practical investment fund

PRACTICALINVESTMENT

FUNDANNUALREPORT

15 SEPTEMBER 2009

CONSISTENT UNIT TRUSTMANAGEMENT COMPANY LIMITED

Manager and Advisers

ManagerConsistent Unit Trust Management Company LimitedRegistered Office and Main Office:Woodside, Maidstone Road, Colts Hill, Pembury, Kent TN2 4ALTelephone: 01892 824445Fax: 01892 822994

(Authorised and regulated by the Financial Services Authority,a member of the Investment Management Association)

Directors of the ManagerP. J. C. Ashfield (Chairman)S. P. AshfieldMs. J. M. Sculley

SecretaryMs. J. M. Sculley

TrusteeBNY Mellon Trust and Depositary (UK) LimitedThe Bank of New York Mellon Centre,160 Queen Victoria Street, London EC4V 4LA(Authorised and regulated by the Financial Services Authority)

Administrators & RegistrarsPhoenix Fund Services (UK) LimitedSpringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PWTelephone: 01245 398950Fax: 01245 398951www.phoenixfundservices.com

Customer Service Centre:PO Box 10117, Chelmsford, Essex CM1 9JBTelephone: 0845 026 4281Fax: 0845 280 2234

(Authorised and regulated by the Financial Services Authority)

AuditorsShipleys LLPChartered Accountants & Registered Auditors10 Orange Street, Haymarket, London WC2H 7DQ

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PRACTICAL INVESTMENT FUND

Manager’s ReportFor the year ended 15 September 2009

It is with great sadness we have to announce that Gerald Ashfield died on 11 September 2009. MrAshfield had been the Investment Adviser to the Practical Investment Fund since he started the Fundin 1941. Its track record over the years in providing both capital growth and income is a testament tohis dedication to the investment aims of the Fund. During the last few years Mr Ashfield’s involvementin the management of the assets had lessened and Sean Ashfield has been instrumental inmaintaining the investment aims of the Fund. It is the intention of the Managers that the Fund willcontinue to provide capital and income growth over the long term.

History and Aims of the FundFrom its inception in 1941, the Practical Investment Fund has been designed to provide investors withabove average capital growth and increasing real income through a wide spread of InvestmentCompanies’ ordinary shares and other selected financial securities. The results of the last 68 yearsdemonstrate that these objectives have been achieved, despite many difficult years.

Investment StrategyThe Fund has investments in about forty Investment Companies. As at 15 September 2009, of theFund’s total assets of £52,679,667 about 71% was invested in UK and international securitiesincluding United States, Canada, Europe, Japan and the Pacific Basin. Of the remaining 29%, around7% was in Investment Companies Prior Charges, 5% in Collective Investment Schemes (unit trusts)and the final 17% was in short-dated British Government securities, bonds, cash and current assets.

We consider many factors when selecting Investment Companies. Confidence in the expertise of themanagement and its ability to achieve better than average performance over the years is essential. Inaddition, we look to take advantage of investment opportunities, for example, where an InvestmentCompany is trading at a higher than average discount. Discounts are currently 10% which means£100 worth of assets can be bought for around £90, whereas direct purchases of shares in majorcompanies such as Tesco or GlaxoSmithKline would cost the full £100. An additional advantage forunitholders is that neither the Fund itself (nor the approved Investment Companies in the portfolio)pay capital gains tax on profits arising from sales of underlying investments, whereas a privateinvestor when selling still has to pay tax on capital gains in excess of the exemption limit.

We believe our investment process and constant monitoring of the investment portfolio will enablethe Fund to produce positive returns for its unitholders over the coming years. The compound annualincrease in capital value and gross income has been 7.48% for the capital, and 7.34% for the incomesince 1941.

IncomeWe are pleased to report that, despite many companies cutting back on their dividend payments, wehave been able to maintain the distribution level for the current year to that paid last year, which wasat a record level. The amount to be distributed to unitholders on 31 October 2009 is 6.6p net. The totaldistribution for the year is 7.4p net. Unitholders should be aware that, in the present uncertaineconomic conditions, it may not be possible to maintain this high level of distributions.


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Capital Record15.09.08 15.03.09 15.09.09 One year 6 Months

% change % change

Practical Investment FundIncome Units Offer Price 169.85p 123.34p 152.33p -10.3 +23.5

FTSE All Share Index 2653 1899 2594 -2.2 +36.6

Twenty Largest HoldingsAs at 15 September 2009

%* %*

1 London & St Lawrence 9.17 11 Brunner 3.332 Third Canadian General 6.40 12 City of London 3.293 Bankers 4.40 13 Alliance 3.134 Edinburgh 4.37 14 Witan 3.065 Martin Currie Portfolio 4.19 15 Treasury 5.75% 2009 2.886 Merchants 4.06 16 Law Debenture 2.457 Treasury 6.25% 2010 4.05 17 Foreign & Colonial 2.098 JPMorgan Inc & Growth Income 4.02 18 Treasury 4.5% 2013 2.059 Consistent Unit Trust 3.51 19 National Grid 6.25% 2014 2.0210 TR Property 3.41 20 Treasury 4.5% 2011 2.00

The above totals 73.88% of net assets. * percentage of net assets

Investment OutlookOur prudent investment policy should continue to achieve steady progress over the future years.

