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ABSOLUTE RETURN TRUST LIMITED

HALF YEARLY REPORT

The Company has today, in accordance with DTR 6.3.5, released its Interim Financial Report for the six months ended 30th September 2009.  The Report will shortly be available from the Company's website 

www.absolute-funds.com and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is located at:

Financial Services Authority

25 The North Colonnade
Canary Wharf

London E14 5HS

SUMMARY INFORMATION

Structure

Absolute Return Trust Limited (the "Company") was incorporated in Guernsey on 21st January 2005 as a closed-ended investment company. The Company's Redeemable Participating Preference Shares were listed on the London Stock Exchange on 23rd February 2005, when it commenced business. 

Since incorporation up to 30th September 2009 the Company has raised the following capital:

									£		€
Capital raised at launch of the Company									66,000,000		-
Capital raised since launch of the Company to 30th September 2009									198,511,731		20,912,654
Total capital raised by the Company to 30th September 2009									264,511,731		20,912,654

Shares in issue as at 30th September 2009
											Number of Shares
- Sterling Redeemable Participating Preference Shares											217,336,472
- Euro Redeemable Participating Preference      Shares											18,722,513

Investment Objective and Policy

The Company's investment objective is to achieve a target return of three month Sterling LIBOR plus five per cent. over a rolling five year period, coupled with low volatility. Capital preservation is a priority. The Company's investment policy is to invest in a diversified portfolio of hedge funds.

Manager and Investment Advisor 

The Manager of the Company is Fauchier Partners Management Limited (the "Manager") and the Investment Advisor is Fauchier Partners LLP (the "Investment Advisor").

Financial Highlights 

	30.9.2009		30.9.2009		31.3.2009		31.3.2009
	Sterling		Euro		Sterling		Euro
	Shares		Shares		Shares		Shares
Total Net Assets	£284,798,489		€18,210,390		£256,746,554		€19,669,048
Net Asset Value per Share	131.0p		97.3¢		117.5p		87.6¢
Increase/(Decrease) in Net Asset Value for the period/year	11.5%		11.1%		(10.3%)		(10.2%)
Mid-Market Share Price	117.0p		86.0¢		92.0p		81.5¢
(Discount) to Net Asset Value	(10.7%)		(11.6%)		(21.7%)		(7.0%)

CHAIRMAN'S STATEMENT 

Introduction

Over the six months to 30th September 2009 financial market conditions have improved markedly, and there have been encouraging signs of stabilisation in the global economy. All risk asset classes have benefited from this improvement, and liquidity has returned to many markets where it had been absent for a protracted period.

The hedge fund sector has been a beneficiary of these changes, which have enabled well positioned hedge fund managers to deliver greatly improved results. 

The Company's portfolio has registered a strongly positive return over the six months to 30th September 2009, and our share price has risen steadily, with a pronounced narrowing in the discount on the Sterling Shares to Net Asset Value. 

  

Results

Over the six months to 30th September 2009 the Net Asset Value of the Company's Sterling Shares has risen from 117.5p per Share on 31st March 2009 to 131.0p per Share on 30th September 2009, representing an increase of 11.5 per cent. Over the same period the Net Asset Value of the Company's Euro Shares has risen from 87.6¢ per Share to 97.3¢ per Share (an increase of 11.1 per cent.) 

The growth in the Company's Net Asset Value since its inception in March 2005 has been 6.5 per cent. per annum, equivalent to LIBOR plus 1.95 per cent. per annum, compared with our objective of LIBOR plus 5.0 per cent. per annum over rolling five year periods. 

The volatility of the Company's Net Asset Value has risen to 6.2 per cent. per annum over the same period, which is marginally higher than the target level set in the Company's objectives. 

Currency hedging and Liquidity

It remains the Company's policy to hedge its currency exposures and the Board is satisfied that the foreign exchange and borrowing facility remains sufficient to manage the cash flows arising from this activity. Although during the period under review currency volatility was greatly reduced, the Board and the Manager continue to monitor this area closely, and the Company's liquid resources are managed with an eye towards potential cash outflows arising from exchange rate fluctuations.

Share Price relative to Net Asset Value

The Company's share price is currently trading at a discount of 10.3 per cent. to Net Asset Value for our Sterling Shares and 9.7 per cent. for our Euro Shares, and the discount on the Sterling Shares has narrowed markedly over the last six months. 

The Board continues to believe that the use of share buybacks is the most appropriate mechanism to employ in response to the share price discount. Over the period under review and up to today, the Company has repurchased 4.6 million shares. In seeking to buy back shares, the Board continues to take account of market conditions and remains mindful of the desire of some of our shareholders to add to their holdings.

Outlook

Although financial markets have recovered substantially, the outlook for the world economy remains uncertain, with opinion divided between those who believe that we face a further setback, and those who see the recovery continuing steadily. Whichever forecast proves to be correct, there is a clear possibility that financial markets will suffer further bouts of turbulence. 

The positive return from the Company's portfolio over the six months to 30th September 2009 has been achieved in strongly rising equity, commodity and corporate bond markets. As markets become more testing, there may be concerns that hedge funds will struggle to build on these gains. Our Investment Manager has concentrated on selecting hedge funds which have the skills to take advantage of opportunities in changing market conditions, and the Board therefore remains positive about the Company's prospects for the coming period.

Andrew Sykes

Chairman

27th November 2009

 

INVESTMENT ADVISOR'S REPORT

For the period from 1st April 2009 to 30th September 2009

NAV Performance

For the six months to 30th September 2009, the hedge fund portfolio of the Company has generated a return of 11.5 per cent. in Sterling, net of fees (11.1 per cent. net of fees in Euro). Since launch on 1st March 2005 the Company's portfolio has achieved an average annual compound return of 6.5 per cent. which is approximately 1.95 per cent over three month Sterling LIBOR, compared with its stated target of 5 per cent. over LIBOR over rolling five year periods. Over the same period the annualised volatility of the Company's monthly returns has been approximately 6.2 per cent., slightly above the Company's stated volatility objective of less than 6 per cent. per annum. 

The Company's "beta" to major asset classes remains low, at 0.25 to the FTSE All Share Index and -0.21 to the Citigroup UK Gilt Index since inception. 

The table below gives details of the Company's Sterling Share Class performance in Net Asset Value terms since 1st March 2005 (the launch date):

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	YTD
2009	1.71%	(0.83)%	0.67%	1.85%	3.73%	0.01%	2.30%	1.57%	1.79%				13.47%
2008	(0.77)%	1.83%	(2.38)%	1.20%	2.13%	1.53%	(1.67)%	(1.01)%	(5.50)%	(6.37)%	(0.80)%	(1.68)%	(13.04)%
2007	1.11%	1.98%	0.83%	1.32%	1.86%	1.06%	2.28%	(0.27)%	1.54%	3.46%	0.52%	1.15%	18.14%
2006	2.08%	(0.10)%	1.34%	1.53%	(0.87)%	(0.54)%	0.26%	0.27%	0.00%	1.09%	1.39%	0.82%	7.46%
2005	-	-	(0.04)%	(1.25)%	0.32%	1.62%	1.65%	0.97%	1.96%	(1.31)%	1.11%	1.21%	6.34%

The Portfolio

As at 30th September, 2009 the Company had holdings in some 301  hedge funds across 10 different strategies, two more funds than at the end of the last financial year. During the last six months six funds were purchased and three sold, slightly higher turnover than usual. As at the end of September, 66.9 per cent. of the Company's assets were invested in Absolute Value strategies with the balance in Relative Value strategies. For a description of individual hedge fund strategies, see the glossary of Investment Strategies.

¹ Includes three holdings in different shares of the same manager that are merged into a single holding, and ignores holdings of less than 10 basis points.

Market Review

The first three months of the period under review was characterised by a growing sense of stability returning to financial markets despite the depressed state of the global economy. Risk assets in general rallied as it became evident that even though economic conditions were bad, they were perhaps not as bad as feared. Credit spreads tightened sharply and stock markets booked substantial gains, especially in April and May.

The focus of debate shifted away from whether there would be a recovery towards when it might occur and what shape it might take. Government bonds sold off and yield curves steepened in anticipation of inflationary pressures. Equity market volatility dropped and the dollar fell as traders felt less need to seek the safe haven of the world's default currency. Dollar weakness, accompanied by growing hopes of global recovery, led to sharp moves in some commodity markets including crude oil, which rose by more than 40% over the quarter2.

The rehabilitation of the financial sector was aided by the release of the Federal Reserve's stress-test results for US financial institutions which helped to foster an environment in which the banks were able to raise capital and thereby shore up their balance sheets.

Conditions in global markets for risk assets continued to improve over the next quarter as better than expected economic data encouraged investors to speculate that the recession might end in 2009. The Equity market rally that began in the previous quarter continued after a slight pause in June. The MSCI World (Total Return) Index was up over 42% for the full six months. Equity market volatility continued to decline, with the VIX volatility index ending 4 points lower at around 25. Liquidity in credit markets also improved, as record new issuance of investment grade bonds and convertibles helped to fuel the continuing rally in credit securities. High-yield assets generally outperformed investment grade, with spreads (as measured by the DLJ High Yield Spread) tightening by over 200 basis points to 854 basis points.

