henderson international property

International Property

Henderson

Fund OEIC(Formerly New Star International Property Fund)

Annual ReportFor the year ended 31 March 2010

Established in 1934 to administer the estates of Alexander Henderson, the first Lord Faringdon, Henderson Global Investors (Henderson) is a leading independent global asset management firm. The company provides its institutional, retail and high net-worth clients with access to skilled investment professionals representing a broad range of asset classes, including equities, fixed income, property and private equity. With its principal place of business in London, Henderson is one of Europe’s largest investment managers, with £58.1 billion assets under management (as at 31 December 2009)† and employs around 930 people worldwide.

In Europe, Henderson has offices in Amsterdam, Frankfurt, Luxembourg, Madrid, Milan, Paris, Vienna, Zurich and London. Henderson

has had a presence in North America since 1999, when it acquired US real estate investment manager Phoenix Realty Advisers, and

has offices in Chicago and Hartford. In Asia, Henderson has offices in New Delhi, Singapore (Asia headquarters), Hong Kong, Tokyo and

Sydney. In April 2009 New Star Asset Management Group PLC was acquired by Henderson Group plc.

With investment expertise across every asset class, Henderson’s skillful investment managers invest in every major market around the

globe. They are supported by a global team of researchers and economists who have a keen understanding of the economic forces

driving the security markets and who undertake rigorous sector and theme analysis. Underpinning this process is a comprehensive

risk-control framework to ensure that investment views are translated into portfolios managed in line with investors risk and return

requirements.

What do we do?At Henderson Global Investors we do one thing and we do it really well - investment management. As a company, we are totally focused

on this core activity and it underpins everything we do.

We do this by providing a range of investment products and services including:

• Open ended funds - offshore funds, unit trusts, OEICs

• Closed ended funds - partnerships, companies, offshore unit trusts

• Investment trusts

• Individual Savings Accounts

• Pension fund management

• Management of portfolios for UK and international institutional clients

† Source: Henderson Global Investors.

Henderson Global Investors?Who are

Contents

Authorised Corporate Director’s report Page 1

Investment property overview Page 7

Comparative tables Page 10

Portfolio statement Page 13

Statement of Authorised Corporate Director’s responsibilities Page 17

Statement of the Depositary’s responsibilities Page 17

Independent Auditor’s report to the shareholders Page 18

Financial Statements of the Henderson International Property Fund

Statement of total return Page 20

Statement of change in net assets attributable to shareholders Page 20

Balance sheet Page 22

Statement of cash flows Page 24

Notes to the financial statements Page 26

Distribution table 4

Henderson International Property Fund OEIC 1

We are pleased to present the annual report for the Henderson International Property Fund (formerly New Star International Property

Fund) for the year ended 31 March 2010.

Authorised status

The Henderson International Property Fund (OEIC) is an open-ended investment company with variable capital incorporated in England

and Wales under registered number IC000511 and authorised by the Financial Services Authority (FSA) with effect from 1 February

2007.

Shareholders are not liable for the debts of the company.

The Henderson International Property Fund (OEIC) is structured as an open-ended investment company with a single fund. The fund is a

Non-UCITS Retail Scheme (NURS) operating under Chapter 5 of the Collective Investment Schemes sourcebook (COLL) issued by the

Financial Services Authority.

The Authorised Corporate Director (ACD) of the company is Henderson Investment Funds Limited and it is the sole director of the

company.

Advisers

Name Address Regulator

Manager and Dealing Henderson Investment Funds Limited which is the sole Director

Member of IMA

The ultimate controlling party is Henderson Group Plc.

Registered Office: 201 Bishopsgate, London EC2M 3AE. Registered in England No 2678531. Telephone - 020 7818 1818 Dealing - 08459 46 46 46 Enquiries - 0800 832 832

Authorised and regulated by the Financial Services Authority.

Investment Adviser Henderson Global Investors Limited

The ultimate controlling party is Henderson Group Plc.

201 Bishopsgate, London EC2M 3AE


Registrar International Financial Data Services (UK) Limited

IFDS House, St. Nicholas Lane, Basildon, Essex SS15 5FS


Depositary Royal Bank of Scotland The Broadstone, 50 South Gyle Crescent, Edinburgh EH12 9UZ

Authorised and regulated by the Financial Services Authority

Independent Auditors KPMG Audit Plc Saltire Court 20 Castle Terrace Edinburgh EH1 2EG

Institute of Chartered Accountants in England and Wales

Legal Adviser Eversheds LLP One Wood StreetLondonEC2V 7WS

The Law Society

Authorised Corporate Directors report

2 Henderson International Property Fund OEIC

Authorised Corporate Director’s report for the year ended 31 March 2010

Investment objective and policyThe objective of the fund is to achieve long-term capital growth and income. The fund will invest principally in commercial property and property related securities. The fund may also invest in residential property, non property related securities, units in collective investment schemes, money-market instruments, deposits, derivatives and forward foreign exchange contracts.

Investments in these assets may include exchange traded funds, trust structures, real estate investment trusts and unregulated collective investment schemes (which may include unauthorised property unit trusts and limited partnerships).

Whilst the fund will invest principally overseas it may also invest in the UK. The fund will not hold either UK real property or UK real estate investment trusts as direct holdings. This is to facilitate the ability of the fund to pay interest distributions.

For tax and portfolio efficiency the Fund may invest in property via intermediate investment vehicles. The fund’s direct holdings in such cases may be debentures and equity securities of wholly owned subsidiaries. These subsidiaries may in turn invest in property via appropriate investment vehicles for the jurisdiction in which a particular property is located. These investment vehicles will generally be bodies corporate and an example is a specially formed corporate body which will directly purchase and hold the property asset. Decisions by the subsidiaries or holding companies to buy and sell property will take into consideration the advice of the Investment Manager. For tax and portfolio efficiency purposes it may be necessary for the intermediate investment vehicles to lend to their own subsidiaries. This does not create any net debt in the fund.

The fund will aim to directly hold in excess of 60% of the fund property in a combination of debentures of wholly owned subsidiaries and cash, or such other combination of assets as would enable it to make interest distributions.

Derivative instruments and forward foreign exchange contracts may be used for the purposes of Efficient Portfolio Management and interest rate and currency hedging. The fund may be hedged against such market exposures and risks as the ACD determines at its discretion from time to time. As the market in property derivatives develops, derivatives may be used outside of Efficient Portfolio Management to meet the fund’s investment objective.

If the ACD decides to use derivatives for purposes outside of Efficient Portfolio Management, the ACD will give advance notice to Shareholders.

As a result of the fund’s investment policy it may mean at times that it is not appropriate to be fully invested but instead to hold cash or near cash. This will occur when it is necessary to ensure that in excess of 60% of the Fund Property is held in debentures and cash or such other combination of assets as would enable it to make interest distributions, when required to enable redemption of shares, or efficient management in accordance with the investment objective of the fund or for a purpose ancillary to the investment objective of the fund.


Authorised Corporate Director’s report (continued)

Performance summaryOver the year to 31 March 2010 the funds Retail share price fell by 17.12%.

Discrete annual performance†

31 Mar 09- 31 Mar 08- 4 Jun 07†-

31 Mar 10 31 Mar 09 31 Mar 08

% % %

Henderson International Property Fund Retail shares (17.1) (29.4) 3.5

Source: Morningstar, mid to mid, basic rate tax, GBP. Figures in brackets are negative.

Performance is no longer sourced from Lipper. Historic performance has been restated using Morningstar.

Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.

Company summary of material portfolio changes for the year ended 31 March 2010

Purchases £000 Sales £000

Subsidiary companies:

New Star Global Property Management (Mauritius) Limited

33,529

RB Netherlands B.V. 26,243

New Star International Property (Luxembourg 5) S.A.R.L 24,433

Abtana B.V. 15,324

New Star International Property (Luxembourg 1) S.A.R.L 13,957

Total for the year 0 Total for the year 113,486

Note: There were no purchases during the period and all sales are shown.



Company summary of material portfolio changes for the year ended 31 March 2010

Purchases £000 Sales £000

Subsidiary companies:

120 Robinson Road, Singapore 35,975

414 LaTrobe Street, Melbourne 27,284

1-20-17 Imaizumi, Chuo-ku, Fukuoka 24,425

203 Rue du Faubourg, Saint-Honore, Paris 22,477

2-9 Rokubancho, Chiyoda-ku, Tokyo 18,823

1-17 Capellalaan, Hoofddorp 15,803

85 Goethestrasse, Berlin 14,231

13-4 Motomachi, Naka-ku, Hiroshima-shi, Hiroshima 5,791

2-4-6 Minamihonmachi, Chuo-ku, Osaka 5,360

1-2-22 Komemachi, Kokurakita-ku, Kitakyushu, Fukuoka 1,635

Total for the year 0 Total for the year 171,804

Note: There were no purchases during the period and all sales are shown.


