Select Committee on Treasury Minutes of Evidence


Annex B (continued)

Capital Structure at 31 July 2002


Income shares
25,487,543
Capital shares
25,487,543
Zero Dividend Preference shares
16,991,695
Geared Equity Units*
[11,327,796]

* Comprising one Income and one Capital share.

Source: Aberdeen Asset Managers Ltd.

CALENDAR
Year end28 February
Accounts publishedJune
Annual General MeetingJune
Dividend paidn/a
Launch dateJanuary 1972
Winding up dateNovember 2004




TRADING DETAILS
SEAQ Page51526 cap
SEAQ Page51527 inc
SEAQ Page51531 geared unit
SEAQ Page48168 zdp
Topic page21332/21333/111
Reuters/Bloomberg CodeJOVC/JOVI/JOVU/JOVZ
StockbrokerOld Mutual
Market makersCSCS, HSBC, UBSW, CAZN, MLSB
Internethttp://www.joveit.co.uk
http://www.aberdeen-asset.com


Capital Structure at 31 July 2002


Income shares
25,487,543
Capital shares
25,487,543
Zero Dividend Preference shares
16,991,695
Geared Equity Units*
[11,327,796]

* Comprising one Income and one Capital share.

Source: Aberdeen Asset Managers Ltd.

CALENDAR
Year end28 February
Accounts publishedJune
Annual General MeetingJune
Dividend paidn/a
Launch dateJanuary 1972
Winding up dateNovember 2004



TRADING DETAILS
SEAQ Page51526 cap
SEAQ Page51527 inc
SEAQ Page51531 geared unit
SEAQ Page48168 zdp
Topic page21332/21333/111
Reuters/Bloomberg CodeJOVC/JOVI/JOVU/JOVZ
StockbrokerOld Mutual
Market makersCSCS, HSBC, UBSW, CAZN, MLSB
Internethttp://www.joveit.co.uk
http://www.aberdeen-asset.com



TRADING DETAILS
Topic page196A/51022A, 197A/51024A
Bloomberg/Reuters CodeEPM, EPMA
StockbrokerHSBC Investment Bank plc
Market MakersCSCS, HSBC, UBSW
Internethttp://www.aberdeen-asset.com
http://www.monthlyincome.co.uk

The American Income Trust Limited

INSTITUTIONAL REPORT

August 2002




OBJECTIVE

  To provide Ordinary Sharholders with a quarterly income and the potential for capital growth, to provide Annuity Shareholders with a preferred quarterly income and to provide Zero Dividend Preference Shareholders with a preferred capital entitlement on the planned subsidiary winding-up date from investment in a broad range of quoted US securities and fixed interest and other high yielding securities.

MANAGER'S REPORT

  Equity markets fell sharply in July as fears over corporate malfeasance and accounting scandals undermined investor confidence. WoldCom filed for bankruptcy, supassing Enron as the world's largest bankrupt.

  Q2 earnings have largely exceeded expectations, corporate profits are up 2-3 per cent on last year, the first gain since the end of 2000. However, company guidance for profit growth in the second half of 2002 has been disappointing as the economic recovery has been relatively muted to date.

  Economic data through the month has been poor, consumer confidence fell sharply on the back of the equity market weakness, whilst the initial estimate for Q2 GDP showed growth of just 1.1 per cent, well below the 2.3 per cent forecast. Inflation, however, remains low.

  The fund reduced its weight in technology through the sale of semiconductor manufacturer Analog Devices as end demand remains weak. A position in leading biotech play Amgen was taken following positive news on new product launches.

Allocation of Expenses and Interest at 31 July 2002


Capital %
Revenue %
80
20

Source: Aberdeen Asset Managers Ltd.

Total Investments at 31 July 2002


Total Investments
171

Source: Aberdeen Asset Managers Ltd.

Sector Allocation at 31 July 2002


% Trust

Corporate Bonds—Europe
12.8
Equities—US
8.5
Corporate Bonds—UK
7.2
Investment Companies
2.6
Cash
68.9

Total
100.0

Source: Aberdeen Asset Managers Ltd.




OBJECTIVE

  The Group invests in UK and Irish property and in the European high yield securities market, including high yielding securities issued by investment companies and trusts. The Company's objectives are to repay the Bank Borrowings and Loan Stock, to satisfy the pre-determined capital entitlement of the ZDP Shareholders and to provide Ordinary Shareholders with an expected initial annualised dividend yield of 8.8 per cent per annum and an increasing net asset value entitlement over the Planned Life of the Company.

MANAGER'S REPORT

UK Property Market

  The year began on a relatively quiet note with the debt based buyers the most in evident. However, in the second quarter the desire to acquire property has gained in momentum among the institutional buyers and there is now strong demand from home and overseas purchasers. This is no doubt encouraged by the uncertainties in the other alternative investment markets and the view held by some that property is a comparatively "safe haven".

  This demand is putting downward pressure on property yields given the weight of money available for investment and stock is still in relatively short supply. Howevewr, this is against a background of an uncertain occupational market which is affected by current economic conditions.

Irish Property Market

  The outlook for the property market continues to remain favourable going forward with low interest rates and the prospect of global economic recovery likely to increase confidence and boost demand as the year progresses.

  However, the SCS/IPD Irish Property Index recorded a 0.0 per cent total return during the first three months of 2002. There was a 1.3 per cent growth in income returns but this outcome was directly offset by a 1.3 per cent reduction in capital values.

  The retail sector has been the most active section of the market during the first quarter of 2002 and achieved the strongest total return of 1.4 per cent. Shopping centres gained the upper hand within this sector achieving a return of 1.9 per cent over the three month period.

  The industrial sector recorded a total return of 0.9 per cent during the first three months of 2002.

  The office sector total returns dropped -8 per cent during the period. However, although vacancy rates are rising the level of vacancies are to a great extent location led. The vacancy rates are higher in the suburban areas than in the prime areas of Dublin 2 and 4 and 31 per cent of space currently under construction is pre-let.

  The IPD Monthly Index all property return for the first six months to end June 2002 is 4.9 per cent.

Income Portfolio

    —  High yield bonds weak

    —  Income shares collapse

  An extraordinary month in the securities markets with extreme volatility in equity markets and a flight to quality in bond markets. High yield bonds were generally very nervous on worries about the overall economic background. Equities were very weak and volatile in the absence of serious buying interest. Over the month the FTSE 100 Index lost nearly 9 per cent however the fall was nearly 20 per cent at one stage before a late rally. In the circumstances the split capital sector could find no support and July and August have seen the suspension of a number of trusts some of which have announced liquidation/receiverships.

  The high yield market continued to benefit from IPOs. In May HMV Media tendered for its bonds after its share issue.

  The feature of the currency markets was again the strength of the euro which gained more than 3.5 per cent against the dollar and sterling.

  During July the Company suspended the second interim dividend and released a banking update. This announcement is shown on the following page.


 
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Prepared 17 October 2002