2 As measured by Nymex Crude Oil contracts (Source: Bloomberg)

Commodities were broadly higher, with the oil price touching the high for the year during August, as economic stimulus in China and hopes of a faster global recovery pushed prices higher. Despite the general optimism for the economic outlook, concerns about inflation remained muted. Yield curves flattened somewhat towards the end of the period as short term rates rose slightly and high issuance of government bonds resulted in modestly higher yields at the long end of the curve.

Hedge Fund Strategies

With the exception of the Short Bias managers, all strategies contributed positively to performance during the six months to 30th September 2009. Macro managers generally performed well. Some managers who were more sceptical about the sustainability of the recovery and positioned for a downturn detracted from performance. The majority however were well-positioned to benefit from narrowing credit spreads, emerging market outperformance, yield curve volatility and the persistence of the low interest rate environment.

Equity Hedge managers as a group performed very well with all sub-categories producing positive results for the period. Managers have been rewarded for increasing their gross exposures and those with higher net exposures also benefited from the strength of the equity markets generally. Good stock-picking however enabled managers to extract positive returns from both long and short positions, particularly by exploiting the lack of consensus around expected earnings across industry sectors during the summer reporting season. Short Bias managers by contrast were hard-pressed to preserve capital in the face of the equity market strength and detracted from performance overall. 

Specialist Credit managers also made a positive contribution, helped by narrowing spreads and high gross exposures on the long side. The rally in credit has been fairly indiscriminate and this general improvement now appears to be slowing. However event-driven credit opportunities such as breaches of first lien debt covenants are increasingly presenting opportunities for managers to acquire assets at attractive prices while short positions are being focussed on companies with vulnerable balance sheets.

Event Driven managers performed well. The equity market rally and the continued tightening of credit spreads were major drivers of performance but encouragingly the results came from a variety of sources with no single name or theme dominating.

The Volatility Trading strategy was effectively flat due to the widely divergent performance across managers. The Convertible Bond Arbitrage sub-strategy performed very well as the rehabilitation of the convertibles market continued apace. These gains however were offset by losses from the Options Trading sub-strategy where the decline in both realised and implied volatility made for extremely unfavourable conditions.

The Fixed Income manager in the portfolio had a quieter six months than in the recent past, but nonetheless was able to generate positive performance from the contraction in short-term spreads and increases in long-dated volatility.

Multiple Strategy managers produced good gains from a variety of regions and strategies. The run up in European and Asian equities proved to be particularly beneficial as did the continued improvement in the convertibles market.

Portfolio Liquidity

The table below shows the expected liquidity profile of the portfolio3.

Expected time to cash flow	Proportion
Within 3 months	18.8%
3 to 6 months	63.5%
6 to 12 months	7.0%
Greater than 12 months	10.7%
Total	100.0%

Since the beginning of the fiscal year, conditions for the underlying hedge funds impacted by the restrictive liquidity conditions in markets have continued to improve, particularly for those managers exposed to certain credit and convertible bond markets.

Outlook

The outlook for hedge funds for the rest of 2009 and into 2010 looks favourable, despite the uncertainty in the macro-economic environment. The return of stability and liquidity to the financial system means that hedge funds are once again able to function effectively and are more likely to be rewarded for good fundamental research. 

Although equity market volatility has decreased considerably throughout 2009, intra-stock correlation has remained at elevated levels. As attention focuses increasingly on the real economy, we expect markets to become more discriminating and present an excellent environment for our Equity Hedged managers.

The broad rally in credit markets may now have run its course, and future opportunities will rather be catalyst driven and situation specific, such as capital re-structuring, default or covenant violation. Potential gains in this area may be significant, but will not be easy to achieve. Accordingly we are positioning the portfolio so that we are invested with managers, particularly those in the Specialist Credit, Multiple Strategy and Event Driven strategies, who have the ability to exert the influence required to extract value from these situations.

3 The table reflects the anticipated cash flow assuming notice was given to all underlying funds as at 30th September 2009. It includes a provision for "audit hold back" which most hedge funds apply to full redemptions and any other known restrictions the managers of the underlying funds may have placed on redemptions. Where there is currently no firm indication from the underlying manager on the expected timing of the receipt of redemption proceeds, the relevant amount is included in the "greater than 12 months" category. The cash flow projections are therefore conservative but remain estimates. Restrictions are in the course of being lifted and the information contained in the table above may not be an indication of the Company's future liquidity.

The environment for thematic Macro managers remains challenging as momentum trading offers few opportunities. As a result, we have reduced our exposure to Macro in aggregate and focussed our positions on managers who are best able to exploit the tactical trading opportunities that currently abound.

Fauchier Partners LLP

Date: 27th November 2009

UNAUDITED PORTFOLIO STATEMENT

As at 30th September 2009

							% of Total				% of Total
		No. of shares		Fair			Net Assets				Net Assets
		held on		Value			held on				held on
Description		30.9.2009		£			30.9.2009				31.3.2009
Funds
Alydar Fund Ltd		158,360.52		11,996,864			3.98
Ascend Partners Fund II, Ltd		185,090.24		13,713,066			4.55
Bay Resource Partners Offshore Fund, Ltd		3,515.20		13,591,147			4.51
Brevan Howard Fund Ltd		79,286.27		12,039,559			3.99
Claren Road Credit Fund Ltd		1.00		2,805,267			0.93
Clarium Capital Fund Ltd		95,055.72		5,188,523			1.72
Criterion Capital Partners Ltd		152,945.00		8,998,590			2.99
Drawbridge Global Alpha V Fund Ltd		3,163.06		2,697,390			0.89
Drawbridge Global Macro Fund Ltd		208.01		124,768			0.04
Elm Ridge Value Partners Offshore Fund, Inc		106,837.33		15,635,069			5.19
Explorer Global Fund, Ltd		13,462.69		7,321,229			2.43
Fauchier Partners Counterpoint Fund Ltd *		20,976.97		13,202,945			4.38
FCOI II Holdings, L.P.		1.00		1,840,541			0.61
Fortress Macro Offshore LP		1.00		6,322,568			2.10
Harbinger Capital Partners Offshore Fund I, Ltd		99,746.70		10,618,654			3.52
Highbridge Asia Opportunities Fund, Ltd		9,030.22		6,933,167			2.30
Lansdowne Global Fund Limited		69,608.44		12,619,171			4.19
Lansdowne UK Equity Fund Limited		65,023.90		15,681,678			5.20
Lydian Global Opportunities Fund Ltd		13,550.01		5,619,178			1.86
Marathon Vertex Japan Fund Limited		6,387.46		8,100,065			2.69
OZ Europe Overseas II Fund Ltd		16,188.85		11,069,993			3.67
OZ Overseas Fund II, Ltd		1.00		53,142			0.02
Pacific Alliance Asia Opportunities Fund		1.00		6,001,486			1.99
Paulson Advantage Plus Ltd		7,729.95		2,420,664			0.80
Perella Weinberg Partners Xerion Offshore Fund Ltd		2,500.00		1,766,269			0.59
Pershing Square International, Ltd		11,650.00		8,307,311			2.76
SCP Ocean Fund		8,094.06		13,604,846			4.51
Shepherd Investments International, Ltd		10,853.14		7,079,806			2.35
Sunbeam Opportunities Offshore		18,350.00		12,172,744			4.04
Vicis Capital Fund (International)		14,743.93		11,369,604			3.77
Visium Balanced Offshore Fund, Ltd		13,129.73		10,973,968			3.64
Walker Smith International Fund, Ltd		1,662.50		10,715,189			3.55
Wexford Offshore Spectrum Fund		3,531.30		12,529,015			4.16
Total investments				283,113,476			93.92				97.37
Other net current assets				18,328,086			6.08				2.63
Total value of Company (attributable to
Redeemable Participating Preference Shares)				301,441,562			100.00				100.00

* Fauchier Partners Counterpoint Fund Ltd is classed as a related party as it shares the same Investment Advisor and Manager as the Company. 

A top-up of the Fauchier Partners Counterpoint Fund Ltd at the end of September 2009 increased the position size to within the top ten holdings. Confirmation of this trade occurred after the month end and so was not included in the announcement of the top ten holdings released to the London Stock Exchange on 2nd October 2009.

RESPONSIBILITY STATEMENT

Responsibility Statement of the Directors in respect of the Interim Unaudited Condensed Financial Statements

We confirm that to the best of our knowledge that:

● this set of Condensed Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting;

● the Interim Management Report and Notes to the Interim Unaudited Condensed Financial Statements provide a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred 
     during the first six months of the financial year and their impact on the condensed set of financial statements; and 
     a description of the principal risks and uncertainties for the remaining six months of the year; and 

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in 
     the first six months of the current financial year and that have materially affected the financial position or 
     performance of the entity during that period; and any changes in the related party transactions described in the 
     last annual report that could do so. 

Signed on behalf of the Board by:

                    

Robert King                        Nicholas Moss        

Director                              Director

27th November 2009         27th November 2009        

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF ABSOLUTE RETURN TRUST LIMITED

Introduction 

We have been engaged by the company to review the condensed set of Financial Statements in the half-yearly financial report for the six months ended 30th September 2009 which comprises the Unaudited Statement of Comprehensive Income, the Unaudited Statement of Changes in Equity, the Statement of Financial Position, the Unaudited Statement of Cash Flows and the related Notes 1 to 23. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of Financial Statements. 

