Performance (to 30/09/11)

Value to latest month end, total return, bid to bid price, Net income re-invested.
Past performance is not a guide to future performance and the value of this investment can go down as well as up. This is not a guaranteed investment and you may get back less than you have put in.
*The Fund moved from Global Growth to UK All Companies Sector on the 7th May 2004.

Cumulative performance (% change)

	1 year	3 years	5 years	Since launch (29/05/90)*
Fund	-6.2	2.2	-1.9	330.4
Sector median	-5.3	17.8	-0.5	265.7
Quartile Rank	3rd	4th	3rd	4th

Percentage Growth to latest month end, total return, bid to bid price, Net income re-invested.
*The Fund moved from Global Growth to UK All Companies Sector on the 7th May 2004.

Discrete performance (% change to 30/09/2011)

	30/09/10 - 30/09/11	30/09/09 - 30/09/10	30/09/08 - 30/09/09	30/09/07 - 30/09/08	30/09/06 - 30/09/07
Fund	-6.2	6.6	2.3	-14.2	11.8
Sector	-5.3	11.2	11.6	-23.2	10.6

Percentage Growth for discrete 1 year periods, bid to bid price, Net income re-invested.

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Why recommend this fund to your clients?

• Holds OBSR ‘A’ rating and Morningstar’s ‘Superior’ Qualitative Rating.
• Mike Fox was Citywire’s ‘UK Growth Fund Manager of the Year 2007’.
• Invests in the three core themes of the environment, human welfare and sustainability, thereby making a positive contribution to society.
• Aims to outperform the UK FTSE All-Share.

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A closer look at the Fund

Fund aims

The Fund invests in companies with products or services that benefit the core themes of environmental improvement, human welfare and sustainability. Companies leading their industries in environmental, social and governance (ESG) performance, as assessed by our ESG analysts, are also included in the investable universe, thereby creating a portfolio of investments that make a positive contribution to society.

The Fund aims to provide first quartile performance over a rolling three-year period measured against the UK All Companies sector. The Fund also aims to outperform the FTSE All-Share Index.

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What does the Fund invest in?

The Fund invests predominantly in UK equities. Given the Fund's aim, sectors such as utilities, healthcare, telecoms and support services are prominent. The Fund excludes tobacco and armament manufacturers, nuclear power generators and companies conducting animal testing for the purpose of developing cosmetic and household goods. Companies not making strenuous efforts to reduce their environmental impact are also excluded.

The investment universe consists of around 170 companies evenly split between small, medium and large capitalisation companies. Approximately 50% of the FTSE100 by market capitalisation currently meets the Fund's criteria. Oil & gas and mining, whose combined weighting is approximately 27% of the UK FTSE All-Share, are the largest excluded sectors.

Who it's suited to

The Fund may be suitable for investors looking for:

• long-term growth through investing in high quality UK companies
• investments in companies that demonstrate responsible business practices, and avoiding companies that are involved in armaments, tobacco, nuclear power generation or animal testing for the development of cosmetics and household goods
• the opportunity to ensure that their money helps to make a positive contribution to society through improving human welfare and the environment.

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Investment philosophy

Our investment philosophy and style is best described as follows:

• Focused - The portfolio will typically have between 40-50 holdings and over 45% of assets in the top 10 holdings.
• Long-term - Investment holding periods of three to four years.
• Stockpicking - We construct portfolios on a bottom up basis.
• Responsible - Embedded environmental, social and governance (ESG) analysis provides a broader perspective and represents the views of our customers in the investment process.

Our investment approach is structured to consider companies at three levels to identify stocks which are mis-priced.

• Investment Themes - The increasingly short-term nature of the investment industry, evidenced by declining stock holding periods, results in long-term opportunities being overlooked. We have therefore adopted a long-term investment philosophy and evaluate the effect of long-term investment themes.
• Industry trends - The increasingly narrow focus of most investors has resulted in us broadening the scope of inputs beyond traditional investment research to identify wider industry trends or linkages between industries.
• Company specific - We believe that the market inefficiently discounts company specific events such as management change. Therefore we devote a large amount of analytical resource to changing company situations.

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Top 10 holdings

(as at 30/09/11)

	% of Fund
BG Group	4.3
GlaxoSmithKline Plc	4.2
Vodafone Group Plc	4.0
Apple Inc	3.8
Unilever	3.6
Scottish And Southern Energy Plc	3.3
Pearson	3.2
HSBC Holdings	3.0
International Power	3.0
BT Group	3.0

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2 Stock profiles

Stock example – Rotork

Rotork is a world leader in the design and manufacture of actuators, which are essentially control valves. These actuators are used in the development of basic infrastructure such as water and waste water systems. With a significant part of its business in emerging markets, Rotork is well set to grow for many years to come.

