Contact: Bevis Ingram, 01962 847508, email [email protected]

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

· the Aldershot Military Historical 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, this includes the Tasker Trust and the Aldershot Military Historical Trust which do not hold any investments nor had any financial transactions during the year. The accounts for the year 2006/07 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 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 2006/07 was good for the fourth successive year. The trustees should continue to bear in mind the long-term nature of equity investment.

2. Recommendation

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

3. Management of the Investments

The Allen and Curtis Museum Foundation

3.1 The Foundation holds units in Charibond and Charifund.

3.2 Overall, the Allen and Curtis Foundation's income rose by £185, or 5.4% due to a good increase in income from Charifund and higher interest on cash balances.

3.3 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.

3.4 Charibond's income distribution remained unchanged from 2005/06 at 7.6p per share. The capital value per Charibond share fell during 2006/07, by 4.8%, from 127.4p per share in 2005/06 to 121.3p. This compared with a fall of 4.6% in Charibond's benchmark, the FTSE British Government All Stocks Index. This continues a downward trend in the capital value of the shares which is expected to continue into 2007 with the base rate rises.

3.5 Charifund increased its income distribution from equities by 8.5%, from 60.0p per share in 2005/06 to 65.0p per share in 2006/07. The capital value of each Charifund share rose by 9.1% over the year, compared with a rise of 7.7% in the FTSE All Share Index. Charifund's portfolio is heavily weighted towards shares that provide a high income yield.

3.6 The higher income from interest on cash balances reflects the rise in average base rates between 2005/06 and 2006/07 which increased by three quarters in the year.

The Red House Foundation

3.7 The Red House Foundation's total income in 2006/07 rose by £133 or 3.1%, compared with 2005/06. The main sources of income are Charibond, Charinco and Allianz RCM, which accounts for the majority of the increase during the year. The balance of the increased income for the year results from interest earned on cash balances.

3.8 Charinco is another fixed interest fund. The distribution remained unchanged from 2005/06 at 10.0p per share. The capital value of each Charinco share fell by 4.5% compared with a fall of 4.6% in the FTSE British Government All Stocks Index.

3.9 The Allianz RCM UK Equity Fund aims to provide healthy capital growth over the very long term. In 2006/07 the capital value per share rose by 5.5%. This rise in value was slightly less than the rise of 7.7% in the FTSE All Share Index, and less than the Charifund holding held by the Allen Curtis Trust. Allianz pursue a more adventurous growth-based investment style, which they believe will outperform over the long term. Income distribution growth this year was 9.4% on 2005/06, a larger growth than the Charifund investment.

3.10 The Red House Foundation also holds smaller investments in three equity-based funds. The Aberdeen UK Growth Fund rose by 10.8% and the New Star Equity Trust Income units rose by 3.9%. The Aberdeen North American Unit Trust underwent a restructuring during the year which resulted in a new holding of 233.37 units from 1005.15. The holding decreased in capital value by 1.1%.

Flora Twort

3.11 The Trust's investments are held in Charibond and Charinco. As explained in the previous sections, income from Charibond and Charinco remained unchanged in 2006/07. However the Trust's income for 2006/07 rose by £22 due to an increase in interest earned on cash balances. The market value of the Trust's investments fell, by an overall figure of 4.7% during 2006/07.

4. Possible future use of funds

4.1 A bid for HLF funds is being prepared for investment in the Red House. If successful, this bid will require a significant amount of match funding. One obvious source for this would be the capital value of the investments held by the Red House Foundation. Using the funds in this way would be in line with the charitable objectives of the Foundation. This would mean foregoing the annual income that the investments provide to contribute to the running costs of the Museum (£4.485 in 2006/07) and a paper analysing the best way forward will be brought for a decision by the Executive Member for Recreation and Heritage as the Trustee for the Foundation, in due course.

Or

This proposal does not link to the Corporate Strategy but, nevertheless, requires a decision to comply with the statutory requirements of the Charities Commission.

Section 100 D - :Local Government Act 1972 - background documents

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

NB: the list excludes:

1. Published works

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

Museum Trust Accounts County Treasurers