Agenda Document Pack - Lanarkshire Educational Trust - 22/10/2025
North Lanarkshire Council · 22 October 2025
Back to Lanarkshire Educational Trust — 22 October 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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Clerk Name: Clare Louise McDonald Clerk Telephone: 01698 302190 Clerk Email: mcdonaldcl@northlan.gov.uk 13 October 2025 Members of the Lanarkshire Educational Trust Chief Executive’s Office Rachel Blair Chief Officer (Legal & Democratic) Civic Centre, Windmillhill Street, Motherwell ML1 1AB www.northlanarkshire.gov.uk Notice is given that a Meeting of the Lanarkshire Educational Trust is to be held in the Hybrid Meeting, on Wednesday, 22 October 2025 at 14:00 PM which you are requested to attend. The agenda of business is attached. Rachel Blair Chief Officer (Legal & Democratic) Members : A Ballinger, E Logan, M McBride, C McClymont, S Watson, G Wylie-Keatt. Page 1 of 62
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Agenda 1 Declarations of Interest In Terms of the Ethical Standards In Public Life Etc. (Scotland) Act 2000 2 Note of Previous Meeting - 8 April 2025 Submit note of previous meeting held on 8 April 2025. 5 - 6 3 Lanarkshire Educational Trust - Recommendations Submit report by the Chief Officer (Strategic Communication and Engagement) setting out the applications received for the Lanarkshire Educational Trust Scheme and recommendations for distribution. 7 - 14 4 Review of Unaudited Annual Accounts 2024/25 Submit report by the Business Finance Manager informing of the Trust's unaudited annual accounts for the year ended 31 March 2025. 15 - 20 5 Educational Endowments Investment Policy and Strategy Review Submit report by the Business Finance Manager providing the outcome of the options appraisal concerning the financial management of the Trust's assets. 21 - 62 Page 3 of 62
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LANARKSHIRE EDUCATIONAL TRUST – 8 APRIL 2025 1 8 April 2025 at 10am. A Meeting of the LANARKSHIRE EDUCATIONAL TRUST PRESENT Councillors Ballinger, McBride and Watson (NLC), and Councillors Logan, McClymont and Wylie-Keatt (SLC). IN ATTENDANCE Business Finance Manager (NLC); Area Community Partnership Manager (NLC); Grants Administration Officer (NLC); Service Manager (SLC); and Democratic Co-Ordinator (NLC). CHAIR Councillor McBride (Convener) presided. DECLARATIONS OF INTEREST IN TERMS OF THE ETHICAL STANDARDS IN PUBLIC LIFE ETC. (SCOTLAND) ACT 2000 1. There were no declarations. NOTE OF PREVIOUS MEETING 2. There were submitted the note of the previous meeting of the Lanarkshire Educational Trust held on 2 October 2024 for approval. Decided: that the note of the meeting, held on 2 October 2024 be approved. LANARKSHIRE EDUCATIONAL TRUST REPORT 3. There was submitted a report by the Chief Officer (Strategic Communication and Engagement): (1) providing an update on applications to the Lanarkshire Educational Trust Scheme, and (2) setting out in the Appendix to the report, details of applications which had been received requesting grant assistance under the Lanarkshire Educational Trust Scheme application rounds, which closed on 15 December 2024, together with recommendations for grant awards. Arising from discussion, it was agreed that the guidance be updated to include a deadline date for the submission of additional evidence requested. Decided: that applications for grant awards under the Trust Scheme, as attached at Appendix 1 to this Minute, be approved. ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2024 Item 2 Page 5 of 62
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LANARKSHIRE EDUCATIONAL TRUST – 8 APRIL 2025 2 4. With reference to paragraph 4 of the minute of the meeting of this Trust held on 21 October 2024, there was submitted a report by the Chief Officer (Finance and Technology): presenting a copy of the annual accounts for the year ending 31 March 2024 submitted to OSCR on 4 December 2024. The Business Finance Manager was heard in further explanation of the report and responded to Members questions. Arising from discussion, it was proposed that (a) a further report be submitted to the next meeting of the Trust in relation to the 2024/25 annual accounts and the detailed composition, and (b) a review of options concerning the management of the fund, including a review of the grant awards programme and the Terms of Reference of the Trust which will inform of future operational and financial planning objectives, which was agreed. Decided: (1) that the Draft Trust Annual Accounts for period ending 31 March 2024, be noted; (2) that a further report be submitted to the next meeting of the Trust in relation to the 2024/25 annual accounts and the detailed composition; and (3) that a review of options concerning the management of the fund, including a review of the grant awards programme and the Terms of Reference of the Trust be undertaken, which will inform of future operational and financial planning objectives. DATE OF NEXT MEETING 5. The Democratic Officer (NLC) advised that the next meeting of the Trust would take place on Wednesday, 22 October 2025 at 2pm and that the meeting would be held via MS Teams. Decided: that the next meeting of the Trust take place on Wednesday, 22 October 2025. Page 6 of 62
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North Lanarkshire Council Report Lanarkshire Educational Trust Committee Does this report require to be approved? ☒ Yes ☐ No Ref SP/LP/SL Date 22/10/25 Lanarkshire Educational Trust - Recommendations From Stephen Penman, Chief Officer (Strategic Communication and Engagement) E-mail Penmanste@northlan.gov.uk Telephone 07947997750 Executive Summary This report provides the Lanarkshire Educational Trust (LET) with an update on applications to the Lanarkshire Educational Trust Scheme together with recommendations for the distribution of the Trust income for the application rounds which closed on 15 August 2025. Recommendations It is recommended that the Lanarkshire Educational Trust: (1) Approve the LET award decisions set out in appendix 1 (2) In line with the terms of reference of the Trust, Committee are recommended to approve 13 applications £10,468.68 with 4 applications £3,530 being deemed ineligible for support. 1 application to be at the discretion of the Committee £750 and 1 application withdrew £1,100. The Plan for North Lanarkshire Priority Support all children and young people to realise their full potential Ambition statement (10) Engage with children, young people, parents, carers, and families to help all children and young people reach their full potential Programme of Work Brighter Futures Item 3 Page 7 of 62
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1. Background 1.1 Trusts were created in 1930 in the form of educational bursaries and scholarships and reactivated under the collective heading of the Lanarkshire Educational Trust Scheme for residents who reside within the area formerly known as The County of Lanark in 1930 when the Trusts were established. Throughout 2023, the Trust reviewed the criteria for applications to ensure that they are fit for purpose relating to fairness and transparency in the current public sector context whilst maintaining a focus on the original intent and purpose of the trusts around educational excellence and attainment. 2. Report Lanarkshire Educational Trust – 15 August 2025 2.1 Appendix 1 sets out the applications received as of 15 August 2025 deadline. Committee is asked to consider the recommendations detailed in appendix 1 and note the refusal reasons where appropriate. 2.2 Committee are recommended to approve 13 applications £10,468.68 with 4 applications £3,530 being deemed ineligible for support. 1 application to be at the discretion of the Committee £750 and 1 application withdrew £1,100. 3. Measures of success 3.1 Direct funding to support participants to achieve potential. 4. Supporting documentation 4.1 Appendix 1- Applications received for consideration as at 15 August 2025. Stephen Penman Chief Officer (Strategic Communication and Engagement) Page 8 of 62
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Impact on the LET fund as set out in Appendix 1 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☒ No ☐ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☒ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Page 9 of 62
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Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 10 of 62
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Appendix 1 Lanarkshire Educational Trust Scheme – Committee 22 October 2025 New Applications for Consideration received by 15 August 2025 REF Area Category Purpose of Application Costs Previous Application Amount Requested Recommendation 25/26 EE01/CV North Lanarkshire 29 Music, Drama and Performing Arts - equipment costs for production and hall let charges for rehearsals £1,500 N/A £1,500 £1,500 The school won a competition from Disney Theatrical Group and Music Theatre International to be the first school in Scotland that is eligible to perform Disney’s Frozen: The West End Musical 25/26 EE07/BW South Lanarkshire 29 Expressive Arts - visual arts project involving all pupils to create a panel of ceramic to celebrate 150 years which is of historical significance, providing a record for all pupils during the 150th year - request activity, equipment and event costs £3,495 N/A £1,500 £1,500 Blackwood Primary and ELC are celebrating 150 years - This is a Legacy Project and will benefit the whole community - Community event to be held 6 November 2025 25/25 EE09/SA South Lanarkshire 25 Special Equipment - activity and equipment costs towards enhancing Physical Education (PE) curriculum at Strathaven Academy £1,000 N/A £1,000 Nil Award - reason - everyday activity 25/26 GR05/CC North Lanarkshire 24 Special event, new equipment costs, administration costs £1,100 N/A £1,100 Organisation withdrew application as advised to apply for a Community Grant and were successful 25/26 GR12/KA North Lanarkshire 24 Special event, new equipment costs, administration costs N/A £1,800 Maximum is £1,500 - No correspondence received - Nil Award - Referred to Support for Businesses in North Lanarkshire Page 11 of 62
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Appendix 1 REF Area Category Purpose of Application Costs Previous Application Amount Requested Recommendation 25/26 IN02/PD Glasgow 26 GB Mens Football - Deaflympics 2025 in Japan £6,300 N/A £750 £685.22 (totals of evidence received) 25/26 IN03/KH Glasgow 26 Dance Orsalina Gaga Lab - Orsalina - Italy £1,835 Nov 2022 £750, Apr 2024 £750 £750 £750 - Third and Final Award 25/26 IN04/EG South Lanarkshire 26 World Karate Federation - Series A Austria International training camp - Nottingham Budapest International Open £719.50 N/A £719.50 £719.50 25/26 IN06/EC South Lanarkshire 26 Hamilton Rugby Club - full membership to play, train, travel with the team and receive physio £330 N/A £280 Nil - does not meet criteria for Cat 26 same applies under Cat 30 25/26 IN08/JW North Lanarkshire 30 Diploma in Legal Practice - University of Strathclyde £4,500 N/A £750 At discression of the Trust Committee under Cat 30 as doesn't meet criteria under Cat 23 25/26 IN10/MH South Lanarkshire 23 MSc History, University of Edinburgh £13,000 N/A £750 £750 (will submit proof of fees end of month - hold payment until received) 25/26 IN11/HB South Lanarkshire 26 Performance Foundation Programme - British Curling £3,690 Oct 2024 £750 £750 £750 25/26 IN13/RP North Lanarkshire 23 MFA (Masters of Fine Arts) Directing Fiction - The National Film and Television School £30,900 N/A £750 £750 (will submit fees 1 December - hold payment until received) 25/26 IN14/MG North Lanarkshire 26 Compete in the Scottish Championships 5k - Scottish National Team £366.08 Oct 2024 £304.99 £366.08 £366.08 25/26 IN15/EM North Lanarkshire 30 Diploma in Professional Legal Practice - University of Strathclyde £12,200 N/A £750 Nil - does not meet criteria for Cat 30 Page 12 of 62
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Appendix 1 REF Area Category Purpose of Application Costs Previous Application Amount Requested Recommendation 25/26 IN16/SF North Lanarkshire 26 Compete in the ITF (International Taekwon-Do Federation) European Championships in Holland representing Scotland (Taekwondo) - ITFU (International Taekwon-Do Federation Union) £611 April 2024 £500 £500 £500 25/26 IN17/ER Glasgow 26 ITFFS (International Tennis Federation) Decines-Charpieu - France (wheelchair tennis competition) - ITF (International Tennis Federation) £852 N/A £750 £697.88 (totals of evidence received) 25/26 IN18/SL South Lanarkshire 21 BMus Degree - Berklee College of Music, Boston £889.60 Oct 2024 £750 £750 £750 25/26 IN19/CM South Lanarkshire 26 Glasgow School of Sport for Swimming - City of Glasgow Swim Team Glasgow School of Sport £1,992 Mar 2023 £750, Oct 2024 £750 £750 £750 Third and Final Award Page 13 of 62