Management

During the year under review, Mark Carpenter was appointed Head of Henderson’s retail property funds, the former New Star property

funds. Mark has 20 years’ experience within commercial property fund management and is deputy chairman of the Henderson Property

Investment Committee. Since the acquisition of New Star by Henderson the fund has benefited from an enlarged investment team, which

is able to draw on the resources and property expertise in Henderson’s existing regional offices across Europe and Asia-Pacific. Mark

became the Fund Manager of the International Property Fund on 1 September 2009.

Commercial property overview

At the start of the financial year, global property markets were still under distress, a trend which had emerged in the second Quarter of

2008. With increasing vacancy rates, weak occupier demand and falling rents, valuations across the globe were in decline. European

values started to fall before those in the Asian property markets where the effects of the global recession were also harmful, but slower

to take effect.

By mid-2009, the UK commercial property market (having been one of the first, and largest sufferers of a fall in values) started to show

signs of stabilization. This translated into an increase in values buoyed by a recovery in investor sentiment and attractive pricing vis a

vis equities and gilts as the year progressed. The more developed and liquid property markets of Western Europe soon followed suit,

although the recovery has been less robust. This upturn was limited to the prime assets in core markets, with the uncertain economic

backdrop dampening a wider peripheral European recovery. In Asia, the picture was a little less uniform. Countries such as South Korea,

Hong Kong and China recovered sooner and more sharply than in Singapore, Australia and Japan, where values slipped until later in

2009. Most of these markets have been stable in the early months of 2010 and some have now rebounded, such as Singapore and, to

a lesser extent, Australia.

Looking forwards, many of the Asian markets are benefitting from renewed economic growth, partly a ripple effect from the booming

Chinese economy as well as optimism surrounding future expectations for the region. The recovery story for real estate is expected to

strengthen in the short / medium term across Asia, whilst at the financial year end the uncertainty over national budget deficits across

Europe has held back a further recovery in Euro based markets and pricing.

Portfolio review

Henderson Global Investors took over as investment adviser to the Fund early in the financial year on the New Star acquisition. The

objective was to re-open the fund and resume daily dealing as soon as possible. In order to carry this out successfully and re-open

with a sufficient level of liquidity, the fund embarked on a disposal programme. Proceeds from the disposals were required to meet

outstanding redemption requests as well as to provide a sufficient liquidity buffer going forward.

In order to maintain a diverse portfolio, the disposal programme was carefully planned having regard to future performance prospects

and maintaining fund diversification. A total of ten assets were sold in France, the Netherlands, Germany, Singapore, Japan and Australia

over a period of six months all at prices in line with their most recent valuation. At the beginning of the financial year the fund had owned

a total of seven assets in Japan which accounted for over 35% of the direct property portfolio. After the sales programme the new

weighting of 16.4% at the year end is in two assets in good locations in Tokyo and is in line with the strategy of reducing exposure to the

country. Conversely, at the financial year end there was a higher weighting to Australia, where the market is more liquid and high yielding

as well as being one of the more transparent property markets across the globe. The redistribution of the portfolio during the sales

programme is expected to benefit the Fund performance in future periods.

At the financial year end there were a total of 42 tenants in the portfolio with a combined weighted unexpired lease term of 4.2 years.

This provides shareholders with income security to a diverse range of tenants.

On 31st March 2010, the vacancy level of the portfolio was 1.9% which is very low by international standards.




Fund suspension / re-opening

The Fund re-opened for daily dealing on 12 February 2010 following a period of suspended dealing. For the Fund to be most effective

over the long term, it ideally needed to be larger and have greater diversification. Based on the level of inflows into the Fund, the

Manager believed that it was unlikely to increase in size organically at a rate that would enable it to take advantage of the positive

environment for international commercial property and maximise returns for investors. The Manager has reached agreement that

Aviva Investors will take over as Investment Manager and ‘Authorised Corporate Director’ of the Fund with effect from 2 August 2010.

The Manager believes that the transfer to Aviva Investors is in the best interests of investors in the Fund. Following the transfer, Aviva

Investors intend to seek approval from investors to restructure the Fund. This restructure would permit investors to retain their exposure

to international commercial property but through a more diversified portfolio.

In April 2010, Henderson changed the name of the fund to the Henderson International Property Fund.

Outlook

The markets are showing steady recovery at the year end with value increases in the fund’s porffolio being representative of the

underlying markets and driven mainly by the Asia-Pacific holdings. The first quarter of 2010 recorded increased transactional evidence

and yield-driven capital growth in response to an improvement in investor confidence across Asia. We anticipate that this trend will

continue, with a further upturn in Asia buoyed by a resilient economic backdrop and historically well priced assets. In Europe, some

further moderate capital appreciation is likely across prime assets in core markets, but the recovery is unlikely to stretch to the peripheral

markets and secondary stocks whilst wider European financial uncertainty lingers. A sustained European market recovery is very much

dependant on a successful solution to the sovereign debt crisis, re-igniting confidence and economic growth. However, should ECB

fiscal intervention put downward pressure on yields, some investors may turn to property in search of yield, helping to generate a wider

upturn in valuations.


Investment property overview as at 31 March 2010

Zamdorfer Strasse, Munich, Germany

The property, a high quality office building constructed in 2002, is located in the

district of Steinhausen to the east of Munich. The building is situated between the

central city ring road, “Mittlere Ring”, and the Munich exhibition centre at Riem.

The building overlooks the A94 motorway. It is entirely let until 2012 under a good

covenant, to the global technology group, Giesiecke & Devrient.

Market value at 31/03/10: £13.7m

% of fund NAV: 6.51%

Purchased: June 2007

Sussex Street, Sydney, Australia

160 Sussex Street is a modern, multi-storey office building behind a heritage

façade in Sydney’s central business district. The primary tenant is DP World

formerly P&O Australia. Demand for premium office space in the area is expected

to remain buoyant.



Purchased: July 2007

Castlereagh Street, Sydney, Australia

The fund’s Bulgari store strata investment (on the ground floor) is situated close to

Tiffany & Co, Burberry, Gucci and Hermes in Sydney’s luxury retail “Golden Mile” in

the central business district. Founded in 1884, Bulgari is one of the World’s leading

luxury brands. The lease is due to expire in 2014 and has built-in rent rises each year.

The Fund acquired the first floor (let to D H Goodman) in a separate transaction.




Kanda, Tokyo, Japan

Built in 2004, this multi-let property is located less than five minutes by rail from

Tokyo Station and a two minute walk from Akihabara Station. It is located in one of

the largest shopping districts for electronic goods in Tokyo.

The upper floors are specified as offices and let to KK Samedi (local school) until

May 2019 and the ground floor is let to Fedex Kinko until February 2014.



Purchased: August 2007


Investment property overview (continued)

Uchikanda, Tokyo, Japan

Also located in one of the main central wards of Tokyo, Chiyoda, within walking

distance of Marunouchi and Tokyo Stations. This asset is a mix of leasehold and

freehold interests. It is a multi-tenanted office property with 8 tenants generally

occupying on a floor by floor basis.



Purchased: August 2007

The Esplanade, Perth, Australia

The building is located in the heart of Perth’s central business district. The office

property was substantially redeveloped with completion occurring in 2006.

The anchor tenant is WestNet (formerly Alinta Ltd) the largest listed energy

infrastructure company in Australia who entered into a 10 year lease from

December 2006.



Purchased: January 2008

Phillip Street, Singapore

Constructed in 1993, this 16 storey office building is situated in the heart of

Singapore’s prestigious Raffles Place office district. Held on a 999 year leasehold

(starting 11 April 1827), the property is multi-let with leases ranging from 2 to 3

years.



Purchased: April 2008

Královsk´y vrch, Kadan, Czech Republic

Kadan is located in the north west of the Czech Republic, in the region of Usti,

close to the German border. Government incentives have made this region

increasingly attractive to producers and manufacturers looking for high skilled/low

cost labour. The logistics property, acquired in July 2008, is let on leases expiring in

March 2017, to two tenants of good covenant; Jeyes s.r.o., who manufactures and

sells household cleaning products and Andreas Schmid, the integrated logistics

solutions company.





Investment property overview (continued)

Dêtmarovická, Karvina, Czech Republic

Located further east than Kadan, the property was acquired in July 2008 and

benefits from excellent communications being situated to the north of the city of

Ostrava. The main railway in Czech Republic passes through the town and road

links are excellent. Numerous local and foreign manufacturers, especially car

production plants, operate in the vicinity. The property is let to Gates Hydraulics

s.r.o., a global manufacturer of industrial and automotive parts on a lease expiring in

December 2016.