This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our work, for this report or for the conclusions we have formed.

Directors' Responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 

As disclosed in Note 1, the Annual Financial Statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of Financial Statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union. 

Our Responsibility 

Our responsibility is to express to the Company a conclusion on the condensed set of Financial Statements in the half-yearly financial report based on our review. 

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of Financial Statements in the half-yearly financial report for the six months ended 30th September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 

Ernst & Young LLP

Guernsey, Channel Islands

27th November 2009

Note

The maintenance and integrity of the Absolute Return Trust Limited website is the responsibility of the Investment Advisor and Manager; work carried out by the auditors does not involve consideration of these matters and accordingly the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME 

For the period from 1st April 2009 to 30th September 2009

							1.4.2009 to		1.4.2008 to
							30.9.2009		30.9.2008
	Notes		Revenue		Capital		Total		Total
			£		£		£		£
Investment Income
Bank interest income			-		-		-		27,602
Total investment income			-		-		-		27,602
Net gains on financial assets at
fair value through profit or loss	1, 4		-		7,849,080		7,849,080		18,247,986
Gains/(Losses) on foreign exchange	1, 5		-		24,495,168		24,495,168		(26,437,448)
Total income/(expense)			-		32,344,248		32,344,248		(8,161,860)
Expenses
Management fee	6		(1,452,737)		-		(1,452,737)		(1,411,901)
Performance fee	7		(9,837)		-		(9,837)		-
Interest expense			(4)		-		(4)		(72,126)
Other expenses	10		(410,425)		-		(410,425)		(371,722)
Total expenses			(1,873,003)		-		(1,873,003)		(1,855,749)
Total comprehensive income/(expense)
for the period			(1,873,003)		32,344,248		30,471,245		(10,017,609)
Profit/(loss) for the period
Sterling Share Class			£(1,771,900)		£30,783,219		£29,011,319		£(8,863,933)
Profit/(loss) for the period
Euro Share Class			€(114,173)		€1,804,736		€1,690,563		€(1,201,982)
Exchange losses on translation reserve			-		£(25,864)		£(25,864)		£(181,369)
Earnings per Participating Redeemable
Preference Share - basic and diluted*;
Sterling Share Class			(0.81p)		14.08p		13.27p		(4.46p)
Euro Share Class			(0.61¢)		9.62¢		9.01¢		(5.95¢)

* Earnings per Participating Redeemable Preference Share is based on the weighted average number of Redeemable Participating Preference Shares. The weighted average number of Redeemable Participating Preference Shares for the period for the Sterling Share Class and the Euro Share Class respectively were 218,604,472 and 18,763,101 (30th September 2008: 198,952,646 and 20,192,560)

The 'Total' column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS. The supplementary 'Revenue' and 'Capital' columns are both prepared under guidance published by the Association of Investment Companies. 

All items in the above statement derive from continuing operations.

UNAUDITED STATEMENT OF CHANGES IN EQUITY 

For the period from 1st April 2009 to 30th September 2009

						Share		Realised		Unrealised				Other
						Capital		Capital		Capital		Revenue		Distributable
						Account		Reserve		Reserve		Reserve		Reserve		Total
						£		£		£		£		£		£
Balance brought forward at 31st March 2009						49,170,841		(52,808,110)		61,033,809		(7,609,054)		225,178,321		274,965,807
Total comprehensive income/(expense)
for the period						-		45,067,488		(12,723,240)		(1,873,003)		-		30,471,245
Cancellation of Shares						(3,995,490)		-		-		-		-		(3,995,490)
Balance carried forward at
at 30th September 2009						45,175,351		(7,740,622)		48,310,569		(9,482,057)		225,178,321		301,441,562
Net Assets attributable to holders of Redeemable Participating Preference Shares at the end of the period.																301,441,562

For the period from 1st April 2008 to 30th September 2008

				Redeemable
			Founder	Participating	Share	Realised	Unrealised		Other
			Share	Preference	Capital	Capital	Capital	Revenue	Distributable
			Capital	Shares	Account	Reserve	Reserve	Reserve	Reserve	Total
			£	£	£	£	£	£	£	£
Balance brought forward
at 31st March 2008			2	21,325	21,231,448	10,843,970	22,121,175	(3,775,909)	225,156,835	275,598,846
Total comprehensive (expense)/
income for the period			-	-	-	(17,149,126)	8,959,664	(1,828,147)	-	(10,017,609)
Issue of Shares				150	1,532,191	-	-	-	-	1,532,341
Cancellation of shares			(2)	-	-	-	-	-	-	(2)
Net effect of Shares
conversion			-	11	(11)	-	-	-	-	-
Transfer to other
distributable reserve			-	(21,486)	(22,763,628)	-	-	-	22,785,114	-
Balance carried forward
at 30th September 2008			-	-	-	(6,305,156)	31,080,839	(5,604,056)	247,941,949	267,113,576
Net Assets attributable to holders of Redeemable Participating Preference Shares at the end of the period										267,113,576
Net assets attributable to holders of Founder Shares at the end of the period										-

STATEMENT OF FINANCIAL POSITION 

As at 30th September 2009

			(Unaudited)		(Audited)
			30.9.2009		31.3.2009
	Notes		£		£
ASSETS
Non-current assets
Financial assets at fair value through profit or loss	1, 12		283,113,476		267,723,986
Current assets
Cash and cash equivalents	11		23,454,470		12,815,035
Unrealised gains on open forward foreign
currency contracts	22		629,537		703,399
Other receivables	13		3,335,827		1,923,975
Total assets			310,533,310		283,166,395
EQUITY AND LIABILITIES
CURRENT LIABILITIES
Other payables	14		384,065		1,696,144
Unrealised losses on open forward foreign
currency contracts	22		8,707,683		6,504,444
Total liabilities			9,091,748		8,200,588
EQUITY
Share Capital Account	15		45,175,351		49,170,841
Other Distributable Reserve			225,178,321		225,178,321
Retained Earnings			31,087,890		616,645
Total equity			301,441,562		274,965,807
Total equity and liabilities			310,533,310		283,166,395
Number of Sterling Redeemable Participating Preference
Shares in issue	16		217,336,472		218,570,291
Number of Euro Redeemable Participating Preference
Shares in issue	16		18,722,513		22,446,726
Net assets attributable to holders of Sterling Redeemable
Participating Preference Shares (per share)	16		131.0p		117.5p
Net assets attributable to holders of Euro Redeemable
Participating Preference Shares (per share)	16		97.3¢		87.6¢

The Interim Unaudited Condensed Financial Statements were approved on 27th November 2009 and signed on behalf of the Board of Directors by:

Robert King                        Nicholas Moss        

UNAUDITED STATEMENT OF CASH FLOWS 

For the period from 1st April 2009 to 30th September 2009

		1.4.2009 to		1.4.2008 to
	Note	30.9.2009		30.9.2008
		£		£
Cash flows from operating activities
Total comprehensive income/(expense) for the period		30,471,245		(10,017,609)
Adjusted for:
Gains on financial assets at fair value through profit or loss		(7,849,080)		(18,247,986)
Realised and unrealised (gains)/losses on forward foreign
currency contracts		(33,207,255)		30,312,593
Exchange losses/(gains) on cash and cash equivalents		8,686,223		(4,056,514)
Exchange losses on translation reserve		25,864		181,369
Operating cash flows before movements in working capital		(1,873,003)		(1,828,147)
Decrease in other receivables		19,114		24,849
Increase/(decrease) in other payables		2,429		(1,831,289)
Net cash used in operating activities		(1,851,460)		(3,634,587)
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss		(96,784,618)		(88,626,417)
(Receivables)/payables from Broker		(1,430,966)		17,860,215
Sale of financial assets at fair value through profit or loss		87,929,700		49,265,729
Realised gains/(losses) on currency option
and forward currency contracts		35,458,492		(21,749,361)
Net cash generated from/(used in) investing activities		25,172,608		(43,249,834)
Cash flows from financing activities
Proceeds from issue of Redeemable Participating
Preference Shares		-		1,532,341
Cancellation of Redeemable Participating Preference Shares		(3,995,490)		-
Cancellation of Founder Shares		-		(2)
Subscriptions received in advance		-		28,196,314
Net cash (used in)/generated from financing activities		(3,995,490)		29,728,653
Net increase in cash and cash equivalents		19,325,658		(17,155,768)
Cash and cash equivalents at beginning of period		12,815,035		12,797,196
Exchange (losses)/gains on cash and cash equivalents		(8,686,223)		4,056,514
Cash and cash equivalents at end of period	11	23,454,470		(302,058)
Supplementary cash flow information
Cash flows from operating activities include:
		1.4.2009 to		1.4.2008 to
		30.9.2009		30.9.2008
		£		£
Interest received		-		56,515
Interest paid		(4)		(72,126)

NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the period from 1st April 2009 to 30th September 2009

 

1.    ACCOUNTING POLICIES

The following accounting policies have been applied consistently in dealing with items which are considered to be material in relation to the Company's Financial Statements:

Basis of accounting

The Interim Unaudited Condensed Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". The accounting policies have been described in full and are the same that were applied to the Annual Financial Statements for the year ended 31st March 2009 which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.  