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North Lanarkshire Council Report Lanarkshire Educational Trust Committee Does this report require to be approved? ☒ Yes ☐ No Ref: SMcC Date: 22/10/25 Review of Unaudited Annual Accounts 2024/25 From Scott McCrossan – Business Finance Manager E-mail McCrossanS@northlan.gov.uk Telephone 07353 153 042 1. Background 1.1 With a principal charitable purpose concerning the advancement of education for children and young people, North Lanarkshire Council Educational Endowments – SC028079 (the Trust) is a registered charity regulated under the Office of Scottish Charity Regulator (OSCR). 1.2 In line with prevailing legislation, the Trustees are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and accounting practice. In addition, the annual accounts of the Trust are required to be Executive Summary This report provides the Trustees of the North Lanarkshire Council Educational Endowments (the Trust) with pertinent information regarding the Trust’s unaudited annual accounts for the year ended 31 March 2025. Accordingly, this report is placed to allow the Trustees to appropriately review the 2024/25 annual accounts for formal sign-off thereby facilitating the submission of such in line with statutory financial reporting requirements. Recommendations It is recommended that the Lanarkshire Educational Trust Committee: 1) Approve, in principle, the submission of the unaudited accounts of the Trust for the 2024/25 financial year 2) Acknowledge the requirement to file accounts by 31 December 2025 The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning Programme of Work Statutory / corporate / service requirement Item 4 Page 15 of 62
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submitted to OSCR within 9-months after the end of the reporting period. In this regard, the 2024/25 annual accounts are due to be submitted to OSCR by 31 December 2025. 1.3 To assist the Trustees in discharging their duties and responsibilities, officers within North Lanarkshire Council have responsibility for preparing the annual accounts in accordance with applicable law and accounting practice as well as facilitating the external audit process of the Trust’s annual accounts. 1.4 As such, this report provides Trustees with pertinent information regarding the 2024/25 unaudited annual accounts for review and sign-off in principle. 2. Report 2.1 Annual Accounts Overview 2.1.1 Per the unaudited accounts, the Trust reported a surplus of c. £0.046m in the 2024/25 financial year. In addition, as at 31 March 2025, the assets of the Trust equated to c. £1.867m, an increase of c. £0.121m / 7% compared to the prior year. 2.1.2 The 2024/25 unaudited accounts of the Trust are provided at Appendix 1 of this report for Committee review and consideration. 2.2 Analysis of 2024/25 Financial Year 2.2.1 For additional management information, the table below provides a high-level summary of the Trust’s financial outturn and overall asset position for the 2024/25 financial year, as well as outlining comparable figures regarding prior financial years: Table 1 Trust Activity 2022/23 2023/24 2024/25 £ % Statement of Receipts & Payments Dividends 23,713 15,774 20,718 4,944 31% Interest 19,773 58,505 61,876 3,371 6% Total Receipts 43,486 74,279 82,594 8,315 11% Grant Awards 14,229 18,646 21,649 3,003 16% Administration Fee 15,000 15,000 15,000 0 0% Other 20 20 20 0 0% Total Payments 29,249 33,666 36,669 3,003 9% Surplus / (Deficit) For Year 14,237 40,613 45,925 5,312 13% Statement of Balances Cash Funds 745,179 785,793 831,718 45,925 6% Investments 978,637 959,440 1,034,669 75,229 8% Total Assets 1,723,816 1,745,233 1,866,387 121,154 7% Movement (24/25 v 23/24) Page 16 of 62
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2.2.2 Consistent with the previous two financial years, the Trust has again reported a net surplus regarding the provision of its charitable activities. More specifically, through a combination of dividends and interest received aligned to the Trust’s investment portfolio, the Trust received c. £0.083m in income and expended c. £0.037m in the form of grant awards (c. £0.022m) and administration costs (c. £0.015m). 2.2.3 From an asset perspective, cash funds have grown by the returned surplus of c. £0.046m / 6% to c. £0.832m, coupled with an observed recovery of c. £0.075m / 8% to c. £1.035m regarding the market value of the Trust’s investments in listed stocks / shares and unit / investment trusts (as at 31 March 2025). 2.3 Annual Audit and Reporting Requirements 2.3.1 As the appointed auditors of the Trust, Audit Scotland are currently undertaking their review of the unaudited accounts. On completion of the audit, the Trust’s finalised accounts are due to be submitted to OSCR by 31 December 2025. 2.3.2 In line with prior year practice, Committee are recommended to approve the unaudited accounts in principle. This is on the basis that the unaudited accounts are not expected to evidence any material changes regarding the reported financial position disclosed within this report and supporting documentation. 2.3.3 Accordingly, should there be no material changes emanating from the audit, this will allow officers within the Finance and Technology Service of North Lanarkshire Council to submit the Trust’s final audited accounts in line with statutory reporting deadlines and accompanying legislative requirements without the need to convene a separable Committee meeting to approve the final audited accounts for submission. As noted previously, due to the scheduling of Committee meetings and overall statutory filing requirements, this approach was employed in the preceding financial year. 2.3.4 Following submission to OSCR, a copy of the final audited accounts will be circulated to the Trustees as well as being submitted to a future Committee for review. 3. Measures of success 3.1 As a registered charity, the Trust continues to adhere to the requirements of relevant statutory financial reporting standards and charity legislation. 4. Supporting documentation Appendix 1: North Lanarkshire Educational Endowments (SC028079) Unaudited Annual Report & Accounts for the Year Ended 31 March 2025 Scott L McCrossan CA Business Finance Manager Finance and Technology Page 17 of 62
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? As stated within the main body of the report. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Page 18 of 62
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Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ Page 19 of 62
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North Lanarkshire Council Report Lanarkshire Educational Trust Committee Does this report require to be approved? ☒ Yes ☐ No Ref: SMcC Date: 22/10/25 North Lanarkshire Council Educational Endowments: Investment Policy and Strategy Review From: Scott McCrossan – Business Finance Manager E-mail: McCrossanS@northlan.gov.uk Telephone: 07353 153 042 1. Background 1.1 With a principal charitable purpose concerning the advancement of education for children and young people, North Lanarkshire Council Educational Endowments (the Executive Summary This report provides the Lanarkshire Education Trust Committee with the outcome of the options appraisal concerning the financial management of the Trust’s assets. Following extensive appraisal and evaluation of pertinent information and liaison with established asset management firms, underpinned by North Lanarkshire Council’s approved Treasury Management Strategy and accompanying methodologies, Committee are recommended to approve the ‘Cash Deposits (Interest on Revenue Balances) Approach’ (Option B). In doing so, Committee are advised that this approach provides a prudent and sustainable financial funding model in the short to medium term thus enabling the Trust to make informed decisions in executing its charitable aims and objectives. Recommendations It is recommended that the Lanarkshire Education Trust Committee: 1) Approve the proposed Investment Policy and Strategy of the Trust (Section 1.8) 2) Endorse the commencement of the review of the Trust’s Grant Awards Programme and Terms of Reference (Section 2.5.3) 3) Otherwise, review the overall contents of the report The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning Programme of Work Statutory / corporate / service requirement Item 5 Page 21 of 62
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Trust) operates an expendable endowment fund which consists of financial assets that are held for the benefit of the charity, in terms of income generation, with which to fund its charitable and operational activities. 1.2 At the meeting of the Lanarkshire Educational Trust Committee on 8 April 2025, the Trustees instructed officers to review options concerning the financial management of the Trust’s assets, including a review of the grant awards programme and associated terms of reference (ToR). In doing so, Committee were previously advised that the associated review would have an overarching aim of providing a suitable base to inform future operational and financial planning assumptions and overall strategy in line with the Trust’s charitable aims and objectives. 1.3 Committee will recall that similar reviews have been conducted by officers in the past, the most recent of which was presented at the meeting of Committee on 5 February 2024. In summary, with reference to the ‘Review of Options for Managing Trust Fund Investments’ report, as submitted by the then Business Finance Manager as advisor to the Trust, Committee decided that: 1) The Trust proceed to the next stage of the investigatory process of a possible, alternative investment strategy in terms of engaging with a specialised financial advisory service, at no additional cost to the Trust; with 2) The acknowledgement that the conclusion of this investigatory stage would require a formal procurement process, inclusive of the appointment of a panel comprising of officers and named Trustees. 1.4 Over the course of the last 18-months, acknowledging the duration that is required to devise an appropriate approach in this context to aid informed decision-making, elements of these workstreams have now progressed to latter stages. For clarity, this is particularly the case concerning the comprehensive investigatory process noted. 1.5 Committee are advised that this report specifically focuses on the review of the Trust’s investment policy and strategy and overall financial management of the Trust’s assets. Whilst officers were also instructed to review the Trust’s grant awards programme and ToR, it has been considered financially and operationally prudent to undertake this holistic review in two distinct phases: • Phase 1: Review of the Trust’s Investment Policy and Strategy. • Phase 2: Review of the Trust’s Grant Awards Programme and ToR. 1.6 First, by adopting this phased approach, this will allow Committee to make a collective and informed decision as to the investment policy and strategy that it wishes to adopt. Second, underpinned by an overarching principle of seeking to maximise the charitable outcomes of the Trust in a financially sustainable manner, this will then allow for the grant awards programme and accompanying ToR to be commensurately constructed for Committee review, scrutiny, and approval prior to the commencement of the 2026/27 session. 1.7 Committee are advised that due consideration of the provisions of enacted charity legislation regarding the Charities and Trustee Investment (Scotland) Act 2005 and The Charity Accounts (Scotland) Regulations 2006 have been reviewed in conjunction with published sectoral guidance from the Office of Scottish Charity Regulator (OSCR). In addition, given the salient focus of this report, North Lanarkshire Council’s (NLC) Treasury Management Strategy 2025/26 and Treasury Management & Prudential Page 22 of 62
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Indicators (2025/26 to 2029/30), as approved at the meeting of NLC’s Finance and Resources Committee on 26 February 2025, has also been considered. 1.8 With the above in mind, this report provides Committee with an overview of the Trust’s financial position and recent financial performance; an overview of the investment policy and strategy review and outcome of the options appraisal conducted; cumulating in the recommendation for Committee to approve the corresponding investment policy and strategy (Option B) as outlined in Section 2.3.11 to 2.3.17 of the report. 2. Report 2.1 Analysis of the Trust’s Financial Position and Performance 2.1.1 Committee will be aware that the Trust has an asset portfolio which contains cash deposits which attract ‘Interest on Revenue Balances’ (IORB), as well as various investments in listed stocks / shares and unit / investment trusts. Importantly, these financial assets accrue income, e.g., interest and dividends respectively, with which to support the charitable and operational activities of the Trust. 2.1.2 The table below provides a high-level summary of the Trust’s financial outturn and overall asset position and investment performance for the 2024/25 financial year, as well as outlining comparable figures regarding the previous three financial years (2022/23 to 2024/25): Table 1 Trust Activity 2022/23 2023/24 2024/25 £ % Statement of Receipts & Payments Dividends 23,713 15,774 20,718 4,944 31% Interest 19,773 58,505 61,876 3,371 6% Total Receipts 43,486 74,279 82,594 8,315 11% Grant Awards 14,229 18,646 21,649 3,003 16% Administration Fee 15,000 15,000 15,000 0 0% Other 20 20 20 0 0% Total Payments 29,249 33,666 36,669 3,003 9% Surplus / (Deficit) For Year 14,237 40,613 45,925 5,312 13% Statement of Balances Cash Funds 745,179 785,793 831,718 45,925 6% Investments 978,637 959,440 1,034,669 75,229 8% Total Assets 1,723,816 1,745,233 1,866,387 121,154 7% Financial Ratios + / - 3-Year Ave Receipts : Awards Ratio 3.1 4.0 3.8 (0.2) 3.6 Surplus : Awards Ratio 1.0 2.2 2.1 (0.1) 1.8 Surplus Margin 32.7% 54.7% 55.6% 0.9% 47.7% Dividend Yield 2.4% 1.6% 2.0% 0.4% 2.0% Income Yield 2.5% 4.3% 4.4% 0.2% 3.7% Net Return on Assets 0.8% 2.3% 2.5% 0.1% 1.9% Movement (24/25 v 23/24) Page 23 of 62
