44768 LV ICVC I Long Form - Columbia Threadneedle · 12/31/2010 · class launched on 25 May 2010....

ANNUAL REPORTAND AUDITED FINANCIAL STATEMENTS OF THE

FUNDS I ICVC

31 December 2010

LIVERPOOL VICTORIA

LV= INVESTMENT

LV= INVESTMENT FUNDS I ICVC

CoNTENTS

Page

Management and professional service details ....................................................................................................................... 3

Investment objectives and policies ....................................................................................................................................... 4

Regulatory disclosure and constitution ................................................................................................................................ 5

Publication of prices ............................................................................................................................................................. 5

Report of the Authorised Corporate Director ................................................................................................................... 6-7

Investment reports of the Authorised Corporate Director

LV= UK Equity Income Fund .................................................................................................................................... 8

LV= UK Growth Fund ............................................................................................................................................... 9

LV= European ex-UK Growth Fund ....................................................................................................................... 10

LV= Japan Growth Fund .......................................................................................................................................... 11

LV= Pacific ex-Japan Growth Fund ........................................................................................................................ 12

Performance records

LV= UK Equity Income Fund .................................................................................................................................. 13

LV= UK Growth Fund ........................................................................................................................................ 14-15

LV= European ex-UK Growth Fund .................................................................................................................. 16-17



Portfolio statements

LV= UK Equity Income Fund ............................................................................................................................. 20-23

LV= UK Growth Fund ....................................................................................................................................... 24-27

LV= European ex-UK Growth Fund .................................................................................................................. 28-31

LV= Japan Growth Fund ..................................................................................................................................... 32-36

LV= Pacific ex-Japan Growth Fund ................................................................................................................... 37-41


CoNTENTS

Page

Top ten purchases and sales

LV= UK Equity Income Fund .................................................................................................................................. 42

LV= UK Growth Fund ............................................................................................................................................. 43

LV= European ex-UK Growth Fund ....................................................................................................................... 44



Statements of total return .................................................................................................................................................. 47

Statements of change in net assets attributable to shareholders ........................................................................................ 48

Balance sheets ..................................................................................................................................................................... 49

Notes to the financial statements .................................................................................................................................. 50-62

Distribution tables ......................................................................................................................................................... 63-76

Statement of Authorised Corporate Director’s responsibilities ......................................................................................... 77

Statement of Depositary’s Responsibilities ......................................................................................................................... 77

Report of the Depositary ..................................................................................................................................................... 77

Independent Auditor’s report .........................................................................................................................................78-79

General information ...................................................................................................................................................... 80-84


3

ManageMent and Professional service details Liverpool Victoria Portfolio Managers Limited is the Authorised Corporate Director and sole director of LV= Investment Funds I ICVC.

directors of liverpool victoria Portfolio Managers limitedK.W. Abercromby (Resigned 9th November 2010)R.M. Cook (Resigned 31 March 2010)P. Moore (Appointed 10 November 2010)M.J. RogersA.L. RougheadR.A. Rowney

registered officeCounty GatesBournemouthBH1 2NF

registrarInternational Financial Data Services (UK) LimitedIFDS HouseSt. Nicholas LaneBasildonEssexSS15 5FS

investment ManagerLiverpool Victoria Asset Management Limited80 CheapsideLondonEC2V 6EE

depositaryHSBC Bank plc8 Canada SquareLondon E14 5HQ

investment Managerfor the lv= Pacific ex-Japan growth fund:J.F. Asset Management Limited (Regulated in Hong Kong by the Securities and Futures Commission) 21/F Chater House 8 Connaught Road Central Hong Kong

auditorsErnst & Young LLPTen George StreetEdinburghEH2 2DZ

investment Managerfor the lv= Japan growth fund:Nomura Asset Management Co., Limited(Regulated in Japan by the Financial Services Agency)1-12-1 NihonbashiChuo-KuTokyo 103-8260Japan


4

INVESTMENT oBJECTIVES AND PoLICIESlv= UK equity income fundThe objective of the Fund is to achieve a high level of income combined with long-term capital growth from investments principally in UK equities. Investment may also occur in other transferable securities, money market instruments, deposits, cash and near cash, derivative instruments and forward transactions and units in collective investment schemes when deemed appropriate.

The Fund will normally be invested in a range of blue chip, medium and smaller companies in order to generate yield and maximise return whilst moderating the risk of equity investment at any particular point in the economic and business cycle. The Fund may from time to time use derivatives for the purposes of efficient portfolio management only, although derivatives may be used for investment purposes on not less than 60 days’ notice to investors.

lv= UK growth fundTo achieve long-term capital growth from investments principally in UK equities. Investment may also occur in other transferable securities, money market instruments, deposits, cash and near cash, derivative instruments and forward transactions and units in collective investment schemes when deemed appropriate.

The Fund will normally be invested in a range of blue chip, medium and smaller companies in order to maximise the return whilst moderating the risk of equity investment at any particular point in the economic and business cycle. The Fund may from time to time use derivatives for the purposes of efficient portfolio management only, although derivatives may be used for investment purposes on not less than 60 days’ notice to investors.

lv= european ex-UK growth fundTo achieve long-term capital growth from investments principally in European equities, excluding the UK. Investment may also occur in other transferable securities, money market instruments, deposits, cash and near cash, derivative instruments and forward transactions and units in collective investment schemes when deemed appropriate.

The Fund will normally be invested in a range of European markets to maximise the return whilst moderating the risk of equity investment at any particular point in the economic and business cycle. The Fund may from time to time use derivatives for the purposes of efficient portfolio management only, although derivatives may be used for investment purposes on not less than 60 days’ notice to investors.

lv= Japan growth fundTo achieve long-term capital growth from investments principally in Japanese equities. Investment may also occur in other transferable securities, money market instruments, deposits, cash and near cash, derivative instruments and forward transactions and units in collective investment schemes when deemed appropriate.

The Fund will normally be invested in a range of Japanese companies to maximise the return whilst moderating the risk of equity investment at any particular point in the economic and business cycle. The Fund may from time to time use derivatives for the purposes of efficient portfolio management only, although derivatives may be used for investment purposes on not less than 60 days’ notice to investors.

lv= Pacific ex-Japan growth fundTo achieve long-term capital growth from investments principally in Far East equities, excluding Japan. Investment may also occur in other transferable securities, money market instruments, deposits, cash and near cash, derivative instruments and forward transactions and units in collective investment schemes when deemed appropriate.

The Fund will normally be invested in a range of Far East markets to maximise the return whilst moderating the risk of equity investment at any particular point in the economic and business cycle. The Fund may from time to time use derivatives for the purposes of efficient portfolio management only, although derivatives may be used for investment purposes on not less than 60 days’ notice to investors.


5

This document has been issued by the Authorised Corporate Director of the LV= Investments Funds I ICVC, Liverpool Victoria Portfolio Managers Limited.

LV= Investment Funds I ICVC (“the Company”) is an Investment Company with Variable Capital incorporated under Regulation 14 (Authorisation) of the Open-Ended Investment Companies Regulations 2001. It is an umbrella company for the purposes of the rules of the Collective Investment Schemes Sourcebook (COLL) of the Financial Services Authority. The Company is incorporated in England and Wales with registered number IC24 and authorised and regulated by the Financial Services Authority (register number 188233) with effect from 3 March 1999.

The Company currently comprises of five securities Funds: LV= UK Equity Income, LV= UK Growth Fund, LV= European ex-UK Growth Fund, LV= Japan Growth Fund and LV= Pacific ex-Japan Growth Fund.

The value of investments held by the Funds and the revenue from them may go down as well as up, and when you redeem your shares you may not get back the amount you put in. When a Fund holds overseas investments, currency exchange rates will be an extra factor affecting its performance. If the investment growth for your Fund is less than the charges deducted, the value of your capital will go down.

As Funds within the Company are not legal entities in their own right, if the assets attributable to any Fund are insufficient to meet the liabilities attributable to it, any shortfall might have to be met out of the assets attributable to the other Funds of the Company. However, as at 31 December 2010, each of the Funds within the Company had sufficient assets in their own right to meet liabilities attributable to them individually.

The shareholders are not liable for the debts of the Company.

PUBLICATIoN oF PrICES

The daily prices of the shares in each class of shares in each Fund are currently published on our website (www.lvam.co.uk) or can be obtained by telephone on 0845 113 0273 (please note calls may be recorded for training and monitoring purposes). We may also, at our sole discretion, decide to publish certain share prices on third party websites or publications.

rEGULATorY DISCLoSUrE AND CoNSTITUTIoN


6

The ACD, Liverpool Victoria Portfolio Managers Limited has pleasure in presenting the Annual Report and Audited Financial Statements of the Company for the year ended 31 December 2010.

Liverpool Victoria Asset Management Limited has been retained under an investment management agreement to make investment decisions on behalf of the ACD concerning the property of the Funds. The Investment Manager has delegated its role of investment management for the LV= Japan Growth Fund to Nomura Asset Management Co. Limited and, for the LV= Pacific ex-Japan Growth Fund, to J.F. Asset Management Limited.

The LV= UK Equity Income Fund Institutional share class and the LV= European ex-UK Growth Institutional share class launched on 25 May 2010. The GBP Hedged share class of the LV=European ex-UK Growth Fund launched on 1 September 2010.

The money you invest is used to buy a wide range of investments mainly in stocks and shares in line with the investment objectives of these Funds which are given on page 4. The Report and Financial Statements have been presented on an aggregated basis. However, separate financial information is also provided on a Fund basis to enable investors to review the status and performance of those Funds for the period under review.

the funds at a glance at 31 december 2010lv= UK equity income fund

lv= UK growth fund

lv= european ex-UK growth fund

Return for the year ended 31 December 2010 - Retail Shares 19.17%* 17.87%* 7.16%*Return for the year ended 31 December 2010 - Second Retail Shares 18.49%* 17.32%* 6.66%*Return for the year ended 31 December 2010 - Group shares 20.20%* 19.07%* 8.21%*Return for the year ended 31 December 2010 -

Institutional shares 19.62%* 18.42%* 7.81%*Return for the period ended 31 December 2010 -

Institutional Income Shares 31.51%*+ n/a 25.28%*+Return for the period ended 31 December 2010 -

Institutional Income GBP Hedged Shares n/a n/a 25.78%*++Total Fund Size £131.2 million £185.2 million £210.8 millionCharges - Initial (Retail Shares and Institutional Shares) 5.00% 5.00% 5.00% - Initial (Second Retail Shares) 4.00% 4.00% 4.00% - Initial (Group Shares) 0.00% 0.00% 0.00% - Annual (Retail Shares) 1.00% 1.00% 1.00% - Annual (Second Retail Shares) 1.50% 1.50% 1.50% - Annual (Group Shares) 0.00% 0.00% 0.00% - Annual (Institutional Shares) 0.55% 0.55% 0.55%Minimum Investment - Retail Shares & Second Retail Shares Initial £1,000 Initial £1,000 Initial £1,000

Subsequent £500 Subsequent £500 Subsequent £500Minimum Investment - Institutional Shares Initial £500,000 Initial £500,000 Initial £500,000

Subsequent £50,000 Subsequent £50,000 Subsequent £50,000income distributed/accumulated per shareRetail Shares 4.8292p 1.8909p 1.4900pSecond Retail Shares 4.8030p 1.4063p 0.5101pGroup Shares 5.1999p 5.0864p 4.1152pInstitutional Accumulation Shares 5.1711p 2.9524p 1.3169pInstitutional Income Shares 1.7483p n/a 0.3255pInstitutional Income GBP Hedged Shares n/a n/a 0.2154p

Price per share Mid price Mid price Mid priceRetail Shares 132.00p 127.30p 248.40pSecond Retail Shares 130.80p 121.90p 134.60pGroup Shares 147.00p 208.50p 275.40pInstitutional Accumulation Shares 145.70p 151.10p 146.40pInstitutional Income Shares 121.70p n/a 119.70pInstitutional Income GBP Hedged Shares n/a n/a 107.90p

*Source: Copyright © 2010, Lipper. All rights reserved. Bid to Bid basis with net income reinvested.

+ Returns are for the period from 25 May 2010 to 31 December 2010.++ Returns are for the period from 1 September 2010 to 31 December 2010.

rEPorT oF THE AUTHorISED CorPorATE DIrECTor (“the ACD”)


7

lv= Japan growthfund

lv= Pacific ex-Japan growth fund

Return for the year ended 31 December 2010 - Group Shares 23.36%* 24.35%*Return for the year ended 31 December 2010 -

Institutional shares 22.79%* 23.67%*Total Fund Size £46.7 million £35.0 millionCharges - Initial (Group Shares) 0.00% 0.00% - Initial (Institutional Shares) 5.00% 5.00% - Annual (Group Shares) 0.00% 0.00% - Annual (Institutional Shares) 0.55% 0.55%Minimum Investment - Institutional Shares Initial £500,000 Initial £500,000

Subsequent £50,000 Subsequent £50,000income distributed/accumulated per shareGroup Shares 1.9009p 6.4179pInstitutional Accumulation Shares 1.1989p 2.6300p

Price per share Mid price Mid priceGroup Shares 139.40p 372.30pInstitutional Accumulation Shares 142.80p 210.00p

*Source: Copyright © 2010, Lipper. All rights reserved. Bid to Bid basis with net income reinvested.

A detailed review of investment activities in the Funds is set out in the Investment Report on pages 8 to 12.

P.B. Cassidy Company Secretary Liverpool Victoria Portfolio Managers Limited

28 February 2011

rEPorT oF THE ACD (continued)


8

INVESTMENT rEPorT oF THE ACD:LV= UK EqUITY INCoME FUND for the year ended 31 December 2010

The LV= UK Equity Income Fund has performed strongly over the past year, both in absolute terms and relative to the IMA UK Equity Income Sector and the FTSE All-Share Index. The “Fund Performance” table can be found in the Short Report or on our website www.lvam.co.uk.

The primary reason for this outperformance was good stock selection across a wide range of sectors. For example, in the Energy sector, the Fund’s large overweight holding in Petrofac and underweight holding in BP relative to the FTSE All-Share Index produced strong relative performance. Similarly, our performance in financials benefited from overweight positions in both Legal & General and Tullett Prebon as well as a large underweight holding in HSBC Holdings.

The Fund also benefited from our overweight exposure to high-quality industrial companies such as Weir Group, Rotork and Ultra Electronics. Combined with our portfolio construction discipline of targeting a minimum holding of 1.0% and maximum holding of 5.0% in any single stock, this meant that the Fund benefited from an above-average exposure to UK mid-cap and small-cap stocks which significantly outperformed large-cap stocks (as measured by the FTSE 100 Index) over the period.

The Fund remains well-diversified both in absolute terms and relative to the FTSE All-Share Index, with the continued focus on achieving the majority of outperformance from stock selection rather than from sector allocation.

However, the Fund is currently overweight in consumer discretionary areas such as general retailers, although the outlook for UK retail expenditure remains muted, we believe there is potential for self-help in some of the companies we hold. In addition, our assessment is that valuations are very attractive.

In contrast, the Fund currently has no holdings in FTSE 100 Index heavyweights HSBC Holdings, Royal Dutch Shell or GlaxoSmithKline.

We continue to believe that the UK equity market will produce attractive long-term returns for investors as many of the companies we look at are trading on low valuations, have strong balance sheets and are generating plenty of cash to finance future expansion and return to shareholders via dividends.

Another positive is that many UK-listed companies have an increasing exposure overseas, particularly in the faster growing emerging markets economies. In other words, the UK equity market is not dependent solely on the domestic economy.

However, as share prices are in the short-term driven primarily by investor sentiment, there is always the possibility of a material setback in the UK equity market – as happened in Q2 2010.

Graham Ashby Head of UK Equities

Data Source: Copyright - © 2010, Lipper. All rights reserved. Bid to Bid basis with net income reinvested.


9

INVESTMENT rEPorT oF THE ACD:LV= UK GroWTH FUND for the year ended 31 December 2010

The LV= UK Growth Fund performed well in 2010 generating significant capital growth and outperforming both its benchmark (FTSE All-share Index) and peer group in the IMA UK All Companies Sector.

The FTSE-All Share returned 14.51%. The returns for the Fund and the sector can be found in the Short Report or on our website www.lvam.co.uk.