Katowice, Rozdzienska, Poland

Katowice is located near the Slovakian and Czech Republic borders and benefits

from its proximity to the modern infrastructure network. The property constructed in

July 2008 is designated for light production and logistics, and provides office and

production accommodation. The tenant, Rockwell Automation Sp. z o.o., has a lease

until April 2017.




Kostrzyn, Zniwna, Poland

The property is located in Kostrzyn, 21km east of Poznan and 300km west of

Warsaw. The site benefits from immediate access and good road communications

to Poznan, Warsaw and the wider region. The building constructed in December

2008 provides modern light industrial, warehouse and ancillary office

accommodation. Puratos Sp. z o.o. supplies the bakery, confectionery & chocolate

market and has a lease until November 2017.





Net asset value per share

Net asset Shares NAV per

value of fund in existence share

£ p

Retail shares (Inc)

2008 588,226,164 1,258,754,043 46.73

2009 349,007,635 1,093,025,942 31.93

2010 203,522,037 769,238,169 26.46

Z shares (Inc)

2008 34,558,728 73,101,742 47.27

2009 2,478,270 7,685,131 32.25

2010* - - -

Euro shares (Acc)

2008 5,945,525 1,530,091 388.57

2009 2,858,465 867,901 329.35

2010 2,441,291 859,442 284.06

US Dollar shares (Acc)

2008 9,787,013 3,843,676 254.63

2009 6,702,360 2,749,091 243.80

2010 4,413,236 2,098,355 210.32

* Share class closed 01.03.10.

Comparative tables as at 31 March 2010


Comparative tables (continued)

Performance record

Calendar Year Highest Lowest Income per share Income per share

offer price bid price by accounting year by calendar year

p p

Retail shares (Inc)

2007* 48.61p 46.26p - 0.3159

2008 51.79p 37.68p 1.0525 1.4179

2009 40.73p 25.05p 1.3796 1.2771

2010 28.34p 24.99p 0.9581 0.3793

Z shares (Inc)

2007** 49.22p 44.60p - 0.3170

2008 52.30p 38.34p 1.0565 1.4286

2009 42.68p 25.62p 1.4286 1.3092

2010**** 35.70p 25.60p 0.5697 -

Euro shares (Acc)

2007*** EURO 5.02 EURO 4.73 - 2.5947

2008 EURO 5.33 EURO 3.96 10.1165 14.4303

2009 EURO 4.36 EURO 2.96 16.0172 16.3708

2010 EURO 3.34 EURO 3.00 12.0347 4.7726

US Dollar shares (Acc)

2007*** USD 5.15 USD 4.79 - 1.85122008 USD 5.52 USD 4.10 6.8325 10.16202009 USD 4.32 USD 3.14 13.5334 13.78952010 USD 3.42 USD 3.07 9.5043 4.0675

* From 02.04.07 to 31.12.07

** From 30.05.07 to 31.12.07

*** From 25.06.07 to 31.12.07

**** as at 01.03.10


Total expense ratio

The annualised Total expense ratio (TER) of the fund, based on the total expenses included within the financial statements for the year

as indicated below:

2010 2009

% %

Class R income 1.98 1.85

Class Z income n/a 0.45

Class Euro accumulation 2.11 1.96

Class USD accumulation 2.06 1.89

The TER of a fund is the ratio of the fund’s total operating costs to its average net assets for twelve months.

Portfolio turnover rate

The Portfolio Turnover Rate (PTR) of the fund, based on the figures included within the financial statements for the year as indicated

below:

2010 2009

% %

12.00 (17.26)

The PTR of a fund is the ratio of the fund’s transactions to its average net assets for twelve months.


Consolidated portfolio statement as at 31 March 2010

Holding Investment Market Percentage

value of total

£000 net assets

%

Australia - 27.96% (22.47%)

Direct Properties

64 Castlereagh Street, Sydney 10,104 4.80

160 Sussex Street, Sydney 18,660 8.87

12-14 The Esplanade, Perth 30,059 14.29

58,823 27.96

Czech Republic - 8.64% (5.92%)

Direct Properties

Detmarovicka, Karvina 8,388 3.99

Kraslovsky vrch, Kadan 9,785 4.65

18,173 8.64

France - 0.00% (7.21%)

Germany - 6.51% (8.33%)

Direct Properties

29 Zamdorfer Strasse, Munich 13,699 6.51

Japan - 12.12% (35.66%)

Direct Properties

4-10 Kanda Matsunagacho, Chiyoda-ku, Tokyo 14,343 6.82

1-8-1 Uchikanda, Chiyoda-ku, Tokyo 11,164 5.30

25,507 12.12

Netherlands - 0.00% (4.26%)

Poland - 5.67% (3.82%)

Direct Properties

Katowice, ul. Rozdzienska 41 8,050 3.83

Kostrzyn, Kostrzyn Wlkp, ul. Zniwna 2 3,869 1.84

11,919 5.67

Singapore - 12.76% (18.97%)

Direct Properties

1 Phillip Street, Singapore 26,837 12.76


Consolidated portfolio statement (continued)

Bermuda - 0.00% (1.52%)

Equities

36,450 New Star Global Property Fund Ltd B shares - -

11,000 New Star Global Property Fund Ltd B (ii) shares - -

- -

Interest rate derivatives - (0.08%) ((0.15%))

Interest rate derivatives (165) (0.08)

Portfolio of investments and derivative liabilities 154,793 73.58

Net other assets 55,584 26.42

Net assets 210,377 100.00

Total property investments 154,958 73.66

Total unlisted equity investments - -

Portfolio of investments 154,958 73.66

Interest rate derivative liabilities (165) (0.08)

Portfolio of Investment and derivative liabilities 154,793 73.58


Net assets 210,377 100.00

The percentages in brackets represent comparative figures at 31 March 2009.


value of total

£000 net assets

%


Company portfolio statement as at 31 March 2010


value of total

£000 net assets

%

Czech Republic - 9.33% (6.38%)

Subsidiary Companies:

New Star Global Property Karvina s.r.o 9,246 4.39

New Star Global Property Kadan s.r.o 10,401 4.94

19,647 9.33

Luxembourg - 27.89% (40.77%)

Subisidiary Companies:

New Star International Property (Luxembourg 1) S.A.R.L 229 0.11

New Star International Property (Luxembourg 2) S.A.R.L 14,341 6.82


New Star International Property (Luxembourg 5) S.A.R.L 276 0.13


58,665 27.89

Netherlands - 30.33% (27.43%)


RB Netherlands B.V. 62,971 29.93

Abtana B.V. 837 0.40

63,808 30.33

Mauritius - 13.05% (19.34%)


New Star Global Property Management (Mauritius) Limited 352 0.17

New Star International Property (Mauritius) Limited 27,087 12.88

27,439 13.05

Bermuda 0.00% (1.52%)

Equities

36,450 New Star Global Property Fund Ltd B shares - -

11,000 New Star Global Property Fund Ltd B (ii) shares - -

- -



value of total

£000 net assets

%



Net assets 210,377 100.00

Total unlisted equity investments - -

Total subsidiary company investments 169,559 80.60



Net assets 210,377 100.00

The percentages in brackets represent comparative figures at 31 March 2009.

Company portfolio statement (continued)


The Financial Services Authority’s Collective Investment Schemes Sourcebook (COLL) requires the ACD to prepare financial statements

for each annual accounting period which give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting

Practice, of the financial affairs of the Trust and of its income for the period. In preparing the financial statements the ACD is required to:

• select suitable accounting policies and then apply them consistently;

• comply with the disclosure requirements of the Statement of Recommended Practice for Authorised Funds issued by the Investment

Management Association (IMA) in November 2008;

• follow generally accepted accounting principles and applicable accounting standards;

• keep proper accounting records which enable it to demonstrate that the financial statements, as prepared, comply with the above

requirements;

• 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 fund will continue in

operation for the foreseeable future.

The ACD is responsible for the management of the company in accordance with its Instrument of Incorporation, Prospectus and the

Regulations. The ACD is also responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of the Depositary’s responsibilities and Report of the Depositary to the shareholders

The Depositary is responsible for the safekeeping of all the property of the fund (other than tangible moveable property) which is

entrusted to it and for the collection of income that arises from that property.

It is the duty of the Depositary to take reasonable care to ensure that the fund is managed in accordance with the Financial Services

Authority’s Collective Investment Schemes Sourcebook (COLL), as amended, the fund’s Instrument of Incorporation and Prospectus, in

relation to the pricing of, and dealings in, shares in the fund; the application of income of the fund; and the investment and borrowing

powers applicable to the fund.

