LLOYDS INVESTMENT FUNDS LIMITED (formerly lloyds tsb offshore funds limited)
Annual Report and Audited Financial Statements
For the year ended 30th September 2013
Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Contents
Company Information 2
Investment Objectives and Policy 3
Directors’ Profiles 4
Report of the Directors 5
Report of the Investment Manager 7
Report of the Custodian 12
Report of the Independent Auditor 13
Balance Sheets 14
Statements of Comprehensive Income 18
Statements of Changes in Net Assets Attributable to Holders of Participating Redeemable Preference Shares 20
Cash Flow Statements 22
Investment Dealing 26
Investment Portfolios 27
Capital Growth Fund (Closed 5th July 2013) 27
Euro High Income Fund 31
European Fund 34
High Income Fund 36
International Fund 41
North American Fund 44
Sterling Bond Fund 46
UK Fund 49
Investments Purchased and Sold 51
Summary of Material Portfolio Changes 52
Notes to the Financial Statements 56
Distribution Table (Unaudited) 84
Performance Record (Unaudited) 88
Notice of Meeting 92
Form of Proxy 93
1 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Company Information Legal Advisers. In England: Linklaters Registered Office One Silk Street, London, PO Box 160, 25 New Street, EC2Y 8HQ. St Helier, Jersey, JE4 8RG, Investment Manager Channel Islands. Scottish Widows Investment Partnership Limited, 33 Old Broad Street, Principal Place of Business London EC2N 1HZ. PO Box 311, 11 - 12 Esplanade, St Helier, Jersey, JE4 8ZU, Custodian Channel Islands. Capita Trust Company (Jersey) Limited, PO Box 532, 12 Castle Street, Directors St Helier, c/o Registered Office Jersey, JE2 3RT, R. D. Willcox (Chairman) Channel Islands. I. M. J. Hardy B. C. James Secretary. N. R. Jeacock-Fewtrell Lloyds Corporate Services (Jersey) Limited (Formerly Lloyds TSB Offshore Corporate Services Limited), T. J. Herbert PO Box 160, 25 New Street, PO Box 87, 22 Grenville Street, St Helier, St Helier, Jersey, JE4 8PX, Jersey, JE4 8RG, Channel Islands. Channel Islands. Manager and Registrar Independent Auditors Lloyds Investment Fund Managers Limited (Formerly Lloyds TSB PricewaterhouseCoopers CI LLP, Offshore Fund Managers Limited), 37 Esplanade, PO Box 160, 25 New Street, St Helier, St Helier, Jersey, JE1 4XA, Jersey, JE4 8RG, Channel Islands. Channel Islands. Tel: +44 (0) 1534 845555 Paying Agent Legal Advisers Lloyds Bank International Limited (Lloyds TSB Offshore Limited), PO Box 111, In Jersey: Peveril Buildings, Peveril Square, Mourant Ozannes Douglas, IM99 1JJ, PO Box 87, 22 Grenville Street, St Helier, Isle of Man. Jersey, JE4 8PX, Channel Islands.
2 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Objectives and Policy
Lloyds Investment Funds Limited ‘the Company’ (Formerly Lloyds also hold a substantial part of its assets in bank deposits and money TSB Offshore Funds Limited) is an open-ended investment Company market instruments from time to time. The Company is permitted to registered in Jersey with seven classes each being an individual fund. invest in securities denominated in currencies other than sterling. The current policy of the Directors is that any such investments in It is known as an ‘umbrella’ Fund because it provides its non-sterling denominated securities should be fully hedged against shareholders with a variety of investment options under the sterling to eliminate the effects of any exchange rate movements. umbrella of a single Company. The overall objective of the Company is to provide investors with a International Fund managed investment designed to meet the specific objectives laid Objective down for each Fund. The investment objectives and policy of each To seek long term capital appreciation through investment in Fund is set out below. securities world-wide. Capital Growth Fund Investment Policy Closed 5th July 2013: merged via a scheme of amalgamation To be invested primarily in a diversified portfolio of international with the Lloyds Multi Strategy Growth Fund (Formerly Lloyds TSB equities and from time to time in securities convertible into equities. Offshore Multi-Strategy Fund Limited) - Growth Strategy. North American Fund Euro High Income Fund Objective Objective To seek long term capital appreciation through investment To maintain a high income through investment in a spread of fixed in North American securities. interest securities denominated predominately in euro. Investment Policy Investment Policy To be invested primarily in a diversified portfolio of North To support the payment of dividends above the level of short term American equities and from time to time in securities convertible euro interest rates. This policy will result in a gradual reduction in into equities. the capital value of the Shares, except when bond prices generally are rising. The Company will normally hold a relatively wide range Sterling Bond Fund of securities in order to keep a low level of exposure to individual Objective bond issues other than government securities. The Company may To provide a regular income from a managed portfolio of sterling also hold a substantial part of its assets in bank deposits and money fixed interest securities with a particular emphasis on those market instruments from time to time. The Company is permitted to securities on which interest is paid gross to non residents of the invest in securities denominated in currencies other than euro. The United Kingdom. current policy of the Directors is that any such investments in non- euro denominated securities should be fully hedged against euro to Investment Policy eliminate the effects of any exchange rate movements. The assets of the Company are generally invested in a managed portfolio of sterling fixed interest securities which have been issued European Fund by governments, local authorities, public utilities and corporations. Objective If it appears advisable to hold assets having a short term maturity, To seek long term capital appreciation through investment in then the Company may also place money on bank deposit (subject European securities. to certain limitations) or to purchase money market instruments. Investment Policy Similarly, derivative instruments such as traded options To be invested primarily in a diversified portfolio of European and financial futures may be used to reduce risk. (excluding the United Kingdom) equities and from time to time in UK Fund securities convertible into equities. Objective High Income Fund To seek long term capital appreciation through investment Objective in United Kingdom securities. To seek a high income from a spread of fixed interest securities. Investment Policy Investment Policy To be invested primarily in a diversified portfolio of United Kingdom To support the payment of dividends above the level of short term equities and from time to time in securities convertible into equities. sterling interest rates. This policy will result in a gradual reduction in the capital value of the Shares, except when bond prices generally are rising. The Company will normally hold a relatively wide range of securities in order to keep a low level of exposure to individual bond issues other than government securities. The Company may
3 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Directors’ Profiles
Ross Davey Willcox (Chairman) – Head of International Investments and Wealth Solutions, International Wealth, Lloyds Banking Group. Joined the Lloyds Banking Group in 1977 and held a number of managerial positions in the UK and Internationally. Was appointed Managing Director of the Jersey Fund Management Company in 1999 and is currently Chairman/Director of the International Fund Companies. Current responsibilities include the value proposition of all investment products for International Wealth. A qualified Banker, a Fellow of the Securities & Investment Institute. A Chartered Director. Aged 54. Ian Mark Jeremie Hardy – Senior Product Manager, International Wealth, Lloyds Banking Group. Joined the Lloyds Banking Group in 1981 and held a number of managerial positions before being appointed Managing Director of the Group’s Guernsey based Fund Management Company in 1997 and a Director of the Company in 2000. Current responsibilities include provision of technical and regulatory advice on a range of investment products and services. Holder of an upper second class honours degree from the University of Aston in Birmingham in Business Administration and Transport Planning. Aged 54. Timothy Joseph Herbert – Consultant, Mourant Ozannes. Jersey born and educated. M.A. in jurisprudence Trinity College Oxford 1982. Member of Middle Temple. Joined Mourant du Feu & Jeune (now Mourant Ozannes) in May 1983. Sworn in as an advocate of the Royal Court, September 1985. Tim Herbert was a partner of Mourant Ozannes from 1987 to 2012. In July 2012 he stepped down from the partnership and is now retained by Mourant Ozannes as a consultant to the firm. He has extensive experience in corporate and commercial law and mutual funds advice. Holds other external directorships and also acts as Honorary Consul for Finland. Aged 54. Brian Charles James – Head of Investment Operations Jersey, International Wealth, Lloyds Banking Group. Joined the Lloyds Banking Group in 1988 and held a number of managerial positions primarily in Financial Control and Risk Management roles. Appointed as a Director in 1997. Current responsibilities include leading a team of specialists delivering operational support for a range of offshore investment products and services. A Chartered Director. Aged 52. Nigel Ross Jeacock-Fewtrell – Transaction Leader, Change and Transformation, International Wealth, Lloyds Banking Group. Joined the Lloyds Banking Group in 1985 and held a number of managerial positions in Jersey, UK and Hong Kong. Appointed as a Director in 2002. Current responsibilities include delivering strategic change to the Group’s international business. A Chartered Director. Aged 47.
4 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Directors
The Directors have pleasure in submitting their Annual Report that investment in the Funds should be considered as a long term together with the Audited Financial Statements for the year commitment, as the price of shares may rise and fall in the short ended 30th September 2013. term in response to changing market conditions. Results European Union (Including United Kingdom) The results for the year are set out in the financial statements on Tax Considerations. pages 14 to 83. The European Union Savings Directive (‘EUSD’) came into effect Distributions from 1st July 2005. Its purpose is to ensure that European Union (‘EU’) residents pay tax on savings income in accordance with the Distributions for the year are detailed in Note 5 to the financial tax laws in their country of residence. Although the Channel Islands statements. and Isle of Man are not part of the EU, they agreed (along with Directors Switzerland and a number of other jurisdictions) to apply the same provisions. Mr R.D. Willcox, Mr I.M.J. Hardy, Mr T.J. Herbert, Mr B.C. James and Mr N.R. Jeacock-Fewtrell were Directors throughout the year, As distributions and the income element of redemption proceeds have since continued to act and are willing to remain in office. from investments in certain sub funds of Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited) fall within the As at 30th September 2013, the Shares held in the Company by the scope of the Directive, the Manager applies the requirements of the Directors were as follows: Directive to investments made by investors who are resident in the Mr I. M. J. Hardy Shares EU for tax purposes. International Fund 4,441.80 Details of the identity, residence and total amount paid to investors No Director has a service contract with the Company and is, or was, in the Company will be supplied to the local tax authorities for materially interested in any service or other contract entered into by onward communication to the investors’ home tax authority. the Company. For the avoidance of doubt, details of payments of dividends and the proceeds of sales, redemptions and refunds are included in Mr T.J. Herbert was a partner of Mourant Ozannes from 1987 to this exchange of information. 2012. In July 2012 he stepped down from the partnership and is now retained by Mourant Ozannes as a consultant to the firm. Management and Administration Providers Mr R.D. Willcox, Mr B.C. James, Mr I.M.J. Hardy and Mr N.R. The names and addresses of management and administration Jeacock-Fewtrell are Directors of Lloyds Investment Fund Managers providers are stated on page 2. Limited (Formerly Lloyds TSB Offshore Fund Managers Limited) (the ‘Manager’) which has a management contract with the Company. Comparatives Tables Fees earned by the Manager are disclosed in the The distribution table (unaudited), performance record (unaudited) financial statements. and net asset value per share tables (unaudited) are stated on pages 84 to 91. Investment Activities The Report of the Manager is set out on pages 7 to 11. Directors’ Responsibilities. The Directors are responsible for preparing the financial statements Independent Auditors in accordance with applicable law and International Financial PricewaterhouseCoopers CI LLP were re-appointed as Independent Reporting Standards (IFRS). The Directors are required by the Auditors at the Annual General Meeting held on 19th March 2013 Companies (Jersey) Law 1991 to prepare financial statements and have indicated their willingness to remain in office. for each financial year which give a true and fair view of the state of affairs of the Company for that year and are in accordance Prospectus with applicable laws. In preparing these financial statements the A revised Prospectus which reflects the above name changes, Directors are required to: together with other minor amendments, was issued dated • select suitable accounting policies and then apply September 2013. Copies of the Prospectus are available, free of them consistently; charge, on application to the Manager. Alternatvely they can be • make judgements that are reasonable and prudent; accessed on our website at • state whether applicable accounting standards have been http://international.lloydsbank.com/international-investments/ followed subject to any material departures disclosed and funds/. explained in the financial statements; and Market Conditions • prepare the financial statements on the going concern basis Some of the assets held within certain Funds have been adversely unless it is inappropriate to presume that the Company will affected by market conditions, this has also affected the share price continue in business. of those Funds. The Directors would like to remind shareholders
5 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Directors continued
The Directors are responsible for keeping proper accounting records Website which disclose with reasonable accuracy at any time the financial The Directors have selected Lloyds Bank International Limited’s position of the Company and to enable them to ensure that the (Formerly Lloyds TSB Offshore Limited) website as the host website financial statements comply with the Companies (Jersey) Law 1991 for the Company’s financial statements and believe this selection to and the Collective Investment Funds (Recognized Funds) (Rules) be a reasonable one; the work carried out by the Auditors does not (Jersey) Order 2003 (as amended). involve consideration of these matters and, accordingly, the Auditors They are also responsible for the safeguarding of the assets of accept no responsibility for any changes that may have occurred to the Company which includes the appointment of a duly qualified the financial statements since they were initially presented on the Custodian. The Directors must also ensure that they or their website. duly appointed agents take reasonable steps for the prevention Information published on the internet is accessible in many and detection of fraud, error and non-compliance with law and countries. Legislation in Jersey governing the preparation and regulations. dissemination of financial statements may differ from legislation The Directors confirm that they have complied with the above in other jurisdictions. requirements in preparing the financial statements. The latest prices can be viewed on our website. So far as the Directors are aware, there is no relevant audit http://international.lloydsbank.com/international-investments/ information of which the Company’s Auditors are unaware, and funds/prices/ each Director has taken all the steps that he ought to have taken as Director, in order to make himself aware of any relevant audit Change of Company Name information and to establish that the Company’s Auditors are As advised to shareholdersin August 2013, an Extraordinary General aware of that information. Meeting was held on 16th September 2013 at which a resolution proposing the change of name of the company to Lloyds Investment Reporting Funds Regime Funds Limited, from Lloyds TSB Offshore Funds Limited was passed. HM Revenue & Customs has accepted the entry of the Company As a result, the name of the Company changed with effect from 23rd into the Reporting Funds Regime with effect from 1st October September 2013. 2010 for the purposes of regulation 51 of the Offshore Funds (Tax) Regulations 2009. Change of Name of Management Company As part of Lloyds Banking Group’s preparations to create a separate General Information bank (TSB), the name of the Manager, Lloyds TSB Offshore Fund The Company is an open-ended investment Company with variable Managers Limited, changed to Lloyds Investment Fund Managers capital and shareholders are not liable for the debts of the Company. Limited with effect from 23rd September 2013. There will be no change to the service that Shareholders currently receive as a result The Company holds a certificate as a recognized Securities Fund of this change. under the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 (as amended), and holds a permit under Article Closure of Capital Growith Fund 7 of the Collective Investment Funds (Jersey) Law, 1988. At an Extraordinary General Meeting of Shareholders of the Capital The Company is a recognised scheme under Section 270 of the Growth Fund held on 28th June 2013, a proposal to enter into a Financial Services and Markets Act 2000 of the United Kingdom. scheme of amalgamation with the Lloyds Multi Strategy Growth Fund (formerly Lloyds TSB Offshore Multi-Strategy Fund - Growth The Company is listed on the Channel Islands Stock Exchange Strategy) was approved. The scheme of amalgamation was effected and on the Malta Stock Exchange. on 5th July 2013, and subsequently the Capital Growth Fund has The market value per Share of the property of each been closed Fund was as follows: By order of the Board 30th Sep 1st Oct Lloyds Corporate Services (Jersey) Limited (Formerly Lloyds TSB 2013 2012 Offshore Corporate Services Limited) Capital Growth Fund N/A 179.50p Secretary (Closed 5th July 2013) 18th December 2013 Euro High Income Fund* 164.20c 160.10c European Fund 782.90p 633.20p High Income Fund 86.93p 87.21p International Fund 416.20p 338.70p North American Fund 1,326.00p 1,102.00p Sterling Bond Fund 143.90p 142.50p UK Fund 715.50p 618.00p * Prices are in euro cents 6 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Investment Manager
Euro High Income Fund tier 2 debt into BNP Paribas tier 1 debt. Barclays was considered expensive on relative valuations. Performance The Fund produced a return of 6.12% for the year ended 30th As at 30 September, the Fund remained long of credit risk - that September 2013, compared to a return of 5.31% in the iBOXX Euro is, the portfolio was skewed towards lower-rated and higher- Corporates 5 years + index. yielding bonds. The Fund was overweight relative to benchmark in subordinated bank debt and corporate hybrids, with a healthy Background and Strategy allocation to high yield. Returns from corporate bonds have been fairly flat. In the first half of the review period, the asset class turned in a strong performance, Outlook but this was only partially due to a narrowing of yield spreads over Looking ahead, we expect corporate bonds to outperform government bonds. Much was due to a sharp downward movement government bonds based on strong corporate fundamentals and in government bond yields. Investors, dismayed by the meagre the ongoing hunt for yield. There is clear evidence of substantial returns on offer from core government bonds, have tended to amounts of cash continuing to chase corporate bonds, in both migrate up the risk spectrum towards bonds with lower credit sterling and euros. ratings and in some cases up the curve into bonds with longer- European Fund dated maturities. Performance A high volume of new issuance from financial and corporate issuers The Fund produced a return of 23.72% for the year ended 30th has not hurt the performance of corporate bonds. This has been very September 2013, compared to a median return of 28.22% in the adequately soaked up by the huge demand for yield from pension Lipper Hindsight European excluding UK sector and 27.14% in the funds, insurance companies and private investors. FTSE Europe ex UK index. In April, returns were boosted by a fall in government bond yields, a Background and Strategy tightening of credit spreads and a paucity of new issuance relative to demand. But in May and June, returns from corporate bonds European equities posted excellent gains over the 12 months. were negative. While yield spreads over government bonds moved Primarily driving markets was the ongoing extraordinary support tighter in May, this was more than countered by an upward move by the world’s central bankers. This included European Central in government bond yields. In June, after US Federal Reserve Bank President Mario Draghi declaring he would do “whatever indications that it would taper its accommodative monetary policy, it takes” to save the euro. For many, this showed that the single heightened risk aversion drove prices lower. In the final three months currency project was incontrovertible. The US Federal Reserve (“the of the review period, credit spreads tightened, largely due to a series Fed”) has also played a major part in supporting global markets by of better-than-expected economic data releases on both sides of pumping $85 billion-a-month into the US economic in the form of the Atlantic. quantitative easing. Although fears that this was to be “tapered” in September spooked investors. In the event, the Fed refrained from Throughout the review period, the Fund has invested selectively acting, which spurred a relief rally. Meanwhile, the economic picture in a variety of new issues. Early on, we participated in new euro- has also improved for the eurozone, with the region finally emerging denominated issues from UK companies Xstrata and British from recession on the second quarter of 2013. Good-quality cyclical American Tobacco. Moving into 2013, more complicated deal stocks, as a result, found themselves in favour. Political discord structures gained in popularity. This was exemplified by corporate remains a concern both here and abroad, with stalled US budget hybrid issuance from various entities including energy group EDF, UK talks and a confidence vote in Italy recently unsettling markets. This utility National Grid (NGG Finance) and Dutch phone company KPN was a cue for traders to lock in profits at the close of the reporting (subsequently sold). Further new issues included euro-denominated period. Tier 2 debt from Dutch life insurer Achmea. Turning to the Fund, a position in Kabel Deutschland, a German Trading in the second half of the review period was fairly muted. provider of TV, internet and phone services, did well. The company’s The Fund took part in a new corporate hybrid issue from Hutchison shares climbed after it received a preliminary takeover approach Whampoa, the large Hong Kong based conglomerate. A rating- from Vodafone. The stock was further buoyed by a counterbid from agency change in methodology led to a good opportunity to re- Liberty Global, before Vodafone finally closed out the deal with an establish a position in Santos, the Australian oil & gas producer, and improved final offer. We approved of this bid and sold our shares as the Fund switched from Lloyds Banking Group subordinated debt part of the deal. Meanwhile, Safran, an aerospace & defence group, into a more attractively valued Clerical Medical subordinated issue. was another highlight for the fund. This is a quality company, with strong underlining fundamentals and excellent long-term growth The Fund took part in a new 2019 euro-denominated issue from prospects. Despite this, Safran is undervalued when compared to Fiat, aiming to capture the large new issue premium that came with close peer EADS. The market has woken up to this fact, hence the the deal. Later in the quarter we sold this bond at a profit, switching stock’s recent strong performance. into a shorter-dated (2015) Fiat bond. Fiat bonds remain volatile; accordingly, we prefer shorter-dated issues. We also participated Among the largest underperformers was Andritz, the Austrian in a new euro-denominated 10-year issue from America Movil, the engineering firm. Its stock plunged to an 11-month low in May after Mexican telecoms giant. Finally, we switched from Barclays upper it issued a profit warning. The company made the statement in light
7 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Investment Manager continued of cost overruns at a pulp mill in South America. Elsewhere, shares yields continued on their upward trend, credit spreads tightened. in SAP fell back over the review period. Business software sales The tightening was largely due to a series of better-than-expected and operating profits fell short over the opening quarter of 2013 economic data releases on both sides of the Atlantic. thanks to a “perfect storm” in the Asia-Pacific region. Nonetheless, Early on, we bought high yield bonds issued by Jaguar Land its cloud, data and mobile operations continued to enjoy excellent Rover Automotiver, and covered bonds issued by Clydesdale growth. Bank. Meanwhile we sold bonds issued by Co-op after they were Outlook disappointingly downgraded to sub-investment grade. The outlook for Europe has certainly improved. Business activity in One notable theme has been the growth in popularity of more the 17-country region grew at its fastest pace in two years in August. complicated deal structures offering the prospect of higher yields. The closely-watched Markit’s composite managers’ index returned This was exemplified by “corporate hybrid” issuance from such 52.1 over the month, up from 51.5 in August. Unemployment figures entities as energy group EDF, UK utility National Grid (NGG Finance), also showed their smallest drop in 18 months. Inflation, meanwhile, Dutch phone company KPN and Pennon, the group that owns South fell to its lowest level in three and a half years, edging down to 1.1% West Water. The Fund participated in hybrid new issues from all of in September (from 1.4% the previous month). Subdued borrowing these companies. . costs should allow the European Central Bank (ECB) to maintain its expansionary monetary policy for some time to come. Between April and June, the Fund invested in one new issue, the AA’s first ever deal in the sterling bond market. This was a high Encouragingly, news from the embattled south of Europe has not yield offering with a highly attractive 9.5% coupon. Further trades been as bad as feared. Tentative hopes are mounting that the included switching longer in Intercontinental Hotels, one of our region may have reached a nadir. Further, the various austerity favoured names, from the 2016 into the 2022 issue. measures that have strangled several nations look set to ease in 2014. This could equate to a lift of around 1% to eurozone GDP In the final three months of the review period, we added to a sterling- next year. denominated holding in AIG, a short-dated bond in the insurance sector at an attractive valuation. We reduced our exposure to Lloyds So, while potential hurdles remain - no least that the eurozone is Banking Group. This is the biggest overweight position in the fund heavily reliant on a global recovery and therefore susceptible to any and the best performer. correction – there are reasons for optimism for Europe. The worst, it would appear, is over. As such, we forecast a period of gradual and We participated in two corporate hybrid issues from America Movil sustainable growth for European corporates into 2014 and beyond. and Enel. These were funded by sales of two high yield bonds from Virgin Media and Ladbrokes. Finally, we have continued to reduce High Income Fund exposure to Telecom Italia, as there is a possibility of a downgrade to Performance high yield in the coming months. The Fund produced a return of 4.90% for the year ended 30th As at 30 September, the Fund remained long of credit risk – that September 2013, compared to a return of 3.88% in the iBoxx Non is, the portfolio was skewed towards lower-rated and higher- Gilt ex Sovereign All Maturities index and comfortably outperformed yielding bonds. The Fund was overweight relative to benchmark the peer group median. in subordinated bank debt and corporate hybrids, with a healthy allocation to high yield. Background and Strategy Returns from corporate bonds have been strong, but this has only Outlook partly been due to a narrowing of yield spreads over government Looking ahead, we expect corporate bonds to outperform bonds. Much has been due to a sharp downward movement in government bonds based on strong corporate fundamentals and government bond yields. Investors, dismayed by the meagre returns the ongoing hunt for yield. There is clear evidence of substantial on offer from core government bonds, have tended to migrate up amounts of cash continuing to chase corporate bonds, in both the risk spectrum towards bonds with lower credit ratings and – in sterling and euros. some cases – up the curve into bonds with longer-dated maturities. A high volume of new issuance from financial and corporate issuers International Fund over the review period did not hurt the performance of corporate Performance bonds, largely due to central bank actions that flooded the system The Fund produced a return of 22.66% for the year ended 30th with liquidity. September 2013, compared to a median return of 18.28% in the The asset class experienced a setback in May and June. Even though Lipper Hindsight International Equity sector and a 20.56% sterling yield spreads over government bonds moved tighter, this was more return by the MSCI World index. than countered by the upward move in government bond yields. Background And Strategy In June, after US Federal Reserve indications that it would taper its Global equity markets have made considerable progress over accommodative monetary policy, heightened risk aversion drove the last 12 months. The MSCI World index gained 23.0% in local prices lower. However, some of the lost ground was recouped in the currency, total return terms. Nevertheless, uncertainty over future final three months of the review period. While government bond plans for global monetary policy was prevalent from the second
8 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Investment Manager continued quarter onwards. Ben Bernanke, the chairman of the US Federal North American Fund Reserve (“the Fed”), said that the central bank would consider the idea of “tapering” its $85 billion-a-month asset-buying programme, Performance should we see a sustained economic improvement. Investors The Fund produced a return of 20.00% for the year ended 30th reacted with surprise when the Fed decided not to begin the cuts September 2013, compared to a median return of 18.76% in the (for the moment) after its meeting in September, giving a boost to Lipper Hindsight North American Offshore sector and 19.00% in the the S&P 500. The reporting period finished amid worries over a US S&P 500 (sterling) index. political stalemate and worries that politicians would fail to reach Background and Strategy an agreement to increase the country’s debt ceiling. A temporary US equity markets were up over the 12 months, with significant extension to the limit was finally agreed in mid October. The S&P 500 gains occurring from November 2012 onwards. The S&P 500 index gained 19.3% in dollar, total return terms. index returned 19.3% in dollar, total return terms. Nevertheless, Elsewhere, it was revealed that the eurozone had finally emerged uncertainty over future plans for monetary policy was prevalent from recession, recording growth of 0.3% over the second quarter. from the second quarter onwards. Ben Bernanke, the chairman of After a long period in the doldrums, confidence in the single- the Federal Reserve (“the Fed”), said that the central bank would currency bloc was also on the up. The European Commission’s consider the idea of “tapering” its $85 billion-a-month asset-buying Economic Sentiment Indicator hit a two-year high of 96.9 in programme, should we see a sustained economic improvement. September. The FTSE World Europe (ex-UK) index was up by 23.4% Market participants have spent the last few months questioning in local currency, total return terms. whether any optimistic economic data could, in fact, be positively UK equities also did well, although they lagged slightly behind other construed. Good news, it was feared, would simply lead the Fed developed markets. The FTSE 100 gained 16.7% in sterling, total to take more aggressive action in terms of beginning the taper. return terms. Japan was the clear leader among this group, with an In economic news, the number of new claims for unemployment impressive 65.0% gain in yen, total return terms for the broad-based benefits fell to the lowest level in six years in the second week Topix index. of August. Meanwhile, consumer price data for July highlighted that the economic recovery is not stoking inflation. Given this Meanwhile, China’s factory sector managed a marginal gain in background, the mid-September meeting of the Fed’s rate-setting September, with HSBC’s PMI edging up to 50.2. Preliminary “flash” committee was widely expected to bring about a reduction to survey data had been more encouraging, however, while both the its monthly $85 million of bond purchases. Investors therefore HSBC/Markit PMI and the official index maintained by the Chinese reacted with surprise when it was announced that there would be government had shown more impressive growth in the earlier no changes to monetary policy yet. They breathed a collective sigh months of the year. As a group, emerging markets lagged their of relief, and the S&P 500 index reached a record intra-day high of developed peers, with the MSCI emerging markets index gaining just 1,729.86. 6.2% over the 12 months. But political stalemate over a stop-gap US budget increased investor Turning to the Fund, our holding in TripAdvisor performed well. uncertainty at the end of September. The impasse led to a partial The company recently produced a solid earnings report, while the shutdown of the US government and fears that politicians would fail stock continued to benefit from the decision by a large existing to reach an agreement to increase the country’s debt ceiling (the shareholder to increase their stake in the company at a substantial amount that the government can borrow by way of issuing bonds, premium to the current share price. Recently, the holding in ITV has currently $16.7 trillion), leaving it potentially unable to fulfil debt made a strongly positive contribution. The stock’s performance was obligations. A temporary extension to the limit was finally agreed in boosted by management investment in improving the quality of mid October. ITV’s television programmes for subsequent distribution to the US At asset level, our holding in TripAdvisor performed well. The and other markets. The potential for an improvement in advertising company recently produced a solid earnings report, while the budgets (based on continued UK economic recovery) has also stock continued to benefit from the decision by a large existing helped to drive the share price up. shareholder to increase their stake in the company at a substantial From a sectoral perspective the Fund is underweight consumer premium to the current share price. In contrast, our holding in staples and energy. The principal overweights are in the industrial, SolarWinds, the network solutions company, had a negative effect financial and consumer discretionary sectors, mainly due to bottom- on returns over the review period. The company’s first-quarter up stock selection. revenue report missed analysts’ estimates. Its director said that it did In terms of our future investment efforts, we are always seeking not achieve the level of new software licence sales it had expected. opportunities to invest in companies that can generate profits We recently started a new position in WhiteWave Foods, an exciting growth that does not depend entirely on the prediction of spin-off from Dean Foods. In its current form, we believe WhiteWave macroeconomic trends. represents one of the best growth stories in the packaged food group.
