 2009.
A
  Discounts on transfers are the same for ISAs unless otherwise stated
CB Cashback (not available via the Chelsea Portfolio/Cofunds)
^ Discounts applicable to fund company minimums and above

Whilst every effort has been made to ensure the accuracy of this information,
including discounts, Chelsea Financial Services take no responsibility
for any errors, omissions or inaccuracies contained therein.
Please read the Important Notice on page 2.
Past performance is not a guide to future returns.




                                                                                                                             Viewpoint issue 24 • September 2009                                  43
The Chelsea
Relegation Zone
It may be a time-worn saying but never before in                           Sometimes it feels like poor funds are like grapes – they
fund management has the following rung as true:                            come in bunches. The following fund houses collectively have
“only when the tide goes out do you discover who’s                         16 entries into the Relegation Zone: GLG; Aberdeen; AXA
                                                                           Framlington and Scottish Widows. Scottish Widows has the
been swimming naked” – this is how legendary
                                                                           inglorious honour of having the most funds in the Relegation
investor Warren Buffet described the clarity of torrid                     Zone – a formidably awful 7.
market conditions.
                                                                           GLG is an interesting case: despite having signed a host of
Many of you will have noticed that when fund managers, are
                                                                           top-drawer managers, following the recent integration of
outperforming they love to talk about their relative returns.
                                                                           Société Generale with GLG, it has yet to announce what
Peer groups, indices and benchmarks once surpassed will be
                                                                           exactly these managers are to do and meanwhile it has a
wheeled out to highlight the merits of an outperforming fund.
                                                                           number of underperforming funds in need of a managerial
And, of course, this is how it should be, but only if fund
                                                                           shake-up. It is akin to Chelsea FC signing some world-class
managers are prepared to talk about relative returns during
                                                                           strikers and opting to leave them warming the bench.
periods of underperformance. The unfortunate truth is,
however, that a section of managers dive for cover when the                Aberdeen’s high conviction multi-manager process may have
going gets tough. The subterfuge employed by managers has                  worked in Asia under Hugh Young, but it has backfired badly
been a tactic of ‘safety in numbers’ – the excuse that                     in Europe and the UK. The investment house has two entries
everyone has fallen foul of the credit crunch, and this is what            in the Europe Excluding UK sector (European Opportunites
accounts for disastrous performance, is beginning to sound                 and European Growth); in the UK – their UK Growth fund
like a broken record. Forgive us here at CFS, but there is a               has been relegated.
great chasm between posting losses of -5% and -40%.
                                                                           Small-Caps run out of luck
For example, over the three years the top performing fund in
the UK All Companies sector, M&G Recovery actually gained                  One of the major surprises has been the inclusion of
4.7%, while in the same sector, Relegation Zone victim                     award-winning fund manager George Luckraft. Luckraft was
Gartmore UK Focus, was down a derisory 44%. It is true that                the victim of sustained underperformance due to his fund’s
the market was struck by a whirlwind of unprecedented                      bias to small caps, a sector which has had a torrid time
volatility – three-year numbers show the MSCI World, an                    under the weight of the credit crunch. Unfortunately for
index of global companies, is down by 2.26%, while the                     AXA Framlington that old footballing manager adage springs
FTSE All-Share is down 12.4% over the same period. But it                  to mind – “You are never too good to go down”. That said,
is not just the job of a fund manager merely to make returns               his funds are performing better in the recent rally, so now
in rising markets; they must also do their utmost to protect               may not be the best time to switch.
capital on the downside. Luckily the Relegation Zone is                    Dirty dozen
here to highlight those funds that failed to notice the
                                                                           As you will have seen in the last issue of Viewpoint, even
wind changing.
                                                                           amid the Relegation Zone, there is a certain group that has
Over £10 billion in drop-zone                                              been dubbed the Dirty Dozen. These are the worst of the
The list of shame now houses 67 funds, which                               worst – the six worst performing and the six largest funds
together amount to a staggering £10.2 billion of assets                    in the Relegation Zone.
under management.




The Dirty Dozen
Dirty                                               % negative deviation   Dirty    Largest funds in                          Fund size
Dozen      Worst performers                         from sector average*   Dozen    Relegation Zone                         (m) – millions

1st        Thesis Unit Trust Mgmt Ltd                     29.96%           1st      Scottish Widows Corporate Bond            £2531.5m

2nd        Legg Mason US Equity                           29.10%           2nd      SWIP MultiManager UK Equity Income        £1044.4m

3rd        Gartmore UK Focus                              28.42%           3rd      SWIP MultiManager UK Growth                £885.3m

4th        Rensburg UK Micro Cap Growth Trust             28.37%           4th      M&G Dividend                                £441m

5th        Halifax Far Eastern                            27.52%           5th      Investec Global Free Enterprise            £401.3m

6th        CF – Canlife UK Smaller Companies              27.23%           6th      AXA Rosenberg Global                       £331.9m
*Based on three year cumulative performance

44            Viewpoint issue 24 • September 2009
                                                 3 year   Quartile Status                                                                          3 year   Quartile Status
                                                 % growth position (NE*)                                                                           % growth position (NE*)

ASIA PACIFIC EXCLUDING JAPAN                                                  UK ALL COMPANIES
Halifax Far Eastern                              11.55     4       ~           Aberdeen MMgr UK Growth Pfl                                          -19.62          3         NE
Sector Average                                   39.07     2                   Aviva Inv UK Growth & Value                                          -19.9           4         NE
CAUTIOUS MANAGED                                                               CF Real Life                                                         -23.01          4         NE

AXA Defensive Distribution                       -17.53    4       ~           Family Asset                                                         -25.91          4         ~

Premier Discovery Balanced                       -15.16    4       NE          GLG UK Active 350                                                    -20.38          4         NE

Thesis Optima Income                             -12.7     4       ~           GLG UK Growth                                                        -33.78          4         NE

Sector Average                                   -5.92     2                   Gartmore UK Focus                                                    -43.71          4         NE
                                                                               Gartmore UK Growth                                                   -32.6           4         ~
EUROPE EXCLUDING UK
                                                                               Henderson UK Equity                                                  -21.75          4         ~
Aberdeen European Opportunities                  -17.22    4       ~
                                                                               Insight UK Discretionary                                             -17.91          3         ~
Aberdeen European Growth                         -17.39    4       ~
                                                                               JPM Premier Equity Growth                                            -31.57          4         NE
AXA Rosenberg European                           -16.93    4       NE
                                                                               Martin Currie UK Growth                                              -28.27          4         NE
Henderson European Opportunities                 -8.96     4       ~
                                                                               Old Mutual Ethical                                                   -31.24          4         NE
Legg Mason Continental European Equity           -18.03    4       ~
                                                                               Singer & Fried UK Growth                                             -20.55          4         NE
Sector Average                                   -5.14     3
                                                                               Sovereign Ethical                                                    -40.28          4         NE
GLOBAL BONDS                                                                   Stan Life Inv UK Equity Manager Of Managers                          -20.62          4         NE
Marlborough Global Bond                          14.29     3       ~           SWIP MultiManager UK Equity Growth                                   -21.15          4         NE
Sector Average                                   17.63     3                   Sector Average                                                       -15.29          3
GLOBAL GROWTH                                                                 UK CORPORATE BOND
AXA Rosenberg Global                             -15.22    4       NE          AXA Sterling Long Corporate Bond                                     -13             4         NE
CF Sackville Growth Portfolio                    -22.8     4       NE          Royal Bank of Scot Extra Income                                      -8.16           3         ~
Investec Global Free Enterprise                  -16.81    4       NE          Scottish Widows Corporate Bond                                       -7.32           3         ~
L&G (Barclays) MultiManager Global Core          -24.51    4       NE          Thesis Unit Trust Mgmt Ltd Resolution Fixed Interest -34.31                          4         NE
Lincoln Global                                   -11.42    3       NE          Sector Average                                                       -4.35           2
Marlborough Global                               -9.86     3       ~          UK EQUITY INCOME
PMIS MultiManager Equity                         -16.78    4       NE
                                                                               Allianz RCM UK Equity Income                                         -20.44          3         NE
Pru Global Growth                                -14.48    4       NE
                                                                               AXA Framlington Equity Income                                        -37.21          4         ~
Scottish Widows Opportunities Portfolio          -13.66    4       ~
                                                                               AXA Framlington Monthly Income                                       -41.34          4         NE
Wesleyan International                           -6.26     3       NE
                                                                               EFA OPM Equity High Income                                           -27.17          4         NE
Sector Average                                   -5.49     2
                                                                               GLG UK Income                                                        -29.16          4         ~
JAPAN                                                                          M&G Dividend                                                         -20.19          3         NE
Scottish Widows Japan Select Growth              -26.46    3       NE          SWIP MultiManager UK Equity Income                                   -23.04          4         NE
Sector Average                                   -19.79    2                   Sector Average                                                       -17.89          3
NORTH AMERICA                                                                 UK HIGH YIELD BOND
CIS US Growth                                    -15.26    4       NE          Invesco Perp European High Yield                                     -4.99           3         NE
HSBC American Index                              -11.24    3       NE          Marlborough High Yield Fixed Interest                                -14.64          4         NE
HSBC American Growth                             -15.55    4       NE          Sector Average                                                       -0.25           2
Legg Mason US Equity                             -36.7     4       ~
                                                                              UK SMALLER COMPANIES
M&G North American Value                         -28.97    4       NE
                                                                               AXA Framlington UK Smaller Cos                                       -35.09          4         NE
Stan Life Inv North American Manager Of Managers -17.77    4       ~
                                                                               Cavendish AIM                                                        -25.42          3         NE
Sector Average                                   -7.6      2
                                                                               CF Canlife UK Smaller Companies                                      -45.1           4         ~
                                                                               Invesco Perp UK Smaller Companies Growth                             -36.22          4         NE
                                                                               Rensburg UK Micro Cap Growth Trust                                   -46.24          4         NE
                                                                               Scot Wid UK Smaller Companies                                        -29.24          4         NE
                                                                               Sector Average                                                       -17.87          2
                                                                              STERLING STRATEGIC BOND
                                                                               AXA Sterling Strategy Bond                                           -18.48          4         NE
                                                                               Baillie Gifford Corporate Bond                                       -13.35          4         NE
                                                                               Royal Bank of Scot High Yield                                        -9.91           3         NE
                                                                               Scottish Widows Strategic Income                                     -12.89          4         ~
                                                                               Sector Average                                                       -3.38           2

                                                                            Please read the Important Notice on page 2. This is a purely
                                                                            statistical chart, featuring funds which have been 3rd or 4th
                                                                            quartile for three discrete consecutive years.
                                                                            *NE = New Entry
                                                                            All cumulative statistics % change, bid to bid, net income reinvested, three years to 31/07/09.
                                                                            Source: Financial Express Analytics.
                                                                            Whilst every effort has been made to ensure the accuracy of this information, Chelsea Financial
                                                                            Services take no responsibility for any errors, omissions or inaccuracies contained therein.
                                                                            Past performance is not a guide to future returns.