Having carried out such procedures as we consider necessary to discharge our responsibilities as Depositary of the fund, it is our

opinion, based on the information available to us and the explanations provided, that in all material aspects the fund, acting through the

ACD:

(i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the fund’s shares and the application of

the fund’s income in accordance with the Sourcebook, the Instrument of Incorporation and Prospectus, and

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

Royal Bank of Scotland

Edinburgh

12 July 2010

Statement of Authorised Corporate Director’s responsibilities


Independent Auditor’s report to the shareholders of the Henderson International Property Fund OEIC (‘the Company)We have audited the financial statements of the Group and Company for the year ended 31 March 2010 which comprise the

Consolidated and Company Statement of total return, the Consolidated and Company Statement of change in net assets attributable

to shareholders, the Consolidated and Company Balance sheet together with the related notes, including the Distribution Tables. These

financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the Company’s shareholders, as a body, in accordance with Rule 4.5.12 of the Collective Investment

Schemes Sourcebook issued by the Financial Services Authority under the Open-Ended Investment Companies Regulations 2001. 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 (‘the ACD’) and the AuditorAs described in the Statement of ACD’s responsibilities on page 17, the ACD is responsible for preparing the Annual Report and the

financial statements in accordance with applicable law, UK financial services rules and regulations and UK Accounting Standards (UK

Generally Accepted Accounting Practice).

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements 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 are properly prepared in accordance

with the Instrument of Incorporation, the Statement of Recommended Practice relating to Authorised Funds and the rules in the

Collective Investment Schemes Sourcebook published by the Financial Services Authority. We also report to you if, in our opinion, the

information given in the ACD’s Report is not consistent with the financial statements, if proper accounting records for the Group and

Company have not been kept, if the financial statements are not in agreement with the accounting records, or if we have not received all

the information and explanations we require for our audit.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. We

consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial

statements. Our responsibilities do not extend to any other information.

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 evidence relevant to the amounts and disclosures in the financial statements. It also

includes an assessment of the significant estimates and judgements made by the ACD in the preparation of the financial statements,

and of whether the accounting policies are appropriate to the Group and Company’s circumstances, consistently applied and adequately

disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to

provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement,

whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation

of information in the financial statements.


Independent Auditor’s report to the shareholders of the Henderson International Property Fund OEIC (‘the Company) (continued)

OpinionIn our opinion:

• the financial statements give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the financial

position of the Group and Company as at 31 March 2010 and of the net revenue and the net losses on the property of the Group

and Company for the year then ended;

• the financial statements have been properly prepared in accordance with the Instrument of Incorporation, the Statement of

Recommended Practice relating to Authorised Funds and the rules in the Collective Investment Schemes Sourcebook published by

the Financial Services Authority; and

• the information given in the Authorised Corporate Director’s Report is consistent with the financial statements.

Emphasis of matter – going concernIn forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in

note 1a to the financial statements concerning the group’s and the parent company’s ability to continue as a going concern. From the 2

August 2010 the Manager of the Fund will change and at that point the future of the Fund will depend on their recommendations to unit

holders and whether/how such changes are implemented. This condition indicates the existence of a material uncertainty which may

cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. The financial statements do not

include the adjustments that would result if the Group and the Parent Company were unable to continue as a going concern.

We have received all the information and explanations which we consider necessary for the purposes of the audit.

WEJ Holland

For and on behalf of KPMG Audit Plc, Statutory Auditor

Chartered Accountants

London

22 July 2010


Consolidated statement of total return for the year ended 31 March 2010

2010 Restated* 2009

Notes £000 £000 £000 £000

Net losses on investments 4 (62,339) (168,892)

Income 5 25,999 38,128

Expenses 6 (14,671) (20,565)

Finance costs: Interest 8 (1,990) (1,934)

Net income before taxation 9,338 15,629

Taxation 7 212 (1,331)

Net income after taxation 9,550 14,298

Total return before distributions (52,789) (154,594)

Finance costs: Distributions 8 (13,970) (22,957)

Change in net assets attributable to shareholders (66,759) (177,551)

Consolidated statement of change in net assets attributable to unitholders for the year ended 31 March 2010

2010 2009

£000 £000 £000 £000

Net assets at the start of the year 361,046 638,517

Movement due to sales and repurchases of shares:

Amounts receivable on issue of shares 448 56,978

Less: amounts payable on cancellation of shares (86,292) (163,101)

(85,844) (106,123)

Stamp duty reserve tax - (2)

Dilution levy charges 1,595 5,457

Change in net assets attributable to shareholders (see above) (66,759) (177,551)

Retained distribution on accumulation shares 339 748

Net assets at the end of the year 210,377 361,046

* Refer to note 1(a)


Company statement of total return for the year ended 31 March 2010

2010 Restated* 2009

Notes £000 £000 £000 £000

Net losses on investments 4 (61,189) (168,511)

Income 5 14,350 25,176

Expenses 6 (5,884) (11,095)

Finance costs: Interest 8 (31) (84)


Taxation 7 (35) (80)


Total return before distributions (52,789) (154,594)

Finance costs: Distributions 8 (13,970) (22,957)

Change in net assets attributable to shareholders (66,759) (177,551)

Company statement of change in net assets attributable to unitholders for the year ended 31 March 2010

2010 2009

£000 £000 £000 £000

Net assets at the start of the year 361,046 638,517

Movement due to sales and repurchases of shares:

Amounts receivable on issue of shares 448 56,978

Less: amounts payable on cancellation of shares (86,292) (163,101)

(85,844) (106,123)

Stamp duty reserve tax - (2)

Dilution levy charges 1,595 5,457

Change in net assets attributable to shareholders (see above) (66,759) (177,551)

Retained distribution on accumulation shares 339 748

Net assets at the end of the year 210,377 361,046

* Refer to note 1(a)


Consolidated balance sheet as at 31 March 2010

2010 2009

Notes £000 £000 £000 £000

Assets

Portfolio of investments 154,958 390,560

Debtors 10 5,015 9,434

Cash and bank balances 11 79,410 44,928

Total other assets 84,425 54,362

Total assets 239,383 444,922

Liabilities

Derivative liabilities (165) (554)

Creditors 12 (25,923) (75,635)

Distribution payable on income shares (2,918) (7,687)

Total other liabilities (28,841) (83,322)

Net assets attributable to shareholders 210,377 361,046

Certification of financial statements by Directors of the Authorised Corporate Director

In accordance with the requirements of the Financial Services Authority’s Collective Investment Schemes Sourcebook, we hereby certify

the investment report and financial statements on behalf of the Directors of Henderson Investment Funds Limited.

Andrew Formica

(Chief Executive)

David Jacob

(Chief Investment Officer)

22 July 2010


Company balance sheet as at 31 March 2010

2010 2009

Notes £000 £000 £000 £000

Assets

Portfolio of investments 169,559 344,573

Debtors 10 7,314 4,912

Cash and bank balances 11 39,864 22,134

Total other assets 47,178 27,046

Total assets 216,737 371,619

Liabilities

Creditors 12 (3,442) (2,886)

Distribution payable on income shares (2,918) (7,687)

Total other liabilities (6,360) (10,573)

Net assets attributable to shareholders 210,377 361,046

Certification of financial statements by Directors of the Authorised Corporate Director

In accordance with the requirements of the Financial Services Authority’s Collective Investment Schemes Sourcebook, we hereby certify

the investment report and financial statements on behalf of the Directors of Henderson Investment Funds Limited.