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2.1.3 In the past three financial years, the assets of the Trust have generated average, annual receipts of c. £0.067m (c. £0.083m | 2024/25). In addition, as an expendable endowment fund, the Trust has issued average, annual grant awards of c. £0.018m (c. £0.022m | 2024/25). 2.1.4 After factoring in static costs concerning the internal administration of the Trust’s activities, based on the enacted investment policy and strategy, and accompanying grant awards programme and ToR, the Trust has observed an average annual surplus of c. £0.034m (c. £0.046m | 2024/25). 2.1.5 In terms of the asset position, deposited cash funds have grown by the returned surplus of c. £0.046m / 6% to c. £0.832m, coupled with an observed recovery of c. £0.075m / 8% to c. £1.035m regarding the market value of the Trust’s investments in listed stocks / shares and unit / investment trusts (as at 31 March 2025). 2.1.6 As highlighted above, in terms of the examination of the Trust’s financial position and performance, all key financial ratios demonstrate levels of financial sustainability in terms of servicing the Trust’s charitable activities. Commentary regarding the pertinent financial ratios of the Trust is outlined below: • In terms of the Trust’s core charitable objectives, the Receipts : Awards Ratio, which expresses the entity’s ability to support grant awards relative to the receipts generated, equated to a factor of 3.8 (3-Year Average: 3.6). • The Surplus : Awards Ratio, which expresses the entity’s reported surplus relative to grant awards issued, equated to a factor of 2.1 (3-Year Average: 1.8). In addition, the associated Surplus Margin, which measures the surplus retained relative to the total receipts generated, equated to c. 55.6% (3-Year Average: 47.7%). • From a financial performance and return perspective, in the 2024/25 financial year, Committee are advised that deposited cash funds received an average interest rate of c. 5.12% in line with North Lanarkshire Council’s approved Treasury Management Strategy and aligned methodologies (i.e., receipts received pertaining to IORB). • In terms of the Trust’s listed investments, the Dividend Yield, which measures the income generated by an investment relative to its current market value (as at 31 March 2025), equated to c. 2% (3-Year Average: 2%). • Moreover, the overall Income Yield, which measures the gross income generated by all investments relative to their current market value (as at 31 March 2025), equated to c. 4.4% (3-Year Average: 3.7%). • Lastly, the Net Return on Assets, which demonstrates how an entity uses its assets to generate returns, equated to c. 2.5% (3-Year Average: 1.9%). 2.1.7 In summary, the recent financial performance of the Trust’s assets suggests that the level of receipts accrued from its investment portfolio can adequately support the current level of charitable activity observed. This is both in terms of the number of applications approved in any given year, coupled with the current quantum of grant award values issued for successful applications and associated categorisations. Page 24 of 62
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2.2 Current Investment Policy and Strategy 2.2.1 Committee will be aware that the Trust’s investment policy and strategy, and overall approach regarding the management of its investments, has remained static over the years. In this regard, the current asset portfolio of the Trust evidences a legacy accumulation of cash deposits (managed in line with North Lanarkshire Council’s approved Treasury Management Strategy and accompanying methodologies) as well as various holdings within listed stocks / shares and unit / investment trusts. 2.2.2 As part of this review, other educational endowments / councils were surveyed to ascertain what investment policies and strategies they utilise. Broadly, Committee are advised that there is not a consistent approach in the management of financial assets of such funds, with the overall approach relative to each trust and their requirements. 2.2.3 In terms of listed assets, Committee are advised that the portfolio of assets contains what is known as idiosyncratic risk, which is the inherent risk associated with holding a concentration of specific equities e.g., holding shares in NatWest, St James Place etc. Despite having various equities, the holdings are also contained within UK markets therefore elements of systematic risk, which is the risk associated with the performance of the entire market, is also considered to be present. 2.2.4 As part of the overall review, the responses received from external specialists reaffirm this assessment whereby they observe that the current portfolio is considered to evidence an acceptance of high levels of risk. This is primarily due to the investment concentration in specific UK-based equities whilst also demonstrating minimal levels of diversification within the overall portfolio. 2.2.5 However, despite this approach, and as highlighted in Section 2.1 / Table 1 above, the returns generated by the current investment portfolio of the Trust demonstrates a reasonably liquid and strong position relative to the operational and charitable activity in which it supports. This is not to say that the approach is optimal, but rather it currently serves its core purpose and objective. 2.2.6 Consequently, in line with the Trust’s current grant awards programme and ToR, if the overall demand and associated quantum of award values remained consistent with 2024/25 activity / approvals, the cash funds of the trust are assumed to continue to grow on an annual basis in the short to medium term. However, this is based on the broad assumption that the level of returns generated from the Trust’s entire investment portfolio continues to exceed its charitable and operating expenditure. 2.2.7 In this regard, Committee are advised that the current, prudent assumption for IORB in the short to medium term is c. 3.75% per annum (2025/26 to 2029/30). For clarity, this is the envisaged rate of return regarding the deposited cash funds of the Trust. Overall, such deposits are typically considered low risk but are still subject to market fluctuations and changes in interest rates. 2.2.8 As for the Trust’s holdings within listed stock / shares and unit / investment trusts, it is difficult to ascertain what level of returns can be expected with any degree of acceptable tolerance. This is on the basis that the value of the investment, and any income generated from it, may fall, with past performance not a guide regarding the approximation of envisaged future returns. 2.2.9 Overall, in considering the options appraisal conducted in conjunction with the review of the Trust’s investment policy and strategy, the Trust could opt to retain this methodology and overall approach i.e., the ‘do nothing’ option. Page 25 of 62
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2.3 Proposed Investment Policy & Strategy General Points 2.3.1 With the above in mind, this section of this report considers an alternative investment policy and strategy and overall approach regarding the financial management of the Trust’s assets. 2.3.2 It is important to note that within the UK, investment advice must be provided by an individual and / or organisation who are authorised and regulated by the Financial Conduct Authority (FCA). Consequently, this report cannot provide advice on the specific type of investment products and assets which the Trust should invest in. 2.3.3 Instead, the report provides the outcome of the options appraisal conducted regarding the overall asset management approach, concluding with a recommendation for Trustees to review and consider. 2.3.4 At this juncture, it is pertinent to note that the underpinning principles of the ‘charity test’ prescribes that a charity must have a charitable purpose and must provide public benefit. Whilst the Trust fully satisfies these conditions, any adopted approach regarding the financial management of the Trust’s assets must have these principles in mind i.e., ensuring that it is congruent with the Trust’s charitable purpose and that it maximises the public benefit that it wishes to serve. Option A – Appointment of an External Asset Management Firm 2.3.5 In developing alternative options, officers from North Lanarkshire Council’s Finance and Technology Service have again liaised with established asset management firms to determine what an externally managed service would resemble. As part of this exercise, four asset management firms were approached: RBC Brewin Dolphin; Evelyn Partners; Rathbones; and Cazenove Capital. 2.3.6 To provide a consistent base for appraisal and evaluation, each firm was provided with a set of 12 predetermined questions and asked to formulate their respective responses. In addition, to aid the firms in constructing their individual responses, this phase also included respective virtual meetings with firm representatives to provide further, relevant information about the Trust and the overall review being conducted. The formal responses from the firms are provided within the accompanying appendices of this report. 2.3.7 With reference to the written responses received from the associated firms, the following conclusions can be drawn regarding the pertinent features and parameters of an external asset management service: 1) Through a business partnering-type model, firms seek to develop strong working relationships with the Trust and its Trustees. To provide a tailored approach regarding the management of the Trust’s assets, this is in terms of fully understanding the Trust and its charitable purpose and objectives. 2) Firms exhibit similarities in terms of formal client engagement and contractual arrangements. For example, there is typically no standard contractual term regarding the duration of formal engagement, as well as indicating that the commencement and / or cessation of arrangements would have a smooth route and transition. Page 26 of 62
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In addition, firms also undertake similar processes including aspects aligned to client onboarding; client engagement in terms of understanding investment preferences etc; development of an investment policy and strategy; conducting administrative processes regarding the realignment of the Trust’s assets into the managed fund; and client support mechanisms (e.g., Trustee training, financial performance reporting etc) to name but a few. 3) All firms offering financial investment and management advice charge annual fees for their services. Again, in line with the preferred service option chosen by the Trust, the charging mechanisms typically demonstrate a percentage fee relative to the overall asset base contained within the managed portfolio. Broadly, the cost for a managed service would be in the region of c. £0.015m per annum. This would be an additional administration cost to the Trust. 4) In terms of income generation, it is important to note that firms cannot guarantee the value of investments nor the returns received. Notwithstanding, firms indicate that typical returns would be in the region of c. £0.040m - £0.080m per annum. Importantly, such returns would be dependent on the Trust’s / Trustees’ acceptance of risk and preference regarding the investment approach adopted e.g., whether to specify particular investment interests and / or exclusions, focus on income growth or capital appreciation (or vice versa), seek a ‘total returns’ approach etc. 5) For context, and in broad terms, items [3] and [4] are the envisaged cost and return associated with adopting an externally managed fund approach for a portfolio valued at c. £1.8m, which approximately equates to the total assets of the Trust as at 31 March 2025 (see Table 1 above). 6) As such, after factoring in prevailing NLC administration fees of £0.015m, which supports the administration of the Trust’s grant awards programme and statutory reporting and accounting requirements, an indicative net surplus in the region of c. £0.010m - £0.050m would be available to support approved grant applications and subsequent awards. 2.3.8 From a best value perspective, should the Trust opt for this approach, it is again advised that an open and transparent selection process for the appointment of an external asset management firm ought to be followed. 2.3.9 For procurement purposes, whilst the Trust is a separable legal entity which is not bound by NLC’s General Contract Standing Orders, and with investment companies / asset management firms also attracting a procurement exemption under Reg. 11(f) of The Public Contracts (Scotland) Regulations 2015, it would still be considered prudent to follow an appropriate and proportionate procurement process to allow the Trustees to make an informed decision regarding the quality and price of services rendered. In addition, this approach would also be considered commensurate with the duties and responsibilities imposed on the Trustees in line with prevailing charity legislation. 2.3.10 Moreover, consistent with previous advice (see Section 1.3 – Item 2), Committee would also be required to again nominate Trustees to lead on this process in terms of formal decision making, with assistance and support provided by relevant officers during the process itself. In any case, a final report outlining the preferred asset management firm would need to be brought back to Committee for formal approval and sign-off. Page 27 of 62