Consistent Unit Trust Management Company Ltd.31 October 2009

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Manager’s Reportcontinued

Portfolio Breakdownas at 15 March 2009

Portfolio Breakdownas at 15 September 2009


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Investment Companies62.98%British Government

Securities and Bonds 15.32%

Net Current Assets (including cash on deposit) 2.48%

Investment CompaniesPrior Charges 7.30%

Collective InvestmentSchemes 4.68%

Canada7.24%

Investment Companies63.65%British Government

Securities and Bonds 13.00%

Net Current Assets (including cash on deposit) 3.51%

Investment CompaniesPrior Charges 7.35%

Collective InvestmentSchemes 4.95%

Canada7.54%

Trust Size

Income Units Accumulation Units

As at Net Asset Net Asset15 Sept Net Asset No. of Value Net Asset No. of Value

Value units Pence per Value units Pence per£ in issue unit £ in issue unit

2006 55,209,165 31,810,777 173.55 23,196,931 3,922,108 591.44 2007 55,338,818 29,870,938 185.26 23,715,938 3,629,430 653.43 2008 42,381,608 28,006,423 151.33 17,919,411 3,341,564 536.26 2009* 37,246,272 27,419,015 135.84 15,433,395 3,060,556 504.27

*As at 15 September 2009

Price HistoryThe table below shows the highest buying and lowest selling prices on a calendar year basis in penceper unit for the last five years. Past performance is not necessarily a guide to the future performance.


Year Highest Buying Lowest Selling Highest Buying Lowest Selling

2004 143.22 120.33 455.94 369.34 2005 178.17 133.09 587.50 423.70 2006 200.16 165.41 682.11 547.39 2007 215.02 183.33 735.86 627.41 2008 197.97 110.84 698.28 409.45 2009* 153.06 107.09 569.51 395.60


Distribution Record


Year Net income per unit Per £1,000 invested Net income per unit Per £1,000 investedp £ p £

2005 5.4720 38.21 17.4860 38.35 2006 5.8700 40.99 19.4130 42.58 2007 6.5751 45.91 22.4933 49.33 2008 7.4000 51.67 26.2103 57.49 2009* 7.4000 51.67 27.4556 60.22


Total Expense Ratio

Expense Type 15 September 2009 % 15 September 2008 %

Manager’s periodic charge 1.01 1.00Other expenses 0.09 0.18

Total expense ratios 1.10 1.18

Portfolio Turnover Ratio

Turnover 15 September 2009 % 15 September 2008 %

Portfolio turnover ratios 14.95 34.26

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Statement of Total Returnfor the year ended 15 September 2009

2009 2008Note £ £ £ £

Income2 Net capital losses (6,497,499) (14,822,033)3 Revenue 3,450,269 3,925,6594 Expenses (550,401) (795,517)

6 Finance costs: Interest (1,662) (15)

Net revenue before taxation 2,898,206 3,130,127

5 Taxation (8,471) (40,769)

Net revenue after taxation 2,889,735 3,089,358

Total return before distributions (3,607,764) (11,732,675)

6 Finance costs: Distributions (2,933,746) (3,041,665)

Change in net assets attributable tounitholders from investment activities £(6,541,510) £(14,774,340)

Statement of Change in Net Assets Attributable to Unitholdersfor the year ended 15 September 2009

2009 2008£ £ £ £

Opening net assets attributable to unitholders 60,301,019 79,054,756

Movement due to sales/repurchases of unitsAmounts receivable on issue of units 926,814 116,088Less: Amounts payable on cancellation of units (2,863,326) (4,976,996)

(1,936,512) (4,860,908)

1(g)Stamp duty reserve tax – (265)Change in net assets attributable to unitholders from investment activities

(see Statement of Total Return above) (6,541,510) (14,774,340)Re-invested income on Accumulation shares 847,225 880,542 Unclaimed distributions 9,445 1,234

Closing net assets attributable to unitholders £52,679,667 £60,301,019


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Portfolio of Investments and Net Current Assetsas at 15 September 2009

Value % of Total(Note 1g) Net Assets

Holding Security £ 2009 2008British Government Securities

£1,500,000 Treasury 5.75% 2009 1,518,450 2.88£2,000,000 Treasury 6.25% 2010 2,135,400 4.05£1,000,000 Treasury 4.25% 2011 1,051,400 2.00£1,000,000 Treasury 4.50% 2013 1,077,100 2.05