The Interim Unaudited Condensed Financial Statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Company's Annual Report and Audited Financial Statements for the year ended 31st March 2009.

Going concern

As described in the note 15, there is a provision for a continuation vote to be put to the members if the Company's shares trade at a discount of more than 5.0 per cent at each monthly Net Asset Value calculation date over the course of a full financial year. So far this year, the Company's Sterling Shares have traded at a discount in excess of such level. However, the Company continues to perform satisfactorily and monitors and manages its liquidity as described in note 22. Accordingly, the Directors do not believe that there exists significant doubt as to the Company's ability to continue as a going concern. The Interim Unaudited Condensed Financial Statements therefore continue to be prepared on a going concern basis.

Presentation of information

In order to better reflect the activities of an investment company and in accordance with the guidance issued by the Association of Investment Companies, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented within the Unaudited Statement of Comprehensive Income.  

New Accounting Standards

In the current financial period, the Company has adopted International Financial Reporting Standard 8 'Operating Segments' (IFRS 8) and International Accounting Standard 1 (Amended) - Presentation of Financial Information (IAS 1) which became effective as of 1 January 2009.

IFRS 8 requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes.

The Board has considered the requirements of IFRS 8 'Operating Segments', and is of the view that the Company's activities form a single segment under the standard being investments in a diversified portfolio. From a geographical perspective, the Company's investments are managed on a global basis. The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return based on the Net Asset Value per Share, as calculated under IFRS. Therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the Interim Unaudited Condensed Financial Statements.

IAS 1 requires the Company to present all non-owner changes in equity (comprehensive income) in one statement of comprehensive income. This presentation has been applied in these Interim Unaudited Condensed Financial Statements as of and for the six months period ended on 30th September 2009.

Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects there is no impact on the Net Asset Value of the Company.

IFRS 7 - Financial Instruments: Disclosures

Amendments to IFRS 7 were issued by the IASB in March 2009 and become effective for annual periods beginning on or after 1 January 2009 with early application permitted. The amendment to IFRS 7 requires fair value measurements to be disclosed by the source of inputs, using a three-level hierarchy: 

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) 

• Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as  
  prices) or indirectly (derived from prices) (Level 2) 

• Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). 

In addition the amendment revises the specified minimum liquidity risk disclosures including amongst others: the contractual maturity of non derivative and derivative financial liabilities, and a description of how this is managed.  

Other standards, interpretations and amendments published are not expected to have a significant impact on the Interim Unaudited Condensed Financial Statements and have not been disclosed.

Financial instruments 

Financial assets and financial liabilities are recognised on the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities, other than those shown at fair value through profit or loss, are measured at amortised cost using the effective interest rate method.

Financial assets at fair value through profit or loss ("investments")

Purchases and sales of investments are recognised on the trade date (the date on which the Company commits to purchase or sell the investment). Investments purchased are initially recorded at fair value, being the consideration given and excluding transaction or other dealing costs associated with the investment. Gains and losses on investments sold are shown in Note 4 and recognised in capital in the Statement of Comprehensive Income in the period in which they arise. The investments are managed and their performance is evaluated on a fair value basis which is consistent with the Company's documented investment strategies. The information regarding the Company's portfolio is also provided on that basis to the Board.

Other Financial Instruments

For other financial instruments, including other receivables, other payables and unrealised gains or losses on open forward foreign currency contracts, the carrying amounts as shown in the Statement of Financial Position approximate to fair values due to the short term nature of these financial instruments.

Forward foreign currency and currency option contracts

Forward foreign currency and currency option contracts are derivative contracts and as such are recognised at fair value on the date on which they are entered into and subsequently remeasured at their fair value. Fair value is determined by rates in active currency markets. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.  

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position , if and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise assets and settle the liabilities simultaneously.

Fair value

Investments of the Company consist of shares or units in hedge funds and these are valued at the latest estimate of net asset value from the administrator of the respective hedge fund i.e. most recent price is the best estimate of the amount for which holdings could have been disposed of at the statement of financial position date.

Gains and losses arising from changes in the fair value of financial assets are shown as net gains or losses on financial assets through profit or loss in Note 4 and recognised in capital in the Statement of Comprehensive Income in the period in which they arise.

Derecognition of financial instruments

A financial asset is derecognised when: (a) the rights to receive cash flows from the asset have expired, (b) the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a "pass through arrangement"; or (c) the Company has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled.

Restatement of comparatives

During the current period some comparatives have been restated to conform with the current period presentation.

Significant accounting judgements, estimates and assumptions 

The preparation of the Company's Financial Statements requires the Directors to make judgements, estimates and assumptions that affect the reported amounts of income, expenses, assets and liabilities at the reporting date. However, uncertainties about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in future periods. Although some of the Company's underlying investments have imposed restrictions on redemptions the Directors believe it remains appropriate to estimate their fair values based on net asset values as reported by the Administrators of the relevant investments. The Directors believe that such net asset values represent fair value because subscriptions and redemptions in the underlying investments occur at these prices at the statement of financial position date.

Income

All income is accounted for on an accruals basis and is recognised in the Statement of Comprehensive Income. Interest income for all debt instruments is recognised using the effective interest rate method.

Expenses

Expenses are accounted for on an accruals basis. Expenses incurred on the acquisition of investments at fair value through profit or loss are charged to the Statement of Comprehensive Income in capital. All other expenses are charged to the Statement of Comprehensive Income in revenue. 

Share issue expenses

Share issue expenses are fully written off against the Share Capital Account in the period of the share issue. 

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, overdrafts and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant changes in value. Overdrafts are shown separately on the Statement of Financial Position.

Capital reserves

Gains and losses recorded on the realisation of investments and realised exchange differences of a capital nature are transferred to the realised capital reserve. Unrealised gains and losses recorded on the revaluation of investments held at a period end and unrealised exchange differences of a capital nature are transferred to the unrealised capital reserve.

Translation of foreign currency 

Items included in the Company's Financial Statements are measured using the currency of the primary economic environment in which it operates (the "functional currency"). The majority of the Company's Shares are denominated in Sterling (a small number are denominated in Euros) and its operating expenses are incurred in Sterling. While the Company's investments are denominated in US Dollars all exposure to these currencies is hedged by forward foreign currency and currency option contracts. Accordingly the Directors regard Sterling as the functional currency. The Company has also adopted Sterling as its presentation currency.

The assets and liabilities of the Company that are denominated in a currency other than the functional currency are translated using the exchange rate as at the statement of financial position date. The Statement of Changes in Equity is translated into Sterling for aggregation purposes using an average rate of exchange for the period, with the exception of Share Capital Account which is translated at the rate ruling at the date of the transaction and the unrealised gains on investments which are translated at the rates ruling as at the statement of financial position date. Exchange differences arising on aggregation are taken to equity and subsequently transferred to net assets attributable to Redeemable Participating Preference Shares.

Translation differences on financial assets held at fair value through profit or loss are reported as part of net gains on financial assets at fair value through profit or loss in the Statement of Comprehensive Income in capital.

 

2.    TAXATION

The Company has been exempted from taxation in Guernsey under the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989. Its liability is an annual exemption fee of £600. 

 

3.    DISTRIBUTION TO SHAREHOLDERS

The Directors do not expect income (net of expenses) to be significant for the foreseeable future and do not currently expect to declare any dividends. In the event that the net income is significant, the Directors may consider the distribution of net income in the form of dividends. To the extent that any cash dividends are paid, they will be paid in accordance with applicable Guernsey laws and the regulations of the UK Listing Authority. 

The Company has a feature which, subject to a shareholder making an election, may allow a shareholder to benefit from an annual capital distribution dependent on Net Asset Value performance. This will be achieved by way of a partial redemption of shares. The feature operates in each financial year if the Net Asset Value has risen at least 5.0 per cent. over each financial year.  

 

4.    NET GAINS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS  

				1.4.2009 to		1.4.2008 to
				30.9.2009		30.9.2008
				£		£
Net gains on financial assets at fair value through profit or loss
during the period comprise:
Gains realised on investments sold during the period				18,790,572		1,789,533
Movement in unrealised (losses)/gains arising from
changes in fair value during the period				(10,941,492)		16,458,453
Net gains on financial assets at
fair value through profit or loss				7,849,080		18,247,986

5.     GAINS/(LOSSES) ON FOREIGN EXCHANGE

				1.4.2009 to		1.4.2008 to
				30.9.2009		30.9.2008
				£		£
Realised gains/(losses) on forward foreign currency contracts				35,484,356		(21,567,992)
Unrealised losses on forward foreign currency contracts				(2,277,101)		(8,744,601)
Exchange (losses)/gains on cash and cash equivalents				(8,686,223)		4,056,514
Exchange losses on translation reserve				(25,864)		(181,369)
				24,495,168		(26,437,448)

The Company's investment portfolio is denominated in US Dollars and the currency risk has been hedged with forward foreign currency and currency option contracts.