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Option B – Cash Deposits (IORB) Approach 2.3.11 From an economic and financial appraisal perspective, the indicative overall return, cost, and associated surplus of this approach presents a sustainable funding model and demonstrates the principles of best value. In addition, in terms of managing financial risks and aiding the achievement of the charitable objectives of the Trust, the key advantages of this approach include: 1) An asset management approach that wholly aligns with NLC’s approved Treasury Management Strategy, which is fundamentally underpinned by NLC’s approved Financial Regulations and conforms to sectoral best practice regarding the ‘Treasury Management in the Public Services Code of Practice and Cross- sectoral Guidance Notes’ (CIPFA, 2021). 2) As such, this approach is placed to prudently mitigate and manage the effects of interest rate risk as well as limiting the exposure of the Trust’s assets to other risks associated with the market and wider macro-economic factors. 3) Administratively, this approach does not incur additional administrative costs in either financial or resource terms for officers and Trustees. 4) The approach also facilitates the ability to undertake short to medium term financial planning to support the holistic assessment of the Trust’s grant awards programme and ToR (Phase 2); and 5) In doing so, this approach can aid the Trust in fulfilling its stated charitable objectives with the potential to maximise its public benefit. 2.3.12 To illustrate the ‘Cash Deposits (IORB) Approach’, the table below provides Committee with an indicative example as to what this investment policy and strategy could evidence in practice. In terms of assumptions, to derive the receipts envisaged from this approach, the prevailing IORB rate (Section 2.2.7) has been applied to an assumed total asset investment value of c. £1.8m (Table 1). In addition, in terms of payments, and in line with recent activity, total grant awards are assumed to be c. £0.025m per annum with administration costs staying at a fixed value of c. £0.015m per annum. Table 2 Page 28 of 62
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2.3.13 Therefore, as an alternative option, in line with NLC’s approved Treasury Management Strategy, Committee are advised that tailoring the current investment policy and strategy towards a ‘full cash deposits approach’ presents a low-risk and financially sustainable option in the short to medium term. 2.3.14 In comparison to Option A, this is not to say that externally managed services do not offer this, rather, Committee are advised that the evaluation of the formal responses can be relied upon and are considered prudent and reflective of indicative costs and expected returns regarding the assumed investment value attributable to the Trust (i.e., a total invested asset position of c. £1.8m per Table 1). 2.3.15 In this respect, the options appraisal and overall review highlights that an externally managed fund, in line with current assumptions, would generate less and / or comparable levels of returns, but would also create additional costs thus eroding the potential income available. 2.3.16 This latter point is particularly important in terms being able to demonstrate the level of income attributable to the Trust in managing and maximising its charitable and operational activities in a financially sustainable manner. 2.3.17 For clarity, and under instruction from the Trust / Trustees, this approach would involve liquidating all the Trust’s holdings within listed stocks / shares and unit / investment trusts, with the sale proceeds being reinvested within deposited funds managed by NLC which would attract IORB. Please note, this methodology and approach for annual income generation already pertains to the current cash funds of the Trust (c. £0.832m per Table 1). If the non-cash assets were liquidated, based on the market value of non- cash assets as at 31 March 2025, it is envisaged that the deposited balance would increase to c. £1.8m (i.e., an increase of c. £1.035m per Table 1). 2.4 Conclusion and Recommendations 2.4.1 In summary, on conclusion of the options appraisal and review conducted, Committee are recommended to approve ‘Option B – Cash Deposits (IORB) Approach’ as outlined in Section 2.3.11 to 2.3.17 of the report. In addition, the table below provides Committee with a high-level overview of the options presented in this report: Table 3 Options Comparison Do Nothing¹ Low-End High-End Option B³ Total Receipts 67,000 40,000 80,000 70,000 Grant Awards 25,000 25,000 25,000 25,000 Administration Fee 15,000 15,000 15,000 15,000 Asset Management Fee 0 15,000 15,000 0 Total Payments 40,000 55,000 55,000 40,000 Surplus / (Deficit) For Year 27,000 -15,000 25,000 30,000 Surplus : Awards Ratio 1.1 -0.6 1.0 1.2 Surplus Margin 40.3% -37.5% 31.3% 42.9% Option A² [1] Average 3-year receipts value utilised (2022/23 to 2024/25) [2] Low / High-End receipts values utilised to show range of envisaged asset mgmt. returns based on info received [3] Average 3-year envisaged receipts utilised Page 29 of 62
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2.4.2 In line with current and prevailing assumptions, Option B demonstrates a low financial risk profile as well as outlining a prudent funding outlook regarding the short to medium term income generation of the Trust. Moreover, whilst the recommended option still bears risk regarding potential fluctuations and changes in interest rates, the underpinning assumptions are backed by NLC’s approved Treasury Management Strategy and accompanying methodologies therefore provides reasonable assurance regarding the approach developed. 2.4.3 In addition, in line with best practice, Committee are advised that it would be appropriate to agree to a triennial review of the Trust’s investment policy and strategy to ensure the long-term financial sustainability of the Trust is maintained. As such, it is recommended that Committee approves this approach in principle as part of the formulation of the Trust’s investment policy and strategy governing document. 2.4.4 In this regard, should the recommended option be approved by Committee (Option B), a follow-up report concerning the governing document of the Trust’s investment policy and strategy will be presented. Please note, whilst Option B represents the Trust’s underpinning investment policy and strategy, the associated document cannot be constructed at this time until the approach, concerning the financial management of the Trust’s assets, is known as this a key component of this document. 2.5 Next Steps 2.5.1 Assuming approval of the recommended option, under instruction from the Trust / Trustees, officers within NLC’s Finance and Technology and Legal and Democratic Services will begin the process of liquidating assets regarding the Trust’s holdings in listed stocks / shares and unit / investment trusts, along with depositing the proceeds of these sales in line with the approved investment policy and strategy. 2.5.2 Officers within NLC’s Finance and Technology Service, in consultation with officers from NLC’s Legal and Democratic Service, will construct the formal investment policy and strategy governing document for Committee review and scrutiny which will require to be formally adopted by the Trust. Any necessary external legal specialist advice, if required, will be obtained. 2.5.3 Officers within NLC’s Community Partnership Team, in consultation with officers from Finance and Technology and Legal and Democratic Services, will also commence Phase 2 of this review in terms of formulating the grants awards programme and ToR in advance of the 2026/27 session. 2.5.4 Progress updates regarding these key actions will be presented at a future meeting of Committee. 3. Measures of success 3.1 As a registered charity, in accordance with enacted legislation and approaches to best practice, the Trust continues to operate in a financial sustainable manner regarding the advancement of education for children and young people. Page 30 of 62
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4. Supporting documentation Asset Management Firm Responses: Appendix 1 – RBC Brewin Dolphin Appendix 2 – Evelyn Partners Appendix 3 – Rathbones Appendix 4 – Cazenove Capital Finance and Resources Committee: Treasury Management Strategy 2025/26 & Treasury Management & Prudential Indicators 2025/26 to 2029/30 (26 February 2025) Legislation and Sectoral Guidance: • Charity Investment Guidance (OSCR, 2025) • Charities and Trustee Investment (Scotland) Act 2005 • The Charities Accounts (Scotland) Regulations 2006 Scott L McCrossan CA Business Finance Manager Finance and Technology 5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Page 31 of 62
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As stated within the main body of the report. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☒ No ☐ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? Advice has been obtained in relation to the exemption under the procurement regulations for appointing the external advisor. In addition, the Trust will require to seek further advice regarding the formulation of strategies, liquidation of financial assets, as well as the review of the grant awards programme and accompanying terms of reference should Option B and the commencement of Phase 2 be approved. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Page 32 of 62
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5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Whilst Phase 1 does not have any direct communications impact, it is envisaged that Phase 2 may impact of the Council’s communication activities depending on the outcome of the associated review and accompanying approvals at a future Committee. 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? As outlined in the main body of the report, the Trust’s investment portfolio contains discrete finance-based risks in terms of idiosyncratic and systematic risks in relation to holdings within listed stocks / shares and unit / investment trusts. Whilst the recommended option cannot guarantee full financial risk mitigation, the overall asset management approach outlined wholly aligns with North Lanarkshire Council’s approved Treasury Management Strategy, which is fundamentally underpinned by the North Lanarkshire Council’s approved Financial Regulations and conforms to sectoral best practice regarding the ‘Treasury Management in the Public Services Code of Practice and Cross-sectoral Guidance Notes’ (CIPFA, 2021). 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐ _________ Page 33 of 62