Andrew Formica

(Chief Executive)

David Jacob

(Chief Investment Officer)

22 July 2010


Consolidated statement of cash flows as at 31 March 2010

2010 2009

Notes £000 £000 £000 £000

Net cash inflow from operating activities 20 10,154 22,471

Servicing of finance

Bank interest paid (2,149) (1,712)

Taxation 212 (1,331)

Acquisitions and disposals

Payments to acquire investments - (103,307)

Receipts from sales of investments 171,804 14,464

Transaction charges (74) (176)

171,730 (89,019)

Equity dividends paid

Distributions paid (17,716) (23,773)

Financing

Secured bank loan (45,262) 62,084

Amounts received on issues of shares 451 62,592

Amounts paid on cancellation of shares (86,143) (164,002)

Dilution levy 1,595 5,455

(129,359) (33,871)

Increase in cash in the year 32,872 (127,235)

Analysis of changes in funds

Cash and bank balances at the start of the year 44,928 256,275

Net cash flows 32,872 (127,235)

Forward FX realised gain/(losses) - (70,358)

Effect of foreign exchange rate changes 1,610 (17,121)

Other non cash movements - 3,367

Cash and bank balances at the end of the year 79,410 44,928


Company statement of cash flows as at 31 March 2010

2010 2009

Notes £000 £000 £000 £000

Net cash inflow from operating activities 20 5,744 14,205

Servicing of finance

Bank interest paid (31) (84)

Taxation (35) (80)

Acquisitions and disposals

Payments to acquire investments - (103,153)

Receipts from sales of investments 113,486 68,247


113,412 (35,082)

Equity dividends paid

Distributions paid (17,716) (23,773)

Financing

Amounts received on issues of shares 451 62,592

Amounts paid on cancellation of shares (86,143) (164,002)

Dilution levy 1,595 5,455

(84,097) (95,955)

Increase in cash in the period 17,277 (140,769)

Analysis of changes in funds

Cash and bank balances at the start of the year 22,134 232,319

Net cash flows 17,277 (140,769)

Forward FX realised gains/(losses) - (70,358)

Effect of foreign exchange rate changes 453 942

Cash and bank balances at the end of the year 39,864 22,134


Notes to the financial statements as at 31 March 2010

1 Accounting policies(a) Basis of accounting

The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in

accordance with applicable United Kingdom accounting standards and principles (UK GAAP) and the Statement of Recommended

Practice relating to Authorised Funds issued by the Investment Management Association in November 2008.

Change in accounting policy

The Statement of Recommended Practice (November 2008) supersedes the previous version (December 2005) and applies to

accounting periods beginning on or after 1 January 2009. In line with Financial Reporting Standard 18, adoption of the regulations

constitutes a change in accounting policy resulting in the following effect to the current and comparative figures:

Other capital gains/losses of £1,610,000 (2009: £17,121) were previously included as a separate line in the ‘Statement of total return’

but have now been included in ‘Net losses on investments’.

Transaction charges of £74,000 (2009: £176,000) were previously included in ‘Expenses’ but have now been included in ‘Net capital

losses on investment’.

Going concern

After 2 August and the change of ACD, the Manager will no longer control the Fund and this limits the foreseeable future over which the

Manager can look forward in their going concern review. Any changes by Aviva will be subject to approval by the regulator and the unit

holders.

The financial position of the Group and the Company are set out on pages 22 and 23. The cashflows of the Group and the Company

are set out on pages 24 and 25. The borrowing facilities are set out on pages 37 and 38. The business activities of the Group and

the Company are set out on pages 5 to 9. Note 3 to the financial statements includes the groups risk management objectives and its

exposure to credit and liquidity risks.

The Manager has considered the level of redemptions in the fund, the compliance with bank mandates, the sustainability of the income

stream and levels of expenses. On the basis of this, other than for the uncertainties surrounding Aviva’s plans once they become

ACD, the Manager believes it is appropriate for the financial statements to be prepared on a going concern basis. However, these

circumstances indicate the existence of a material uncertainty which may cast significant doubt on the group’s and the parent company’s

ability to continue as a going concern.

The financial statements do not include any adjustments that would result from the going concern basis being in appropriate.

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the company and each of its subsidiaries. Subsidiaries are

those entities, including special purpose entities, controlled by the company. Control exists when the company has the power, directly

or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,

potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the

consolidated financial statements from the date that control commences until the date that control ceases.

(c) Basis of valuation of investments

Property shares

The valuation of listed investments has been based on the bid prices, excluding any accrued interest in the case of fixed interest

securities, at 12 noon on the last day of the accounting period.

Unlisted or suspended securities are valued by the manager taking into account, where appropriate, latest dealing prices, valuation from

reliable sources, financial performance and other relevant factors.


Notes to the financial statements (continued)

Investment properties

Investment properties are those which are held by the fund either to earn rental income or for capital appreciation or for both. Investment

properties are stated at fair value which is based on an estimate of market value at balance sheet date.

Investment properties are valued on a monthly basis by an External Valuer on the basis of Market Value, as defined in the Royal

Institution of Chartered Surveyors (“RICS”) Valuation Standards, 6th Edition (the Red Book). Market Value is defined as: The estimated

amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length

transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Properties

undergo a physical inspection on an internal and external basis annually with desk reviews on a monthly basis. In accordance with UITF

28 the value at which a property is stated in the balance sheet will make allowances for any amounts treated as a separate accrued

income asset. In accordance with SSAP 19, no depreciation is provided on investment properties.

At 31 March 2010 the valuation was performed by CBRE (CB Richard Ellis Ltd) for the Far Eastern properties and DTZ (Debenham

Tie Leung) for the European properties. The valuations were undertaken in accordance with the RICS Valuation Standards, 6th Edition.

The International Valuation Standards Council (IVSC), publishes the International Valuation Standards (IVS) that set out internationally

accepted valuation principles, procedures and definitions. RICS has adopted these standards.

Acquisitions and their associated costs are recognised on completion. Disposals and their associated costs are recognised on

completion with any profit or loss being recognised in the statement of total return. The profit or loss on disposal is determined as the

difference between the sale proceeds and the carrying amount of the asset.

Subsidiary undertakings

Many of the properties are acquired via unlisted subsidiary undertakings. Investments in subsidiary undertakings are financed through a

mixture of debt and equity. The debt and equity elements of the investments in subsidiary undertakings are regarded as one investment

which is held at fair value. In the event of a disposal, the debt and equity investment would be sold as one investment. The group aims to

dispose of companies rather than underlying properties. Accordingly no provision is made for deferred taxation in arriving at the valuation

of subsidiary undertakings.

(d) Recognition of income

Income is included in the statement of total return on the following basis:

•Dividendsonordinaryandpreferencesharesarerecognisedwhenthesecuritiesarequotedex-dividend;

•Incomefromunquotedsecuritiesisrecognisedwhentheentitlementtothedividendisestablished;

•Inthecompanyaccounts,interestincomeondebentureinvestmentsinsubsidiariesisrecognisedonaneffectiveinterestratebasis;

•Interestonbankdepositsandfixedinterestbearingsecuritiesisrecognisedasearned;

•Managementfeerebatearrangementsareinplace.Theserebatesarerecognisedonanaccrualsbasis.

•Stocklendingincomeandanyassociatedchargesarerecognisedonanaccrualsbasis;

•Underwritingcommissionistakentoincomeandrecognisedwhentheissuestakeplaceexceptwherethefundisrequiredtotakeup

some or all of those shares underwritten, in which case the appropriate proportion is deducted from the cost of those shares;

•Rentalincomeisrecognisedonastraightlinebasisovertheshorteroftheperiodtothefirstrentrevieworleasebreakoption.Where

such rental income is recognised ahead of the related cash, an adjustment is made to ensure the carrying value of the related property

including the accrued rent does not exceed the external valuation. Rental income received in advance is deferred and recognised as

income over the period to which it relates;

•Leaseincentivesareamortisedonastraightlinebasisfromtheperiodofleasecommencementtotheearlierofthedateofthenext

market rent review or the earliest date the tenant is entitled to terminate the lease;

•Leasesurrenderpremiumsarerecognisedasincomeonthedatetheleaseisterminated.

(e) Treatment of stock and special dividends

The ordinary element of stocks received in lieu of cash dividends is recognised as income of the fund. Any enhancement above the cash

dividend is treated as capital gains on investments.

Special dividends are treated as repayments of capital or income depending on the facts of each particular case.



(f) Treatment of expenses

The ACD’s annual management charge is taken from capital. Direct acquisition costs are capitalised at the time of purchase. Significant

capital enhancements and refurbishment expenditure are also capitalised. Expenditure on properties which is not deemed to be of a

capital nature is charged against income. All other expenses are charged against income.

(g) Allocation of income and expenses and taxation to multiple share classes

Income is allocated to each share class in proportion to the net assets of each share class at the time the income is received. Expenses

and taxation are allocated on the same basis with the exception of the ACD’s annual management charge, which is allocated directly to

each share class, and registrars fees which are allocated on the basis of the actual number of shareholders in each share class.

(h) Taxation

Corporation tax is charged at 20% of the income liable to corporation tax less allowable expenses. Deferred tax is recognised at a rate

at which taxation is likely to become payable in respect of all timing differences between accounting and taxation treatment of items.

Deferred tax arising on revaluation of investment property is not provided unless the disposal of the property has been completed.

Deferred tax is not provided on permanent differences. Deferred tax assets are only recognised to the extent that it is more likely than

not there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted.

(i) Exchange rates

Foreign currency transactions are translated into sterling at the exchange rate ruling at the date of the transaction.

Assets and liabilities expressed in foreign currencies at the end of the accounting period are translated into sterling at the exchange

rates ruling at 12 noon on the last valuation day of the accounting period.