9 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Investment Manager continued
Outlook progressed we continued to reduce our holding in the utility, as there Our outlook for the US remains positive. We are encouraged by the is a possibility of a downgrade to high yield in the coming months. fact that American households and the corporate sector appear We also reduced our position in G4S, as the security services to be in good financial health. We view the current political turmoil group has been hit hard by negative news flow. We sold a holding as temporary and we do not expect it to hinder the prospects for in Finmeccanica, the Italian defence company best known for its economic recovery. helicopters. After strong recent performance, we thought it prudent to take profits. Sterling Bond Fund Between April and June, the Fund invested in two new issues: a Performance rare sterling issue from Rolls-Royce, and the first ever deal from The Fund produced a return of 3.68% for the year ended 30th the AA. This latter deal was a six-year sterling bond with a healthy September 2013, compared to a return of 20.56% BY THE MSCI spread of 330 basis points over the relevant Gilt. Further trades World index and 18.28% s3.88% in the iBoxx Non Gilt ex Sovereign during this period included a switch from a 2016 to a 2022 issue from All Maturities. Intercontinental Hotels. Background and Strategy Trading during the final three months of the review period was Returns from corporate bonds have been strong, but this has only limited. We took part in a new short-dated issue from Volkswagen. partly been due to a narrowing of yield spreads over government We added to our holdings in the banking sector in upper tier 2 paper bonds. Much has been due to a sharp downward movement in – our favoured part of banks’ capital structures – with purchases of government bond yields. Investors, dismayed by the meagre returns Standard Chartered and Santander. on offer from core government bonds, have tended to migrate up As at 30 September, the Fund remained long of credit risk – that is, the risk spectrum towards bonds with lower credit ratings and – in the portfolio was skewed towards lower-rated bonds. The Fund was some cases – up the curve into bonds with longer-dated maturities. overweight relative to benchmark in subordinated bank debt and A high volume of new issuance from financial and corporate issuers corporate hybrids. over the review period did not hurt the performance of corporate Outlook bonds, largely due to central bank actions that flooded the system with liquidity. Looking ahead, we expect corporate bonds to outperform government bonds based on strong corporate fundamentals and The asset class experienced a setback in May and June. Even though the ongoing hunt for yield. There is clear evidence of substantial yield spreads over government bonds moved tighter, this was more amounts of cash continuing to chase corporate bonds, in both than countered by the upward move in government bond yields. sterling and euros. In June, after US Federal Reserve indications that it would taper its accommodative monetary policy, heightened risk aversion drove UK Fund prices lower. However, some of the lost ground was recouped in the Performance final three months of the review period. While government bond The Fund produced a return of 16.03% for the year ended 30th yields continued on their upward trend, credit spreads tightened. September 2013, compared to a median return of 19.29% in the The tightening was largely due to a series of better-than-expected Lipper Hindsight UK Offshore Funds sector and 18.93% in the FTSE economic data releases on both sides of the Atlantic. All Share index. During the review period, the Fund has invested selectively in a Background and Strategy variety of new issues. Early on, these included participation in a new ten-year sterling issue by Swedish oil & gas producer Svenska. We The 12-month reporting period was a positive one for UK equities, also invested in sterling-denominated tranches of hybrid bonds despite the fact that they lagged behind some of their developed issued by energy group EDF and from National Grid (NGG Finance). peers. Initially, performance was driven by ongoing extraordinary Both issues were attractively priced compared to the company’s support from the world’s central bankers. Liquidity and historically senior debt. low interest rates have encouraged traders into riskier assets, with equities among the main beneficiaries. Markets, however, The Fund switched some senior financial debt to covered debt as were thrown into turmoil in May after Ben Bernanke, the Federal a risk-reduction measure, selling Nationwide and Lloyds Banking Reserve (“the Fed”) chairman, said that his rate-setting institution Group in favour of Yorkshire Building Society and Coventry Building would soon “taper” its quantitative easing (“QE”) programme. Society. Further risk-reduction trades included a sale of Barclays They breathed a collective sigh of relief when the Fed chose senior debt. not to implement the cuts (for the moment) after its meeting We switched a holding in Marks & Spencer from the 2021 issue into in September. a 2025 issue. This was prompted by persistent LBO rumours; the longer-dated issue is more attractively priced if a “change of control” clause is triggered. We trimmed exposure to Telecom Italia following a period of strong performance in the first half of the review period. As the year
10 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Investment Manager continued
Not to be outdone, Mark Carney, the new Bank of England governor, introduced his brand of “forward guidance”. This will see rates remain low until unemployment falls below 7%. The declaration came with several caveats, however, and investors’ reactions have been fairly muted. In terms of sector performance, leisure goods were the standout performer over the 12 months. Forestry & paper and personal goods also did well. In contrast, industrial metals & mining was the biggest laggard. Turning to the Fund, negative returns were derived from its holdings in KSK Power Ventur and iEnergizer. These stocks were affected by the same issues, namely the current weakness of the Indian currency and the ongoing delays with regard to reforming the country’s energy policy. In contrast, the holding in ITV made a positive contribution to returns. The stock’s performance was boosted by management investment in improving the quality of ITV’s television programmes for subsequent distribution to the US and other markets. The potential for an improvement in advertising budgets (based on continued UK economic recovery) has also helped to drive the share price up. UK growth for the first half of 2013 was confirmed at 1.1%, while the unemployment rate unexpectedly fell to 7.7% between May and June. Meanwhile, the all-sector business PMI index recorded 60.2 over the third quarter, its highest since comparable data were first compiled in 1998. The UK’s service sector also expanded at the fastest rate in six years in August. The housing market is rebounding strongly, helped but the government’s Help to Buy scheme. This wealth-effect has spurred consumer confidence, while bank lending is improving. Outlook This turnaround is undoubtedly encouraging - but there are still warning signs, suggesting the recovery may take some time to translate into rising disposable incomes for the UK consumer and better activity in the real economy. New home-build numbers are also uninspiring. The third quarter corporate reporting season will be an interesting litmus test in this regard. If we see another round of tepid outlook statements - particularly after a good run up in equity markets - we could be in for an end-of-year market correction. Scottish Widows Investment Partnership Limited 18th December 2013
11 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Custodian to the Members of Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Statement of Custodian’s Responsibilities. The Custodian is required under the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 (as amended) (the ‘Rules’) to ensure that, inter alia, it: • satisfies itself that the sale, issue, redemption, cancellation and valuation of shares in the Company are carried out in accordance with the Rules; and • takes into its custody all the assets of the Company and holds them in trust for the shareholders in accordance with the Rules; and • enquires into the conduct of the Company in each annual accounting year and reports thereon to shareholders in a report, which shall contain the matters prescribed by the Rules. The Custodian’s Report is included in this Annual Report. Report of the Custodian to the Members of Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited) In accordance with Article 2.06 of the Rules, Capita Trust Company (Jersey) Limited, has acted throughout the year as independent Custodian to the Company. In accordance with Article 7.08 of the Rules we confirm, in our capacity as the Custodian, that we have enquired into the conduct of the Company for the year ended 30th September 2013 and in our opinion, to the best of our knowledge having made such enquiry, the affairs of the Company have been conducted in all material respects for the year then ended: • in accordance with the limitations imposed on the investment and borrowing powers of the Company by the Memorandum and Articles of Association, by prospectuses and by all Orders for the time being in force under Article 11 of the Collective Investment Funds (Jersey) Law 1988 (as amended) (‘the Law’); and • otherwise in accordance with the provisions of the Memorandum and Articles of Association and the Law. Capita Trust Company (Jersey) Limited, Custodian 12 Castle Street, St Helier, Jersey, JE2 3RT Channel Islands 18th December 2013
12 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Report of the Independent Auditors to the Members of Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
We have audited the financial statements of Lloyds Investment • have been properly prepared in accordance with International Funds Limited (Formerly Lloyds TSB Offshore Funds Limited) for the Financial Reporting Standards; and year ended 30th September 2013 which comprise the balance sheet, • have been properly prepared in accordance with the the statement of comprehensive income, the statement of changes requirements of the Companies (Jersey) Law 1991 and the in net assets attributable to holders of participating redeemable Collective Investment Funds (Recognised Funds)(Rules) preference shares, the cash flow statement, the investment (Jersey) Order 2003 (as amended). portfolio and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and Opinion on other matters International Financial Reporting Standards. In our opinion: Respective responsibilities of directors and auditors • the information given in the Directors’ Report for the financial As explained more fully in the Directors’ Responsibilities statement, year for which financial statements are prepared is consistent as set out on pages 5 and 6, the directors are responsible for the with the financial statements. preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and Matters on which we are required to report express an opinion on the financial statements in accordance with by exception applicable law and International Standards on Auditing (UK and We have nothing to report in respect of the following matters where Ireland). Those standards require us to comply with the Auditing the Companies (Jersey) Law 1991 requires us to Practices Board’s Ethical Standards for Auditors. report to you if, in our opinion: This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 113A • proper accounting records have not been kept; or of the Companies (Jersey) Law 1991 and for no other purpose. We • the financial statements are not in agreement with the do not, in giving this opinion, accept or assume responsibility for any accounting records; or other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our • we have not received all the information and explanations we prior consent in writing. require for our audit. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material Christopher Stuart misstatement, whether caused by fraud or error. This includes an For and on behalf of PricewaterhouseCoopers CI LLP assessment of: Chartered Accountants and Recognized Auditor Jersey, Channel Islands • whether the accounting policies are appropriate to the 19th December 2013 company’s circumstances and have been consistently applied and adequately disclosed; • the reasonableness of significant accounting estimates made by the directors; and • the overall presentation of the financial statements. In addition, we read all the financial and non-financial information listed on the contents page of the Annual Report on page 1 to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the company’s affairs as at 30 September 2013 and of its movement in net assets attributable to holders of participating redeemable preference shares from operations and cash flows for the year then ended;
13 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Balance Sheet
As at 30th September 2013
Notes Company Capital Growth Euro High Income European Fund Fund Fund (Closed 05.07.13) £ £ € £ Assets 4,887,328 — 421,238 462,428 Cash and cash equivalents Creations receivable 23,694 — — 9,003
Investment sales receivable 1,600,313 — — —
Financial assets at fair value through profit 418,637,685 — 12,620,386 16,015,368
Other accrued income & pre paid expenses 4 9,484,352 — 264,488 —
Total Assets 434,633,372 — 13,306,112 16,486,799 Equity 1,000 — — — Ordinary share capital Total Equity 1,000 — — — Cancellation payable 108,273 — 26,272 —
Investment purchases payable 1,412,988 — — —
Proposed distributions 5 2,229,652 — 149,686 —
Accrued expenses 6 710,006 — 34,793 48,552
Nominal shares 14 644,056 — — —
Total Liabilities* 5,104,975 — 210,751 48,552 Net assets attributable to holders of participating redeemable 17 429,527,397 — 13,095,361 16,438,247 preference shares Total Liabilities and Equity 434,633,372 — 13,306,112 16,486,799
* Excluding net assets attributable to holders of participating redeemable preference shares The financial statements on pages 14 to 83 were approved by the Board of Directors on 18th December 2013 and are signed on their behalf by: R. D. Willcox } Directors B. C. James The notes on pages 56 to 83 form an integral part of these financial statements.
14 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Balance sheet
As at 30th September 2013
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Assets 2,431,945 550,762 229,594 721,041 138,496 Cash and cash equivalents Creations receivable — 2,705 11,271 — 716
Investment sales receivable — 6,990 — — 1,593,323
Financial assets at fair value through profit 316,043,000 25,126,664 8,352,326 22,195,464 20,327,051
Other accrued income & pre paid expenses 8,032,831 15,791 1,533 501,276 66,183
Total Assets 326,507,776 25,702,912 8,594,724 23,417,781 22,125,769 Equity — — — — — Ordinary share capital Total Equity — — — — — Cancellation payable 66,067 20,186 — — —
Investment purchases payable — 55,391 19,732 — 1,337,865
Proposed distributions 1,507,105 — — 261,197 335,889
Accrued expenses 436,331 66,548 27,190 43,519 58,704
Nominal shares — — — — —
Total Liabilities* 2,009,503 142,125 46,922 304,716 1,732,458 Net assets attributable to holders of participating redeemable 324,498,273 25,560,787 8,547,802 23,113,065 20,393,311 preference shares Total Liabilities and Equity 326,507,776 25,702,912 8,594,724 23,417,781 22,125,769
The notes on pages 56 to 83 form an integral part of these financial statements.
15 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Balance Sheet continued
As at 30th September 2012
Notes Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Assets Cash and cash equivalents 5,643,653 1,295,756 368,685 52,851 Creations receivable 77,909 14,232 — —
Investment sales receivable 2,559,252 58,044 — 172,866 Financial assets at fair value through 426,524,127 12,376,361 11,989,933 14,070,273 profit or loss Other accrued income & pre paid expenses 4 9,754,163 35,343 280,397 —
Total Assets 444,559,104 13,779,736 12,639,015 14,295,990 Equity 1,000 — — — Ordinary share capital Total Equity 1,000 — — — Cancellation payable 146,246 — — 17,153
Investment purchases payable 2,364,213 178,385 99,398 —
Proposed distributions 5 2,454,824 143,557 142,031 56,327
Accrued expenses 6 717,503 31,272 31,014 42,405
Nominal shares 14 559,643 — — —
Total Liabilities* 6,242,429 353,214 272,443 115,885 Net assets attributable to holders of participating redeemable 17 438,315,675 13,426,522 12,366,572 14,180,105 preference shares Total Liabilities and Equity 444,559,104 13,779,736 12,639,015 14,295,990
The notes on pages 56 to 83 form an integral part of these financial statements.
16 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Balance Sheet continued
As at 30th September 2012
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Assets Cash and cash equivalents 3,036,979 551,671 129,383 151,394 131,471 Creations receivable — 9,331 7,735 18,292 28,319
Investment sales receivable 1,856,576 112,444 252,081 107,241 — Financial assets at fair value through 317,523,690 21,733,079 8,288,344 22,933,807 20,032,645 profit or loss Other accrued income & pre paid expenses 8,336,820 33,297 7,513 556,637 201
Total Assets 330,754,065 22,439,822 8,685,056 23,767,371 20,192,636 Equity — — — — — Ordinary share capital Total Equity — — — — — Cancellation payable 129,094 — — — —
Investment purchases payable 1,844,591 140,162 27,643 94,129 —
Proposed distributions 1,696,381 — — 258,157 187,085
Accrued expenses 432,102 63,070 23,633 42,412 57,864
Nominal shares — — — — —
Total Liabilities* 4,102,168 203,232 51,276 394,698 244,949 Net assets attributable to holders of participating redeemable 326,651,897 22,236,590 8,633,780 23,372,673 19,947,687 preference shares Total Liabilities and Equity 330,754,065 22,439,822 8,685,056 23,767,371 20,192,636
The notes on pages 56 to 83 form an integral part of these financial statements.
17 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Statement of Comprehensive Income
For the year ended 30th September 2013
Notes Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Operating Profit Net gains on financial assets at fair value 7 19,738,852 1,510,474 358,703 3,357,618 through profit or loss Investment income 18,473,338 325,057 559,782 413,443
Other income 8 11,713 1,817 — 362
Total operating expenses 9 (5,573,901) (235,368) (159,760) (334,094)
Operating profit 32,650,002 1,601,980 758,725 3,437,329 Finance Costs Distributions to holders of participating 5 (20,221,771) — (600,616) — redeemable preference shares Total finance costs (20,221,771) — (600,616) —
Profit/(Loss) before tax 12,428,231 1,601,980 158,109 3,437,329 Withholding tax on dividends 18 (359,810) (19,602) (6,988) (108,589) and other investment income Increase/(Decrease) in net assets attributable to holders of participating redeemable 12,068,421 1,582,378 151,121 3,328,740 preference shares from operations
For the year ended 30th September 2012
Notes Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Operating Profit Net gains on financial assets at fair value 7 44,559,752 1,736,436 1,273,770 1,937,588 through profit or loss Investment income 24,892,611 482,540 717,466 517,126
Other income 8 19,298 1,910 306 695
Total operating expenses 9 (5,727,227) (286,137) (152,797) (325,145)
Operating profit 63,744,434 1,934,749 1,838,745 2,130,264 Finance Costs Distributions to holders of participating 5 (21,880,674) (143,557) (591,558) (56,327) redeemable preference shares Total finance costs (21,880,674) (143,557) (591,558) (56,327)
Profit/(Loss) before tax 41,863,760 1,791,192 1,247,187 2,073,937 Withholding tax on dividends 18 (380,018) (48,010) (7,421) (115,456) and other investment income Increase/(Decrease) in net assets attributable to holders of participating redeemable 41,483,742 1,743,182 1,239,766 1,958,481 preference shares from operations
The notes on pages 56 to 83 form an integral part of these financial statements.
18 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Statement of Comprehensive Income
For the year ended 30th September 2013
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Operating Profit Net gains on financial assets at fair value 5,066,147 5,097,805 1,542,503 50,239 2,813,967 through profit or loss Investment income 14,914,074 415,563 91,759 1,103,751 741,365
Other income 8,227 420 35 335 517
Total operating expenses (3,424,348) (539,410) (190,378) (267,492) (449,152)
Operating profit 16,564,100 4,974,378 1,443,919 886,833 3,106,697 Finance Costs Distributions to holders of participating (18,419,659) — — (965,588) (335,889) redeemable preference shares Total finance costs (18,419,659) — — (965,588) (335,889)
Profit/(Loss) before tax (1,855,559) 4,974,378 1,443,919 (78,755) 2,770,808 Withholding tax on dividends (110,563) (79,832) (26,397) (8,613) (368) and other investment income Increase/(Decrease) in net assets attributable to holders of participating redeemable (1,966,122) 4,894,546 1,417,522 (87,368) 2,770,440 preference shares from operations
For the year ended 30th September 2012 High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Operating Profit Net gains on financial assets at fair value 28,791,907 3,755,896 2,347,058 2,307,082 2,637,277 through profit or loss Investment income 19,782,503 499,621 160,059 1,604,677 1,256,628
Other income 11,345 705 168 1,285 2,939
Total operating expenses (3,324,597) (520,833) (241,920) (296,632) (607,057)
Operating profit 45,261,158 3,735,389 2,265,995 3,616,412 3,289,787 Finance Costs Distributions to holders of participating (19,859,770) — — (1,146,909) (187,085) redeemable preference shares Total finance costs (19,859,770) — — (1,146,909) (187,085)
Profit/(Loss) before tax 25,401,388 3,735,389 2,265,995 2,469,503 3,102,702 Withholding tax on dividends (46,655) (109,328) (46,654) (7,818) — and other investment income Increase/(Decrease) in net assets attributable to holders of participating redeemable 25,354,733 3,626,061 2,219,341 2,461,685 3,102,702 preference shares from operations
The notes on pages 56 to 83 form an integral part of these financial statements.
19 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Statement of Changes in Net Assets Attributable to Holders of Participating Redeemable Preference Shares
For the year ended 30th September 2013
Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Net assets attributable to holders of participating redeemable preference 438,315,675 13,426,521 12,366,572 14,180,105 shares as at 1st October 2012 Creation of participating redeemable 20,363,886 318,615 1,226,942 489,242 preference shares issued Redemption of participating redeemable (41,717,612) (15,327,515) (649,274) (1,559,840) preference shares
Dilution Levies — — — —
Net (decrease)/increase from (21,353,726) (15,008,900) 577,668 (1,070,598) share transactions Increase in net assets attributable to holders of participating redeemable 12,068,421 1,582,380 151,121 3,328,740 preference shares from operations Movement in currency translation 497,027 — — — Net assets attributable to holders of participating redeemable preference 429,527,397 — 13,095,361 16,438,247 shares as at 30th September 2013
For the year ended 30th September 2012
Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Net assets attributable to holders of participating redeemable preference 433,046,912 12,511,764 11,887,645 15,556,220 shares as at 1st October 2011 Creation of participating redeemable 15,504,157 296,008 1,176,232 429,155 preference shares issued Redemption of participating redeemable (50,866,952) (1,124,433) (1,937,071) (3,763,751) preference shares
Dilution Levies 7,933 — — —
Net (decrease)/increase from (35,354,862) (828,425) (760,839) (3,334,596) share transactions Increase in net assets attributable to holders of participating redeemable 41,483,742 1,743,182 1,239,766 1,958,481 preference shares from operations Movement in currency translation (860,117) — — — Net assets attributable to holders of participating redeemable preference 438,315,675 13,426,521 12,366,572 14,180,105 shares as at 30th September 2012
The notes on pages 56 to 83 form an integral part of these financial statements.
20 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Statement of Changes in Net Assets Attributable to Holders of Participating Redeemable Preference Shares
For the year ended 30th September 2013
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Net assets attributable to holders of participating redeemable preference 326,651,897 22,236,590 8,633,780 23,372,673 19,947,687 shares as at 1st October 2012 Creation of participating redeemable 15,708,224 542,908 336,248 1,358,993 601,302 preference shares issued Redemption of participating redeemable (15,895,726) (2,113,252) (1,839,748) (1,531,232) (2,926,118) preference shares
Dilution Levies — — — — —
Net (decrease)/increase from (187,502) (1,570,344) (1,503,500) (172,239) (2,324,816) share transactions Increase in net assets attributable to holders of participating redeemable (1,966,122) 4,894,546 1,417,522 (87,368) 2,770,440 preference shares from operations Movement in currency translation — — — — — Net assets attributable to holders of participating redeemable preference 324,498,273 25,560,792 8,547,802 23,113,066 20,393,311 shares as at 30th September 2013
For the year ended 30th September 2012
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Net assets attributable to holders of participating redeemable preference 305,411,273 21,191,129 11,046,595 25,784,346 31,229,582 shares as at 1st October 2011 Creation of participating redeemable 11,183,980 159,878 446,991 1,446,767 602,943 preference shares issued Redemption of participating redeemable (15,306,021) (2,740,479) (5,079,148) (6,320,125) (14,987,539) preference shares
Dilution Levies 7,932 — 1 — —
Net (decrease)/increase from (4,114,109) (2,580,601) (4,632,156) (4,873,358) (14,384,596) share transactions Increase in net assets attributable to holders of participating redeemable 25,354,733 3,626,061 2,219,341 2,461,685 3,102,702 preference shares from operations Movement in currency translation — 1 — — (1) Net assets attributable to holders of participating redeemable preference 326,651,897 22,236,590 8,633,780 23,372,673 19,947,687 shares as at 30th September 2012
The notes on pages 56 to 83 form an integral part of these financial statements.
21 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Cash Flow Statement
For the year ended 30th September 2013
Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Cash flows from operating activities Purchases of financial assets and (109,524,328) (6,055,122) (2,963,740) (6,034,483) settlement of financial liabilities Receipts from sale of investments 133,761,461 19,776,890 2,528,988 7,626,357
Investment income received 21,330,591 54,598 632,348 304,854
Other income received 1,081,249 343,192 — —
Bank interest received 11,713 1,817 — 362
Interest paid (1,805) (696) (1) (99)
Operating expenses paid (5,579,888) (265,944) (154,833) (327,847) Net cash inflow/(outflow) 41,078,993 13,854,735 42,762 1,569,144 from operating activities Cash flows from financing activities Distributions paid to holders of participating (20,454,537) (143,557) (592,961) (56,328) redeemable preference shares issued Proceeds received from issue of participating redeemable 20,416,221 332,846 1,226,942 480,239 preference shares Payments on redemption of participating redeemable (41,754,632) (15,327,515) (623,002) (1,576,993) preference shares Tax (960) — (1,147) —
Dilution Levies — — — — Net cash (outflow) (41,793,908) (15,138,226) 9,832 (1,153,082) from financing activities Net (decrease)/increase (714,915) (1,283,491) 52,594 416,062 in cash and cash equivalents Cash and cash equivalents 5,643,653 1,295,756 368,685 52,851 as at 1st October 2012 Exchange (losses)/gains on (56,354) (12,265) (41) (6,485) cash and cash equivalents Movement in currency 14,944 — — — translation Cash and cash equivalents 4,887,328 — 421,238 462,428 as at 30th September 2013
The notes on pages 56 to 83 form an integral part of these financial statements.
22 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Cash Flow Statement
For the year ended 30th September 2013
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Cash flows from operating activities Purchases of financial assets and (52,554,857) (20,136,166) (7,022,852) (4,678,196) (10,563,123) settlement of financial liabilities Receipts from sale of investments 55,219,230 21,884,687 8,757,784 5,359,844 13,020,863
Investment income received 19,002,433 353,237 71,344 1,270,547 (255,458)
Other income received — — — — 738,057
Bank interest received 8,227 420 35 335 517
Interest paid (159) (319) (225) (89) (217)
Operating expenses paid (3,419,965) (535,618) (186,596) (266,296) (448,105) Net cash inflow/(outflow) 18,254,909 1,566,241 1,619,490 1,686,145 2,492,534 from operating activities Cash flows from financing activities Distributions paid to holders of participating (18,608,935) — — (962,548) (187,085) redeemable preference shares issued Proceeds received from issue of participating redeemable 15,708,223 549,534 332,712 1,357,274 628,906 preference shares Payments on redemption of participating redeemable (15,958,753) (2,093,066) (1,839,748) (1,511,222) (2,926,118) preference shares Tax — — — — —
Dilution Levies — — — — — Net cash (outflow) (18,859,465) (1,543,532) (1,507,036) (1,116,496) (2,484,297) from financing activities Net (decrease)/increase (604,556) 22,709 112,454 569,649 8,237 in cash and cash equivalents Cash and cash equivalents 3,036,979 551,671 129,383 151,394 131,471 as at 1st October 2012 Exchange (losses)/gains on (478) (23,618) (12,243) (2) (1,212) cash and cash equivalents Movement in currency — — — — — translation Cash and cash equivalents 2,431,945 550,762 229,594 721,041 138,496 as at 30th September 2013
The notes on pages 56 to 83 form an integral part of these financial statements.