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Wealth Management Investment management proposal North Lanarkshire Council Educational Endowments Trust August 2025 Prepared by: James Flett | Associate Director, Wealth Manager – Charities David Hourston | Director, Wealth Manager – Charities RBC Europe Limited Page 34 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Contents Executive summary ................................................................................................................................................................... 1 Your specific questions ............................................................................................................................................................. 2 Conclusion .................................................................................................................................................................................. 9 Page 35 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 1 Executive summary Thank you for inviting RBC Brewin Dolphin to provide updated information to the North Lanarkshire Council Educational Endowments Trust regarding how we might approach the management of your investments. We recognise how valuable your role is in providing educational grants to pupils in the Lanarkshire area. We furthermore appreciate the importance of establishing a robust financial strategy to allow for this to be delivered today and in future years. We are grateful for the opportunity to provide these details and would very much welcome the opportunity to build on this in order to give you confidence in our ability to meet your needs and help support you on your investment and strategic journey. Every client comes to us with their own parameters and aims for their investment portfolio. At RBC Brewin Dolphin, we therefore believe that it is important to offer a bespoke portfolio management service where we listen carefully and tailor the investments to meet the specific requirements. This is in contrast to a unitised, single fund approach, where one size fits all and a charity has to accept the criteria set out by the fund. A bespoke approach furthermore offers the flexibility to adapt to your changing requirements over time. We would work in partnership with you to provide: • A tailored, actively managed, discretionary investment management service based on the specific requirements of the charity. • A local, experienced, and specialist Scottish-based charity team who will provide advice, manage the investments and report directly to the Trustees. • The most suitable investments, aligned to your purposes today and as they evolve. Beyond the investment management of your portfolio, we also provide: • Advice and guidance on the continued evolution of your Investment Policy Statement. • A high level of administrative support and reporting tailored to your needs • Trustee training • Seminars, educational workshops and networking opportunities. We are an experienced and approachable team, and pride ourselves on providing high levels of service and communication which we feel are essential in developing a strong working relationship as we partner with our clients on their investment journey. “Getting it right for you” is our commitment to our clients and it would be a pleasure to work with North Lanarkshire Council Educational Endowments. We would welcome the opportunity to expand on our proposal with the Board of Trustees. If there is anything further that you need, please do get in touch. James Flett Associate Director Tel: 0131 300 2818 (direct) Email: james.flett@brewin.co.uk David Hourston Director, Wealth Manager – Charities Tel: 0131 300 2963 (direct) Email: david.hourston@brewin.co.uk Page 36 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 2 Your specific questions 1. If appointed, is there a standard type of contract that The Trust would enter with Brewin Dolphin and, if so, what are the main terms of reference? If appointed as the Endowments’ investment manager, we would wish to meet with the Trustees at the outset to have an in-depth discussion about the needs and requirements of the Trust to get a full understanding of the current position, the ongoing cashflow requirements and the wider financial context of the endowments. This will allow us to formulate an investment strategy which is tailored to the needs of the Trust, taking into account the appropriate level of investment risk, the portfolio’s income demands and overall return requirements as well as any specific ethical restrictions which should be considered. Based on these discussions, we would send over our formal recommendation in our Client Advice Proposal. It is this document which would form the basis of our relationship and contains the following information: • Our understanding of your objectives • A breakdown of your current financial position • Our proposed strategy, including discussion on investment risk and the investment timeframe • Our fees and charges • The key stakeholders, including the authorised signatories to the account • Any ethical investment restrictions to be applied We will send the Client Advice Proposal to the Board with the other account opening documentation to be signed and returned, allowing us to open an account in the name of the Trust, and arrange transfer or encashment of the existing assets. Alongside our Client Advice Proposal which sets out the details of how the investment account will be managed, we would also need to complete our Account Opening Process. This ensures that we have all the information that we need to be able to formally set the account up. At this stage, we would also provide our Terms & Conditions, which covers all aspects of how the service that we will provide as well as information regarding our Conflicts Policy and Order Execution Policy. We only offer a discretionary investment management service for our charity clients and all clients are taken on under a retail agreement offering the full protection of the Financial Conduct Authority. Our standard terms and conditions are set out Retail Terms & Conditions document which is attached as a separate document. 2. What key actions would The Trust have to undertake prior to formal engagement with Brewin Dolphin? Prior to formal engagement, the Trustees would need to satisfy themselves that their chosen investment partner has sufficient expertise to be able to provide the level of service that the Trust needs to be able to achieve its objectives. Following any decision to move forward, where appropriate, the endowments board would appoint RBC Brewin Dolphin informally, verbally or by email. We will then carry out an in- depth conversation with the councillors and complete and distribute the Client Advice Proposal and account opening documentation for signing, as described above. At this point we would also require the names and details of the authorised signatories and we will carry out anti-money laundering verification checks on each of them. Once this information is provided and paperwork has been signed and returned, this completes the formal process of engagement/appointment. Our dedicated charity administration team are highly experienced in the onboarding process and we would look to shoulder as much of the administrative burden as possible throughout the process, including pre-populating forms wherever possible, and managing the transfer process from end to end. Page 37 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 3 3. What is the typical contractual term to engage with Brewin Dolphin? There is no standard contractual term for our clients. We have worked in partnership with many of our clients for decades, while some will review their investment management arrangements within a regular cycle, or indeed on an ad hoc basis as circumstances change. For public procurements, it is relatively common for appointments to be made, for example, on a 5 year basis, or on a 3 year basis with an option to extend for a set additional period, e.g. 2 further years. 4. What happens should either party wish to exit the contract prior to the contract cessation date? At RBC Brewin Dolphin, there is no minimum period for the contract nor any exit charges, other than associated transfer costs, so the contract could be terminated at any time by agreement of the councillors and we will help arrange encashment or transfer out as appropriate. 5. In terms of fees / charges, what type of structure does Brewin Dolphin apply on a contract of this nature? We believe in being as transparent as possible in everything we do and provide all our clients with a full breakdown of the total cost of investing. For clarity, we have outlined our charging structure for your portfolio in two parts: 1. Our RBC Brewin Dolphin annual management fee • For charities with assets less than £1m, our annual management fee is based upon a flat fee of 0.8% (excl. VAT) • For charities with assets over £1m, our annual management fee is based upon tiered rates (excl. VAT) as follows: First £1m at 0.6% Next £4m at 0.5% Balance over £5m at 0.3% 2. Underlying external fund charges • Where we hold external third-party funds within portfolios, they incur their own underlying charges such as management fees, transaction costs and administrative charges. • These costs are charged at source and reflected within the unit pricing and have, therefore, an indirect impact upon the value of your portfolio. Fund managers quote this cost as a percentage of the overall fund value and it is charged at source. Your fee illustration Based upon the current portfolio size of £1.8m, our fees for the management of the portfolio and our full range of investment and administration services would be 0.56% (plus VAT). We do not charge dealing commissions for transactions. 1. Our annual management fee First £1 million at 0.6% £6,000 Next £4 million at 0.5% £4,000 Balance at 0.3% - Total management fees (excluding VAT) £10,000 0.56% VAT @ 20% £2,000 Total management fees (including VAT) £12,000 0.67% Page 38 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 4 2. Illustrative external charges for funds held within the portfolio * Based on risk profile 6, medium risk. For illustrative purposes only. UK VAT is applied on fees and charges in line with applicable legislation. Other duties, transaction taxes etc may apply in line with overseas law. Other Charges The fees shown above is an inclusive fee and includes pooled fund charges. We do not charge any additional contract charges, dealing commissions, nominee or custodial costs or individual/performance related fees. The table below outlines other charges that may apply to our Discretionary Investment Management services. Fees are charged as a percentage of the total assets under management. Transaction charges Miscellaneous Contract charges (per trade) Nil Initial charge Nil Transaction commission Nil Exit charge £15 per line of UK stock £25 per line of overseas stock BACS payments Nil Performance fees Nil CHAPS payments £15 Custody fees Nil Administrative charges Nil Operating fees Nil Research costs Nil 6. In terms of client engagement and issuance of pertinent information, would Brewin Dolphin provide periodic financial updates on fund performance with such information also enabling statutory accounting requirements? Yes. At RBC Brewin Dolphin, all of our portfolio administration is done in-house. Our administration and reporting is designed to provide you with clear and useful information to help you to discharge all of your fiduciary obligations. Assets are also safely held with our custodian, a separate legal entity. We provide written quarterly reports on the portfolio valuation and performance against an agreed benchmark for comparison. In addition, a full year-end accounting pack is produced for your year-end, and we can provide comment for annual accounts, should this be required. Information in our quarterly reports typically includes: Portfolio valuation Economic and market commentary Asset allocation breakdown Performance net of fees Transactions and rationale Capital & income statements Stewardship and engagement report Top and bottom performers Our reporting can be adjusted to meet your needs and so if there is any other information you require, we would be happy to enhance our current reports in the future. In addition to the written reporting, James or David, one of your designated investment managers, would be delighted to meet with members of the Board, on dates agreed with you and at a frequency to suit you, to report on the portfolio over the years ahead. At each meeting, they typically provide a comprehensive slide pack which reflects up-to-date information on progress and activity within the portfolio, as well as market review and outlook. We will also formally review the suitability of our advice on an annual basis. Total external fund charges* £3,780 0.21% Total management fees (including VAT) £15,780 0.93% Page 39 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 5 ESG reporting tool Within our client meeting packs we provide an ESG reporting tool to report on the Environmental, Social & Governance characteristics of portfolios. Data includes: • Overall portfolio ESG risk score • Five highest and lowest scoring assets • Carbon intensity scoring Online access We offer online access to reporting via the MyBrewin system, which provides a facility for nominated individuals to view the portfolio through a secure, password protected internet site, mobile telephone app or smart watch. MyBrewin allows charities to access: • A high-level summary of the portfolio • A list of all portfolio holdings, with prices as at the close of business of the previous working day • Clear performance charts with customisable data ranges (charts can be exported to Excel for offline use) • Position details page shows individual holding data and further information on the stock • Multiple portfolio access • Portfolio transactions • Income calendar which provides an estimation of future income from the portfolio • Look back, which allows you to see what your holdings were worth on a date in the past • Glossary – a full list of definitions is provided on key terminology used throughout MyBrewin A guide, providing further information on the portal is available upon request. 