5,782,350 10.98 10.98

Other UK Bonds£1,000,000 National Grid 6.125% 2014 1,064,620 2.02

1,064,620 2.02 –

Investment Companies Prior Charges3,385,000 JPMorgan Income & Growth income 2,115,625 4.0228,000 London & St Lawrence 5% gross cum pref 21,000 0.0412,750,000 M&G Equity income 1,020,000 1.94700,000 M&G High Income income 304,500 0.58884,473 M&G High Income units 406,857 0.77

3,867,982 7.35 7.87

Collective Investment Schemes4,000,000 Consistent Unit Trust income 1,850,800 3.511,536,205 Henderson Preference & Bond income 758,578 1.44

2,609,378 4.95 4.69

Equities450,000 Aberforth Geared Capital & Income 470,250 0.89 550,000 Alliance 1,647,800 3.13 655,000 Bankers 2,318,700 4.40 500,000 Brunner 1,755,000 3.33 755,000 City of London 1,734,990 3.29 600,000 Dunedin Income Growth 1,056,000 2.00650,000 Edinburgh 2,301,000 4.37 450,000 Foreign & Colonial 1,100,250 2.09 450,000 Invesco Income Growth 753,750 1.43

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Portfolio of Investments and Net Current Assetscontinued

Value % of Total(Note 1g) Net Assets

Holding Security £ 2009 200875,000 JPMorgan Mid Cap 285,750 0.54 2,000,000 Jupiter Dividend & Growth 320,000 0.61 3,014,000 Jupiter Second Enhanced income 286,330 0.54 100,000 Keystone 975,000 1.85 475,000 Law Debenture Corporation 1,292,000 2.45 2,100,000 London & St Lawrence 4,830,000 9.17 2,000,000 Martin Currie Portfolio 2,205,000 4.19 50,000 Mercantile 464,000 0.88 650,000 Merchants 2,138,500 4.06 85,000 Murray Income 445,400 0.85 1,750,000 New Star Financial Opportunities 595,000 1.13 200,000 Scottish Mortgage 957,000 1.82 875,000 Small Companies Dividend 638,750 1.21100,000 Temple Bar 739,000 1.40 1,100,000 TR Property 1,795,200 3.41 550,000 Value & Income 814,000 1.55 400,000 Witan 1,614,000 3.06

33,532,670 63.65 65.28

Canada41 Canadian & Foreign Securities* 454,305 0.86255,000 Third Canadian General 3,372,257 6.405,332 United Corporations 145,527 0.28

3,972,089 7.54 9.25

Total Value of Investments 50,829,089 96.49 98.07Net Other Assets 1,850,578 3.51 1.93

Total Value of the Trustas at as at 15 September 2009 £52,679,667 100.00 100.00

All holdings are ordinary shares unless otherwise stated.

*unlisted stocks


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Balance Sheetas at 15 September 2009

15.09.09 15.09.08Note £ £ £ £

ASSETSInvestment assets 50,829,089 59,134,679

Other assets7 Debtors 1,052,386 583,454

Bank balances 2,632,570 2,510,006

Total other assets 3,684,956 3,093,460

Total assets £54,514,045 £62,228,139

LIABILITIESOther liabilities

8 Creditors (24,723) (78,696)Distribution payable on Income Units (1,809,655) (1,848,424)

Total liabilities (1,834,378) (1,927,120)

Net assets attributable to Unitholders £52,679,667 £60,301,019

PRICES & YIELD as at 16 September 2009 (first XD dealing date)Income Units Buying 147.52p Selling 135.39pAccumulation Units Buying 566.58p Selling 520.00pYield 5.02%

Income and Accumulation selling to buying spread 8.22%

(includes 5% initial charge)

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Statement of Material Portfolio Changesfor the year ended 15 September 2009

Purchases since 16 September 2008 Cost£

Edinburgh 1,277,266 National Grid 6.125% 2014 1,018,413 Alliance 669,063 Temple Bar 504,002 Aberforth Geared Capital & Income 494,425 City of London 445,969 Bankers 318,883 JPMorgan Income & Growth - income 271,326 M&G Equity - income 167,077 TR Property 108,361

Total purchases for the year (note 14) £5,274,786

Sales since 16 September 2008 Proceeds£

Gartmore Global 1,308,060 Scottish Mortgage 1,122,619 Treasury 4% 2009 1,000,000 Brunner 955,123 London & St Lawrence 813,776 JPMorgan Mid Cap 731,794 Foreign & Colonial 498,922 Throgmorton 247,500 M&G Equity - income 129,804 Ecofin Water & Power Opportunities - income 125,000 Majedie Investments 62,611

Total sales for the year (note 14) £6,995,209


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Income/Accumulation Statementfor the year ended 15 September 2009