Our investment approach is to focus on companies with durable competitive advantage that achieve high returns on capital. We do not attempt to try to predict the effect of shorter-term macroeconomic events or other generic trends. These companies tend to generate capital growth in most years and in fact 2010 was no exception. In addition, such companies entered the year at particularly appealing valuations which attracted investment during the year, driving up share prices. The Fund’s performance was therefore driven primarily by specific stock holdings with notable examples being Ultra Electronics, Rotork, Antofagasta and Fidessa. In addition, the fund benefited relatively from a low weighting in BP which underperformed due to its problems in the Gulf of Mexico.

Currently, Fund turnover is generally low as our focus is maintained on the long-term prospects of the high quality companies held within the portfolio. In certain instances, where momentum investors drive valuations to extreme levels, positions will be reduced. Some profits were taken in higher-growth medium-sized and small companies, where this was the case. Conversely, weightings were increased in larger, steadily growing, high-return companies. For example the holding in the smaller engineer, Rotork, was reduced and the holding in the large beverage company, Diageo, increased.

On the whole we consider that companies held within the portfolio are at attractive valuations and we expect that they are likely to continue to generate good returns on capital for the foreseeable future. There continues to be a considerable amount of concern and worry, especially in relation to the economic status of developed western economies. However, at the company level, we are seeing improving operating and financial performance and more confidence amongst management. Generic investor concern combined with good progress by companies financially tends to be an attractive combination for market performance.

Michael Crawford Principal Fund Manager



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INVESTMENT rEPorT oF THE ACD:LV= EUroPEAN EX-UK GroWTH FUND for the year ended 31 December 2010

During 2010 the Fund performed better than its benchmark index – the FTSE-World Europe ex-UK Index. This was the seventh consecutive year that the Fund has done so, underlining its long track record of delivering attractive relative returns to investors. The “Fund Performance” table in the Short Report, which can also be found on our website www.lvam.co.uk, includes the performance of all share classes and the IMA sector.

2010 was a difficult year to navigate rapid swings in investor sentiment and, with unusually high levels of correlation within and between markets, it was re-assuring that stock selection made the largest contribution to the Fund’s outperformance. In particular, financials are worthy of mention where we aimed to be highly selective in our stock selection rather than favouring the sector as a whole. We were forced to be fairly active traders in some of Europe’s big names but ended the year with no holding in stocks such as BBVA (Banco Bilbao Vizcaya Argentaria) and Unicredit. This was balanced by holdings in both asset gatherers (Partners; Baer) and Scandinavia (SEB; DnB NOR). The avoidance of ‘domestic’ exposure to the troubled economies of Portugal, Italy, Ireland, Greece, and Spain was also the essence of our positioning. This was reinforced by good stock selection in the industrials (Maersk; Outotec; Tognum), consumer staples (Viscofan; Barry Callebaut), and consumer discretionary sectors (VW and Autoliv). There were disappointments during the year, including an absence of luxury goods companies in the fund and an underweight in the heavyweight German chemical stocks (BASF; Bayer), which performed well. Our options overlay strategy, which is used predominantly as ‘insurance cover’ for the portfolio also contributed positively to our outperformance.

A fall in consumer borrowing and the potential of inflationary pressures slowing the Asian tiger lead us to believe that economic growth will be slow (and may well disappoint) in that part of the world in 2011. In addition the euro will probably remain under pressure. However, we expect that emerging world inflation will not feed through into headline figures in the developed world. In part this is due to the far smaller impact of food pricing in western inflation measures and also because Western economic growth is simply not strong enough for successful price rises in many areas.

The result is a continued search for world-class companies with increasingly strong balance sheets benefiting from global growth, irrespective of its country of origin. This does not lead us to make radical changes to our current positioning. Indeed, we have trimmed our autos exposure to underweight and are cautious of luxury goods companies at current prices. We have marginally underweighted banks and insurers as news will no doubt ebb and flow, and we think that the holders of debt will be increasingly uncomfortable in 2011. Utilities remains an underweight in those countries where government balance sheets are under pressure. The other side to this coin is a belief that both consumer services and technology offer names that have business models adaptable or strong enough to cope in a slow growth environment.

Mark Page Head of European Equities



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INVESTMENT rEPorT oF THE ACD:LV= JAPAN GroWTH FUND for the year ended 31 December 2010

The LV= Japan Growth Fund has performed strongly over the past year, both in absolute terms and relative to its peer group and the benchmark index. The Institutional Share Class of the Fund returned 22.79% and the Group Share Class returned 23.36% during 2010, compared with returns of 19.32% and 19.03% from the IMA Japan sector average and the FTSE Japan Index, respectively. The “Fund Performance” table in the Short Report, which can also be found on our website www.lvam.co.uk, includes the performance of all share classes and the IMA sector. The primary reason for the Fund’s outperformance was good stock selection and sector allocation both adding value to the portfolio during the year.

Stock within the financials and automobiles sectors made a positive contribution. Credit Saison and Orix, our favoured non-bank holdings, performed well in the financials sector. In the automobiles sector, Isuzu Motors and Daihatsu Motor performed well reflecting the strong demand in Asia. Offsetting this to some degree, there were disappointing results within the electronics sector as some component producers and home electrical appliance producers performed poorly.

In terms of sector allocation, our underweight exposures to defensive sectors, such as medical and infrastructure, added value amid investors’ preference for sectors driven by external demand. Our underweight exposure to the financials sector also contributed positively. We made some adjustments to the portfolio within the manufacturing-related sectors by raising our exposure to automobiles and reducing our machinery holdings. With expectations that conditions in other developed economies would start to normalise, thereby leading to recoveries in domestic demand, we prefer automobiles to the other export-oriented manufacturing sectors. In addition, with the exception of the sector’s largest company, Toyota Motor, valuations of most automobile companies remain relatively attractive compared with those of other manufacturers.

Among the external demand-led sectors, we increased the commodities sector target from neutral to overweight. In an uncertain economic environment, capital savings resulting from monetary policy easing tend to flow into liquid markets, including commodities, rather than stimulating real economic activity. In addition, emerging economies are expected to continue growing, which will further increase their demand for commodities and basic materials. Japanese economic indicators released during 2010 suggest an ongoing recovery. External demand continued to recover at a robust pace due to relatively healthy demand from Asia. In addition, domestic demand was boosted by temporary factors such as an acceleration in consumer spending. As a result, real GDP growth in the July-September quarter was unexpectedly high, at 4.5% which marked a substantial increase from the first half of 2010. Growth is expected to lose steam through to the first half of next year, as government stimulus programs to encourage domestic demand are withdrawn. However, we expect this will be followed by a modest upturn accompanied by a recovery in external demand.

We believe when the global demand recovery accelerates, export-oriented Japanese companies should be among the chief beneficiaries, possibly triggering a leap in company earnings growth for the Japanese corporate sector, that could capture the attention of global investors.

Nomura Asset Management Co., Limited Investment Adviser



12

INVESTMENT rEPorT oF THE ACD:LV= PACIFIC EX-JAPAN GroWTH FUND for the year ended 31 December 2010

The LV= Pacific ex-Japan Growth Fund performed strongly during 2010 in absolute terms, marginally outperforming its peer group and broadly in line with the benchmark. The Institutional Share Class of the Fund returned 23.67% and the Group Share Class returned 24.35% during 2010, compared with returns of 21.40% from the IMA Asia Pacific ex Japan sector average, and 23.88% from the benchmark FTSE All World Asia Pacific ex-Japan Index. The “Fund Performance” table in the Short Report, which can also be found on our website www.lvam.co.uk, includes the performance of all share classes and the IMA sector.

Relative to the benchmark index, asset allocation was a minor drag on the Fund’s performance as the negative impact of being underweight to Australia was not fully offset by the benefit from being overweight towards Thailand. In contrast, stock selection provided a net positive contribution. Strong contributions came from where we own cheap cyclical stocks (cement and mining stocks in China, Korean engineering stocks and Indian aluminium and autos stocks). Stock selection in Hong Kong suffered from being overweight in China consumer stocks which had previously performed well.

We remain positive on banks in Hong Kong, but have turned more cautious on Chinese financials and property for the near term. In the banking sector, we are seeing increased lending activity arising from a recovery in the real economy. However, both loan and bond yields remain under pressure due to competition and the current global monetary policy. We continue to be positive on the Taiwan market because of the long-term benefits that ECFA (Economic Cooperation Framework Agreement) could bring to Taiwan. Our investment direction will continue to take advantage of the increased spending power in China and a consumption recovery in Taiwan.

US Dollar weakness and a flattening of developed world growth were making the headlines in the latter part of 2010. Despite action from the Federal Reserve (a second bout of quantitative easing), there is disquiet about the effect of low interest rates and a weak dollar on the success of U.S. Treasury auctions. There are concerns too about possible speculative or bubble effects resulting from keeping interest rates at record low levels, the bursting of which might further damage already weak financial institutions.

Some concern exists on capital controls but we favour South Asia over the more export-exposed North Asia. That said, there will still be companies in Korea and Taiwan, and even Japan, which offer good exposure to growth both in China and in those products still seeing growth.

J.F. Asset Management Limited Investment Adviser



13

PErForMANCE rECorD: LV= UK EqUITY INCoME FUND

net asset value

Net asset value (£)

Net asset value pence

per share

No. of shares in issue

31 December 2009* - Retail Income Share Class 35,426 114.55 30,92531 December 2010 - Retail Income Share Class 1,015,596 130.99 775,32031 December 2009* - Institutional Accumulation Share Class 1,214 121.40 1,00031 December 2010 - Institutional Accumulation Share Class 1,166,788 145.25 803,27831 December 2010** - Institutional Income Share Class 9,308,894 120.77 7,707,80931 December 2009* - Second Retail Income Share Class 6,775 114.12 5,93731 December 2010 - Second Retail Income Share Class 383,670 129.77 295,65731 December 2009* - Group Accumulation Share Class 82,093,078 121.92 67,330,84231 December 2010 - Group Accumulation Share Class 119,280,528 146.59 81,368,097

share Price range

Calendar Year

Highest (pence)

Lowest (pence)

2009* - Retail Income Share Class 117.30 86.242010 - Retail Income Share Class 133.10 109.802009* - Institutional Accumulation Share Class 122.07 86.282010 - Institutional Accumulation Share Class 146.80 117.202010** - Institutional Income Share Class 122.70 100.002009* - Second Retail Income Share Class 116.84 86.292010 - Second Retail Income Share Class 131.83 109.012009* - Group Accumulation Share Class 122.60 86.322010 - Group Accumulation Share Class 148.20 117.70

distribution History

Calendar Year

Pence per Share

Per £1,000 invested at launch date

(£)2009* - Retail Income Share Class 5.7592 57.592010 - Retail Income Share Class 4.8292 48.292009* - Institutional Accumulation Share Class 5.8470 58.472010 - Institutional Accumulation Share Class 5.1711 51.712010** - Institutional Income Share Class 1.7483 17.482009* - Second Retail Income Share Class 5.7475 57.482010 - Second Retail Income Share Class 4.8030 48.032009* - Group Accumulation Share Class 5.8511 58.512010 - Group Accumulation Share Class 5.1999 52.00

total expense ratio (ter)31 December 2010 31 December 2009

Retail Income Share Class 1.08% 1.11%Institutional Accumulation Share Class 0.62% 0.69%Institutional Income Share Class 0.64% n/aSecond Retail Income Share Class 1.57% 1.59%Group Accumulation Share Class 0.08% 0.11%

* The Fund and the Retail Income, Institutional Accumulation and Second Retail Income share classes were launched on 28 January 2009.** The Insitutional Income Share Class was launched 25 May 2010.

Note: The Institutional Income Share Class TER has been annualised to reflect a full 12 month period.


14

PErForMANCE rECorD: LV= UK GroWTH FUND

net asset value



per share


31 December 2008 - Retail Accumulation Share Class 21,347,211 86.83 24,585,70831 December 2009 - Retail Accumulation Share Class 19,495,750 107.75 18,094,10931 December 2010 - Retail Accumulation Share Class 8,716,923 126.92 6,867,79231 December 2008* - Group Accumulation Share Class 216,418,995 139.43 155,218,89531 December 2009 - Group Accumulation Share Class 241,375,044 174.76 138,120,81431 December 2010 - Group Accumulation Share Class 174,705,768 207.96 84,009,95931 December 2008** - Institutional Accumulation Share Class 1,013,179 102.13 992,05831 December 2009 - Institutional Accumulation Share Class 1,466,088 127.30 1,151,69131 December 2010 - Institutional Accumulation Share Class 1,755,232 150.67 1,164,94731 December 2009*** - Second Retail Accumulation Share Class 10,373 103.73 10,00031 December 2010 - Second Retail Accumulation Share Class 69,712 121.63 57,315

share Price range

Calendar Year

Highest (pence)

Lowest (pence)

2006 - Retail Accumulation Share Class 122.80 105.202007 - Retail Accumulation Share Class 135.30 117.902008 - Retail Accumulation Share Class 181.20 72.772009 - Retail Accumulation Share Class 108.30 72.692010 - Retail Accumulation Share Class 128.30 101.902006* - Group Accumulation Share Class 193.10 164.602007* - Group Accumulation Share Class 214.60 186.602008* - Group Accumulation Share Class 209.80 116.602009 - Group Accumulation Share Class 175.70 116.902010 - Group Accumulation Share Class 210.20 165.502008** - Institutional Accumulation Share Class 106.00 89.112009 - Institutional Accumulation Share Class 128.00 85.572010 - Institutional Accumulation Share Class 152.30 120.502009*** - Second Retail Accumulation Share Class 104.30 99.942010 - Second Retail Accumulation Share Class 122.96 98.06

* The Group Accumulation Share Class was launched 5 September 2002 and was known as the Insitutional Accumulation Share Class until 3 November 2008.** The Institutional Accumulation Share Class was launched on 3 November 2008.*** The Second Retail Accumulation Share Class was launched on 27 November 2009.


15

PErForMANCE rECorD: LV= UK GroWTH FUND (continued)


Calendar Year

Pence per Share


(£)2006 - Retail Accumulation Share Class 2.7531 30.362007 - Retail Accumulation Share Class 3.9336 43.382008 - Retail Accumulation Share Class 3.8006 41.912009 - Retail Accumulation Share Class 2.6484 29.212010 - Retail Accumulation Share Class 1.8909 20.852006* - Group Accumulation Share Class 6.1739 44.002007* - Group Accumulation Share Class 6.2369 44.452008* - Group Accumulation Share Class 7.9301 56.522009 - Group Accumulation Share Class 5.7703 41.132010 - Group Accumulation Share Class 5.0864 36.252008** - Institutional Accumulation Share Class 0.8048 8.052009 - Institutional Accumulation Share Class 3.6128 36.142010 - Institutional Accumulation Share Class 2.9524 29.532009*** - Second Retail Accumulation Share Class - -2010 - Second Retail Accumulation Share Class 1.4063 14.06


Institutional Accumulation Share Class 0.64% 0.62%Retail Accumulation Share Class 1.10% 1.07%Group Accumulation Share Class 0.09% 0.07%Second Retail Accumulation Share Class 1.56% 1.55%

* The Group Accumulation Share Class was launched 5 September 2002 and was known as the Insitutional Accumulation Share Class until 3 November 2008.** The Institutional Accumulation Share Class was launched on 3 November 2008.*** The Second Retail Accumulation Share Class was launched on 27 November 2009.