7. Whilst managing the assets of The Trust, what other support and / or information would Brewin Dolphin provide to The Trust / Trustees as part of your standard contractual terms? Should we be appointed, you would have a direct relationship with our specialist Scottish charity team who bring together substantial experience of the charity sector with a local service and a team approach. The team was formally established 15 years ago and the individuals within it have a specialist, in-depth understanding of investment, legal, ethical, regulatory, and accounting needs of Scottish charities. The team work with clients across Scotland and with offices in Glasgow, Edinburgh, Aberdeen and Dundee, we are well placed to service our clients. Page 40 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 6 Given their charity specialism, the team members have a high level of understanding and expertise in sustainable and responsible investment and appreciate the importance of aligning a charity’s investment policy to their charitable objectives and interests. Head of the Team, Lynne Lamont was part of the working group that led to the publishing of the OSCR guidance ‘Charity Investments: Guidance and Good Practice’. The diagram below outlines the team’s structure. Your proposed investment managers, James Flett and David Hourston, would be responsible for the investment management of the portfolio and overall relationship. James and David have considerable experience of managing charity investment portfolios. They are supported by the rest of the Scottish charity team and their specialist charity administrators who would assist with the opening and transitioning of your account as well as subsequent reporting requirements. They will work in partnership with the Board of Trustees to tailor the portfolio to meet your needs as these change over time. The Trustees will have a direct line to James, David and the wider team, who will be on hand to answer any queries you may have and to meet with the Trustees at a frequency to suit you. As well as providing advice and managing investment portfolios we also offer local and organisation specific trustee training, webinars, Investment Policy Statement guidance and ongoing guidance on responsible investment. We are also happy to engage directly with you on specific issues of interest or to present on a variety of investment related topics at bespoke in-person or online events. As part of our partnerships with clients we provide: Investment Policy Statement guidance We provide ongoing advice on the structuring of your Investment Income and Reserves Policy Statement (IPS). It is important that we discuss all aspects of the policy with you as it crystallises your mandate with us and sets the framework for how we will be investing your funds. Charity perspective We produce a charity specific magazine addressing key subjects relevant to charities. Our most recent issue included articles focusing on the cost-of-living squeeze, balancing ethics and returns, Step One (an RBC Brewin Dolphin charity client supporting people with disabilities and mental health), collaboration with Social School of Entrepreneurs and how charities can navigate the challenges of the post-pandemic digital transformation. Webinars & seminars We host webinars and seminars to keep our audience members informed on key sector issues and charity investment matters. Page 41 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 7 Trustee training We understand that Trustees’ responsibilities extend beyond investment matters. Therefore, we hold regular trustee training, seminars, conferences and often partner with leading charity audit firms, legal firms and sector bodies, so that we can offer a comprehensive update on a wide range of topics. We would be delighted to host trustees at these events which are also a great opportunity to network. Markets insights Insights into current market conditions are provided to clients regularly which discuss market changes and significant events causing volatile activity. Flexible approach to your cashflow needs Our bespoke approach to managing your portfolio provides us with the investment flexibility to adapt to your changing needs, such as your cash flow requirements and investment time horizon. Cash solution We provide the option of a cash solution through term deposits with the Royal Bank of Canada. RBC is one of the most respected and highly rated global banks, with a credit rating of AA-. Availability of meeting facilities We are delighted to make office space available in our Central London offices to provide you with meeting room space for finance related meetings as required (subject to availability). 8. Can The Trust / Trustees specify if they do or do not want to invest in particular companies, sectors etc? Yes. We can apply exclusions based on the trustees preferences. RBC Brewin Dolphin is a strong advocate of responsible share ownership. Incorporating Environmental, Social and Governance (ESG) factors and active ownership in investment decisions is embedded within our investment process. For the charities that we work with, the nature of their own work is often reflected in the ethical element of their Investment Policy Statement. We accommodate a wide range of ethical criteria and use the screening services of a third party ESG responsible investment research specialist to screen the portfolios, ensuring that all direct stocks held are compliant with each client’s agreed policy. We therefore have significant experience of advising on policies, conducting sample screenings, debating the options, and assessing the impact with our clients. We are experienced in this area and would be happy to lead any discussion on the development of the ethical policy, if this would be helpful, to identify areas of concern and highlight the financial or investment implications of any proposed restrictions. 9. In terms of income yield, are you able to provide an indication of the estimated annual income for The Trust based on a fund of c. £1.8m? The income generation of the fund would be influenced by a number of factors including the level of risk the Trustees are prepared to accept, the extent of any ethical requirements, and any particular income constraints the Trustees may wish to place on the portfolio. However, we have flexibility within our investment process to be able tailor portfolios and as part of this we are able to generate more or less income, depending upon individual client requirements. As a general guide, a portfolio unconstrained by income requirements will generate an income yield of around 2.3%, which would be an income of £41,400 for the Trust. However, we are able to favour higher income paying investments where appropriate and the income yields available for clients who have asked for a heavy income bias could be in the region of 3.1%, or £55,800 for the Trust. As part of our initial discussions we would consider the cashflow requirements of the Trust carefully, and it is worth Page 42 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 8 emphasising that the higher the level of income, the more constrained we are in our investment approach and this is likely to impact the ability of the portfolio to generate higher levels of capital growth over the long term. We understand the Educational Endowments are expendable, and for charities with no specific constraints on spending capital, we are increasingly seeing Trustees opt for a total return approach, whereby a specific level of return is targeted from a combination of income and capital growth. Under this approach, the focus is on the overall return generated, with no distinction between income and capital growth. Under such an approach, we would have an in-depth discussion with the charity regarding your current income needs and future ambitions, and help you understand what is achievable and what is sustainable over the long term. Once the desired drawdown is determined, we would put in place a fixed regular drawdown, which is paid across from the investment account to the Trust on a monthly or quarterly basis. We would manage the portfolio to ensure the payments could be met from the natural income, and from periodic and opportunistic profit taking from portfolio capital. This ensures flexibility for us in the management of the portfolio, allowing us to target the best long-term investments, irrespective of yield. This also gives the Trustees more visibility and predictability with respect to money available for grants and expenditure, which can be helpful for planning and budgeting. 10. In terms of income remittance, and for cash flow purposes, what mechanism(s) do Brewin Dolphin employ to distribute the income accrued back to The Trust? Any income payment is made directly to the bank account we have on record by BACS. Income can be paid out monthly, quarterly, bi-annual or annually in full. Alternatively, if a fixed amount is required, we can pay out the full income, topped up by a withdrawal of capital as a standing order payment, as described above. 11. The Trust currently has an asset portfolio consisting of cash and stocks / shares, what process would Brewin Dolphin undertake to realign the current portfolio into the new managed fund? At the outset of the relationship, as part of the account opening process, we will discuss and confirm the investment policy statement with the trustees. The most appropriate risk categories, income targets and distribution objectives will also be considered and incorporated into a client advice proposal. Following the opening of the investment account we would request an up-to-date copy of the investment portfolio to review the assets currently held. We try, wherever possible, to instruct an in- specie transfer of the assets to reduce the risk of being ‘out of the market’ but there may be cases where we instruct the sale of a holding ahead of transfer with the cash being transferred. We will liaise with the incumbent firm, if relevant, throughout this process to ensure the efficient and timely transfer the assets. This process can take up to six weeks with pooled funds taking longer to transfer than cash and direct equities. We will closely monitor the transfer of the assets and by the time that they arrive we will have a plan in place for the restructuring of the portfolios. We will focus initially on ensuring the overall weighting to each asset class is in line with what has been agreed, before reviewing each holding to consider whether is satisfies our long-term investment criteria. In the restructuring of the portfolios, we would pay particular attention to the collection of income, particularly for the Endowment Funds. We would also be mindful of the underlying liquidity of any underlying collective funds that we would be looking to sell. We would carefully review the existing holdings to ensure that they comply with any ethical restrictions and would have this at the forefront of our stock selection decision making in the purchasing of new holdings for the fund. We would work very closely with both our charity portfolio manager and internal dealing team in order to ensure the most effective and efficient restructuring process. The initial restructuring process is likely to be completed within the first quarter of the transfer and given that we do not charge any transaction or dealing costs there would be no cost to the restructuring of the portfolio. It may be that your incumbent investment manager applies a charge per line of stock for the transfer of the assets, but it is worthwhile asking if they would consider removing such charges as a longstanding client with charitable purposes Page 43 of 62
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RBC Brewin Dolphin North Lanarkshire Educational Endowments Trust Page 9 12. Linked to the above, and where applicable, what key actions would The Trust have to undertake to facilitate this process? Once we have completed the processes set out in responses 1 and 2, we would seek information on how the assets are currently being held and liaise with the relevant person to ensure a smooth transition. We will manage this process closely and then realign the portfolio on your behalf. Conclusion Thank you for giving us the opportunity to provide you with information on how we can work with North Lanarkshire Educational Endowments Trust. We have enjoyed learning about your charitable and financial objectives. We would very much welcome the opportunity to meet with the trustees to discuss our proposal in more detail. We hope that this document has provided a sufficiently substantive overview of the comprehensive investment management services offered by RBC Brewin Dolphin and how we can tailor them to help you fulfil your objectives. In summary, we will provide you with: • A dedicated team with specialist knowledge of managing charity investments • A tailored investment solution to meet your investment objectives and ethical requirements • Ongoing support and guidance on your Investment Policy Statement • Added value services to help you keep abreast of charity rules and developments within the sector • A highly personal service We are passionate about the work we do on behalf of our charity clients, and it is rewarding to see our efforts make such a difference in communities across the region. Our clients come to us for our knowledge and expertise, and our success is also based on the personal relationships and the values that are at the core of everything we do. They are: Client first | Collaboration | Accountability | Diversity & Inclusion | Integrity It would be a pleasure to work with you as a highly valued client of RBC Brewin Dolphin and we stand by our commitment to “Getting it Right for You”. Page 44 of 62