Income Unit DistributionInterim paid 30 April 2009

Net Income

Tax Equalisation Distribution DistributionUnits Gross Credit Net 2009 2008

Group 1 0.8889 0.0889 0.8000 — 0.8000 0.8000Group 2 — — — 0.8000 0.8000 0.8000

Accumulation Unit DistributionInterim allocated 30 April 2009

Net Income

Tax Equalisation Allocation AllocationUnits Gross Credit Net 2009 2008

Group 1 3.2834 0.3283 2.9551 — 2.9551 2.8220Group 2 — — — 2.9551 2.9551 2.8220

Income Unit DistributionFinal payable 31 October 2009

Net Income

Tax Equalisation Distribution DistributionUnits Gross Credit Net 2009 2008

Group 1 7.3333 0.7333 6.6000 — 6.6000 6.6000Group 2 6.3226 0.6323 5.6903 0.9097 6.6000 6.6000

Accumulation Unit DistributionFinal to be allocated 31 October 2009

Net Income

Tax Equalisation Allocation AllocationUnits Gross Credit Net 2009 2008

Group 1 27.2228 2.7223 24.5005 — 24.5005 23.3883Group 2 23.4766 2.3471 21.1235 3.377 24.5005 23.3883

Further informationInterim: Group 1 – Units purchased prior to 16 September 2008

Group 2 – Units purchased on or after 16 September 2008Final: Group 1 – Units purchased prior to 16 March 2009

Group 2 – Units purchased on or after 16 March 2009

EqualisationEqualisation applies only to units purchased during the distribution period (Group 2 units). Itrepresents the accrued income included in the purchase price of the units. After averaging it isreturned with the distribution as a capital repayment. It is not liable to Income Tax but must bededucted from the cost of the units for Capital Gains Tax purposes.

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Notes to the Financial Statementsas at 15 September 2009

1. Accounting Policies

(a) Basis of accountingThe financial statements have been prepared under the historical cost basis, as modified by therevaluation of investments and in accordance with the Statement of Recommended Practice(“SORP”) for Financial Statements of Authorised Funds issued by the Investment ManagementAssociation in November 2008.

(b) Recognition of incomeDividends on quoted equities and preference shares are recognised when the securities arequoted ex-dividend.

Distributions from collective investment schemes are recognised when the schemes are quotedex-distribution. Equalisation returned with the distribution is deducted from the cost of thescheme and does not form part of the distributable income.

Interest on bank and other cash deposits is recognised on an accruals basis.

Income on debt securities is recognised on an accruals basis.

All income includes withholding taxes but excludes irrecoverable tax credits.

(c) Treatment of stock and special dividendsThe ordinary element of stocks received in lieu of cash dividends is credited to capital in the firstinstance followed by a transfer to income of the cash equivalent being offered and this forms partof the distributable income.

Special dividends are reviewed on a case by case basis in determining whether the dividend is tobe treated as income or capital. Amounts recognised as income will form part of the distributableincome. The tax accounting treatment follows the treatment of the principal amount.

(d) Treatment of expensesAll expenses, except for those relating to the purchase and sale of investments and stamp dutyreserve tax, are charged initially against income.

(e) TaxationCorporation tax is provided at 20% on income, other than UK dividends, after deduction of expenses.

Where overseas tax has been deducted from overseas income that tax can, in some instances, beset off against the corporation tax payable, by way of double tax relief.

Deferred tax is provided using the liability method on all timing differences arising on thetreatment of certain items for taxation and accounting purposes, calculated at the rate at which itis anticipated the timing differences will reverse. Deferred tax assets are recognised only when,on the basis of available evidence, it is more likely than not that there will be taxable profits in thefuture against which the deferred tax asset can be offset.

Stamp duty reserve tax suffered on surrender of shares is deducted from capital.


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(f) Distribution policyThe net income after taxation, as disclosed in the financial statements, after adjustment for itemsof a capital nature, is distributable to shareholders as dividend distributions. Any income deficitis deducted from capital.

Interim distributions may be made at the Manager’s discretion and the balance of income isdistributed in accordance with the regulations.

(g) Basis of valuation of investmentsListed investments are valued at closing bid prices excluding any accrued interest in the case offixed interest securities, on the last business day of the accounting period.

Collective investment schemes are valued at quoted bid prices for dual priced funds and at quotedprices for single priced funds, on the last business day of the accounting period.

Unlisted or suspended investments are valued by the Manager taking into account, whereappropriate, latest dealing prices, valuations from reliable sources, financial performance andother relevant factors

(h) Exchange ratesTransactions in foreign currencies are recorded in sterling at the rate ruling at the date of thetransactions. Assets and liabilities expressed in foreign currencies at the end of the accountingperiod are translated into sterling at the closing exchange rates ruling on that date.