16

PErForMANCE rECorD: LV= EUroPEAN EX-UK GroWTH FUND

net asset value



per share


31 December 2008 - Retail Accumulation Share Class 7,165,271 190.38 3,763,66431 December 2009 - Retail Accumulation Share Class 7,355,508 231.17 3,181,84331 December 2010 - Retail Accumulation Share Class 11,758,506 248.16 4,738,34331 December 2008* - Group Accumulation Share Class 54,454,872 207.46 26,248,22931 December 2009 - Group Accumulation Share Class 67,783,815 253.88 26,699,22931 December 2010 - Group Accumulation Share Class 160,595,360 275.20 58,355,38331 December 2008** - Institutional Accumulation Share Class 691,203 111.11 622,11431 December 2009 - Institutional Accumulation Share Class 1,261,175 135.41 931,34931 December 2010 - Institutional Accumulation Share Class 1,552,199 146.25 1,061,35031 December 2009*** - Second Retail Accumulation Share Class 288,677 125.93 229,24631 December 2010 - Second Retail Accumulation Share Class 313,917 134.51 233,38431 December 2010**** - Institutional Income Share Class 28,154 119.43 23,57431 December 2010***** - Institutional Income GBP Hedged Share Class 36,520,005 107.57 33,950,713

share Price range

Calendar Year

Highest (pence)

Lowest (pence)

2006 - Retail Accumulation Share Class 216.40 174.702007 - Retail Accumulation Share Class 253.10 213.102008 - Retail Accumulation Share Class 252.60 90.632009 - Retail Accumulation Share Class 237.10 145.502010 - Retail Accumulation Share Class 251.60 207.102006* - Group Accumulation Share Class 232.10 186.502007* - Group Accumulation Share Class 273.50 228.802008* - Group Accumulation Share Class 273.50 90.842009 - Group Accumulation Share Class 260.00 158.802010 - Group Accumulation Share Class 278.70 228.602008** - Institutional Accumulation Share Class 113.42 89.432009 - Institutional Accumulation Share Class 138.80 84.992010 - Institutional Accumulation Share Class 148.20 121.802009*** - Second Retail Accumulation Share Class 129.30 79.542010 - Second Retail Accumulation Share Class 136.50 112.502010**** - Institutional Income Share Class 121.30 99.682010***** - Institutional Income GBP Hedged Share Class 109.20 100.00

* The Group Accumulation Share Class was launched 5 September 2002 and was known as the Institutional Accumulation Share Class until 3 November 2008.** The Institutional Accumulation Share Class was launched 3 November 2008.*** The Second Retail Accumulation Share Class was launched 28 January 2009.**** The Institutional Income Share Class was launched 25 May 2010.***** The Institutional Income GBP Hedged Share Class was launched 1 September 2010.


17

PErForMANCE rECorD: LV= EUroPEAN EX-UK GroWTH FUND (continued)


Calendar Year

Pence per Share


(£)2006 - Retail Accumulation Share Class 2.1273 11.982007 - Retail Accumulation Share Class 2.7663 15.582008 - Retail Accumulation Share Class 5.7397 32.322009 - Retail Accumulation Share Class 3.6957 20.812010 - Retail Accumulation Share Class 1.4900 8.392006* - Group Accumulation Share Class 3.9116 20.712007* - Group Accumulation Share Class 4.6732 24.742008* - Group Accumulation Share Class 7.7038 40.782009 - Group Accumulation Share Class 5.7633 30.512010 - Group Accumulation Share Class 4.1152 21.792008** - Institutional Accumulation Share Class 0.2173 2.172009 - Institutional Accumulation Share Class 2.5824 25.822010 - Institutional Accumulation Share Class 1.3169 13.692009*** - Second Retail Accumulation Share Class 1.6807 16.812010 - Second Retail Accumulation Share Class 0.5101 5.102010**** - Institutional Income Share Class 0.3255 3.262010***** - Institutional Income GBP Hedged Share Class 0.2154 2.15


Retail Accumulation Share Class 1.11% 1.13%Group Accumulation Share Class 0.10% 0.14%Institutional Accumulation Share Class 0.67% 0.69%Second Retail Accumulation Share Class 1.63% 1.67%Institutional Income Share Class 0.70% n/aInstitutional Income GBP Hedged Share Class 0.66% n/a

* The Group Accumulation Share Class was launched 5 September 2002 and was known as the Institutional Accumulation Share Class until 3 November 2008.** The Institutional Accumulation Share Class was launched 3 November 2008.*** The Second Retail Accumulation Share Class was launched 28 January 2009.**** The Institutional Income Share Class was launched 25 May 2010.***** The Institutional Income GBP Hedged Share Class was launched 1 September 2010.

Note: The Institutional Income and Institutional GBP Hedged Share Classes TER have been annualised to reflect a full 12 month period.


18

PErForMANCE rECorD: LV= JAPAN GroWTH FUND

net asset value



per share


31 December 2008* - Group Accumulation Share Class 16,425,476 113.23 14,506,73431 December 2009 - Group Accumulation Share Class 11,871,454 112.97 10,508,73431 December 2010 - Group Accumulation Share Class 46,577,397 139.44 33,404,16331 December 2008** - Institutional Accumulation Share Class 88,202 117.13 75,30031 December 2009 - Institutional Accumulation Share Class 85,055 116.34 73,11231 December 2010 - Institutional Accumulation Share Class 77,462 142.76 54,259

share Price range

Calendar Year

Highest (pence)

Lowest (pence)

2006* - Group Accumulation Share Class 170.50 135.602007* - Group Accumulation Share Class 150.60 124.002008* - Group Accumulation Share Class 135.22 88.152009 - Group Accumulation Share Class 120.70 89.752010 - Group Accumulation Share Class 140.80 114.402008** - Institutional Accumulation Share Class 118.72 100.602009 - Institutional Accumulation Share Class 124.50 92.732010 - Institutional Accumulation Share Class 144.20 117.80


Calendar Year

Pence per Share


(£)2006* - Group Accumulation Share Class 1.2138 7.682007* - Group Accumulation Share Class 1.3426 8.492008* - Group Accumulation Share Class 1.9578 12.382009 - Group Accumulation Share Class 1.3335 8.432010 - Group Accumulation Share Class 1.9009 12.022008** - Institutional Accumulation Share Class 0.1651 1.652009 - Institutional Accumulation Share Class 0.8803 8.802010 - Institutional Accumulation Share Class 1.1989 11.99


Group Accumulation Share Class 0.23% 0.31%Institutional Accumulation Share Class 0.81% 0.88%

* The Group Accumulation Share Class was known as the Institutional Accumulation Share Class until 3 November 2008.** The Institutional Accumulation Share Class was launched 3 November 2008.


19

PErForMANCE rECorD: LV= PACIFIC EX-JAPAN GroWTH FUND

net asset value



per share


31 December 2008* - Group Accumulation Share Class 35,050,885 192.06 18,250,39431 December 2009 - Group Accumulation Share Class 22,462,625 299.05 7,511,24331 December 2010 - Group Accumulation Share Class 34,042,657 371.62 9,160,61531 December 2008** - Institutional Accumulation Share Class 410,887 109.40 375,59231 December 2009 - Institutional Accumulation Share Class 666,163 169.61 392,77031 December 2010 - Institutional Accumulation Share Class 961,697 209.60 458,820

share Price range

Calendar Year

Highest (pence)

Lowest (pence)

2006* - Group Accumulation Share Class 206.80 160.602007* - Group Accumulation Share Class 305.70 195.402008* - Group Accumulation Share Class 286.10 129.102009 - Group Accumulation Share Class 301.70 168.202010 - Group Accumulation Share Class 373.60 277.102008** - Institutional Accumulation Share Class 110.00 87.302009 - Institutional Accumulation Share Class 171.10 95.802010 - Institutional Accumulation Share Class 210.70 157.10


Calendar Year

Pence per Share


(£)2006* - Group Accumulation Share Class 3.6906 20.842007* - Group Accumulation Share Class 4.6112 26.042008* - Group Accumulation Share Class 5.2068 29.402009 - Group Accumulation Share Class 4.7996 27.102010 - Group Accumulation Share Class 6.4179 36.242008** - Institutional Accumulation Share Class 0.3212 3.212009 - Institutional Accumulation Share Class 2.1349 21.342010 - Institutional Accumulation Share Class 2.6300 26.30


Group Accumulation Share Class 0.25% 0.28%Institutional Accumulation Share Class 0.80% 0.82%

* The Group Accumulation Share Class was launched 5 September 2002 and was known as the Institutional Accumulation Share Class until 3 November 2008.** The Institutional Accumulation Share Class was launched 3 November 2008.


PorTFoLIo STATEMENT: LV= UK EqUITY INCoME FUNDas at 31 December 2010

20

Holding

Market value £’000

Percentage of total

net assets %

aerospace & defence - 2.98% (2.12%)

172,444 Aero Inventory+ - -

230,540 Ultra Electronics Holdings 3,910 2.98

3,910 2.98

Banks - 5.45% (7.54%)

609,414 Barclays 1,595 1.22

321,703 Standard Chartered 5,549 4.23

7,144 5.45

chemicals - 0.97% (0.12%)

85,575 Victrex 1,267 0.97

construction & Materials - 1.12% (0.00%)

9,875 Geberit 1,473 1.12

electricity - 0.52% (2.85%)

55,370 Scottish & Southern Energy 678 0.52

electronic & electrical equipment - 1.09% (0.82%)

219,445 Domino Printing 1,426 1.09

equity investment instruments - 1.34% (3.49%)

99,420 British Empire Securities 483 0.37

66,860 Caledonia Investments 1,270 0.97

1,753 1.34

financial services - 10.21% (3.43%)

91,362 Annaly Mortgage Management 1,054 0.80

223,635 Close Brothers 1,899 1.45

1,525,635 Collins Stewart 1,194 0.91

189,422 Investor ‘B’ free 2,615 1.99

542,650 Metric Property Investments 583 0.44

255,045 Provident Financial 2,214 1.69

1,010,655 Tullet Prebon 3,841 2.93

13,400 10.21


PorTFoLIo STATEMENT: LV= UK EqUITY INCoME FUNDas at 31 December 2010 (continued)

21

Holding


Percentage of total

net assets %

fixed line telecommunications - 2.61% (2.97%)

1,892,390 BT Group 3,421 2.61

food & drug retailers - 0.98% (1.46%)

301,340 Tesco 1,281 0.98

food Producers & Processors - 1.37% (3.33%)

709,850 Hilton Food 1,803 1.37

gas, Water & Multiutilities - 2.70% (2.77%)

1,067,865 Centrica 3,541 2.70

general retailers - 3.55% (1.41%)

342,770 Marks & Spencer 1,265 0.96

226,710 Ted Baker 1,446 1.10

2,507,435 Vertu Motors 690 0.53

260,335 WH Smith 1,262 0.96

4,663 3.55

Healthcare equipment & services - 1.05% (0.00%)

202,840 Smith & Nephew 1,372 1.05

Household goods & textiles - 3.69% (4.81%)

353,864 Headlam 1,097 0.84

106,245 Reckitt Benckiser 3,745 2.85

4,842 3.69

industrial engineering - 3.91% (1.03%)

391,680 Hill & Smith Holdings 1,079 0.82

139,550 IMI 1,319 1.00

85,360 Rotork 1,560 1.19

66,525 Weir 1,182 0.90

5,140 3.91

industrial Metals - 0.51% (0.00%)

16,100 Kumba Iron Ore ADR 666 0.51



22

Holding


Percentage of total

net assets %

leisure goods - 0.52% (0.00%)

510,154 Hornby 689 0.52

life insurance - 0.94% (0.00%)

1,276,500 Legal & General 1,235 0.94

Media & entertainment - 2.95% (1.60%)

63,360 Pearson 639 0.49

359,751 Reed Elsevier 1,943 1.48

164,830 Rightmove 1,283 0.98

3,865 2.95

Mining - 9.78% (8.79%)

191,261 Antofagasta 3,083 2.35

142,972 BHP Billiton 3,647 2.78

136,010 Rio Tinto 6,102 4.65

12,832 9.78

non-life insurance - 4.46% (4.66%)

492,190 Amlin 1,992 1.52

332,595 Hiscox 1,258 0.96

2,074,285 Royal & Sun Alliance Insurance Group 2,597 1.98

5,847 4.46

oil & gas Producers - 8.88% (14.03%)

407,420 BG 5,280 4.03

1,365,940 BP 6,359 4.85

11,639 8.88

oil equipment & services - 3.16% (2.13%)

261,375 Petrofac 4,148 3.16

Pharmaceuticals & Biotechnology - 4.62% (7.47%)

207,325 AstraZeneca 6,057 4.62

real estate - 0.00% (1.05%)

software & computer services - 0.00% (0.26%)



23

Holding


Percentage of total

net assets %

speciality and other finance - 0.00% (1.41%)

support services - 3.40% (5.61%)

185,908 Homeserve 824 0.63

147,000 Paypoint 522 0.40

707,394 Regus 610 0.46

2,115,235 Smiths News 2,501 1.91

4,457 3.40

technology Hardware & equipment - 0.00% (0.87%)

tobacco - 7.50% (4.60%)

261,415 British American Tobacco 6,440 4.91

172,705 Imperial Tobacco 3,399 2.59

9,839 7.50

travel & leisure - 3.03% (2.37%)

684,765 Compass 3,978 3.03

corporate Bonds - 4.40% (5.74%)

£1,300,000 Amlin 6.5% 19/12/2026 1,154 0.88

£1,670,000 LBG Capital 11.04% 19/03/2020 1,689 1.29

£2,150,000 Nationwide 6.024% 1,726 1.32

£1,200,000 Santander 11.30% 1,195 0.91

5,764 4.40

options - 0.07% (0.00%)

1,450 Vodafone Group Call Option December 2011 94 0.07

Market value of investments - 97.76% 128,224 97.76

net other assets 2,931 2.24

total net assets 131,155 100.00

Comparative figures shown in brackets relate to 31 December 2009.+ Suspended Security - not an approved security.Note: All assets are securities and admitted to official stock exchanges listing unless otherwise stated.


PorTFoLIo STATEMENT: LV= UK GroWTH FUND as at 31 December 2010

24

Holding


Percentage of total

net assets %

aerospace & defence - 2.91% (4.37%)

924,934 Aero Inventory+ - -

316,660 Ultra Electronics Holdings 5,371 2.91

5,371 2.91

automobiles & Parts - 0.88% (0.00%)

31,635 BMW 1,604 0.88

Banks - 10.00% (10.20%)

1,447,775 Barclays 3,788 2.04

3,899,930 Lloyds Banking Group 2,562 1.38

398,557 Standard Chartered 6,875 3.71

268,236 Wells Fargo & Co 5,324 2.87

18,549 10.00

Beverages - 1.94% (0.00%)

303,082 Diageo 3,592 1.94

chemicals - 1.07% (0.12%)

133,954 Victrex 1,984 1.07

construction & Materials - 1.15% (0.00%)

14,240 Geberit 2,124 1.15

electricity - 0.00% (2.06%)

electronic & electrical equipment - 0.92% (0.00%)

263,002 Domino Printing 1,710 0.92

equity investment instruments - 5.86% (3.72%)

455,441 3i Smaller Quoted Companies Trust 2,259 1.22

277,166 BlackRock World Mining Trust 2,242 1.21

21,971 British Empire Securities 107 0.06

113,343 Caledonia Investments 2,154 1.16

1,089,310 Polar Capital Technology Trust 4,090 2.21

10,852 5.86


PorTFoLIo STATEMENT: LV= UK GroWTH FUND as at 31 December 2010 (continued)

25

Holding


Percentage of total

net assets %

financial services - 6.84% (4.04%)

439,979 Close Brothers 3,735 2.02

2,202,858 Collins Stewart 1,724 0.93

2,541,277 F&C Asset Management 2,135 1.15

166,739 Hargreaves Lansdown 977 0.53

1,078,448 Tullet Prebon 4,098 2.21

12,669 6.84

fixed line telecommunications - 1.66% (0.96%)

1,702,106 British Telecom 3,077 1.66

food & drug retailers - 0.00% (1.93%)

food Producers & Processors - 4.36% (2.89%)

955,037 Hilton Food 2,426 1.31

287,731 Unilever 5,648 3.05

8,074 4.36


592,386 Inchcape 2,099 1.13

4,060,289 Vertu Motors 1,117 0.60

3,216 1.73

gas, Water & Multiutilities - 1.91% (0.00%)

1,067,041 Centrica 3,538 1.91

Healthcare equipment & services - 1.03% (0.00%)

280,855 Smith & Nephew 1,900 1.03

Household goods - 2.38% (5.18%)

566,400 Headlam 1,756 0.95

74,918 Reckitt Benckiser 2,641 1.43

4,397 2.38


608,775 Hill & Smith Holdings 1,677 0.91

323,120 IMI 3,054 1.65

154,213 Rotork 2,817 1.52

69,296 Weir Group 1,231 0.66

8,779 4.74



26

Holding


Percentage of total

net assets %

leisure goods - 0.86% (0.00%)

1,186,934 Hornby 1,602 0.86

life assurance - 0.68% (1.50%)

1,299,947 Legal & General 1,258 0.68

Media & entertainment - 4.65% (2.13%)

270,610 Pearson 2,728 1.47

720,143 Reed Elsevier 3,889 2.10

256,475 Rightmove 1,997 1.08

8,614 4.65

Mining - 8.02% (8.70%)

477,260 Antofagasta 7,693 4.15

170,945 BHP Billiton 4,361 2.35

62,809 Rio Tinto 2,818 1.52

14,872 8.02

Mobile telecommunications - 0.92% (2.08%)

1,030,348 Vodafone 1,708 0.92


760,930 Amlin 3,080 1.66

42 Berkshire Hathaway 3,221 1.74

1,452,305 Royal & Sun Alliance Insurance 1,818 0.98

8,119 4.38

oil & gas - 11.67% (14.37%)

616,864 BG 7,995 4.32

1,784,101 BP 8,306 4.48

1,424,926 Enquest 1,988 1.07

264,248 Tullow Oil 3,332 1.80

21,621 11.67

oil equipment & services - 2.80% (1.60%)

326,791 Petrofac 5,186 2.80



27

Holding


Percentage of total

net assets %


270,985 AstraZeneca 7,917 4.27

Personal goods - 1.06% (1.92%)

38,045 Colgate-Palmolive 1,968 1.06

real estate - 0.00% (0.97%)


116,285 Fidessa 1,794 0.97

support services - 1.55% (2.34%)

244,872 Experian 1,954 1.05

1,079,872 Regus Group 931 0.50

2,885 1.55

tobacco - 2.91% (2.83%)

218,716 British American Tobacco 5,388 2.91

travel & leisure - 4.10% (4.18%)

981,306 Compass 5,701 3.08

586,608 Ryanair 1,884 1.02

7,585 4.10

technology Hardware & equipment - 0.92% (1.38%)

475,258 Imagination Technologies 1,705 0.92

options - 0.08% (0.00%)

2,212 Vodafone Group Call Option 180 December 2011 144 0.08

Market value of investments - 99.22% (98.79%) 183,802 99.22


net assets 185,248 100.00

Comparatives figures shown in brackets relate to 31 December 2009. + Suspended securities - not an approved securityNote: All assets are ordinary shares and admitted to official stock exchange listing unless otherwise stated.