 

6.    MANAGEMENT FEE

The Company's manager is Fauchier Partners Management Limited (the "Manager"). The Manager is entitled to an annual management fee, calculated monthly and payable monthly in arrears, at the rate of 1.0 per cent. of the monthly gross assets of the Company. The Manager is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. The Company's investment advisor is Fauchier Partners LLP (the "Investment Advisor"). The Manager will be responsible for discharging all fees of the Investment Advisor out of its management fee. During the period ended 30th September 2009 management fees of £1,452,737 were charged to the Company (30th September 2008: £1,411,901) and £248,005 was payable at the period end (31st March 2009: £233,364).

 

7.    PERFORMANCE FEE 

The Manager is also entitled to a performance fee if the Net Asset Value per Share for each class of Share at the end of the Performance Period (31st March each year and after adjustments for share issues/redemptions/repurchases);

a)    Exceeds the Net Asset Value per Share at the start of the Performance Period by more than the 
       Performance  Hurdle; or

b)    Exceeds the highest previously recorded Net Asset Value per Share in respect of which a performance fee 
       was last paid; or  

c)    If a performance fee is yet to be paid, exceeds the higher of 100.0p per Sterling Share, 98.7¢ per Euro 
       Shares or the Net Asset Value per Share of each Share class as at 31st March 2009 (the "High Water 
       Mark").

The Performance Hurdle applicable in respect of a Performance Period is 110.0 per cent. of three month Sterling LIBOR compounded quarterly and is pro-rated where the Performance Period is greater or shorter than one year.

If the Performance Hurdle for a Performance Period is met, then a performance fee will be calculated and payable to the Manager equal to 10.0 per cent. of the total increase in the Net Asset Value per Share on all share classes in issue at the end of the relevant Performance Period over the Net Asset Value per Share at the start of the relevant Performance Period multiplied by the aggregate number of shares in issue for each share class (having made adjustment for any issue and/or redemption and/or repurchase of shares of each class or other distributions made in respect thereof) at the end of the relevant Performance Period.

During the period ended 30th September 2009 performance fees of £9,837 were charged to the Company (30th September 2008: £Nil) and £9,837 was payable at the period end (31st March 2009: £Nil).

 

8.    ADMINISTRATION FEE

The Company's administrator is Northern Trust International Fund Administration Services (Guernsey) Limited (the "Administrator"). The Administrator is entitled to receive an annual fee, equal to 0.125 per cent. per annum on the first £50.0 million, 0.10 per cent. per annum on the next £50.0 million and 0.075 per cent. per annum thereafter of the Net Asset Value of the Company, calculated monthly and payable monthly in arrears, subject to a minimum fee of £48,000 per annum. In addition, the Administrator and any of its delegates will also be entitled to reimbursement of certain expenses incurred by them in connection with their duties. During the period ended 30th September 2009 administration fees of £131,607 (30th September 2008: £135,834) were charged to the Company and £45,141 was payable at the period end (31st March 2009: £19,527).

 

9.    CUSTODIAN FEE

The Company's custodian is Northern Trust (Guernsey) Limited (the "Custodian"). The Custodian is entitled to receive an annual fee equal to 0.075 per cent. per annum of the Net Asset Value of the Company, calculated monthly and payable monthly in arrears, subject to a minimum fee of £24,000 per annum. In addition, the Custodian will receive £100 per transaction executed. During the period ended 30th September 2009 custodian fees of £108,955 (30th September 2008: £104,604) were charged to the Company and £37,492 was payable as at the period end (31st March 2009: £17,502).

10.    OTHER EXPENSES    

				1.4.2009 to		1.4.2008 to
				30.9.2009		30.9.2008
				£		£
Administration fee (Note 8)				131,607		135,834
Custodian fee (Note 9)				108,955		104,604
General expenses				94,075		66,909
Directors' fees (Note 18)				62,500		57,500
Audit fee				13,288		6,875
				410,425		371,722

 

11.    CASH AND CASH EQUIVALENTS

				30.9.2009		31.3.2009
				£		£
Current deposits with banks				23,454,470		12,815,035
				23,454,470		12,815,035

All cash balances attract interest at variable rates.

An uncommitted credit facility covering borrowings and spot and forward foreign exchange was made available to the Company by its bankers. The aggregate amount outstanding under this facility should not exceed the lower of:

 

a)    £40.0 million (or the currency equivalent thereof); or

b)    20.0 per cent. of the Net Asset Value of the Company.

The repayment of all monies at any time owing by the Company to the bank is secured by way of a Security Agreement between the Company and its bankers dated 24th February 2005. As detailed in the Security Agreement the investment portfolio of the Company is provided as security against the facility.

12.    FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

				30.9.2009		31.3.2009
				£		£
Cost of investments at end of period/year				230,639,326		204,308,344
Cumulative net unrealised gain				52,474,150		63,415,642
Fair value at end of the period/year				283,113,476		267,723,986

13.    OTHER RECEIVABLES

				30.9.2009		31.3.2009
				£		£
Sale of investments awaiting settlement				1,991,531		1,904,861
Fund purchases awaiting settlement				1,344,296		-
Other receivables				-		19,114
				3,335,827		1,923,975

The Directors consider that the carrying amount of the other receivables approximates their fair value. 

14.    OTHER PAYABLES

				30.9.2009		31.3.2009
				£		£
Sale of investments received in advance				-		1,339,473
Management fee payable				248,005		233,364
Due to Broker				24,965		-
Performance fee payable				9,837		-
Other creditors				101,258		123,307
				384,065		1,696,144

The Directors consider that the carrying amount of the other payables approximates their fair value.

 

15.    SHARE CAPITAL AND SHARE PREMIUM

30.9.2009

31.3.2009

Unclassified

Unclassified

Shares

Shares

Authorised Share Capital

Unclassified Shares at no par value

Unlimited

Unlimited

-

-

In accordance with the Companies (Guernsey) Law 2008, an Extraordinary General Meeting was held on 24th September 2008 to cancel all of the Company's Authorised Share Capital as at that date. The Authorised Share Capital was replaced by the creation of an unlimited number of Unclassified Shares (as defined in the Company's amended Articles of Incorporation) at no par value. 

Under The Companies (Guernsey) Law 2008, all of the Company's Share Capital and Reserves are distributable, subject only to satisfaction of the solvency test and any relevant provisions of the Company's Articles of Association.

The Company is a closed-ended investment company with an unlimited life. The Redeemable Participating Preference Shares are not puttable instruments because redemption is conditional upon certain market conditions and/or Board approval. As such they are not required to be classified as debt under IAS 32.

IFRIC Interpretation 2: 'Members' Shares in Co-operative Entities and Similar Instruments' paragraph 7 states "Members' share is equity if the entity has an unconditional right to refuse redemption of the members' share." 

As defined in the Articles of Association, redemption of Redeemable Participating Preference Shares is at the sole discretion of the Directors, therefore the Redeemable Participating Preference Shares have been classified as equity.

In the event that the Company's Shares trade at a discount of more than 5.0 per cent. at each monthly Net Asset Value calculation date over the course of a full financial year, there is a provision for a resolution to be put to the members at the Annual General Meeting for a termination of the Company ("continuation vote"). In the event that a discount of greater than 5.0 per cent. prevails during the year to 31st March 2010, a continuation vote may be raised at the following Annual General Meeting (after 31st March 2010). The Board also has the discretion to operate the Redemption Facility, offering shareholders the possibility of redeeming part of their shareholding at the Net Asset Value, if it appears appropriate to do so. 

The Company operates a Share Buyback Programme whereby it may purchase, subject to various terms as set out in its Articles and in accordance with The Companies (Guernsey) Law, 2008, up to 14.99 per cent. of its existing Share Capital following the admission of the Shares to trading on the London Stock Exchange's market for listed securities. 

Founder Shares were issued for administrative purposes and were fully cancelled during the prior year.

			1.4.2009 to			1.4.2008 to
			30.9.2009			31.3.2009
	Sterling	Euro	Total Share	Sterling	Euro	Total Share
	Shares	Shares	Capital	Shares	Shares	Capital
Issued Share Capital	£	€	£	£	€	£
Founder Shares of £1.00 each
Balance at start of the
period/year	-	-	-	2	-	2
Cancelled during the
period/year	-	-	-	(2)	-	(2)
Balance at end of the
period/year	-	-	-	-	-	-
Equity Shares
Redeemable Participating Preference Shares at no par value
Balance at start of the
period/year	-	-	-	19,911	1,898	21,325
Issued during the
period/year	-	-	-	-	190	150
Net effect of conversion
during the period/year	-	-	-	(30)	52	11
Transferred to other
distributable reserves	-	-	-	(19,881)	(2,140)	(21,486)
Balance at end of the
period/year	-	-	-	-	-	-

			1.4.2009 to			1.4.2008 to
			30.9.2009			31.3.2009
			Total			Total
	Sterling	Euro	Number	Sterling	Euro	Number
Issued Share Capital	Shares	Shares	of shares	Shares	Shares	of shares
Founder Shares
Balance at start of the
period/year	-	-	-	2	-	2
Cancelled during the
period/year	-	-	-	(2)	-	(2)
Balance at end of the
period/year	-	-	-	-	-	-
Equity Shares
Balance at start of the
period/year	218,570,291	22,446,726	241,017,017	199,106,550	18,977,000	218,083,550
Issued during the
period/year	-	-	-	21,929,496	1,897,700	23,827,196
Net effect of conversion
during the period/year	2,568,613	(3,724,213)	(1,155,600)	(1,063,755)	1,572,026	508,271
Bought back and cancelled
during the period/year	(3,802,432)	-	(3,802,432)	(1,402,000)	-	(1,402,000)
Balance at end of the
period/year	217,336,472	18,722,513	236,058,985	218,570,291	22,446,726	241,017,017