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Notes to the Financial Statementsas at 15 September 2009

2. Net capital losses 15.09.09 15.09.08£ £

Net losses on investmentsNon-derivative securities (6,497,499) (14,822,033)

Net capital losses £(6,497,499) £(14,822,033)

3. Revenue 15.09.09 15.09.08£ £

Revenue from non-derivative investments:UK dividends: Ordinary 2,776,862 2,939,135 Overseas Dividends 350,102 572,732 Interest on debt securities 303,558 303,715 Bank interest 18,809 110,077 Sundry 938 –

£3,450,269 £3,925,659

4. Expenses 15.09.09 15.09.08£ £

Payable to the Manager, associates of the Manager and agents ofeither of them:

Manager’s periodic charge 506,001 737,832

Payable to the Trustee, associates of the Trustee and agents ofeither of them:

Trustee’s fee (including VAT) 23,396 31,207Transaction charges 571 1,524Safe custody and other bank charges 5,659 8,400

29,626 41,131

Other expenses:Audit fee (including VAT) 6,580 6,580Registration fees 15,191 6,726FSA (rebate)/fee (2,713) 1,106Printing costs (4,284) 2,142

14,774 16,554

Total expenses £550,401 £795,517


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5. Taxation 15.09.09 15.09.08£ £

(a) Analysis of charge for the year:Overseas tax 8,471 40,769

Current tax charge (note 5b) £8,471 £40,769

(b) Factors affecting taxation charge for the year

Net income before taxation 2,898,206 3,130,127

Corporation tax at 20% 579,641 626,025

Effects of:UK dividends (555,372) (587,827)Movement in income accruals – 4,331Expenses not deductible for tax purposes 114 304Utilisation of excess management expenses (24,383) (42,833)Overseas tax expensed 8,471 –Higher tax rates on overseas earnings – 40,769

Current tax charge (note 5a) £8,471 £40,769

(c) Provision for defered taxation

At the year end there are potential deferred tax assets of £56,392 (15.09.08: £178,307) in relationto surplus management expenses, and £26,611 (15.09.08: £30,661) in relation to excessunutilised foreign tax available for tax relief. It is unlikely that the Fund will generate sufficienttaxable profits to utilise these amounts and therefore, no deferred tax asset has been recognisedin the period.

15


Notes to the Financial Statementscontinued

6. Finance costs 15.09.09 15.09.08£ £

DistributionsThe distributions take account of income received and deductedon the issue and cancellation of units, and comprise:Interim 318,464 330,944Final 2,559,506 2,629,959

2,877,970 2,960,903Add: Income deducted on cancellation of units 62,728 82,634Deduct: Income received on issue of units (6,952) (1,872)

Net distributions for the year 2,933,746 3,041,665

Finance costs: Interest 1,662 15

Total finance costs £2,935,408 £3,041,680

7. Debtors 15.09.09 15.09.08£ £

Amounts receivable on creations 55,809 33,070Currency deals outstanding 8,999 8,551Sales awaiting settlement 350,943 –

Accrued income:Bank interest receivable – 7,210Interest on debt securities 89,615 65,524UK dividends 492,587 391,202Income tax recoverable 29,781 44,770

Prepaid expenses:Management fee 23,568 28,833Trustee’s fee 1,084 4,294

Total debtors £1,052,386 £583,454


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8. Creditors 15.09.09 15.09.08£ £

Amounts payable on cancellations 6,506 55,702Currency deals outstanding 9,148 8,456Accrued expenses:Amounts payable to the Manager, associates of the Manager

and agents of either of them:

Printing costs – 4,284Registration fees 2,503 514

2,503 4,798

Amounts payable to the Trustee, associates of the Trusteeand agents of either of them:

Transaction charges payable – 60Safe custody and other bank charges 779 976

779 1,036

Other expenses:FSA fee – 2,711Audit fee payable 5,787 5,993

5,787 8,704

£24,723 £78,696

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9. Dealing and Average CommissionThe average rate of commission charged to the Trust on the acquisition and disposal of securitieswas 0.24% (15.09.08 : 0.15%). The brokers who accounted for more than 10% of the businesstransacted was Charles stanley. The total commission paid during the year was £29,115(15.09.08 : £42,488) to Charles Stanley. There were no soft commission arrangements in placeduring the period. There was no dealing via either the Managers, Trustee or associates of theirs.

10. Individual Savings Accounts and Personal Equity PlansThe trust has been managed throught the period to ensure that it is eligible to qualify and beincluded in an Individual Savings Account (ISA) and a Personal Equity Plan (PEP).

11. Related Party TransactionsManagement fees payable to Consistent Unit Trust Management Company Limited (theManagers) are disclosed in note 4 and amounts due at the period end are shown in note 8.

Trustee and other fees payable to BNY Mellon Trust and Depositary (UK) Limited are disclosed innote 4 and amounts due at the period end are shown in note 8.

12. Contingent liabilitiesThere were no contingent liabilities or outstanding commitments at the balance sheet date(15.09.08: same).

13. Derivatives and other Financial InstrumentsIn pursuing the investment objective a number of financial instruments are held which maycomprise securities and other investments, cash balances and debtors and creditors that arisedirectly from operations, for example, in respect of sales and purchases awaiting settlement,amounts receivable for creation and payable for liquidations and debtors for accrued income.

There is little exposure to credit or cash flow risk. There are no net borrowings or unlistedsecurities and so little exposure to liquidity risk. The main risks arising from financial instrumentsare:

(i) Foreign currency risk, being the risk that the value of investments will fluctuate as a result ofexchange rate movements.