PorTFoLIo STATEMENT: LV= EUroPEAN EX-UK GroWTH FUND as at 31 December 2010


28

Holding


Percentage of total

net assets %

austria - 1.25% (1.51%)

78,186 Vienna Insurance Group 2,631 1.25

Belgium - 0.74% (0.00%)

62,900 Elia System 1,552 0.74

13,198 Elia System Strip 4 -

1,556 0.74

denmark - 0.00% (1.34%)

finland - 4.53% (0.00%)

246,298 Amer Sports Corporation 2,212 1.05

545,853 Nokia 3,636 1.73

92,446 Outotec 3,681 1.75

9,529 4.53

france - 21.71% (21.81%)

121,344 BNP Paribas 4,975 2.36

99,753 CFAO NPV 2,789 1.32

152,693 Edenred 2,327 1.10

119,345 Groupe Danone 4,833 2.29

240,620 Lyxor ETF DJ Euro Stoxx 50 3,159 1.50

34,979 Neopost 1,963 0.92

48,726 Societe BIC 2,699 1.28

82,112 Sodexho Alliance 3,647 1.73

237,098 Total 8,096 3.84

38,991 Vallourec 2,639 1.25

120,557 Vinci 4,223 2.00

256,412 Vivendi Universal 4,459 2.12

45,809 21.71

germany - 15.34% (14.02%)

70,422 Allianz (registered) 5,382 2.55

111,582 Deutsche Euroshop 2,772 1.32

286,479 E.ON 5,630 2.67

68,224 Fresenius Medical Care 2,546 1.21

152,967 Kloeckner & Co 2,766 1.31

159,310 SAP 5,223 2.47

PorTFoLIo STATEMENT: LV= EUroPEAN EX-UK GroWTH FUND as at 31 December 2010 (continued)


29

Holding


Percentage of total

net assets %

germany (continued)

149,396 Tognum 2,527 1.20

29,883 Volkswagen preference 3,129 1.48

28,937 Vossloh 2,376 1.13

32,351 15.34

greece - 0.00% (1.15%)

ireland - 1.07% (2.35%)

105,341 Kerry Group ‘A’ (London listed) 2,263 1.07

italy - 1.07% (10.78%)

390,326 Azimut 2,261 1.07

luxembourg - 3.35% (3.33%)

156,713 Arcelor-Mittal 3,830 1.82

210,501 SES Global 3,230 1.53

7,060 3.35

netherlands - 5.98% (5.68%)

83,762 Akzo Nobel 3,353 1.59

277,332 KPN Koninklijke 2,608 1.24

49,839 Nutreco Holding 2,425 1.15

213,521 Philips Electronics 4,215 2.00

12,601 5.98

norway - 6.35% (3.26%)

335,259 Den Norske Bank 3,028 1.44

626,443 Storebrand 3,012 1.43

374,495 Telenor 3,915 1.86

91,869 Yara International 3,414 1.62

13,369 6.35

Portugal - 0.00% (1.01%)

spain - 9.71% (9.70%)

514,056 Banco Santander Central Hispano 3,510 1.67

167,965 Ebro Puleva 2,290 1.09

58,192 Inditex 2,808 1.33



30

Holding


Percentage of total

net assets %

spain (continued)

195,667 Repsol YPF 3,513 1.67

430,987 Telefonica 6,297 2.99

82,550 Viscofan 2,015 0.96

20,433 9.71

sweden - 9.69% (1.09%)

665,000 Ericsson Telefonatkie ‘B’ 4,985 2.37

253,314 Kinnevik Investment 3,329 1.58

700,000 Nordea 4,912 2.33

287,547 SCA ‘B’ 2,929 1.39

792,986 SEB ‘A’ 4,267 2.02

20,422 9.69

switzerland - 16.72% (20.15%)

352,391 ABB 5,063 2.40

3,987 Barry Callebaut 2,126 1.01

96,110 Julius Baer ‘B’ 2,902 1.38

90,497 Novartis 3,430 1.63

18,494 Partners Group 2,258 1.07

80,166 Roche 7,576 3.59

2,190 Sika AG ‘B’ 3,098 1.47

45,677 Synthes 3,979 1.89

453,043 UBS 4,797 2.28

35,229 16.72

United states - 1.02% (0.00%)

42,328 Autoliv (Swedish Deposit Receipt) 2,160 1.02

derivatives - 0.00% (0.03%)

forward fX contracts - (0.28) (0.00%)

Bought DKK 36,000,000: Sold SEK 43,591,600 (20) (0.01)

Bought EUR 9,500,000: Sold NOK 74,878,345 (69) (0.03)

Bought GBP 1,000,298: Sold NOK 9,262,656 (20) (0.01)

Bought GBP 2,674,841: Sold SEK 28,302,079 (37) (0.02)

Bought GBP 22,131,304: Sold EUR 26,080,322 (333) (0.16)



31

Holding


Percentage of total

net assets %

United states (continued)

Bought GBP 347,821: Sold DKK 3,052,253 (5) -

Bought GBP 5,283,727: Sold CHF 7,819,584 (114) (0.05)

(598) (0.28)

options - 0.00% (0.00%)

5,500 Storebrand Put Option 32 Feb 2011 1 -

Market value of investments* 98.27% (97.21%) 207,077 98.25



Comparative figures shown in brackets relate to 31 December 2009.* This figure includes derivative liabilities.Note: All assets are securities and admitted to official stock exchange listing unless otherwise stated.

PorTFoLIo STATEMENT: LV= JAPAN GroWTH FUND as at 31 December 2010


32

Holding


Percentage of total

net assets %

automobiles & Parts - 13.44% (13.27%)

22,500 Aisin Seiki 512 1.10

89,000 Fuji Heavy Industries 444 0.95

182,000 Isuzu Motors 532 1.14

29,000 Koito Manufacturing 292 0.63

44,000 NHK Spring 308 0.66

231,000 Nissan Motor 1,415 3.03

18,100 Toyoda Gosei 273 0.59

78,700 Toyota Motor 2,008 4.30

46,500 Yamaha Motor 487 1.04

6,271 13.44

Banks - 5.78% (4.48%)

59,000 Chou Mitsui 157 0.34

83,000 Sumitomo Mitsui 1,902 4.08

156,000 Sumitomo Trust & Banking 633 1.36

2,692 5.78

Building Materials & construction - 3.93% (3.63%)

589,500 Haseko 336 0.72

63,400 JS Group 898 1.92

28,000 Kandenko 121 0.26

19,200 Nichiha 101 0.22

457,000 Taiheiyo Cement 377 0.81

1,833 3.93

chemicals - 4.94% (5.21%)

127,000 Denki Kagaku Kogyo 388 0.83

29,500 Hitachi Chemical 393 0.84

86,000 Kureha Chemical 333 0.71

27,400 Nissan Chemical 229 0.49

63,000 Sekisui Chemical 291 0.62

269,000 Showa Denko 390 0.84

45,000 Sumitomo Bakelite 170 0.36

37,000 Sumitomo Chemical 117 0.25

2,311 4.94

PorTFoLIo STATEMENT: LV= JAPAN GroWTH FUND as at 31 December 2010 (continued)


33

Holding


Percentage of total

net assets %

electronic appliances & components - 14.57% (11.53%)

28,500 CMK 105 0.22

4,300 Daichi Seiko 149 0.32

49,000 Dainippon Screen Manufacturing Company 224 0.48

64,600 Elpida Memory 484 1.04

10,100 Foster Electric 192 0.41

26,400 Funai Electric 592 1.27

181,000 Hitachi 621 1.33

38,600 Hitachi High Technology 580 1.24

15,200 Ibiden 308 0.66

7,700 Mabuchi Motor 255 0.55

13,300 Nihon Dempa Kogyo 163 0.35

15,700 Rohm 659 1.41

62,900 Seiko Epson 737 1.58

33,500 Sony 777 1.67

212,000 Toshiba 742 1.59

40,800 Yokogawa Electric 209 0.45

6,797 14.57

engineering & Machinery - 2.88% (4.73%)

19,600 Makita Corporation 515 1.10

74,000 Minebea 300 0.64

106,000 Shimadzu 530 1.14

1,345 2.88

fishery, agriculture & forestry - 1.12% (0.08%)

168,000 Oji Paper 523 1.12

foods - 0.40% (1.11%)

19,900 Fuji Oil 187 0.40


14,400 Alpen 165 0.35

97,300 Isetan Mitsukoshi Holdings 728 1.56

27,600 IT Holdings 237 0.51

212,600 Itochu 1,384 2.97

8,200 Kose 136 0.29

76,300 Marui 400 0.86



34

Holding


Percentage of total

net assets %

general retailers (continued)

107,700 Mitsui & Company 1,144 2.45

4,300 Paltac 49 0.10

42,000 Sanyo Shokai 106 0.23

64,000 Seiko 153 0.33

26,600 Seven and I Holdings 457 0.98

52,700 Sumitomo Corporation 480 1.03

25,700 United Arrows 250 0.54

5,689 12.20

Household goods & textiles - 0.41% (1.31%)

10,100 Fuji Seal 150 0.32

3,700 Mitsubishi Pencil 40 0.09

190 0.41


40,000 Aida Engineering 118 0.25

23,900 Daikin Industries 545 1.17

9,500 Glory 150 0.32

250,000 Hitachi Zosen 244 0.52

201,000 Kawasaki Heavy Industries 435 0.93

117,000 Kubota 713 1.53

21,800 Sintokogio 133 0.28

7,500 SMC 826 1.77

3,164 6.77

information technology - 3.19% (3.47%)

108,000 Fujitsu 483 1.03

54,900 Nihon Unisys 283 0.61

16,100 TDK 721 1.55

1,487 3.19

leisure & Hotels - 3.85% (4.24%)

16,400 Daiichikosho 205 0.44

7,000 Nintendo 1,321 2.83

14,600 Saizeriya 190 0.41

88 Toridoll 78 0.17

1,794 3.85



35

Holding


Percentage of total

net assets %

Mining - 1.54% (0.92%)

64,000 Sumitomo Metal Mining 719 1.54

Mobile telecommunications - 1.82% (2.25%)

229 KDDI 851 1.82


22,500 Tokio Marine Holdings 433 0.93


22,000 Kaken Pharmaceutical 172 0.37

41,000 Kyowa Hakko Kogyo 272 0.58

10,000 Nippon Shinyaku 92 0.20

64,300 Shionogi & Co 817 1.75

1,353 2.90

real estate - 2.42% (2.00%)

47,000 Mitsubishi Estate 561 1.20

25,000 Mitsui Fudosan 321 0.69

16,000 Sumitomo Realty & Development 246 0.53

1,128 2.42


16,100 CAPCOM 167 0.36

14 Gourmet Navigator 13 0.03

180 0.39

speciality & other finance - 5.74% (6.16%)

41,800 Aeon Credit Service 380 0.81

293,000 Mitsubishi UFJ Financial 1,019 2.18

13,470 Orix 853 1.83

26,350 T&D Holdings 430 0.92

2,682 5.74

steel & other Metals - 0.98% (4.16%)

59,000 Hitachi Metals 456 0.98



36

Holding


Percentage of total

net assets %

telecommunication - 3.96% (3.44%)

15,000 Nippon Telegraph & Telephone 437 0.94

1,255 NTT DoCoMo 1,410 3.02

1,847 3.96

tobacco - 1.53% (1.43%)

299 Japan Tobacco 712 1.53

transport - 3.70% (3.82%)

29,800 East Japan Railway 1,246 2.67

35,000 Mitsui Soko 94 0.20

135,000 Nippon Yusen KK 385 0.83

1,725 3.70

Utilities - 0.00% (2.23%)

Market value of investments - 99.39% (98.90%) 46,369 99.39

net other assets 286 0.61


Comparative figures shown in brackets relate to 31 December 2009.Note: All assets are securities and admitted to official stock exchanges listing unless otherwise stated.

PorTFoLIo STATEMENT: LV= PACIFIC EX-JAPAN GroWTH FUND as at 31 December 2010


37

Holding


Percentage of total

net assets %

australia - 19.08% (24.76%)

101,550 AMP 352 1.01

461,750 Asciano Group 483 1.38

37,369 Australia and New Zealand Banking 572 1.63

49,244 BHP Billiton 1,460 4.17

92,649 Brambles 432 1.23

5,400 Commonwealth Bank of Australia 180 0.51

9,440 CSL 224 0.64

12,781 National Australia Bank 198 0.57

6,708 Newcrest Mining 178 0.51

20,761 Orica 339 0.97

45,253 QBE Insurance Group 538 1.54

9,799 Rio Tinto 549 1.57

70,144 Westpac Banking 1,021 2.92

5,374 Woodside Petroleum 150 0.43

6,676 19.08

Bermuda - 4.53% (5.02%)

68,000 China Yurun Food Group 143 0.41

26,250 Jardine Matheson 744 2.13

19,500 Jardine Strategic 348 0.99

197,500 Ports Design 351 1.00

1,586 4.53

cayman islands - 2.12% (0.71%)

1,179,000 Glorious Property Holdings 258 0.74

26,900 Tencent Holdings 378 1.08

73,600 Wynn Macau 106 0.30

742 2.12

china - 13.47% (11.20%)

299,000 China Communications Construction 168 0.48

1,572,900 China Construction Bank 907 2.59

94,000 China Life Insurance Company 247 0.71

444,000 China National Building Material Company 651 1.86

892,000 China Petroleum & Chemicals ‘H’ 548 1.57

112,880 China Vanke 90 0.26

423,000 Hidili Industry International Development 230 0.66

PorTFoLIo STATEMENT: LV= PACIFIC EX-JAPAN GroWTH FUND as at 31 December 2010 (continued)


38

Holding


Percentage of total

net assets %

china (continued)

1,567,500 Industrial & Commercial Bank of China 750 2.14

61,000 Jiangxi Copper 129 0.37

28,500 Ping An Insurance 205 0.59

226,000 Yanzhou Coal Mining ‘H’ 442 1.26

582,000 Zijin Mining 342 0.98

4,709 13.47

Hong Kong - 11.28% (15.61%)

22,000 BOC Hong Kong Holdings 48 0.14

55,000 Cheung Kong Holdings 546 1.56

108,600 China Taiping Insurance Holding 215 0.61

13,000 China Mobile (Hong Kong) 83 0.24

112,000 China Resources Land 131 0.37

175,000 CNOOC 266 0.76

16,400 Hong Kong Exchanges & Clearing 240 0.69

154,000 Kerry Properties 517 1.48

28,000 Li Ning 38 0.11

85,500 Lifestyle International 135 0.39

460,500 Parkson Retail 456 1.30

233,000 Poly (Hong Kong) Investment 146 0.42

834,000 Prime Success International Group 501 1.43

4,708 Standard Chartered 83 0.24

109,000 Wharf Holdings 540 1.54

3,945 11.28

india - 8.63% (6.78%)