			1.4.2009 to			1.4.2008 to
	Sterling	Euro	30.9.2009	Sterling		31.3.2009
	Shares	Shares	Total	Shares	Euro	Total
	£	€	£	£	€	£
Share Capital Account
Balance at start of the
period/year	46,341,670	3,376,771	49,170,841	21,231,448	-	21,231,448
Issued during the
period/year	-	-	-	28,143,633	1,935,464	29,675,824
Net effect of conversion
during the period/year	3,015,679	(3,261,770)	-	(1,296,991)	1,441,307	(11)
Share issue expenses
written off	-	-	-	(412,672)	-	(412,672)
Bought back and cancelled
during the period/year	(3,995,490)	-	(3,995,490)	(1,323,748)	-	(1,323,748)
Balance at end of the
period/year	45,361,859	115,001	45,175,351	46,341,670	3,376,771	49,170,841

On 25th May 2006, 38.0 million Sterling C Shares were issued at 100.0p per Share. This issue took place in response to demand from existing and new shareholders and took the market capitalisation of the Company to over £100 million. On 30th June 2006, the 38.0 million Sterling C Shares were converted into 34,371,000 Sterling Redeemable Participating Preference Shares.

The Company successfully petitioned the Royal Court of Guernsey on 17th November 2006 and 14th March 2008 to seek its approval and confirmation of the Share Capital Account arising on the issue of C Shares and its transfer to Other Distributable Reserve.

On 31st January 2008 the Company issued 110.8 million Sterling C Shares at a price of 100.0p per Share and 18.9 million Euro C Shares at a price of 100.0¢ per Share. On 14th March 2008 the Sterling C and Euro C Shares were converted respectively into 82,758,201 and 18,977,000 new Redeemable Participating Preference Shares. 

On 28th March 2008 the Company issued a further 16,082,779 new Sterling Redeemable Participating Preference Shares at a price of 134.0p per Share.

On 27th June 2008 the Company issued 1,897,700 Euro Redeemable Participating Preference Shares at a price of 102.0¢ per Share. These Shares were listed on the London Stock Exchange on 2nd July 2008. 

On 1st October 2008 the Company issued 28.1 million Sterling C Shares at a price of 100.0p per Share. These Sterling C Shares were subsequently converted into 21,929,496 new Sterling Redeemable Participating Preference Shares on 28th October 2008. These Shares were listed on the London Stock Exchange on 3rd November 2008. 

Effective 24th September 2008 and in accordance with the Companies (Guernsey) Law 2008, the nominal amount paid in respect of each Share Class in issue as at that date was cancelled and the balance transferred to Other Distributable Reserve. The issued Shares thereafter became Shares of no par value. The Founder Shares were also cancelled. 

The Company operates a Share Conversion Scheme which allows Shareholders of any one class of Shares to convert all or part of their holdings into any other class of Share. On 1st July 2008, at the request of existing shareholders, the Company converted 593,317 Sterling Redeemable Participating Preference Shares to 1,008,208 Euro Redeemable Participating Preference Shares and 488,000 Euro Redeemable Participating Preference Shares to 287,181 Sterling Redeemable Participating Preference Shares. These Shares were converted using the 30th June 2008 Net Asset Value of each Share class and were listed on the London Stock Exchange on 1st August 2008. 

On 1st October 2008, at the request of existing shareholders, the Company converted 11,916 Sterling Redeemable Participating Preference Shares into 20,451 Euro Redeemable Participating Preference Shares. These Shares were converted using the 30th September 2008 Euro Redeemable Participating Preference Shares Net Asset Value per Share and were listed on the London Stock Exchange on 3rd November 2008.

On 1st January 2009, at the request of existing shareholders, the Company converted 745,703 Sterling Redeemable Participating Preference Shares into 1,031,367 Euro Redeemable Participating Preference Shares. These Shares were converted using the 31st December 2008 Euro Shares Net Asset Value per Share and were listed on the London Stock Exchange on 5th February 2009.

On 1st April 2009, at the request of existing shareholders, the Company converted 3,641,684 Euro Redeemable Participating Preference Shares to 2,516,352 Sterling Redeemable Participating Preference Shares and on 1st July 2009 82,529 Euro Redeemable Participating Preference Shares to 52,261 Sterling Redeemable Participating Preference Shares. These Shares were converted using the 31st March 2009 and 30th June 2009 Net Asset Value of each Share class and were listed on the London Stock Exchange on 12th May 2009 and 5th August 2009 respectively. 

During the period under the Share Buyback Programme the Company purchased and cancelled Shares as follows:

								Price per		Percentage of
Date						Shares		Share		Issued Share
								£		Capital
3rd April 2009						100,000		0.90		0.04%
15th May 2009						260,000		1.06		0.11%
18th May 2009						100,000		1.06		0.04%
19th May 2009						200,000		1.07		0.08%
20th May 2009						1,250,000		1.06		0.52%
26th May 2009						500,000		1.02		0.21%
10th June 2009						150,000		1.08		0.06%
15th June 2009						110,000		1.05		0.05%
16th June 2009						30,000		1.06		0.01%
17th June 2009						200,000		1.04		0.08%
18th June 2009						105,756		1.04		0.04%
19th June 2009						104,425		1.05		0.04%
22nd June 2009						135,000		1.04		0.06%
23rd June 2009						200,000		1.04		0.08%
25th June 2009						149,251		1.05		0.06%
7th July 2009						28,000		1.07		0.01%
29th July 2009						100,000		1.07		0.04%
8th September 2009						55,000		1.11		0.03%
15th September 2009						25,000		1.12		0.01%
						3,802,432				1.57%

16.    NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE PARTICIPATING PREFERENCE SHARES

					Sterling		Euro		30.9.2009
					Shares		Shares		Total
					£		€		£
Total assets less liabilities					284,798,489		18,210,390		301,441,562
Number of shares outstanding					217,336,472		18,722,513
Net Assets attributable to holders of Redeemable
Participating Preference Shares (per Share)					131.0p		97.3¢

						Sterling		Euro		31.3.2009
						Shares		Shares		Total
						£		€		£
Total assets less liabilities						256,746,554		19,669,048		274,965,807
Number of shares outstanding						218,570,291		22,446,726
Net Assets attributable to holders of Redeemable
Participating Preference Shares (per Share)						117.5p		87.6¢

17.    CONTINGENT LIABILITIES

There were no contingent liabilities as at the statement of financial position date.

18.    RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for the Company's activities. The Company's investment portfolio is managed by Fauchier Partners Management Limited which is the parent company of the Fauchier Partners Group.  

The Company and the Manager have entered into a Management Agreement dated 24th January 2005 under which the Manager has been given responsibility for the day-to-day discretionary management of the Company's assets (including uninvested cash) in accordance with the Company's investment objectives and policies, subject to the overall supervision of the Directors and in accordance with the investment restrictions in the Management Agreement and the Articles of Association. The Management Agreement may be terminated by the Company or the Manager giving to the other not less than 12 month's written notice. Details of the management and performance fees to which the Manager is entitled are in Notes 6 and 7.

The Company has five non-executive directors, all independent of the Manager.

For the period ended 30th September 2009, the Chairman was entitled to £32,000 per annum (31st March 2009: £29,000 per annum) and the Audit Committee Chairman was entitled to £27,000 per annum (31st March 2009: £23,000 per annum) and the other Directors £22,000 per annum (31st March 2009: £21,000 per annum). Total Directors' fees for the period, including outstanding Directors' fees at the end of the period, are set out below. 

Total Directors' fees for the period, including outstanding Directors' fees at the end of the period, are set out below.

								1.4.2009 to		1.4.2008 to
								30.9.2009		30.09.2008
Directors' fees for the period								62,500		57,500
Payable at end of period								-		28,750

As at 30th September 2009 the Company held investments in a related fund valued at £13,202,945 (31st March 2009: £11,515,341). Refer to the Unaudited Portfolio Statement for details. 

As at  30th September 2009 and 31st March 2009, Directors of the Company held the following numbers of shares beneficially:

Directors								Shares		Shares
								30.9.2009		31.3.2009
Andrew Sykes								152,790		152,790
Nicholas Fry								190,000		160,675
Robert King								38,150		38,150
Nicholas Moss								Nil		Nil
Robin Rumboll								175,000		25,000

19.    SEGMENT REPORTING

The Directors have considered the requirements of IFRS 8 'Operating Segments' and have concluded that the Company's activities form a single segment under the standard. From a geographical perspective, the Company's investments are managed on a global basis. Equally, in relation to business segmentation, the Company's investments are predominantly in a diversified portfolio of hedge funds.  

 

20.    SUBSEQUENT EVENTS

On 3rd November 2009, at the request of existing shareholders, the Company converted 18,530 Sterling Redeemable Participating Preference Shares into 27,315 Euro Redeemable Participating Preference Shares. These Shares were converted using the 30th September 2009 Euro Redeemable Participating Preference Shares Net Asset Value per Share and were listed on the London Stock Exchange on 5th November 2009.