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The table below details the interest rate risk profile at the balance sheet date.15.09.09 15.09.08

£ £Currency:

Canadian dollars 3,981,237 5,589,416Pounds sterling 48,698,430 54,711,603

Net assets £52,679,667 £60,301,019

Although the Trust’s capital and income are denominated in sterling, a proportion of the Trust’sinvestments have currency exposure and, as a result, the income and capital value of the Trustare affected by currency movements.

(ii) Interest rate risk, being the risk that the value of investments will fluctuate as a result of interestrate changes.

The table below details the interest rate risk profile at the balance sheet date.15.09.09 15.09.08

£ £Floating rate assets:

Canadian dollars 9,148 –Pounds sterling 2,623,422 2,510,006

Fixed rate assets:Pounds sterling 6,867,970 6,609,700

Assets on which interest is not paid:*Canadian dollars 3,972,089 5,580,980Pounds sterling 41,041,416 46,943,999

45,013,505 52,524,979Liabilities on which interest is not paid

Pounds sterling (1,834,378) (1,343,666)

Net assets £52,679,667 £60,301,019

*Equity shares which receive dividend income, and debtors.The floating rate financial assets comprise bank balances that earn interest at rates linked to theUK base rate.

Fixed rate financial assets have a weighted average yield of 5.54% (15.09.08: 4.10%) and aweighted average period for which income is fixed of 1.91 years (15.09.08: 2.00 years)(assuming the earliest maturity date for those assets with variable maturity dates).

There are no material amounts of non-interest bearing financial assets and liabilities, other thanequities, which do not have maturity dates.

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13. Derivatives and other Financial Instruments (continued)

(iii) Market price risk, being the risk that the value of investment holdings will fluctuate as a result ofchanges in market prices caused by factors other than currency or interest rates or foreigncurrency movements.

The investment portfolio is exposed to market price fluctuations which are monitored by theManager’s in pursuance of the investment objective and policy set out in the Prospectus.

Adherence to investment guidelines and to investment and borrowing powers set out in the TrustDeed and the Prospectus and the rules of the CIS Sourcebook mitigates the risk of excessiveexposure to any particular type of security or issuer.

(iv) Counterparty risk, being the risk that the counterparty will not deliver the investments for apurchase or the cash for a sale after the Trust has fulfilled it's responsibilities.

14. Portfolio Transaction Costs15.09.09 15.09.08

£ £Analysis of purchases

Purchases before transaction costs 5,243,770 12,308,805

Transaction costs:Commissions 13,553 22,262Stamp Duty and other charges 21,156 27,996

34,709 50,258

Total purchase cost £5,278,479 £12,359,063

Analysis of sales

Sales before transaction costs 7,010,790 16,232,404

Transaction costs:Commissions (15,562) (20,226)Other charges (19) (39)

(15,581) (20,265)

Net sales proceeds £6,995,209 £16,212,139


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Certification of Accounts by Directors of the ManagerThis report is signed in accordance with the requirements of the COLL Sourcebook.

P. J. C. AshfieldChairman

Ms. J. M. SculleyDirector

For Consistent Unit Trust Management Ltd.Managers of the Consistent Unit Trust 9 November 2009

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Statement of the Manager’s Responsibilities in Relationto the Report and Accounts of the Trust

The Manager is responsible for preparing the financial statements in accordance with applicable lawand United Kingdom Generally Accepted Accounting Practice.

The Financial Services Authority’s Collective Investment Schemes Sourcebook (“the COLLSourcebook”) requires the Manager to prepare financial statements for each financial year which givea true and fair view of the state of affairs of the Trust and of the net income/expenses and of the netgains/losses on the property of the Trust for that year. In preparing the financial statements theManager is required to:

• select suitable accounting policies, as described in the attached financial statements, and thenapply them consistently;

• make judgements and estimates that are reasonable and prudent;

• comply with the Trust Deed, generally accepted accounting principles and applicable accountingstandards, subject to any material departures, which are required to be disclosed and explainedin the financial statements;

• comply with the disclosure requirements of the Statement of Recommended Practice on financialstatements of Authorised Funds; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presumethat the Scheme will continue in business.

The Manager is responsible for keeping proper accounting records which disclose with reasonableaccuracy at any time the financial position of the Trust and to enable them to ensure that the financialstatements comply with the COLL Sourcebook. The Manager is also responsible for safeguarding theassets of the Trust and hence forth taking reasonable steps for the prevention and detection of fraudand other irregularities.

In so far as the Manager is aware:

• there is no relevant audit information of which the Trust’s auditors are unaware; and

• the Manager has taken all steps that they ought to have taken to make themselves aware of anyrelevant audit information and to establish that the auditors are aware of that information.