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RBC Brewin Dolphin is a trading name of RBC Europe Limited. RBC Europe Limited is registered in England and Wales No. 995939. Registered Address: 100 Bishopsgate, London EC2N 4AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. Risk warning This information has been provided to North Lanarkshire Educational Endowments Trust only and should not be distributed in whole or in part to any third parties. The value of your investment or any income from it may fall and you may get back less than you invested. Past performance is not a guide to future performance. Performance is shown before charges which will have the effect of reducing the illustrated performance. Any forward-looking estimates are based on reasonable assumptions based on objective data and are no guarantee of future performance. No investment is suitable for all people and should you have any doubt about this service please contact us. The information contained in this presentation has been taken from public sources and is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. The opinions expressed in this presentation are not necessarily the views held throughout RBC Brewin Dolphin. We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell, or offer to make a purchase or sale of such securities from time to time. In addition, we reserve the right to act as a principal or agent with regard to the sale or purchase of any security mentioned in this document. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk. If you invest in currencies other than your own, fluctuations in currency value will mean that the value of your investment will move independently of the underlying asset. We will only be bound by specific investment restrictions which have been requested by you and agreed by us. RBC Brewin Dolphin is authorised and regulated by the Financial Conduct Authority. This document is for information purposes only and should not be considered investment advice. Restricted advice Whilst RBC Brewin Dolphin looks across a wide range of financial products and services in order to meet your needs and objectives, we will not review all retail investment products in the market. As such we offer a ‘Restricted Advice’ service. Page 45 of 62
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North Lanarkshire Council Educational Endowments (SC028079), 1. If appointed, is there a standard type of contract that The Trust would enter with Evelyn Partners and, if so, what are the main terms of reference? If appointed, as part of our onboarding process, the Trustees would be asked to sign an Investment Management Agreement, which effectively acts as your contract with Evelyn Partners. By signing this document, the Trustees would be confirming the main Heads of Terms – namely that they are comfortable proceeding with the proposed service (which would be outlined in the document), for the agreed fees, and that they accept our standard Terms & Conditions. You would also require a custodian to hold investments on your behalf. Our nominee company, Smith & Williamson Nominees Limited, exists exclusively for the purpose of holding registered title to clients’ investments. The structure is such that all client positions in the nominee company are held to the benefit of the client. The nominee company has no legal or other liability for any of the obligations of any other company in the group. 2. What key actions would The Trust have to undertake prior to formal engagement with Evelyn Partners? If Evelyn Partners were appointed to manage the Educational Endowments, we would firstly look to engage the Trustees, or their representatives, in a more detailed discussion around our understanding of their requirements, and how this would be implemented within the portfolio. We would then write an Investment Profile Report. The purpose of this report is to reconfirm our understanding of the Charity’s circumstances, the service proposed, any restrictions in place, fees agreed and any other relevant information. The next stage of the account opening process would involve paperwork being completed and signed by the Trustees. We normally suggest that a sub-group is formed from the wider group of Trustees, allowing perhaps three or four Trustees to sign on behalf of the wider group. Once this sub-group has been established, we will ask for Identification Documentation for each of the named Trustees to carry out our Anti-Money Laundering checks. We pre-populate as much of the paperwork as possible using information available online and from the ID documentation, with the aim of streamlining this part of the process. The next stage of the process would be completing the following pieces of paperwork: 1. Investment Management Agreement 2. FATCA Form – this is a US law that requires foreign financial institutions to report on the assets held 3. LEI Transfer Form – an LEI is a unique global identifier for legal entities participating in financial transactions 4. Transfer Forms (if applicable) 5. Marketing Consent Form The timing of this stage is largely dependent on the Trustees involved, and how quickly the paperwork is signed by each named individual. However, in our experience, this can range from a few days to a few weeks. Upon receipt of the completed paperwork, we can submit this to our internal Account Opening department to carry out various checks and ensure that they are comfortable with the information provided. Assuming this stage is completed without any issues, the investment accounts can then be opened. Again, this stage can take anywhere from a few days to a few weeks. When the account is in place, we can then facilitate the transfer (or liquidation) of the existing holdings and start the process of transferring the cash over into the account with us. During this stage, our transfers team liaises directly with the incumbent service provider to ensure a smooth transfer and our dedicated administration team will be on hand to keep you updated with progress made. The timescales for this process vary but we would generally find that it can take anywhere up to 8 weeks, depending on where the existing investments are held. Page 46 of 62
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Once the existing holdings or the cash have transferred over, your Investment Managers would invest in line with your chosen investment strategy in a timely manner. The timescales for this last stage may be dictated by market movements over the period but can also be completed immediately. 3. What is the typical contractual term to engage with Evelyn Partners? Investment arrangements are typically reviewed every five years. At that stage there may be a re-tendering exercise required. Our clients typically stay with us for long periods of time, due to a combination of strong performance and excellent service. 4. What happens should either party wish to exit the contract prior to the contract cessation date? There are no notice periods or financial penalties. If either party wants to exit, this can be facilitated as quickly as alternative arrangements can be made. 5. In terms of fees / charges, what type of structure does Evelyn Partners apply on a contract of this nature? Our fees are inclusive of reporting, administration, custody, and meetings. Our standard charity fee scale exclusive of VAT is 0.75% on the first £1m, 0.60% on the next £2m and 0.45% on any balance above £3m – hence an effective fee rate for a £1.8m portfolio of 0.68%. We review each opportunity on a case-by-case basis and would be willing to discount these fees, at the point you are reviewing potential managers, to something in the region of 0.40%, to reflect how keen we are to partner with you. We do not charge any dealing commission and research costs are not passed onto clients. The fee is charged quarterly in arrears. There are no initial fees and no termination notice period. 6. In terms of client engagement and issuance of pertinent information, would Evelyn Partners provide periodic financial updates on fund performance with such information also enabling statutory accounting requirements? We provide clients with quarterly investment reports and valuations, or more frequently if required. As part of our quarterly reporting, we provide detailed performance analysis packs. We also provide our clients with online account access through our portal. It supplements the direct contact our clients have with their dedicated investment managers. The online portal provides almost all the information that our clients need on a day-to-day basis, including tax packs and data required for statutiry accounts preparation. This includes a full daily valuation, a library of all documents sent to the client, the asset allocation, and the transaction history. 7. Whilst managing the assets of The Trust, what other support and / or information would Evelyn Partners provide to The Trust / Trustees as part of your standard contractual terms? We are happy to hold regular meetings (typically once or twice a year) with you at a frequency which suits your preferences, either at your office or ours. Your investment manager will explain our view on any changes or challenges in the financial markets and the impact they are having or are likely to have on the portfolio, and how we have responded or intend on responding to them. We are keen to ensure that we are thinking along the same lines and want to work hard to ensure that everything to do with the portfolio is as clear as possible. These meetings also provide you with an opportunity to let us know of any changes in your circumstances. Keeping up to date with a wide range of topics is essential and we do everything we can to make this as easy as possible. We work with you to ensure you make the most of opportunities, achieve your goals and fulfil your duties. • We host a series of webinars and live events (in Glasgow and Edinburgh) throughout the year to keep trustees and charity executives informed and educated on a wide range of topics. Page 47 of 62
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• We share monthly investment updates and charity specific insights, to all of our clients and contacts. • We can work with you to develop and improve your investment policy including Responsible Investing and ESG considerations, and we can offer practical advice based on our wide experience. • We can help you establish your reserves policy. • We can provide in-depth portfolio income forecasting. • We can help you determine the most appropriate spending levels for your organisation using our proprietary cash flow analysis tool. All this work is included as part of our fee offering. Our aim is for you to see us as more than just a professional advisor, but also as a trusted partner. 8. Can The Trust / Trustees specify if they do or do not want to invest in particular companies, sectors etc? Yes, they can. We are committed to generating strong risk-adjusted returns for our clients by investing in companies that create long-term value for all stakeholders. We recognise how environmental, social, and corporate governance factors, as well as voting and engagement activity, can influence the prospects and financial performance of your investments. • Your trustees are responsible for the approach you adopt and that we implement for you. However, we have considerable experience supporting similar organisations on this journey, so please just ask. We can assist through supplying the key questions that you should be considering or facilitating those discussions for you. We’ll work with you to design a policy that specifically matches your requirements. • We would build those requirements into your investment portfolio using our in-house analytical resource and our access to the market leading MSCI ESG screening tool to screen direct investments and any funds for your ethical preferences. • We can apply both negative screening (avoiding agreed companies and sectors) and positive screening (biasing the portfolio to particular themes, such as clean energy) to match your precise requirements. 