                                                                                                       Viewpoint issue 24 • September 2009                                        45
Key Features of the Cofunds Platform (1108)
This document should be read in conjunction with the Cofunds Platform Fund Key Features.                   Such benefits will only be provided to an intermediary on the strict understanding that this will
This gives further information regarding the funds available through Cofunds, such as                      enable the intermediary to:
charges, fund objectives and risks.                                                                        • Improve and extend the range of services provided, whether or not investment advice is given,
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It requires us, Cofunds, to give you this important information to help you to decide whether the            rebating commissions, or reducing fees.
platform service we provide (in respect of ISAs, and investment funds) is right for you. You should        Full details of any monetary or non-monetary benefits are available on request at our administration
read this document carefully so that you understand what you are buying, and then keep it safe for         address (see opposite).
future reference.
                                                                                                           Matching Trades – We deal in units at the standard prices determined by the fund, which may set
Copies of all documentation can be provided in large print, braille or audio tape. All documentation       different prices for buying and selling units. We may from time to time offset your order against
and communications in relation to Cofunds will be in the English language.                                 orders received from other customers, thereby realising a profit equal to the difference between the
Cofunds is the UK’s leading independent investment platform and is backed by some of the largest           buying and selling prices. We retain this profit and are not obliged to pay it to you. The price at
financial institutions in the UK and USA, including Threadneedle, Jupiter, Newhouse Capital Partners,      which we deal is the same whether or not we offset transactions in this way.
Legal & General, IFDS and Prudential.
Cofunds enables intermediaries, on behalf of their clients, to invest in over a thousand funds from        YOUR INVESTMENT
many different fund managers – all in one place. Essentially, Cofunds provides award-winning               There are three ways of investing via your intermediary with Cofunds. You can also invest in a range
administration services to investors via their intermediaries. Cofunds is not a fund manager and           of pension and investment bond products via the Cofunds platform. Please refer to your
therefore does not offer its own range of funds, nor does it offer investment advice. This independent     intermediary for further details.
status means that it is free to concentrate on providing the tools and services your intermediary
needs to give you superlative service.                                                                     1. Investment funds
Services include the opportunity to hold investments, either directly in funds, in ISAs or within an       You can invest directly into three types of investment funds through Cofunds:
investment bond or pension (for which separate documents are available).                                   • Unit Trust – A unit trust is an easy way to invest in stock market investments. Investors’ money is
Cofunds offers greater convenience and choice compared to investing with each individual product              ‘pooled’ and invested across a wide spread of investments on their behalf by professional fund
provider. These include:                                                                                      managers. You own units in the fund, which represent your share of the ‘pool’. Normally, two
                                                                                                              prices are published for a unit trust – the buying price and the selling price. The difference
• One view of most of your investments within your portfolio including cash and any insured funds
   you may hold within an investment bond or pension.                                                         between these is known as the ‘spread’ and is effectively a charge built into the price.
• Consolidated valuations across your entire investment fund and insured fund portfolio.                   • Open Ended Investment Company (OEIC) – An OEIC is similar to a unit trust. The main
                                                                                                              difference is that OEICs have a corporate structure and offer shares rather than units. In addition,
• The ability to switch funds easily as your investment needs change.                                         there is generally only a single price published for the fund that reflects the underlying value of the
• Significantly less paperwork.                                                                               investments in the fund. Fund managers’ charges are shown separately.
• Statements issued at least annually.                                                                     • European Collective Investment Vehicles (ECIVs) – ECIVs are investment funds based outside
• One consolidated tax voucher issued each year.                                                              of the UK which are subject to local tax and legislation. These include Luxembourg based SICAVs
                                                                                                              (Société d’Investissement à Capital Variable – the Luxembourg equivalent of an OEIC) and Dublin
With so many different financial products in the market, selecting the ones that best suit your needs         based OEICs. All funds of this nature available through Cofunds fall into the category of a
can be a complex process. Cofunds believes in the value of advice, which is why we only offer our             ‘distributor’ fund, which will be denominated in pounds Sterling only. Distributor funds must
services via intermediaries. Through your relationship with your intermediary, not only do you benefit        distribute at least 85% of their income to investors. The potential benefit of such funds is that of
from their expertise but also the value added services that Cofunds has to offer.                             cash flow: until the tax is paid, and depending on the timing and frequency of distributions, the
If you receive advice, your intermediary will give you two ‘key facts’ documents – one details the            money may be better off in the investor’s account than being deducted at source. Please see the
services they provide and the other the costs of their services. The amount may depend on the size            section ‘How will charges and expenses affect my investment’ for more information regarding
of your investment and, in the case of regular savings, the period for which you make them.                   taxation and ECIV funds.
Cofunds Limited administers your investment and is also the ISA Plan Manager. Cofunds                      • UCITS Directive (85/116/EEC) – The “ECIVs” available through Cofunds are governed by the
cannot advise you or assess your investment or the appropriateness of an investment in                        UCITS Directive (85/116/EEC). This means that fund managers have to meet certain requirements
respect of your own personal circumstances.                                                                   in order to offer the funds for sale. For example, the fund manager must have initial capital of at
To use the Cofunds service, you must at all times have a nominated intermediary. Please                       least EUR 125,000. Its head office, registered office, management company and the depositary of
refer to Section A 3.1 of the Terms & Conditions of the Cofunds Platform.                                     the “ECIV”, must be in the same member state. The relevant regulators for UK, Luxembourg and
                                                                                                              Ireland are the FSA, Commission de Surveillance du Secteur Financier (CSSF) and the Irish
ITS AIMS                                                                                                      Financial Services Regulatory Authority (IFSRA) respectively. Each of the regulators has
                                                                                                              incorporated the UCITS Directive into their regulatory frameworks. UCITS funds are recognised by
• To give you access to the country’s leading fund managers in one place.
                                                                                                              the FSA. This means that the ECIVs available through the platform are permitted to market
To provide a one-stop investment dealing and custody service available exclusively through your               themselves directly in the UK. In doing so, the FSA recognise that the regulatory regime in the
nominated intermediary.                                                                                       overseas territory is comparable to that of the UK.
                                                                                                           2. Investment funds within an ISA
FEES AND CHARGES                                                                                           An ISA is an account that acts as a tax efficient ‘wrapper’ for your investment funds. You can invest
• There is normally a switch charge of 0.25% of the value of the switch for investment funds,              in a wide range of unit trust and OEIC investments available on the Cofunds platform through a
  including investment funds within an ISA.                                                                stocks and shares ISA.
• For ISA investments only, copies of annual reports and accounts can be downloaded free of                There are two types of ISAs:
  charge on the Cofunds website. However, if you choose to receive hard copies of these
  documents, attend unit/shareholder meetings and vote on any of the funds, there will be a charge         • Stocks and shares ISAs, which normally include investments in unit trusts, open-ended investment
  of £20.00 per communication.                                                                                companies (OEICs), investment trusts, shares, corporate bonds and gilts.
• Platform fee: After the deduction of any commission paid to your intermediary, Cofunds shares a          • Cash ISAs, which include building society and bank deposits, national savings and money market
  proportion of the fund manager’s standard initial charge with the fund manager. The fund manager            funds. Cash ISAs are not available through Cofunds.
  will receive between 25% – 100% of the standard initial charge after discounts and commission for        Cofunds Investment ISA
  each fund you invest in. The remainder is retained by Cofunds as a fee. This fee has no impact           The Cofunds Investment ISA is a stocks and shares ISA that allows you to invest in Unit trusts and
  whatsoever on the fund charges that you pay. For example, based on an investment amount of               OEICs on the Cofunds platform.
  £3,600 into a fund with a standard initial charge of 5%, a fund discount of 1% and commission of
  3% payable to your intermediary, the remaining initial charge equates to 1% or £36, of which             • You can invest up to £7,200 into a Cofunds Investment ISA in each tax year. You can invest at
  Cofunds will receive a maximum of £27 (75%) and the remaining £9 is retained by the fund manager.           any time.
• Ongoing fee: Cofunds will receive an annual fee from the fund manager which varies between               • The above maximum is subject to the amount you may hold in a cash ISA. For example, if you
  0.10% – 0.40% of the value of your investment, depending upon fund choice. This fee has no                  have £3,000 invested in a cash ISA elsewhere you can invest up to £4,200 into a Cofunds
  impact on the fund charges you pay. For example, if your fund value averages £4,000 over a one              Investment ISA.
  year period and the funds in which you invest generate an average fee to Cofunds of 0.245%,              If you have a stocks and shares ISA and a cash ISA, you cannot increase the maximum allowance
  Cofunds will typically receive a fee of £9.80 over the year. This fee is calculated daily and paid to    in one by transferring it to the other.
  Cofunds by the fund manager on a monthly basis.
                                                                                                           It is your responsibility as the investor to ensure that you do not exceed the total maximum
Details of the fees that Cofunds receive in respect of your specific investments are available upon        ISA allowance (£7,200) in each tax year.
request by writing to us at our administration address: Cofunds Limited, PO Box 1103,
Chelmsford CM99 2XY.                                                                                       Can I invest cash within my Cofunds Investment ISA?
                                                                                                           You may temporarily hold monies in the Cash Reserve facility. This allows you to shelter your
CONFLICTS OF INTEREST                                                                                      investment, either in times when markets are uncertain or when you simply want to secure your ISA
Conflicts of interest will invariably exist for every company, due to the complex nature of its            allowance for the tax year, pending a suitable investment opportunity. You may earn interest on your
relationship with its stakeholders. Cofunds treats issues surrounding conflicts of interest very           money while it is held in this way. Any interest you receive is not intended to compete with rates for
seriously and has a duty of care to manage them in a manner which is in the best interests of its          other cash accounts and is unlikely to achieve the potential returns of equity investments. Please
customers, in line with its regulatory requirements.                                                       see Section B 3.2 of the ISA terms for further details.
Listed below are a series of conflicts of interest that might arise as a result of Cofunds providing its   If there is no clear instruction on your Cofunds Investment ISA application, your cash will be
services; and also outlines the manner in which Cofunds deals with these conflicts of interest.            automatically placed into the Cash Reserve facility.
Beneficial Corrections – In exceptional circumstances Cofunds may make corrections to a client’s           Movement of cash to and from your Cash Reserve is subject to the same switching arrangements
holdings where instructions received from an intermediary are capable of misinterpretation. In all         and charges as investment funds. Please refer to the section ‘How do I move between funds?’ for
such cases Cofunds will bear the cost of correction. Full details are available upon request by writing    more information.
to our administration address (see above).
                                                                                                           The use of the Cash Reserve facility within your Cofunds Investment ISA does not qualify as an ISA
Business Entertainment and Gifts – While recognising the value of personal relationships with              cash component. Interest payable on cash held in the Cash Reserve is paid net of a 20% HMRC flat
service providers, intermediaries and suppliers, Cofunds has strict standards in respect of what gifts     rate charge which is not reclaimable. If cash is not invested, HMRC may require the ISA manager to
and business entertainment are acceptable. This is applicable both to the provision and receipt of         return the cash to you.
such items. Our policy on gifts and business entertainment forms part of our code of conduct which
is subject to our disciplinary process if it is not strictly adhered to.                                   Investment Limits for 2009/10
Code of Conduct – A code of conduct is in place at Cofunds which all staff must adhere to. At the
forefront of the code of conduct is the key principle that no employee may benefit from the                       Product                   Min New                   Max New                Min Regular
knowledge of an end customer’s affairs. Non-compliance with the code of conduct will result in the                                         Lump Sum                   Lump Sum              Monthly Savings
application of the disciplinary process.                                                                                                    per fund                                           per fund
Cofunds Platform – Cofunds may receive commission and other non-monetary benefits from fund
                                                                                                                  Investment                                                                      £100 by
managers/product providers for distribution and administration services connected with your                                                    £1,000                     NONE
investment. This is disclosed where required and does not influence the choice, positioning or                       funds                                                                    direct debit only
offering of platform products.                                                                                      Cofunds                                             £7,200*
Fee Payments – We may pay fees to third parties in connection with the maintenance of your account.                                                                                                £50 by
                                                                                                                  Investment                   £1,000                 (Please see
If you require details of these fees, please write to us at our administration address (see above).                                                                                           direct debit only
                                                                                                                      ISA                                                below)
Intermediary Benefits
(a) Monetary – Cofunds may agree to pay a commission based on a proportion of the platform fee
it receives from the fund manager to an intermediary and/or contribute to the intermediary’s                      Product                      Min                        Max                        Min
marketing costs.                                                                                                                            Transfers                  Transfers                   Top Up
                                                                                                                                           in per fund                in per fund                 per fund
(b) Non-monetary – ‘Non-monetary’ services may from time to time be provided to an intermediary
free of charge. These include:                                                                                    Investment
• Data gathering of customer information from fund managers.                                                         funds                     £1,000                     NONE                       £500
• Technical training on use of the platform and associated facilities.
                                                                                                                    Cofunds
• Integration of computer systems and websites.                                                                                                                                                 £500 (up to
                                                                                                                  Investment                   £1,000                     NONE                 maximum limit)
                                                                                                                      ISA
           46               Viewpoint issue 24 • September 2009
                                                                                                           *The maximum investments detailed above are for the 2009/10 tax year.
3. Cofunds Cash Account                                                                                      2. ISA Investments
The Cofunds Cash Account is a client money account that allows you to hold monies on the Cofunds             Transfers of stocks and shares ISAs:
platform. It is not an investment product, ISA or bank account – it is a service that allows you to          • If you have a stocks and shares ISA from the current tax year and would like to transfer this into a
transfer monies in and out of relevant investment(s) conveniently, and at a time suitable to you.              Cofunds Investment ISA, you must transfer the full amount. This will continue to count towards
The cash account is made available in the name(s) of the investor(s) and if applicable will carry the          your ISA allowance for the current tax year.
same designation. The cash account can then be used to fund future payments into these                       • If you wish to transfer stocks and shares in an ISA from a previous tax year into Cofunds, you do
investments. One investor may therefore be linked to several cash accounts, as they may be part of             not have to transfer the full amount. This transfer will not count towards your ISA allowance for the
separate investments that have different holders or, carry different designations. You may hold a              current tax year.
Cofunds Cash Account without having any other investment on the platform, however all monies
                                                                                                             Transfer of cash ISAs:
within your cash account must be destined for investment.
                                                                                                             • If you transfer your cash ISA in the current tax year and can use this to buy funds within a
The cash account will be linked to the nominated bank account you designate at the time of                     Cofunds Investment ISA. This will continue to count towards your ISA allowance for the current tax
investment. Your nominated bank account can be used to transfer monies to and from your cash                   year. For example, if you only hold £3,600 in a current year cash ISA and transfer this cash into a
account. Cofunds will normally process your transfer instruction within 1 business day of receipt.             Cofunds Investment ISA, it will then be classed as a stocks and shares ISA. You then have the
Where large numbers of transfer instructions are received, transfers may be processed within 2                 ability to open another cash ISA to the value of £3,600 as you now have an unused cash ISA
business days of receipt.                                                                                      allowance.
Interest                                                                                                     • If you have invested into the cash component of an ISA from previous years, you can transfer
Monies held within a Cofunds Cash Account will accrue interest daily, which will be credited to the            some or all of this amount to buy funds within a Cofunds Investment ISA. This will not count
balance monthly in arrears. The rate of interest earned will be a fixed percentage below the Bank of           towards your total ISA allowance for that year.
England (BOE) base rate:                                                                                     Cash transfer – If the old manager cannot support re-registration, your investment can be sold and
• Details of Cofunds current interest rates can be found at the below link. Alternatively, please            the cash proceeds transferred to Cofunds.
  contact your intermediary: www.cofunds.co.uk/docs/cofundsrates.pdf                                         Please Note:
• Details of the Bank of England’s current base rate can be found in the financial section of leading        • Your nominated intermediary will detail all the charges on transfer.
  newspapers or by visiting: www.bankofengland.co.uk
                                                                                                             • You should also check any exit charges that your existing manager may make for cash transfers.
Any interest you receive will fluctuate in line with the BOE base rate. If interest earned in any monthly
period is £1 or under, no interest will be paid.                                                             • If you are transferring an existing stocks and shares ISA in cash, there is a potential loss of income
                                                                                                               or growth because you will be out of the market between the time your investment is sold and
Cofunds is not a retail bank, nor a deposit taker. All Cofunds Cash Account monies are pooled                  bought back. This applies to both transfers into and out of Cofunds.
together and held as a client account with the Bank.
Please note that if the Bank defaults or becomes insolvent you may not receive all your money back.          d) Registration
Cofunds uses a number of banks to spread the risk of default. For more information on the current            Units/Shares will be registered in the name of Cofunds Nominees Limited. For further details, please
Cofunds nominated Bank(s), please contact your intermediary or visit the Cofunds website at                  see the Terms and Conditions of the Cofunds Platform.
www.cofunds.co.uk/docs/cofundsrates.pdf                                                                      For SIPP, SSAS, Corporate or Trust fund investments please consult with your nominated
Cofunds will receive additional interest from the Bank. Details are available in request by writing to       intermediary before making your application.
the Cofunds administration address. Refer to the ‘Conflicts of Interest’ section.
                                                                                                             When and how is my money invested? (Order execution policy)
TAXATION                                                                                                     Your money is invested, whether by way of lump sum, regular monthly savings, cash transfer or
Tax treatment depends on your individual circumstances and may change in the future.                         Cofunds Cash Account, using one method:
Unit Trusts and OEICs – You may be liable to income and/or capital gains tax on income/growth                • Units are purchased and executed directly through the fund manager who sets prices at a specific
from your investment if bought directly. Interest paying fund distributions are subject to income tax at       ‘valuation pricing time’ in the future. Therefore, you will not know in advance exactly what price
20%. UK dividend distributions on equity funds are subject to tax at 10% which cannot be claimed               you will receive. Provided the relevant fund dealing cut-off times are met (usually 11.15am, but
back. Higher rate taxpayers will have an additional tax liability.                                             does vary between funds), we will normally buy units in the funds you have chosen at the next
ISAs – All growth, income and withdrawals through ISA investments are free of UK income and                    available valuation pricing time following receipt of your instruction. In the case of regular savers,
capital gains tax. A 10% tax on UK dividend distributions does however apply and cannot be                     the price will be calculated at the next available valuation pricing time following receipt of your
claimed back. Funds might not remain eligible for investment within ISAs.                                      monthly payment. The valuation pricing times vary between fund managers. Please refer to the
                                                                                                               “Fund Details” section of the Fund Key Features for further details.
ECIVs – The ‘distributor’ status of the funds determine the tax treatment of your investment.
Distributions are paid gross, without deduction of any tax. UK investors should declare the income           • Please note that there may be a situation where the purchase/sale of your ECIV investment may
in their annual tax returns and will be subject to tax on this gross income as overseas dividends, at          be delayed due to the availability of valuation pricing times being impacted by European public
                                                                                                               holidays, where they differ to those in the UK.
the applicable rate of Income/Corporation Tax. Capital Gains Tax/Corporation Tax will be chargeable
on any gain arising on disposal, or redemption of units in an ECIV fund. In the unlikely event a fund        • Instructions are dealt with in due turn. When larger numbers of instructions are received, deals
were to lose its ‘distributor’ status, investors may instead be liable to Income Tax (or Corporation Tax       may be placed at the next available valuation pricing time on the business day following receipt.
on income) rather than to capital gains (or Corporation Tax on chargeable gains) in respect of any
gain arising on disposal, or redemption of units in an ECIV fund.                                            Am I eligible to invest?
Please refer to your nominated intermediary if you are in any way unsure about the tax situation on          Investment funds and Cofunds Cash Account
ECIVs in respect to your own personal circumstances.                                                         • You must be aged 18 or over.
Cash Account and Consolidated Income Account – Interest on the Cofunds Cash Account and                      • Up to four joint holders can be registered. Signatures from all joint holders are required for all
Consolidated Income Account is paid net of Lower Rate Tax at 20%. Higher rate tax payers will,                 transactions.
therefore, have an additional tax liability. Non-taxpayers are eligible to receive gross interest on these   • Applications from overseas may be refused.
accounts by completing and submitting a R85 form which is available via your intermediary or from the
                                                                                                             • ECIVs only – Applications to invest in or add to existing ECIV investments can only be accepted
HM Revenue & Customs website. If applicable, please quote the Cofunds Cash Account reference.
                                                                                                               from UK residents and must be in pounds Sterling.
INVESTING THROUGH COFUNDS                                                                                    Cofunds Investment ISA
Simply complete the relevant application form supplied by your intermediary.                                 • You must be 18 or over and resident or ordinary resident in the UK for tax purposes, or are a
                                                                                                               Crown employee serving overseas, their spouse or civil partner.
a) Investments into a Cofunds Cash Account                                                                   • You are not eligible to take out a Cofunds Investment ISA if you have already taken out a stocks
1. Lump sum investments                                                                                        and shares ISA with Cofunds, or another provider in the same tax year.
Your initial payment can be made by either cheque or Bank Automated Clearing System (BACS).                  Verification of personal identity
Cheques must be made payable to Cofunds Limited and should either be drawn on your own or on                 UK anti-money laundering regulations require firms to identify anyone associated with the
a joint account. For building society cheques, your name must appear on the front of the cheque              investment. This may also apply to existing investors. As a result, your intermediary may require
(for example, Cofunds Limited Re: A.B. Smith), or on the back of the cheque accompanied by the               documentary evidence of proof of your identity before you invest. Cofunds may also carry out an
building society’s official stamp and signature.                                                             identity search, using a credit reference agency. Processing of your instruction or payment may be
Once your Cash Account is made available to you, you will receive a confirmation letter which                delayed, pending receipt of satisfactory evidence.
provides your account reference and the bank details required for future payments in. You must               ECIVs only – To satisfy overseas anti-money laundering requirements, we may need to provide
ensure that you use this account reference so that monies are not delayed being received into your           information about your investment to the fund manager if requested.
Cash Account.
2. Regular investments                                                                                       RISK FACTORS
If you wish to make any future BACS or standing order payments from your nominated bank                      • Please refer to the Fund Key Features for details of the risks associated with investment funds,
account, please use the account reference and bank account details provided to you in the                      including ECIV funds.
confirmation letter.                                                                                         • When placing your instruction with Cofunds, all individual fund deals will be added together with
Please remember the Cofunds Cash Account is used to fund investments held in the names                         other investors and a single deal is placed with the fund manager. On certain occasions a fund
of all holders and, if applicable, the same designation as the Cash Account.                                   manager may apply a large deal price or dilution levy when the value of a deal exceeds certain
                                                                                                               limits. This may have a negative impact on the price you would receive.
b) Investments into an ISA or investment funds
1. Lump sum investments                                                                                      QUESTIONS AND ANSWERS
You have the ability to make a lump sum payment into your ISA or investment funds from your Cash
Account or via cheque. If paying from your Cash Account please ensure that it is in the same name
                                                                                                             What can I do with income earned on investment funds?
and if applicable, has an identical designation to the holders of the Cash Account.                          You can choose to either take income or reinvest back into investment funds. In most cases, you
                                                                                                             have a choice between accumulation (“ACC”) units/ shares or income (“INC”) units/shares:
Cheques must be made payable to Cofunds Limited and should either be drawn on your own or on
a joint account. For building society cheques, your name must appear on the front of the cheque              • “ACC” units/shares – any income earned on your investment accumulates within the price of
(for example, Cofunds Limited Re: A.B. Smith), or on the back of the cheque accompanied by the                  your holding, increasing the value.
building society’s official stamp and signature. New investments can also be made online via your            • “INC” unit/shares – income generated can be paid to you as income or used to purchase further
intermediary.                                                                                                   units in the fund, thereby increasing the number of units/shares held within the fund.
2. Regular monthly investments                                                                               If you do not specify “ACC” or “INC” units/shares on your application, and have not completed the
• If your intermediary has verified that the bank or building society account you wish to make               income section, Cofunds will invest into “ACC” units where available. Where “ACC” units/shares are
   monthly payments from belongs to you, then your first monthly subscription can simply be made             not available, we will invest in “INC” units/shares and arrange for any income generated to be
   by direct debit. For applications received up until the last day in any month, the first direct debit     reinvested back into the fund.
   collection will be made on or just after the 25th day of the following month.
                                                                                                             Can I have income paid to me?
• If your intermediary has not verified your bank or building society account as belonging to you, you       Funds that pay income do so either as dividends or, in the case of fixed interest funds, interest.
   will need to send your first monthly subscription by cheque, drawn on your own or a joint account         You can have income paid to you in several different ways on the Cofunds platform.
   which must match that of the direct debit instruction. Thereafter, Cofunds will automatically collect
   on or just after the 25th day of each month.                                                              • Consolidated Natural Income – when income is generated, that income and the tax reclaim
                                                                                                               received from your individual investment funds and/or ISA holdings (if applicable) are consolidated
• If you stop paying regular monthly savings for three consecutive months and the value of the                 and held in your Consolidated Income Account, pending payment to you.
   investment is below £1,000, Cofunds reserve the right to cash in your investment and return the
   value to you. Consequently you will lose the portion of your overall ISA allowance for the value of         On a monthly basis, shortly after the 6th working day of the following month, your Consolidated
   any investment already made. Any future contributions to an ISA in the current tax year will be             Natural Income will be paid directly to your nominated bank account, as one payment.
   limited to the difference between the ISA limit and the total value of all subscriptions made in the        If you do not supply us with your bank details we will be unable to process your application and
   current tax year.                                                                                           will contact your intermediary for further instruction. Payments will be made using BACS (Bank
                                                                                                               Automated Clearing System) and will be paid in pounds Sterling.
c) Transferring funds                                                                                          All monies pending payment are pooled together and held as a client account with the Bank and
1. Investment Funds                                                                                            will earn the same rate of interest as the Cofunds Cash Account. Details of Cofunds current
If you wish to transfer existing unit trust or OEIC holdings to Cofunds, you can do so as long as the          interest rates can be found at the below link. Alternatively please contact your intermediary.
fund is available through Cofunds. Your existing manager will re-register your investment in the name          www.cofunds.co.uk/docs/cofundsrates.pdf
of Cofunds Nominees. Your money will remain invested and you will not pay an initial charge.

