24th March 2009

Thames River Capital - Innovative Income Investing

The current low level of interest rates has helped highlight the need for a sustainable income at attractive levels. Investment vehicles focusing on income generation, such as the Thames River Distribution Fund, are a compelling choice as yields are an increasingly significant part of the total return:

• In more challenging times for world equity markets, when returns are lower than those seen in recent years, dividend income becomes ever more important as yields account for a higher percentage of total returns.
• The opportunity for receiving income from diversified sources is emerging as capital markets around the world develop and mature.
• An ageing population is placing a greater importance on income derived from investments and as a result, companies are coming under shareholder pressure to increase dividends.
• In the past high yielding companies were restricted to certain defensive sectors of the market, however, this is changing due to demands from shareholders.

The Thames River Distribution Fund's yield target at launch was quoted at 5.5% - the current yield is running comfortably above this, and whilst it is difficult to make predictions we expect to be in a position to be able to continue to offer amongst the highest yielding Distribution funds in the market place.

Some general points:

• It remains our intention to keep the yield of the Thames River Distribution fund amongst the very highest in the IMA Cautious Managed sector.
• We feel a diverse well managed multi-manager fund is well placed to achieve this aim in most conditions especially when compared to the single manager options that dominate the Distribution fund population of the IMA Cautious Managed sector.
• We have constructed and manage a portfolio of genuinely diverse sources of income from a range of asset classes beyond the usual equity and bond mix.
• The current portfolio contains 21 fund holdings with over 900 sources of income between them helping to smooth income across the year and through cycles.
• It is important to avoid the income traps and we take care to avoid investing solely for income at the expense of capital.
• We continue to monitor other issues such as the impact of the recent IMA sector changes for income funds.
• The fund has first quartile performance since launch, for 2008 and for 2009 YTD in the IMA Cautious Managed sector (TR Distribution is ranked against Cautious Managed funds yielding more than 3%).

In short we feel our fund benefits from its broad scope, common sense management approach. We are very aware of the issues facing income investors at present but feel well placed against competing funds to continue to provide an attractive level of income.

ISA Deadlines 2009

With the tax year end coming up, we thought that it would be best to inform you all of the cut-off points;

The 5th April falls on a Sunday this year and so our administrator, Northern Trust, will process any applications received up to 5pm on Friday the 3rd April into the next valuation point (ie Monday 6th April), but for the 08/09 ISA tax year.

Northern Trust are expecting a mail delivery on Saturday the 4th April and again applications received will be processed into the 08/09 tax year, but will receive the price of Monday 6th April 09.

Please also note, that under The ISA Guidance Notes (Bed and ISAing or Share Exchange Chapter 6 .14 and 6.15), the last day for acceptance of a switch from an unwrapped product to an ISA will be Monday 30th March 2009. You should note that this is a 2 day process with the purchase of units completed on the day after the redemption, as this is the first point at which the cash value for investment into the ISA is known.

The team's performance

Quartile ranking Source Lipper Hindsight, TR in GBP. 01/10/07 to 03/03/2009
* Including TR Distribution which is ranked against Cautious Managed funds yielding more than 3%

I hope that you find the above information useful. If you do need anything else then please do get in contact with me Matt Stinchcombe on 0207 3603506 or email
mstinchcombe@thamesriver.co.uk