7,786 HDFC Bank P-Note 25/08/2014 263 0.75

20,936 Housing Development Finance P-Note 25/08/2014 220 0.63

7,292 ICICI Bank ADR 236 0.67

9,337 Infosys Technologies ADR 459 1.31

239,800 Infrastructure Development Finance P-Note 25/08/2014 630 1.80

14,950 Reliance GDR 451 1.29

52,600 Rural Electrification P-Note 18/06/2013 226 0.65

15,830 Tata Motors ADR 299 0.85

12,061 Tata Power P-Note 08/09/2014 237 0.68

3,021 8.63



39

Holding


Percentage of total

net assets %

indonesia - 1.56% (2.35%)

260,500 Bank Mandiri 120 0.34

124,000 Bank Negra Indonesia 34 0.10

173,000 Bank Ratyat Indonesia 129 0.37

72,500 Indo Tambangraya Megah 263 0.75

546 1.56

Korea - 14.16% (13.60%)

6,540 Daelim Industrial 442 1.26

3,656 GS Engineering & Construction 243 0.69

1,458 Hyundai Heavy Industries 372 1.06

4,410 Hyundia Engineering & Construction 183 0.52

24,058 KB Financial 829 2.37

8,980 Korea Electric Power 156 0.45

4,479 Korea Kumho Petrochemical 232 0.66

4,100 LG Display 94 0.27

74,285 LG Telecom 306 0.87

1,080 Lotte Shopping 294 0.84

1,041 POSCO 291 0.83

2,468 Samsung Electronics 1,346 3.85

1,542 Samsung Engineering 170 0.49

4,958 14.16

Malaysia - 1.31% (0.00%)

96,100 CIMB Group Holdings 170 0.48

78,000 Genting 181 0.52

95,700 Petronas Chemicals 110 0.31

29 Sime Darby Berhad - -

461 1.31

new Zealand - 0.70% (0.58%)

64,207 Fletcher Challenge Building Division 245 0.70

245 0.70

singapore - 4.77% (2.33%)

76,631 Capitaland 143 0.41

32,000 Keppel Corporation 182 0.52

266,000 Neptune Orient Lines 291 0.83



40

Holding


Percentage of total

net assets %

singapore (continued)

35,000 Singapore Airlines 269 0.77

47,000 Singapore Exchange 199 0.57

118,000 Singapore Telecommunications 181 0.52

44,000 United Overseas Bank 402 1.15

1,667 4.77

taiwan - 7.43% (9.23%)

181,070 Advanced Semiconductor Engineering 135 0.38

172,000 Cathay Financial Holdings 197 0.56

159,004 Compal Electronics 136 0.39

106,000 Formosa Chemical & Fibre 230 0.66

345,335 Fubon Financial Holding 305 0.87

166,027 Hon Hai Precision Industry 429 1.22

265,000 Innolux Display 236 0.67

14,084 MediaTek 130 0.37

402,672 Taiwan Cement 292 0.83

42,000 Taiwan Fertilizer 101 0.29

100,181 Taiwan Semiconductor Manufacturing 157 0.45

83,000 Unimcron Technology 104 0.30

322,000 Yuanta Financial Holdings 155 0.44

2,607 7.43

thailand - 3.43% (1.95%)

7,250 Banpu 122 0.35

9,400 Banpu Public non voting depositary receipt 159 0.45

1,031,700 Krung Thai Bank 381 1.09

25,700 PTT 176 0.50

3,870,000 Quality Houses 174 0.50

26,300 Siam Cement 191 0.54

1,203 3.43

derivatives - 0.04% (0.01%)

18 HKG H-SHARES Index Januray 2011 15 0.04



41

Holding


Percentage of total

net assets %

Warrants - 3.80% (3.87%)

101,654 Ambuja Cements 10/08/2012 210 0.60

9,310 Bharat Heavy Electricals 10/06/2013 312 0.89

177,990 Hindalco Industries 21/09/2012 629 1.80

8,770 Maruti Suzuki India 21/05/2012 179 0.51

1,330 3.80

Market value of investments 96.31% (98.00%) 33,711 96.31



Comparative figures shown in brackets relate to 31 December 2009.Note: All assets are securities and admitted to official stock exchanges listing unless otherwise stated.


42

ToP TEN PUrCHASES AND SALES: LV= UK EqUITY INCoME FUND for the year ended 31 December 2010

Purchases £’000Imperial Tobacco 4,126

GlaxoSmithKline 3,990

British American Tobacco 3,596

BP 3,213

Rio Tinto 3,164

BT Group 2,914

Provident Financial 2,819

Reed Elsevier 2,716

Royal & Sun Alliance Insurance 2,665

Tullett Prebon 2,654

31,857

Total purchases for the year 101,112

sales £’000GlaxoSmithKline 6,159

Royal Dutch Shell ‘B’ 3,903


Scottish & Southern Energy 2,435

Telefonica 2,104

Unilever 2,021

Imperial Tobacco 1,901

Close Brothers 1,848

BHP Billiton 1,669

Diageo 1,582

26,815

Total sales for the year 69,854


43

ToP TEN PUrCHASES AND SALES: LV= UK GroWTH FUND for the year ended 31 December 2010

Purchases £’000Close Brothers 5,605

Wells Fargo & Co 5,258

BP 4,143

Tullett Prebon 3,679

Diageo 3,460

Centrica 3,397

Lloyds Banking Group 2,825

Pearson 2,751

Annaly Mortgage Management 2,680

BT Group 2,563

36,361


sales £’000Royal Dutch Shell ‘B’ 11,124

HSBC Holdings (London listed) 9,528

BHP Billiton 9,105


Reckitt Benckiser 7,353

GlaxoSmithKline 6,758

BG 6,431

Barclays 5,765

BP 5,623

AstraZeneca 5,535

75,221



44

ToP TEN PUrCHASES AND SALES: LV= EUroPEAN EX-UK GroWTH FUND for the year ended 31 December 2010

Purchases £’000Total 16,439

Banco Santander Central Hispano 13,183

Roche 9,829

Ericsson 9,621

E.ON 8,961

Telefonica 7,910

ENI 7,875

Banca Intesa 7,746

BNP Paribas 7,461

Novartis 7,411

96,436


sales £’000Total 11,892

Banco Santander Central Hispano 11,604

Banca Intesa 8,784

ENI 8,696

Novartis 8,278

Siemens 8,230

Axa 8,060

Nestle 6,282

Muenchener Ruecker 5,951

Ahold Kon 5,828

83,605



45

ToP TEN PUrCHASES AND SALES: LV= JAPAN GroWTH FUND for the year ended 31 December 2010

Purchases £’000Toyota Motor 1,472

Sumitomo Mitsui 1,368

Nissan Motor 1,102

Mitsui & Company 1,059

NTT DoCoMo 954

Nintendo 873

East Japan Railway 869

Itochu 848

SMC 747

Mitsubishi UFJ Financial 707

9,999


sales £’000AEON Mall 478

Ajinomoto 400

Daihatsu Motor 345

Amada 282

JFE Holdings 266

Sumitomo Corporation 256

Credit Saison 230

Toyota Motor 201

Tokyo Electric Power 200

Itochu 171

2,829



46

ToP TEN PUrCHASES AND SALES: LV= PACIFIC EX-JAPAN GroWTH FUND for the year ended 31 December 2010

Purchases £’000KB Financial 764

Industrial & Commercial Bank of China 628

Samsung Electronics 559

Westpac Banking 555

DBS 520

Parkson Retail 491

United Overseas Bank 491

BHP Billiton 484

Kerry Properties 430

Genting 425

5,347


sales £’000DBS 516

BOC Hong Kong Holdings 477

China Life Insurance Company 456

China Resources Land 453

Westpac Banking 448

China Construction Bank 384

Genting 372

China Shenhua Energy 371

KB Financial 358

Taiwan Semiconductor 343

4,178



47

STATEMENTS oF ToTAL rETUrN for the year ended 31 December 2010

lv= UK equity income

fund

lv= UK growth fund

lv= european ex-UK growth

fund

notes2010

£’0002009+£’000

2010£’000

2009£’000

2010£’000

2009£’000

income

Net capital gains/(losses) 3 15,827 13,599 24,016 41,902 17,502 11,865

Revenue 4 3,970 3,045 4,877 9,355 2,976 2,149

Expenses 5 (98 ) (57 ) (257 ) (366 ) (389 ) (154 )

Finance costs: interest 7 (1) (1) (2) (4) (4 ) (2)

Net revenue before taxation 3,871 2,987 4,618 8,985 2,583 1,993

Taxation 6 (102 ) (109 ) (52 ) (12 ) (317 ) (389 )

Net revenue after taxation 3,769 2,878 4,566 8,973 2,266 1,604

total return before distributions/accumulations 19,596 16,477 28,582 50,875 19,768 13,469

Finance costs: distributions/accumulations 7 (3,781 ) (2,893 ) (4,566 ) (8,973 ) (2,311 ) (1,633 )

change in net assets attributable to shareholders from investment activities 15,815 13,584 24,016 41,902 17,457 11,836

lv= Japan growth fund

lv= Pacific ex-Japan growth fund aggregated

2010£’000

2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

income

Net capital gains/(losses) 3 5,504 (996 ) 6,178 12,669 69,027 79,039

Revenue 4 274 204 630 810 12,727 15,563

Expenses 5 (39 ) (38 ) (70 ) (87 ) (853 ) (702 )

Finance costs: interest 7 - - - - (7 ) (7 )

Net revenue before taxation 235 166 560 723 11,867 14,854

Taxation 6 (19 ) (21 ) (38 ) (94 ) (528 ) (625 )

Net revenue after taxation 216 145 522 629 11,339 14,229

total return before distributions/accumulations 5,720 (851 ) 6,700 13,298 80,366 93,268

Finance costs: distributions/accumulations 7 (216 ) (145 ) (523 ) (629 ) (11,397 ) (14,273 )

change in net assets attributable to shareholders from investment activities 5,504 (996 ) 6,177 12,669 68,969 78,995

+ For the period from 28 January 2009 to 31 December 2009.


STATEMENTS oF CHANGE IN NET ASSETS ATTrIBUTABLE To SHArEHoLDErS for the year ended 31 December 2010

48


fund

lv= UK growth fund


fund

2010£’000

2009+£’000

2010£’000

2009£’000

2010£’000

2009£’000

opening net assets attributable to shareholders 82,136 0 262,347 246,653 76,689 62,311

Amounts receivable on creation of shares 29,580 64,670 8,360 3,693 227,014 7,612

Amounts payable on cancellation of shares (135 ) (3 ) (113,993 ) (38,504 ) (113,861 ) (6,686 )

29,445 64,667 (105,633 ) (34,811 ) 113,153 926

Stamp duty reserve tax (37 ) - (144 ) (18 ) (38) -

Dilution levy charged 14 305 166 52 111 2

Change in net assets attributable to shareholders from investment activites (see Page 47) 15,815 13,584 24,016 41,902 17,457 11,836

Retained distribution on accumulation shares 3,782 3,580 4,496 8,569 3,396 1,614

closing net assets attributable to shareholders 131,155 82,136 185,248 262,347 210,768 76,689



2010£’000

2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

opening net assets attributable to shareholders 11,957 16,514 23,129 35,462 456,258 360,940

Amounts receivable on issue of shares 30,312 28 10,256 77 305,522 76,080

Amounts payable on cancellation of shares (1,593 ) (3,734 ) (5,065 ) (25,613 ) (234,647 ) (74,540 )

28,719 (3,706 ) 5,191 (25,536 ) 70,875 1,540

Stamp duty reserve tax - - - - (219 ) (18 )

Dilution levy charged 72 4 3 32 366 395

Change in net assets attributable to shareholders from investment activites (see Page 47) 5,504 (996 ) 6,177 12,669 68,969 78,995

Retained distribution on accumulation shares 403 141 504 502 12,581 14,406

closing net assets attributable to shareholders 46,655 11,957 35,004 23,129 608,830 456,258



BALANCE SHEETS as at 31 December 2010

49


fund

lv= UK growth fund


fund

notes2010

£’0002009£’000

2010£’000

2009£’000

2010£’000

2009£’000

assetsInvestment assets 128,224 81,100 183,802 259,162 207,675 74,553

Debtors 9 536 290 198 3,310 339 193 Cash and bank balances 10 2,508 857 1,341 2,438 3,585 2,129

total other assets 3,044 1,147 1,539 5,748 3,924 2,322

total assets 131,268 82,247 185,341 264,910 211,599 76,875

liabilities

Investment liabilities - - - - 598 -

Creditors 11 60 110 93 2,256 114 186 Bank overdrafts 10 - - - 307 46 - Distribution payable on income shares 53 1 - - 73 -

total other liabilities 113 111 93 2,563 233 186

total liabilities 113 111 93 2,563 831 186

net assets attributable to shareholders 131,155 82,136 185,248 262,347 210,768 76,689



notes2010

£’0002009£’000

2010£’000

2009£’000

2010£’000

2009£’000

assetsInvestment assets 46,369 11,825 33,711 22,666 599,781 449,306

Debtors 9 153 195 8 75 1,234 4,063 Cash and bank balances 10 416 159 1,315 621 9,165 6,204

total other assets 569 354 1,323 696 10,399 10,267

total assets 46,938 12,179 35,034 23,362 610,180 459,573

liabilities

Investment liabilities - - - - 598 -

Creditors 11 164 222 30 233 461 3,007 Bank overdrafts 10 119 - - - 165 307 Distribution payable on income shares - - - - 126 1

total other liabilities 283 222 30 233 752 3,315

total liabilities 283 222 30 233 1,350 3,315

net assets attributable to shareholders 46,655 11,957 35,004 23,129 608,830 456,258

aUtHorised corPorate director’s stateMentWe hereby approve the Report and Financial Statements of the LV= Investment Funds I ICVC for the year ending 31 December 2010 on behalf of Liverpool Victoria Portfolio Managers Limited in accordance with the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority.

Philip Moore Ann Roughead28 February 2011 28 February 2011


NoTES To THE FINANCIAL STATEMENTS as at 31 December 2010

50

1. accounting Policiesa. Basis of accounting

The financial statements have been prepared on the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice for Authorised Funds (SORP) issued by the Investment Management Association (IMA) in October 2010. The prior year financial statements had been prepared under the SORP issued in November 2008. No restatement was necessary following this change.

b. revenueDividends on equities are recognised when the security is quoted ex-dividend. Interest on debt securities are recognised on an effective interest rate basis. Bank interest is accounted for on an accruals basis. Special dividends are reviewed on a case by case basis when determining if the dividend is to be treated as revenue or capital. The tax accounting treatment follows the treatment of the principal amount.

Underwriting commission is taken to revenue and recognised when the issue takes place, except where the fund is required to take up all or some of the shares underwritten, in which case an appropriate proportion of the commission received is deducted from the cost of the shares.

c. taxationCorporation tax is charged at 20% of the revenue liable to corporation tax less expenses.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay less or receive more tax.

Deferred tax assets are recognised only to the extent that the Authorised Corporate Director considers that it is more likely than not that there will be taxable profits from which the underlying timing differences can be deducted.

Stamp duty reserve tax, if any, is suffered on surrender of units and is deducted from capital.

d. investmentsThe listed investments of the Company have been valued at bid prices at the closing valuation point on 31 December 2010. The valuation of unlisted investments is based on the Authorised Corporate Director’s assessment of their fair value. Suspended securities are valued initially at the suspended price but are subject to constant review. Exchange traded options are valued at the closing cost of the contract at the balance sheet date.

The market value of forward currency exchange contracts is the difference between the contract rate and the current forward rate.

e. exchange ratesWhere applicable, transactions during the period have been converted into sterling at the rates of exchange ruling at the date of the transaction. Foreign currency assets and liabilities at the end of the accounting period are translated at the exchange rates at the closing valuation point on 31 December 2010.

2. distribution policiesa. Basis of distribution

Where the revenue from investments exceeds the expenses, a distribution will be made. Should expenses exceed revenue, there will be no distribution and the shortfall will be transferred to capital. The policy of the Funds is to make distributions to shareholders half-yearly on 31 August and annually on 28 February each year. From 30 September 2010 LV= UK Equity Income also pays quarterly distributions on 31 May and 30 November each year.

b. stock dividendsOrdinary scrip dividends are recognised as revenue, and form part of the distribution. For enhanced scrip dividends the amount of enhancement is treated as capital and does not form part of the distribution.

c. expensesAll expenses, other than those relating to the purchase and sale of investments and stamp duty reserve tax are charged against revenue on an accruals basis. The ACD’s periodic charges and Administration fees for LV= UK Equity Income Fund is charged to the capital account for the purposes of determining the distribution.