                                                                                                                                      Viewpoint issue 24 • September 2009                             47
  If your Consolidated Income Account is overdrawn, we reserve the right to reclaim any cash owed         Cofunds Cash Account
  to us prior to income being paid. The frequency of the fund distribution payments will impact upon      • Once your Cash Account is made available to you, you will receive a confirmation letter which
  the amount you will receive on a monthly basis. If the funds you hold only pay income quarterly           contains your account reference and the bank details required for all future payments in. Use this
  or half yearly then in some months a payment may not be made at all.                                      account reference so that monies are not delayed being received into your cash account.
  If you elect to take a regular withdrawal from your Cofunds Cash Account, then your separate            • If you are eligible and request to set up a regular withdrawal facility for your cash account, you will
  income payment may cease as it may fund part of your regular withdrawal. Please refer to the              receive an acknowledgment confirming the details of the plan.
  “Addendum to the Cofunds Platform Key Features (1108R) – Cofunds Cash Account Regular
  Withdrawal Facility.”                                                                                   What happens if I change my mind?
• Cofunds Cash Account – Income can be paid to your cash account. It may then be used for                 Cofunds provides a cancellation period of 14 days after you invest. This applies to all investment
  future investment or a lump sum withdrawal.                                                             funds including those held within an ISA. Cancellation rights will apply to all unit purchases and
  If you select this option for your ISA holdings, income earned will not be retained within the tax      transfers. If you wish to cancel your investment through Cofunds you must inform us in writing within
  efficient ‘wrapper’.                                                                                    14 days of receipt of your confirmation notice, instructing Cofunds to cancel the relevant investments.
• Natural Income – If the value of your account is £100,000 or more, you have the option of receiving     Please forward your request to cancel to the Cofunds administration address. Refer to the ‘Conflicts
  the income paid to you shortly after it is received from the relevant fund manager. To request this     of Interest’ section.
  please write to our administration address. Refer to the ‘Conflicts of Interest’ section.               Prior to the release of your monies we may need to carry out additional security checks and ensure
                                                                                                          all payments have cleared, which may delay settlement.
How do I reinvest income? (retain into the fund)                                                          Financial Consequences of Cancellation
1. If available, you can choose “ACC” units/shares.                                                       If you cancel your investment and withdraw from the contract, we will return your original investment
    If you have requested “ACC” units/shares and these are not available, we will purchase “INC”          to you less a deduction for any amount by which the value of your investment has fallen at the time
    units/shares and arrange for any income generated to be reinvested into the fund.                     we receive your cancellation letter. You will be required to repay any amounts already paid to you
2. Alternatively you can choose “INC” units/shares and specify on your application that you wish for      under the contract.
    any income generated to be reinvested into the fund.                                                  You will not be able to cancel outside of the 14 day period. If you wish to withdraw after this
If you have requested “INC” units/shares and have asked to have income reinvested but “INC”               period then:
units/shares are not available, we will purchase “ACC” units/shares.                                      • All fund management charges will apply.
                                                                                                          • A potential tax liability will apply outside an ISA investment.
How do I move between funds?
                                                                                                          • Any ISA contribution will still qualify towards the allowance for the relevant tax year.
Simply complete the switch instruction form, which can be obtained and submitted via your
intermediary. Online switching may also be available through your intermediary. Switches are not          Investment fund investors only – All joint holders must sign the cancellation letter informing us that
instantaneous and depend upon the valuation pricing times for the funds you wish to switch out of         you wish to cancel.
and into. Your investment may be out of the market for a period of time whilst the switch is taking       ISA investors only – Interest will not be paid on cancelled investments held in Cash Reserve.
place. There is normally a switch charge of 0.25% of the value of the switch. We will deal in             Transfers, ISA – If you exercise your right to cancel, the cancellation will apply to all your
accordance with our standard dealing process. Units/Shares will be sold at one valuation pricing          investments being transferred. On cancellation, you have the following options:
time and bought at the next available valuation pricing time. Please see ‘When and how is my
money invested?’ for more details.                                                                        1. To transfer the plan back to your previous plan manager, we require a letter of acceptance from the
                                                                                                              plan. Your investment will continue to be held within your chosen funds until the acceptance has
How do I take my money out?                                                                                   been received by Cofunds. If your previous plan manager accepts and requests re-registration of
                                                                                                              the plan we will arrange for this. If the previous plan manager does not accept re-registration we
Requests for withdrawals can be made in writing to the Cofunds administration address. Refer to the           will transfer the plan back in cash.
‘Conflicts of Interest’ section. Online withdrawal requests may also be made online through your
intermediary. We are unable to accept instructions by either fax or phone. Please note that for partial   2. To transfer the plan to a new plan manager, we will require a letter of acceptance from the new
withdrawals, you must specify the number or percentage of units/shares to be sold from any fund.              plan manager in order for this to take place. Your investment will continue to be held within your
The same order execution policy is used for the sale of units as detailed in ‘When and how is my              chosen funds until the acceptance has been received by Cofunds. If the new plan manager
money invested?’.                                                                                             accepts and requests re-registration of the plan we will arrange for this. If the new plan manager
                                                                                                              does not accept re-registration we will transfer the plan in cash.
Cofunds permits withdrawal proceeds to be sent to your Cofunds Cash Account, nominated bank
account or to your registered home address. In the absence of any instruction, we will transfer the       3. We will cancel the contract and return the proceeds to you by cheque. In this instance your
proceeds to your Cofunds Cash Account.                                                                        holdings will no longer be held in a ISA and will lose all future tax advantages.
Timings                                                                                                   Your cancellation letter should clearly indicate which of the above options you wish to follow.
Cofunds will send the proceeds to your nominated bank account, Cofunds Cash Account or to your            Investment fund transfers – If you are transferring assets to Cofunds and use your right to cancel,
registered home address within 5 working days of the valuation pricing time of the last fund sold.        you will be given the following options:
However, payment may take up to 8 days in total to reach your account. This is subject to funds           1. To transfer your investments back to the previous fund manager. In this instance we will require
being made readily available by the fund manager. For proceeds being sent to your registered home             confirmation of your client account number with the fund manager in question. If you do not
address, please be aware that postal times can vary.                                                          supply us with your account number we may not be able to re-register the units. Once the units
For ECIV funds only – some fund managers may settle a day later and therefore the payment in to               have been re-registered the contract will be cancelled.
your bank account will be deferred by 1 business day. If you withdraw monies from a number of             2. We will cancel the contract and return proceeds to you by cheque. If you choose this option it
funds and one settles on a different day, we will normally release proceeds within 5 working days of          may give rise to a chargeable event for capital gains tax purposes.
the fund being sold.                                                                                      Your cancellation letter should clearly indicate which of the above options you wish to follow.
Additional Information
ISA and Investment Funds withdrawals – If you do not fully encash your investment you must                How do I keep track of my investments?
leave a minimum amount of £1,000 in any investment per fund. For ISA investments, you will not be         There are a number of ways that you can do this including:
able to replace contributions withdrawn in the same tax year, unless the amount you wish to invest        • Contact your intermediary and request a valuation at any time.
is within your unused ISA allowance.
                                                                                                          • The latest buying and selling prices and estimated distribution yield for many funds can be found
Cofunds Cash Account withdrawals – Requests for either one-off or regular withdrawals must be               at www.ft.com/funds and in daily newspapers.
made using the Cash Account withdrawal form.
                                                                                                          • Daily fund prices are available through the Investment Management Association website at
We are unable to accept instructions by either fax or phone.                                                www.investmentuk.org/investors.
• One-off withdrawals – Cofunds will process your instruction within 1 business day of receipt.
  Monies will be released from Cofunds within 5 business days via BACS transfer.                          What should I do if I have a complaint?
• Regular withdrawals – For information on the Cofunds Cash Account regular withdrawal facility,          Please write to:
  please refer to the “Addendum to the Cofunds Platform Fund Key Features (1108R) – Cofunds               Head of Retail Operations, Cofunds Limited, PO Box 1103, Chelmsford CM99 2XY
  Cash Account Regular Withdrawal Facility”.
                                                                                                          We can give you full details of the procedure we have set up for dealing with complaints.
                                                                                                          Alternatively, you may wish to make a complaint through your intermediary. If you are not satisfied
How do I transfer money between Cofunds Cash Accounts?                                                    with Cofunds response, you may take your complaint to the Financial Ombudsman Service whose
You can transfer monies between cash accounts by completing a “Cofunds Cash Account Inter                 address is:
Account Transfer Form”. For jointly held accounts, all signatures will be required to authorise the
transfer. Only cleared funds can be transferred between Cofunds Cash Accounts.                            The Financial Ombudsman, South Quay Plaza, 183 Marsh Wall, London E14 9SR
                                                                                                          Tel: 0845 080 1800, E-mail: complaint.info@financial-ombudsman.org.uk
What’s the difference between the Consolidated Income                                                     Will I be entitled to compensation?
Account, Cash Reserve and Cofunds Cash Account?                                                           Cofunds is covered by the Financial Services Compensation Scheme (FSCS). You may be entitled to
Cofunds Cash Account is a separate service to that of the Cash Reserve. The Cash Reserve facility         compensation from the scheme if we cannot meet our obligations. This depends on the type of
is part of your ISA investment and issued to temporarily hold cash for future investment. The             business and the circumstances of the claim. Most types of investment business are covered for
Consolidated Income Account is an account which temporarily holds distributions pending payment           100% of the first £30,000 and 90% of the next £20,000, so the maximum compensation is
to your nominated bank account. Please refer to the following sections of this document for more          £48,000. Further information about the compensation scheme arrangements is available on request
information.                                                                                              from the FSCS at www.fscs.org.uk. Telephone number: 020 7892 7300.
• For Cash Reserve: ‘Can I invest cash within my Cofunds Investment ISA?’ in ‘YOUR INVESTMENT’.           Whilst the ECIVs offered through Cofunds are recognised by the FSA, they are based overseas. It is
                                                                                                          important to note that once you purchase units overseas the UK Financial Services Compensation
• For the Consolidated Income Account: ‘Can I have income paid to me’ in ‘QUESTIONS AND
                                                                                                          Scheme will not apply. For details of any local compensation arrangements that may be available,
  ANSWERS’.
                                                                                                          you can visit the relevant regulator’s websites as follows:
Can I transfer out of Cofunds?                                                                            Luxembourg, CSSF: www.cssf.lu
If you wish to transfer your ISA investment to another manager, then your investments will be sold        Dublin, IFRSA: www.ifsra.ie
and the proceeds paid across to your new ISA manager. In the case of transfers, we will require a
completed transfer authority form from the new ISA manager.                                               EU Savings Directive
Investment funds will be re-registered.                                                                   If you move overseas within the European Union the EU Savings Directive may apply. Please contact
                                                                                                          your intermediary for more details.
FURTHER INFORMATION
                                                                                                          Terms & Conditions of the Cofunds Platform
What documentation will I receive?                                                                        Introduction – The terms and conditions are split into three sections as follows:
General                                                                                                   SECTION A
• We will send you details of your transactions, once completed.                                          To be read by all investors.
• Cofunds will send you a tax deduction certificate each year detailing the deduction of tax from         SECTION B
  your cash account and Consolidated Income Account for the previous year. Duplicate tax
                                                                                                          Additional terms to be read by all ISA investors.
  deduction certificates are available upon request at a charge of £10 each.
                                                                                                          SECTION C
• If you invest by regular savings, we will send you an acknowledgement confirming the amount of
  your monthly investment.                                                                                Additional terms to be read by all investment fund investors investing outside of an ISA.
• We will maintain the records of your investments. Certificates will not be issued. In the case of an
  investment held in joint names, all documentation will be sent to the primary holder’s address.         SECTION A
  Secondary holders can of course request copies of correspondence.                                       The Terms & Conditions in this section together with the ISA Terms & Conditions in Section B,
• A statement will be sent direct to you at least annually showing the value of your investments and      Customer Agreement in Section C and Key Features of the Cofunds platform form the overall terms
  all the transactions since the previous statement date.                                                 for your investment. If you would like more information, or have any questions, please call your
                                                                                                          Intermediary who will be able to advise you.
Investment Funds
• For investment funds only, one consolidated tax voucher is issued each year, which details all
  relevant income and tax deductions during the previous financial year.