23 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Cash Flow Statement continued
For the year ended 30th September 2012
Company Capital Growth Euro High European Fund Income Fund (Closed 05.07.13) Fund £ £ € £ Cash flows from operating activities Purchases of financial assets and (122,739,539) (8,983,481) (2,323,008) (4,961,591) settlement of financial liabilities Receipts from sale of investments 160,593,133 10,155,673 3,561,337 7,703,678
Investment income received 25,959,817 484,023 654,089 401,670
Other income received — — — —
Bank interest received 19,316 1,910 306 695
Interest paid (1,383) 685 (89) (24)
Operating expenses paid (5,703,861) (283,382) (149,143) (330,242) Net cash inflow 58,127,483 1,375,428 1,743,495 2,814,186 from operating activities Cash flows from financing activities Distributions paid to holders of participating (21,949,881) (71,980) (609,141) (106,923) redeemable preference shares issued Proceeds received from issue of participating redeemable 15,518,454 287,348 1,176,232 448,918 preference shares Payments on redemption of participating redeemable (50,854,982) (1,124,433) (2,035,439) (3,746,599) preference shares Tax 1,219 — 1,481 —
Dilution Levies 7,932 — — — Net cash (outflow) (57,277,258) (909,065) (1,466,867) (3,404,604) from financing activities Net increase/(decrease) 850,224 466,363 276,628 (590,418) in cash and cash equivalents Cash and cash equivalents 4,836,600 854,919 91,958 671,325 as at 1st October 2011 Exchange (losses)/gains on (30,174) (25,526) 99 (28,056) cash and cash equivalents Movement in currency (12,997) — — — translation Cash and cash equivalents 5,643,653 1,295,756 368,685 52,851 as at 30th September 2012
The notes on pages 56 to 83 form an integral part of these financial statements.
24 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Cash Flow Statement continued
For the year ended 30th September 2012
High International North Sterling UK Income Fund American Bond Fund Fund Fund Fund £ £ £ £ £ Cash flows from operating activities Purchases of financial assets and (57,839,047) (22,508,520) (7,523,171) (7,015,660) (11,999,524) settlement of financial liabilities Receipts from sale of investments 66,087,653 24,936,979 11,961,506 11,728,153 25,093,555
Investment income received 21,106,251 384,006 116,172 1,617,455 1,312,852
Other income received — — — — —
Bank interest received 11,345 705 168 1,303 2,938
Interest paid (227) (740) (307) (289) (411)
Operating expenses paid (3,284,070) (510,653) (251,441) (300,159) (621,381) Net cash inflow 26,081,905 2,301,777 4,302,927 6,030,803 13,788,029 from operating activities Cash flows from financing activities Distributions paid to holders of participating (19,786,909) — — (1,217,141) (266,468) redeemable preference shares issued Proceeds received from issue of participating redeemable 11,183,980 163,105 449,401 1,428,475 590,853 preference shares Payments on redemption of participating redeemable (15,179,844) (2,740,479) (5,079,147) (6,324,655) (14,987,540) preference shares Tax — — — — —
Dilution Levies 7,932 — — — — Net cash (outflow) (23,774,841) (2,577,374) (4,629,746) (6,113,321) (14,663,155) from financing activities Net increase/(decrease) 2,307,064 (275,597) (326,819) (82,518) (875,126) in cash and cash equivalents Cash and cash equivalents 729,765 801,743 457,129 234,012 1,007,907 as at 1st October 2011 Exchange (losses)/gains on 150 25,525 (927) (100) (1,310) cash and cash equivalents Movement in currency — — — — — translation Cash and cash equivalents 3,036,979 551,671 129,383 151,394 131,471 as at 30th September 2012
The notes on pages 56 to 83 form an integral part of these financial statements.
25 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Dealing
For the year ended 30th September 2013. During the year transactions representing more than 10% of the aggregate value of the transactions in the property of the Funds were carried out with the following brokers: Capital growth fund. (Closed 05.07.13) Now closed. Euro High Income Fund Deutsche Bank AG HSBC Securities European Fund Credit Suisse First Boston Instinet High Income Fund Deutsche Bank AG J.P. Morgan International Fund Credit Suisse First Boston Salomon Smith Barney North American Fund Credit Suisse First Boston PRG Goldman Sachs Sterling Bond Fund Lloyds Banking Group RBC Dominion UK Fund Instinet Merrill Lynch Salomon Smith Barney
26 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios For the year ended 30th September 2013 Capital Growth Fund. (Closed 05.07.13)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £
Australia 0.00% (0.51%) Treasury Wine Estates 21,201 — — — 67,855
Brazil 0.00% (0.31%) BR Malls 5,000 — — — 42,123
Canada 0.00% (0.62%) 83,810 Brookfield Asset Management 3,879 — — —
China 0.00% (0.49%) China Mobile 9,500 — — — 65,180
France 0.00% (1.59%) AXA 4,711 — — — 44,984 Sanofi 3,085 — — — 168,119
Germany 0.00% (1.10%) Allianz 1,218 — — — 90,795 Fresenius Medical Care 1,239 — — — 56,272
Ireland 0.00% (0.39%) Ryanair SPN ADR 1:5 2,586 — — — 52,399
Japan 0.00% (1.97%) Japan Tobacco 1,800 — — — 33,455 Kansai Paint 8,000 — — — 54,955 Makita 2,000 — — — 95,199 Miraca Holdings 2,900 — — — 80,446
Korea 0.00% (0.59%) Samsung 211 — — — 78,923
Singapore 0.00% (0.53%) — — — Overseas Chinese Banking Corporation 15,000 70,727
Switzerland 0.00% (0.94%) SGS ‘N’ 62 — — — 79,260 Syngenta 202 — — — 47,014
United Kingdom 0.00% (65.99%) AMEC 7,009 — — — 81,235 AstraZeneca 12,054 — — — 357,040 Aviva 22,489 — — — 73,427
27 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Capital Growth Fund. (Closed 05.07.13) (continued) Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Barclays 72,092 — — — 159,756 Berkeley Group 10,916 — — — 153,370 BG Group 19,743 — — — 249,255 BHP Billiton 3,986 — — — 77,906 Booker Group 44,086 — — — 41,397 BP 94,680 — — — 419,953 British American Tobacco 8,929 — — — 286,085 British Sky Broadcasting 30,030 — — — 224,775 Burberry Group 5,264 — — — 53,114 Centrica 58,632 — — — 194,189 Compass Group 24,796 — — — 171,464 Debenhams 43,178 — — — 44,214 Diageo 6,830 — — — 120,003 DS Smith 136,752 — — — 252,991 Dunhelm Group 7,246 — — — 46,882 Experian 10,444 — — — 108,722 Filtrona 15,744 — — — 80,216 GKN 22,949 — — — 49,593 GlaxoSmithKline 31,663 — — — 454,681 Glencore International 31,284 — — — 108,603 Great Eastern Energy 13,988 — — — 35,670 HSBC Holdings 65,951 — — — 382,450 Ienergiser 18,003 — — — 64,811 Imperial Tobacco 2,956 — — — 67,870 Indus Gas 20,800 — — — 203,840 Intermediate Capital 29,510 — — — 89,976 Invensys 55,697 — — — 130,999 Keller 8,256 — — — 44,954 KSK Power Ventur 34,274 — — — 147,378 LXB Retail Properties 90,925 — — — 102,291 National Grid 12,569 — — — 86,726 Northgate 18,811 — — — 45,147 Prudential 13,848 — — — 112,238 Pursuit Dynamics 14,375 — — — 669 Reckitt Benckiser Group 1,492 — — — 53,339 Reed Elsevier 27,763 — — — 166,856 Resolution 86,939 — — — 191,092 Rio Tinto 2,426 — — — 71,215 Rolls Royce Holdings 15,741 — — — 133,326 Royal Dutch Shell ‘A’ 3,676 — — — 79,442 Royal Dutch Shell ‘A’(L) 7,180 — — — 155,304 Royal Dutch Shell ‘B’ 24,612 — — — 547,863 RSA Insurance Group 51,000 — — — 56,610 Sabmiller 5,834 — — — 159,472 Sage Group 34,085 — — — 107,606 Shire 2,711 — — — 48,825 Smith & Nephew 8,575 — — — 58,739 Standard Chartered 3,341 — — — 47,509 Tate & Lyle 10,856 — — — 72,681 Travis Perkins 5,912 — — — 62,135
28 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
YourInvestment perfect Portfolios (continued) travelFor the year endedpartner. 30th September 2013 Capital Growth Fund. (Closed 05.07.13) (continued) Holding Holding Market % of Market Your Lloyds Bank Visa debit card works in just the same30.09.12 way 30.09.13 Value Total Net Value abroad as it does at home. You can withdraw money from over one 30.09.13 Assets 30.09.12 million ATMs, and use your card in 27 million outlets worldwide. It’s £ £ thatTreasury simple. 1.75% 2017 35,000 — — — 36,778 Treasury 1.75% 2022 30,000 — — — 30,108 YourTreasury debit 3.75% card, 2052 at a glance 86,000 — — — 96,903 UseTreasury it anywhere 4.00% 2022 you see the Visa sign: 48,000 — — — 58,418 Treasury 4.25% 2039 92,000 — — — 113,525 A safe alternative to carrying cash. •T reasury 4.5% 2013 295,000 — — — 300,351 •T reasuryA secure 4.5% payment 2019 method for peace of mind. 16,000 — — — 19,574 •T reasuryCompetitive 4.5% 2034 exchange rates. 102,000 — — — 131,167 Treasury 4.75% 2030 44,000 — — — 58,666 •T reasuryYou can 5% call 2025 us 24 hours a day, 7 days a week with any110,000 queries. — — — 147,638 Tullett Prebon 38,966 — — — 116,859 UBM 12,549 — — — 88,094 Vodafone Group 149,310 — — — 264,055 Xstrata 20,853 — — — 203,525
United States 0.00% (15.31%) Airgas 2,096 — — — 107,695 Altria Group 3,568 — — — 74,860 American Express 3,282 — — — 114,955 Apache 856 — — — 46,028 Apple 218 — — — 91,991 Ashland 2,192 — — — 98,333 Concur Technologies 680 — — — 31,528 Danaher 1,339 — — — 45,971 EMC 4,199 — — — 71,561 Flowserve 587 — — — 46,366 Harley Davidson 3,299 — — — 86,786 Hexcel 6,576 — — — 96,026 ICICI 2,101 — — — 51,901 Interpublic Group 7,114 — — — 49,033 LKQ Corporation 9,164 — — — 106,918 Masco 631 — — — 5,979 McKesson 1,662 — — — 89,687 Mead Johnson Nutrition 1,232 — — — 56,748 Mohawk Industries 1,440 — — — 70,939 MSC Industrial Direct 1,485 — — — 61,983 Occidental Petroleum 839 — — — 44,813 Pfizer 9,584 — — — 148,021 Rayonier 2,524 — — — 76,449 Royal Caribbean Cruises 3,577 — — — 67,074 Sally Beauty Holdings 1,942 — — — 30,318 Solarwinds 1,662 — — — 57,967 Solera Holdings 1,228 — — — 33,369 Tripadvisor 2,633 — — — 54,509 US Bancorp 2,167 — — — 45,828 Wells Fargo 4,152 — — — 89,324
29 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Capital Growth Fund. (Closed 05.07.13) (continued) Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ LIFFE FTSE 100 Index Dec 2012 4 — — — 230,940 LIFFE Long Gilt Dec 2012 (1) — — — (120,620) Total Value of Assets — — 12,376,361
Other Assets — — 1,403,375 Total Assets — — 13,779,736 Liabilities — — (353,214) Total Net Assets — — 13,426,522
For the period For the year ended ended 05.07.13 30.09.12
Cost of investments purchased £17,057,699 £8,514,417 Proceeds from investments sold £19,718,844 £9,757,656
30 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Euro High Income Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 € € Europe 52.68% (50.33%) ABN Amro Bank 4.125% 2022 — 130,000 143,372 1.09 — ABN Amro Bank 6.375% 2021 100,000 100,000 111,443 0.85 103,601 Achmea 6% 2043 — 100,000 103,875 0.79 — Anheuser-Busch InBev 8.625% 2017 60,000 60,000 74,696 0.57 78,532 Arcellormittal 9.375% 2016 100,000 100,000 119,050 0.91 115,629 Assicurazioni Generali 5.125% 2024 — 70,000 74,845 0.57 — Atlantia 5.875% 2024 100,000 100,000 120,098 0.92 109,607 Banque Federative Credit Mutuel 4.375% 2016 100,000 100,000 108,550 0.83 109,195 BNP Paribas 8.667% (Perp) 50,000 — — — 50,625 BNP Paribas 7.781% (Perp) FRN — 100,000 111,050 — — Bord Gais Eireann 5.75% 2014 80,000 — — — 83,718 Bundesrepub Deutschland 2.5% 2014 102,000 — — — 107,067 Bundesrepub Deutschland 3% 2020 100,000 — — — 114,353 Bundesrepub Deutschland 3.25% 2021 118,000 — — — 137,624 Bundesrepub Deutschland 3.25% 2042 104,000 — — — 127,052 Bundesrepublic Deutschland 3.75% 2019 — 97,000 111,829 0.85 — Bundesrepublic Deutschland 6.25% 2024 166,000 117,000 166,278 1.27 245,582 Caixa Bank 5.125% 2016 100,000 100,000 107,886 0.82 101,488 Cloverie FRN 2039 100,000 100,000 119,869 0.92 114,010 Confi-Gummi Finance 8.5% 2015 75,000 — — — 81,750 Deutsche Bank 5.125% 2017 200,000 200,000 229,051 1.75 234,523 Deutsche Telekom Intl Finance 6.625% 2018 63,000 63,000 77,031 0.59 78,984 Deutsche Telekom Intl Finance 7.5% 2033 150,000 150,000 221,686 1.69 226,124 DONG Energy 5.5% FRN 6,559 6,559 6,811 0.05 6,857 DONG Energy 7.75% 2010 FRN 50,000 — — — 55,325 EDF 4.5% 2040 100,000 100,000 110,398 0.84 108,585 EDF 4.625% 2030 150,000 150,000 168,917 1.29 167,935 EDF 5.375% (Perp) — 100,000 102,469 0.78 — EDF 6.25% 2021 100,000 150,000 189,801 1.45 127,049 Enel 5.625% 2027 120,000 170,000 178,973 1.37 120,387 E.ON International Finance 5.75% 2020 130,000 130,000 161,073 1.23 165,388 Fiat Industrial Finance Europe 6.25% 2018 100,000 100,000 110,383 0.84 105,750 Fiat Finance and Trade 6.875% 2015 — 100,000 105,001 0.80 — Finmeccanica 5.25% 2022 92,000 92,000 93,196 0.71 87,678 Gas Natural Capital Markets 6.375% 2019 150,000 150,000 175,893 1.34 154,818 Gaz Capital 6.605% 2018 125,000 125,000 142,188 1.09 144,375 GDF Suez 6.875% 2019 100,000 100,000 126,516 0.97 129,254 GE Capital European Funding 6% 2019 50,000 50,000 60,102 0.46 60,413 GE Capital European Funding 6.025% 2038 202,000 202,000 267,724 2.04 257,018 Glencore Finance 7.125% 2015 100,000 100,000 109,010 0.83 112,760 Heidelberg Cement 8.5% 2019 100,000 70,000 85,827 0.66 116,100 Iberdrola Finanzas 7.5% 2015 50,000 50,000 56,541 0.43 56,092 ING Bank 6.125% FRN 2023 75,000 75,000 82,238 0.63 76,552 ING Groep 4.75% 2017 105,000 105,000 116,626 0.89 117,173 Intesa Sanpaolo 4.125% 2016 100,000 100,000 103,151 0.79 100,127 Intesa Sanpaolo 4.75% 2017 100,000 100,000 104,996 0.80 102,256 KBC IFIMA 4.5% 2014 50,000 — — — 52,433 La Poste 2.75% 2024 — 200,000 200,042 1.53 — LeasePlan Corporation 3.875% 2015 100,000 — — 0.00 105,143 Orange SA 5.625% 2018 — 50,000 58,682 0.45 — Orange SA 8.125% 2033 (formerly France Telecom) 150,000 150,000 224,098 1.71 230,915 Pirelli & Co 5.125% 2016 100,000 100,000 105,430 0.81 103,600 Repsol International Finance 4.875% 2019 100,000 100,000 109,785 0.84 101,073 Rhodia 7% 2018 50,000 50,000 53,598 0.41 56,025 RWE Finance 6.5% 2021 250,000 250,000 319,487 2.44 330,175 Siemens FRN 2066 115,000 115,000 123,266 0.94 123,741
31 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Euro High Income Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 € € Euro (continued) Telecom Italia 8.25% 2016 102,000 152,000 169,010 1.29 117,932 Telefonica Europe 5.875% 2033 48,000 48,000 52,012 0.40 46,966 Unitymedia Hessen 8.125% 2017 100,000 100,000 105,150 0.80 107,450 Vattenfall 6.25% 2021 — 120,000 152,588 1.17 — Veolia Environment 6.125% 2033 175,000 175,000 215,452 1.65 219,649 Volkswagon 5.375% 2018 — 50,000 58,713 0.45 — Wind Acquisition Finance 7.375% 2018 100,000 100,000 104,135 0.80 92,000 Xstrata Finance Dubai 2.625% 2018 — 100,000 100,043 0.76 — Xstrata Finance Cayman 5.25% 2017 80,000 — — — 91,196 Ziggo Finance 6.125% 2017 85,000 85,000 87,125 0.67 90,313
United Kingdom 20.80% (23.10%) Aviva FRN 2038 50,000 50,000 54,921 0.42 48,500 Aviva FRN (Perp) 110,000 110,000 113,231 0.86 96,938 Barclays Bank 6% 2018 135,000 70,000 78,125 0.60 142,788 BG Energy Capital 6.5% FRN 2072 100,000 100,000 110,047 0.84 107,750 British American Tobacco 2.375% 2023 — 100,000 98,112 0.75 — British Telecom 6.5% 2015 60,000 60,000 66,003 0.50 68,664 Clerical Medical Finance 4.25% FRN (Perp) — 150,000 145,500 1.11 — Everything Everywhere Finance 3.5% 2017 100,000 — — — 104,286 Global Switch 5.5% 2018 100,000 100,000 112,827 0.86 109,922 HBOS 4.375% FRN 2019 160,000 160,000 154,800 1.18 136,000 Heathrow Funding 4.6% 2020 (formerly BAA Funding) 175,000 175,000 196,440 1.50 194,766 HSBC 6% 2019 200,000 200,000 230,781 1.76 229,305 Imperial Tobacco 8.375% 2016 107,000 107,000 124,870 0.95 130,555 Lloyds Banking Group 6.5% 2020 127,000 — — — 127,657 National Grid 5% 2018 175,000 175,000 202,963 1.55 206,453 Nationwide 6.75% 2020 150,000 150,000 170,465 1.30 159,184 NGG Finance 4.25% FRN 2076 — 100,000 98,598 0.75 — Royal Bank of Scotland 5.375% 2019 150,000 150,000 173,825 1.33 174,760 Royal Bank of Scotland 6.934% 2018 180,000 180,000 196,621 1.50 183,207 Scottish and Southern Energy 5.025% FRN (Perp) 100,000 100,000 103,453 0.79 101,104 Severn Trent Utilities 5.25% 2016 135,000 — — — 153,073 Society of Lloyds FRN 2024 122,000 — — — 119,632 Standard Chartered 5.875% 2017 100,000 100,000 112,091 0.86 109,993 Standard Life 5.314% FRN (Perp) 60,000 60,000 60,482 0.46 55,837 Vodafone 6.25% 2016 108,000 108,000 121,268 0.93 126,204
United States 13.49% (17.25%) American International 6.797% 2017 100,000 100,000 118,292 0.90 115,550 Bank of America 4.75% 2017 50,000 50,000 55,327 0.42 54,964 Bank of America 7% 2016 100,000 100,000 115,137 0.88 116,856 Bank of America 1.061% FRN 2018 150,000 150,000 142,527 1.09 130,125 Citigroup 4.25% 2030 100,000 — — — 80,650 Citigroup 7.375% 2019 100,000 150,000 191,777 1.46 126,072 GE Capital Funding 4.625% 2066 170,000 170,000 169,652 1.30 159,743 Goldman Sachs 4.5% 2016 150,000 150,000 162,029 1.24 159,735 Goldman Sachs 4.5% 2017 100,000 100,000 109,289 0.83 107,003 JP Morgan Chase 2.75% 2022 120,000 120,000 121,038 0.92 119,848 Lehman Brothers Holdings FRN 2019 150,000 150,000 15 0.00 15 Metlife Global Funding 2.375% 2019 100,000 100,000 102,315 0.78 101,157 Morgan Stanley 5.375% 2020 300,000 300,000 347,278 2.65 321,561 National Capital Instruments FRN (Perp) 150,000 150,000 132,948 1.02 117,750
32 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Euro High Income Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 € € Central America 3.04% (2.43%) America Movil 3.259% 2023 — 100,000 99,489 0.76 — America Movil 4.75% 2022 50,000 50,000 56,335 0.43 57,898 Pemex Project Funding Master Trust 5.5% 2025 50,000 50,000 56,876 0.43 56,046 Petrobras Global Finance 3.25% 2019 100,000 100,000 100,325 0.77 101,253 Votorantim Cimentos 5.25% 2017 80,000 80,000 85,054 0.65 86,050
Asia 1.71% (0%) Hutchinson Whampoa 3.75% (Perp) — 120,000 113,438 0.87 — Hutchison Whampoa 4.625% 2016 100,000 100,000 109,435 0.84 111,445
Australia and New Zealand 4.64% (3.48%) Australia and New Zealand Capital Trust III FRN 2053 150,000 150,000 143,145 1.09 127,589 Commonwealth Bank of Australia 4.375% 2020 100,000 100,000 113,167 0.86 114,817 National Australia Bank FRN 2023 95,000 95,000 111,793 0.85 108,002 Origin Energy Finance 2.875% 2019 — 100,000 100,042 0.76 — Santos Finance FRN 2070 85,000 55,000 59,884 0.46 86,917 Westpac Securities 3.875% 2017 75,000 75,000 81,297 0.62 82,347
Total Value of Investments 12,620,386 96.36 11,989,933 Other Assets 685,726 5.24 649,082 Total Assets 13,306,112 101.60 12,639,015 Liabilities (210,751) (1.60) (272,443) Total Net Assets 13,095,361 100.00 12,366,572
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased €2,864,342 €2,422,406
Proceeds from investments sold €2,528,988 €3,512,707
33 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 European Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Austria 3.80% (3.79%) Andritz 9,157 10,316 371,781 2.26 315,788 OMV — 8,299 252,524 1.54 — Schoeller-Bleckmann 3,434 — — — 220,598
Belgium 0% (5.48%) Anheuser-Busch InBev 8,613 — — — 459,625 Telenet Group Holding 11,454 — — — 318,073
Finland 2.81% (2.36%) Sampo 17,382 17,382 461,438 2.81 334,858
France 23.73% (35.51%) Allianz 4,948 — — — 368,844 Arkema 6,293 6,293 431,978 2.63 369,663 AXA 33,708 25,108 361,173 2.20 321,866 BNP Paribas 12,140 14,241 594,867 3.62 371,120 Bureau Veritas International 5,704 12,512 240,360 1.46 359,559 Essilor International 5,402 2,988 198,293 1.21 321,241 Kering (formerley PPR) 3,090 3,661 502,307 3.06 295,669 Publicis Groupe 11,062 8,913 437,402 2.66 386,551 Safran 13,665 10,907 412,402 2.51 305,765 Sanofi-Aventis 11,839 — — — 645,172 Schneider Electric 9,260 6,628 347,253 2.11 356,080 SCOR 18,515 18,515 373,240 2.27 296,057 Technip 4,868 — — — 336,492 Total 9,414 — — — 298,174
Germany 18.54% (18.80%) Bayer — 9,687 707,250 4.30 — BMW 4,013 6,362 423,100 2.57 185,615 Continental 4,453 4,453 468,809 2.85 273,087 Fresenius Medical Care 8,453 8,453 339,716 2.07 383,909 Heidelberg Cement 8,179 — — — 273,250 Hugo Boss 5,117 5,117 404,674 2.46 277,675 Kabel Deutscheland Holdings 9,488 — — — 420,990 LEG Immobilien — 8,550 301,342 1.83 — SAP 10,430 8,831 404,451 2.46 463,677 TAG Immobilien 58,358 — — — 386,326 Ireland 2.84% (0.00%) Glanbia — 39,323 318,067 1.93 — Ryanair Holdings — 4,800 149,870 0.91 —
Italy 4.06% (2.73%) Eni — 22,572 318,186 1.94 — Prysmian 34,207 23,051 348,630 2.12 387,815
Netherlands 6.97% (3.79%) DSM Koninklijke 6,264 9,098 424,586 2.58 197,230 ING Groep 67,126 54,895 382,006 2.32 340,884 Randstad Holdings — 9,877 339,660 2.07 —
Norway 2.83% (2.59%) DNB ASA (formerley DNB NOR) 47,536 48,682 464,637 2.83 366,892
Spain 2.19% (0.00%) Amadeus IT Holdings — 16,620 360,731 2.19 —
34 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 European Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Sweden 6.40% (4.71%) Hexagon — 18,426 344,446 2.10 — Millicom International Cellular 5,350 — — — 310,512 Swedish Match 14,217 14,217 310,699 1.89 357,587 Volvo — 42,787 395,796 2.41 —
Switzerland 23.26% (19.48%) Barry Callebaut 464 — — — 267,078 Julius Baer Group 16,124 17,792 510,863 3.11 352,432 Nestle 'R' 16,508 12,648 546,604 3.33 651,052 Novartis 'R' 10,245 — — — 389,196 Roche Holdings — 5,848 968,935 5.89 — Syngenta 1,486 1,787 446,139 2.71 345,857 The Swatch Group 1,413 1,413 558,958 3.40 348,978 UBS 'R' — 35,277 446,511 2.72 — Zurich Insurance Group 2,628 2,179 345,684 2.10 409,036
Total Value of Investments 16,015,368 97.43 14,070,273 Other Assets 471,431 2.87 225,717 Total Assets 16,486,799 100.30 14,295,990 Liabilities (48,552) (0.30) (115,885) Total Net Assets 16,438,247 100.00 14,180,105
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased £6,034,482 £4,951,66 Proceeds from investments sold £7,453,491 £7,876,544
35 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 High Income Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ UK Government 2.69% (4.94%) Treasury 1.75% 2017 1,750,000 — — — 1,838,900 Treasury 1.75% 2022 — 2,686,000 2,522,374 0.78 — Treasury 3.75% 2021 2,082,000 — — — 2,484,117 Treasury 4% 2016 1,042,000 1,440,000 1,575,101 0.49 1,187,161 Treasury 4.25% 2032 1,045,000 — — — 1,308,695 Treasury 4.25% 2055 675,000 — — — 849,434 Treasury 4.5% 2019 1,499,000 777,000 892,478 0.28 1,833,802 Treasury 4.5% 2042 2,797,000 1,234,000 1,466,140 0.45 3,596,886 Treasury 6% 2028 965,000 1,645,000 2,227,659 0.69 1,457,459 Treasury 8% 2021 1,033,000 — — — 1,597,844