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Statement of the Trustee’s Responsibilities in Relation to the FinancialStatements of the Scheme

The Trustee is under a duty to take into its custody and to hold the property of the Scheme in trustfor the holders of units. It is also the duty of the Trustee to enquire into the conduct of the Managersin the management of the Scheme and to ensure that the Scheme is managed in accordance with allapplicable rules and restrictions in each annual accounting period, and to report thereon tounitholders. A copy of the Trustee’s report is set out below.

Report of the Trustee

To the investors of Practical Investment Fund for the year ended 15 September 2009

In our opinion, the Managers have managed the Scheme, in all material respects during the periodcovered by this Report in accordance with the investment and borrowing powers and the restrictionsapplicable to the Scheme and otherwise in accordance with the provisions of the Trust Deed and therules in the COLL Sourcebook.

BNY Mellon Trust and Depositary (UK) LimitedTrustee of Consistent Unit Trust 9 November 2009

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Independent Auditors’ Report to the Unitholders ofPractical Investment Fund

We have audited the financial statements of Practical Investment Fund for the year ended 15 September 2009, which comprise the Statement of Total Return, the Statement of Change in NetAssets Attributable to Unitholders, the Balance Sheet, the Distribution Table and the related notes.These financial statements have been prepared under the historical cost convention as modified bythe revaluation of investments and the accounting policies set out therein.

This report is made solely to the Trust’s unitholders as a body, in accordance with Rule 4.5.12 of theCollective Investment Scheme Sourcebook issued by the Financial Services Authority under section247 of the Financial Services and Markets Act 2000. Our audit work has been undertaken so that wemight state to the Trust’s unitholders those matters we are required to state to them in an Auditor’sReport and for no other purpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Trust and the Trust’s unitholders as a body, for our audit work,for this report, or for the opinions we have formed.

Respective Responsibilities of the Managers and the Auditors

As described in the Statement of Manager’s Responsibilities, the Manager is responsible for preparingthe Annual Report and the financial statements in accordance with applicable law, UK FinancialServices Rules and Regulations and United Kingdom Accounting Standards (United KingdomGenerally Accepted Accounting Practice).

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatoryrequirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and areproperly prepared in accordance with the Trust Deed, the Statement of Recommended Practice forFinancial Statements of Authorised Funds issued by the Investment Management Association, and therules of the Collective Investment Schemes Sourcebook issued by the Financial Services Authority.We also report to you if, in our opinion, the information given in the Manager’s Report is notconsistent with the financial statements, if the Manager has not kept proper accounting records forthe Trust, if the financial statements are not in agreement with the accounting records for the Trustor if we have not received all the information and explanations we require for our audit.

We read the other information contained in the Annual Report and consider whether it is consistentwith the audited financial statements. We consider the implications for our report if we become awareof any apparent misstatements or material inconsistencies with the Financial Statements. Ourresponsibilities do not extend to any other information.


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Basis of Audit OpinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland)issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidencerelevant to the amounts and disclosures in the financial statements. It also includes an assessmentof the significant estimates and judgements made by the Manager in the preparation of the financialstatements and of whether the accounting policies are appropriate to the Trust’s circumstances,consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial statements are free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentationof information in the financial statements.

OpinionIn our opinion :

• the financial statements give a true and fair view, in accordance with United Kingdom GenerallyAccepted Accounting Practice, of the state of the Trust’s affairs as at 31 July 2009 and of the netincome and the net losses on the property of the Trust for the year then ended;

• the financial statements have been properly prepared in accordance with the Trust Deed, theStatement of Recommended Practice for Financial Statements of Authorised Trust’s issued by theInvestment Management Association, and the rules of the Collective Investment SchemesSourcebook issued by the Financial Services Authority;

• the information given in the Manager’s Report is consistent with the financial statements yearended 31 July 2009.

Shipleys LLPChartered Accountants and Registered Auditors 9 November 2009

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General Information

Authorised StatusPractical Investment Fund (“the Fund”) is an Authorised Unit Trust Scheme, established on 30 September 1964, and belongs to the “securities fund” category of such schemes. The base currencyof the Scheme is pounds sterling.

Investment PolicyThis Fund is designed to provide investors with capital growth and increasing income from investmentin a wide spread of UK and dollar denominated investment trusts, ordinary shares and other selectedinvestments.

The Fund will invest mainly in a broad base of investment trusts which satisfy the Managers’ criteriaof sound long term performance, a satisfactory discount to net asset value and income growthpotential. However, equities are subject to short term fluctuations and there is a risk that their valuecan decrease as well as increase. Currencies are also subject to the same risk. The Managers willattempt to minimise these risks by pursuing a policy of diversification and may also use other hedgingmechanisms.

All or part of the Managers’ periodic fee can be charged to capital instead of income and mayaccordingly constrain capital growth but will reduce the pressure to invest at an above average rate ofincome.