           48               Viewpoint issue 24 • September 2009
A.1 Definitions                                                                                           2.8 Client Classification
In these Terms the following words mean:                                                                  Cofunds classifies all clients as Retail, other than FSA regulated firms who are classified as
                                                                                                          Professional. Any clients, who would ordinarily be considered to be a Professional or Eligible
Account: The account that we open in your name to record investments that you make through
                                                                                                          Counterparty, may not necessarily have rights under the Financial Ombudsman Service (FOS) or the
Cofunds.
                                                                                                          Financial Services Compensation Scheme (FSCS) as a result of that classification.
Administration Address: Cofunds Limited, PO Box 1103, Chelmsford CM99 2XY.                                2.9 Timing
Application: The application(s) completed by you or on your behalf to invest or withdraw (redeem)         Your investments will be purchased as soon as reasonably practicable and in any event, no later than
in the Account.                                                                                           the valuation pricing time on the next Business Day. Please refer to the section “How do I take my
Assets: Investments, income, interest, cash balances and any other rights and entitlements from           money out” on for more information regarding the timing of withdrawals/selling your investment.
time to time held within your Account.                                                                    2.10 Cofunds Cash Account
Bank: A Cofunds nominated bank, which may vary from time to time. Full, up to date details, of the        In the event that Cofunds is instructed to source monies from your Cofunds Cash Account for the
banks with which money is held can be obtained by contacting your intermediary or visiting the            purposes of funding an onward investment, Cofunds will verify that there is a sufficient amount
Cofunds website at www.cofunds.co.uk/docs/cofundsrates.pdf.                                               available within the account to perform the transaction. If sufficient monies are not available,
Banking Day: Any day on which the Bank is open for normal business other than a Saturday, a               Cofunds will not process your instruction. Cofunds reserves the right to reclaim any Cash owed prior
Sunday or a bank holiday in the United Kingdom.                                                           to monies being withdrawn and will notify you of any amounts deducted.
Business Day: Any day when the London Stock Exchange is open for business. Our normal hours               2.11 Circumstances Beyond Our Control
of opening are 9:00am to 5:00pm.                                                                          If circumstances beyond our control result in a loss to you, Cofunds will not be held responsible for
Calculation Date: Three working days before the sell down valuation pricing time.                         any damages relating to the loss. Examples of when these circumstances apply could be when the
Cash: Any cash balances, interest, distributions and other amounts received or receivable as cash         loss occurred as a result of a flood or earthquake.
in your Account from time to time.
                                                                                                          A.3 Making your Investment
Cash Reserve: A client money account used solely for money destined for eventual investment in
                                                                                                          3.1 Your Nominated Intermediary
one or more of the Funds offered by Cofunds.
                                                                                                          We are entitled to rely and act on any instruction which purports to have been given by your
Client Account: A bank account held by us with the Bank.
                                                                                                          Nominated Intermediary however transmitted and whether or not in writing and unless we have
Cofunds Cash Account: An interest paying client money account, separate from Cofunds money,               received written notice to the contrary in accordance with the following paragraph, whether or not the
and held under trust with the Bank.                                                                       authority of any such person has been terminated. You allow us to give your Nominated Intermediary
Consolidated Income Account: A cash account which temporarily holds distributions pending                 information about you and your Account from time to time. Cofunds will treat the Intermediary
payment to your nominated bank account.                                                                   identified in your Application as your Nominated Intermediary. You may at any time tell us in writing to
                                                                                                          stop accepting instructions from your current Nominated Intermediary and appoint a new Nominated
Current Year Account: A separate Account containing only Assets representing your Subscriptions           Intermediary in their place. Your instruction will take effect upon receipt by us at our Administration
made in the current Year.                                                                                 Address. Refer to the ‘Conflicts of Interest’ section. We will acknowledge receipt of your instruction
Dealing Cut-off Time: The time by which an instruction needs to be processed in order to utilise          and will inform both of the Intermediaries concerned. In the case of joint holders, a change of
the next valuation pricing time.                                                                          Intermediary notification must be signed by all holders. You must at all times have a Nominated
Fund: An authorised unit trust or open-ended investment company (or sub-fund thereof) we specify          Intermediary. If you do not nominate a replacement Intermediary then Cofunds will continue to deal
as available for investment within your Account.                                                          with your existing Intermediary until you appoint one. Should your Intermediary cease to be
                                                                                                          authorised, Cofunds can provide you with details of other Intermediaries registered with Cofunds, but
FSA: The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.              does not make any recommendation as to the suitability or appropriateness of any Intermediary or
Income: All payments received as income including any tax payments we reclaim for your Account.           subsequent advice.
Indemnify: Secure against future loss, damage, or liability: give security for.                           3.2 Buying and selling your Investments
Intermediary: A person authorised by the FSA to conduct investment business.                              Your investment will be made if we accept your correctly completed application form and payment.
ISA: An Individual Savings Account managed under the ISA Regulations.                                     Please see the ‘Investing through Cofunds’ section of the Key Features for further details. Levels of
                                                                                                          trading are actively monitored and acceptance of anyone who is considered to have a history of
ISA Manager: This is Cofunds Limited.                                                                     short-term or excessive trading or whose trading has been disruptive may be refused. In instances
Joint Holders: A maximum of four persons who can invest in the same investment.                           where a payment to your Account is unpaid for any reason, you will be held accountable for any
Monies: Any client money held within the Cofunds Cash Account for the purposes of future                  loss that may arise due to market movement. Please refer to the section “How do I take my money
investment.                                                                                               out” for more information regarding the timing of withdrawals/selling your investment.
Nominated Bank Account: A UK bank or building society account of which you are a named                    3.3 Unit Allocation on Transfers (Equalisation)
holder and which you specify and we accept as the account to pay Income and withdrawal                    If you are re-registering Investments, we will request the old manager to provide us with the correct
proceeds to you.                                                                                          Unit holdings for your Investment and register your Investment with Cofunds with the same Unit split.
Nominated Intermediary: An Intermediary nominated by you, who is authorised by you to give
instructions on your behalf on all matters concerning your Account.                                       A.4 Title and Registering Investments
Nominee: Cofunds Nominees Limited, a wholly owned subsidiary of Cofunds for which we accept               4.1 Title and borrowing
full responsibility.                                                                                      All documents evidencing title to Assets in your Account are held by us or as we direct. We may not
                                                                                                          lend any part of your Account to a third party and we cannot use it as security for borrowing.
Ombudsman: The Financial Ombudsman Service who may be contacted at South Quay Plaza,
183 Marsh Wall, London E14 9SR.                                                                           4.2 Beneficial ownership
Payment: A payment by cheque, direct debit or debit card in sterling, to be applied to your Account       You are and remain the beneficial owner of the Assets. Investments made by you will be held in your
either paid by you from your bank account or paid on your behalf by your Nominated Intermediary,          name as owner but you must not use them as security for a loan although you may be able to use
or previous ISA Manager.                                                                                  the Assets in your Account as a loan repayment method, subject to your lender’s agreement. You
                                                                                                          may not dispose of or transfer an interest in any Asset held through us and may not create (or have
Primary Holder: The first named person on the Cofunds Application form.                                   outstanding) any charge or security on or over any Asset.
Registered Office: Cofunds Limited, 1st Floor, 1 Minster Court, Mincing Lane, London EC3R 7AA.            4.3 Registration
Regulations: The Individual Savings Account Regulations 1998, and any other applicable                    We register your Investments in the same name as those of other Cofunds investors and do not
regulations made from time to time by HM Treasury.                                                        identify individual Investments by separate certificates.
Sell down: The process by which Cofunds will effect a sale of units from your investment to fund          4.4 Default
regular withdrawals from your Cofunds Cash Account where insufficient monies are available.
                                                                                                          Should we default on our obligations, any shortfall in Investments registered in Cofunds name may
Terms: The Key Features of the Cofunds Platform and the Terms & Conditions, as from time to time          be shared out proportionately among all of our customers whose Investments are registered with
amended, together with your Application. The Terms & Conditions will take precedence if the two differ.   our Nominee. In this event, your Investment may be returned to you or transferred to another
Units: Income or Accumulation units, or shares of any class, in a Fund, including any fractions or        company as specified by you or your Nominated Intermediary.
decimals of units.
Valuation Pricing Time: The dealing time utilised to price units that are either bought or sold.          A.5 Payments to you
We, us and our: Cofunds Limited (“Cofunds”) of Minster Court.                                             5.1 Income payments
                                                                                                          It takes seven Business Days after we receive your instructions to apply them to Income payments.
Year: A year beginning on 6 April and ending on the following 5 April. This is commonly known as
                                                                                                          If you no longer have a holding in an Investment at the time when we receive the Income arising from
the tax year.
                                                                                                          it, we pay that Income to you. You can instruct us at any time to stop using a particular account.
You and your: A person who invests in an Account through Cofunds.
                                                                                                          5.2 Withdrawals and closing payments
A.2 Our Role                                                                                              We may deduct from any amount to be paid to you any outstanding fees, charges and expenses due
2.1 General                                                                                               from you. We keep an amount which we reasonably estimate will be enough for us to meet any tax
                                                                                                          liability for which we must account to the HM Revenue & Customs for you under the Regulations.
We do not review your portfolio and we do not give advice about investments. All personal data            We hold any cash due awaiting payment outside your Account in a Client Account. We may delay
relating to you that we hold for the purpose of providing services under this Agreement is held in        paying any sale proceeds and cash balances until we know that all Payments made by you have
accordance with the requirements of Data Protection legislation.                                          cleared and we have received all amounts which you owe to us. Cofunds will not make payments
2.2 Regulation                                                                                            to a third party account except another FSA regulated firm.
We are authorised and regulated by the FSA for Investment business. Our FSA registration number           5.3 Residual payments
is 194734 and you can check this on the FSA website at www.fsa.gov.uk/register or by contacting           Upon full closure of your Account, any payments subsequently received by us of £1 or less will not
the FSA on 0845 606 1234.                                                                                 be processed or retained by Cofunds. If you transfer holdings to Cofunds and payments are
2.3 Client Account                                                                                        subsequently received from your old manager, such as distributions and tax reclaims, these will be
                                                                                                          added to your Account in the following way: Any residual Income received from the old manager will
We will deposit your money in our Client Account. If there has been no movement on your balance           be reinvested into the largest value holding within your Account, regardless of any change to
for a period of at least six years, including any payments on account of charges, interest or similar     mandate instructions received upon transfer to Cofunds. Cofunds reserves the right to return any
items, we will write to you and your Nominated Intermediary at your last known addresses informing        residual Income to the old manager if the amount is below £25.
you of our intention to no longer treat your balance as client money. You will have 28 days to make
a claim for this money. However, we will still pay what is due to you if you subsequently claim           5.4 Other payments
payment. We do not pay interest on client monies but we reserve the right to do so in the future.         All payments other than Income payments shall be made to you or your Nominated Intermediary.
2.4 Client Asset Protection                                                                               5.5 Good discharge
We keep all Client Account Money separate from our own money and hold it under trust with the             Payment to your Nominated Bank Account or to your Nominated Intermediary for the time being,
Bank. We are also responsible for safe custody of all Assets held in your Account. Legal title to all     at their direction, is in any case a discharge of our obligation to pay monies owed to you under
Assets is registered in the name of the Nominee. We register Investments in the name of Cofunds           this Agreement.
Nominees Limited, whose address is our Registered Office. You authorise us to direct and instruct
our Nominee to discharge our responsibilities under these Terms. We are responsible for the acts          A.6 Documentation
and omissions of our Nominee. Our Nominee is not itself an authorised person under the Financial          6.1 Confirmation notes
Services and Markets Act 2000; it can only hold investments and does not carry on business in its         Confirmation notes will be sent to you and your Nominated Intermediary on the next Business Day
own right.                                                                                                following the completion of the Investment transaction carried out at your instruction. This will include
2.5 Special Circumstances                                                                                 the essential details of the transaction. For regular savings we will send you an acknowledgement of
We have discretion to apply Funds to an Account on a day other than a Business Day. If, after             receipt of your Application. We do not send confirmation notes each time a payment is received as
you’ve made your investment, we make an adjustment to your holding on the basis of instructions           these details will be included within your statements and Consolidated Confirmation Note.
received from the Fund Manager which is then found to be incorrect, adjustments of £5 or less will        6.2 Statements
not be processed or kept by Cofunds.                                                                      At least annually we send you an Account statement showing details of all Assets within your
2.6 Assignment and Delegation                                                                             Account on the statement date and all transactions made since the previous statement date,
We may assign all or any of our benefits and obligations under this Agreement to any other company        including Investment and interest Income. A copy will be made available to your Intermediary.
within the Cofunds group. Should this become necessary, then you will be notified in advance of any       Valuations are based on the bid price as at the date shown on your statement.
such assignment or delegation and Cofunds Limited will remain primarily liable at all times.              6.3 Records
2.7 Address                                                                                               You may inspect copies of confirmation notes, vouchers and entries on our books or electronic
Correspondence about our service should be sent to the Administration Address. Refer to the               media relating to transactions on your Account. We keep these records for six years.
‘Conflicts of Interest’ section.
                                                                                                                                   Viewpoint issue 24 • September 2009                              49
A.7 Withdrawals and closing your account                                                                    civil partner. You must inform us immediately if you stop being UK resident and ordinarily resident for
7.1 Minimum amount                                                                                          tax purposes, or if as a non-resident you stop being a Crown employee, their spouse or civil partner.
Should the amount in your Fund fall below £1,000 as a result of your instruction to sell, we will contact   2.4 Account type
your intermediary to inform them that we may require you to sell your entire holding in that Fund.          For an investment held under these Terms, we designate your ISA Current Year Account as
7.2 Closing your Account                                                                                    “Cofunds Investment ISA”. All new ISA investments will be designated “Cofunds Investment ISA”.
You may close your Account at any time by withdrawing all the Assets, or transferring them to another       2.5 Timing
Manager. Closing your Account does not affect any transactions initiated before the closure began.          In the case of an ISA transfer, the date of transfer is the date agreed between the Plan Managers.
These Terms continue to apply until we complete all outstanding transactions and meet all liabilities.      These Terms will take effect if Cofunds accepts your Application, which is normally on the day of
                                                                                                            receipt. Cofunds has discretion to reject an Application.
A.8 Fees, Charges and Expenses
8.1 Our Remuneration                                                                                        B.3 Investments
We do not charge you a fee for investing through us. The only additional charges are those                  3.1 Choosing your Investments
described under Section B 5.2 of the ISA Terms & Conditions and Section A 8.4 below. We do                  Your Nominated Intermediary can help you choose the Investments to buy for your Account and can
however receive a fee from Fund Managers for administration services provided to Fund Managers              advise you on changes you should make to the Investments in your Account.
connected with your Investment. If you require details of these fees, please write to us at our             The Cash Reserve provides a temporary shelter for your Investment. Cash held in this way must be
Administration Address. Refer to the ‘Conflicts of Interest’ section.                                       destined for investment in one or more of the Funds offered by Cofunds.
8.2 Fund Manager                                                                                            3.2 Cash Reserve
The manager of each fund in your Account may receive an initial charge. An annual management                Investments held temporarily in the Cash Reserve may earn interest. If interest earned in any accrual
charge and other fees, charges or expenses properly payable to them may be paid out of the                  period is under £10, no interest will be credited to your Cash Reserve investment. The interest is
property of that Fund.                                                                                      payable six monthly. Details of the Cofunds current interest rates can be found at:
8.3 Nominated Intermediary                                                                                  www.cofunds.co.uk/docs/cofundsrates.pdf
Commissions payable to your Nominated Intermediary will be disclosed to you on the confirmation             Alternatively, please contact your intermediary. Any interest you receive within your ISA will fluctuate
note sent to you after each transaction, other than regular Investments, where these will be shown          with changes to this base rate. Please refer to ‘Can I invest cash within my Cofunds Investment
on your statement.                                                                                          ISA?’ section of the Key Features for further details.
8.4 Switch fees & Unit Conversion                                                                           If you close your Cash Reserve without having invested in a Fund(s), interest will not be payable on
We will allow you to switch funds within your Account. You will normally pay an initial switching           money withdrawn. Please note that we require written instructions to carry out all of the above
charge of 0.25% of the value of the switch. Commission on switches may be added if agreed with              transactions.
your Nominated Intermediary.
The maximum switching charge or commission will not exceed the funds standard initial charge.               B.4 Void Accounts
Unit conversion: Where available, fund managers offer the facility to convert Accumulation units to         Your Account will be managed in accordance with the Regulations. We will notify you if, by reason of
Income units, or vice versa within the same fund. No commission is paid on unit conversion. Should          any failure to satisfy the provisions of the Regulations, your Account has or will become no longer
you wish to exercise this facility, there is no charge for unit conversion.                                 exempt from tax. If your Account is voided, we will sell the Investments and, after deducting any
                                                                                                            cash available to cover any tax we have to pay or repay, pay you the proceeds together with any
A.9 Variation, Termination and Amendment of Terms                                                           remaining cash balance held in your Account. Any interest accrued in the Cash Reserve will not be
9.1 Funds offered by Cofunds                                                                                payable. There will be a charge of £100 if we have to void your ISA due to an error on your part.
Cofunds reserves the right to add and remove Funds from the service.                                        B.5 Report & Accounts and Voting
9.2 Changes to these Terms                                                                                  5.1 Voting rights
We may introduce changes to our services and to these Terms from time to time. We will give you at          We do not exercise voting rights for any of your Investments unless you instruct us to vote on your
least 30 days advance notice of any change, except where the change is not to your disadvantage             behalf. If you have requested this, you will be notified of each voting event.
or is required in order to comply with a legal or regulatory requirement. If you are not happy with a       5.2 Reports, notices, meetings and voting
change, you can close your Account at any time by withdrawing all the Assets or, if applicable,
transferring them to another ISA manager.                                                                   For any Investment held in your Account, we can arrange when you open your Account, (or at your
                                                                                                            request in writing after one month’s notice) for you:
9.3 Termination
                                                                                                            • to receive a copy of the annual report and accounts for each Fund in which you are invested, and
We may terminate your Account provided we give you a minimum of three months notice. Upon
termination, unless otherwise agreed at the time, we will realise all your Units and will pay the           • to attend meetings of unit holders or shareholders and exercise voting rights
proceeds, together with any other Cash in your Account, to your Nominated Bank Account.                     Your instruction should be given on your Application. Availability of these facilities will be subject to a
9.4 If we cease to be an Account Manager                                                                    charge of £20.00 per communication to cover our costs, although copies of report and accounts
                                                                                                            can be downloaded free from the Cofunds website. The charge may be deducted from cash in
Your Account will close if we stop acting as an Account Manager. We will give you at least 30 days          your Account.
advance notice of any change, except where the change is not to your disadvantage or is required
in order to comply with a legal or regulatory requirement. At the end of that notice period the             Other notices will be sent to you either directly or with your statements.
Account will close but in the meantime you may withdraw or transfer Assets.
                                                                                                            B.6 Transferring out of Cofunds
A.10 Indemnity                                                                                              6.1 ISA Transfers out
You will indemnify us and our Nominee against any liability or loss which we or our Nominee may             Transfers out upon your instructions, and in the time specified by you, Cofunds will transfer all or
suffer or incur (including taxes for which you are primarily liable and any expenses reasonably and         part of your ISA, with all your rights and obligations under it, to another ISA Manager who has
properly incurred) in the proper course of administering your Account, except to the extent arising         agreed to accept the transfer. In the case of your current year Payments, you may either transfer
from any negligence, wilful default or fraud on the part of ourselves or our Nominee or breach to           these as part of a transfer of the whole of your ISA to another ISA Manager or you may maintain
regulatory duties.                                                                                          them in your Cofunds ISA, for which purpose we may create a Current Year Account.
                                                                                                            We require that the transfer is made in cash after selling relevant Investments and deducting any
A.11 Notices                                                                                                amounts due to us. If we subsequently receive any Income arising from Investments transferred out,
Except as otherwise provided, notices to Cofunds should be sent to us at our Administration                 we will remit it directly to you.
Address. Refer to the ‘Conflicts of Interest’ section. Notices to you will be sent to your last known
                                                                                                            These Terms continue to apply to (the part of) your ISA being transferred until the transfer is
address and may be copied to your Nominated Intermediary.
                                                                                                            complete, all outstanding transactions settled and all liabilities met.
A.12 Information for the Manager                                                                            B.7 If you die
You must give us all information which we reasonably request to manage your Account and tell us
                                                                                                            Upon your death, your Account will cease to be tax exempt and will be closed. We will continue to
promptly if you change your permanent residential address or wish to change your Nominated Bank
                                                                                                            hold your Assets until we receive instructions from your personal representatives, upon whom these
Account or Nominated Intermediary.
                                                                                                            terms become binding.
Instructions should generally be in writing and signed by you unless we agree otherwise.
                                                                                                            We do not reinvest income but hold it in our Client Account until we can pay it as your personal
                                                                                                            representatives direct. Any tax reclaimed on income distributions paid between the date of your
A.13 Governing law                                                                                          death and notification of your death will be deducted by us.
These Terms & Conditions are governed by and are to be construed in accordance with English law.
The information contained in these Terms and the Application is based on our understanding of
current legislation and HM Revenue & Customs practice and could be affected by changes in                   SECTION C
legislation and practice.                                                                                   Investment Funds Customer Agreement
If there is any conflict between these Terms & Conditions and the ISA Regulations or other legislation      Additional terms to those stated in Section A, to be read by all clients investing in Investment Funds.
relating to your Account, the ISA Regulations and/or other legislation will prevail.
                                                                                                            C.1 Title and registering Investments in joint names
SECTION B                                                                                                   The first named applicant will be the ‘Primary’ Holder of the Investment. This is purely for administrative
                                                                                                            purposes and does not affect the legal status of your joint ownership. All communication and
Terms and Conditions of the Cofunds ISA                                                                     documentation will be sent to the Primary Holder’s address. Secondary holders may request copies
Additional terms to those stated in Section A, to be read by all clients investing in ISAs.                 of correspondence.
B.1 Your ISA Manager                                                                                        C.2 Opening Your Account
1.1 Our Role                                                                                                This agreement will take effect if Cofunds accepts your Application, which is normally the day we
We agree to act as ISA Manager for your Account. We make all necessary claims for tax relief                receive it. A direct debit instruction authorises us to collect and invest regular investments for you
relating to your Account and the Assets held in it.                                                         unless and until you tell us to stop, either at the time you apply or both. Cofunds has discretion to
1.2 Regulations                                                                                             reject an application.
We will notify you if all or part of your Account is no longer exempt from tax. We will sell any            C.3 If you die
investments that are no longer exempt from tax at the published selling price and normally release          Upon your death, we will continue to hold your Assets and Cash until we receive instructions from
proceeds with 5 working days together with any affected cash balances.                                      your personal representatives, upon whom these Terms become binding.
B.2 Opening your account                                                                                    We do not reinvest income but hold it in our Client Account until we can pay it as your personal
2.1 ISA Applications                                                                                        representatives direct. If a Primary Holder dies then the next named holder is promoted to Primary
                                                                                                            Holder. We reserve the right to carry out further money laundering checks if the new Primary
In the case of an ISA, your Account is opened when we accept your correctly completed Application           Holder’s bank account differs from the original.
and Payment.
Your ISA Application covers the current Year and each subsequent Year until we receive no Payments
for one full Year. We reserve the right to require a fresh Application for each new tax Year.               THE DIRECT DEBIT GUARANTEE
A direct debit instruction authorises us to collect and invest regular Payments for you unless and until
you notify us to the contrary, either at the time of your Application or otherwise.                         • This Guarantee is offered by all Banks and Building Societies that take part in the Direct Debit
2.2 ISA Transfers in                                                                                          Scheme. The efficiency and security of the Scheme is monitored and protected by your own
                                                                                                              Bank or Building Society.
Where you have transferred your current year’s ISA investment, you may reactivate your Account by
restarting Payments, although you must submit another Application if we receive no Payments for             • If the amounts to be paid or the payment dates change, Cofunds will notify you five working
one full Year.                                                                                                days in advance of your account being debited or as otherwise agreed.
2.3 Tax status                                                                                              • If an error is made by Cofunds or your Bank or Building Society, you are guaranteed a full and
                                                                                                              immediate refund from your branch of the amount paid.
You may not subscribe to your ISA Account while not resident and ordinarily resident in the UK for tax
purposes unless you qualify as a Crown employee (a person holding public office or employment               • You can cancel a Direct Debit at any time by writing to your Bank or Building Society. Please also
under the Crown and paid out of the public revenue of the UK or of Northern Ireland), their spouse or         send a copy of the letter to us. Please ensure you retain this guarantee.