The Company has made the following share buybacks subsequent to the period end and up to date of this report:

									Price per		Percentage of
Date							Shares		Share		Issued Share
									£		Capital
4th November 2009							400,000		1.17		0.17%
9th November 2009							350,000		1.16		0.15%
							750,000				0.32%

All shares bought back by the Company were cancelled.

 

21.    FINANCIAL INSTRUMENTS

In accordance with its investment objectives and policies, the Company holds financial instruments which at any one time may comprise the following:

•     securities held in accordance with the investment objectives and policies;
•     cash and short-term receivables and payables arising directly from operations;
•     derivative instruments including forward foreign currency and currency option contracts; and
•     borrowings used to finance investment activity up to a maximum of the lower of 20.0 per cent. of the Net 
      Asset Value of the Company or £40.0 million.

The financial instruments held by the Company are comprised principally of hedge fund investments.

Details of the Company's significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of its financial assets and liabilities are disclosed in Note 1. The following table analyses the carrying amounts of the financial assets and liabilities by category as defined in IAS 39.

								30.9.2009		31.3.2009
								Fair Value		Fair Value
								£		£
Financial assets at fair value through profit or loss
Listed equity securities								42,427,913		46,186,674
Unlisted equity securities								240,685,563		221,537,312
Unrealised gains on open forward foreign currency contracts								629,537		703,399
Total financial assets at fair value
through profit or loss								283,743,013		268,427,385
Receivables								26,790,297		14,739,010

Receivables include Cash and cash equivalents and other receivables.

								30.9.2009		31.3.2009
								Fair Value		Fair Value
								£		£
Financial liabilities designated at fair value through profit or loss
Unrealised losses on open forward foreign currency contracts								(8,707,683)		(6,504,444)
Other payables								(384,065)		(1,696,144)
								(9,091,748)		(8,200,588)

22.     FINANCIAL RISK MANAGEMENT AND ASSOCIATED RISKS

The Company is exposed to a variety of financial risks as a result of its activities. These risks include market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. These risks, which have been applied throughout the period and the Manager's policies for managing them are summarised below. 

Market risk 

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company's activities expose it primarily to the market risks of changes in market prices, interest rates and foreign currency exchange rates.

Market price risk 

Market price risk arises mainly from the uncertainty about future prices of the financial instruments held by the underlying hedge funds. It represents the potential loss the Company may suffer through holding market positions in the face of price movements.

Market risk encompasses the potential for both gains and losses and is affected by three main components: changes in actual market prices, interest rate and foreign currency movements. Interest rate and foreign currency movement risks are covered elsewhere in this note. The overall market risk management strategy of each of the holdings of the Company is primarily driven by their respective investment objectives as previously detailed.

The Manager considers the asset allocation of each underlying holding of the Company in order to minimize the risk associated with particular countries or industry sectors while continuing to follow their respective investment objective. It achieves this primarily through the diversification of investments across different hedge fund strategies.  

The Investment Manager does not use derivative instruments to hedge the investment portfolios against market risk, as in their opinion the cost of such a process would result in an unacceptable reduction in the potential for capital growth. 

The maximum risk resulting from financial instruments is determined by their fair value. The overall market exposure as at 30th September 2009 is shown in the Statement of Financial Position.

Foreign currency risk

Foreign currency risk arises from fluctuations in the value of a foreign currency. It represents the potential loss the Company may suffer through holding foreign currency assets in the face of foreign exchange movements. The Company's treatment of currency transactions is set out in Note 1 to the Financial Statements under "Translation of foreign currency" and "Forward foreign currency and currency option contracts". 

The majority of the Company's Shares are denominated in Sterling (a small number are denominated in Euros) and its operating expenses are incurred in Sterling, while the Company's investments are denominated in US Dollars. The Company's presentation currency is Sterling; hence the Statement of Financial Position may be significantly affected by movements in the exchange rates between the US Dollar, Euro and Sterling. The Manager manages exposure to currency movements by using forward foreign currency and currency option contracts to hedge total exposure.

As at 30th September 2009, the Company had fifteen (31st March 2009: nine) open forward foreign currency contracts.

								30.9.2009
								Total
		US$		£		€		£
Sterling forward currency
contracts
Position at 30th September 2009				292,823,432		-		292,823,432
Contracted position		468,271,625		284,123,066		-		284,123,066
Euro forward currency
contracts
Position at 30th September 2009				-		17,488,338		15,982,762
Contracted position		25,562,228		-		18,169,171		16,604,982
Unrealised (losses)/gains				(8,700,366)		680,833		(8,078,146)
Settlement date		30th October 2009				30th October 2009

								31.3.2009
								Total
		US$		£		€		£
Sterling forward currency						.
contracts
Position at 31st March 2009				261,124,768		-		261,124,768
Contracted position		374,336,688		254,658,650		-		254,658,650
Euro forward currency
contracts
Position at 31st March 2009				-		18,833,429		17,444,821
Contracted position		25,005,908		-		19,551,442		18,109,894
Unrealised (losses)/gains				(6,466,118)		718,013		(5,801,045)
Settlement date		29th May 2009				29th May 2009

As at 30th September 2009 and 31st March 2009 the Company had no open currency option contracts.

As at 30th September 2009 and 31st March 2009, the Company held the following assets and liabilities denominated in US Dollars:

								30.9.2009		31.3.2009
								£		£
Assets								310,441,177		282,986,086
Liabilities								8,757,613		7,843,917

Interest rate risk 

Interest rate risk represents the uncertainty of investment return due to changes in the market rates of interest. Interest receivable on bank deposits or payable on bank overdraft will be affected by fluctuations in interest rates. All cash balances are at variable rates. Increases in interest rates will also increase the borrowing costs of the Company should the uncommitted credit facility be used.  

The Company is not exposed to significant interest rate risk as the majority of the Company's financial assets are investments in underlying hedge funds which are non-interest-bearing. Any excess cash and cash equivalents of the Company are invested at short-term market interest rates.

The Company's continuing position in relation to interest rate risk is monitored on a monthly basis by the Investment Manager as part of its review of the monthly Net Asset Value calculations prepared by the Company's Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited. 

Liquidity risk

Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments in a reasonable timeframe or at a reasonable price. 

The Company is exposed to the possibility of cash redemptions of Redeemable Participating Preference Shares, subject to the discretion of the Directors, as described in Note 23. It invests the majority of its assets in collective hedge funds with their own liquidity conditions.

The liquidity risk of the Company, which mainly consists of a possible mismatch of liquidity between the conditions offered at the Company level and those proposed by each collective investment fund at the underlying fund level, is carefully monitored by the Investment Manager on a monthly basis.  

To minimise liquidity risk the Company has a credit facility in place from its bankers to manage the mark to market exposures and short-term cash flows arising from its currency hedging programme and for other short-term cash flow management purposes. The Company may borrow the lower of 20.0 per cent. of the Net Asset Value of the Company or £40.0 million to meet any liquidity risk that may arise. (See Note 11).

The following table details the Company's liquidity analysis for its financial assets and liabilities. The table has been drawn up based on the undiscounted net cash flows on the financial assets and liabilities that settle on a net basis and the undiscounted gross cash flows on those financial assets and liabilities that require gross settlement.

						Greater
			Within 3			than	30.9.2009
			Months	3-6 months	6-12 months	12 months	Total
			£	£	£	£	£
Financial assets at fair value
through profit or loss*			38,223,572	191,418,359	20,978,136	32,493,409	283,113,476
Sale of investments awaiting
settlement			407,071	1,052,332	532,128	-	1,991,531
Purchase of Investments
awaiting settlement			-	1,344,296	-	-	1,344,296
Management fee payable			(248,005)	-	-	-	(248,005)
Due to Broker			-	(24,965)			(24,965)
Performance fee payable			(9,837)	-	-	-	(9,837)
Other creditors			(101,258)	-	-	-	(101,258)
Total			38,271,543	193,790,022	21,510,264	32,493,409	286,065,238

						Greater
			Within 3			than	31.3.2009
			Months	3-6 months	6-12 months	12 months	Total
			£	£	£	£	£
Financial assets at fair value
through profit or loss*			23,750,126	186,527,685	9,092,592	48,353,583	267,723,986
Management fee payable			(233,364)		-	-	(233,364)
Sale of investments received
in advance			(1,339,473)	-	-	-	(1,339,473)
Other creditors			(123,307)	-	-	-	(123,307)
Total			22,053,982	186,527,685	9,092,592	48,353,583	266,027,842

*The table reflects the anticipated cash flow assuming notice was given to all underlying funds as at 30th September 2009 and 31st March 2009. It includes a provision for "audit hold back" which most hedge funds apply to full redemptions and any other known restrictions the managers of the underlying funds may have placed on redemptions. Where there is currently no firm indication from the underlying manager on the expected timing of the receipt of redemption proceeds, the relevant amount is included in the "greater than 12 months" category. The cash flow projections are therefore conservative, but remain estimates. Restrictions are in the course of being lifted and the information contained in the table above is not an indication of the Company's future liquidity.

Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Company. Failure of any relevant counterparty to perform its obligations in respect of these items may lead to a financial loss.