UK Corporate 59.23% (56.59%) AA Bond 9.5% 2043 — 800,000 856,000 0.26 — Anglian Water Services Financing 4.5% 2026 — 1,000,000 985,570 0.30 — Anglian Water Osprey Financing 7% 2018 600,000 600,000 647,562 0.20 639,600 Anglian Water Group 12.375% 2014 1,000,000 1,000,000 1,027,780 0.32 1,129,032 Annington Finance No 4 8.07% 2023 1,500,000 1,500,000 1,855,106 0.57 1,771,170 Annington Finance No 4 2023 FRN 2,000,000 2,000,000 2,131,484 0.66 2,106,918 Arkle Master Issuer 4.681% 2060 1,200,000 1,200,000 1,315,477 0.41 1,314,551 Aspire Defence Finance 4.674% 2040 1,643,000 1,643,000 1,661,254 0.51 1,708,063 Autolink Concessionaires M6 2022 FRN 1,500,000 1,500,000 1,344,685 0.41 1,500,198 Aviva (Perp) FRN 1,200,000 1,200,000 1,168,500 0.36 903,144 Aviva 6.125% (Perp) 170,000 — — — 134,915 Aviva 2041 FRN 600,000 600,000 648,735 0.20 561,034 Aviva 6.875% 2058 400,000 — — — 344,301 BAE Systems 10.75% 2014 1,600,000 1,600,000 1,764,088 0.54 1,887,358 Barclays Bank 5.75% 2026 1,750,000 1,750,000 1,853,178 0.57 1,714,027 Barclays Bank 9.5% 2021 — 1,697,000 2,154,440 0.66 — Barclays Bank 10% 2021 2,673,000 2,673,000 3,474,258 1.07 3,315,006 Barclays Bank 2049 FRN (Perp) 500,000 500,000 668,000 0.21 626,060 Beazley Group 7.25% 2026 3,192,000 — — — 3,017,398 BG Energy Capital 5.125% 2025 1,340,000 1,340,000 1,481,980 0.46 1,602,096 BG Energy Capital 2072 FRN 1,300,000 2,500,000 2,700,000 0.83 1,374,750 BL Superstores 5.27% 2030 750,000 750,000 813,689 0.25 837,398 British American Tobacco 6% 2022 700,000 700,000 836,175 0.26 868,608 British American Tobacco 6.375% 2019 1,240,000 2,040,000 2,469,455 0.76 1,555,103 British Telecommunications 6.375% 2037 2,306,000 2,306,000 2,838,785 0.87 2,842,447 British Telecommunications 6.625% 2017 — 2,750,000 3,185,061 0.98 — Broadgate Financing 4.821% 2036 1,340,000 1,340,000 1,441,005 0.44 1,460,576 Canary Wharf II 6.455% 2030 1,380,000 1,380,000 1,390,180 0.43 1,502,792 Centrica 6.375% 2022 2,500,000 2,500,000 3,024,520 0.93 3,196,283 Centrica 7% 2018 2,400,000 2,400,000 2,907,583 0.90 3,029,280 City of Greenwich & Lewisham Rail Link 9.375% 2020 600,000 600,000 385,492 0.12 426,730 Close Brothers 6.5% 2017 900,000 900,000 956,184 0.29 975,752 Clydesdale Bank 4.625% 2026 1,050,000 2,050,000 2,203,166 0.68 1,225,172 Co-Operative Group 5.625% 2020 1,530,000 — — — 1,572,289 Delamare Finance 5.5457% 2029 1,690,000 1,690,000 1,865,792 0.57 1,928,900 Dignity Finance 8.151% 2031 1,400,000 1,400,000 1,900,636 0.59 1,986,057 Dwr Cymru Finance 6.907% 2021 1,900,000 1,900,000 2,348,961 0.72 2,483,186 Eastern Power Networks 8.5% 2025 1,500,000 1,500,000 2,096,517 0.65 2,214,672 Electricity North Western 8.785% 2026 (formerly Norweb) 1,452,000 1,452,000 2,115,433 0.65 2,220,406 First Hydro 9% 2021 1,550,000 1,550,000 2,035,228 0.63 1,898,750 Friends Life Group 8.25% 2022 1,300,000 1,300,000 1,410,708 0.43 1,259,781 Gatwick Funding Limited 2028 FRN 900,000 — — — 1,074,285 GlaxoSmithKline Capital 6.375% 2039 957,000 957,000 1,255,888 0.39 1,330,259 Great Rolling Stock 6.5% 2031 1,000,000 1,000,000 1,200,946 0.37 1,222,332
36 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 High Income Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ UK Corporate (continued) HBOS (Perp) FRN 1,940,000 1,940,000 1,944,637 0.60 1,619,900 HBOS 12% (Perp) 2,000,000 2,000,000 2,356,400 0.73 2,030,000 HBOS 13.625% (Perp) 300,000 300,000 457,110 0.14 348,600 HBOS (Perp) FRN 449,000 449,000 452,206 0.14 377,160 Heathrow Funding 5.225% 2025 2,932,000 2,932,000 3,252,383 1.00 3,356,430 Heathrow Funding 5.875% 2043 1,000,000 1,000,000 1,180,575 0.36 1,144,455 Heathrow Funding 6.45% 2033 1,000,000 1,000,000 1,237,449 0.38 1,242,030 Heathrow Funding 6.75% 2028 900,000 900,000 1,140,721 0.35 1,176,211 Housing Association Funding 8.25% 2027 1,500,000 1,500,000 1,468,707 0.45 2,072,873 HSBC Bank 4.75% 2020 FRN 400,000 400,000 417,093 0.13 410,712 HSBC Holdings 6% 2040 4,700,000 3,550,000 3,958,381 1.23 4,962,866 HSBC Holdings 6.5% 2024 1,650,000 1,650,000 2,021,790 0.62 2,117,919 Hutchison Whampoa Finance UK 5.625% 2017 1,850,000 1,850,000 2,093,588 0.65 2,144,259 Imperial Tobacco 8.125% 2024 850,000 850,000 1,115,232 0.34 1,166,954 Imperial Tobacco 9% 2022 — 1,200,000 1,624,376 0.50 — Integrated Accommodation Service 6.48% 2029 1,951,000 1,951,000 1,908,499 0.59 2,111,650 InterContinental Hotels 6% 2016 1,982,000 — — — 2,238,017 InterContinental Hotels 3.875% 2022 — 2,109,000 2,119,509 0.65 — Jaguar Land Rover Automotive 8.125% 2018 — 1,000,000 1,089,000 0.34 — Ladbrokes 7.625% 2017 2,600,000 — — — 2,840,500 Lafarge Cement UK 10.75% 2013 2,500,000 — — — 2,724,875 Land Securities FRN 2026 467,000 467,000 534,199 0.16 556,812 Lloyds Banking Group 2020 FRN 4,757,000 2,757,000 2,867,280 0.88 4,379,770 Lloyds Banking Group 7.5% 2024 458,000 458,000 590,254 0.18 596,952 Lloyds Banking Group 9.625% 2023 2,300,000 2,300,000 3,023,465 0.93 2,750,128 Lloyds Banking Group 2021 FRN 958,000 1,014,000 1,210,463 0.37 1,063,639 Lloyds Banking Group 2049 FRN (Perp) 692,000 692,000 954,960 0.29 871,920 Marstons Issuer 2035 FRN 2,712,000 2,712,000 2,318,760 0.71 1,945,860 Motability Operations Group 6.625% 2019 1,500,000 1,500,000 1,836,989 0.57 1,923,585 National Grid Electricity Transmission 6.5% 2028 2,600,000 2,600,000 3,270,756 1.01 3,473,015 National Grid Gas 8.75% 2025 1,380,000 1,380,000 2,011,347 0.62 2,135,551 National Westminster Bank 6.5% 2021 3,420,000 1,180,000 1,245,149 0.38 3,446,279 National Westminster Bank 11.5% (Perp) 1,300,000 — — — 1,391,000 National Westminster Bank (Perp) FRN 1,650,000 1,650,000 1,278,750 0.39 1,119,245 Nationwide Building Society 5.625% 2019 1,450,000 1,450,000 1,659,695 0.51 1,695,282 NGG Finance 2073 FRN — 1,590,000 1,574,100 0.49 — Northern Powergrid Yorkshire 9.25% 2020 2,232,000 3,032,000 4,020,083 1.25 3,150,743 Northumberland Services 6.875% 2023 2,250,000 2,250,000 2,805,255 0.86 2,986,922 Pennon Group (Perp) FRN — 1,800,000 1,863,000 0.57 — PICTS 5.218% 2039 1,000,000 1,000,000 862,179 0.27 873,254 Places For People Homes 5.875% 2031 1,500,000 1,500,000 1,667,340 0.51 1,736,685 Porterbrook Rail Finance 5.5% 2019 — 1,500,000 1,675,956 0.52 — Prudential Corporation 2039 FRN 1,420,000 1,420,000 1,945,864 0.60 1,889,651 QBE Capital Funding 2041 FRN 700,000 700,000 749,032 0.23 669,016 Royal Bank of Scotland 6.625% 2018 1,200,000 1,200,000 1,409,458 0.43 1,426,043 RSA Insurance Group 2039 FRN — 1,300,000 1,603,230 0.49 — Santander UK 7.375% (Perp) 1,250,000 — — — 925,000 Santander UK FRN (Perp) 440,000 440,000 407,000 0.13 390,680 Santander UK 10.0625% (Perp) 3,000,000 3,000,000 3,405,120 1.05 3,090,000 Scottish & Southern Energy 5.875% 2022 1,090,000 1,090,000 1,293,767 0.40 1,355,582 Scottish & Southern Energy (Perp) FRN 1,655,000 1,655,000 1,701,064 0.52 1,667,540 Scottish Power 6.375% (Step) 2041 1,000,000 1,000,000 1,193,310 0.37 1,105,310 Scottish Power 8.375% 2017 900,000 900,000 1,071,532 0.33 1,090,625 Scottish Widows (Perp) FRN 1,906,000 — — — 1,493,122 Severn Trent 6% 2018 760,000 760,000 871,720 0.27 904,497
37 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 High Income Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ UK Corporate (continued) Severn Trent 6.25% 2029 1,250,000 1,250,000 1,535,910 0.47 1,641,388 Society of Lloyds (Perp) FRN 1,189,000 1,189,000 1,257,368 0.39 1,123,153 Southern Gas Networks 4.875% 2029 3,850,000 2,850,000 3,044,125 0.94 4,267,841 Southern Water Services 6.125% 2019 1,447,000 1,447,000 1,676,730 0.52 1,720,557 Southern Water Greensands Financing 8.5% 2019 938,000 938,000 1,020,075 0.31 844,200 Spirit Issuer 5.472% 2034 1,130,000 — — — 841,850 Standard Chartered 7.75% 2018 1,350,000 1,350,000 1,592,756 0.49 1,614,186 Standard Chartered (Perp) FRN 1,500,000 1,500,000 1,616,250 0.50 1,610,771 Standard Life Finance (Perp) FRN 1,820,000 2,140,000 2,306,903 0.71 1,711,007 Telereal Securitisation 4.9741% 2033 854,000 854,000 783,728 0.24 805,654 Telereal Securitisation 5.3887% 2033 13,000 13,000 11,969 0.00 12,521 Telereal Securitisation 6.1645% 2031 1,130,000 1,130,000 1,275,054 0.39 1,243,324 Tesco 6.125% 2022 2,400,000 2,400,000 2,797,363 0.86 2,896,838 Tesco Property 6.0517% 2039 1,150,000 1,150,000 1,238,633 0.38 1,304,230 Tesco Property Finance 2039 263,000 263,000 326,183 0.10 347,210 Thames Water Kemble Finance 7.75% 2019 1,500,000 1,800,000 1,957,320 0.60 1,592,355 Thames Water Utilities Finance 5.125% 2037 1,986,000 1,986,000 2,160,941 0.67 2,278,069 Thames Water Utilities (Cayman) Finance 2025 FRN 2,600,000 2,600,000 2,838,368 0.87 2,833,332 The Housing Finance Corporation Funding No.2 6.35% 2041 — 1,080,000 1,363,375 0.42 — UBS AG (London Branch) 6.625% 2018 2,010,000 2,010,000 2,379,719 0.73 2,407,783 UBS AG (Jersey) 8.75% 2025 2,724,000 2,724,000 3,692,848 1.14 3,405,240 Virgin Media Secured Finance 7% 2018 1,530,000 1,160,000 1,209,300 0.37 1,654,313 Vodaphone Group 8.125% 2018 1,000,000 1,000,000 1,269,412 0.39 1,334,052 Wales & West Financial 5.125% 2016 1,450,000 1,450,000 1,598,690 0.49 1,624,805 Western Power Distribution West Mildlands 5.75% 2032 1,300,000 1,300,000 1,498,944 0.46 1,555,935 Yorkshire Water Services Odsal Finance 6.5876% 2023 842,000 842,000 1,030,430 0.32 1,101,941 Zurich Finance UK (Perp) FRN - 1,600,000 1,735,616 0.53 -
Overseas Borrowers 35.46% (35.77%) Aegon 6.125% 2031 1,102,000 1,102,000 1,269,030 0.39 1,229,658 America Movil SAB 2073 FRN - 2,500,000 2,478,125 0.76 - Anheuser Busch 9.75% 2024 1,000,000 1,000,000 1,532,350 0.47 1,620,488 AIG SunAmerica Institutional Funding 5% 2018 1,338,000 2,554,000 2,854,621 0.88 1,420,825 AIG SunAmerica Institutional Funding 5.375% 2016 1,129,000 2,504,000 2,756,558 0.85 1,233,203 AT&T 7% 2040 1,550,000 1,550,000 2,014,419 0.62 2,204,906 Australia & New Zealand Banking Group 2018 FRN 1,710,000 1,710,000 1,716,977 0.53 1,737,959 AXA 7.125% 2020 1,100,000 1,100,000 1,298,015 0.40 1,224,370 AXA (Perp) FRN 2,492,000 2,492,000 2,536,420 0.78 2,132,703 AXA (Perp) FRN 1,030,000 1,030,000 1,017,640 0.31 803,606 Bank of America 7% 2028 2,700,000 2,700,000 3,428,833 1.07 3,323,373 Bank of America Merrill Lynch 7.75% 2018 2,350,000 2,350,000 2,846,891 0.88 2,808,151 BNP Paribas (Perp) FRN 1,550,000 1,550,000 1,555,813 0.48 1,286,686
38 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 High Income Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Overseas Borrowers (continued) Cie de Saint Gobain 5.625% 2016 1,450,000 1,450,000 1,596,975 0.49 1,618,027 Citigroup 6.8% 2038 4,091,000 2,791,000 3,660,586 1.14 4,948,232 Citigroup 7.625% 2018 422,000 422,000 512,308 0.16 514,183 Credit Foncier 10.25% 2014 2,230,000 1,115,000 1,169,560 0.36 2,469,605 Deutsche Telekom Intl Finance 7.375% 2019 1,866,000 1,666,000 2,090,903 0.64 2,431,361 DONG Energy 5.75% 2040 500,000 — — — 607,964 E.ON International Finance 5.825% 2037 1,100,000 1,100,000 1,313,123 0.40 1,389,727 EDF 5.5% 2041 2,500,000 2,500,000 2,725,415 0.84 2,757,080 EDF 5.875% 2031 1,178,000 1,178,000 1,341,939 0.41 1,383,932 EDF (Perp) FRN — 2,300,000 2,317,250 0.71 — EDF 6.125% 2034 50,000 50,000 58,689 0.02 60,950 Enel 6.25% 2019 2,350,000 2,350,000 2,581,729 0.80 2,485,680 Enel 2075 FRN — 1,230,000 1,236,150 0.38 — European Coal and Steel 6.875% 2019 — 1,700,000 2,075,751 0.64 — Euro Loan Conduit 5.0636% 2033 1,903,000 1,903,000 1,979,960 0.61 2,012,920 Finmeccanica Finance SA 8% 2019 932,000 — — — 970,278 FirstGroup 8.75% 2021 1,600,000 1,000,000 1,238,924 0.38 1,977,597 Freshwater Finance 5.182% 2035 858,000 858,000 883,062 0.27 894,957 GDF Suez 6.125% 2021 800,000 800,000 960,862 0.30 990,059 GE Capital UK Funding 5.125% 2023 5,898,000 5,898,000 6,506,573 2.02 6,629,358 GE Capital UK Funding 8% 2039 1,500,000 1,500,000 2,187,915 0.67 2,206,068 General Electric Capital Corp 2066 FRN 309,000 309,000 314,895 0.10 287,627 General Electric Capital Corp 6.25% 2017 2,514,000 2,514,000 2,911,883 0.90 2,967,928 GHQB 12.625% 2015 500,000 500,000 572,990 0.18 624,205 General Electric Capital Corp 2067 FRN 1,900,000 1,900,000 1,993,290 0.61 1,860,453 Glencore Finance 6.5% 2019 1,050,000 1,050,000 1,180,704 0.36 1,179,985 Goldman Sachs 7.125% 2025 850,000 850,000 1,074,352 0.33 1,031,857 Goldman Sachs 7.25% 2028 1,157,000 1,157,000 1,486,472 0.46 1,404,892 Highbury Finance 7.017% 2023 1,550,000 1,550,000 1,568,774 0.48 1,612,432 Holcim Finance 8.75% 2017 350,000 1,450,000 1,758,412 0.54 430,386 Hydro-Quebec 12.625% 2015 1,900,000 1,900,000 2,192,790 0.68 2,404,830 Intesa Sanpaolo 5.25% 2022 1,400,000 — — — 1,267,066 JP Morgan Chase 2017 FRN 1,050,000 1,050,000 1,001,406 0.31 952,760 Kingdom of Belgium 9.375% 2020 1,000,000 1,000,000 1,363,180 0.42 1,410,589 Koninklijke KPN 5% 2026 700,000 700,000 729,876 0.22 768,030 Koninklijke KPN 2073 FRN — 600,000 612,000 0.19 — Lafarge 10% 2017 — 1,500,000 1,788,630 0.55 — Linde Finance 12.25% 2017 2,130,000 — — — 2,147,125 Metropolitan Life Global Funding I 3.5% 2026 1,000,000 1,000,000 974,875 0.30 1,027,120 MetLife 5.25% 2020 1,238,000 1,238,000 1,392,756 0.43 1,437,857 Morgan Stanley 5.75% 2017 950,000 950,000 1,052,044 0.32 1,010,590 Muenchener Rueckversicherungs 2028 FRN — 500,000 592,570 0.18 — Orange SA 5.25% 2025 (formerly France Telecom) 700,000 — — — 805,644 Orange SA 7.25% 2020 (formerly France Telecom) 1,250,000 550,000 681,799 0.21 1,626,568 Orange SA 8% 2017 (formerly France Telecom) 2,000,000 2,000,000 2,456,296 0.76 2,540,062 Petrobras 5.375% 2029 — 1,500,000 1,346,250 0.41 — Principal Financial Group 5.625% 2013 1,186,000 — — — 1,222,697 RWE Finance 6.25% 2030 1,200,000 1,200,000 1,404,572 0.43 1,526,197 RWE Finance 6.5% 2021 700,000 700,000 837,202 0.26 880,226 Santander International Debt 3.16% 2015 1,500,000 1,500,000 1,513,620 0.47 1,434,075 SLM Student Loan 2038 FRN 3,000,000 1,350,000 1,076,625 0.33 2,385,000 Societe Generale (Perp) FRN 4,071,000 3,671,000 3,902,677 1.21 3,605,481 Swiss Reinsurance Co via ELM BV (Perp) FRN 1,850,000 1,850,000 1,938,800 0.60 1,743,810
39 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th september 2013 High Income Fund (continued) Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Overseas Borrowers (continued) Telecom Italia 5.875% 2023 1,000,000 — — — 969,133 Telecom Italia 7.375% 2017 1,750,000 1,750,000 1,902,658 0.59 1,903,524 Telefonica Emisione 5.445% 2029 2,750,000 2,750,000 2,612,948 0.81 2,384,465 Time Warner Cable 5.75% 2031 1,525,000 1,525,000 1,421,006 0.44 1,784,361 Vattenfall 6.875% 2039 1,976,000 1,976,000 2,683,108 0.83 2,835,102 Wal-Mart Stores 5.25% 2035 1,483,000 2,483,000 2,880,178 0.89 1,801,063
Total Value of Investments 316,043,000 97.38 317,523,690 Other current assets 10,464,776 3.23 13,230,375 Total net assets 326,507,776 100.61 330,754,065 Liabilities (2,009,503) (0.61) (4,102,168) Total Net Assets 324,498,273 100.00 326,651,897
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased £50,710,266 £57,963,648 Proceeds from investments sold £53,362,654 £66,210,681
40 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th september 2013 International Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Australia 1.24% (2.04%) Treasury Wine Estates 141,491 124,112 316,674 1.24 452,851
Austria 1.04% (0.00%) OMV — 8,705 264,878 1.04 —
Canada 2.06% (1.95%) Brookfield Asset Management 20,060 — — — 433,419 Suncor Energy — 23,487 526,463 2.06 —
China 0.00% (4.45%) China Mobile 83,500 — — — 572,898 Overseas Chinese Banking 88,000 — — — 414,933
France 0% (6.06%) AXA 42,811 — — — 408,788 Sanofi 17,234 — — — 939,175
Germany 4.49% (5.13%) Allianz 7,924 — — — 590,687 Bayer — 9,060 661,473 2.59 — Fresenius Medical Care 12,103 12,103 486,406 1.90 549,681
India 1.08% (0.00%) ICICI Bank 14,320 14,320 275,357 1.08 353,743
Ireland 2.25% (1.14%) Ryanair Holdings 12,369 18,369 573,534 2.25 250,628
Japan 11.45% (3.56%) Japan Tobacco — 20,300 452,466 1.77 — Kansai Paint 34,000 31,000 255,213 1.00 233,556 Lawson 5,200 — — — 247,518 Miraca Holdings 11,200 — — — 310,686 Mitsubishi Estate — 25,000 457,319 1.79 — ORIX — 70,800 714,044 2.79 — Sumitomo Mitsui Financial Group — 12,900 387,041 1.51 — Toyota Motor — 16,700 662,087 2.59 —
Netherlands 2.94% (0.00%) ING Groep — 45,673 317,831 1.24 — Randstad — 12,641 434,711 1.70 —
Spain 1.59% (0.00%) Amadeus IT Holding — 18,676 405,355 1.59 —
Sweden 1.93% (0.00%) Volvo — 53,441 494,350 1.93 —
Switzerland 9.52% (4.45%) Dufry 'R' 3,104 — — — 237,676 Pentair — 13,794 559,255 2.19 — Roche Holding — 5,002 828,764 3.24 — SGS 'N' 278 — — — 355,389 Swatch Group — 1,029 407,055 1.59 — Syngenta 1,700 — — — 395,664 UBS 'R' — 50,526 639,522 2.50 —
41 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 International Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ United Kingdom 10.48% (10.14%) BAE Systems — 134,106 615,681 2.41 — BG Group 44,684 — — — 564,136 BP 75,764 — — — 336,051 BT Group — 217,875 750,579 2.94 — Centrica 113,335 — — — 375,366 ITV — 377,506 654,218 2.56 — Johnson Matthey — 9,490 265,720 1.04 — Travis Perkins 49,380 24,128 391,115 1.53 518,984 WPP 53,925 — — — 460,250
United States 48.25% (58.87%) Airgas 11,556 — — — 593,759 American Express 18,363 15,661 735,363 2.88 643,183 American International Group — 20,922 636,284 2.49 — Ansys 9,060 8,038 430,255 1.68 408,845 Apple 1,058 — — — 446,453 Ashland 12,263 8,979 507,632 1.99 550,119 Beacon Roofing Supply — 24,640 564,501 2.21 — Citigroup — 16,187 489,677 1.92 — Concur Technologies 3,448 — — — 159,866 Cooper Companies — 9,734 786,286 3.08 — Danaher 13,974 11,551 499,485 1.95 479,761 EMC 24,824 — — — 423,060 F5 Networks — 4,569 245,331 0.96 — Flowserve 2,932 — — — 231,593 Goldcorp 12,426 — — — 357,128 Google — 1,643 890,787 3.48 — Halliburton — 12,960 387,966 1.52 — Harley-Davidson 18,730 12,546 501,824 1.96 492,724 Hexcel 31,776 31,776 763,033 2.99 464,007 Interpublic Group 60,468 — — — 416,775 Keycorp — 104,019 730,669 2.86 — LKQ 34,817 30,073 587,203 2.30 406,213 Lorillard 3,746 — — — 275,035 Marathon Petroleum — 8,848 355,607 1.39 — McKesson 10,299 10,299 824,022 3.22 555,768 Mead Johnson Nutrition 6,907 7,519 350,030 1.37 318,146 Mohawk Industries 8,653 — — — 426,273 MSC Industrial Direct 8,942 — — — 373,229 Occidental Petroleum 11,185 — — — 597,415 Pfizer 25,675 — — — 396,541 Rayonier 13,264 13,264 457,977 1.79 401,748 Royal Caribbean Cruises 23,317 — — — 437,230 Sally Beauty Holdings 13,384 — — — 208,949 Solarwinds 18,478 16,630 367,840 1.44 644,464 Solera Holdings 650 9,725 319,284 1.25 17,663 Teradata — 17,946 627,521 2.46 —
42 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 International Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ United States (continued) Tripadvisor 20,376 5,774 270,976 1.06 421,829 UnitedHealth Group 11,805 — — — 411,143 US Bancorp 22,354 — — — 472,745 Wells Fargo 32,507 — — — 699,339
Total Value of Assets 25,126,664 96.41 21,733,079 Other Assets 576,248 4.39 706,743 Total Assets 25,702,912 100.80 22,439,822 Liabilities (142,125) (0.80) (203,232) Total Net Assets 25,560,787 100.00 22,236,590
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased £20,051,395 £20,753,679 Proceeds from investments sold £21,779,233 £23,358,000
43 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 North American Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Chemicals 18.57% (10.44%) Ashland 4,120 3,190 180,348 2.11 184,823 Clean Harbors — 2,912 103,681 1.21 — Core Laboratories 1,479 1,703 178,458 2.09 113,242 Ecolab 7,290 3,064 186,025 2.18 293,893 Marathon Petroleum — 3,251 130,660 1.53 — McKesson 5,739 4,489 359,164 4.20 309,696 Pentair — 7,051 285,871 3.34 — Perrigo — 2,134 163,306 1.91 — Pfizer 13,010 — — — 200,935
Consumer Goods 18.47% (20.67%) Brunswick 16,013 — — — 226,491 Coca Cola 8,235 — — — 195,319 General Motors — 6,786 152,704 1.79 — Harley Davidson 14,537 6,114 244,552 2.86 382,420 Kraft Foods Group — 7,840 256,530 3.00 — Lorillard 1,340 2,400 67,182 0.79 98,384 Macy's Inc — 6,889 185,506 2.17 — Mead Johnson Nutrition 2,776 2,729 127,043 1.49 127,867 O'Reilly Automotive 3,751 2,714 212,881 2.49 195,401 Penske Automotive 7,505 9,249 241,729 2.83 141,009 Sally Beauty Holdings 12,584 — — — 196,459 Wal-Mart Stores 2,700 — — — 123,680 WhiteWave Foods — 7,249 89,951 1.05 — Whole Foods Market 1,623 — — — 98,156
Energy 4.58% (13.48%) Airgas 4,404 — — — 226,282 Apache 2,459 — — — 132,224 Exxon Mobil 5,525 1,850 99,473 1.16 314,092 FMC Technologies 1,802 — — — 52,114 Halliburton — 6,780 202,964 2.37 — Occidental Petroleum 2,314 — — — 123,596 Suncor Energy — 3,993 89,503 1.05 —
Financials 17.70% (10.18%) American Express 8,199 5,269 247,406 2.89 287,178 American International — 9,517 289,433 3.39 — Aon — 2,386 110,794 1.30 — Citigroup — 7,870 238,077 2.79 — Keycorp — 43,323 304,317 3.55 — Prudential Financial — 3,611 175,209 2.05 — Signature Bank 1,428 — — — 59,426 Suntrust Banks — 7,321 147,707 1.73 — US Bancorp 12,885 — — — 272,494 Wells Fargo 12,020 — — — 258,592
44 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 North American Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Information Technology 13.54% (14.11%) Ansys 3,197 2,507 134,194 1.57 144,269 Apple 979 — — — 413,116 Citrix Systems 2,706 — — — 127,089 Concur Technologies 3,163 — — — 146,652 EMC 2,582 — — — 44,003 F5 Networks — 1,867 100,248 1.17 — Google — 870 471,689 5.52 — Intel 5,476 — — — 78,233 Microsoft 8,158 — — — 152,520 Solarwinds 9,063 6,677 147,689 1.73 316,094 Solera Holdings 650 3,410 111,767 1.31 17,663 Teradata 2,017 5,476 191,480 2.24 95,179
Services 24.85% (27.11%) Beacon Roofing Supply — 8,458 193,772 2.27 — Comcast 8,232 — — — 182,452 Cooper Cosmetics — 2,677 216,241 2.53 — Cummins 1,843 — — — 105,937 Danaher 2,683 1,869 80,819 0.95 92,114 Delta Airlines — 9,593 139,935 1.64 — Hexcel 7,864 11,812 283,640 3.31 114,833 Intuitive Surgical 590 — — — 182,499 JB Hunt Transport Services 3,296 — — — 108,057 LKQ 16,794 13,921 271,820 3.17 195,937 Masco 3,441 939 12,268 0.14 32,603 MSC Industrial 1,746 — — — 72,876 Rayonier 8,260 5,047 174,262 2.04 250,184 Rock Tenn — 2,805 181,046 2.12 — Royal Caribbean Cruises 13,265 — — — 248,739 Thermo Fischer Scientific 3,258 2,129 122,538 1.43 119,925 Tripadvisor 8,401 2,002 93,954 1.10 173,920 UnitedHealth Group 7,456 5,721 254,892 2.98 259,676 WW Grainger — 610 99,598 1.17 —
