FINANCIAL REVIEW AND RESULTS F
I A CA N L SS O H E R NNI L A AYI F T E YA
The global ‘credit crunch’ and sharp onset of recession has given rise to the most aggressive bear market since the 1970’s, and resulted in 2008 being one of the worst and most volatile years on record for equity markets. The FTSE All Share returned -29.3% to 31st March 2009 driven by continued uncertainty generated by the global credit crunch and liquidity crises. Overseas equity markets performed modestly better in aggregate – the MSCI World ex-UK Index produced a total return -18.8% in sterling terms.
The bankruptcy of a number of financial institutions severely shook investor confidence. The demise of Lehman Brothers in September triggered a collapse in confidence in the banking sector, prompting an exceptional level of direct intervention by authorities around the world. In the UK base rates fell from 2.00% to 0.5%, the lowest level in the Bank of England’s three hundred year history. The mounting fears of prolonged deflation led the US, UK and Switzerland to initiate quantitative easing.
Given the turmoil in the banking system and deterioration in the economic background, it is not surprising that the only major asset classes to produce positive returns have been the ‘safe’ ones of cash and government bonds. During the year the FT Government All Stocks Index produced a total return of +10.3%.
Against the backdrop of worsening economic data and market volatility, the Trust saw a sharp decline in the value of its investments. The value of the Trust’s total net assets as at 31st March 2009 was £31,791,163, a decrease of -25.05% on the previous year where the Trust’s total net assets as at 31st March 2008 totalled £42,414,446. Income for the year also declined, although not at the rate as that witnessed on the asset value. Total incoming resources as at 31st March 2009 were £1,382,625, a decrease of -7.09% on the previous year where incoming resources totalled £1,488,202.
The Trustees confirm that for each fund held by the charity the charity’s assets are available and adequate to enable it to fulfill its obligations.
F N A A E E T U D MN GMN
All investments held by the charity have been acquired in accordance with the powers available to the Trustees.
For the year under review the Trust’s portfolio was managed in equal proportions by Schroders Investment Management Limited and Lazard Asset Management. Subject to satisfactory performance the Fund Managers are re-appointed on an annual basis, the last such appointment having been made in May 2008.
The Investment Committee and Trustees are aware of their obligation under the Trustee Act 2000 to conduct periodic independent reviews of their Fund Managers. With this in mind, they agreed that a review of Fund Managers would be undertaken in the early part of the forthcoming financial year, prior to any reappointment of Schroders and Lazard. During the year, three organisations specialising in investment review and fund manager selection were asked to tender for the work.
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