           50               Viewpoint issue 24 • September 2009
Fund Key Features                                                                                         Stamp Duty Reserve Tax
This Fund Key Features provides you with the key facts of the funds available through                     You may also be charged an amount of Stamp Duty Reserve Tax (SDRT) Provision (currently 0.5%).
Cofunds and should be read in conjunction with the Key Features of the Cofunds platform.                  This is a charge made by the fund manager to be made as a provision for SDRT for which the fund
                                                                                                          may be liable and this is usually deducted from the fund (under the Stamp Duty and Stamp Duty
How will charges and expenses affect my investment?                                                       Reserve Tax Regulations 1999). This is normally charged on withdrawals and certain transfers of
Cofunds shares a platform fee from the fund manager’s Standard Initial Charge with the fund               Investments. Any amount of SDRT Provision charged to you will be shown separately on your
manager. This fee has no impact on the charges you pay. Please refer to the ‘Platform fee’ section        confirmation note.
of the Key Features of the Cofunds platform for more information.
                                                                                                          General Risk Factors
The following tables illustrate the total effect of charges and expenses on a typical Cofunds direct
                                                                                                          Like any investment there are risks involved in investing in the funds available through Cofunds.
investment and an ISA or investment into a unit trust or an OEIC. Dealing costs are not included.
                                                                                                          There are general risks which apply to all fund investments, as well as additional risks arising as a
Allowance for any tax relief available has been made in the calculation. The effect of charges is
                                                                                                          result of your fund selection. The general risks are listed below. Additional risks are highlighted in
based on a lump sum investment of £5,000, and a monthly investment of £100 assuming a growth
                                                                                                          subsequent pages of this document.
rate of 7.00% per year for ISAs and 6.00% for direct investments. These figures are laid down by
the Financial Services Authority to demonstrate the effect of charges and expenses on an                  • The value of your investment is not guaranteed, it may go down as well as up and income from it
investment and are not guaranteed. The figures do not take into account any additional discount             may fluctuate and you may not get back your original investment.
you may receive on your investment                                                                        • Levels of taxation and tax relief are subject to change. The value of any tax relief will depend on
                                                                                                            your own individual circumstances.
An example unit trust (Income) fund                                                                       • Funds available through Cofunds are not suited to short-term investment i.e. less than 5 years
Normally, unit trusts have a buying (offer) price and a selling (bid) price and the difference between      where, in most instances, investment into a bank or building society deposit account is likely to be
these two prices is known as the spread. The buying price includes the manager’s initial charge. For        more appropriate.
further details of the spread applied to an individual fund please contact your intermediary.
                                                                                                          • For newly launched funds there is a risk that, if the assumed size is not achieved, the proportion of
Initial charge: 5.25%                                                                                       charges and expenses allocated to the fund may be higher and the value of the investment
Annual Management Charge: 1.5%                                                                              consequently reduced.
Additional charges and expenses: 0.04%
                                                                                                          • Where a fund manager is the operator of an Open Ended Investment Company (OEIC) it is
Gross Distribution Yield: 3.56%
                                                                                                            important to note that, although each sub-fund within the OEIC will be treated as being
Annual charges and expenses are deducted from capital.
                                                                                                            responsible for meeting its own liabilities, the Authorised Corporate Director may reallocate these
Figures are based on income units.
                                                                                                            in a manner which is fair to all the OEIC investors if any such sub-fund is unable to meet its
                                                                                                            liabilities. A shareholder will not, however, be liable for the debts of the OEIC after paying the
Investments within an ISA                                                                                   purchase price of the shares.
 At end        Investment               Income              Effect of      What you might
 of year         to date                to date         deductions to date   get back                     Special Risk Factors
                    £                      £                    £           at 7.00% £                    1. Part or all of the Manager’s annual management charge and expenses may be charged to
           Lump sum      Monthly       Lump sum          Lump sum Monthly Lump sum Monthly                    capital, rather than income of the fund, which could reduce the potential for capital growth.
           investment     saver        investment        investment saver investment saver                    Your capital could also decrease if withdrawals exceed the growth rate of the fund(s).
    1        5,000        1,200              164              399         85         4,780        1,130   2. For funds that invest overseas, exchange rate variations may cause the value of your investment
   3         5,000        3,600              503              619        330         4,950       3,450        to increase or decrease.
   5         5,000        6,000              855              877        689         5,130       5,850
   10        5,000       12,000            1,790            1,720      2,220         5,610      12,200
                                                                                                          3. Investments in certain funds, including emerging markets, specialist geographical areas, smaller
                                                                                                              companies and specialist sectors (such as technology and ethical stocks) tend to be more
The last line in the table shows that over 10 years the effect of the total charges and expenses              volatile. This is due to factors such as restrictions in those areas or possibly the size of the
could amount to £1,720 (lump sum investment) or £2,220 (monthly saver). Putting it another way, if            companies. Additionally, these funds can suffer from partial or total illiquidity, which may lead to
the growth rate were to be 7.00% per year, which is in no way guaranteed, the total charges would             considerable price fluctuations and the inability to redeem your investment. For investments in
have the effect of reducing the growth rate to 4.60% per year (lump sum investment) or 4.02% per              emerging markets these are usually considered to carry a greater degree of risk relating to
year (monthly saver).                                                                                         dealing, settlement and custody practices, than investments in established markets.
                                                                                                          4. Funds that invest in fixed interest securities (corporate or government bonds). Unit values are
Investment directly into Funds                                                                                sensitive to interest rate trends and/or inflationary expectations. An increase in medium to long-
 At end        Investment               Income              Effect of      What you might
                                                                                                              term interest rates is likely to reduce the value of your investment.
 of year         to date                to date         deductions to date   get back                     5. Where an investment objective is to provide income, when income is paid out, there is minimal
                    £                      £                    £           at 6.00% £                        potential for capital growth especially over the medium to long term. Where a bond fund
           Lump sum      Monthly       Lump sum          Lump sum Monthly Lump sum Monthly
                                                                                                              income/running yield is greater than the redemption yield, this may erode capital.
           investment     saver        investment        investment saver investment saver                6. Any adverse changes to perceived or actual solvency of organisations in which the fund invests
    1        5,000        1,200              163              396         84         4,730        1,120       may affect the fund’s capital and therefore, any income paid by the fund.
   3         5,000        3,600              495              602        324         4,810      3,400     7. For funds comprising mainly Bonds, the Gross Redemption Yield is normally quoted after all
   5         5,000        6,000              833              837        670         4,900       5,710        charges, but before tax has been deducted.
   10        5,000       12,000            1,700            1,570      2,090          5,110     11,600
                                                                                                          8. Whilst equity investments carry potential for greater returns over the longer term as opposed
The last line in the table shows that over 10 years the effect of the total charges and expenses              investing in lower risk assets, the volatility on these returns can also be greater and the value of
could amount to £1,570 (lump sum investment) or £2,090 (monthly saver). Putting it another way, if            your capital is not guaranteed.
the growth rate were to be 6.00% per year, which is in no way guaranteed, the total charges would         9. Fund managers may use derivative investments as part of their investment strategy. These may
have the effect of reducing the growth rate to 3.62% per year (lump sum investment) or 3.03%                  increase the fund’s volatility, can cause disproportionate price fluctuations and may restrict
(monthly saver).                                                                                              potential gains in a rising market. Funds that primarily use derivatives as the main investment
                                                                                                              vehicle are considered higher risk.
An example OEIC (Growth) Fund
                                                                                                          10. If a fund invests in capital shares, income shares or zero dividend preference shares (Zeros),
Shares in an OEIC fund have a single price, which means there is no bid/offer spread, merely a                their value is at risk if the capital growth of the underlying assets that back these investments
single price at which you buy and sell. The initial charge is deducted from the amount you invest             is inadequate.
and the remaining subscription invested at the single price.
                                                                                                          11. The overall fund, or a significant portion of it, is invested in relatively few individual assets.
Initial charge: 5.00%                                                                                         Therefore, the performance of the fund is significantly influenced by the shares, fixed interest
Annual Management Charge: 1.38%                                                                               securities or properties of a relatively small number of companies or institutions.
Additional charges and expenses: 0.28%
Annual charges and expenses are deducted from income.                                                     12. Where the main objective of the fund is to provide an income, the level of income is not
Figures are based on accumulation shares.                                                                     guaranteed and will often vary from one payment to another.
                                                                                                          13. Funds that invest in higher risk fixed interest securities, known as subinvestment grade bonds.
Investments within an ISA                                                                                     These bonds have a lower credit rating and a higher risk of default than investment grade
 At end           Investment                     Effect of                   What you might                   bonds. This means there is an increased risk that the value of your investment could fall.
 of year            to date                  deductions to date                get back                   14. Property assets can be difficult to buy or sell, the impact of this could mean cash remains
                       £                             £                        at 7.00% £                      uninvested, disposing of property at an unfavourable price, illiquidity of investments and reduced
            Lump sum         Monthly      Lump sum         Monthly       Lump sum             Monthly         diversification if the size of the portfolio falls significantly. Investors should be aware that their
            investment        saver       investment        saver        investment            saver          right to sell units may be suspended by the fund manager in situations where there is insufficient
    1         5,000            1,200           374             78           4,970               1,160         uninvested cash or assets which are readily realisable to meet investor demand for the sale of
   3          5,000            3,600            611           315           5,510              3,680          units. In addition rental growth is not guaranteed, rent default could have an adverse impact on
   5          5,000            6,000           902            679            6,110             6,480          performance. Property valuations are based upon the opinion of independent property experts,
   10         5,000           12,000         1,930          2,340           7,890             14,800          not fact, so can be liable to revision, up or down.
The last line in the table shows that over 10 years the effect of the total charges and expenses          15. These funds are unable to invest in certain sectors and companies due to the ethical criteria
could amount to £1,930 (lump sum investment) or £2,340 (monthly saver). Putting it another way, if            used to select investments for the fund. This could mean that the fund is more volatile than
the growth rate were to be 7.00% per year, which is in no way guaranteed, the total charges would             funds which do not have these restrictions.
have the effect of reducing the growth rate to 4.20% per year (lump sum investment) or 4.20% per          16. As this is an aggressively managed fund, investors should be prepared to accept a higher
year (monthly saver).                                                                                         degree of risk than for a fund with a broader investment mandate.
                                                                                                          17. The value of units may be adversely affected by insolvency or other financial difficulties affecting
Investment directly into Funds                                                                                the banks and building societies with whom the fund’s monies are deposited. These deposits
 At end            Investment                    Effect of                   What you might                   are not protected by the Financial Services Compensation Scheme (FSCS).
 of year             to date                 deductions to date                get back                   18. The value of investment returns will be reduced by a ‘performance’ fee charged to the fund if the
                        £                            £                        at 6.00% £                      fund outperforms a pre-determined level of return. Full details of how this is calculated and
            Lump sum         Monthly      Lump sum         Monthly       Lump sum             Monthly         charged is available from your intermediary and within the fund’s Scheme particulars,
            investment        saver       investment        saver        investment            saver          Prospectus or Simplified Prospectus.
    1         5,000            1,200           371             78           4,920              1,160      19. The Close protected unit trust funds give exposure to the movements of the stockmarket, with
    3         5,000            3,600           595             311          5,350             3,630           either 100% or 95% protection (depending upon fund choice) on a quarterly basis from falls,
    5         5,000            6,000           862            661           5,820             6,320           provided the investment remains intact across two consecutive quarter dates, i.e. for a full three
   10         5,000           12,000         1,760          2,200           7,180             14,100          month period. The selling price at the end of each period is to be no lower than the selling price
The last line in the table shows that over 10 years the effect of the total charges and expenses              at the start of the period for the 100 Fund, or a maximum of 5% lower for the 95.
could amount to £1,760 (lump sum investment) or £2,200 (monthly saver). Putting it another way, if        20. For the Close 100 and 95 funds at the beginning of each quarter a minimum selling price is set
the growth rate were to be 6.00% per year, which is in no way guaranteed, the total charges would             for the Funds representing the protection on the units sold at this price. Instructions to sell must
have the effect of reducing the growth rate to 3.70% per year (lump sum investment) or 3.20%                  be received to coincide with the quarter days which are the third Fridays in March, June,
(monthly saver).                                                                                              September and December. Actual returns will depend on the stockmarket. No return is
                                                                                                              guaranteed and the return in any one quarter can be zero.
Dilution Levy/Adjustment
When you buy or sell units/shares in a single priced fund, the fund price does not include dealing
costs, unlike a typical dual priced fund where costs are included in the spread. Therefore, the fund
manager may seek to cover these costs by applying a dilution levy/adjustment to reduce the effect
of dilution on the fund value. This amount is paid to the fund and if applied will be shown on your
confirmation note.