Total Value of Investments 8,352,326 97.71 8,288,344 Other Assets 242,398 2.84 396,712 Total Assets 8,594,724 100.55 8,685,056 Liabilities (46,922) (0.55) (51,276.) Total Net Assets 8,547,802 100.00 8,633,780
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased £7,014,941 £7,550,774 Proceeds from investments sold £8,505,703 £12,213,587
45 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Sterling Bond Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ UK Government 2.24% (0.34%) Treasury 4% 2016 — 183,000 200,169 0.87 — Treasury 4.25% 2055 64,000 64,000 74,887 0.32 80,539 Treasury 4.75% 2038 — 113,000 138,582 0.60 — Treasury 5% 2025 — 86,000 104,579 0.45 —
UK Corporate 56.76% (62.11%) AA Bond G/R 2043 — 140,000 144,121 0.62 — Abbey National 5.25% 2029 — 137,000 157,695 0.68 — Amlin FRN 6.5% 2026 150,000 150,000 152,625 0.66 137,226 Annington Finance 8.07% 2023 120,000 120,000 148,408 0.64 141,694 Arkle Master Issuer 4.681% 2060 120,000 — — — 131,455 Autolink 8.39% 2022 300,000 300,000 268,937 1.16 300,040 Aviva FRN 2058 350,000 225,000 239,037 1.03 301,264 Bank of Scotland 6.375% 2019 125,000 125,000 135,240 0.59 125,556 Bank of Scotland 10.5% 2018 — 100,000 124,649 0.54 — Barclays Bank 10% 2021 425,000 225,000 292,446 1.27 527,077 BG Energy Capital 5.125% 2025 120,000 120,000 132,715 0.57 143,471 BG Energy Capital 6.5% 2072 FRN 100,000 100,000 108,000 0.47 105,750 BL Superstores 4.482% 2030 390,000 290,000 311,389 1.35 435,439 BP Capital Markets 4.325% 2018 200,000 100,000 109,740 0.47 225,390 British American Tobacco 6% 2022 100,000 200,000 238,907 1.03 124,087 British Telecom 6.375% 2037 201,000 201,000 247,440 1.07 247,759 British Telecom 6.625% 2017 50,000 50,000 57,910 0.25 59,671 BUPA Finance 7.5% 2016 50,000 50,000 57,152 0.25 58,542 Canary Wharf Finance 5.952% 2035 150,000 150,000 183,936 0.80 186,051 Centrica 6.375% 2022 225,000 225,000 272,207 1.18 287,665 Close Brothers 6.5% 2017 100,000 100,000 106,243 0.46 108,417 Clydesdale Bank 4.625% 2026 FRN 100,000 100,000 107,472 0.46 116,683 Co-Operative Group 5.625% 2020 200,000 — — — 205,528 Coventry Building Society 4.625% 2018 — 170,000 188,712 0.82 — Dignity Finance 8.151% 2031 100,000 100,000 135,760 0.59 141,861 Eastern Power Networks 5.75% 2024 250,000 250,000 287,746 1.24 299,566 Everyone Everywhere Finance 4.375% 2019 100,000 100,000 103,656 0.48 102,767 First Group 8.75% 2021 190,000 90,000 111,503 0.48 234,840 Friends Life Group 8.25% 2022 100,000 100,000 108,516 0.47 96,906 G4S 7.75% 2019 100,000 50,000 59,866 0.26 124,488 Gatwick Funding Ltd 6.125% 2026 100,000 100,000 117,879 0.51 119,365 Great Rolling Stock 6.5% 2031 100,000 100,000 120,095 0.52 122,233 Hutchinson WHAMPOA Finance UK 5.625% 2026 (BAA Funding) — 100,000 114,632 0.50 — Heathrow Funding 6.45% 2033 200,000 200,000 247,490 1.07 248,406 Heathrow Funding 6.75% 2028 150,000 150,000 190,120 0.82 196,035 Heathrow Funding 7.125% 2024 100,000 100,000 119,322 0.52 116,225 HSBC FRN 2023 300,000 300,000 320,335 1.39 310,830 HSBC 6.375% FRN 2022 200,000 200,000 222,707 0.96 214,628 HSBC 6.5% 2024 200,000 200,000 245,065 1.06 256,717 HSBC 8.208% FRN (Perp) 120,000 120,000 129,841 0.56 128,463 Imperial Tobacco 8.125% 2024 100,000 150,000 196,806 0.85 137,289 Imperial Tobacco 9% 2022 60,000 60,000 81,219 0.35 85,265 Integrated Accommodation Service 6.48% 2029 325,000 225,000 220,099 0.95 351,761 Inter-Continental Hotels 6% 2016 100,000 — — — 112,917 Inter-Continental Hotels 3.875% 2022 — 110,000 110,548 0.48 — Lloyds Banking Group 6% 2029 100,000 100,000 124,062 0.54 132,133 Lloyds Banking Group 6.5% 2040 230,000 155,000 192,340 0.83 273,299 Marks & Spencer 4.75% 2025 — 112,000 112,773 0.49 — Marks & Spencer 6.125% 2021 100,000 — — — 110,870 Meadowhall 4.988% 2037 150,000 150,000 138,216 0.60 165,726
46 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Sterling Bond Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ UK Corporate (continued) Mitchells & Butler 5.965% 2025 550,000 550,000 349,046 1.51 375,169 Motability 4.375% 2027 100,000 100,000 104,097 0.45 109,501 National Grid Gas 8.75% 2025 100,000 100,000 145,750 0.63 154,750 Nationwide 5.625% 2019 250,000 170,000 194,585 0.84 292,290 Next 5.375% 2021 100,000 — — — 113,345 NGG Finance FRN 2073 — 120,000 118,800 0.51 — Northern Rock 6.375% 2019 300,000 — — — 310,043 Northumbrian Water 5.125% 2042 100,000 100,000 108,633 0.47 109,919 Permanent Master 4.805% 2042 147,000 147,000 161,014 0.70 164,302 Places for People Homes 5.875% 2031 150,000 150,000 166,734 0.72 173,669 Prudential Banking 11.375% 2039 FRN 100,000 100,000 137,033 0.59 133,074 QBE Capital Funding 7.5% 2041 100,000 100,000 107,005 0.46 95,574 RMPA Services 5.337% 2038 180,000 180,000 169,486 0.73 180,972 Rolls-Royce 3.375% 2026 — 130,000 126,380 0.55 — Royal Bank of Scotland 5.125% 2024 200,000 200,000 227,605 0.98 241,217 Royal Bank of Scotland 6.875% 2025 200,000 200,000 243,508 1.05 247,764 Royal Sun Alliance 8.5% FRN (Perp) 100,000 100,000 105,063 0.45 107,177 Santander UK 7.5% FRN — 100,000 92,500 0.40 — Santander UK 9.625% 2023 FRN 125,000 125,000 144,776 0.63 128,573 Scottish and Southern Energy 5.453% FRN (Perp) 150,000 150,000 154,175 0.67 151,137 Severn Trent 6.25% 2029 220,000 170,000 208,884 0.90 288,884 Society of Lloyds 7.421% FRN (Perp) 234,000 114,000 120,555 0.52 221,041 Southern Electric 5.5% 2032 270,000 270,000 311,354 1.35 329,614 Southern Gas Networks 4.875% 2020 250,000 250,000 277,058 1.20 284,067 Sovereign Housing 4.768% 2043 100,000 100,000 106,609 0.46 108,703 Standard Chartered Bank 7.75% FRN (Perp) — 100,000 112,516 0.49 — Standard Life Finance 6.75% FRN (Perp) 220,000 220,000 237,158 1.03 206,825 Telereal Securitisation 6.1645% 2031 150,000 150,000 169,255 0.73 165,043 Tesco 5% 2023 — 217,000 232,519 1.01 — Tesco 6.125% 2022 200,000 — — — 241,403 Tesco Property Finance 5.8006% 2040 275,000 275,000 298,856 1.30 303,889 United Utilities 5% 2035 120,000 120,000 128,589 0.56 131,748 Wales & West Utilities 5.125% 2016 100,000 50,000 55,127 0.24 112,056 Western Power Distribution West Midlands 5.75% 2032 150,000 150,000 172,955 0.75 179,531 Western Power Distribution West Midlands 5.75% 2040 100,000 100,000 116,933 0.51 117,579 Yorkshire Building Society 4.75% 2018 — 100,000 110,397 0.48 —
Overseas Borrowers 37.03% (35.08%) AIG SunAmerica 5% 2018 201,000 201,000 224,659 0.97 213,442 AIG SunAmerica 5.375% 2016 112,000 112,000 123,297 0.53 122,337 America Movil SAB 4.948% 2033 — 150,000 150,648 0.65 — AT&T 5.5% 2027 100,000 100,000 110,770 0.48 120,539 Bank of America 7% 2028 150,000 150,000 190,491 0.82 184,632 Bank of America Merrill Lynch 7.75% 2018 200,000 200,000 242,289 1.05 238,992 BHP Billiton Finance 3.25% 2024 100,000 100,000 94,478 0.41 100,318 Bouygues 5.5% 2026 150,000 100,000 107,223 0.46 169,266 Citigroup 4.5% 2031 270,000 270,000 250,606 1.08 230,953 Citigroup 6.8% 2038 85,000 85,000 111,483 0.48 102,811 Commonwealth Bank of Australia 3% 2026 — 175,000 162,365 0.70 — Deutsche Telekom Intl Finance GRN 2030 115,000 115,000 157,313 0.68 163,540 DONG Energy 4.875% 2032 100,000 100,000 101,993 0.44 110,538 DONG Energy 5.75% 2040 100,000 100,000 113,537 0.49 121,593 EDF 5.5% 2041 100,000 100,000 109,017 0.47 110,283
47 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 Sterling Bond Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Overseas Borrowers (continued) EDF FRN — 200,000 201,500 0.87 — EDF 6.125% 2034 250,000 250,000 293,443 1.27 304,750 ELM FRN (Perp) 150,000 150,000 157,200 0.68 141,390 Enel Societa Per Azioni 5.75% 2040 100,000 100,000 88,460 0.38 84,416 Enel Societa Per Azioni 6.25% 2019 163,000 163,000 179,073 0.77 172,411 Finmeccanica 8% 2019 75,000 — — — 78,080 Gaz Capital 6.58% 2013 75,000 — — — 78,159 General Electric Cap. Corp. 5.875% 2033 140,000 140,000 162,588 0.70 165,531 General Electric Cap. Corp. 6.75% 2018 125,000 125,000 148,145 0.64 151,199 General Electric Cap. Corp. 8% 2039 210,000 210,000 306,309 1.34 308,850 General Electric Cap. Corp. 2067 6.5% FRN 180,000 180,000 188,838 0.82 176,253 Glencore Finance 6.5% 2019 150,000 150,000 168,672 0.73 168,569 Goldman Sachs 7.25% 2028 200,000 — — — 242,851 Holcim Finance 8.75% 2017 100,000 100,000 121,270 0.52 122,968 Iberdrola Finanzas 7.375% 2024 150,000 150,000 177,020 0.77 162,588 ING Groep 6.875% 2023 FRN 126,000 126,000 139,189 0.60 134,873 Koninklijke KPN 5% 2026 100,000 100,000 104,268 0.45 109,719 Linde Finance 8.125% 2068 125,000 125,000 141,354 0.61 143,614 Mellon Capital FRN 2066 150,000 — — — 135,375 Metlife 5.25% 2020 189,000 189,000 212,626 0.92 219,511 Morgan Stanley 5.75% 2017 93,000 — — — 98,931 National Capital Trust FRN (Perp) 220,000 220,000 223,303 0.97 201,632 Nordea Bank Finland FRN (Perp) 200,000 200,000 204,272 0.88 201,040 Orange SA 5.25% 2025 315,000 315,000 339,978 1.48 362,540 Orange 5.375% 2050 (France Telecom) 100,000 — — — 105,768 Petrobras 5.375% 2029 100,000 100,000 89,750 0.39 100,622 Rabobank Capital FRN (Perp) 156,000 156,000 155,727 0.67 140,364 RWE Finance 5.5% 2022 200,000 150,000 169,635 0.73 239,240 RWE Finance 6.125% 2039 100,000 100,000 117,021 0.51 124,983 Siemens 6.125% FRN 2066 150,000 150,000 162,551 0.70 161,205 SLM Student Loan 5.45% 2038 190,000 190,000 151,525 0.66 151,050 Southern Water 5% 2021 180,000 180,000 197,193 0.85 200,631 Svenska Handelsbanken 2.75% 2022 — 150,000 142,607 0.62 — Svenska Handelsbanken FRN (Perp) 196,000 — — — 197,170 TDC 5.625% 2023 100,000 100,000 111,538 0.48 118,695 Telecom Italia 6.375% 2019 — 50,000 51,539 0.22 — Telecom Italia 7.375% 2017 250,000 100,000 108,723 0.47 271,932 Telefonica Emisiones 5.289% 2022 150,000 150,000 150,933 0.65 139,666 Telefonica Emisiones 5.445% 2029 100,000 100,000 95,016 0.41 86,708 Thames Water Utilties Cayman 4.375% 2034 100,000 100,000 99,049 0.43 106,272 Thames Water Utilties Cayman 5.375% 2025 FRN 140,000 140,000 152,835 0.66 152,564 Time Warner Cable 5.75% 2031 FRN 150,000 150,000 139,771 0.60 175,511 UBS AG (Jersey) 5.25% 2021 150,000 150,000 159,671 0.69 150,129 UBS AG (London) 6.625% 2018 140,000 140,000 165,752 0.72 167,706 Vattenfall 6.875% 2039 194,000 194,000 263,423 1.14 278,345 Volkswagen Financial Services SVS 1.75% 2017 — 75,000 74,779 0.32 —
Total value of investments 22,195,464 96.03 22,933,807 Other assets 1,222,317 5.29 833,564 Total assets 23,417,781 101.32 23,767,371 Less Liabilities (304,716) (1.32) (394,698) Total Net assets 23,113,065 100.00 23,372,673
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased £4,584,067 £7,109,789 Proceeds from investments sold £5,252,603 £11,835,394
48 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 UK Fund
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Basic Resources 5.01% (6.35%) Essentra (formerly Filtrona) 41,624 — — — 212,074 Glencore Xstrata (formerly Glencore 100,241 — — — 347,987 International) Melrose Industries — 139,153 408,654 2.00 — Rio Tinto 6,180 20,503 614,782 3.01 181,414 Xstrata 53,913 — — — 526,191
Consumer Goods 25.59% (26.62%) AstraZeneca 31,790 20,902 672,626 3.30 941,620 Booker Group 113,635 113,635 150,794 0.74 106,703 British American Tobacco 16,464 16,464 539,114 2.64 527,507 Burberry Group — 19,349 312,099 1.53 — Debenhams 111,294 — — — 113,965 Diageo 17,643 28,367 555,710 2.72 309,988 DS Smith 296,661 — — — 548,823 Dunelm Group 18,677 18,677 170,988 0.84 120,840 GKN 55,505 79,311 273,623 1.34 119,946 GlaxoSmithKline 86,777 67,409 1,052,592 5.16 1,246,118 Imperial Tobacco 9,990 — — — 229,370 Rolls Royce Holdings 49,511 12,424 137,782 0.68 419,358 SABMiller 15,035 2,166 68,229 0.33 410,982 Shire 6,257 28,043 694,906 3.41 112,689 Sports Direct International — 29,573 208,342 1.02 — Tate and Lyle 31,596 — — — 211,535 Tesco — 105,529 382,859 1.88 —
Energy 17.90% (29.66%) AMEC 21,352 — — — 247,470 BG Group 49,000 71,250 842,888 4.13 618,625 BHP Billiton 6,129 — — — 119,791 BP 228,325 50,661 221,237 1.08 1,012,736 Centrica 156,200 28,817 105,384 0.52 517,334 Drax Group — 60,775 410,231 2.01 — Great Eastern Energy 66,865 — — — 170,506 Indus Gas 74,928 52,517 470,027 2.30 734,294 Keller 21,281 — — — 115,875 KSK Power Ventur 123,969 123,969 254,136 1.25 533,067 National Grid 40,800 40,800 300,084 1.47 281,520 Royal Dutch Shell 'A' 9,285 28,289 576,954 2.83 200,835 Royal Dutch Shell 'B' 61,414 21,901 470,214 2.31 1,367,076
Financials 20.90% (15.20%) Aviva — 78,264 310,395 1.52 — Barclays 183,646 302,969 798,929 3.92 406,960 Barclays (Nil Paid Rights) — 75,742 59,457 0.29 — Eatonfield Group 39,071 — — — 59 Hammerson — 60,294 304,183 1.49 — HSBC Holdings 155,852 183,390 1,233,114 6.06 903,786 Intermediate Capital 85,306 48,740 214,456 1.05 260,098 Prudential 40,364 51,228 588,610 2.89 327,150 Resolution 187,142 58,802 187,284 0.92 411,338 RSA Insurance Group 130,000 218,990 264,978 1.30 144,300 Standard Chartered 8,600 — — — 122,292 Tullett Prebon 117,979 86,588 297,603 1.46 353,819
Information Technology 1.13% (0%) ARM Holdings — 23,235 231,072 1.13 —
49 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Investment Portfolios (continued) For the year ended 30th September 2013 UK Fund (continued)
Holding Holding Market % of Market 30.09.12 30.09.13 Value Total Net Value 30.09.13 Assets 30.09.12 £ £ Materials 4.76% (2.03%) Berkeley Group Holdings 28,835 14,368 293,682 1.44 405,132 Johnson Matthey — 13,029 364,221 1.79 — Meggitt — 56,712 311,064 1.53 —
Services 24.39% (20.51%) American Leisure (Suspended) 416,667 416,667 — — — BAE Systems — 141,601 650,090 3.19 — British Sky Broadcasting Group 75,234 — — — 563,126 BT Group — 189,008 651,133 3.19 — Compass Group 69,088 12,560 106,006 0.52 477,744 EasyJet — 26,279 330,853 1.62 — Experian 26,672 — — — 277,656 Grainger — 134,000 231,418 1.13 — Ienergizer 65,446 65,446 210,736 1.03 235,606 IMI — 17,443 251,702 1.23 — Invensys 138,708 — — — 326,241 ITV — 269,145 466,428 2.29 — Northgate 48,488 16,488 71,063 0.35 116,371 Reckitt Benckiser Group 3,447 — — — 123,230 Reed Elsevier 76,011 27,935 231,162 1.13 456,826 Sage Group 103,356 — — — 326,295 Smith and Nephew 25,255 19,255 147,590 0.72 172,997 UBM 28,570 — — — 200,561 Vodafone Group 460,742 296,076 643,077 3.16 814,822 Whitbread — 11,522 344,393 1.69 — William Hill — 40,647 165,880 0.81 — WPP — 37,567 472,217 2.33 —
Total Value of Investments 20,327,051 99.68 20,032,645 Other Assets 1,798,718 8.82 159,991 Total Assets 22,125,769 108.50 20,192,636 Liabilities (1,732,458) (8.50) (244,949) Total Net Assets 20,393,311 100.00 19,947,687
For the year ended For the year ended 30.09.13 30.09.12
Cost of investments purchased £10,500 ,079 £11,901,507 Proceeds from investments sold £13,020,863 £24,841,854
50 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Investments Purchased and Sold For the year ended 30th September 2013 This schedule refers to investments both purchased and sold during the year and as a result do not appear on the portfolio listings. CCY Capital Growth Fund (Closed 05.07.13) Closed during the year and all assets sold. Euro High Income Abertis 4.75% 2019 99,563 Koninklijke FRN PERP 99,478 European Fund Groupe FNAC 3,090 Julius Bar Gruppe 1,668 Saipem 212,737 TGS-Nopec Geophysical Company 245,365 Vivendi 155,379 International Fund Macy’s 395,516 Makita 365,874 Mitsubishi Materials 331,418 Rio Tinto 303,397 Samsung Electronics 559,229 TGS-Nopec Geophysical Company 252,415 Vivendi 238,931 WPP 447,317 North American Fund IHS ‘A’ 71,737 Motorola Solutions 124,786 Regal Beloit 206,201 Verisk Analytics 180,638 Sterling Bond Fund Abbey National 5.75% 2026 167,492 Treasury 5% 2018 227,016 Treasury 1.75% 2017 134,975 Treasury 1.75% 2022 210,344 Treasury 3.75% 2021 123,339 Treasury 4.25% 2036 120,120 UK Fund Melrose 82,088 Sage Group 207,409
51 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Summary of Material Portfolio Changes For the year ended 30th September 2013 This schedule refers to securities purchased and sold during the year which had a value of greater than 2% of the net asset value of each Fund. The Directors consider that the disclosure of the 20 largest purchases and sales is sufficient to reflect the nature of the operating activity of the Company. Euro High Income Fund Purchases Cost € Sales Proceeds € La Poste 2.75% 2024 208,370 Severn Utilities 5.25% 2016 157,419 Vattenfall 6.25% 2021 162,756 Lloyds Banking Group 6.5% 2020 145,999 ABN Amro Bank 4.125% 2022 148,140 Bundesrep 3.25% 2021 138,227 Clemed 4.25% FRN 145,420 Lloyds Society FRN 2024 131,100 Hutchinson Whampoa 3.75% Perp 120,000 Bundesrep 6.25% 2024 129,993 BNP Paribas FRN Perp 110,205 Bundesrep 3% 2020 114,914 Fiat Finance & Trade 6.875% 2015 109,277 Everyone Everywhere 3.5% 2017 107,813 Bundesrep 3.75% 2019 105,651 Bundesrep 2.5% 2014 107,018 Bundesrep 6.25% 2024 102,338 Leaseplan 3.875% 2015 106,068 Achmea 6% 2043 100,000 Fiat Finance & Trade 6.75% 2019 104,162 Fiat Finance & Trade 6.75% 2019 100,000 Citigroup International 4.25% 2030 102,383 America Movil GRN 2023 100,000 Koninklijke KPN GRN 101,124 NGG Finance GRN 2076 99,973 Abertis 4.75% 2019 100,100 Xstrata Finance GRN 2018 99,608 Santos Finance 8.25% 2070 97,025 Origin Energy 2.875% 2019 99,575 XSTRATA Finance 5.25% 2017 93,849 Abertis 4.75% 2019 99,563 Bundesrep 3.75% 2019 89,451 Koninklijke KPN GRN 99,478 Bord Gais Energy GRN 2014 87,645 British American Tobacco 2.375% 2023 99,362 Conti-Gummi Finance 8.5% 2015 78,188 Elite De France GRN Perp 98,923 Bundesrep 3.25% 2042 75,736 Bundesrep 3.75% 2019 97,146 Barclays Bank 6% 2018 75,214
European Fund Purchases Cost £ Sales Proceeds £ Eni 343,314 Kabel Deutschland Holding 379,969 Hexagon ‘B’ 245,118 TAG Immobilien 319,903 Roche Holding 215,989 Allianz 291,401 Glanbia 208,788 Telenet Group Holding 280,676 Roche Holding 184,911 Millicom International Cellular 239,325 Bayer 156,378 Anheuser-Busch Inbev 235,156 Saipem 151,745 Anheuser-Busch Inbev 196,969 Roche Holding 146,644 Technip 166,016 Amadeus IT Holding 134,709 Nestle ‘R’ 165,900 LEG Immobilien 127,553 Prysmian 163,796 TAG Immobilien 124,991 Novartis ‘R’ 150,787 Roche Holding 122,869 Sanofi 146,343 Bayer 117,201 Sanofi 144,945 UBS ’R’ 103,074 Novartis ‘R’ 139,879 Ryanair 96,292 Saipem 135,025 Volvo ‘B’ 95,388 Scholler-Bleckmann 134,103 Bayer 92,670 Sanofi 119,303 LEG Immobilien 92,002 Barry Callbaut 118,293 Volvo ‘B’ 90,358 Novartis ‘R’ 113,319 Kering 84,275 Allianz 111,309
52 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Summary of Material Portfolio Changes (continued) For the year ended 30th September 2013
High Income Fund Purchases Cost £ Sales Proceeds £ Brit Telecom 6.625% 2017 3,220,884 Beazley Group FRN 2026 3,071,928 Lafarge GRN 2017 2,588,415 Lafarge Cement 10.75% 2013 2,729,465 Barclays Bank 9.5% 2021 2,321,320 Natwest Bank 6.5% 2021 2,303,023 European Coal & Steel Company 6.875% 2019 2,278,893 Lloyds Banking Group 6.5% 2020 2,118,257 Elite De France FRN Perp 2,274,493 Treasury Gilt 4.5% 2019 1,826,092 Pennon Group FRN Perp 1,791,558 Natwest Bank 11.5% 1,680,719 Imperial Tobacco 9% 2022 1,781,066 Scottish Widows FRN Perp 1,620,446 Porterbrook 5.5% 2019 1,748,832 Treasury Gilt 3.75% 2021 1,573,904 Zurich Financial Utilities FRN Perp 1,671,912 Treausry Stock 8% 2021 1,572,436 RSA Insurance GRN 2039 1,662,544 Ladbrokes 7.625% 2017 1,444,081 ASIF III 5.375% 2016 1,526,306 Intesa 5.25% 2022 1,414,758 Petrobras 5.375% 2029 1,516,184 Satander UK 7.375% Perp 1,268,163 America Movil GRN 2073 1,491,555 Treasury Stock 4.25% 2032 1,225,148 Holcim GB Finance 8.75% 2017 1,439,659 HSBC Holding 6% 2040 1,221,273 The Housing Finance Corporation Funding 6.35% 2041 1,394,057 Gatwick Funding FRN 2028 1,140,286 BG Energy Capital GRN 2072 1,305,138 Southern Gas Networks 4.875% 2029 1,125,882 Enel GRN 2075 1,213,985 Credit Foncier 10.25% 2014 1,115,000 Wal-Mart Stores 5.25% 2035 1,196,829 Treasury Gilt 1.75% 2017 1,108,921 Northern Powergroup 9.25% 2020 1,192,598 Treasury Gilt 4.5% 2042 1,107,808 Clydesdale Bank FRN 2026 1,174,233 SLM Student Loan Trusts 5.45% 2038 1,102,481
International Fund Purchases Cost £ Sales Proceeds £ Samsung Electronics 560,738 Wells Fargo 646,396 Citigroup 539,671 Allianz 584,637 Orix 514,200 Samsung Electronics 468,157 Toyota Motor 499,608 Occidental Petroleum 465,462 Bayer 449,408 Pfizer 388,736 American International Group 446,713 Macy’s 361,210 Macy’s 395,991 US Bancorp 338,790 Sumitomo Mitsui Financial Group 387,505 BP 328,439 Bayer 318,575 Apple 323,062 Google ‘A’ 290,154 WPP 305,128 Mitsubushi Estate 276,514 Syngenta 292,230 F5 Networks 275,314 Brookfield Asset Management ‘A’ 283,175 Suncor Energy 270,184 AXA 277,592 Google ‘A’ 250,641 UnitedHealth Group 272,608 Ryanair 221,443 MSC Industrial Direct ‘A’ 266,356 The Swatch Group ‘B’ 197,591 China Mobile 255,066 Halliburton 193,684 Dufry ‘R’ 249,592 ING Groep 193,285 Citigroup 249,590 Amadeus IT Holding 190,856 Royal Caribbean Cruises 249,588 The Swatch Group ‘B’ 187,181 AXA 239,952
53 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Summary of Material Portfolio Changes (continued) For the year ended 30th September 2013