(j) Derivatives

Returns on derivatives are recognised either in the income account or the capital account depending on whether the motives and

circumstances for holding the instrument were to protect or enhance income or to protect or enhance capital.

2 Distribution policy(a) Basis of distribution

The policy of the fund is to make interest distributions to shareholders on 31 May (annual) and 30 November (interim).

For the purpose of determining the distribution, all of the ACD’s management charge is borne by capital. The ACD’s management charge

has been added back for the purpose of determining the amount available for distribution.

(b) Unclaimed distributions

All distributions unclaimed for a period of six years after having become due for payment shall be forfeited and shall revert to the fund.

The payment of any unclaimed distribution, interest or other sum payable by the fund on or in respect of a share into a separate account

shall not constitute the ACD a trustee thereof.

(c) Expenses

When income from investments exceeds expenses, a distribution will be made. Should expenses exceed income there will be no

distribution and the shortfall will be transferred from the capital account.



3 Risk management policiesIn pursuing its investment objective, the fund holds a number of financial instruments and properties. These may comprise:

•Equityshares,equityrelatedshares,non-equitysharesandfixedincomesecurities;

•Cash,liquidresourcesandshort-termdebtorsandcreditorsthatarisedirectlyfromitsoperations;

•Borrowingsusedtofinanceinvestmentactivity;and

•Propertiesheldthroughintermediaryholdingvehicles.

The fund may also enter into derivative transactions in the form of futures contracts. The purpose of such financial instruments is efficient

portfolio management. The fund managers have responsibility for monitoring the portfolio in accordance with the investment objective

and seek to ensure that investments in direct properties and individual securities also meet a risk reward profile that is acceptable. The

main risks arising from financial instruments are credit, foreign currency, interest rate, liquidity and market price risks. These risks have

remained unchanged since the beginning of the year to which these financial statements relate and are summarised below.

Credit risk

Certain transactions in securities that the fund enters into expose it to the risk that the counterparty will not deliver the investment

(purchase) or cash (sale) after the fund has fulfilled its responsibilities. The fund only buys and sells investments through brokers which

have been approved by the manager as an acceptable counterparty. The manager follows a broker selection process which includes

verifying relevant regulatory permission, creditworthiness and anti-money laundering requirements of each broker prior to granting

approval.

All the investment holdings and cash balances were previously held by HSBC Bank Plc and since 6 April 2010 are now held by

BNP Paribas Securities Services, the custodian of the fund. Bankruptcy or insolvency of the custodian may cause the fund’s rights,

with respect to securities and cash held by the custodian, to be delayed or limited. The Credit Risk Committee (CRC) of the manager

assesses and regularly reviews counterparty risk at Henderson. Only approved counterparties or custodians may undertake transactions

with Henderson, as considered appropriate by the CRC through assessment of their creditworthiness and meeting and maintaining a

minimum credit rating as determined by recognised credit rating agencies.

Foreign currency risk

The manager has identified three principal areas where foreign currency risk could impact the fund:

•Movementinexchangeratesaffectsthevalueofassets;

•Movementinexchangeratesaffectsshort-termtimingdifferences;and

•Movementsinexchangeratesaffectstheincomereceived.

The manager may choose to retain holdings in currencies other than sterling, and the sterling value of this income can be affected by

movements in exchange rates. The fund converts all receipts of income into sterling on or near the date of receipt. The fund may enter

into forward foreign exchange contracts in order to minimise the effect of exchange rate movements.



3 Risk management policies (continued)

Liquidity risk

Liquidity risk is the risk that the fund cannot raise sufficient cash to meet their liabilities when due. One of the key factors influencing this

will be the ability to sell investments at, or close to, the fair value without a significant loss being realised. Recent market issues following

the credit crunch resulted in a significant reduction in liquidity of property.

Under normal circumstances, the fund will remain close to fully invested. However, where circumstances require for example because

of an illiquid market or high levels of redemptions in the funds, the funds may hold cash and/or more liquid assets. Temporary higher

liquidity levels may also arise during the carrying out of a change in asset allocation policy, or following a large issue of units.

The manager manages the fund cash to ensure they can meet their liabilities. The manager receives daily reports of subscriptions and

redemptions enabling the manager to raise cash from the funds portfolio in order to meet redemption requests. In addition the managers

monitors market liquidity of all underlying properties and where relevant, seeking to ensure the funds maintain sufficient liquidity to

meet known and potential redemption activity. The funds cash balances are monitored daily by the manager and Administrator. Where

investments cannot be realised in time to meet any potential liability, the fund may borrow up to 10% of their value to ensure settlement.

All of the funds’ financial liabilities are payable on demand or between 1 and 2 years.

Market price risk

Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the fund

might suffer through holding market positions in the face of price movements.

Interest rate risk

The fund holds assets in interest bearing deposit accounts and has interest bearing loans. Interest receivable on bank deposits and

interest payable on bank loans will be affected by fluctuations in interest rates.

Direct property risk

A significant portion of the fund’s assets are invested in tangible properties. These are exposed to specific risks including:

Reduced liquidity

By their very nature direct properties are less liquid and the investments are not readily realisable. Sales may take a number of months.

Market price movements

Whilst each direct property is independently valued on a monthly basis, such valuations are a matter of the valuer’s opinion and such

values may or may not be achieved on a sale.

Sector exposure risk

The fund’s assets are invested solely in direct properties and property securities. As such the fund is exposed to the sector specific risk

as a result of its concentration in this market sector. The fund is also exposed to specific sector risk through the tenants of the direct

properties invested in. In addition the rental income is dependant on the creditworthiness of the tenants.



4 Net losses on investments2010 2009

£000 £000

Group:

Currency exchange 1,610 (17,121)

Investments in direct properties (58,301) (36,424)

Non-derivative securities (5,497) (48,359)


Derivative securities (77) (554)

Forward currency contracts - (66,258)

Net losses on investments (62,339) (168,892)

Company:

Currency exchange 453 942


Non-derivative securities (5,497) (48,359)

Investments in subsidiary companies (56,071) (54,660)

Forward currency contracts - (66,258)

Net losses on investments (61,189) (168,511)

5 Income2010 2009

£000 £000

Group:

Rental income 20,245 22,068

Service charge income 4,413 4,920

Parking charge income 1,118 984

Overseas dividends - 749

Bank interest 434 8,558

Stocklending income - 18

Income from forward exchange contracts - 94

Management fee rebates - 737

Management fee rebates written off (211) -

Total income 25,999 38,128

Company:

Overseas dividends - 749

Interest on debt securities 14,308 15,491

Bank interest 253 8,087

Stocklending income - 18

Income from forward exchange contracts - 94

Management fee rebates - 737

Management fee rebates written off (211) -

Total income 14,350 25,176



6 Expenses2010 2009£000 £000

Group:Payable to the ACD, associates ofthe ACD, and agents of either of them:Authorised corporate director's periodic charge 5,359 9,777

Payable to the depositary, associates of the depositary, and agents of either of them:Depositary fee 106 161 Safe custody fee - 2

106 163

Other expenses:Administration fee 374 433 Audit fee 178 375 Bank charges - 123 Directors fees 112 74 Domiciliation expenses 911 976 Irrecoverable VAT - 16 Price publication fee 12 7 Professional fees 844 1,564 Property expenses 2,745 2,580 Property service charge 3,769 4,145 Registration fee 129 193 Report and accounts fee 67 50 Trust fees 65 89

9,206 10,625

Total expenses 14,671 20,565

Company:Payable to the ACD, associates ofthe ACD, and agents of either of them:Authorised corporate director's periodic charge 5,359 9,777

Payable to the depositary, associates of the depositary, and agents of either of them:Depositary fee 106 161 Safe custody fee - 2

106 163

Other expenses:Administration fee 127 226 Audit fee 25 94 Price publication fee 12 7 Professional fees 59 585 Registration fee 129 193 Report and accounts fee 67 50

419 1,155

Total expenses 5,884 11,095



7 TaxationGroup:

(a) Analysis of charge in the year

The tax charge comprises:

2010 2009

£000 £000

Irrecoverable overseas withholding tax 35 80

Overseas property company tax (247) 1,251

Total current tax charge for the year (note 7b) (212) 1,331

Deferred tax (note 7c) - -

Total tax for the year (212) 1,331

(b) Factors affecting the tax charge for the year

The tax assessed for the year is lower than the standard rate of corporation tax in the UK for an open ended investment company (20%).