                                                                                                                                   Viewpoint issue 24 • September 2009                              51
Fund details explained
 Fund Aim: This is the objective of the fund as set out in the trust                                             Initial charge: The charge made by the fund manager when you make your
 deed. The fund manager must invest in accordance with this fund                                                 investment. This is charged as a percentage of your initial investment.
 objective and act within any limits on their investment powers.

                                                                                                                 EXAMPLE FUND MANAGER
 Special Risk Factors: As well as the general and sector risks,
 the funds may carry additional risks associated more specifically with                                          Example Fund
 the type of assets in which they invest. The special risk factors which
 relate to the funds you invest in are on the following pages in numerical                                       Unit/Share type: Acc & Inc Fund type: OEIC
 order. Just check the relevant special risk information against the                                             Investment Aims – To maximise the total return (income plus
 numbers shown in the individual fund details.
                                                                                                                 capital) by investing in global debt instruments, denominated in any
                                                                                                                 currency, ranging from AAA Government Bonds through to high
  Annual Management Charge (AMC): Deducted annually by                                                           yield and emerging market corporate bonds. At least 50% of the
  the fund manager as a percentage of the value of your investment at a                                          fund will be invested in sterling and other currency denominated
  specific date.                                                                                                 bonds hedged back to Sterling.
                                                                                                                 Trustee           Royal Bank of Scotland plc
 Additional Charges and Expenses: These are additional                                                           Special                Standard           Annual     Additional                    RIY ISA
 costs incurred by the fund which are not included in the AMC. This could                                        Risk                   Initial            Management Charges                       based on
 include such costs as Trustee or Depositary fees.                                                               Factors                Charge             ChargeI    & ExpensesI                   UGR** ISA 7%
                                                                                                                 1,3,4,5,6,             4.50%              1.25%      0.14%                         5.33% (Acc)
                                                                                                                 7,11,12,13                                                                         5.33% (Inc)

 I, C, IC: Fund managers can differ in the way they apply charges.                                               RIY UT/OEIC    Single/                    Valuation           Dealing cut
 Some take the AMC and additional charges and expenses from income                                               based on UGR** Dual                       Pricing Time        Off time
 (indicated as ‘I’ here), some take it from capital (indicated as ‘C’) and                                       UT/OEIC 6%     Priced
 some take it from a mix of capital and income (indicated as ‘IC’).                                              4.39% (Acc) Dual                          16:00               15:15
                                                                                                                 4.02% (Inc)

 Valuation Pricing Time and Dealing cut off time:
 Please see ‘When and how is my money invested?’.
                                                                                                                 Effect of Charges: This is calculated by the fund manager, based on a set of
                                                                                                                 calculations laid down by the Financial Services Authority. Assuming that the underlying
 Single/Dual Priced: Please see ‘Your Investment’.
                                                                                                                 growth rate (UGR)** will be a particular percentage, then over 10 years the charges
                                                                                                                 would reduce the growth rate to the lower percentage figure. The actual effect on your
** UGR=Underlying Growth Rate. The Reduced Investment Yield is calculated on a                                   investment would of course depend on the performance of the fund and how long you
    lump sum investment over 10 years assuming an underlying growth rate as                                      remain invested.
    indicated above, which is in no way guaranteed. The yields are based on
    Accumulation (Reinvested) and/or Income shares/units with Income distribution paid
    out, unless otherwise stated. Dealing costs are not included. Any tax relief has
    reduced the expenses rate, where available.
The Reduced Investment Yields quoted reflect the standard initial charges and do not
take account of any discounts or commission waivers that may be available.