51

NoTES To THE FINANCIAL STATEMENTS as at 31 December 2010 (continued)

3. net capital gains/(losses)lv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK

growth fund2010£’000

2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Currency (losses)/gains (27) 12 (46 ) 7 (621) (13)Security transaction charges (14) (6) (15) (4) (27) (22)Gains/(losses) on non-derivative securities 15,691 13,527 23,991 39,167 22,964 10,082 Gains/(losses) on derivative securities 177 66 86 2,732 (4,899) 1,826 Capital special dividends - - - - 43 7 Capital gains tax - - - - 42 (15)

Net capital gains/(losses) 15,827 13,599 24,016 41,902 17,502 11,865


lv= Pacific ex-Japan

growth fund aggregated2010£’000

2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Currency (losses)/gains (75 ) 14 24 (124) (745) (104)Security transaction charges (12) (21) (61) (57) (129) (110)Gains/(losses) on non-derivative securities 5,591 (989) 6,187 11,991 74,424 73,778Gains/(losses) on derivative securities - - 28 859 (4,608) 5,483Capital special dividends - - - - 43 7 Capital gains tax - - - - 42 (15)

Net capital gains/(losses) 5,504 (996) 6,178 12,669 69,027 79,039

4. revenuelv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

UK dividends 3,183 2,400 4,306 8,794 - - Overseas dividends 361 82 550 309 2,855 2,135 Property income distributions from UK REITs - 117 - - - - Bank interest - 1 1 2 2 1 Underwriting commission 7 33 9 136 - - Interest on fixed interest stocks 419 301 - 93 - - Futures interest - - - 21 2 3 Stock dividends - - 11 - 117 10 Option premiums - 111 - - - -

Total revenue 3,970 3,045 4,877 9,355 2,976 2,149




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

UK dividends - - 4 3 7,493 11,197Overseas dividends 274 204 613 793 4,653 3,523Property income distributions from UK REITs - - - - - 117 Bank interest - - - 2 3 6 Underwriting commission - - - - 16 169 Interest on fixed interest stocks - - - - 419 394 Futures interest - - - 1 2 25 Stock dividends - - 13 11 141 21 Option premiums - - - - - 111

Total revenue 274 204 630 810 12,727 15,563


52


5. expenseslv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Payable to the authorised corporate director, associates of the authorised corporate director, and agents of either of them:

ACD’s periodic charge 16 - 100 194 213 67

16 - 100 194 213 67

Payable to the depositary, associates of the depositary, and agents of either of them:

Depositary fee 16 - 59 41 35 11Safe custody fee 3 2 6 (18) 48 18Administration fee 25 19 23 3 36 22

44 21 88 26 119 51

other expenses:Audit fee 7 7 8 5 8 5 Capped expense rebate - - - (1) - - Registration fee 31 29 61 139 49 31 Dividend collection expenses - - - - - - Report & Accounts fee - - - 3 - -

38 36 69 146 57 36

Total expenses 98 57 257 366 389 154




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Payable to the authorised corporate director, associates of the authorised corporate director, and agents of either of them:

ACD’s periodic charge 1 1 4 3 334 265

1 1 4 3 334 265

Payable to the depositary, associates of the depositary, and agents of either of them:

Depositary fee 4 2 9 5 123 59Safe custody fee 2 2 14 16 73 20Administration fee 20 22 26 41 130 107

26 26 49 62 326 186

other expenses:Audit fee 8 5 8 5 39 27Capped expense rebate - - - - - (1)Registration fee 4 6 9 16 154 221Dividend collection expenses - - - 1 - 1 Report & Accounts fee - - - - - 3

12 11 17 22 193 251

Total expenses 39 38 70 87 853 702


53


6. taxationlv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

a analysis of charge in yearCorporation tax 65 105 - - 22 327 Overseas withholding tax 37 4 52 12 317 292 Double tax relief - - - - (22) (223)Overseas tax credits - - - - - (7)Total current taxation (note 6b) 102 109 52 12 317 389

Deferred tax - - - - (42) 15

Total tax for the year 102 109 52 12 275 404




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

a analysis of charge in yearCorporation tax - 17 - 67 87 516 Overseas withholding tax 19 14 38 49 463 371 Double tax relief - (8) - (20) (22) (251)Overseas tax credits - - - - - (7)Total current taxation (note 6b) 19 23 38 96 528 629

Deferred tax - (2) - (2 ) (42) 11

Total tax for the year 19 21 38 94 486 640


fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

b factors affecting taxation charge for the yearRevenue before taxation 3,871 2,987 4,618 8,985 2,583 1,993 Corporation tax @ 20% (2009 - 20%) 774 597 924 1,797 517 399

effects of:Revenue taxable in different periods - (492) - - - -Expenses not deductible for tax purposes - - 50 - - - Overseas withholding tax 37 4 52 12 317 292 Double tax relief - - - - (22) (223)Taxable revenue adjusted for recoverable overseas tax - - - - - 1 Overseas tax credits - - - - - (7)Realised gains on non-qualifying offshore funds - - - - 36 28 Utilisation of excess management expenses - - - - - - Revenue not subject to taxation (709) - (974) (1,797) (531) (101)

Current tax charge for the year (note 6a) 102 109 52 12 317 389


54


6. taxation (continued)lv= Japan

growth fund



2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

b factors affecting taxation charge for the yearRevenue before taxation 235 166 560 723 11,867 14,854Corporation tax @ 20% (2009 - 20%) 47 33 112 145 2,374 2,971

effects of:Revenue taxable in different periods - 3 - 2 - (487)Expenses not deductible for tax purposes 8 - 14 - 72 - Overseas withholding tax 19 14 38 49 463 371Double tax relief - (8) - (20) (22) (251)Taxable revenue adjusted for recoverable overseas tax - - - - - 1 Overseas tax credits - - - - - (7)Realised gains on non-qualifying offshore funds - - - - 36 28 Utilisation of excess management expenses - - - - - - Revenue not subject to taxation (55) (19) (126) (80) (2,395) (1,997)

Current tax charge for the year (note 6a) 19 23 38 96 528 629 *


fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

c deferred taxProvision at start of year - - - - 76 61 Deferred tax charge in year - - - - (42 ) 15 *

Provision at end of year - - - - 34 76




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

c deferred taxProvision at start of year - 2 - 2 76 65 Deferred tax charge in year - (2) - (2 ) (42) 11

Provision at end of year - - - - 34 76

* The deferred tax charge in the year is reflected within net capital gains/(losses) as it relates to unrealised gains on non-reporting offshore funds.


55


7. finance costs

The distributions/accumulations take account of amounts received on the issue of shares and amounts deducted on the cancellation of shares, and comprise:


fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Interim distributions/accumulations 3,256 2,098 2,849 5,468 2,679 1,252Final distribution/accumulation 611 1,484 1,647 3,101 790 362

3,867 3,582 4,496 8,569 3,469 1,614

Add: Amounts deducted on cancellation of shares 1 - 82 446 270 53 Deduct: Amounts received on issue of shares (87) (689) (12) (42) (1,428) (34)

Net distribution/accumulation for the year 3,781 2,893 4,566 8,973 2,311 1,633 Interest 1 1 2 4 4 2

Total finance costs 3,782 2,894 4,568 8,977 2,315 1,635




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Interim distributions/accumulations 104 70 224 323 9,112 9,211Final distribution/accumulation 299 71 280 179 3,627 5,197

403 141 504 502 12,739 14,408

Add: Amounts deducted on cancellation of shares 11 4 24 127 388 630 Deduct: Amounts received on issue of shares (198) - (5) - (1,730) (765)

Net distribution/accumulation for the year 216 145 523 629 11,397 14,273Interest - - - - 7 7

Total finance costs 216 145 523 629 11,404 14,280

8. Movements between net revenue and accumulationslv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Net revenue after taxation 3,769 2,878 4,566 8,973 2,266 1,604 WHT payable on stock dividend charged to capital - - - - - -ACD’s periodic charge/Administration fee charged to capital 16 19 - - - - Tax relief transferred to capital (4) (4) - - 43 29Income deficit transfer to Capital - - - - 2 -

Net distribution/accumulation for the period 3,781 2,893 4,566 8,973 2,311 1,633




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Net revenue after taxation 216 145 522 629 11,339 14,229WHT payable on stock dividend charged to capital - - 1 - 1 -ACD’s periodic charge/Administration fee charged to capital - - - - 16 19 Tax relief transferred to capital - - - - 39 25 Income deficit transfer to Capital - - - - 2 -

Net distribution/accumulation for the period 216 145 523 629 11,397 14,273


56


9. debtorslv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK


2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Accrued revenue 372 290 177 447 42 20 Amounts receivable for creation of shares 13 - 3 4 151 78 Prepaid expenses - - 5 - - - Overseas tax recoverable 16 - 13 - 139 95 Corporation tax recoverable - - - - 7 -Capped expenses rebate - - - 5 - - Sales awaiting settlement 135 - - 2,854 - -

Total debtors 536 290 198 3,310 339 193




2009£’000

2010£’000

2009£’000

2010£’000

2009£’000

Accrued revenue 18 4 8 10 617 771Amounts receivable for creation of shares - - - - 167 82 Prepaid expenses - - - - 5 -Overseas tax recoverable - - - - 168 95 Corporation tax recoverable - - - - 7 -Capped expenses rebate - - - - - 5 Sales awaiting settlement 135 191 - 65 270 3,110

Total debtors 153 195 8 75 1,234 4,063

10. cash and bank balanceslv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK

growth fund2010 £’000

2009 £’000

2010 £’000

2009 £’000

2010 £’000

2009 £’000

Cash and bank balances 2,508 857 1,341 2,438 3,509 1,749Bank overdrafts - - - (307) (46) -Amounts held at derivative clearing houses and brokers - - - - 76 380

Total cash and bank balances 2,508 857 1,341 2,131 3,539 2,129



growth fund aggregated2010 £’000

2009 £’000

2010 £’000

2009 £’000

2010 £’000

2009 £’000

Cash and bank balances 416 159 1,218 545 8,992 5,748Bank overdrafts (119) - - - (165) (307)Amounts held at derivative clearing houses and brokers - - 97 76 173 456

Total cash and bank balances 297 159 1,315 621 9,000 5,897


57


11. creditorslv= UK

equity income fund

lv= UK growth fund

lv= european ex-UK


2009 £’000

2010 £’000

2009 £’000

2010 £’000

2009 £’000

Amounts payable for cancellation of shares - - 4 - 2 - Purchases awaiting settlement - 11 52 2,146 - - Accrued expenses 30 17 37 110 78 63 Corporation tax payable 30 82 - - - 47 Deferred tax - - - - 34 76

Total creditors 60 110 93 2,256 114 186




2009 £’000

2010 £’000

2009 £’000

2010 £’000

2009 £’000

Amounts payable for cancellation of shares - - - - 6 -Purchases awaiting settlement 149 192 - 106 201 2,455Accrued expenses 15 22 29 81 189 293Corporation tax payable - 8 1 46 31 183Deferred tax - - - - 34 76

Total creditors 164 222 30 233 461 3,007

12. related Party transactionsLiverpool Victoria Portfolio managers Limited (ACD) is regarded as the controlling party of the Company in respect of the operations of the Company.

Liverpool Victoria Portfolio Managers Limited, a related party, acts as principal on all transactions of shares in the Company. The aggregate monies received through creations and liquidations are disclosed in the Statement of Change in Net Assets Attributable to Shareholders, amounts due to or from Liverpool Victoria Portfolio Manager Limited in respect of share transactions at the year end are disclosed in notes 9 and 11.

Amounts paid to Liverpool Victoria Portfolio Managers Limited in respect of ACDs periodic charges are disclosed in note 5. At the year end £39,907 (31 December 2009: £24,059) was due to Liverpool Victoria Portfolio Managers Limited in respect of ACDs periodic charge.

Liverpool Victoria Portfolio Managers Limited did not enter into any other transactions with the Company during the period.

At the year end date. The following percentages of shares in each fund were held or controlled by the Liverpool Victoria group of companies:

2010 (%)

2009 (%)

LV= UK Equity Income Fund 90.9 99.9LV= UK Growth Fund 95.3 96.9LV= European ex-UK Growth Fund 88.4 90.0LV= Japan Growth Fund 100.0 100.0LV= Pacific ex-Japan Growth Fund 100.0 100.0

13. equalisationEqualisation is accrued revenue included in the price of the shares purchased during the accounting period, which, after using monthly groupings to average, is refunded as part of the shareholder’s first distribution/accumulation following investment, resulting in the same rate of distribution/accumulation for that particular share class. As a capital repayment, it is not liable to income tax but must be deducted from the cost of shares for Capital Gains Tax purposes.

14. Hedged share classes The Hedged Share Class within LV= European ex-UK Growth Fund is designed to mitigate currency risk, by limiting the impact of exchange rate movements between the base currency (Sterling) and the currencies in which the assets of that Fund are denominated. The effects of hedging will be reflected in the value of this Class. The cost and expenses associated with the hedging transactions, and any benefits of those transactions will accrue to Shareholders in this Class only.

15. contingent liabilitiesThere were no contingent liabilities at the balance sheet date (31 December 2009: nil).


58


16. financial instrumentsIn pursuing the investment objectives set out on page 4 the Funds may hold a number of financial instruments, comprising:

• equity shares and debt instruments, fixed income securities, and floating rate securities.

• cash, liquid resources and short-term debtors and creditors that arise directly from its operations.

• borrowings to meet redemption and settlement mismatches.

• derivatives and forward currency transactions for the purposes of efficient portfolio management.

17. risks of financial instrumentsThe risks arising from the Funds’ financial instruments are market price, foreign currency, interest rate liquidity, credit and counterparty risks. The ACD reviews (and agrees with the Depositary) policies for managing each of these risks as summarised below. The policies have remained unchanged since the beginning of the year to which these financial statements relate:

(a) Market price risk - arises mainly from the uncertainty about future prices of financial instruments held. It represents the potential loss the Funds might suffer through holding market positions in the face of price movements.

The ACD meets regularly to consider the asset allocation of the portfolio in order to minimise the risk associated with particular industry sectors whilst continuing to follow the investment objective. An individual fund manager has responsibility for monitoring the existing portfolio selected in accordance with the overall asset allocation parameters and seeks to ensure that individual stocks also meet the risk reward profile that is acceptable.

(b) Foreign currency risk - the revenue and capital value of the Funds’ investments can be affected by foreign currency translation movements since some of the Funds’ assets are denominated in currencies other then sterling.

The ACD has identified three principal areas where foreign currency risk could impact the Funds, where movements in exchange rates affect the value of investments, short term timing differences and the revenue received.

The Funds may be subject to short term exposure to exchange rate movements, for instance where the date of an investment purchase and the date when the settlement occurs are different. To reduce this risk, foreign currency contracts are generally executed when the initial transaction takes place.

Revenue is received in currencies other than sterling and hence movements in exchange rates can affect the sterling value of this revenue. To minimise this risk, all income receipts are converted to sterling on, or shortly after, the date of receipt.

At the year end date a portion of the net assets of the Funds were denominated in currencies other than sterling with the effect that the balance sheet and total return can be affected by exchange rate movement.


Monetary non-monetary total Monetary non-monetary total

currency2010 £’000

2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Euro 10 - 10 16 2,437 2,453Sterling 2,873 122,416 125,289 1,016 77,865 78,881Swedish krona 10 2,615 2,625 - 798 798Swiss franc 6 1,473 1,479 - - -US dollar 32 1,720 1,752 4 - 4total 2,931 128,224 131,155 1,036 81,100 82,136

lv= UK growth



2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Sterling 1,419 167,677 169,096 3,114 242,113 245,227Canadian Dollar - - - - 2,176 2,176Euro - 3,488 3,488 - 4,692 4,692Singapore Dollar - - - - 2,579 2,579Swiss franc 13 2,124 2,137 - - -US Dollar 14 10,513 10,527 71 7,602 7,673total 1,446 183,802 185,248 3,185 259,162 262,347


59


17. risks of financial instruments (continued)lv= european ex-UK growth fund



2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Danish krone 573 3,806 4,379 - 1,031 1,031Euro 715 122,212 122,927 934 53,987 54,921Norwegian krone 552 4,099 4,651 136 2,501 2,637Sterling (125) 31,438 31,313 884 - 884Swedish krone 80 15,690 15,770 87 833 920Swiss franc 1,896 29,832 31,728 95 15,463 15,558US Dollar - - - - 738 738total 3,691 207,077 210,768 2,136 74,553 76,689




2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Japanese yen 75 46,369 46,444 19 11,825 11,844Sterling 211 - 211 113 - 113total 286 46,369 46,655 132 11,825 11,957

lv= Pacific ex-Japan growth fund



2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Australian dollar 56 6,676 6,732 (77) 5,727 5,650Chinese yuan - - - 4 - 4Hong Kong dollar 152 9,905 10,057 16 6,954 6,970Indonesian rupiah - 546 546 (1) 544 543Korean won 4 4,958 4,962 4 3,144 3,148Malaysian ringgit - 461 461 - - -New Zealand dollar - 245 245 - 133 133Singapore dollar 4 1,667 1,671 22 539 561Sterling 315 - 315 281 - 281Taiwanese dollar 440 2,607 3,047 117 2,137 2,254Thai baht - 1,203 1,203 - 451 451US dollar 322 5,443 5,765 97 3,037 3,134total 1,293 33,711 35,004 463 22,666 23,129

As the reporting currency is in sterling, there is no currency exposure connected to sterling. However, the amount of sterling is included to enable the table to be reconciled back to the balance sheet.