The differences are explained below:

2010 2009

£000 £000


Corporation tax at 20% (2009: 20%) 1,868 3,126

Effects of:

Net overseas property income not subject to UK taxation (181) (327)

Income taxable in different years - 360

Expenses not deductible for tax purposes - 16

Current year expenses not utilised 1,114 1,435

Tax deductible interest distributions (2,794) (4,591)


Overseas property company tax (247) 1,251

Tax relief on overseas tax suffered (7) (19)

Current tax charge for the year (note 7a) (212) 1,331

(c) Provision for deferred taxation

At 31 March 2010 there is a potential deferred tax asset of £3,969,409 (31 March 2009: £2,839,651) in relation to surplus

management expenses. It is unlikely the fund will generate sufficient taxable profits in the future to utilise these amounts and therefore

no deferred tax asset has been recognised.



7 Taxation (continued)

Company:

(a) Analysis of charge in the year

The tax charge comprises:

2010 2009

£000 £000


Total current tax charge for the year (note 7b) 35 80

Deferred tax (note 7c) - -

Total tax for the year 35 80

(b) Factors affecting the tax charge for the yearThe tax assessed for the year is lower than the standard rate of corporation tax in the UK for an open ended investment company (20%).

The differences are explained below:2010 2009

£000 £000


Corporation tax at 20% (2009: 20%) 1,687 2,799

Effects of:Income taxable in different years - 360 Expenses not deductible for tax purposes - 16 Current year expenses not utilised 1,114 1,435 Tax deductible interest distributions (2,794) (4,591) Irrecoverable overseas withholding tax 35 80 Tax relief on overseas tax suffered (7) (19) Current tax charge for the year (note 7a) 35 80

(c) Provision for deferred taxation

At 31 March 2010 there is a potential deferred tax asset of £3,969,409 (31 March 2009: £2,839,651) in relation to surplus

management expenses. It is unlikely the fund will generate sufficient taxable profits in the future to utilise these amounts and therefore

no deferred tax asset has been recognised.



8 Finance costsDistributionsThe distributions take account of income received on the issue of shares and income deducted on the cancellation of shares, and comprise:

2010 2009£000 £000

Group:Interim 8,175 12,393Final 4,174 9,976

12,349 22,369

Add: income deducted on cancellation of shares 1,630 872Deduct: income received on issue of shares (9) (284)

Net distribution for the year 13,970 22,957

Undistributed net income 1,150 381ACD's yearly charge borne by the capital account (5,359) (9,777) Management fee rebates borne by the capital account (211) 737 Net revenue after taxation 9,550 14,298

Undistributed net income represents undistributed income from the property company subsidiaries.

2010 2009£000 £000

Finance costs

Net distribution for the year 13,970 22,957 Interest 1,990 1,934 Total finance costs 15,960 24,891

2010 2009

£000 £000

Company:

Interim 8,175 12,393

Final 4,174 9,976

12,349 22,369

Add: income deducted on cancellation of shares 1,630 872

Deduct: income received on issue of shares (9) (284)


Undistributed net income - -

ACD's yearly charge borne by the capital account (5,359) (9,777)

Management fee rebates borne by the capital account (211) 737


Finance costs


Interest 31 84

Total finance costs 14,001 23,041

Details of the distribution per share are set out in the distribution table on page 44.



9 Investment in subsidiariesThe results of the following subsidiary companies are consolidated in the group accounts:

Country of

Name % Holding incorporation Principal activity

New Star International Property (Luxembourg 1) S.A.R.L 100 Luxembourg Property Holding





RB Netherlands B.V. 100 Netherlands Property Holding

Abtana Holdings B.V. 100 Netherlands Property Holding

New Star Global Property Management (Mauritius) Limited 100 Mauritius Property Holding

New Star International Property (Mauritius) Limited 100 Mauritius Property Holding

New Star Global Property Karvina s.r.o 100 Czech Republic Property Holding

New Star Global Property Kadan s.r.o 100 Czech Republic Property Holding

The company owns 100% of the debenture stock of New Star International Property (Luxembourg 4) S.A.R.L which is a wholly owned

subsidiary of New Star International Property (Luxembourg 3) S.A.R.L.

The company owns 100% of the debenture stock of Astoria Investment Sp 2.0.0 and Casey Investment Sp 2.0.0 which are subsidiaries

of New Star International Property (Luxembourg 6). s.a.r.l.

10 Debtors2010 2009

£000 £000

Group:

Amounts receivable from the ACD for issue of shares 6 -

Management fee rebate receivable - 737

Accrued income 129 1,179

Other deposits 2,585 5,018

Other debtors 2,050 2,168

Overseas tax recoverable - 4

Prepaid expenses 245 328

Total debtors 5,015 9,434

Company:

Amounts receivable from the ACD for issue of shares 6 -

Management fee rebate receivable - 737

Accrued income 7,308 4,171

Overseas tax recoverable - 4

Total debtors 7,314 4,912



11 Cash and bank balances2010 2009

£000 £000

Group:

Short term deposits 28,217 -

Cash and bank balances 51,193 44,928

Total cash and bank balances 79,410 44,928

Company:

Short term deposits 28,217 -

Cash and bank balances 11,647 22,134

Total cash and bank balances 39,864 22,134

12 Creditors2010 2009

£000 £000

Group:

Amounts payable on cancellation of shares 1,779 -

Rental income received in advance 588 2,151

Accrued expenses 1,481 2,439

Income tax payable 1,130 2,067

Overseas property company tax payable 387 556

Other creditors 448 136

Refundable deposits 1,863 5,855

VAT payable 958 347

Bank loans 17,289 62,084

Total creditors 25,923 75,635

Company:

Amounts payable on cancellation of shares 1,779 -

Accrued expenses 533 819

Income tax payable 1,130 2,067

Total creditors 3,442 2,886

13 Interest-bearing loans and borrowingsThis note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. On 18 April 2008,

bonds amounting to JPY8.9bn, and maturing on 15 April 2011, were issued to RBS Tokyo by the three Japanese companies holding

the seven Japanese properties. Bonds amounting to JPY6.4bn were repaid during the year, following the disposal of five Japanese

properties.

2010 2009

£000 £000

Non-current liabilities

Secured bank loans 17,438 63,071

Capitalised loan costs (149) (987)

17,289 62,084



13 Interest-bearing loans and borrowings (continued)

Cost of borrowingThe interest rate applicable to these bonds is LIBOR with a margin of 1.2%. A three-year swap contract for a fixed rate of 1.0401% was

entered into, in order to hedge the risk of interest rate fluctuations.

Terms and debt repayment scheduleThe bank loans are secured over international investment property with a carrying amount of JPY3,610,000,000The repayment of the non-current borrowing excluding loan costs is as follows:

2010 2009

£000 £000

Between 1 and 2 years 17,438 63,071

17,438 63,071

The carrying amounts (excluding capitalised loan costs) of the Group’s borrowings are denominated in the following currencies:

2010 2009

JPY 000 JPY 000

Japanese Yen 2,468,000 8,900,000

Borrowings and the use of gearing may significantly increase the Group’s investment risk. Such activities create the potential for greater

return, but at the same time will increase the Group’s exposure to the risk of capital loss and interest costs. Any investment income and

gains earned on investments made through the use of gearing that are in excess of the interest costs associated with it may cause the

Fund’s net asset value to increase more rapidly and, conversely, the net asset value may decrease more rapidly than

would otherwise be the case.

The fair value of interest-rate swap derivatives amounted to a credit balance of £165,000 at 31 March 2010 (credit balance of

£554,000 at 31 March 2009).

14 Contingent liabilities and outstanding commitmentsThe lease agreements held with the tenants of the four properties located in the Czech Republic and Poland give the tenants the

option to request a building extention, which would be financed by the fund. One of the tenants of the property held by New Star Global

Property Kadan s.r.o has exercised this option. The cost of this project is estimated to be in the region of EUR 3.8m.



15 Related party transactionsThe authorised corporate director (ACD), Henderson Investment Funds Limited, together with the depositary, The Royal Bank of

Scotland plc, are regarded as the controlling parties of this OEIC by virtue of acting together in respect of the operations of the fund and

are considered related parties of the fund.

Details of any related party transactions occurring during the year with the ACD and the depositary and any balances at the accounting

year end are fully disclosed in the balance sheet, the statement of change in shareholders’ net assets and the notes to the financial

statements.

The ACD acts as principal in respect of all transactions of shares in the company. The aggregate monies received through issue and

paid on cancellation are disclosed in the statement of change in shareholders’ net assets. Any amounts due to or from the ACD at the

end of the accounting period for issues and cancellations of shares are disclosed in the notes.

During the year the ACD held shares in the company and had a holding of 1,840,890 Class R (Income) (31 March 2009: 11,119)

at the year end.