Stock example – Johnson Matthey

Johnson Matthey is one of the world's leading automotive catalyst companies. Its products help reduce the emissions from car exhausts. As environmental legislation around emissions increases, Johnson Matthey will be a key beneficiary.

Stock example – Vodafone

Vodafone is a global leader in mobile telecommunications. In particular they have a strong presence in developing economies such as India,
which tend not to have existing fixed line telephones. Mobile phones have a transformational effect on the social and economic development of developing economies by removing the need for expensive infrastructure.

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Sector breakdown (as at 30/09/11)

Fund manager strategy and outlook

Over the last three months the UK equity market has risen 1.0%. Considering the background has featured social disruption in many North African and Middle East economies, leading to a significant spike in the price of oil, and a devastating earthquake in Japan, this should be considered a somewhat resilient performance. Global economic data and corporate cash generation continues to be a key component of equity market strength. Given ongoing valuation support and generally low interest rates we would expect further upside to the UK equity market.

During the last three months the Trust has underperformed the median of the peer group and was ranked in the fourth quartile. The biggest negative attribution came from weakness in the US dollar versus sterling. The Trust has a number of overseas holdings, the value of which has been reduced by this weakness. Negative attribution was also seen from Rotork, an engineer, and Lonmin, a platinum miner. This is due to company-specific issues and we expect their performance to improve. Positive attribution was seen from ITV, which benefited from an improving UK advertising environment.

Over three years the Trust was ranked in the fourth quartile mainly due to stock-specific issues in the Support Services sector. These stocks have now been sold. The fund continues to be positioned towards companies having a net positive social benefit as we believe these companies will be strong beneficiaries of key themes such as healthcare, the environment and technology.

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Investment process summary

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Fund manager and investment team

Years in industry	11
Years at The Co-operative Asset Management	11

Mike Fox has been managing the Sustainable Leaders Trust since November 2003; he won Citywire's UK Growth Fund Manager of the Year in 2007. Mike was a member of the team managing the CIS Pension Fund prior to 2003, and previously trained as a chartered accountant after obtaining a Masters Degree in Mathematics from Leeds University.

Mike draws on the expertise of over 50 investment professionals at The Co-operative Asset Management, all based in Manchester, including:

• equities, fixed income and ESG (environmental, social and governance) research analysts dedicated to researching UK companies
• fund managers focused on stock selection and constructing diversified portfolios which balance performance with risk and volatility
• quantitative, operations and other experts supporting the investment process
• risk analysts, responsible for ensuring appropriate risk is taken within the portfolio.

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Fund facts

Manager name & location	Mike Fox, Manchester
Fund type	Unit trust
Launch date	29 May 1990
Index/benchmark	FTSE All-Share
Sector	UK All Companies
No. of stocks (as at 30/09/11)	52
Fund size (as at 30/09/11)	£281 million
Distribution dates	January, July
Prices	co-operativeassetmanagement.co.uk or the Financial Times
Sedol code	161510
Lipper ID	60009198
Sedol code	161510
PTR (as at 30/09/11)	78.78%
TER (as at 30/09/11)	1.53%

The Co-operative Financial Services has signed up to the internationally recognised UN Principles for Responsible Investment. They reflect the increasing relevance of environmental, social and corporate governance issues to investment practices and in signing the Principles, the organisation publicly commits to adopting and implementing them.

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Why choose The Co-operative Asset Management?

The fund management activities of The Co-operative Financial Services (part of The Co-operative Group) are undertaken by The Co-operative Asset Management. The Co-operative is a household name in the UK offering a wide range of services to consumers including food, pharmacy, travel and other financial services such as insurance, banking and mortgages.

The Co-operative Group has over 12 million customers, of whom over 290,000 are investors in our Unit Trust range, amounting to over £2 billion of assets under management.

Our distinctive approach is reflected in a number of unique investment credentials. We are the only UK fund manager to:

• apply a common core approach to responsible investment across all the funds we manage
• apply active engagement across all the funds we manage
• feed valuable business insights gained from our engagement process back in to company analysis performed for investment purposes.

The Co-operative Asset Management was also the first UK investor to publish its Company AGM voting record on its website in 2002†, a practice now increasingly adopted by fund management groups offering SRI.

In advocating The Co-operative Asset Management to clients, advisers can be assured that they are recommending:

• Britain's most ethical brand, The Co-operative Group*
• a responsible investment approach which fully integrates financial and ESG criteria in stock selection
• an investment process characterised by clear and informed views on why companies are undervalued and offer good long-term prospects
• an investment resource comprising experienced and committed individuals working to deliver outperformance while effecting positive change in the companies they invest in.

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How to invest

The Sustainable Leaders Trust is available to investment professionals through a number of platforms including Cofunds, Fidelity and Hargreaves Lansdown:

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