Where to get further information
If you wish to receive further information about the funds or copies of the scheme                               All fund information has been provided by the respective fund manager. Please note that
particulars or prospectuses, you will need to contact your intermediary or the fund                              Cofunds only offers retail funds. The information supplied within this document is an
management group direct. If you require a simplified prospectus relating to any UCITS                            accurate and current as we can make it, but we cannot guarantee that the status of any
scheme held on the Cofunds platform, please request this information directly from your                          fund has not changed since this document was published in July 2009.
intermediary. This should be supplied to you free of charge.
                                                                                                                                                                                                      CO068 08/09




 AEGON ASSET MANAGEMENT UK PLC                                                                                    ARTEMIS FUND MANAGERS LIMITED

 AEGON Investment Grade Bond A Fund                                                                               Artemis Income Fund
Unit/Share type: Acc & Inc Fund type: OEIC                                                                       Unit/Share type: Acc & Inc Fund type: Unit Trust
Investment Aims – The primary investment objective is to maximise total return                                   Investment Aims – To achieve a rising income combined with capital growth from a
(income plus capital) by investing primarily in investment grade and government                                  portfolio primarily made up of investments in the United Kingdom.
bonds denominated in sterling and other currencies. The fund may hold up to a                                    Trustee           Royal Bank of Scotland plc
maximum of 20% in high yield bonds and may also hold cash. A minimum of 80%
                                                                                                                 Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
of the fund will be invested in £ denominated assets or hedged back to £.                                        Factors                Charge             ChargeC             & ExpensesC          UGR** ISA 7%
Depositary           Royal Bank of Scotland plc                                                                  1,5,8,12               5.25%              1.50%               0.06%                4.69% (Acc)
Special Risk             Standard Initial   Annual Management       Additional Charges    RIY ISA based on                                                                                          4.58% (Inc)
Factors                  Charge             ChargeI                 & ExpensesI           UGR** ISA 7%           RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
1,4,6,7,9,11,14          4.50%              1.25%                   0.09% (Acc)           5.09%                  UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
                                                                    0.10% (Inc)                                  3.71% (Acc)            Dual               12:00               11:15
RIY UT/OEIC based on     Single/Dual        Valuation               Dealing cut                                  3.60% (Inc)
UGR** UT/OEIC 6%         Priced             Pricing Time            Off time
4.11%                    Single             12:00                   11:15
Investors should be aware that their right to sell units may be suspended by the fund manager in situations
where there is insufficient uninvested cash or assets which are readily realisable to meet investor demand for
the sale of units.
                                                                                                                  Artemis UK Special Situations Fund
                                                                                                                 Unit/Share type: Acc Fund type: Unit Trust
                                                                                                                 Investment Aims – To achieve long-term capital growth by exploiting special
 ALLIANZ GLOBAL INVESTORS (UK) LTD                                                                               situations.
                                                                                                                 Trustee           Royal Bank of Scotland plc
 Allianz RCM BRIC Stars A Fund                                                                                   Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
                                                                                                                 Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
Unit/Share type: Acc Fund type: OEIC
                                                                                                                 3,8                    5.25%              1.50%               0.08%                4.64%
Investment Aims – The Fund aims to achieve capital growth in the long term by                                    RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
investing mainly in the equity markets of Brazil, Russia, India and China.                                       UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
Depositary           J.P. Morgan Trustee and Depositary Company Limited                                          3.67%                  Dual               12:00               11:15
Special Risk             Standard Initial   Annual Management       Additional Charges    RIY ISA based on
Factors                  Charge             ChargeI                 & ExpensesI           UGR** ISA 6%
2,3,8                    4.00%              1.75%                   0.34%                 3.49%
RIY UT/OEIC based on     Single/Dual        Valuation               Dealing cut
UGR** UT/OEIC 6%         Priced             Pricing Time            Off time
3.49%                    Single             12:00                   11:15




           52                 Viewpoint issue 24 • September 2009
 AXA INVESTMENT MANAGERS UK LIMITED

 AXA Framlington UK Select Opportunities Fund                                                          First State Greater China Growth A Fund
Unit/Share type: Acc & Inc Fund type: Unit Trust                                                      Unit/Share type: Acc Fund type: OEIC
Investment Aims – To achieve capital growth by investing in companies, primarily of                   Investment Aims – The Fund aims to achieve long term capital growth. The Fund
UK origin, where the Manager believes above average returns can be realised.                          invests in equity and equity related securities issued by companies with either assets
                                                                                                      in, or revenues derived from, the People’s Republic of China, Hong Kong and Taiwan.
Trustee           Royal Bank of Scotland plc
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
                                                                                                      Depositary          Royal Bank of Scotland plc
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%       Special Risk            Standard Initial   Annual Management      Additional Charges     RIY ISA based on
2,3                    5.25%              1.50%               0.07%                4.65%              Factors                 Charge             ChargeI                & ExpensesI            UGR** ISA 7%

RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
                                                                                                      2,3,8                   4.00%              1.75%                  0.09%                  4.86%
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                RIY UT/OEIC based on    Single/Dual        Valuation              Dealing cut
3.70%                  Dual               12:00               11:15                                   UGR** UT/OEIC 6%        Priced             Pricing Time           Off time
                                                                                                      4.30%                   Single             12:00                  11:15


 BARING ASSET MANAGEMENT LIMITED
                                                                                                       HENDERSON NEW STAR
 Baring European Growth Trust
                                                                                                       Henderson Strategic Bond A Fund
Unit/Share type: Inc Fund type: Unit Trust
                                                                                                      Unit/Share type: Inc Fund type: OEIC
Investment Aims – To achieve capital growth by investing in economic sectors in
Europe through securities in any country and/or economic sectors throughout the                       Investment Aims – To provide a return by investing in higher yielding assets
world represented in European markets.                                                                including high yield bonds, investment grade bonds, government bonds, equities,
                                                                                                      preference shares and other bonds. The Fund will take strategic asset allocation
Trustee           Royal Bank of Scotland plc
                                                                                                      decisions between countries, asset classes, sectors and credit ratings. The Fund may
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
                                                                                                      invest in other transferable securities, money market instruments, derivatives and
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
                                                                                                      forward transactions, deposits and units in collective investment schemes.
2,3,8                  5.00%              1.50%               0.11%                5.39%
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut                             Depositary          Royal Bank of Scotland plc
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                Special Risk            Standard Initial   Annual Management      Additional Charges     RIY ISA based on
4.39%                  Dual               12:00               11:15                                   Factors                 Charge             ChargeI                & ExpensesI            UGR** ISA 7%
                                                                                                      1,2,4,6,7               4.00%              1.25%                  0.18%                  4.70%
                                                                                                      RIY UT/OEIC based on    Single/Dual        Valuation              Dealing cut
                                                                                                      UGR** UT/OEIC 6%        Priced             Pricing Time           Off time
 BLACKROCK                                                                                            3.80%                   Single             12:00                  11:15

 BlackRock Continental European A Fund
Unit/Share type: Acc & Inc Fund type: Unit Trust                                                       IGNIS ASSET MANAGEMENT
Investment Aims – To achieve long term capital growth.
Trustee           Royal Bank of Scotland plc
                                                                                                       Ignis HEXAM Global Emerging Markets A Fund
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on   Unit/Share type: Acc Fund type: OEIC
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 6%
2,3,8 (Acc)            5.00%              1.50%               0.15%                3.90%
                                                                                                      Investment Aims – To achieve long term capital growth primarily through investment
                                                                                                      in equities of emerging market companies either directly or indirectly through equity
2,3,6,8 (Inc)
                                                                                                      related instruments.
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                Depositary          Citibank International Plc
3.90%                  Dual               12:00               11:15                                   Special Risk            Standard Initial   Annual Management      Additional Charges     RIY ISA based on
                                                                                                      Factors                 Charge             ChargeI                & ExpensesI            UGR** ISA 7%
                                                                                                      2,3,8,11,16             5.25%              1.50%                  0.15%                  4.80%
                                                                                                      RIY UT/OEIC based on    Single/Dual        Valuation              Dealing cut
                                                                                                      UGR** UT/OEIC 6%        Priced             Pricing Time           Off time
 BlackRock UK Absolute Alpha P Fund                                                                   3.80%                   Single             22:40                  13:15
Unit/Share type: Acc Fund type: Unit Trust                                                            As this is a newly launched fund the rates provided by the Fund Manager are estimated.

Investment Aims – To achieve a positive absolute return for investors. Investing
primarily in a portfolio of equities and equity-related securities (including derivatives)
of companies incorporated or listed in the UK. From time to time cash may be held.                     INVESCO PERPETUAL
The Fund may also invest in other transferable securities, permitted money market
instruments, permitted deposits and units in collective investment schemes. As a result
of the current wording investment in foreign based UK listed companies is prohibited.
                                                                                                       Invesco Perpetual High Income Fund
Trustee           Royal Bank of Scotland plc                                                          Unit/Share type: Acc & Inc Fund type: OEIC
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on   Investment Aims – To achieve a high level of income, together with capital growth.
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 6%       The fund intends to invest primarily in companies listed in the UK, with the balance
6,8,9,18               5.00%              1.50%               0.19%                3.60%              invested internationally. In pursuing this objective, the fund managers may include
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut                             other investments that they consider appropriate, which may include units in collective
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                investment schemes, warrants and other permitted investments and transactions.
3.60%                  Dual               12:00               11:15
                                                                                                      Depositary          Citibank International Plc
                                                                                                      Special Risk            Standard Initial   Annual Management      Additional Charges     RIY ISA based on
                                                                                                      Factors                 Charge             ChargeC                & ExpensesC            UGR** ISA 7%
 FIDELITY INVESTMENT SERVICES LTD                                                                     1,2,4,5,8,12            5.00%              1.50%                  0.11%                  4.89% (Acc)
                                                                                                                                                                                               4.84% (Inc)
 Fidelity Special Situations A Fund                                                                   RIY UT/OEIC based on    Single/Dual        Valuation              Dealing cut
                                                                                                      UGR** UT/OEIC 6%        Priced             Pricing Time           Off time
Unit/Share type: Acc Fund type: OEIC                                                                  3.72% (Acc)             Single             12:00                  11:15
                                                                                                      3.65% (Inc)
Investment Aims – To achieve long term capital growth from a portfolio primarily
made up of the shares of UK companies.
Depositary        J.P. Morgan Trustee and Depositary Company Limited
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%        Invesco Perpetual Monthly Income Plus Fund
3,8                    3.50%              1.50%               0.17%                4.84%
                                                                                                      Unit/Share type: Acc & Inc Fund type: OEIC
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                Investment Aims – To achieve a high level of income whilst seeking to maximise total
3.86%                  Single             12:00               11:15                                   return through investing in high yielding corporate and Government bonds, together
                                                                                                      with UK equities. In pursuing this objective, the fund managers may include other
                                                                                                      investments that they consider appropriate, which may include shares, units in collective
                                                                                                      investment schemes, warrants and other permitted investments and transactions.
 FIRST STATE INVESTMENTS (UK) LIMITED                                                                 Depositary          Citibank International Plc
                                                                                                      Special Risk            Standard Initial   Annual Management      Additional Charges     RIY ISA based on
 First State Asia Pacific Leaders A Fund                                                              Factors                 Charge             ChargeC                & ExpensesC            UGR** ISA 7%
                                                                                                      1,2,4,5,6,7             5.00%              1.25%                  0.15%                  5.18% (Acc)
Unit/Share type: Acc Fund type: OEIC
                                                                                                                                                                                               5.09% (Inc)
Investment Aims – The Fund aims to achieve long term capital growth. The Fund                         RIY UT/OEIC based on    Single/Dual        Valuation              Dealing cut
invests in large and mid capitalisation equities in the Asia Pacific region (excluding                UGR** UT/OEIC 6%        Priced             Pricing Time           Off time
Japan, including Australasia).                                                                        3.98% (Acc)             Single             12:00                  11:15
Depositary        Royal Bank of Scotland plc                                                          3.87% (Inc)
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
2,3,8                  4.00%              1.50%               0.08%                4.89%
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut                             Acc = Accumulation units/shares
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
4.26%                  Single             12:00               11:15                                   Inc = Income units/shares
                                                                                                      The funds chosen in this document have been chosen by Chelsea Financial
                                                                                                      Services PLC, your Nominated Intermediary. They represent a selection of funds
                                                                                                      available on the Cofunds platform. Cofunds cannot advise you on which funds to
                                                                                                      choose or whether the funds offered by Chelsea Financial Services PLC are
                                                                                                      appropriate for you.




                                                                                                                                Viewpoint issue 24 • September 2009                                  53
 INVESTEC ASSET MANAGEMENT

 Investec American A Fund                                                                                   Jupiter Income Trust
Unit/Share type: Acc Fund type: OEIC                                                                       Unit/Share type: Inc Fund type: Unit Trust
Investment Aims – To achieve long term capital growth primarily through investment                         Investment Aims – To produce a high income, increasing at least in line with
in a portfolio of equities issued by USA companies and in derivatives the underlying                       inflation, from a managed portfolio chiefly invested in UK equities and fixed interest
assets of which are equities issued by USA companies.                                                      stocks although with some overseas exposure.
Depositary          State Street Trustees Limited                                                          Trustee           Royal Bank of Scotland plc
Special Risk            Standard Initial   Annual Management       Additional Charges   RIY ISA based on   Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                 Charge             ChargeI                 & ExpensesI          UGR** ISA 7%       Factors                Charge             ChargeC             & ExpensesC          UGR** ISA 7%
2,8                     4.50%              1.50%                   0.11%                4.81%              1,2,8,12               5.00%              1.50%               0.19%                4.43%
RIY UT/OEIC based on    Single/Dual        Valuation               Dealing cut                             RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
UGR** UT/OEIC 6%        Priced             Pricing Time            Off time                                UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
3.83%                   Single             12:00                   11:15                                   3.46%                  Dual               12:00               11:15
Please note, transfers are accepted for the Investec American Fund with the share type B.



