Fixed Interest Unlisted Trusts

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Overview

The Elstree Enhanced Income Fund invests in a diversified portfolio of listed debt hybrid securities. The Fund is designed primarily for investors who are seeking to earn a return above the bank bill rate but are prepared to accept a little more risk to achieve that objective.

The suggested timeframe for an investment in the Fund is at least 3 years.

The Fund is designed for wholesale investors only.

Performance Objective

The Fund aims to outperform the UBS Bank Bill Index by a margin of between 1.5 – 2% over a rolling 3 year period.

Investment Style

Elstree adopts an active approach to managing the Fund. Our unique corporate centric security selection process is complimented by our day to day trading activities.

For further information on our security selection process please click on the “Process” link.

How to invest

Simply download the Information Memorandum, complete the application form and send it, along with a cheque payable to Elstree Enhanced Income Fund to

The Compliance Manager
C/- Elstree Investment Management Limited
Level 15, 333 Collins Street
Melbourne Victoria 3000

Information Memorandum PDF

Fund Performance June 2010

The application unit price for the Elstree Enhanced Income Fund for units issued at the close of business on June 30, 2010 was $0.7352. The redemption unit price for the Elstree Enhanced Income Fund for units redeemed at the close of business on June 30, 2010 was $0.7322. After the payment to unit holders registered at the close of business on 30 June 2010 of a $0.014 distribution the Fund's NAV of a unit was $0.7197.

Monthly Report

Click on the link below to review a performance appraisal of the listed debt equity hybrid sector for the month of June 2010. The key features of the month were;

The Elstree Enhanced Income Fund's NAV of a unit decreased from $0.7411 per unit to $0.7337 over June representing a return of -1.0%. This compares with the All Ordinaries Accumulation Index and the All Maturities Bond Index returns of -2.6% and +1.4% respectively.

The Fund’s over the year net return (after fees and before adjusting for the value of franking credits) decreased to +30.3% from +37% previously. In gross terms the return decreased to +31.9% from +39.0% previously.

The fund’s performance this month was driven by profit taking on some of the non bank hybrid securities the fund owns amid a new bout of heightened global risk aversion.

In our review we comment on the dramatic decline in high yield default rates reported recently by Fitch Ratings. At present high yield default rates are running at an annual rate of around 1%. This compares with the average rate of around 13% reported in 2009 while the cycle average is around 4 - 5% p.a. The point we want to make is that almost nothing is defaulting. This is consistent with our long held view that in the aftermath of a recession default rates decline and the contraction in credit spreads that ensues means that credit outperforms most other asset classes during this period.

As usual we invite any comments you may have.

June 2010 Performance Review

Distribution Components June Quarter 2010

Distribution Components PDF