North American Fund Purchases Cost £ Sales Proceeds £ Citigroup 289,359 Ecolab 236,439 Macy’s 267,929 Wells Fargo 199,325 American International Group 194,767 Coca Cola 193,764 Prudential Financial 176,137 Pfizer 183,287 Verisk Analytics 173,499 Exxon Mobil 180,372 Kraft Foods Group 164,774 Occidental Petroleum 165,655 Perrigo 158,312 AON Class A 150,632 General Motors 151,821 Brunswick 133,137 Suntrust Banks 143,846 Motorola Solutions 119,057 Suntrust Banks 139,743 Cummins 108,870 Google ‘A’ 139,446 Wal Mart Stores 107,800 Delta Air Lines 134,380 Inituitive Surigical 94,738 Google ‘A’ 129,099 Royal Caribbean Cruises 94,313 Google ‘A’ 120,562 Airgas 91,875 Oracle 118,613 Apache 87,632 AON Class A 118,506 Thermo Fisher Scientific 87,475 Clean Harbors 113,021 Airgas 86,641 F5 Networks 112,450 Citigroup 86,634 Kraft Foods Group 99,367 Apple 85,691 Citrix Systems 95,878 Harley Davidson 85,583 Sterling Bond Fund Purchases Cost £ Sales Proceeds £ Tesco 5% 2023 247,083 Northern Rock 6.375% 2019 361,150 Treasury 5% 2018 231,162 Barclays 10% 2021 288,634 Treasury 4.75% 2038 230,058 Goldman Sachs 7.25% 2028 256,122 Treasury 1.75% 2022 210,827 Tesco 6.125% 2022 246,727 Coventry 4.625% 2018 200,559 Treasury Gilt 5% 2018 229,045 Electricite de France FRN Perp 197,782 Svenska Handbkn FRN Perp 196,000 Commonwealth Bank of Australia 3% 2026 175,945 Abbey National 5.75% 2026 171,438 Abbey National 5.75% 2026 172,181 Mellon Capital FRN 2066 154,040 Abbey National 5.25% 2029 170,067 Arkle Master FRN 2060 131,197 America Movil FRN 2033 150,000 Treasury 1.75% 2022 125,862 Svenska Handelsbanken 2.75% 2022 148,596 Treasury 3.75% 2021 125,187 Treasury 4% 2016 147,740 Treasury 4.25% 2036 119,965 AA Bond GRN 2043 140,000 Aviva FRN 2058 119,478 Treasury 1.75% 2017 134,968 Marks and Spencers 6.125% 2021 115,862 British American Tobacco Finance 6% 2022 130,786 Next 5.375% 2021 113,595 Rolls Royce 3.375% 2026 128,826 BP Capital Markets 4.325% 2018 112,701 HBOS 10.5% 2018 127,270 Yorkshire Building Society 4.75% 2018 112,612 Huntchinson Whampoa 5.625% 2026 124,929 Treasury Stock 4.75% 2038 111,737 NGG Finance GRN 2073 121,362 BL Superstore 4.482% 2030 111,608 ICTL Hotels 3.875% 2022 121,137 Co-Operative 5.625% 2020 106,687
54 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Summary of Material Portfolio Changes (continued) For the year ended 30th September 2013
UK Fund Purchases Cost £ Sales Proceeds £ Royal Dutch Shell ‘A’ 562,044 Royal Dutch Shell ‘B’ 576,615 BAE Systems 449,291 Xstrata 346,513 WPP 422,275 Glencore Xstrata 274,712 HSBC Holdings 397,273 British Sky Broadcasting Group 223,281 Astrazeneca 392,916 Astrazeneca 216,174 Diageo 387,962 AMEC 215,335 Barclays 297,025 BP 208,802 Rio Tinto 259,736 Royal Dutch Shell A 208,470 Standard Chartered 212,756 Centrica 207,722 Drax Group 212,539 Diageo 207,094 Shire 209,931 BP 206,726 BG Group 208,809 Rolls-Royce Holdings 206,581 Rio Tinto 196,998 Standard Chartered 205,897 Aviva 178,378 Resolution 204,028 Melrose Industries 175,333 DS Smith 201,691 Easyjet 164,574 HSBC Holdings 196,714 Tesco 160,279 British Sky Broadcasting Group 195,654 Standard Chartered 154,389 Royal Dutch Shell ‘B’ 195,520 William Hill 154,032 Sabmiller 195,256 Shire 148,446 Sage Group 192,720
55 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements For the year ended 30th September 2013 1. The Company 3. Summary of Significant Accounting Policies The Company is registered in Jersey, Channel Islands, and is listed The principal accounting policies applied in the preparation of these on the Channel Islands Stock Exchange and on the Malta Stock financial statements are set out below. These policies have been Exchange. Full details of the Company, Investment Objectives and applied consistently to all years presented, unless otherwise stated Policy and Report of the Directors are stated on pages 2 to 6. in the following text: 2. Basis of Presentation The Directors also monitor new standards and ensure that they are applied when relevant. The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) on the going The Company has adopted the following standards, concern basis. amendments and interpretations as of 1st Oct 2012: The policies set out below have been consistently applied to all • None to note. years presented except for those items set out below relating to the The following standards, amendments and interpretations are classification and measurement of financial instruments. mandatory for accounting periods beginning on or after 1st January The financial statements have been prepared under the historical 2012 but are not relevant to the Company’s operations: cost convention, as modified by the revaluation of investments, and • None to note. in accordance with the Collective Investment Funds (Recognized The following standards, amendments and interpretations have Funds) (Rules) (Jersey) Order 2003 (as amended). Jersey is not part been published and are mandatory for the Company’s accounting of the United Kingdom (‘UK’) and the Company is not regulated periods beginning on or after 1st January 2012 or later periods, by the Financial Conduct Authority or the Prudential Regulation but the Company has not early adopted them: Authority of the UK. • IFRS 9 ‘Financial instruments’ - classification and measurement The capital of the Company comprises various classes of Shares each (effective from 1st January 2013). relating to a separate portfolio Fund consisting of securities, cash, • IFRS 10, ‘Consolidated financial statements’ other assets and liabilities. These financial statements present the (effective from 1st January 2013). balance sheets, statements of comprehensive income, statements IFRS 11, ‘Joint arrangements’ (effective from 1st January 2013). of changes in net assets attributable to holders of participating • redeemable preference shares, cash flow statements, Investment • IFRS 12, ‘Disclosures of interests in other entities’ Portfolio’s, notes to the financial statements, distribution tables (effective from 1st January 2013). (unaudited) and performance records (unaudited). At the balance • IFRS 13, ‘Fair value measurement’ (effective from 1st January sheet date there were seven Funds in existence; Euro High Income 2013). Fund, European Fund, High Income Fund, International Fund, North • IFRS 7 (amendment), ‘Financial instruments: Presentation’, American Fund, Sterling Bond Fund and UK Fund. on offsetting of financial assets and financial liabilities The net assets attributable to holders of participating redeemable (effective from 1st January 2013). preference shares are classified as financial liabilities and therefore, • IAS 32 (amendment), ‘Financial instruments: in the opinion of the Directors, the Capital of the Company is only presentation’, on offsetting of financial assets and represented by the Founders Shares and Nominal Shares. Details financial liabilities (effective from 1st January 2013). of Founders Shares and Nominal Shares are disclosed in Notes 3(g) • IAS 36 (amendment), ‘Impairment of assets’ (effective from 1st and 14. January 2015). Where assets of an individual Fund are insufficient to meet the • IAS 39 (amendment), ‘Financial instruments: Recognition and Funds liabilities, then any liabilities that remain undischarged will measurement’, on novation of derivatives and hedge accounting revert to the Company as a whole and be allocated amongst the (effective from 1st January 2014). other Funds. • Annual improvements 2011 (effective from 1st January 2013). Critical accounting estimates and judgements Functional currency and presentational currency The Company makes assumptions and estimates that affect the Items included in the Company’s financial statements are measured reported amounts of assets and liabilities within the next financial using the currency of the primary economic environment in which year. Estimates and judgements are continually evaluated and it operates (the ‘functional currency’). The Directors have are based on historical experience and other factors, including adopted sterling as the functional and presentational currency expectations of future events that are believed to be reasonable for consolidation purposes which reflects the Company’s primary under the circumstances. The accounting policies deemed critical to economic in which financial assets are invested and the regulatory the Company’s results and financial position, based upon materiality environment of the majority of investors, being UK based. and significant judgements and estimates, are discussed in the following notes.
56 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 3. Summary of Significant Accounting Policies (continued) The Company has adopted sterling as its presentational and Financial assets and financial liabilities at fair value through functional currency for Capital Growth Fund (closed 05.07.13), profit or loss European Fund, High Income Fund, International Fund, North (a) Classification American Fund, Sterling Bond Fund and UK Fund as the majority of The Company classifies its investments in debt and equity securities Shares in each Fund have been subscribed for in sterling and all non as financial assets at fair value through profit or loss. Financial assets dealing related fees and expenses are paid in sterling. and financial liabilities are designated by the Board of Directors as The Company has adopted euro as its presentational and functional fair value through profit or loss at inception. currency for the Euro High Income Fund as the Shares in the Fund Financial assets and financial liabilities designated at fair value have been subscribed for in euro and the majority of non dealing through profit or loss at inception are those that are managed and related fees and expenses are paid in euro. their performance evaluated on a fair value basis in accordance with Share premium and share capital currency translation the Company’s documented investment strategy. The Company’s Share premium and share capital transactions are translated into policy is for the Manager and the Board of Directors to evaluate the sterling at the exchange rate ruling at the time of the transaction. information about these financial assets at fair value together with other related financial information. The aggregated balance of net assets attributable to holders of participating redeemable preference Shares has been translated (b) Recognition using the average exchange rate for the year. Purchases and sales are recognised on the trade date (the date on which the Company commits to purchase or sell the asset). Segmental reporting The Company, at the balance sheet date is organised into seven (c) Measurement business segments, each focussing on achieving returns by investing Financial assets and financial liabilities at fair value through profit or in a range of investments as described in the Investment Objectives loss are initially recognised at fair value, and transaction costs for all and Policy on page 3. financial assets and financial liabilities carried at fair value through The Company issues Shares which are allocated to the Fund selected profit or loss are expensed in the statement of comprehensive by the investor. A separate account is maintained for each Fund, income as incurred. Subsequent to initial recognition, all financial to which proceeds of issue, the income arising from those proceeds assets and financial liabilities at fair value through profit or loss are and expenses are allocated. Upon redemption shareholders are measured at fair value. entitled to their proportion of the net assets held in the Fund in Gains and losses arising from changes in the fair value of financial which their Shares have been designated. assets or financial liabilities at fair value through profit or loss are A balance sheet, statement of comprehensive income, statement recognised in the statement of comprehensive income in the year in of changes in net assets attributable to holders of participating which they arise. redeemable preference shares and cash flow statement have been (d) Fair value estimation prepared for each Fund as well as for the Company as a whole. The fair value of financial instruments traded in active markets (such Foreign currency translation as publicly traded derivatives and trading securities) is based on Assets and liabilities denominated in currencies other than the quoted market prices at the balance sheet date. The quoted market functional currency of the Fund are translated at the rate of price used for financial assets and financial liabilities held by the exchange ruling at the balance sheet date. The currency profits Fund is the current bid-market price. When a Fund holds derivatives or losses arising on translation, together with currency profits or with offsetting market risks, it uses bid-market prices as a basis for losses realised during the year, are recognised in the statement of establishing fair values for the offsetting risk positions and applies comprehensive income. this bid-market price to the net open position, as appropriate. As required by IAS 39 financial assets and financial liabilities at fair value The rate of exchange to sterling from euro ruling at 30th September through profit or loss are valued at the bid-prices ruling at 10.00 a.m. 2013 used for the conversion of balance sheet items was 1.1931 on the last business day of the accounting year. and the average rate for the year used for the conversion of the statement of comprehensive income was 1.1953. (e) Revenue recognition Investment income from Fund investments is recognised in the Translation differences on non-monetary items held at fair value statement of comprehensive income on an ex-dividend basis for through profit or loss are reported as part of the fair value gain equities and on a time proportionate basis for all debt instruments or loss. using the Effective Interest Rate method (‘EIR’). Bank interest is recognised in the statement of comprehensive income on a time proportionate basis using the EIR method.
57 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 3. Summary of Significant Accounting Policies (continued) (f) Cash and cash equivalents (i) Distributions payable to holders of participating redeemable Cash and cash equivalents include cash in hand and deposits held at preference shares call with banks. Distributions to holders of Participating Shares are recognised and classified as finance costs when they are ratified by the Directors. (g) Share capital (i) the Founders Shares have been subscribed for by the (j) Accrued income and expenses Manager and are non-participating. The holders thereof are Accrued income and expenses are recognised initially at fair value entitled only to income arising on the assets represented by and subsequently stated at amortised cost using the EIR. the Founders Shares. These Shares are classified as Ordinary Share capital in the balance sheet. (ii) unclassifiedS hares may be issued as either participating redeemable preference shares (‘Participating Shares’) or Nominal Shares. Participating Shares are redeemable at the shareholder’s option and are classified as financial liabilities. Participating Shares are carried at the redemption amount that is payable if the holder exercises the right to redeem Shares at the balance sheet date. Participating Shares are issued and redeemed at the holder’s option at prices based on each Fund’s net asset value per Share at the time of issue or redemption. Each Fund’s net asset value per Share is calculated by dividing the net assets attributable to the holders of participating redeemable preference shares with the total number of Participating Shares in issue. In accordance with the provisions of the Company’s regulations, investments are valued based on the latest traded market price for the purpose of determining the net asset value per Share for subscriptions and redemptions. The Shares are divided into Funds according to the type of investment in which the proceeds of the issue of Shares in each Fund are invested. A separate portfolio of investments is maintained for each Fund. Each holder of a Participating Share is entitled on a poll, to one vote for each Participating Share held. Participating Shares have a right to dividends declared. If any dividends are paid, different amounts of dividends may be payable in respect of different Funds. (iii) Nominal Shares have been accounted for in accordance with the Companies (Jersey) Law 1991 and corresponding amounts have been included in debtors and financial liabilities. A Nominal Share will be created when a Participating Share is cancelled. A Nominal Share will be cancelled when a Participating Share is created until the number of Nominal Shares falls to zero. both issued Nominal and Participating Shares are carried at a value of £ 0.01 per Share. (iv) Details of the Company’s Share capital transactions are shown in Note 14. (h) Share premium The premium on issues and redemptions of Participating Shares is accounted for within the Share premium account which forms part of the net assets attributable to holders of participating redeemable preference Shares. Details are shown in Notes 15 and 17.
58 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
59 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 4. Other Accrued Income and Pre Paid Expenses Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Year ended 30th September 2013 Accrued Income 8,839,296 — 264,488 — Nominal Shares 644,056 — — — Founders Shares 1,000 — — — Total Debtors 9,484,352 — 264,488 —
Year ended 30th September 2012 Accrued Income 9,193,520 35,343 280,397 — Nominal Shares 559,643 — — — Founders Shares 1,000 — — — Total Debtors 9,754,163 35,343 280,397 —
5. Distributions The distributions take account of income received on the creation of shares and income deducted on the cancellation of shares.
Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund Year ended 30th September 2013 £ £ € £ 31st October 2012 1,696,805 — — — 30th November 2012 1,543,514 — — — 31st December 2012 1,897,193 — 145,564 — 31st January 2013 1,510,913 — — — 28th February 2013 1,509,091 — — — 31st March 2013 1,865,091 — 153,197 — 30th April 2013 1,503,422 — — — 31st May 2013 1,539,132 — — — 30th June 2013 1,903,839 — 152,169 — 31st July 2013 1,513,330 — — — 31st August 2013 1,509,789 — — — 30th September 2013 2,229,652 — 149,686 — 20,221,771 — 600,616 —
Income paid on cancellation of shares 229,192 126,596 3,282 1,506
Income received on creation of shares (71,838) (1,753) (7,258) (367) Net distributions for the year 20,379,125 124,843 596,640 1,139 Fees charged to capital* (311,721) — (23,486) — Net distributions after taxation 20,067,404 124,843 573,154 1,139
* Details can be found in Note 10.
60 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 4. Other Accrued Income and Pre Paid Expenses (continued) High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund £ £ £ £ £ Year ended 30th September 2013 Accrued Income 8,032,831 15,791 1,533 501,276 66,183 Nominal Shares — — — — — Founders Shares — — — — — Total Debtors 8,032,831 15,791 1,533 501,276 66,183
Year ended 30th September 2012 Accrued Income 8,336,820 33,297 7,513 556,637 201 Nominal Shares — — — — — Founders Shares — — — — — Total Debtors 8,336,820 33,297 7,513 556,637 201
5. Distributions The distributions take account of income received on the creation of shares and income deducted on the cancellation of shares.
High Sterling Income Bond UK Fund Fund Fund Year ended 30th September 2013 £ £ £ 31st October 2012 1,696,806 — — 30th November 2012 1,543,514 — — 31st December 2012 1,540,010 238,838 — 31st January 2013 1,510,913 — — 28th February 2013 1,509,091 — — 31st March 2013 1,503,487 232,082 — 30th April 2013 1,503,422 — — 31st May 2013 1,539,132 — — 30th June 2013 1,543,060 233,471 — 31st July 2013 1,513,330 — — 31st August 2013 1,509,789 — — 30th September 2013 1,507,105 261,197 335,889 18,419,659 965,588 335,889
Income paid on cancellation of shares 34,472 5,482 58,390
Income received on creation of shares (42,711) (9,117) (11,818) Net distributions for the year 18,411,420 961,953 382,461 Fees charged to capital* (292,072) — — Net distributions after taxation 18,119,348 961,953 382,461
* Details can be found in Note 10.
61 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 5. Distributions (continued) Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Year ended 30th September 2012 31st October 2011 1,641,552 — — — 30th November 2011 1,615,812 — — — 31st December 2011 2,049,149 — 154,715 — 31st January 2012 1,613,518 — — — 29th February 2012 1,556,418 — — — 31st March 2012 2,057,141 — 147,561 — 30th April 2012 1,705,585 — — — 31st May 2012 1,700,223 — — — 30th June 2012 2,100,194 — 147,251 — 31st July 2012 1,695,395 — — — 31st August 2012 1,690,863 — — — 30th September 2012 2,454,824 143,557 142,031 56,327 21,880,674 143,557 591,558 56,327
Income paid on cancellation of shares 503,223 11,433 15,272 17,256
Income received on creation of shares (72,397) (2,624) (8,626) (330)
Net distributions for the year 22,311,500 152,366 598,204 73,253 Fees charged to capital* (305,149) — (25,539) — Net distributions after taxation 22,006,351 152,366 572,665 73,253
* Details can be found in Note 10.
6. Accrued Expenses
Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Year ended 30th September 2013 Due to Manager 472,423 — 15,115 32,374 Due to Custodian 24,610 — 1,118 1,975 Other Creditors 212,975 — 18,560 14,203
Total Creditors 710,008 — 34,793 48,552
Year ended 30th September 2012 Due to Manager 460,023 19,596 13,334 28,331 Due to Custodian 23,419 1,490 952 1,566 Other Creditors 234,061 10,186 16,728 12,508
Total Creditors 717,503 31,272 31,014 42,405
62 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 5. Distributions (continued) High Sterling Income Bond UK Fund Fund Fund £ £ £ Year ended 30th September 2012 31st October 2011 1,641,552 — — 30th November 2011 1,615,812 — — 31st December 2011 1,610,188 309,275 — 31st January 2012 1,613,518 — — 28th February 2012 1,556,418 — — 31st March 2012 1,633,543 300,554 — 30th April 2012 1,705,585 — — 31st May 2012 1,700,223 — — 30th June 2012 1,700,292 278,923 — 31st July 2012 1,695,395 — — 31st August 2012 1,690,863 — — 30th September 2012 1,696,381 258,157 187,085 19,859,770 1,146,909 187,085
Income paid on cancellation of shares 54,679 40,582 366,726
Income received on creation of shares (40,923) (10,305) (11,128)
Net distributions for the year 19,873,526 1,177,186 542,683 Fees charged to capital* (284,167) — — Net distributions after taxation 19,589,359 1,177,186 542,683
* Details can be found in Note 10.