(c) Interest rate risk - some of the Funds invest in both fixed rate and floating rate securities. Thus any change to the interest rates relevant for particular securities may result in either income increasing or decreasing, or the ACD being unable to secure similar returns on the expiry of contracts or the sale of securities. In addition, changes to prevailing rates or changes in expectations of future rates may result in an increase or decrease in the value of the securities held.

In general, if interest rates rise the potential of the Company also rises but the value of fixed rate securities will decline (along with certain expenses calculated by reference to the assets of the Company). A decline in interest rates will in general have the opposite effect.


60


17. risks of financial instruments (continued)

The interest rate profiles of the Funds assets and liabilities at 31 December 2010 were:


fixed rate floating rate no interest

rate total fixed rate floating rate no interest

rate total2010 £’000

2010 £’000

2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

2009 £’000

Euro assets - 10 - 10 - 16 2,437 2,453Sterling assets 1,689 6,572 122,949 131,210 2,431 3,117 73,444 78,992Swedish krona assets - - 10 10 - - 798 798Swiss franc - - 6 6 - - - -US dollar assets - - 32 32 - 4 - 4Sterling liabilities - - (113) (113) - - (111) (111)

1,689 6,582 122,884 131,155 2,431 3,137 76,568 82,136

lv= UK growth

floating rate no interest rate total floating rate no interest rate total


2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Sterling 1,312 167,784 169,096 2,131 243,096 245,227Canadian Dollar - - - - 2,176 2,176Euro - 3,488 3,488 - 4,692 4,692Singapore Dollar - - - - 2,579 2,579Swiss franc - 2,137 2,137 - - -US Dollar - 10,527 10,527 - 7,673 7,673total 1,312 183,936 185,248 2,131 260,216 262,347

lv= european ex-UK growth fund



2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Danish krone 572 3,807 4,379 - 1,031 1,031Euro 571 122,356 122,927 873 54,048 54,921Norwegian krone 541 4,110 4,651 136 2,501 2,637Sterling 7 31,306 31,313 978 (94) 884Swedish krone 71 15,699 15,770 87 833 920Swiss franc 1,777 29,951 31,728 55 15,503 15,558US Dollar - - - - 738 738total 3,539 207,229 210,768 2,129 74,560 76,689




2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Japanese yen 71 46,373 46,444 15 11,829 11,844Sterling 226 (15) 211 144 (31) 113total 297 46,358 46,655 159 11,798 11,957


61


17. risks of financial instruments (continued)lv= Pacific ex-Japan growth fund



2010 £’000

2010 £’000

2009 £’000

2009 £’000

2009 £’000

Australian dollar 56 6,676 6,732 - 5,650 5,650Chinese yuan - - - - 4 4Hong Kong dollar 165 9,892 10,057 16 6,954 6,970Indonesian rupiah - 546 546 - 543 543Korean won - 4,962 4,962 - 3,148 3,148Malaysian ringgit - 461 461 - - -New Zealand dollar - 245 245 - 133 133Singapore dollar - 1,671 1,671 20 541 561Sterling 344 (19) 325 408 (127) 281Taiwanese dollar 441 2,596 3,037 117 2,137 2,254Thai baht - 1,203 1,203 - 451 451US dollar 309 5,456 5,765 60 3,074 3,134total 1,315 33,689 35,004 621 22,508 23,129

(d) Liquidity risk - the Funds’ assets comprise mainly realisable securities, which can readily be sold. The main liability of the Funds is the redemption of shares that investors wish to sell.

(e) Credit risk - Some of the Funds hold bonds issued by companies and international governments in order to achieve their investment objective of generating high levels of revenue consistent with capital appreciation. The borrower receives from the Funds a principal amount. The Funds will then receive interest based on the coupon rate of the bond and repayment of the initial principal amount on the bond’s maturity date. Any impairment to the borrower’s ability to repay amounts due may result in changes to the tradable value of the bond and the amount to be received upon maturity of the bond. The ability of the borrower to repay not only the principal value but also any interest due on the bond, referred to as the borrower’s credit rating, is monitored by the Manager. The Manager may undertake its own research of the borrower’s financial position in order to assess the ability of the borrower to repay amounts due.

(f) Counterparty risk - The risk of entering an arrangement with a counterparty, which is itself subject to financial risks which may affect its ability to trade as a going concern. The Manager maintains a list of approved counterparties. The list is regularly monitored and revised for changes based on the counterparty credit-worthiness, market reputation and expectations of future financial performance. Transactions will only be opened with financial intermediaries on the approved counterparties list.

The ACD uses a risk management process, as reviewed by the Depositary, enabling it to monitor and measure as frequently as appropriate the risk of the Scheme’s underlying investments, derivative and forward positions and their contribution to the overall risk profile of the Funds. The details of the risk management process are notified to the FSA.

(g) Fair value of financial assets and liabilities - there is no difference between the value of the financial assets and liabilities as shown in the balance sheet and their fair value.

18. Portfolio transaction costs


fund

lv= UK growth fund

lv= european ex-UK


2009+ £’000

2010 £’000

2009 £’000

2010 £’000

2009 £’000

analysis of total purchases costsPurchases in year before transaction costs 100,590 140,345 103,551 192,866 408,469 76,033 Commissions 248 324 277 427 675 160 Taxes 274 425 335 732 1 8 total purchase costs 522 749 612 1,159 676 168 gross purchases total 101,112 141,094 104,163 194,025 409,145 76,201

analysis of total sales costsgross sales before transaction costs 69,967 73,652 203,920 217,019 299,879 72,429 Commissions (113) (113) (340) (367) (720) (164)Taxes - - - - (1) (3)

total sale costs (113 ) (113 ) (340 ) (367 ) (721) (167 )

total sales net of transaction costs 69,854 73,539 203,580 216,652 299,158 72,262



62


18. Portfolio transaction costs (continued)




2009 £’000

2010 £’000

2009 £’000

2010 £’000

2009 £’000

analysis of total purchases costsPurchases in year before transaction costs 37,239 5,466 27,200 30,217 677,049 444,927Commissions 8 6 31 39 1,239 956Taxes - - 11 10 621 1,175total purchase costs 8 6 42 49 1,860 2,131gross purchases total 37,247 5,472 27,242 30,266 678,909 447,058

analysis of total sales costsgross sales before transaction costs 8,301 8,994 22,450 52,113 604,517 424,207Commissions (7) (5) (26) (44) (1,206) (693)Taxes - - (29) (59) (30) (62)

total sale costs (7) (5 ) (55) (103 ) (1,236 ) (755)

total sales net of transaction costs 8,294 8,989 22,395 52,010 603,281 423,452

19. Post Balance sheet eventsAs indicated in note 1(d) of the Accounting Policies, the investments have been valued at the closing valuation point on 31 December 2010. Between the closing valuation point and 15 February 2011, the individual Funds’ quoted mid price has risen/fallen as follows:

Mid price as at 31.12.2010 (p)

Mid price as at 15.02.2011 (p)

Movement (%)

LV= UK Equity Income Fund 145.7 148.2 1.72LV= UK Growth Fund 157.1 154.4 (1.72)LV= European ex-UK Growth Fund 146.4 146.0 (0.27)LV= Japan Growth Fund 142.8 145.0 1.54LV= Pacific ex-Japan Growth Fund 210.0 196.2 (6.57)


DISTrIBUTIoN TABLESLV= UK EqUITY INCoME FUND

63

retail income shares

First Interim Distribution (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010 Distribution

Paid

2009 Distribution

Paid

1 3.0861 - 3.0861 3.64532 1.2785 1.8076 3.0861 3.6453

group 1: shares purchased prior to 1 January 2010group 2: shares purchased 1 January 2010 to 30 June 2010

institutional accumulation shares

First Interim Accumulation (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010 Accumulation

Paid

2009 Accumulation

Paid

1 3.2735 - 3.2735 3.64902 0.6480 2.6255 3.2735 3.6490


institutional income shares


GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 0.1282 - 0.1282 -2 0.0470 0.0812 0.1282 -

group 1: shares purchased during the fixed offer period on 25 May 2010group 2: shares purchased 26 May 2010 to 30 June 2010


DISTrIBUTIoN TABLESLV= UK EqUITY INCoME FUND (continued)

64

second retail income shares


GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 3.0699 - 3.0699 3.64072 1.2803 1.7896 3.0699 3.6407


group accumulation shares

First Interim Accumulation (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 3.2914 - 3.2914 3.64892 3.1333 0.1581 3.2914 3.6489



Second Interim Distribution (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 1.1192 - 1.1192 -2 0.5744 0.5448 1.1192 -

group 1: shares purchased prior to 1 July 2010group 2: shares purchased 1 July 2010 to 30 september 2010



65


Second Interim Accumulation (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.2215 - 1.2215 -2 0.4779 0.7436 1.2215 -




GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 1.0224 - 1.0224 -2 0.7993 0.2231 1.0224 -




GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 1.1094 - 1.1094 -2 0.5961 0.5133 1.1094 -



Second Interim Accumulation (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.2293 - 1.2293 -2 1.1096 0.1197 1.2293 -




66


Final Distribution (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 0.6239 - 0.6239 2.11392 0.2014 0.4225 0.6239 2.1139

group 1: shares purchased prior to 1 october 2010group 2: shares purchased 1 october 2010 to 31 december 2010


Final Accumulation (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.6761 - 0.6761 2.19802 0.2221 0.4540 0.6761 2.1980




GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 0.5977 - 0.5977 -2 0.1524 0.4453 0.5977 -




67



GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 0.6237 - 0.6237 2.10682 0.2207 0.4030 0.6237 2.1068




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.6792 - 0.6792 2.20222 0.2432 0.4360 0.6792 2.2022



DISTrIBUTIoN TABLESLV= UK GroWTH FUND

68

retail accumulation shares

Interim Accumulation (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.3201 - 1.3201 1.84372 0.7063 0.6138 1.3201 1.8437




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 3.1869 - 3.1869 3.64112 3.1869 - 3.1869 3.6411




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.9596 - 1.9596 2.39252 1.3652 0.5944 1.9596 2.3925



DISTrIBUTIoN TABLESLV= UK GroWTH FUND (continued)

69

second retail accumulation shares


GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.1274 - 1.1274 0.00002 0.8930 0.2344 1.1274 0.0000




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.5708 - 0.5708 0.80472 0.2269 0.3439 0.5708 0.8047

group 1: shares purchased prior to 1 July 2010group 2: shares purchased 1 July 2010 to 31 december 2010



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.8995 - 1.8995 2.12922 0.9352 0.9643 1.8995 2.1292



DISTrIBUTIoN TABLESLV= UK GroWTH FUND (continued)

70



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.9928 - 0.9928 1.22032 0.2706 0.7222 0.9928 1.2203




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.2789 - 0.2789 -2 0.0866 0.1923 0.2789 -



DISTrIBUTIoN TABLESLV= EUroPEAN EX-UK GroWTH FUND

71



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.4900 - 1.4900 3.36172 1.1028 0.3872 1.4900 3.3617




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 2.8891 - 2.8891 4.45962 0.6465 2.2426 2.8891 4.4596




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.2134 - 1.2134 2.16412 1.0933 0.1201 1.2134 2.1641



DISTrIBUTIoN TABLESLV= EUroPEAN EX-UK GroWTH FUND (continued)

72



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.5101 - 0.5101 1.68072 0.3631 0.1470 0.5101 1.6807



Interim Distribution (in pence per share)

GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 0.1100 - 0.1100 n/a2 0.1100 - 0.1100 n/a

group 1: shares purchased during the fixed offer period on 25 May 2010group 2: shares purchased 25 May 2010 to 30 June 2010



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 - - - 0.33402 - - - 0.3340




73



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.2261 - 1.2261 1.30372 1.2211 0.0050 1.2261 1.3037




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.1035 - 0.1035 0.41832 0.0945 0.0090 0.1035 0.4183




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 - - - - 2 - - - -




74



GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Accumulation

Paid

1 0.2155 - 0.2155 n/a2 0.1027 0.1128 0.2155 n/a


institutional income gBP Hedged shares


GroupNet

IncomeEqualisation

(note 13)

2010Distribution

Paid

2009Distribution

Paid

1 0.2154 - 0.2154 n/a2 0.1160 0.0994 0.2154 n/a

group 1: shares purchased during the fixed offer period 1 september 2010group 2: shares purchased 1 september 2010 to 31 december 2010


DISTrIBUTIoN TABLESLV= JAPAN GroWTH FUND

75



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.0069 - 1.0069 0.66502 1.0069 0.0000 1.0069 0.6650




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.6361 - 0.6361 0.43982 0.6361 0.0000 0.6361 0.4398




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.8940 - 0.8940 0.66852 0.0331 0.8609 0.8940 0.6685




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 0.5628 - 0.5628 0.44052 0.5628 0.0000 0.5628 0.4405



DISTrIBUTIoN TABLESLV= PACIFIC EX-JAPAN GroWTH FUND

76



GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 3.4206 - 3.4206 2.46982 3.4206 0.0000 3.4206 2.4698




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.4547 - 1.4547 1.15182 1.2345 0.2202 1.4547 1.1518




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 2.9973 - 2.9973 2.32982 2.8562 0.1411 2.9973 2.3298




GroupNet

IncomeEqualisation

(note 13)

2010Accumulation

Paid

2009Accumulation

Paid

1 1.1753 - 1.1753 0.98312 0.2398 0.9355 1.1753 0.9831



77

STATEMENT oF THE AUTHorISED CorPorATE DIrECTor’S rESPoNSIBILITIESThe rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority (“the COLL Sourcebook”)require the Authorised Corporate Director to prepare financial statements for each annual accounting period which give a true and fair view of the financial affairs of the Company and of its revenue and net gains and losses on the Scheme property of the Company for the year. In preparing those financial statements the Authorised Corporate Director is required to:-

• comply with the Instrument of Incorporation, applicable accounting standards and Statement of Recommended Practice for Authorised Funds;

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in operation for the foreseeable future.

The Authorised Corporate Director is required to keep proper accounting records and to manage the Company in accordance with the Regulations and the Instrument of Incorporation.

STATEMENT oF THE DEPoSITArY’S rESPoNSIBILITIES IN rESPECT oF THE SCHEMEThe depositary is responsible for the safekeeping of all of the property of the Company (other than tangible moveable property) which is entrusted to it and for the collection of revenue that arises from that property.

It is the duty of the depositary to take reasonable care to ensure that the Company is managed in accordance with the Financial Services Authority’s Collective Investment Scheme Sourcebook (“The Sourcebook”), the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228) (the OEIC Regulations) and the Company’s Instrument of Incorporation and Prospectus, in relation to the pricing of, and dealings in, shares in the Company; the application of revenue of the Company; and the investment and borrowing powers of the Company.

rEPorT oF THE DEPoSITArY To THE SHArEHoLDErS oF THE LV= INVESTMENT FUNDS I ICVC oEIC (“THE CoMPANY”) For THE PErIoD ENDED 31 DECEMBEr 2010Having carried out such procedures as we consider necessary to discharge our responsibilities as depositary of the Company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the Authorised Corporate Director:

(i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Company’s shares and the application of the Company’s income in accordance with the Sourcebook and, where applicable, the OEIC Regulations, the instrument of incorporation and Prospectus of the Company, and

(ii) has observed the investment and borrowing powers and restrictions applicable to the Company.

