Contact: Bevis Ingram, 01962 847508

1. Introduction

1.1 The Executive Member for Recreation and Heritage acts as Trustee for the following:

· the Allen and Curtis Museum Foundation

· the Red House Foundation

· the Flora Twort Trust

· the Tasker Trust.

1.2 In addition Mr Mark Breedon is a Trustee for the Allen and Curtis Museum Foundation. He has been sent a copy of this report.

1.3 By law, the Trustees are required to approve the annual accounts of the Trusts, which must then be sent to the Charity Commissioners. The accounts for the year 2003/04 are attached at Appendix 1. These include the value of each Trust's investments at book cost. The recent market value of investments is shown, for information, in Appendix 2.

1.4 The various Trusts hold investments in a variety of managed funds, all geared to long term investment. These managed funds should spread risks, while giving access to professional investment management. The funds invested in have not been changed for a number of years, with the exception of the Allianz Dresdner UK Equity Fund, as the transaction costs of selling units and reinvesting in other funds, added to the uncertainty of not finding a "better" performing fund, all militate against change. Paragraph 2, below, indicates that the performance of the equity-based funds in 2003/04 was good, largely recovering the losses made in the previous two years. The trustees should continue to bear in mind the long-term nature of equity investment.

2. Management of the Investments

The Allen and Curtis Museum Foundation

2.1 The Foundation holds units in Charibond and Charifund.

2.2 Overall, the Allen and Curtis Foundation's income rose by £36, or just over 1.1%, as the increase in income from Charifund outweighed the reduction in interest on cash balances.

2.3 Charibond is a fixed interest based fund, investing in UK Government bonds (gilts) and corporate bonds. It should provide a higher income than funds such as Charifund which is invested in equities and convertible stocks. As an equity-based fund, Charifund should provide capital growth and rising income over the longer term.

2.4 Charibond's income distribution remained unchanged from 2002/03 at 7.6p per share. The capital value per Charibond share fell during 2003/04, by 2.3%, from 130.7p per share in 2002/03 to 127.7p. This was better than the fall of 3.5% in Charibond's benchmark, the FTSE British Government All Stocks Index. The capital value has dropped a further 0.9% since then to 126.6p at 30 September 2004.

2.5 Charifund increased its income distribution from equities by 2.0%, from 55.1p per share in 2002/03 to 56.2p per share in 2003/04. The capital value of each Charifund share rose by 23.5% over the year, compared with a rise of 31.0% in the FTSE All Share Index. Charifund's portfolio is heavily weighted towards shares that provide a high income yield. Since March 2004 the Charifund holding has risen in value by a further 5.4%.

2.6 The lower income from interest on cash balances reflects the fall in average base rates between 2002/03 and 2003/04.

The Red House Foundation

2.7 The Red House Foundation's total income in 2003/04 fell by £132, or 4.7%, compared with 2002/03. The main sources of income are Charibond and Charinco. The fall in income is mainly as a result of the lower income received on the holding in Charinco as discussed in the next paragraph.

2.8 Charinco is another fixed interest fund. The distribution fell by 7.0% from 10.75p in 2002/03 to 10.0p per share in 2003/04. The capital value of each Charinco share fell by 2.8%, better than the 3.5% fall in the FTSE British Government All Stocks Index. Since March the value of the Charinco holding has fallen by a further 0.7%.

2.9 The Allianz Dresdner UK Equity Fund aims to provide healthy capital growth over the very long term. In 2003/04 the capital value per share rose by 22.5%. This rise in value was slightly less than the rise of 31.0% in the FTSE All Share Index. However, it performed less well than the Charifund holding held by the Allen Curtis Trust. Dresdner pursue a more adventurous growth-based investment style, which they believe will outperform over the long term.

2.10 The Red House Foundation also holds smaller investments in three equity-based Aberdeen funds. The Aberdeen North American Unit Trust rose in capital value by 10.6%, the Aberdeen UK Growth Fund by 24.3% and the New Star Equity Trust Income units rose by 23.0%.

Flora Twort

2.11 The Trust's investments are held in Charibond and Charinco. As explained in the previous sections, income from Charibond remained unchanged in 2003/04 whilst the income distribution from Charinco fell by 7.0% in 2003/04. This resulted in the Trust's income for 2003/04 falling by 3.4%. The market value of the Trust's investments fell, by an overall figure of 2.6% during 2003/04 and has fallen a further 0.8% in the six months to 30 September 2004.

Recommendation

That the Trustees approve the accounts as set out in Appendix 1.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

N.B. the list excludes:

1. Published works.

2. Documents that disclose exempt or confidential information as defined in the Act.

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