At 31 March 2010 the fund held B shares in Global Property Fund valued at £nil (31 March 2009: £4,155,000) and B(ii) shares

valued at £nil (31 March 2009: £1,342,000), entities managed by related parties to Henderson Investment Funds Limited. The

investment adviser may receive goods and services which are paid for out of broker commissions provided that they relate to execution

and research services which meet the criteria laid down by the Rules of the Financial Services Authority. In accordance with the

disclosure guidelines drafted by the Investment Management Association the investment adviser will provide the ACD and the

Depository with adequate information in relation to its policy for the receipt of goods or services that relate to the execution of trade

and/or the provision of research on an annual basis.

Any transactions conducted under these arrangements are done so on a best execution basis as required by the regulator, the Financial

Services Authority.

16 Shareholder fundsThe fund currently has four share classes: Class R (Retail Income), Class Z (Institutional Income), Euro (Accumulation) and US Dollar

(Accumulation).

The management charge on each share class at 31 March 2010 is as follows:

Class R (Income) 1.75%

Euro (Accumulation) 1.75%

US Dollar (Accumulation) 1.75%

The net asset value of each share class, the net asset value per share and the number of shares in each share class are given in the

comparative table on page 10.

All shares within the OEIC have the same rights on winding up.



17 Financial assets and liabilitiesThe policies applied in the management of financial instruments are set out in note 3.

There is no significant difference between the carrying values of the financial assets and liabilities and their fair values.

A portion of the net assets of the group and company are denominated in currencies other than sterling with the effect that the balance sheet and total return can be significantly affected by currency movements.

Net currency monetary assets and liabilities consist of:

Group Portfolio Net other Net assets

of investments assets

/(liabilities)

Currency £000 £000 £000

2010

Australian Dollar 58,823 3,406 62,229

Euro 43,791 12,230 56,021

Japanese Yen 25,343 10,584 35,927

Singapore Dollar 26,837 825 27,662

Sterling - 23,148 23,148

US Dollar - 5,390 5,390

Total 154,794 55,583 210,377

Portfolio Net other Net assetsof investments assets

/(liabilities)Currency £000 £000 £0002009Australian Dollar 81,150 3,599 84,749 Euro 106,719 12,114 118,833 Japanese Yen 128,167 (50,597) 77,570 New Zealand Dollar - 16 16 Singapore Dollar 68,473 826 69,299 Sterling 5,497 (413) 5,084 US Dollar - 5,495 5,495 Total 390,006 (28,960) 361,046



17 Risk disclosures (continued)

Company Portfolio Net other Net assets

of investments assets

/(liabilities)

Currency £000 £000 £000

2010

Australian Dollar - 840 840

Euro 142,120 11,190 153,310

Japanese Yen - 27 27

Sterling - 23,148 23,148

US Dollar 27,439 5,613 33,052

Total 169,559 40,818 210,377

Portfolio Net other Net assetsof investments assets

/(liabilities)Currency £000 £000 £0002009Euro 269,274 11,847 281,121 Japanese Yen - 27 27 New Zealand Dollar - 16 16 Sterling 5,497 (413) 5,084 US Dollar 69,802 4,996 74,798 Total 344,573 16,473 361,046

The interest rate profile of the group’s financial assets and liabilities is:

Group Floating Rate Fixed Rate Financial Total

financial financial assets/

assets assets (liabilities)

not carrying

interest

Currency £000 £000 £000 £000

2010

Australian Dollar 4,435 - 57,794 62,229

Euro 10,545 - 45,476 56,021

Japanese Yen 11,044 - 24,883 35,927

Singapore Dollar 1,039 - 26,623 27,662

Sterling 29,491 - (6,343) 23,148

US Dollar 5,819 - (429) 5,390

Total 62,373 - 148,004 210,377

2009

Australian Dollar 3,224 - 81,525 84,749

Euro 12,826 - 106,007 118,833

Japanese Yen (50,571) - 128,141 77,570

New Zealand Dollar 16 - - 16

Singapore Dollar 1,916 - 67,383 69,299

Sterling 9,421 - (4,337) 5,084

US Dollar 5,518 - (23) 5,495

Total (17,650) - 378,696 361,046


17 Risk disclosures (continued)

Company Floating Rate Fixed Rate Financial Total

financial financial liabilities

assets assets not carrying

interest

Currency £000 £000 £000 £000

2010

Euro 4,488 140,850 7,972 153,310

Japanese Yen 27 - - 27


Sterling 29,491 - (6,343) 23,148

US Dollar 5,018 27,087 947 33,052

Total 39,864 167,937 2,576 210,377

2009

Euro 7,950 264,023 9,148 281,121

Japanese Yen 27 - - 27


Sterling 9,421 - (4,337) 5,084

US Dollar 4,720 69,802 276 74,798

Total 22,134 333,825 5,087 361,046

18 Stock lending activitiesThe company carries out stocklending activities. Income earned from these activities is shown in note 5 and is net of bank and agent

fees amounting to £nil (31 March 2009: £12,000) payable to HSBC Bank plc.

There was no stock on loan or collateral held at the balance sheet date.

19 Post balance sheet eventsFrom 2 August 2010, the Henderson International Property Fund will change its name to Aviva Investors International Property Fund, and

the Authorised Corporate Director (ACD) and the Investment Manager will also change from Henderson to Aviva Investors.

20 Reconciliation of net income before tax and interest and finance costs to net cash flow from operating activities2010 2009

£000 £000

Group:

Net income before tax and interest 11,328 17,563

Decrease in debtors 4,425 2,574

(Decrease)/Increase in creditors (5,599) 2,334

Net cash inflow from operating activities 10,154 22,471

Company:

Net income before tax and interest 8,466 14,081

(Increase)/decrease in debtors (2,436) 383

Decrease in creditors (286) (259)

Net cash inflow from operating activities 5,744 14,205



21 Portfolio transaction costs


2010 2009

£000 £000 £000 £000

Group:

Analysis of total purchase costs

Purchases in year before transaction costs - 99,143

Commissions - -

Taxes - -

Property acquisition expenses - 4,164

Total purchase costs - 4,164

Total purchases including transaction costs - 103,307

Analysis of total sales costs

Sales in year before transaction costs 175,041 14,599

Commissions - (135)

Property disposal expenses (3,237) -

Total sales costs (3,237) (135)

Total sales including transaction costs 171,804 14,464

Company:

Analysis of total purchase costs:

Purchases in year before transaction costs - 103,153

Commissions - -

Taxes - -

Total purchase costs - -

Total purchases including transaction costs - 103,153

Analysis of total sales costs

Sales in year before transaction costs 113,486 68,383

Commissions - (136)

Total sales costs - (136)

Total sales including transaction costs 113,486 68,247


Company distribution table for the year ended 31 March 2010

Final distribution in pence per shareGroup 1 shares are those shares purchased before 1 October 2009

Group 2 shares are those shares purchased since 1 October 2009

Gross Income tax Net Equalisation Distribution Distributionincome (20%) income paid paid

31/05/10 31/05/09Retail Shares (Inc)Group 1 0.4741 0.0948 0.3793 - 0.3793 0.6983Group 2 0.0000 0.0000 0.0000 0.3793 0.3793 0.6983

Z Shares (Inc) - - - - - 0.7395

Euro Shares (Acc) 4.7726 - 4.7726 - 4.7726 9.1087

US Dollar Shares (Acc) 4.0675 - 4.0675 - 4.0675 8.3527

Interim distribution in pence per shareGroup 1 shares are those shares purchased before 1 April 2009

Group 2 shares are those shares purchased after 1 April 2009

Gross Income tax Net Equalisation Distribution Distributionincome (20%) income paid paid

30/11/09 30/11/08

Retail Shares (Inc) 0.7235 0.1447 0.5788 - 0.5788 0.6813

Z Shares (Inc) 0.7121 0.1424 0.5697 - 0.5697 0.6891

Euro Shares (Acc) 7.2621 - 7.2621 - 7.2621 6.9085

US Dollar Shares (Acc) 5.4368 - 5.4368 - 5.4368 5.1807


Shareholder enquiries

If you have any queries about your fund holding, either contact your professional adviser or telephone us on one of the numbers below:

For dealing enquiries including buying and selling units please telephone at local rate: 0845 608 8703

The following line is also available:

Investor Services: 0800 832 832

or you can contact us via e-mail at [email protected]

We may record telephone calls for our mutual protection and to improve customer service.

Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund

Management plc (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management

Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757) and Henderson Equity Partners

Limited (reg. no.2606646) (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London

EC2M 3AE and authorised and regulated by the Financial Services Authority) provide investment products and services. Telephone calls

may be recorded and monitored.

Unless otherwise stated, all data is sourced by Henderson Global Investors.

HGI42147/0610

henderson international property

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