                                                                                                            Jupiter Japan Income Fund
 J O HAMBRO CAPITAL MANAGEMENT LTD                                                                         Unit/Share type: Acc & Inc Fund type: Unit Trust
                                                                                                           Investment Aims – To achieve long term capital and income growth by investing in
 JOHCM UK Opportunities R Fund                                                                             a combination of Japanese equities and convertible bonds as well as cash, deposits
                                                                                                           and money market instruments.
Unit/Share type: Acc & Inc Fund type: OEIC
                                                                                                           Trustee           Royal Bank of Scotland plc
Investment Aims – To achieve long-term capital appreciation through investment in                          Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
a concentrated portfolio primarily invested in transferable securities of UK companies.                    Factors                Charge             ChargeC             & ExpensesC          UGR** ISA 7%
Depositary          HSBC Bank plc                                                                          1,2,4,6,8,12           5.25%              1.50%               0.27%                4.39%
Special Risk            Standard Initial   Annual Management       Additional Charges   RIY ISA based on   RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
Factors                 Charge             ChargeC                 & ExpensesI          UGR** ISA 7%       UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
8,18                    5.00%              1.25%                   0.10%                5.02%              3.42%                  Dual               12:00               11:15
RIY UT/OEIC based on    Single/Dual        Valuation               Dealing cut
UGR** UT/OEIC 6%        Priced             Pricing Time            Off time
4.04%                   Single             12:00                   11:15
                                                                                                            LEGAL & GENERAL UNIT TRUST MANAGERS LIMITED

                                                                                                            Legal & General Dynamic Bond A Trust
 JPMORGAN ASSET MANAGEMENT
                                                                                                           Unit/Share type: Acc & Inc Fund type: Unit Trust
 JPM Natural Resources A Fund                                                                              Investment Aims – To achieve a total return by investing principally in a range of
                                                                                                           fixed and variable rate income securities.
Unit/Share type: Acc & Inc Fund type: OEIC
                                                                                                           Trustee           Royal Bank of Scotland plc
Investment Aims – The Fund aims to provide capital growth over the long term.                              Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Depositary          Royal Bank of Scotland plc                                                             Factors                Charge             ChargeIC            & ExpensesIC         UGR** ISA 5%
Special Risk            Standard Initial   Annual Management       Additional Charges   RIY ISA based on   1,2,4,5,6,9,13         3.00%              1.25%               0.05%                3.30%
Factors                 Charge             ChargeI                 & Expenses           UGR** ISA 6%       RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
2,3,8 (Acc)           4.25%                1.50%                   0.18%I (Acc)         4.27% (Acc)        UGR** UT/OEIC 5%       Priced             Pricing Time        Off time
1,2,3,6,8,10,16 (Inc)                                              0.18%IC (Inc)        3.76% (Inc)        3.30%                  Dual               12:00               11:15
RIY UT/OEIC based on    Single/Dual        Valuation               Dealing cut
UGR** UT/OEIC 6%        Priced             Pricing Time            Off time
4.27% (Acc)             Single             12:00                   11:15
3.76% (Inc)                                                                                                 M&G SECURITIES LIMITED

                                                                                                            M&G American A Fund
 JUPITER UNIT TRUST MANAGERS LIMITED                                                                       Unit/Share type: Acc & Inc Fund type: OEIC
                                                                                                           Investment Aims – The Fund’s objective is long term capital growth through
 Jupiter Emerging European Opportunities Fund                                                              investment in North American securities. It may also invest in Canada, and in
                                                                                                           companies which are listed, registered or trading within North America.
Unit/Share type: Acc Fund type: Unit Trust
                                                                                                           Depositary        Royal Bank of Scotland plc
Investment Aims – To achieve long-term capital growth through investment primarily                         Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
in Central and Eastern Europe.                                                                             Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
Trustee             Royal Bank of Scotland plc                                                             2,8                    4.00%              1.50%               0.15%                4.80%
Special Risk            Standard Initial   Annual Management       Additional Charges   RIY ISA based on   RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
Factors                 Charge             ChargeI                 & ExpensesI          UGR** ISA 7%       UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
2,3,8,11                5.50%              1.50%                   0.45%                4.22%              4.00%                  Single             12:00               11:15
RIY UT/OEIC based on    Single/Dual        Valuation               Dealing cut
UGR** UT/OEIC 6%        Priced             Pricing Time            Off time
3.25%                   Dual               12:00                   11:15
                                                                                                            M&G Optimal Income A Fund
                                                                                                           Unit/Share type: Acc & Inc Fund type: OEIC
 Jupiter European Special Situations Fund                                                                  Investment Aims – The Fund aims to provide a total return to investors based on
                                                                                                           optimal exposure to income streams in investment markets.
Unit/Share type: Acc Fund type: Unit Trust                                                                 Depositary        Royal Bank of Scotland plc
Investment Aims – To achieve long-term capital growth by exploiting special                                Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
situations by investing principally in European equities, in investments considered to                     Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 5%
be undervalued.                                                                                            4,5,7,9,12,13          4.00%              1.25%               0.20%                3.30%
Trustee             Royal Bank of Scotland plc                                                             RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
                                                                                                           UGR** UT/OEIC 5%       Priced             Pricing Time        Off time
Special Risk            Standard Initial   Annual Management       Additional Charges   RIY ISA based on
Factors                 Charge             ChargeI                 & ExpensesI          UGR** ISA 7%       3.30%                  Single             12:00               11:15
2,8                     5.25%              1.50%                   0.31%                4.37%
RIY UT/OEIC based on    Single/Dual        Valuation               Dealing cut
UGR** UT/OEIC 6%        Priced             Pricing Time            Off time
3.40%                   Dual               12:00                   11:15                                    M&G Recovery A Fund
                                                                                                           Unit/Share type: Acc & Inc Fund type: OEIC
                                                                                                           Investment Aims – The Fund’s sole aim is capital growth, through primarily investing
 Jupiter Financial Opportunities Fund                                                                      in a diversified range of companies which are out of favour, in difficulty or whose
                                                                                                           future prospects are not fully recognised.
Unit/Share type: Inc Fund type: Unit Trust
                                                                                                           Depositary        Royal Bank of Scotland plc
Investment Aims – To achieve long-term capital growth principally through                                  Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
investment in equities of financial sector companies on an international basis.                            Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
Trustee             Royal Bank of Scotland plc                                                             2,3,8                  4.00%              1.50%               0.05%                4.80%
Special Risk            Standard Initial   Annual Management       Additional Charges   RIY ISA based on   RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
Factors                 Charge             ChargeI                 & ExpensesI          UGR** ISA 7%       UGR** UT/OEIC 6%       Priced             Pricing Time        Off time

2,8,11                  5.25%              1.50%                   0.27%                4.42%              3.80%                  Single             12:00               11:15
RIY UT/OEIC based on    Single/Dual        Valuation               Dealing cut
UGR** UT/OEIC 6%        Priced             Pricing Time            Off time
3.45%                   Dual               12:00                   11:15                                    MARLBOROUGH FUND MANAGERS LTD

                                                                                                            Marlborough Special Situations Fund
                                                                                                           Unit/Share type: Acc Fund type: Unit Trust
                                                                                                           Investment Aims – To provide investors with capital growth by following a
                                                                                                           speculative policy investing in smaller companies, new issues and companies going
                                                                                                           through a difficult period with good recovery prospects.
                                                                                                           Trustee           HSBC Bank plc
                                                                                                           Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
                                                                                                           Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
                                                                                                           2,3,8                  5.00%              1.50%               0.07%                4.74%
                                                                                                           RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
                                                                                                           UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
                                                                                                           3.76%                  Dual               12:00               11:15


           54                Viewpoint issue 24 • September 2009
 MARTIN CURRIE INVESTMENT MANAGEMENT LTD                                                               RENSBURG FUND MANAGEMENT LIMITED

 Martin Currie IF Asia Pacific A Fund                                                                  Rensburg UK Select Growth Trust
Unit/Share type: Acc Fund type: OEIC                                                                  Unit/Share type: Inc Fund type: Unit Trust
Investment Aims – To produce long-term capital growth by investment in the                            Investment Aims – To produce a total return (i.e. capital gain and income) in excess of
Middle East, the Indian sub-continent, Australasia and the Far East, excluding Japan.                 the total return achieved by the FTSE All-Share Index over the medium to longer term.
Depositary         State Street Trustees Limited                                                      Trustee               Royal Bank of Scotland plc
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on   Special Risk             Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%       Factors                  Charge             ChargeI             & ExpensesI          UGR** ISA 7%
2,3,8                  5.00%              1.50%               0.21%                4.60%              8                        5.25%              1.50%               0.10%                4.63%†
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut                                                                                                                  4.59%††
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
                                                                                                      RIY UT/OEIC based on     Single/Dual        Valuation           Dealing cut
2.90%                  Single             12:00               11:15                                   UGR** UT/OEIC 6%         Priced             Pricing Time        Off time
                                                                                                      3.65%†                   Dual               14:00               13:15
                                                                                                      3.62%††
                                                                                                      † (income paid out)   †† (income reinvested)
 Martin Currie IF North American A Fund
Unit/Share type: Inc Fund type: OEIC
Investment Aims – To produce long-term capital growth by investment in the US
and Canada.                                                                                            SCHRODER UNIT TRUSTS LIMITED
Depositary         State Street Trustees Limited
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
                                                                                                       Schroder European Alpha Plus A Fund
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
                                                                                                      Unit/Share type: Acc & Inc Fund type: Unit Trust
2,8,11                 5.00%              1.50%               0.19%                4.70%
                                                                                                      Investment Aims – Aims to achieve capital growth by investing in European
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                countries. The fund may also invest in companies headquartered or quoted outside
3.50%                  Single             12:00               11:15                                   Europe which have material or critical operations within, or derive significant business
                                                                                                      from Europe. Fixed interest securities may also be included in the portfolio.
                                                                                                      Trustee               J.P. Morgan Trustee and Depositary Company Limited
                                                                                                      Special Risk             Standard Initial   Annual Management   Additional Charges   RIY ISA based on
 MITONOPTIMAL UK LTD                                                                                  Factors                  Charge             ChargeI             & ExpensesC          UGR** ISA 7%
                                                                                                      2,3,8,11                 5.25%              1.50%               0.24%                4.80%
 CF Miton Special Situations Portfolio A Fund                                                         RIY UT/OEIC based on     Single/Dual        Valuation           Dealing cut
                                                                                                      UGR** UT/OEIC 6%         Priced             Pricing Time        Off time
Unit/Share type: Acc Fund type: OEIC                                                                  3.80%                    Dual               12:00               11:15
Investment Aims – To provide long-term growth by investing in a portfolio of other
authorised funds, worldwide equities, fixed interest stocks, cash and money market
instruments.
Depositary         Bank of New York Trust & Depositary Co. Ltd                                         Schroder Income Maximiser A
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%       Unit/Share type: Acc & Inc Fund type: Unit Trust
1,2,7,8,12             5.00%              1.50%               0.47%                3.90%              Investment Aims – The Fund’s investment objective is to provide income with
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut                             potential for capital growth primarily through investment in equity and equity related
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                securities of UK companies. The Fund will also use derivative instruments to generate
3.90%                  Single             12:00               11:15                                   additional income.
                                                                                                      Trustee               J.P. Morgan Trustee and Depositary Company Limited
                                                                                                      Special Risk             Standard Initial   Annual Management   Additional Charges   RIY ISA based on
 NEPTUNE INVESTMENT MANAGEMENT LIMITED                                                                Factors                  Charge             ChargeC             & ExpensesC          UGR** ISA 7%
                                                                                                      1,5,6,8,9,12             5.25%              1.50%               0.25%                4.80%
                                                                                                      RIY UT/OEIC based on     Single/Dual        Valuation           Dealing cut
 Neptune European Opportunities A Fund                                                                UGR** UT/OEIC 6%         Priced             Pricing Time        Off time
Unit/Share type: Acc & Inc Fund type: OEIC                                                            3.70%                    Dual               12:00               11:15
Investment Aims – The investment objective of Neptune European Opportunities
Fund is to generate capital growth by investing predominantly in a concentrated
portfolio of securities selected from European markets, excluding the UK, with a view
to attaining top quartile performance within the appropriate peer group.                               Schroder UK Alpha Plus A Fund
Depositary         State Street Trustees Limited                                                      Unit/Share type: Acc & Inc Fund type: Unit Trust
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
                                                                                                      Investment Aims – To provide capital growth through investment in UK and
2,3,8,11 (Acc)         5.00%              1.75%               0.48% (Acc)          4.60% (Acc)        other companies.
1,2,8,9,16 (Inc)                                              0.09% (Inc)          4.22% (Inc)        Trustee               J.P. Morgan Trustee and Depositary Company Limited
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut                             Special Risk             Standard Initial   Annual Management   Additional Charges   RIY ISA based on
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                Factors                  Charge             ChargeI             & ExpensesC          UGR** ISA 7%
3.63% (Acc)            Single             12:00               11:15                                   8,11                     5.25%              1.50%               0.19%                4.80%
3.23% (Inc)                                                                                           RIY UT/OEIC based on     Single/Dual        Valuation           Dealing cut
                                                                                                      UGR** UT/OEIC 6%         Priced             Pricing Time        Off time
                                                                                                      3.80%                    Dual               12:00               11:15


 Neptune US Opportunities A Fund
Unit/Share type: Acc Fund type: OEIC                                                                   STANDARD LIFE INVESTMENTS LIMITED
Investment Aims – The investment objective of Neptune US Opportunities Fund is to
generate capital growth by investing predominantly in a concentrated portfolio of                      SL Inv UK Equity High Income R Fund
North American securities, which may include Canada as well as the US, with a view                    Unit/Share type: Acc & Inc Fund type: OEIC
to achieving top quartile performance within the appropriate peer group.
                                                                                                      Investment Aims – The objective of this fund is to provide a high level of income
Depositary         State Street Trustees Limited                                                      with some capital growth over the longer term. The investment policy of the fund is
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on   to invest in equities and equity-type investment of companies listed on a UK stock
Factors                Charge             ChargeI             & ExpensesI          UGR** ISA 7%
                                                                                                      exchange or which in the opinion of the ACD carry a substantial part of their
2,8,11                 5.00%              1.60%               0.40%                4.35%              operations in the UK.
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time                                Depositary            J.P. Morgan Trustee and Depositary Company Limited
3.38%                  Single             12:00               11:15                                   Special Risk             Standard Initial   Annual Management   Additional Charges   RIY ISA based on
                                                                                                      Factors                  Charge             ChargeC             & ExpensesC          UGR** ISA 7%
                                                                                                      1,6,8,12                 4.00%              1.50%               0.02%                5.19%
                                                                                                      RIY UT/OEIC based on     Single/Dual        Valuation           Dealing cut
 RATHBONE UNIT TRUST MANAGEMENT LIMITED                                                               UGR** UT/OEIC 6%         Priced             Pricing Time        Off time
                                                                                                      4.20%                    Single             07:30               15:15
 Rathbone Income Fund
Unit/Share type: Acc & Inc Fund type: Unit Trust
Investment Aims – To achieve above average and maintainable income but without
neglecting capital security and growth.
Trustee            Royal Bank of Scotland plc
Special Risk           Standard Initial   Annual Management   Additional Charges   RIY ISA based on
Factors                Charge             ChargeC             & ExpensesI          UGR** ISA 7%
1,5,6,8,12             5.50%              1.50%               0.03%                5.00% (Acc)
                                                                                   4.90% (Inc)
RIY UT/OEIC based on   Single/Dual        Valuation           Dealing cut
UGR** UT/OEIC 6%       Priced             Pricing Time        Off time
4.00% (Acc)            Dual               12:00               11:15
3.90% (Inc)
                                                                                                                                                                                                              CO068 08/09




                                                                                                                                 Viewpoint issue 24 • September 2009                             55
viewpoint
            How can
            we help?
                                                  CHELSEA FINANCIAL SERVICES was
                                                  founded in 1983 as a firm of independent
                                                  financial advisers by its present Chairman,
                                                  Dr John Holder. We were the first
                                                  intermediary to discount initial charges on
                                                  unit trusts and bonds, and later PEPs/ISAs.
                                                  Over the last twenty-six years our clients
                                                  have saved many millions of pounds they
            Freephone brochure line               would have paid in charges had they
            0800 071 3333                         bought direct from investment companies
                                                  and we are still leading the way. Simply by
            General enquiries                     sending your investment application to us,
            020 7384 7300                         you can save up to 5.25%, an incredible
                                                  £378 on a £7,200 ISA. So, to get your
            Visit our website                     investment off to a flying start, invest
            www.chelseafs.co.uk                   through Chelsea Financial Services.




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