The Company is exposed to material credit risk in respect of cash and cash equivalents and debtors. Credit risk is mitigated by the Company's policy to transact only with leading commercial and investment banks. Currently all cash is placed with Northern Trust (Guernsey) Limited ("NTGL"). NTGL is a wholly owned subsidiary of The Northern Trust Corporation ("TNTC"). TNTC is publicly traded and a constituent of the S&P 500. TNTC has a credit rating of AA from Standard & Poor's and Aa3 from Moody's. The credit risk associated with debtors is limited to the unrealised gains on open forward foreign currency contracts, as detailed above and other receivables. It is the opinion of the Board of Directors that the carrying amounts of these financial assets represent the maximum credit risk exposure as at the statement of financial position date.

Credit risk analysis 

The Company's maximum credit exposure is limited to the carrying amount of financial assets recognised as at the statement of financial position date, as summarised below:

								30.9.2009		31.3.2009
								£		£
Cash and cash equivalents								23,454,470		12,815,035
Net unrealised gains on open forward foreign currency contracts								629,537		703,399
Other receivables								3,335,827		1,923,975
								27,419,834		15,442,409

23. CAPITAL RISK MANAGEMENT

The fair value of the Company's financial assets and liabilities approximates their carrying amounts as at the statement of financial position date.  

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. There are no externally-imposed capital requirements on the Company.  

The Company has the ability to borrow the lower of 20.0 per cent. of its Net Asset Value or £40.0 million for short-term or temporary purposes as is necessary for the settlement of transactions, to facilitate redemption (where applicable) or to meet ongoing expenses. The Directors have put in place a credit facility for this purpose. The Company does not have any structural gearing. The Company is indirectly exposed to gearing to the extent that investee funds are themselves geared. Cash (if any) will be held in G8 currency-denominated accounts. The gearing ratio below is calculated as total liabilities divided by total equity. 

								30.9.2009		31.3.2009
								£		£
Total assets								310,533,310		283,166,395
Less: total liabilities								(9,091,748)		(8,200,588)
Total equity								301,441,562		274,965,807
Gearing ratio								3.02%		2.98%

The Board considers this gearing ratio to be acceptable since total liabilities above refer only to other payables.

The Company may purchase its own Shares in any class in issue in the market with a view to addressing any imbalance between the market supply of and demand for Shares and to assist in maintaining a narrow discount to Net Asset Value at which the Shares may be trading. Any such purchases would only be made at prices which represent a discount to the prevailing Net Asset Value per Share at that date so as to enhance the Net Asset Value per Share for the remaining Shareholders.

The Company may purchase up to a maximum 14.99 per cent. of its own Shares following the admission of the Shares to trading on the London Stock Exchange's market for listed securities. Further to such authority, the minimum price (exclusive of expenses) which may be paid for a Share is 0.01p and the maximum price (exclusive of expenses) which may be paid for a Share is an amount equal to 105.0 per cent. of the average of the market values for a Share taken from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the day on which the Share is purchased (or such other amount as may be specified by the UK Listing Authority from time to time). 

Shareholders may liquidate their investments in the Company half-yearly, on 30th September and/or 31st March of each year (the "Redemption Day"), subject to certain limitations and the Directors exercising their discretion to operate the redemption facility. Shareholders may request the redemption of part of their holdings of Shares for cash at the prevailing Net Assets Value by giving notice to the Company not less than 65 days prior to the Redemption Date. The Directors will meet regularly to consider the operation of the redemption facility in light of prevailing market conditions, Shareholders sentiments and any legal constraints. 

Redemption on any Redemption Day will be restricted to up to 25.0 per cent. of the Shares in issue (or such lesser amount as the Directors, in their discretion, may determine), with any excess redemption requests being scaled back pro rata. Shareholders should note that the operation of this Redemption Facility is at the sole discretion of the Directors and they should place no reliance on the Directors exercising such discretion. Accordingly, Shareholders should have no expectations that the Directors will exercise their discretion on these Redemption Days. 

MANAGEMENT AND ADMINISTRATION

DIRECTORS      Andrew Sykes (Chairman)   Nicholas Fry   Robert King   Nicholas Moss    Robin Rumboll	REGISTERED OFFICE Trafalgar Court, Les Banques, St. Peter Port, Guernsey, GY1 3QL
MANAGER   Fauchier Partners Management Limited,   Suite A1, Hirzel Court,   Hirzel Street,   St. Peter Port,   Guernsey, GY1 2NN	INDEPENDENT AUDITOR Ernst & Young LLP, Royal Chambers, St. Julian's Avenue St. Peter Port, Guernsey, GY1 4AF
INVESTMENT ADVISOR   Fauchier Partners LLP,   72 Welbeck Street,   London, W1G 0AY	SPONSOR JPMorgan Cazenove Limited, 20 Moorgate, London, EC2A 6DA
LEGAL ADVISORS (GUERNSEY)   Ozannes,   1 Le Marchant Street,   St. Peter Port,    Guernsey, GY1 4HP	LEGAL ADVISORS (UK) Herbert Smith, Exchange House, Primrose Street, London, EC2A 2HS
ADMINISTRATOR, SECRETARY AND    REGISTRAR   Northern Trust International    Fund Administration,   Services (Guernsey) Limited,   Trafalgar Court,   Les Banques,   St. Peter Port,   Guernsey, GY1 3QL	RECEIVING AGENT AND UK PAYING AGENT Computershare Investor Services PLC, PO Box 859, The Pavilions, Bridgwater Road, Bristol, BS99 1XZ CUSTODIAN Northern Trust (Guernsey) Limited, Trafalgar Court, Les Banques, St. Peter Port, Guernsey, GY1 3DA

GLOSSARY OF INVESTMENT STRATEGIES

Macro (M)	These funds take directional positions based on their views of macroeconomic and market trends. They primarily use futures, forwards and options to implement trades in currency, bond or equity markets. Macro funds have historically delivered a strong and un-correlated performance, but with considerable volatility; they can be very attractive in a portfolio context as they tend to thrive at times of market stress.
Equity Long Bias (ELB)	These managers seek to extract returns from both long and short positions in individual equities. However, they will have a structurally higher allocation to long positions than to shorts and will primarily incorporate short positions as a means of dampening volatility, rather than as a source of alpha. The Manager expects Equity Long Bias managers to show an average beta to the MSCI World Equity Index (USD) in excess of 0.5 over a market cycle.
Equity Hedged High Volatility	These managers seek to extract returns from both long and short positions
(EHH)	in individual equities. The Manager does not expect these funds to show an average beta to the MSCI World Equity index (USD)of more than 0.5 over a market cycle and they should deliver the majority of their returns through stock-specific or sector-level risk. Over a market cycle, the Manager expects these funds to exhibit at least two-thirds of the volatility of the MSCI World Equity Index (USD).
Equity Hedged Low Volatility	These managers seek to extract returns from both long and short positions
(EHL)	in individual equities. The Manager does not expect these funds to show an average beta to the MSCI World Equity Index (USD) of more than 0.5 over a market cycle and they should deliver the majority of their returns through stock-specific or sector-level risk.  Over a market cycle, the Manager expects these funds to exhibit less than two-thirds of the volatility of the MSCI World Equity Index (USD).
Short Bias (SB)	A few managers run hedge funds with a consistent short bias, primarily in equities but also in corporate bonds. They vary the degree of gross and net exposure according to their perception of individual opportunities. Unsurprisingly, these funds deliver performance which tends to be negatively correlated to markets, Equity Long Bias funds and to a number of other fundamentally-driven hedge fund strategies. They often perform well at times of high equity and bond market volatility and are attractive in a portfolio context as a form of "value added insurance".
Specialist Credit (SC)	These funds generate their returns through long and short positions in corporate debt. Hedging instruments can include credit default swaps, equities and equity options. Managers often specialise in certain areas of the credit spectrum, ranging from Distressed and High Yield bonds to Investment Grade issues.
Event Driven (ED)	The event driven strategy takes advantage of either announced corporate actions or other pre-defined events that provide an estimated rate of return over a defined time period. Examples of such events include mergers, spin-offs and index rebalances. Often there is a "spread" between two or more involved securities or one security and a specified cash level. The principal risk is that the event does not come to fruition or that the timeline is underestimated. Generally, only moderate leverage is employed in this strategy.
Volatility Trading (VT)	Managers in this strategy seek to generate returns by exploiting inefficiencies in the pricing of implied and realised volatility in a variety of asset classes. Managers can be sub-classified into those who capture cheap optionality embedded within convertible bonds ("Convertible Bond Arbitrage") and those who take stand-alone and relative positions in options of both individual securities and in indices ("Options Arbitrage").
Fixed Income (FI)	Funds within this strategy trade interest rate risk on a relative value and/or directional basis. Typically they express their views through G10 government bond markets, interest swaps and other OTC and exchange traded derivative contracts. As government bonds are low volatility instruments, considerable nominal leverage is often applied.
Multiple Strategy (MS)	This group of hedge funds engages in a combination of the aforementioned strategies, adding value by dynamically allocating to in-house specialist teams in the areas which they think are likely to be most rewarding. These funds have further attractions in that they only charge a performance fee on the net returns achieved across the various strategies in aggregate.

ENDIR GGMZMNNZGLZM