6. Accrued Expenses
High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund £ £ £ £ £ Year ended 30th September 2013 Due to Manager 298,902 48,604 18,162 23,075 38,636 Due to Custodian 14,520 2,386 1,104 1,680 2,008 Other Creditors 122,909 15,558 7,924 18,764 18,060
Total Creditors 436,331 66,548 27,190 43,519 58,704
Year ended 30th September 2012 Due to Manager 277,392 44,018 17,914 24,261 37,873 Due to Custodian 13,188 2,046 1,023 1,553 1,793 Other Creditors 141,522 17,006 4,696 16,598 18,198
Total Creditors 432,102 63,070 23,633 42,412 57,864
63 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 7. Net gains on financial assets at fair value through profit or loss The net gains on investments during the year comprise:
Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Year ended 30th September 2013 Proceeds from sales of investments 131,209,197 19,718,844 2,528,988 7,453,491 during the year Original cost of investments sold (116,351,815) (16,993,765) (2,352,988) (5,292,581) during the year Gains realised on investments sold 14,857,382 2,725,079 176,000 2,160,910 during the year Realised foreign exchange (losses)/gains (118,966) (35,863) — (68,939)
Net realised gain/(loss) for the year 14,738,416 2,689,216 176,000 2,091,971
Net unrealised gain/(loss) for the year 5,000,436 (1,178,742) 182,702 1,265,647
Net gains on investments 19,738,852 1,510,474 358,702 3,357,618
Year ended 30th September 2012 Proceeds from sales of investments 158,979,698 9,757,656 3,512,707 7,874,544 during the year Original cost of investments sold (159,198,913) (9,498,171) (3,686,650) (7,678,042) during the year (Losses)/gains realised on investments sold (219,215) 259,485 (173,943) 198,502 during the year Realised foreign exchange gains/(losses) 102,653 1,290 — 34,806
Net realised (loss)/gain for the year (116,562) 260,775 (173,943) 233,308
Net unrealised gain/(loss) for the year 44,676,314 1,475,661 1,447,713 1,704,280
Net gains on investments 44,559,752 1,736,436 1,273,770 1,937,588
64 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 7. Net gains on financial assets at fair value through profit or loss The net gains on investments during the year comprise:
High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund £ £ £ £ £ Year ended 30th September 2013 Proceeds from sales of investments 53,362,654 21,779,233 8,505,703 5,252,603 13,020,863 during the year Original cost of investments sold (51,280,231) (18,109,836) (7,095,654) (4,880,795) (10,730,392) during the year Gains realised on investments sold 2,082,423 3,669,397 1,410,049 371,808 2,290,471 during the year Realised foreign exchange (losses)/gains 623 7,039 (21,072) 194 (948)
Net realised gain/(loss) for the year 2,083,046 3,676,436 1,388,977 372,002 2,289,523
Net unrealised gain/(loss) for the year 2,983,102 1,421,369 153,526 (321,762) 524,444
Net gains on investments 5,066,148 5,097,805 1,542,503 50,240 2,813,967
Year ended 30th September 2012 Proceeds from sales of investments 66,210,681 23,358,000 12,213,587 11,835,394 24,841,854 during the year Original cost of investments sold (68,602,169) (22,853,298) (10,664,139) (11,866,811) (25,007,392) during the year (Losses)/gains realised on investments sold (2,391,488) 504,702 1,549,448 (31,417) (165,538) during the year Realised foreign exchange gains/(losses) 30 56,546 11,660 (244) (1,437)
Net realised gain/(loss) for the year (2,391,458) 561,248 1,561,108 (31,661) (166,975)
Net unrealised gain/(loss) for the year 31,183,365 3,194,648 785,950 2,338,743 2,804,252 Net gains on investments 28,791,907 3,755,896 2,347,058 2,307,082 2,637,277
65 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 8. Other Income Capital Euro High Note Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Year ended 30th September 2013 Bank interest 11,713 1,817 — 362 Underwriting commission — — — — Other income 11,713 1,817 — 362
Year ended 30th September 2012 Bank interest 19,298 1,910 306 695 Underwriting commission — — — — Other income 19,298 1,910 306 695
9. Operating Expenses. Year ended 30th September 2013 Payable to the Manager: 10 4,428,269 162,224 114,595 238,124 Annual management fees Registrar fees 10 239,163 6,280 10,389 22,655 Payable to the Custodian: 11 307,683 15,429 13,097 22,357 Custodian fees Safe custody fees 11 91,250 4,022 4,217 6,522
Other expenses: Administration expenses 199,930 6,936 14,108 8,790 Broker commission, dealing charges 278,967 39,077 1,754 33,646 and stamp duty Audit fee 28,639 1,400 1,600 2,000
Total expenses 5,573,901 235,368 159,760 334,094
Year ended 30th September 2012 Payable to the Manager: 10 4,441,793 200,566 103,102 232,291 Annual management fees Registrar fees 10 275,220 8,190 13,756 29,968
Payable to the Custodian: Custodian fees 11 310,313 19,207 11,783 21,851
Safe custody fees 11 87,498 3,538 4,444 6,725
Other expenses: Administration expenses 329,311 10,068 18,120 12,386 Broker commission, dealing charges 257,406 43,468 392 19,974 and stamp duty Audit fee 25,686 1,100 1,200 1,950
Total expenses 5,727,227 286,137 152,797 325,145
66 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 8. Other Income (continued) High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund £ £ £ £ £ Year ended 30th September 2013 Bank interest 8,227 420 35 335 517 Underwriting commission — — — — — Other income 8,227 420 35 335 517
Year ended 30th September 2012 Bank interest 11,345 705 168 1,285 2,939 Underwriting commission — — — — — Other income 11,345 705 168 1,285 2,939
9. Operating Expenses. Year ended 30th September 2013 Payable to the Manager: 2,922,737 369,702 126,852 205,373 307,384 Annual management fees Registrar fees 116,261 31,707 14,390 15,747 23,431 Payable to the Custodian: 175,811 27,057 12,685 20,271 23,116 Custodian fees Safe custody fees 58,167 7,208 3,035 5,344 3,424
Other expenses: Administration expenses 133,086 8,946 6,576 16,933 6,860 Broker commission, dealing charges 3,286 93,390 25,440 1,724 80,937 and stamp duty Audit fee 15,000 1,400 1,400 2,100 4,000
Total expenses 3,424,348 539,410 190,378 267,492 449,152
Year ended 30th September 2012 Payable to the Manager: 2,753,463 340,958 169,978 221,429 438,401 Annual management fees Registrar fees 118,100 33,696 21,050 22,538 30,376
Payable to the Custodian: Custodian fees 166,067 25,237 16,612 21,290 30,368
Safe custody fees 52,965 6,528 4,305 6,343 3,443 Other expenses: Administration expenses 217,248 28,313 7,459 20,609 18,341 Broker commission, dealing charges 3,254 84,851 20,586 2,523 82,428 and stamp duty Audit fee 13,500 1,250 1,300 1,900 3,700 Total expenses 3,324,597 520,833 241,290 296,632 607,057
67 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 10. Related Party Transactions (a) Management and Registrar fees Parties are considered to be related if one party has the ability to The Manager, which is related to the Company by virtue of a control the other party or exercise influence over the party in making Management Agreement, is entitled to a daily fee equal at the financial or operating decisions. The following are considered by the annual rate set out below by reference to the net assets of each Directors of the Company to be related parties: Fund calculated daily and paid monthly by the Company. The Manager in accordance with the Management Agreement. Capital Growth Fund (closed 05.07.13) 1.5% The Investment Manager in accordance with the Investment Euro High Income Fund 0.875% Management Agreement. European Fund 1.5% The fees received by the Manager are set out in Note 9. The High Income Fund 0.875% Investment Manager is paid by the Manager. Details of amounts due to the Manager at the end of the year are shown in Note 6. International Fund 1.5% The Manager is involved in all transactions in Shares of the North American Fund 1.5% Company, the aggregate values of which are set out in the Sterling Bond Fund 0.875% statement of changes in net assets attributable to holders of participating redeemable preference shares on pages 20 and 21. UK Fund 1.5% At the year end the Manager held Participating Shares in the The Directors and the Manager may agree a higher fee for any Fund Company as follows: subject to a maximum annual rate of 1.5% of the mid market value of net assets of the Fund. If such a higher fee is agreed, shareholders of 30th 30th the relevant Fund will be given at least three months written notice September September before it comes into effect. 2013 2012 The Manager, in its capacity as Registrar, is entitled to a fee payable Capital Growth Fund by the Company of £12.00 for each shareholding which appears on — 4,998.35 (Closed 05.07.13) the Share Register on the last business day of each annual and half yearly accounting period. The Manager and the Company may agree Euro High Income Fund 7,979.37 7,861.35 a higher fee. European Fund 2,671.55 2,688.66 Details of amounts due to the Manager at the end of the year are High Income Fund 7,005.37 6,981.93 shown in Note 6. International Fund 3,014.13 3,003.54 In order to maximise the income available for distribution to North American Fund 2,742.33 2,932.70 shareholders, the Directors, in consultation with the Custodian, Sterling Bond Fund 5,490.75 4,995.67 have agreed to charge the Management and Registrar fees for High Income Fund and Euro High Income Fund only, to the capital UK Fund 2,909.29 2,717.71 of these Funds. 31,812.79 36,179.91
68 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 10. Related Party Transactions (continued) The Custodian is entitled to an annual fee payable monthly by the Company, in respect of each Fund, at the rates set out in the table (b) Stocklending Income below by reference to the net asset value of each Fund calculated on The Company’s Articles of Association allow the Custodian, on a mid-market basis and subject to a minimum overall fee of £20,000 request of the Manager, to enter into stocklending transactions per annum for the Company as a whole. when it reasonably appears to the Manager to be economically appropriate to do so with a view to generating additional income The Custodian is entitled to reimbursement by each Fund of its for the Company with no, or an acceptable level, of risk and expenses in connection with its duties as Custodian and to make otherwise in accordance with the Order. transaction charges to cover the cost of effecting settlement of stock and cash. A stocklending programme is where a lender transfers securities to a borrower otherwise than by way of sale and a requirement is 12. Controlling Party imposed on the borrower to transfer those securities back to the In the opinion of the Directors, there is no ultimate controlling party lender otherwise than by way of sale. The borrower pays the lender of the Company as defined by International Accounting Standards for the privilege of borrowing the securities. Income earned is No.24 Related Party Disclosures. apportioned between the Company, the Manager, the Custodian and the facilitating agent. 13. Equalisation From 31st October 2008, the Directors decided to suspend this The price of a Share includes an equalisation payment calculated programme until further notice. by dividing the net undistributed income of the Fund by the number of Shares in issue at the time when the prices are calculated. (c) Directors’ Fees The payment of the first dividend after the issue of a Share includes Directors who are employees of the Lloyds Banking Group do not an amount of equalisation calculated by averaging the amounts receive Directors’ fees. The non-executive director currently receives received by way of equalisation during the year to which the a fee of £5,000 per annum (2012: £5,000 per annum). dividend relates. 11. Custodian The fees received by the Custodian are set out in Note 9. Details of amounts due to the Custodian at the end of the year are shown in Note 6.
Custodian Fee Rates Sterling Funds paid in £ NAV of each Fund (‘M) Up to 10M 10M to 25M 25M Plus % % % Capital Growth Fund (closed 05.07.13) 0.15 0.125 0.1 European Fund 0.15 0.125 0.1 High Income Fund 0.1 0.075 0.05 International Fund 0.125 0.1 0.075 North American Fund 0.15 0.125 0.1 Sterling Bond Fund 0.1 0.075 0.05 UK Fund 0.125 0.1 0.075
Euro Funds paid in € NAV Fund (‘M) Up to 15M 40M 15M 40M to Plus % % % Euro High Income Fund 0.1 0.075 0.05
69 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 14. Share Capital Year Ended Year Ended 30th September 30th September 2013 2012 £ £ Authorised share Capital: 1,000 Founders Shares of £1 1,000 1,000 750,000,000 Unclassified Shares of 1p 7,500,000 7,500,000 7,501,000 7,501,000 Issued Share Capital: £1,000 £1,000 Founders Shares
Nominal shares: Balance brought forward 559,643 421,463 Creations 284,243 294,874 Redemptions (199,830) (156,694) Balance carried forward 644,056 559,643
Participating Shares: Balance brought forward 4,214,405 4,352,585 Creations 199,836 156,694 Redemptions (284,243) (294,874) Balance carried forward 4,129,998 4,214,405 Total Share Capital 4,774,054 4,774,048
Fund Shares £ Shares £ Capital Growth (closed 05.07.13) — — 7,438,179 74,381 European 2,103,073 21,030 2,253,072 22,530 High Income 376,776,611 3,767,768 376,973,667 3,769,739 International 6,155,467 61,556 6,561,017 65,611 North American 645,548 6,456 778,147 7,782 Sterling Bond 16,324,793 163,248 16,443,143 164,431 UK 2,903,103 29,030 3,253,653 32,536 Total Sterling Funds 404,908,595 4,049,088 413,700,878 4,137,010
Fund Shares € Shares € Euro High Income 8,091,144 125,171 7,740,094 121,662
Total Euro Funds 8,091,144 125,171 7,740,094 121,662
Total Company (Sterling equivalent) 412,999,709 4,129,998 421,440,972 4,214,405
70 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 15. Share Premium Year Ended Year Ended 30th September 30th September 2013 2012 £ £ Balance brought forward 423,060,508 440,760,177 Premium on creations 20,113,090 14,651,979 Premium on redemptions (41,225,207) (49,668,307) Transfer from capital reserve 22,538,887 17,316,659 Balance carried forward 424,487,278 423,060,508
Fund £ £ Capital Growth Fund (closed 05.07.13) — (645,830) European Fund — — High Income Fund 375,901,785 376,095,556 International Fund 14,005,384 15,571,672 North American Fund — (2,238,507) Sterling Bond Fund 25,174,158 25,348,849 UK Fund — — Total Sterling Funds 415,081,327 414,131,740
Fund € € Euro High Income 13,873,262 13,303,080 Total Euro Funds 13,873,262 13,303,080
Total Company (Sterling equivalent) 424,487,278 423,060,508
71 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 16. Capital Reserves Capital Euro High Note Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Net realised gains/(losses) 44,014,114 13,328,593 (592,041) 15,910,590 on investments b/fwd Transfers to share premium b/fwd (17,316,660) — — (3,312,064) Net realised gains for the year 7 14,738,416 2,689,216 176,000 2,091,971 Net realised gains/(losses) 41,435,870 16,017,809 (416,041) 14,690,497 on investments c/fwd Net unrealised movement on investment b/fwd 30,498,744 1,178,738 745,608 2,318,654 Net unrealised movement in the year 7 5,000,434 (1,178,742) 182,702 1,265,647 Net unrealised movement on investment c/fwd 35,499,178 (4) 928,310 3,584,301 Total realised/unrealised movement 76,935,050 16,017,805 512,269 18,274,798 Fees charged to Capital b/fwd* (26,965,767) — (799,539) — Net movement in the year (3,143,562) — (124,984) — Fees charged to Capital c/fwd* (30,109,329) — (924,523) — Transfer to share premium in year (22,538,887) (15,455,507) — (1,067,960) Broker charges reserves b/fwd (5,018,444) (482,237) — (768,058) Broker charges in the year 141,659 (43,467) — — Broker charges reserves c/fwd (4,876,786) (525,704) — (768,058) Transfer of undistributed income at closure (36,594) (36,594) — —
As at 30th September 2013 19,373,456 — (412,254) 16,438,780
* Details of the fees can be found in Note 10. ‘Under the Reporting Fund Regime, broker commission, dealing charges and stamp duty are not an allowable expense. The Directors have, therefore, transferred these fees from the Net undistributed income reserve to a separate Broker charges reserve.
17. Net assets attributable to holders of participating redeemable preference shares Capital Euro High Note Company Growth Income European (Closed 05.07.13) Fund Fund Year ended 30th September 2013 £ £ € £ Share capital 14 4,129,998 — 125,171 21,030 Share premium 15 424,487,278 — 13,873,262 0 Capital reserves 16 19,373,456 — (412,254) 16,438,780 Dilution levies 205,604 — 30,773 5,272 Net undistributed income* (21,585,481) — (521,591) (26,835) Movement in currency translation 2,916,542 — — — As at 30th September 2013 429,527,397 — 13,095,361 16,438,247
Year ended 30th September 2012 Share capital 4,214,405 74,381 121,662 22,530 Share premium 423,060,508 (645,830) 13,303,080 — Capital reserves 25,211,988 14,025,091 (645,972) 10,544,261 Dilution levies 208,936 3,775 30,766 5,269 Net undistributed income* (16,791,447) (30,895) (442,964) 3,183 Movement in currency translation 2,411,285 — — 3,604,862 As at 30th September 2012 438,315,675 13,426,522 12,366,572 14,180,105
* The distributions detailed in Note 5 have been declared by the Directors using a dividend policy based on the ‘Accruals’ method of accounting for income on debt instruments, as opposed to the Effective Interest Rate (‘EIR’) method of accounting for investment income which is the basis used for recognition of income on debt instruments as explained in the accounting policies. Future distributions will continue to be made on the basis of the existing distribution policy. Equity Fund distributions were declared net of broker fees for 2013. Undistributed income under the accruals method as at 30th September 2013 amounts to £81,712 (30th September 2012: £499,740). 72 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 16. Capital Reserves (continued) High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund £ £ £ £ £ Net realised gains/(losses) (31,602,014) 5,587,833 10,378,883 (2,802,567) 34,438,974 on investments b/fwd Transfers to share premium b/fwd — — — — (14,004,596) Net realised gains for the year 2,083,046 3,676,436 1,388,977 372,002 2,289,523 Net realised gains/(losses) (29,518,968) 9,264,269 11,767,860 (2,430,565) 22,723,901 on investments c/fwd Net unrealised movement on investment b/fwd 19,171,595 1,885,666 1,141,922 2,103,752 1,833,703 Net unrealised movement in the year 2,983,102 1,421,369 153,526 (321,762) 524,444 Net unrealised movement on investment c/fwd 22,154,697 3,307,035 1,295,448 1,781,990 2,358,147 Total realised/unrealised movement (7,364,271) 12,571,304 13,063,308 (648,575) 25,082,048 Fees charged to Capital b/fwd* (26,312,216) — — — — Net movement in the year (3,038,998) — — — — Fees charged to Capital c/fwd* (29,351,214) — — — — Transfer to share premium in year — — (3,740,681) — (2,274,738) Broker charges reserves b/fwd — (716,951) (162,573) — (2,691,255) Broker charges in the year — — (20,586) — 205,712 Broker charges reserves c/fwd — (716,951) (183,159) — (2,485,543) Transfer of undistributed income at closure — — — — —
As at 30th September 2013 (36,715,485) 11,854,353 9,139,468 (648,575) 20,321,767
17. Net assets attributable to holders of participating redeemable preference shares (continued) High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund Year ended 30th September 2013 £ £ £ £ £ Share capital 3,767,768 61,556 6,456 163,248 29,030 Share premium 375,901,785 14,005,384 — 25,174,158 — Capital reserves (36,715,485) 11,854,353 9,139,468 (648,575) 20,321,767 Dilution levies 126,876 — 7,857 33,086 6,784 Net undistributed income* (18,582,667) (360,506) (605,979) (1,608,852) 35,730 Movement in currency translation — — — — — As at 30th September 2013 324,498,273 25,560,787 8,547,802 23,113,065 20,393,311
Year ended 30th September 2012 Share capital 3,769,739 65,611 7,782 164,431 32,536 Share premium 376,095,556 15,571,672 (2,238,507) 25,348,849 — Capital reserves (38,742,635) 6,756,548 11,358,232 (698,815) 19,576,826 Dilution levies 126,874 — 7,857 33,089 6,784 Net undistributed income* (14,597,637) (157,241) (501,584) (1,474,881) 331,541 Movement in currency translation — — — — — As at 30th September 2012 326,651,897 22,236,590 8,633,780 23,372,673 19,947,687
* The distributions detailed in Note 5 have been declared by the Directors using a dividend policy based on the ‘Accruals’ method of accounting for income on debt instruments, as opposed to the Effective Interest Rate (‘EIR’) method of accounting for investment income which is the basis used for recognition of income on debt instruments as explained in the accounting policies. Future distributions will continue to be made on the basis of the existing distribution policy. Equity Fund distributions were declared net of broker fees for 2013. Undistributed income under the accruals method as at 30th September 2013 amounts to £81,712(30th September 2012: £499,740). 73 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 18. Taxation • Hedging instruments such as forward exchange contracts and In accordance with International Accounting Standard (IAS) No.12 traded options which a Fund may enter into, for the purpose of Current Tax, investment income is shown gross of withholding tax. managing the risks arising from the Fund’s investment activities. The withholding tax suffered is recorded on the taxation line as set Market price risk out below: All securities investments present a risk of loss of capital. 30th 30th The Manager moderates this risk through a careful selection September September of investments within specified limits. The maximum risk 2013 2012 resulting from investments is determined by the fair value of those investments. Foreign tax on income £359,810 £380,018 for the year The overall market position and therefore the risk exposure for The Company is liable to be charged at a tax rate of 0% under each Fund are governed by the Prospectus, the Collective Schedule D under the Income Tax (Jersey) Law 1961, as amended Investment Funds (Recognized Funds) (Rules) (Jersey) Order (the ‘Income Tax Law’) in respect of 2003 (as amended) and the investment objectives for each Fund. These positions are monitored on a daily basis by the Manager (i) the income or profits of any trade carried on by the Company in and are reviewed on a quarterly basis by the Board of Directors. Jersey or elsewhere, The investments are principally equities, fixed interest securities (ii) any interest of money, whether yearly or otherwise, or other and bank deposits, dependent on each Fund’s investment policy. annual payment paid to the Company, whether such payment is The value of these is not fixed (other than bank deposits) and may made within or outside of Jersey, go down as well as up. This may be the result of a specific factor (iii) dividends and other distributions of a company regarded as affecting the value of an individual stock or be caused by general resident in Jersey paid to the Company, market factors (such as interest rates, government policy or the health of the underlying economy) which could affect the entire (iv) income arising to the Company from securities outside portfolio of a Fund. of Jersey and The year end portfolios of each Fund are detailed on pages 27 to 50. (v) any other income of the Company that is not derived from the ownership or disposal of land in Jersey. The Manager controls this risk on a Fund by Fund basis and monitors the movements in the equities, bonds and interest rates It is not expected that the Company will be in receipt of income against the relevant equity and bond indices and market interest charged to tax under any Schedule under Income Tax Law other rates respectively. than Schedule D. As such the Company is no longer subject to the payment of tax in Jersey. The Manager considers that a reasonably possible movement in the market risk components would be equivalent to a 5% movement in 19. Financial risk management equity and bond indices and a 1% movement in market interest rates. Strategy in using financial instruments The table on the following page summarises, for each of the Funds, The Company’s activities expose it to a variety of financial risks: the impact of increases/ (decreases) in the equity and bond market risk (including currency risk, fair value interest rate risk, cash indices, and market interest rates on the net asset value as at 30th flow interest rate risk and price risk), liquidity risk, counter-party September 2013. The analysis is based on the assumption that the risk, capital risk and certain other risks. The Company’s overall equity and bond indices increase/(decrease) by 5%, and market risk management programme focuses on the unpredictability of interest rates increase/(decrease) by 1%, with all other variables financial markets and seeks to minimise potential adverse effects held constant. The analysis also assumes that the movement in the on the Company’s financial performance. Each Fund is able to use portfolios of each Fund has perfect positive correlation with the derivative financial instruments to moderate certain risk exposures. equity and bond indices and market interest rates. Each Fund’s investment objectives and policy are stated on page 3. To achieve these objectives the Company’s assets and liabilities comprise financial instruments held in accordance with each Fund’s investment objectives and policy. These may include: • Investments including equity and non-equity Shares, fixed income securities and floating rate securities • Cash, liquid resources and short term debtors and creditors that arise directly from the investment activities
74 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013
19. Financial risk management (continued) Value Equities Bonds Cash End of Fund (base 5% Movement 5% Movement 1% Movement Year currency) in equity index in bond index in interest rate
30.09.13 Capital Growth (closed 05.07.13) — — — — 30.09.12 Capital Growth 13,426,522 569,162 47,535 12,958
30.09.13 Euro High Income 13,095,361 — 631,039 4,212 30.09.12 Euro High Income 12,366,572 — 565,488 3,687
30.09.13 European 16,438,247 800,768 — 4,624 30.09.12 European 14,180,105 703,514 — 529
30.09.13 High Income 324,498,273 — 15,802,150 24,319 30.09.12 High Income 326,651,897 — 14,782,914 30,370
30.09.13 International 25,560,787 1,256,333 — 5,508 30.09.12 International 22,236,590 1,086,654 — 5,517
30.09.13 North American 8,547,802 417,616 — 2,296 30.09.12 North American 8,633,780 414,417 — 1,294
30.09.13 Sterling Bond 23,113,065 — 1,109,773 7,210 30.09.12 Sterling Bond 23,372,673 — 1,066,296 1,514
30.09.13 UK 20,393,311 1,016,353 — 1,385 30.09.12 UK 19,947,687 1,001,632 — 1,315
Interest rate risk Each Fund receives income from its various investments. For the Sterling Bond Fund, Euro High Income Fund and High Income Fund, the income is received from investments in bonds and loan stock. The Capital Growth Fund receives part of its income from its investments in UK gilts, loan stock and international bonds. In accordance with the Funds policy, the Manager monitors the Fund’s overall interest rate sensitivity on a daily basis, and the Board of Directors reviews it on a quarterly basis. The interest bearing financial assets and liabilities held in the Funds expose them to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on their financial position and cash flows. The table above summarises the effect of interest rate risks on each Fund. It includes the Fund’s assets and trading liabilities at fair values, categorised by the earlier of contractual re-pricing or maturity dates. Other than those financial instruments identified in the table, each Fund has no significant exposure to interest rate risks. The income received by each Fund is primarily fixed in nature and shown in the table on the next page. Income is derived from the securities held in the portfolio of each Fund which may be varied from time to time in accordance with its investment objective and policy.
75 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013
19. Financial risk management (continued) The interest rate profile of each Fund’s financial assets at 30th September 2013 was:
Fixed rate Floating rate Interest Interest Fund Currency Total interest interest Free Assets Free Liablities 000s securities 000s securities 000s 000s 000s Capital Growth Sterling — — — — — (closed 05.07.13) Euro High Income Euro 13,095 10,540 2,502 264 211 High Income Sterling 324,498 247,241 71,234 8,033 2,010 Sterling Bond Sterling 23,113 17,671 5,246 501 305
Weighted average Weighted average Fund Currency Weighted average period for which effective coupon rate % the rate is interest rate % fixed years Capital Growth Sterling — — — (closed 05.07.13) Euro High Income Euro 6.06 2.86 22.86 Sterling 5.69 3.20 18.09 US$ 4.29 2.48 15.19 High Income Sterling 5.96 4.00 22.78 Sterling Bond Sterling 5.28 3.88 19.62
The interest rate profile of each Fund’s financial assets at 30th September 2012 was:
Fixed rate Floating rate Interest Interest Fund Currency Total interest interest Free Assets Free Liablities 000s securities 000s securities 000s 000s 000s Capital Growth Sterling 13,427 993 1,296 108 353 Euro High Income Euro 12,367 11,990 369 329 272 High Income Sterling 326,652 317,524 3,037 10,193 4,102 Sterling Bond Sterling 23,373 22,409 151 816 395
Weighted average Weighted average Fund Currency Weighted average period for which effective coupon rate % the rate is interest rate % fixed years Capital Growth Sterling 3.66 1.65 13.34 Euro High Income Euro 5.98 4.05 21.00 Sterling 5.59 5.00 16.65 US$ 4.42 4.45 17.65 High Income Sterling 6.08 4.43 22.20 Sterling Bond Sterling 5.63 4.28 22.29
Foreign currency risk The Euro High Income Fund is denominated in euro. All of the other Funds are denominated in sterling. A portion of the underlying financial assets of the Funds may be denominated in currencies other than the base currency with the effect that the balance sheet and each Fund’s total return can be significantly affected by currency movements. An investment in a currency other than the shareholders’ own base currency will be subject to the movement of foreign exchange rates, which may cause additional favourable or unfavourable changes in value.
76 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 19. Financial risk management (continued) It is currently the Company’s policy not to enter into any currency Foreign currency risk (continued) hedging transactions. In accordance with the Company’s policy, With the exceptions of the Sterling Bond Fund and the UK Fund, the Manager monitors each Fund’s currency position on a daily each Fund may purchase securities denominated in a currency other basis, and the Board of Directors reviews it on a quarterly basis. than its base currency, and hence take a position in other currencies. In respect of foreign currency exposure, derivative instruments will only be utilised where a forward exchange or currency option is used for the purpose of reduction of foreign currency risk, in order to hedge this exposure back to the base currency of the Fund. As at 30th September 2013 the Funds had the following currency exposures:
Foreign Foreign Fund Currency Currency Fund Currency Currency Assets £ 000’s Assets £ 000’s Capital Growth Fund (closed 05.07.13) Australian Dollar — International Fund Australian Dollar 317 Canadian Dollar — Canadian Dollar 531 Euro — Euro 1,923 Hong Kong Dollar — Hong Kong Dollar 14 Japanese Yen — Japanese Yen 2,928 Singapore Dollar — Korean Won — Swiss Franc — Norwegian Krona — Taiwan Dollar — Singapore Dollar 15 US Dollar — Swiss Franc 1,876 Euro high Income Fund Sterling 1 Taiwan Dollar — US Dollar — US Dollar 13,810 European Fund Euro 10,526 North American Fund Canadian Dollar 90 Norwegian Krona 606 Euro 2 Swedish Krona ,1,124 US Dollar 8,303 Swiss Franc 3,830 Sterling Bond Fund US Dollar 1 US Dollar 163 UK Fund Euro 7 US Dollar 1
As at 30th September 2012 the Funds had the following currency exposures:
Foreign Foreign Fund Currency Currency Fund Currency Currency Assets £ 000’s Assets £ 000’s Capital Growth Fund (closed 05.07.13) Australian Dollar 53 International Fund Australian Dollar 455 Canadian Dollar 86 Canadian Dollar 435 Euro 552 Euro 2,753 Hong Kong Dollar 6 Hong Kong Dollar 10 Japanese Yen 255 Japanese Yen 795 Singapore Dollar — Korean Won 2 Swiss Franc 178 Norwegian Krona — Taiwan Dollar 2 Singapore Dollar 988 US Dollar 2,600 Swiss Franc 989 Euro high Income Fund Sterling 5,743 Taiwan Dollar 183 US Dollar 2,874 US Dollar 13,179 European Fund Euro 10,278 North American Fund US Dollar 8,312 Norwegian Krona 368 Swedish Krona 2,764 Swiss Franc 668 Sterling Bond Fund US Dollar 1 US Dollar 6 UK Fund Euro 5 US Dollar 14
77 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 19. Financial Risk Management (Continued) Due to the nature of the Founders’ Shares and Nominal Shares the Directors have decided that no capital risk management is required. Credit risk The Company takes on exposure to credit risk, which is the risk that Liquidity risk a counter-party will be unable to pay amounts in full when due. The Company is exposed to daily cash redemptions of Participating Impairment provisions would be provided for losses that have been Shares which are redeemed on demand at the holder’s option. incurred by the balance sheet date. As at 30th September 2013, no It therefore invests all of its assets in investments that are traded in provisions were required. an active market and can be readily disposed of, as such each Fund’s The Company’s main credit risk exposure arises through financial assets are considered to be readily realisable. The Manager investments in debt securities at the Fund level. If any of the manages each Fund’s cash to meet its liabilities. Where investments Funds hold any interest bearing instruments, at least 90% of these cannot be realised in time to meet any redemptions of Participating instruments must have a credit rating of ‘Investment Grade’ as Shares, each Fund may borrow up to 10% of its value to ensure provided by Moodys Investor Services Limited, Standard and Poors settlement of its liabilities. or Fitch Ratings Limited. These instruments could include inter alia In accordance with the Company’s policy, the Manager monitors money market instruments, bonds, gilts, corporate bonds etc. each Fund’s liquidity position on a daily basis, and the Board of In accordance with each Fund’s policy, the Manager monitors the Directors review it on a quarterly basis. Fund’s credit position on a daily basis, and the Board of Directors The table on the following pages analyses the Company’s financial reviews it on a quarterly basis. liabilities into relevant maturity groups based on the remaining period at the balance sheet date to the contractual maturity date. Counter-party risk Certain transactions that the Funds enter into expose them to the risk that the counter-party will not deliver the investment (purchase) or cash (sale) after the Fund has fulfilled its responsibilities. It is the policy of the Manager to buy and sell investments only through approved brokers, or directly with the Fund Manager. Capital risk Where the objective of the underlying Fund seeks to provide high or good levels of income, the investment policy which supports this may result in a gradual reduction in the capital value of the underlying Fund’s Shares, except where bond prices are generally rising. Stocklending The Directors have considered the risks associated with Stocklending and have agreed that any such risks would be mitigated by entering into an arrangement only with a suitably experienced partner, lending only to approved counterparties and ensuring that the counterparty deposited collateral of a readily realisable nature and of sufficient value to cover the cost of the security being lent. The Directors also propose that no such arrangement would be initiated unless the Company was in a position to derive sufficient benefit as to outweigh any potential costs and risks associated with the programme. From 31st October 2008, the Directors decided to suspend this programme until further notice. Capital risk management The net assets attributable to holders of redeemable preference shares are classified as financial liabilities and therefore, in the opinion of the Directors, the capital of the Company is only represented by the Founders Shares and Nominal Shares. Details of Management Shares and Nominal Shares are shown in note 3(g).