HSBC Bank plc London 28 February 2011


78

INDEPENDENT AUDITor’S rEPorT To THE SHArEHoLDErS oF LV = ICVC 1 (“the Company”)We have audited the financial statements of LV = ICVC 1 (the Company) for the year ended 31 December 2010 which comprise the Statements of Total Return, Statements of Change in Net Assets Attributable to Shareholders, Balance Sheets, related notes 1 to 19 and the Distribution Tables. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the Company’s Shareholders, as a body, pursuant to Paragraph 4.5.12 of the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority. Our audit work has been undertaken so that we might state to the Company’s Shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s Shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

respective responsibilities of the authorised corporate director (acd) and auditorsAs explained more fully in the ACD’s responsibilities statement set out on page 77, the ACD is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

scope of the audit of the financial statementsAn 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 misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the ACD; and the overall presentation of the financial statements.

opinion on financial statementsIn our opinion the financial statements:

• give a true and fair view of the financial position of the Company as at 31 December 2010 and of the net revenue and the net gains on the scheme property of the Company for the year then ended; and

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice.


79

opinion on other matters prescribed by the rules of the collective investment schemes sourcebook of the financial services authorityIn our opinion:

• the financial statements have been properly prepared in accordance with the Statement of Recommended Practice relating to Authorised Funds, the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority and the Instrument of Incorporation;

• the information given in the ACD’s report for the financial year for which the financial statements are prepared is consistent with the financial statements;

• there is nothing to indicate that proper accounting records have not been kept or that the financial statements are not in agreement with those records; and

• we have received all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit

Ernst & Young LLPStatutory AuditorEdinburgh28 February 2011


80

GENErAL INForMATIoNthe companyThe Company, an open-ended investment company with variable capital, is an umbrella company currently consisting of five Funds. It is authorised and regulated by the Financial Services Authority, register number 188233. Incorporated in England and Wales No. IC24. Head Office: County Gates, Bournemouth, BH1 2NF.

the authorised corporate director (acd)The ACD is the sole director of the Company and is responsible for all aspects of administration and management. The ACD is Liverpool Victoria Portfolio Managers Limited which is authorised and regulated by the Financial Services Authority, register number 188521. It is a member of the Investment Management Association. It is incorporated in England and Wales No. 3579650 and its registered office is County Gates, Bournemouth, BH1 2NF. Please note our Administration address for all correspondence: PO BOX 10033, Chelmsford, CM99 2AL and our telephone number: 0845 113 0273 (calls may be recorded).

The ultimate holding company of Liverpool Victoria Portfolio Managers Limited is Liverpool Victoria Friendly Society Limited, which is authorised and regulated by the Financial Services Authority, register number 110035, and a member of the Association of British Insurers (ABI), Association of Friendly Societies (AFS) and Investment Life Assurance Group (ILAG). Registered address: County Gates, Bournemouth BH1 2NF.

the depositaryThe Depositary acts as the custodian for all assets relating to the Company. The Depositary is HSBC Bank plc, 8 Canada Square, London, E14 5HQ and is authorised and regulated by the Financial Services Authority.

Minimum Holding/transactionIn respect of Retail Shares and Second Retail Shares, shareholders investing monthly amounts can invest a minimum of £100. The minimum initial lump sum investment is £1,000, the minimum value of a shareholding is £500, and the minimum value of shares which may be the subject of any one subsequent transaction is £500. For Institutional Shares the minimum initial lump sum investment is £500,000, the minimum value of a shareholding is £50,000, and the minimum value of shares which may be the subject of any one subsequent transaction is £50,000.

subscription daysShares may be purchased or sold on any business day. The price of shares is calculated daily. A forward pricing basis is used. Prices are published on our website (www.lvam.co.uk) or by telephone on 0845 113 0273 (calls may be recorded).

repurchase of sharesShareholders may offer all their shares for sale to the ACD. Alternatively, they may offer a lesser number for sale, provided they retain at least the minimum holding referred to above. All sale instructions must be made to the ACD in writing. The shares will be purchased from the shareholder at the next valuation point and a contract note confirming the sale will be sent.

stamp duty reserve taxEach Fund will be liable for stamp duty reserve tax on surrenders and certain other transfers of shares of the Fund. The cost of any SDRT which needs to be paid will be met out of the property of each Fund.

dilutionThe Company may suffer dilution (reduction) in the value of the Scheme Property as a result of the costs incurred in dealing in its investments and of any spread between the buying and selling prices of these investments. It is not, however, possible to predict accurately whether dilution will occur at any point in time.

In order to counter this, the ACD may require the payment of a dilution levy. In cases where a dilution levy is made the value of the capital of the scheme property will not be adversely affected by dilution. If charged, the dilution levy will be shown in addition to (but not part of) the price of Shares on their issue by the Company or sale by the ACD and as a deduction to the price of Shares on their cancellation by the Company or redemption by the ACD. The ACD has no entitlement to the dilution levy. It will either be paid into the Company, in the case of an issue of Shares by the Company or sale by the ACD, or retained in the Company in the case of a cancellation of Shares by the Company or a redemption by the ACD.


81

GENErAL INForMATIoN (continued)

The need to charge a dilution levy will depend on the volume of net purchases or redemptions, as described below. The ACD may charge a dilution levy on any purchase or redemption of Shares if, in its opinion, the existing Shareholders (for purchases) or continuing Shareholders (for redemptions) might otherwise materially be adversely affected. A dilution levy must be imposed only in a manner, that so far as practicable, is fair to all Shareholders or potential Shareholders.

In particular, the dilution levy may be charged in the following circumstances:

• if the Company is experiencing large levels of net purchases (i.e. purchases less redemptions) relative to its size;

• if the Company is experiencing large levels of net redemptions (i.e. redemptions less purchases) relative to its size;

• on “large deals”. For these purposes, a large deal is defined as a purchase or a redemption in excess of £1,000,000 or 2% or more of the value of the Company whichever shall be lower;

• in any other case where the ACD is of the opinion that the interests of existing/continuing Shareholders and potential Shareholders require the imposition of a dilution levy.

In order to reduce the volatility in the rate of any dilution levy, the ACD may take account of the trend of the Company to expand or to contract; and the transactions in Shares at a particular Valuation Point.

For illustrative purposes, for the 12 months from 1 January 2010 to 31 December 2010 dilution levies were made on the following occasions:

retail accumulation sharessecond retail

accumulation sharesinstitutional accumulation

sharesfund range of

charges(%)number ofoccasions

range ofcharges(%)

number ofoccasions

range ofcharges(%)

number ofoccasions

LV= UK Equity Income none nil none nil none nilLV= UK Growth 0.13 to 0.20 2 none nil none nilLV= European ex-UK Growth none nil none nil 0.13 to 0.25 3LV= Japan Growth n/a n/a n/a n/a none nilLV= Pacific Growth n/a n/a n/a n/a none nil

institutional income shares institutional Hedged shares group sharesfund range of number of range of number of range of number of

charges(%) occasions charges(%) occasions charges(%) occasions

LV= UK Equity Income none nil n/a n/a 0.70 1LV= UK Growth n/a n/a n/a n/a 0.18 1LV= European ex-UK Growth none nil none nil 0.03 to 0.20 8LV= Japan Growth n/a n/a n/a n/a 0.25 2LV= Pacific Growth n/a n/a n/a n/a 0.03 2

the sdrt systemSDRT arises on the surrender (i.e. the redemption or switching) and certain transfers of Shares. The charge is 0.5% of the value of surrenders and transfers in each Fund each week reduced proportionately to the extent that during that week and the following week the:

(a) investments held by the Fund are exempt assets that is, broadly, any assets other than UK equities and holdings in collective investment schemes subject to SDRT (this will reduce the charge to nil where a Fund is invested entirely in exempt assets); and

(b) purchases of Shares are less by number than surrenders of Shares.

transfers of sharesTransfers of Shares from one Shareholder to another may be exempt from SDRT, depending on the circumstances. Shareholders transferring Shares should complete a stock transfer form in the normal way. Evidence of any exemption from SDRT should be submitted with the transfer in appropriate cases.


82


frequency of sdrt provisionWith a view to protecting shareholders from a resulting diminution in the value of Shares, an authorised corporate director of an OEIC is permitted to require the payment of an SDRT provision as an addition to (but not as part of) the price of Shares when they are issued or purchased, and as a deduction when they are cancelled or redeemed.

The ACD has the discretion to charge the SDRT liability against the Scheme Property attributed to each Fund or Class as appropriate, or to charge an SDRT provision to outgoing Shareholders by way of an exit charge. The ACD must not retain any SDRT provision but will pay this in to the property of the relevant Fund.

The ACD reserves the right in exceptional circumstances to charge an SDRT provision on redemptions of shares and also to levy an SDRT provision on a transferee in the case of third party transfers.

The ACD’s policy to charge SDRT to the relevant Fund in all cases means that it has not and does not expect to levy an SDRT provision

charges Certain charges are levied to cover the operating costs of the ACD. An initial charge of 5% of the price paid to the depositary is levied when Retail Shares or Institutional Shares are created. The initial charge for Second Retail Shares is 4.0%. There is no initial charge for Group Shares.

An annual management charge is also levied as a percentage of the Net Asset Value represented by relevant share class. The percentage charge per annum is for Retail Shares: 1.0%; Institutional Shares: 0.55%, Group Shares: 0.0% and Second Retails Shares: 1.5%. In addition each Fund pays expenses for the professional services they receive - such as safe custody, audit, regulatory and fund management advice. These charges are deducted daily from the income of the Fund.

All Classes have the same rights on winding up.

accumulationIncome is accumulated by a transfer to the capital account of each Fund on the day following the record date, being the last day in each accounting period.

income share class distributionAn income distribution will be paid to income shareholders twice yearly on 28 February and 31 August, except the LV= UK Equity Income Fund which pays quarterly on 28 February, 31 May, 31 August and 30 November.

reportsShort reports are sent to shareholders every six months. The full long-form report and accounts are available on request from Liverpool Victoria Portfolio Managers Limited, PO Box 10033, Chelmsford, CM99 2AL.

taxationThe following is based on our understanding of current law and UK HM Revenue & Customs practice; changes can occur without warning. It does not describe the tax treatment of shareholders who are subject to special tax regimes or the detailed tax treatment of persons resident in jurisdictions other than the UK. All shareholders are advised to consult their professional advisers as to their tax position.

the fundsEach Fund is treated as a separate open-ended investment company for tax purposes. The Funds may receive interest, dividend and interest from UK collective investment schemes and dividends in respect of investments in equities. The dividends and any part of the dividend distributions which relate to dividends are not subject to corporation tax in the Fund. Each Fund is liable to UK corporation tax at the current rate on any other types of income after deducting management expenses, charges and the gross amount of any interest distributions. Non-UK income can suffer foreign tax where it arises.


83


Each Fund will pay any distributable income as dividend distributions (which will be automatically retained in the Fund in the case of accumulation Shares) on each relevant distribution date.

The Funds are generally exempt from UK corporation tax on capital gains realised on the disposal of investments (including interest-paying securities and derivatives) held within them.

individual shareholdersdividend distributions to UK resident individualsDividend distributions will be received by UK resident individual taxpayers with a 10% tax credit. United Kingdom resident individuals liable to income tax at the basic rate will have no further liability to tax. Higher rate taxpayers, will have to pay a further amount of income tax (equivalent to 25% of the amount received), as will additional rate taxpayers (where the further tax will be equivalent to approximately 36% of the amount received). Non-taxpayers may not reclaim the tax credits on dividend distributions paid.

dividend distributions to non-UK resident individualsNon-United Kingdom resident Shareholders will generally not be entitled to reclaim any part of the tax credit on a dividend distribution from HM Revenue & Customs although it will normally satisfy their UK tax liability on that income. They may also be able to offset the tax credit against their liability to tax in their own country. This will depend on their personal circumstances and the terms of any double taxation agreement between their country of residence and the UK, and is only likely to be the case where income is distributed, not accumulated.

capital gains of UK resident individualsAny gains arising on a disposal of shares by an individual shareholder who is resident or ordinarily resident in the UK are, depending on the shareholder’s personal circumstances, subject to capital gains tax. Once an individual’s aggregate chargeable gains for a tax year exceed the annual exempt amount for the year, the balance will be subject to capital gains tax at the applicable rate.

Part of any increase in value of accumulation Shares represents accumulated income (including income equalisation). These amounts may be added to the acquisition cost when calculating the capital gain realised on their disposal.

Individual Shareholders will find further information in the HM Revenue & Customs Help Sheets for the capital gains tax pages of their tax returns.

it is possible to check HM revenue and customs up-to-date figures on capital gains tax rates at www.hmrc.gov.uk

exchange between funds by UK resident individualsAn exchange of shares in one Fund for shares in any other Fund is treated as a redemption and issue and will for persons subject to UK taxation be a realisation for the purposes of capital gains tax.

exchange between shares classes of the same fund by UK resident individualsAn exchange of one class of shares in one Fund for another class of shares in the same Fund will not constitute a realisation for the purposes of capital gains tax.

corporate shareholdersdividend distributions to UK resident companiesUK resident corporate shareholders who receive dividend distributions (whether or not they are accumulated) may have to divide them into two (in which case the division will be indicated on the tax voucher). Any part representing dividends received from a UK company will be treated as dividend income (that is, franked investment income) and no further tax will be due on it. The remainder will be received as an annual payment after deduction of income tax at the basic rate, and corporate shareholders may, depending on their circumstances, be liable to tax on the grossed up amount, with the benefit of the income tax credit attached or to reclaim part of the tax credit as shown on the tax voucher.


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dividend distributions to non-UK resident companiesNon-UK resident corporate shareholders resident in certain jurisdictions and directly or indirectly holding over 15% of the voting power in the Company may be entitled, on receipt of dividend distributions, to payment of a very small tax credit by HM Revenue & Customs under an applicable double taxation agreement. In other cases, no tax credit will generally be due to the non-UK resident company.

capital gains of UK resident companiesAny gains (after taking account of indexation relief) arising to UK resident corporate shareholders on disposal of their shares will be subject to corporation tax.

exchange between funds by UK resident companiesAn exchange of shares in one Fund for shares in any other Fund is treated as a redemption and issue and will for persons subject to UK taxation be a realisation for the purposes of capital gains tax.

exchange between share classes of the same fund by UK resident companiesAn exchange of one class of shares in one Fund for another class of shares in the same Fund will generally not constitute a realisation for the purposes of capital gains tax.

non-taxpayersindividualsIndividual non-taxpayers (including ISA investors) cannot reclaim the tax credit on dividend distributions (or accumulations).

charitiesCharities are not entitled to claim tax credits on dividend distributions.

Pension fundsPension Funds cannot reclaim the tax credit on dividend distributions.

income equalisationSince each Fund operates equalisation, the first allocation made after the acquisition of Shares will include an amount of equalisation. This amount represents the ACD’s best estimate of the income included in the price at which the Shares were acquired (subject to grouping where appropriate) and represents a capital repayment for UK tax purposes which should be deducted from the cost of the Shares in arriving at any capital gain realised on their subsequent disposal.

ProspectusFurther details concerning the Funds are contained in the Prospectus, which is available on request from the ACD.

application for sharesThe first investment in to the Company can be made using a standard application form, available from Liverpool Victoria Portfolio Managers Limited, PO Box 10033, Chelmsford, CM 99 2AL; telephone 0845 113 0273 (calls may be recorded) or on line at www.lvam.co.uk. Additional investments can be made by letter; telephone or online.

Shares in the Company can be bought or sold on a forward pricing basis. That is, if full instructions (and payment in the case of a request to buy shares) are received prior to 2pm on a business day, the price received will be the price calculated later that day. Instructions received after 2pm will be dealt with at the price calculated on the next business day.

LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and LV= and LV= Asset Management Limited are trading styles of the Liverpool Victoria group of companies. Liverpool Victoria Asset Management Limited and Liverpool Victoria Portfolio Managers Limited are incorporated in England and Wales company numbers 3287943 and 3579650 and are members of the IMA. Authorised and regulated by the Financial Services Authority. Registered address: County Gates, Bournemouth, BH1 2NF. Calls may be recorded for training and monitoring purposes.

LVAM536 02/11

44768 LV ICVC I Long Form - Columbia Threadneedle · 12/31/2010 · class launched on 25 May 2010....

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Transcript of 44768 LV ICVC I Long Form - Columbia Threadneedle · 12/31/2010 · class launched on 25 May 2010....