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Investment Risks

Winterflood Risk Rating: Slightly Above Average

The basis of Winterflood’s risk model is the concept that the FTSE All Share represents average risk for a UK based investor. They then classify funds in one of six categories depending on their risk characteristics relative to the All Share index. The key quantitative measure that they use to assess risk is volatility of returns, using historic NAV performance over 1 and 3 years. The starting point for classifying funds is a comparison of volatility against the All Share using a series of bands, illustrated in the table below:

Risk Classifications - Initial Quantitative Screen

Category	Volatility Relative to All Share
Below Average	<70
Slightly Below Average	70-80
Average	80-120
Slightly Above Average	120-140
Above Average	140-180
High	>180

(Source: Winterflood Securities as at 30 January 2012).

In addition to the quantitative analysis, Winterfloods also assess a number of qualitative factors before determining a fund’s risk rating. Issues that may cause us to modify a fund’s rating include:

• Portfolio concentration by stock or industry sector
• Changes in mandate, investment style, gearing policy or capital structure Type of asset class e.g. volatility tends to be understated in smaller companies due to illiquidity of the underlying investments, while private equity funds only publish NAV on a periodic basis.

Trust Specific Risks

Trust Specific Risk	Description
Exchange Rates	Most of the investments in this portfolio not are made in Sterling, so exchange rates could affect the value of and income from your investment.
Emerging Markets	Asian focused portfolios are exposed to Emerging Markets which tend to be less stable than more established markets and can be affected by local political and economic conditions, reliability of trading systems, buying and selling practices and financial reporting standards.
Options for Revenue Enhancement Purposes	This portfolio allows the manager to use options for revenue enhancement purposes. Options can be volatile and may result in a capital loss.
Single Country or Geographic Area	If a fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more internationally diversified portfolio.

General Risks

Value of Investments

The value of investments and the income from them may go down as well as up and you may not get back your original investment.

Past Performance

Past performance is not a guide to future performance.

Inflation

Inflation may affect the future buying power of your money.

Counterparty Risk

The investment trust will be subject to the risk of a counterparty being able to perform its obligations with respect to transactions, whether due to insolvency, bankruptcy or other causes. The investment manager assesses the credit worthiness of the counterparties as a part of the risk management process.

Borrowing

Investment trusts can borrow money to make additional investments on top of the money invested by shareholders. If the value of these investments falls, borrowing will magnify the negative impact on share performance.

Tax Treatment

Tax assumptions and reliefs depend on an investor's circumstances and may change if those circumstances or the law change.

Discount

The discount or premium at which a Trust shares trade may expand or contract as a result of relative performance and market sentiment.

Accounting, Legal and Regulatory

A breach of Section 1158 of the Corporation Tax Act 2010 could lead to a loss of investment trust status resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the UKLA Listing Rules could result in suspension of a trust's shares.

Operational

Disruption to, or failure of the managers accounting, dealing or payment systems or the custodians records could prevent accurate reporting and monitoring of the trust's financial position. Suppliers may not provide the required level of service.

Derivatives

Derivatives may be used for the purposes of efficient portfolio management. It is not expected that use of derivatives will lead to a higher risk profile. Certain Trusts may use derivatives for investment purposes.

The value of your investments and the income from them can go down as well as up. You may not get back the full amount you have invested.

Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646) and Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Services Authority to provide investment products and services. Henderson Far East Income Limited is a Jersey fund, registered at Liberté, 19-23 La Motte Street, St Helier, Jersey JE2 4SY and is regulated by the Jersey Financial Services Commission. Telephone calls may be recorded and monitored.