Investment summary 2006/07

19 February 2008

Our asset base grew to £15.1 billion during the year, with particularly strong returns from Asian and emerging markets, private equity and UK residential property assets.

We hold a world-class portfolio of investments widely diversified across asset type and geographical region. Rather than restrictive strategic benchmarks, our approach to asset management is a flexible and dynamic approach, based on the identification of the best investment opportunities wherever and in whatever form they may arise. A return of 17.0 per cent in 2006/07 reflects the success of this commitment to excellence and focus on absolute return.

Public equities enjoyed another strong year, with gains in excess of 40 per cent in Asian and emerging markets. Holdings in UK equities were again reduced, to 14.7 per cent of total assets. More than half of our portfolio is now held in ‘alternative’ assets (hedge funds, buyout funds, venture, property and emerging market equities).

Our commitment to hedge funds rose to £3.1bn. The Trust is also seeding up to US$550m in funds, principally hedge funds, managed by New Smith Capital Partners, and is taking a financial interest in the group.

We remain a major investor in private equity, with investments in over 500 partnerships and total commitments in excess of £3.8bn. Net annual returns have exceeded 21 per cent.

The Trust’s property portfolio continued to prosper, the 36 per cent gain in the value of residential property also reflecting the benefits of active portfolio management.

NB Returns quoted are nominal figures - i.e. before adjustment for inflation.

Further investment activity information for the year is available from our Annual Report and Financial Statements 2007.