Normally the Fund will be fully invested save for an amount of cash to enable ready settlement ofliabilities (including redemption of units) and the efficient management of the Fund both generally andin relation to its strategic objective. This amount of cash will vary depending upon prevailingcircumstances and although it would normally not exceed 10% of the total value of the Fund, theremay be times when the Managers consider stock markets around the world to be overpriced or thata period of instability exists which presents unusual risks. In such cases or during such periods, ahigher level of liquidity may be maintained and, if considered prudent, the amount of cash or nearcash instruments held would be increased. Unless market conditions were deemed unusually risky,the increased amount and period would not be expected to exceed 30% and six months respectively.

Valuation of the TrustThe property of the Fund is valued on each business day at 12 noon for the purpose of determiningprices at which units in the Fund may be bought or sold. Valuations may be made at other times withthe Trustee’s approval.


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UnitsThe Fund has had two types of units available for purchase:

1. Income UnitsThe net income is distributed half-yearly. Holders of Income Units will receive at 31 October and30 April each year a tax voucher and an income warrant, unless they have given instructions forthe payment to be made direct to the bank, when they will receive only a tax voucher.

2. Accumulation UnitsThe net income is automatically re-invested with the result that the value of the AccumulationUnits will become progressively greater than that of the Income Units. Tax vouchers showing theamount of the re-invested income accumulated will be issued to Holders of Accumulation Unitson 31 October and 30 April. Unitholders may convert their holding from one type of unit to theother at any time, free of charge and without liability to Capital Gains Tax.

Buying and Selling of UnitsThe Administrators will accept orders for the purchase and sale of units on normal business daysbetween 9.00 am and 4.30 pm and transactions will be effected at prices determined by the nextvaluation. Instructions to buy or sell units may either be in writing to: PO Box 10117, Chelmsford,Essex CM1 9JB or by telephone on 0845 026 4281.

A contract note will be issued by close of business on the next business day after the dealing date toconfirm the transaction.

In the case of buying units in the Fund a purchaser will be forwarded within 24 hours a contract noteand cancellation notice, if applicable, together with a registration document which will need to besigned and returned confirmimg the registration details

The Manager will buy back units from registered holders at not less than the selling price determinedby the next valuation following receipt of selling instructions. The authority duly renounced by allUnitholders must be sent to the Managers and payment of redemption proceeds will be made not laterthan four business days after the dealing date or receipt of the renounced form or stock transferform(s), if later.

The Managers are under no obligation to account to the Trustee or to Unitholders for any profit theymake on the issue of units or the re-issue or cancellation of units which they have redeemed.

The minimum initial investment is £1,000. Thereafter any number of units may be subscribed,redeemed or transferred so long as the subscription, redemption or transfer does not give rise to aholding less than the minimum original holding.

For the purpose of the Pricing Regulations, a large deal will be a purchase or sale of units exceeding£15,000.

The purchase price of units includes a preliminary charge of 5%, the maximum permitted by theTrust Deed.

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General Informationcontinued

PricesThe prices of units are published in the Financial Times in the FT Managed Funds Service sectionunder the heading: Consistent Unit Trust Management Company Limited.

Other InformationThe Trust Deed, Supplemental Deed, Scheme Particulars and the most recent annual and half-yearlyreports may be inspected at the offices of the Managers, the Administrators or the Trustee and copiesmay be obtained upon application to the Managers and/or Administrators.

The Register of Unitholders can be inspected by Unitholders at the office of the Customer ServiceCentre, during normal business hours, at PO Box 10117, Chelmsford, Essex CM1 9JB.

Holders who have any complaints about the operation of the Fund should contact the Managers orthe Trustee, in the first instance. In the event that a Unitholder finds the response unsatisfactory theymay make their complaint direct to the Financial Ombudsman Service at South Quay Plaza,183 Marsh Wall, London E14 9SR.

Unit Trusts should be regarded as longer-term investments and investors should be aware that thevalue of their units and the income from them can go down as well as up.

Distributions and ReportsDistributions and allocations of income to Unitholders registered at the accounting dates will be madeon 31 October and 30 April in each year and Annual and Half yearly (interim) reports will also bepublished and issued at this time.


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Notes for Corporate Unitholders onlyUnitholders liable to UK Corporation Tax are deemed to receive this income distribution andassociated tax credit as franked investment income to the extent that the gross income fromwhich the distribution is made is itself franked investment income.

Where the gross income from which the distribution is made is not wholly franked investmentincome, part of the distribution is received as an annual payment from which Income Tax hasbeen deducted.

For the Final distribution of Practical Investment Fund payable on 31 October 2009 in relationto the accounting period ended on 15 September 2009:

(i) 89.64% of the total distribution together with the tax credit is received as frankedinvestment income.

(ii) 10.36% of the total distribution is received as an annual payment after deduction ofIncome Tax and is liable to Corporation Tax. It is not franked investment income.

The maximum amount of Income Tax, if any, that may be reclaimed from the Inland Revenueis the corporate unitholder’s portion of the Trustee’s net liability to Corporation Tax. For thisdistribution the amount of income tax that may be reclaimed is 100%.

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PRACTICAL INVESTMENT FUND"


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