78 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
79 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 19. Financial Risk Management (continued) Year ended 30th September 2013 Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Share Capital 430,172,453 — 13,095,361 16,438,247 (less than 1 month) Cancellation payable 108,273 — 26,272 — (less than 1 month) Investment purchase payable 1,412,988 — — — (less than 1 month) Proposed dividend (less than 1 month) 1,507,105 — — — (1 month to 3 months) 722,547 — 149,686 — Other liabilities (less than 1 month) 629,596 — 20,676 35,977 (1 month to 3 months) 80,410 — 14,117 12,575 Total financial liabilities 434,633,372 — 13,306,112 16,486,799
Year ended 30th September 2012 Capital Euro High Company Growth Income European (Closed 05.07.13) Fund Fund £ £ € £ Share Capital 438,876,317 13,426,522 12,366,572 14,180,105 (less than 1 month) Cancellation payable 146,246 — — 17,153 (less than 1 month) Investment purchase payable 2,364,213 178,385 99,398 — (less than 1 month) Proposed dividend (less than 1 month) 1,696,381 — — — (1 month to 3 months) 758,443 143,557 142,031 56,327 Other liabilities (less than 1 month) 640,552 22,559 19,412 31,303 (1 month to 3 months) 76,952 8,713 11,602 11,102 Total financial liabilities 444,559,104 13,779,736 12,639,015 14,295,990
80 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 19. Financial Risk Management (continued) Year ended 30th September 2013 High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund
£ £ £ £ £ Share Capital 324,498,273 25,560,787 8,547,802 23,113,065 20,393,311 (less than 1 month) Cancellation payable 66,067 20,186 — — — (less than 1 month) Investment purchase payable — 55,391 19,732 — 1,337,865 (less than 1 month) Proposed dividend (less than 1 month) 1,507,105 — — — — (1 month to 3 months) — — — 261,197 335,889 Other liabilities (less than 1 month) 424,354 50,803 19,957 25,963 55,212 (1 month to 3 months) 11,977 15,745 7,233 17,556 3,492 Total financial liabilities 326,507,776 25,702,912 8,594,724 23,417,781 22,125,769
Year ended 30th September 2012 High North Sterling Income International American Bond UK Fund Fund Fund Fund Fund £ £ £ £ £ Share Capital 326,651,897 22,236,590 8,633,780 23,372,673 19,947,687 (less than 1 month) Cancellation payable 129,094 — — — — (less than 1 month) Investment purchase payable 1,844,591 140,162 27,643 94,129 — (less than 1 month) Proposed dividend (less than 1 month) 1,696,381 — — — — (1 month to 3 months) — — — 258,157 187,085 Other liabilities (less than 1 month) 422,353 46,666 19,824 27,131 55,229 (1 month to 3 months) 9,749 16,404 3,809 15,281 2,635 Total financial liabilities 330,754,065 22,439,822 8,685,056 23,767,371 20,192,636
81 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 20. Financial Risk Management Derivatives Fair value estimation Derivatives will only be used where they accord with existing The fair value of financial assets and liabilities traded in active investment objectives and policy. They may not be used for the markets (such as publicly traded derivatives and trading securities) purpose of reducing risk independently of investment strategy in are based on quoted market prices at the close of trading on the year respect of the underlying physical assets or for merely speculative end date. The quoted market price used for financial assets held by purposes. Derivatives will only be used for efficient portfolio the Company is the current bid price; the appropriate quoted market management. Derivatives may not be used for the purpose of price for financial liabilities is the current asking price. When the gearing or leveraging or for purposes of producing, enhancing or Company holds derivatives with offsetting market risks, it uses generating income. No derivative can be traded on an Over The mid-market prices as a basis for establishing fair values for the Counter basis, and no uncovered positions are allowed. offsetting risk positions and applies this bid or asking price to the The underlying Funds may hold the following derivatives: net open position, as appropriate. If a significant movement in fair (a) Futures value occurs subsequent to the close of trading on the year end date, valuation techniques will be applied to determine the fair value. Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in an A financial instrument is regarded as quoted in an active market if organised market. The futures contracts are collateralised by cash quoted prices are readily and regularly available from an exchange, or marketable securities. Changes in the futures contracts value are dealer, broker, industry group, pricing service, or regulatory agency, settled daily with the exchange. Interest rate futures are contractual and those prices represent actual and regularly occurring market obligations to receive or pay a net amount based on changes in transactions at an arm’s length basis. interest rates at a future date at a specified price, established in an The Company adopted the amendment to IFRS 7, effective 1 January organised financial market. Futures are settled on a net basis. 2009. This requires the Company to classify fair value measurements b) Options using a fair value hierarchy that reflects the significance of the inputs An option is a contractual arrangement under which the seller used in making the measurements. The fair value hierarchy has the (writer) grants the purchaser (holder) the right, but not the following levels: obligation, either to buy (a call option) or sell (a put option) at or by • Quoted prices (unadjusted) in active markets for identical assets a set date or during a set period, a specific amount of securities or a or liabilities (level 1). financial instrument at a predetermined price. Inputs other than quoted prices included within level 1 that are • The seller receives a premium from the purchaser in consideration observable for the asset or liability, either directly (that is, as for the assumption of future securities prices. Where options are prices) or indirectly (that is, derived from prices) (level 2). held by the underlying Funds, they are exchange-traded. The Funds • Inputs for the asset or liability that are not based on observable are exposed to credit risk on purchased options only to the extent of market data (that is, unobservable inputs) (level 3). their carrying amount, which is their fair value. Options are settled on The level in the fair value hierarchy within which the fair value a gross basis. measurement is categorised in its entirety is determined on the The notional amounts of certain types of financial instrument basis of the lowest level input that is significant to the fair value provide a basis for comparison with instruments recognised on the measurement in its entirety. For this purpose, the significance of an balance sheet, but they do not necessarily indicate the amounts of input is assessed against the fair value measurement in its entirety. future cash flows involved or the current fair value of the instruments If a fair value measurement uses observable inputs that require and do not therefore indicate the Company’s exposure to credit or significant adjustment based on unobservable inputs, that market price risks. The derivative instruments become favourable measurement is a level 3 measurement. Assessing the significance (assets) or unfavourable (liabilities) as a result of fluctuations in of a particular input to the fair value measurement in its entirety market interest rates or foreign exchange rates relative to their terms. requires judgement, considering factors specific to the asset The aggregate contractual or notional amount of derivative or liability. financial instruments on hand, the extent to which instruments are The determination of what constitutes observable, requires favourable or unfavourable, and thus the aggregate fair values of significant judgement by the Directors. The Directors consider derivative financial assets and liabilities can fluctuate significantly observable data to be that market data that is readily available, from time to time. regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. There have been no transfers between levels. The financial assets at fair value through profit or loss of the Company are all quoted in active markets and therefore fall under level 1 as defined above.
82 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Notes to the Financial Statements (continued) For the year ended 30th September 2013 21. Review of funds In the light of changing market conditions, and falling assets under management, the Directors are reviewing the continuing need to offer all of the current sub funds within Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited) in their current form. If, and when, any changes are to be proposed, Shareholders will be advised accordingly. 22. Merging of Capital Growth into Multi-Strategy Growth Fund At an Extraordinary General Meeting of Shareholders of the Capital Growth Fund held on 28th June 2013, a proposal to enter into a scheme of amalgamation with the Lloyds TSB Offshore Multi Strategy Fund, Growth Strategy was approved. The scheme of amalgamation was effected on 5th July 2013, and subsequently the Capital Growth Fund has been closed. 23. Post Balance Sheet Event. There are no post balance sheet events to disclose.
83 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Distribution Table - Unaudited For the year ended 30th September 2013
Year ended 30th September 2013 Capital Growth Fund. (Closed 05.07.13)
Gross Equalisation Distribution paid Distribution paid income payable current year prior year (pence) (pence) 30th September 2013 Group 1 _ _ _ 1.93 Group 2 _ _ _ 1.93 30th September 2013 Group 1 : Shares purchased prior to 1st October 2012 Group 2 : Shares purchased between 1st October 2012 and 30th September 2013
Euro High Income Fund Gross Equalisation Distribution paid Distribution paid income payable current year prior year (cents) (cents) 1st Quarter Group 1 1.84 – 1.84 2.00 Group 2 0.941 0.899 1.84 2.00 2nd Quarter Group 1 1.95 – 1.95 1.94 Group 2 0.770 1.180 1.95 1.94 3rd Quarter Group 1 1.91 – 1.91 1.93 Group 2 0.869 1.041 1.91 1.93 4th Quarter Group 1 1.85 – 1.85 1.835 Group 2 0.858 0.858 1.85 1.835 1st Quarter Group 1 : Shares purchased prior to 1st October 2012 Group 2 : Shares purchased between 1st October 2012 and 31st December 2012 2nd Quarter Group 1 : Shares purchased prior to 1st January 2013 Group 2 : Shares purchased between 1st January 2013 and 31st March 2013 3rd Quarter Group 1 : Shares purchased prior to 1st April 2013 Group 2 : Shares purchased between 1st April 2013 and 30th June 2013 4th Quarter Group 1 : Shares purchased prior to 1st July 2013 Group 2 : Shares purchased between 1st July 2013 and 30th September 2013
European Fund Gross Equalisation Distribution paid Distribution paid income payable current year prior year (pence) (pence) 30th September 2013 Group 1 – – – 2.50 Group 2 –- – – 2.50
30th September 2013 Group 1 : Shares purchased prior to 1st October 2012 Group 2 : Shares purchased between 1st October 2012 and 30th September 2013
84 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Distribution Table - Unaudited (continued) For the year ended 30th September 2013
For the year ended 30th September 2013 High Income Fund Gross Equalisation Distribution paid Distribution paid income payable current year prior year (pence) (pence) 31st October 2012 Group 1 0.45 – 0.45 0.43 Group 2 0.119 0.331 0.45 0.43 30th November 2012 Group 1 0.41 – 0.41 0.425 Group 2 0.165 0.245 0.41 0.425 31st December 2012 Group 1 0.41 – 0.41 0.425 Group 2 0.205 0.205 0.41 0.425 31st January 2013 Group 1 0.40 – 0.40 0.425 Group 2 0.174 0.226 0.40 0.425 28th February 2013 Group 1 0.40 – 0.40 0.41 Group 2 0.156 0.244 0.40 0.41 31th March 2013 Group 1 0.40 – 0.40 0.43 Group 2 0.208 0.192 0.40 0.43 30th April 2013 Group 1 0.40 – 0.40 0.45 Group 2 0.135 0.265 0.40 0.45 31st May 2013 Group 1 0.41 – 0.41 0.45 Group 2 0.164 0.246 0.41 0.45 30th June 2013 Group 1 0.40 – 0.41 0.45 Group 2 0.185 0.215 0.41 0.45 31st July 2013 Group 1 0.40 – 0.40 0.45 Group 2 0.207 0.193 0.40 0.45 31st August 2013 Group 1 0.40 – 0.40 0.45 Group 2 0.178 0.222 0.40 0.45 30th September 2013 Group 1 0.40 – 0.40 0.45 Group 2 0.172 0.228 0.40 0.45 31st October 2012 Group 1 : Shares purchased prior to 1st October 2012 Group 2 : Shares purchased between 1st October 2012 and 31st October 2012 30th November Group 1 : Shares purchased prior to 1st November 2012 Group 2 : Shares purchased between 1st November 2012 and 30th November 2012 31st December 2012 Group 1 : Shares purchased prior to 1st December 2012 Group 2 : Shares purchased between 1st December 2012 and 31st December 2012 31st January 2013 Group 1 : Shares purchased prior to 1st January 2013 Group 2 : Shares purchased between 1st January 2013 and 31st January 2013 28th February 2013 Group 1 : Shares purchased prior to 1st February 2013 Group 2 : Shares purchased between 1st February 2013 and 28th February 2013 31st March 2013 Group 1 : Shares purchased prior to 1st March 2013 Group 2 : Shares purchased between 1st March 2013 and 31st March 2013
85 Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited)
Distribution Table - Unaudited (continued) For the year ended 30th September 2013
For the year ended 30th September 2013 High Income Fund (continued)
30th April 2013 Group 1 : Shares purchased prior to 1st April 2013 Group 2 : Shares purchased between 1st April 2013 and 30th April 2013 31st May 2013 Group 1 : Shares purchased prior to 1st May 2013 Group 2 : Shares purchased between 1st May 2013 and 31st May 2013 30th June 2013 Group 1 : Shares purchased prior to 1st June 2013 Group 2 : Shares purchased between 1st June 2013 and 30th June 2013 31st July 2013 Group 1 : Shares purchased prior to 1st July 2013 Group 2 : Shares purchased between 1st July 2013 and 31st July 2013 31st August 2013 Group 1 : Shares purchased prior to 1st August 2013 Group 2 : Shares purchased between 1st August 2013 and 31st August 2013 30th September 2013 Group 1 : Shares purchased prior to 1st September 2013 Group 2 : Shares purchased between 1st September 2013 and 30th September 2013
Sterling Bond Fund Gross Equalisation Distribution paid Distribution paid income payable current year prior year (pence) (pence) 1st Quarter Group 1 1.46 – 1.46 1.57 Group 2 0.467 0.993 1.46 1.57 2nd Quarter Group 1 1.43 – 1.43 1.54 Group 2 – 1.430 1.43 1.54 3rd Quarter Group 1 1.44 – 1.44 1.59 Group 2 0.512 0.928 1.44 1.59 4th Quarter Group 1 1.60 – 1.60 1.57 Group 2 0.766 0.834 1.60 1.57
1st Quarter Group 1 : Shares purchased prior to 1st October 2012 Group 2 : Shares purchased between 1st October 2012 and 31st December 2012 2nd Quarter Group 1 : Shares purchased prior to 1st January 2013 Group 2 : Shares purchased between 1st January 2013 and 31st March 2013 3rd Quarter Group 1 : Shares purchased prior to 1st April 2013 Group 2 : Shares purchased between 1st April 2013 and 30th June 2013 4th Quarter Group 1 : Shares purchased prior to 1st July 2013 Group 2 : Shares purchased between 1st July 2013 and 30th September 2013
86 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Distribution Table - Unaudited (continued) For the year ended 30th September 2013
Year ended 30th September 2013 Uk Equity Fund.
Gross Equalisation Distribution paid Distribution paid income payable current period prior period (pence) (pence) 30th September 2013 _ _ _ _ Group 1 11.57 _ 11.57 _ Group 2 2.04 9.53 11.57 _ 30th September 2013 Group 1 : Shares purchased prior to 1st October 2012 Group 2 : Shares purchased between 1st October 2012 and 30th September 2013
87 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Performance Record - Unaudited (continued) For the year ended 30th September 2013
CapItal Growth Fund. (Closed 05.07.13) Shares in the Fund were first offered to the public in January 1995 at an offer price of 100p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 142.40 106.50 1.50 11.98 2004 148.20 127.20 1.40 11.18 2005 175.90 139.10 2.40 19.17 2006 188.11 162.00 2.80 22.36 2007 194.90 177.10 xd 2.75 21.96 2008 188.20 119.80 xd 2.85 22.76 2009 164.30 115.00 2.15 17.17 2010 182.20 153.10 1.39 11.10 2011 188.20 153.40 0.91 7.27 2012 185.00 167.70 1.94 15.46 30.09.13 214.10 187.00 0.00 0.00
Euro High Income Fund Shares in the Fund were first offered to the public in October 2006 at an offer price of 178.90 cents per share.
Income per £1,000 Highest Lowest Income Invested at Launch Calendar Year/Period Offer Price Bid Price per Share 02/10/06 c c c €
2006 181.80 178.10 2.11 11.79 2007 179.50 162.20 8.41 47.01 2008 162.60 xd 132.00 7.72 43.21 2009 156.20 120.90 7.55 42.20 2010 163.70 153.20 xd 7.52 41.98 2011 156.60 140.60 7.73 32.03 2012 167.40 144.60 7.71 43.07 30.09.13 169.10 161.70 5.71 31.92
European Fund Shares in the Fund were first offered to the public in May 1990 at an offer price of 100p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 415.80 268.50 0.20 0.60 2004 464.80 366.00 0.20 0.00 2005 578.10 428.40 1.70 5.07 2006 661.58 512.20 0.38 1.13 2007 770.40 635.40 0.93 2.78 2008 774.30 445.00 xd 6.50 19.40 2009 656.20 xd 411.00 4.60 13.73 2010 667.80 545.00 0.98 2.92 2011 738.70 522.20 3.80 11.34 2012 682.50 559.60 2.51 7.46 30.09.13 810.40 682.80 0.00 0.00
88 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Performance Record - Unaudited (continued) For the year ended 30th September 2013
High Income Fund Shares in the Fund were first offered to the public in June 1995 at an offer price of 100p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 109.80 99.36 6.23 58.94 2004 107.50 97.00 6.56 62.06 2005 108.50 99.84 6.255 59.18 2006 110.00 xd 97.27 5.96 56.39 2007 97.26 89.79 xd 5.79 54.78 2008 91.61 xd 76.09 xd 5.70 53.93 2009 83.53 69.03 xd 5.595 52.93 2010 88.28 82.15 5.40 51.09 2011 85.30 79.70 3.885 36.75 2012 89.19 81.20 5.245 49.62 30.09.13 91.66 85.23 3.22 30.46
International Fund Shares in the Fund were first offered to the public in May 1990 at an offer price of 100p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 283.20 205.80 0.28 1.15 2004 287.50 245.00 0.00 - 2005 339.00 258.90 0.33 1.35 2006 358.32 291.20 2.90 11.90 2007 346.40 305.00 0.98 4.02 2008 347.90 228.40 xd 0.00 - 2009 312.20 222.80 1.35 5.54 2010 341.30 284.30 1.48 6.08 2011 354.70 278.60 0.00 - 2012 348.40 309.50 0.00 - 30.09.13 439.80 354.30 0.00 -
North American Fund Shares in the Fund were first offered to the public in May 1990 at an offer price of 100p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 893.40 656.90 0.00 0.00 2004 852.50 709.90 0.00 0.00 2005 966.40 745.90 0.00 0.00 2006 960.10 805.90 0.00 0.00 2007 947.50 839.90 0.00 0.00 2008 915.90 637.60 xd 0.00 0.00 2009 887.30 609.80 0.00 0.00 2010 1,016.00 837.20 1.27 1.67 2011 1,048.00 823.00 0.00 0.00 2012 1,140.00 1,001.00 0.00 0.00 30.09.13 1,153.00 1,424.00 0.00 0.00
89 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Performance Record - Unaudited (continued) For the year ended 30th September 2013
Sterling Bond Fund Shares in the Fund were first offered to the public in July 2001 at an offer price of 148.6p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 163.40 146.00 7.83 49.49 2004 160.10 143.60 6.92 43.74 2005 163.60 148.20 6.69 42.29 2006 163.80 147.60 6.43 40.64 2007 148.20 138.60 xd 6.52 41.21 2008 142.70 xd 116.80 xd 6.78 42.86 2009 130.50 107.60 xd 6.95 43.93 2010 139.00 127.40 6.54 41.34 2011 136.80 128.60 6.41 40.52 2012 147.00 131.20 6.27 39.63 30.09.13 151.60 140.10 4.47 28.26
UK Fund Shares in the Fund were first offered to the public in May 1990 at an offer price of 100p per share. Highest Lowest Income Income per £1,000 Offer Price Bid Price per Share Invested at 31/12/02 Calendar Year/Period p p p £
2003 442.20 313.40 6.77 17.99 2004 471.80 398.90 6.40 17.01 2005 587.00 444.00’ 9.50 25.25 2006 659.58 554.40 12.00 31.89 2007 720.40 616.00 xd 6.75 17.94 2008 692.40 391.60 11.80 31.36 2009 572.30 368.90 8.50 22.59 2010 640.00 522.70 6.87 18.26 2011 663.00 527.20 4.68 12.44 2012 637.30 564.00 5.75 15.28 30.09.13 740.30 642.10 11.57 30.75
90 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Performance Record - Unaudited (continued) For the year ended 30th September 2013
Capital Growth Fund (closed 05.07.13) Net Asset Value Net Asset Value No. of Shares of Fund per Share in Issue 30.09.10 £13,701,082 170.35p 8,042,879 30.09.11 £12,511,764 158.18p 7,909,929 30.09.12 £13,426,522 180.51p 7,438,179 30.09.13 – – –
Euro High Income Fund
30.09.10 €16,278,369 160.90c 10,117,386 30.09.11 €11,887,645 143.74c 8,270,144 30.09.12 €12,366,572 159.77c 7,740,094 30.09.13 €13,095,361 161.53c 8,091,144
European Fund
30.09.10 £20,670,709 616.83p 3,351,133 30.09.11 £15,556,220 552.86p 2,813,762 30.09.12 £14,180,105 629.37p 2,253,072 30.09.13 £16,438,247 782.06p 2,103,073
High Income Fund
30.09.10 £352,895,201 87.19p 404,755,653 30.09.11 £305,411,273 79.95p 382,003,662 30.09.12 £326,851,897 86.70p 376,973,667 30.09.13 £324,498,273 86.11p 376,776,611
International Fund
30.09.10 £21,101,231 303.79p 6,945,927 30.09.11 £21,191,129 288.49p 7,345,567 30.09.12 £23,236,590 354.16p 6,561,017 30.09.13 £25,560,787 414.97p 6,155,467
North American Fund
30.09.10 £10,174,353 902.10p 1,127,858 30.09.11 £11,046,595 922.13p 1,197,947 30.09.12 £8,633,780 1,109.53p 778,147 30.09.13 £8,547,802 1,325.86p 645,548
Sterling Bond Fund
30.09.10 £32,915,970 136.75p 24,070,923 30.09.11 £25,784,346 128.77p 20,023,743 30.09.12 £23,372,673 142.14p 16,443,143 30.09.13 £23,113,065 141.58p 16,324,793
UK Fund
30.09.10 £39,788,044 593.09p 6,708,560 30.09.11 £31,229,582 548.49p 5,693,753 30.09.12 £19,947,687 613.09p 3,253,653 30.09.13 £20,393,311 702.49p 2,903,103
91 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Notice of Meeting
Notice is hereby given that the 30th Annual General Meeting of NOTES: Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore A Member entitled to attend and vote at this Meeting may appoint Funds Limited) will be held at: one or more Proxies to attend and, on a poll, vote instead of him. A 11-12 Esplanade, St. Helier, Jersey, on Wednesday 19th March 2014 Proxy need not be a Member of the Company. To be valid, completed at 9.00 a.m. for the following purposes: proxy forms must be deposited at the Company’s principal place of Agenda business not less than 48 hours before the appointed time for holding the meeting, or any adjournment thereof. Ordinary Business In the case of joint holders the vote of the senior shall be accepted to 1. To appoint the Chairman of the meeting. the exclusion of the votes of the other joint holder(s). 2. To read the convening notice. The quorum requirement is two members present in person or by 3. RESOLUTION 1. proxy. If a quorum is not present, the meeting shall stand adjourned To receive and if deemed appropriate, adopt the Annual Report and to Wednesday 26th March 2014 at 9.00 a.m. at the same venue and Audited Financial Statements of the Company for the year ended at such adjourned meeting the shareholder’s present in person or by 30th September 2013. proxy shall be the quorum. 4. RESOLUTION 2. By Order of the Board Lloyds Corporate Services (Jersey) Limited (Formerly Lloyds TSB To consider, and if deemed appropriate, re-elect Ross Davey Willcox Offshore Corporate Services Limited), as a Director of the Company. Secretary, 5. RESOLUTION 3. PO Box 160, 25 New Street, St. Helier, Jersey JE4 8RG, To consider, and if deemed appropriate, re-elect Ian Mark Jeremie Channel Islands. Hardy as a Director of the Company. 18th December 2013 6. RESOLUTION 4. To consider, and if deemed appropriate, re-elect Timothy Joseph Herbert as a Director of the Company. 7. RESOLUTION 5. To consider, and if deemed appropriate, re-elect Brian Charles James as a Director of the Company. 8. RESOLUTION 6. To consider, and if deemed appropriate, re-elect Nigel Ross Jeacock-Fewtrell as a Director of the Company. 9. RESOLUTION 7. To re-appoint PricewaterhouseCoopers CI LLP as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. 10. RESOLUTION 8. To fix the remuneration of each of the Directors at a maximum of £5,000 per annum.
92 Lloyds Investment FundsLloyds Limited Investment (Formerly Funds Lloyds LImIted TSB Offshore Funds Limited)
Lloyds Investment Funds Limited (Formerly Lloyds TSB Offshore Funds Limited) Form of Proxy
BLOCK LETTERS PLEASE. FULL NAME(S)...... ADDRESS...... I/We being a Member(s) of the above named Company hereby appoint the Chairman of the Meeting ...... (see Note 1.) as my/our proxy to attend and vote for me/us on my/our behalf at the 30th Annual General Meeting of the Company to be held on Wednesday 19th March 2014 at 9.00 a.m. and at any adjournment thereof. I/We direct my/our proxy to vote on the resolutions as follows: Ordinary Resolutions: 1. to receive and if deemed appropriate, adopt the Annual Report and Audited Financial FOR AGAINST Statements of the Company for the year ended 30th September 2013. 2. to consider, and if deemed appropriate, re-elect Ross Davey Willcox as a Director of the Company. 3. to consider, and if deemed appropriate, re-elect Ian Mark Jeremie Hardy as a Director of the Company. 4. to consider, and if deemed appropriate, re-elect Timothy Joseph Herbert as a Director of the Company. 5. to consider, and if deemed appropriate, re-elect Brian Charles James as a Director of the Company. 6. to consider, and if deemed appropriate, re-elect Nigel Ross Jeacock-Fewtrell as a Director of the Company. 7. to re-appoint PricewaterhouseCoopers CI LLP as Auditors and to authorise the Directors to fix their remuneration. 8. to fix the remuneration of each of the Directors at a maximum of £5,000 per annum. NOTES: 1. if you wish to appoint another person to be your proxy instead of the Chairman of the Meeting, you should delete the words “the Chairman of the Meeting”, and write the name of your proxy in the space provided and initial the alteration. 2. except as otherwise indicated by you, the proxy will vote, or abstain from voting, at the meeting or any adjournment thereof as the proxy thinks fit. 3. in the case of a corporation, the form of proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised in writing. 4. in the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members. 5. to be valid, forms of proxy must reach the principal place of business of the Company, P.O. Box 311, 11-12 Esplanade, St. Helier, Jersey JE4 8ZU, Channel Islands, not later than 48 hours before the time appointed for the meeting (or any adjourned meeting). Any power of attorney or other authority under which the form of proxy is signed must be sent with the form of proxy.
Signature ...... Date ......
93
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