9. In terms of income yield, are you able to provide an indication of the estimated annual income for The Trust based on a fund of c. £1.8m? Typically, we suggest our charity investment clients take what is known as a ‘total return approach’, with the aim of generating the best possible total returns (income and capital), rather than focussing on income returns, or capital return, in isolation. The adoption of this approach allows us a degree of freedom to target the best performing assets, regardless of how returns are generated. It also gives us a level of flexibility to respond to the changing macro environment and allocate your funds accordingly. Alternatively, we can tailor a portfolio to meet a specific income objective, if that is your preference. The yield from a typical investment portfolio at the moment might be something like 2.5% (which would equate to dividend income of £45,000 per annum for your circumstances), but we can be flexible targeting more income (and possibly less capital growth), or less income and more capital growth. This is something we would expect to discuss with you in more detail if we were appointed. 10. In terms of income remittance, and for cash flow purposes, what mechanism(s) do Evelyn Partners employ to distribute the income accrued back to The Trust? The Trust can draw income from its portfolio in several different ways. Some of our clients look to take the natural income that is automatically generated by the underlying investments to support their charitable work – and this could be remitted monthly, quarterly, six-monthly or annually, depending on the Trust’s requirements. The level of income required may ultimately dictate the type of investments that we would look to hold within the portfolio – though we would caution against targeting a level of income that would limit our ability to invest in growth opportunities within the portfolio. An alternative approach, if allowed by the Trust’s governing documents, is to allow us to manage the investments on a Total Return basis, as described above. With this approach, the Trust could ascertain your required level of regular income, and we would utilise a combination of the natural income generated (yield) and a degree of the capital growth to fund the required income. Again, this can be paid at whatever frequency would be of most use to the Trust. Page 48 of 62
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Ultimately, income remittance is very flexible and can be tailored to meet the Trust’s specific requirements in this area. 11. The Trust currently has an asset portfolio consisting of cash and stocks / shares, what process would Evelyn Partners undertake to realign the current portfolio into the new managed fund?; and The first stage in this process would be for us to agree a suitable investment strategy with the Trustees. We would then look to rebalance the existing holdings into line with the intended strategy, looking for opportunities to sell holdings in which we do not have conviction and reinvest the sale proceeds into our preferred picks in each area. We have also included some commentary on the Trust’s existing investments at the end of this document, and we would look to make the changes discussed as part of the initial rebalancing of the portfolio. When investing cash within portfolios, we do not typically invest all of the cash on the day of receipt. Instead, we would generally look to invest a portion of the cash on initial receipt, and we would then look for opportunities to invest the remainder of the cash over the following 6-8 weeks, with the exact timescale depending on market movements during that time. In our view, this is a more conservative way to approach the initial investment in that it allows us to take advantage of any market weakness in the weeks following receipt of the cash to invest in our preferred names at lower levels. It also reduces the impact of any significant market falls shortly after initial receipt of the cash. It's worth noting that we would typically invest any surplus cash into a cash fund to ensure that the funds are still earning a return whilst waiting to be invested. For illustration purposes, our preferred cash fund is currently offering a yield of around 4.1% at the time of writing. 12. Linked to the above, and where applicable, what key actions would The Trust have to undertake to facilitate this process? Other than the process described in our answer to Question 2 above, the Trust would have to do very little to get the portfolio established. Once the account has been opened, we would supply the Trustees with the bank details to allow the cash transfer to be made. We would then confirm safe receipt once the funds are showing in our system. Assuming the existing investments are held electronically, our internal transfers team would liaise with the current provider to facilitate the transfer into the new Evelyn Partners account. Wherever possible, we would look to keep the Trust’s involvement in this process to a minimum to ease the administrative burden, but we would keep the Trustees updated at every step of the process. This is one of the advantages of appointing a discretionary investment manager, to look after your investments for you. Of course it also ticks the regulatory box – if you don’t have investment expertise internally you should employ external advisors. Evelyn Partners Commentary on Existing Portfolio When we last engaged with North Lanarkshire Council Educational Endowments in early 2024, we shared some high-level analysis of your existing investment holdings. Given that there has been no change we are aware of since then in the make-up of those investments, most of the same comments still apply. The main observation that we would make is that the bulk of your investments are in equities. It may be that this is appropriate for the Trustees, and some charities should be taking a high level of risk with their funds - but I think we would need to have a detailed discussion on risk with the Trustees to ascertain whether this is the case for the NLC Endowments. In our terminology, a portfolio like yours tends to be suitable for those who are happy with a high level of risk, and a corresponding high level of volatility – so our first question to the Trustees would be whether they are comfortable with the funds being invested in a high-risk manner, or whether moving down the risk scale would be more appropriate. Tied to this point, we would also draw your attention to the concentration of the holdings, and the significant amount invested in a relatively small number of investments. As an example, having around £250,500 invested solely in St James’s Place PLC shares exposes the Trust to a significant amount of stock-specific risk –this means that swings in the price of St James’s Place shares will have a significant impact on the overall value of the Endowment. Conversely the holding in Nat West Group Ordinary is extremely small and hence a large movement in either direction will only have a very limited impact on the overall value of your investments If we were appointed to manage an investment portfolio for you, our approach would be diversified. We would look to hold a far longer list of investments and wouldn’t typically have more than 5% of the total portfolio held in any single investment. This helps to reduce the reliance on a small number of investments and to minimise overall portfolio risk (volatility) for a target level of return. Page 49 of 62
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Within equities, we very much advocate a global approach, and so would have a reasonable level of exposure to regions other the UK and US, to capitalise on the differing risk and return characteristics available. For example, compared to your existing investment holdings, we would typically look to have more exposure to Asian markets (to take advantage of increased long-term growth opportunities within parts of the region) and select European markets, and we would also look to introduce some thematic global investments to target exposure to specific ideas which we deem to be strong long-term investment opportunities (for example the energy transition). We would also look to introduce exposure to other types of investments (such as bonds, gold, infrastructure, and absolute return) to further reap the benefits of diversification and tailor our approach to meet your overall investment objectives. The extent of the non-equity exposure in an investment portfolio largely depends on the outcome of any initial discussions on risk, and we would typically expect a lower-risk investor to hold more non- equity exposure to reduce the year-on-year volatility. Please note, all of these details are illustrative of how we would manage your investments. We usually find that once we have been appointed to manage a new client, a series of meetings are required, to agree the more detailed arrangements. Naturally if you require any information that is not incorporated in the document, please don’t hesitate to get in touch. My contact details are below. We look forward to hearing from you. Keith Burdon, Head of Charities (North) Keith.burdon@evelyn.com 0141 212 9298 (Direct) 07976 242314 (Mobile) IMPORTANT INFORMATION The value of investments and the income from them may fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance. This document contains information believed to be reliable but no guarantee, warranty or representation, express or implied, is given as to their accuracy or completeness. This is neither an offer nor a solicitation to buy or sell any investment referred to in this document. Evelyn Partners Investment Management documents may contain future statements which are based on our current opinions, expectations and projections. Evelyn Partners Investment Management does not undertake any obligation to update or revise any future statements. Actual results could differ materially from those anticipated. Appropriate advice should be taken before entering into transactions. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication. The officers, partners and employees of Evelyn Partners Investment Management, and affiliated companies and/or their officers, Directors and employees may own or have positions in any investment mentioned herein or any investment related thereto and may trade in any such investment. Page 50 of 62
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Rathbones Group Plc NLC EDUCATIONAL ENDOWMENT TRUST FUNDS AUGUST 2025 1) If appointed, is there a standard type of contract that The Trust would enter with Rathbones and, if so, what are the main terms of reference? Yes, we have a standard Terms of Business which I have attached. We would be offering NLC Educational Endowment Trust Funds a discretionary agreement, Please refer specifically to the following sections Key Points Our Agreement and our services Discretionary investment services Banking Services General Terms Please note that our Terms of Reference document is all encompassing and to service all Rathbones clients rather than just for Charities only. RIM terms of business valid from 01 July 2024 (4).pdf 2) What key actions would The Trust have to undertake prior to formal engagement with Rathbones? Following a presentation/ discussion with the appointed individuals from NLC we would advise and agree the appropriate investment strategy and mandate including aspects such as risk appetite, income requirements, ethical policy and reporting needs. On appointment, a dedicated member of our team will liase with yourselves to gather relevant regulatory information for Anti Money Laundering purposes, and the completion of account opening documentation. Basic information will be required for all trustees (name, date of birth, address) , and then some additional identification documents for those who will be appointed as authorised signatories (Trustees and/ or officers) who would be able to instruct Rathbones with regard the investment portfolio – for example withdrawal requests outwith standing instructions. At this stage, we would also ask for the completion our Fact Find form which will allows us to collate the necessary information on the organisation. Following receipt of above, and processing the information internally, a final Client Agreement will be produced and will be required to be signed by all appointed authorised signatories. In the most part, digital forms are available for ease as well as digital submission of identification documents. We will also require a certified copy of your constitution. Page 51 of 62
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Rathbones Group Plc An appointed member of our team will be on hand to assist as required, either by email, telephone, virtual meetings etc. 3) What is the typical contractual term to engage with Rathbones? There is no contractual term imposed. 4) What happens should either party wish to exit the contract prior to the contract cessation date? Should NCL wish to exit the contract, this can be done by an authorised signatory sending instruction to your appointed investment team to instruct the account closure. It would be extremely unusual for Rathbones to terminate a client contract. 5) In terms of fees, what type of structure does Rathbones apply on a contract of this nature? We have two services which we offer charities i. Bespoke Service – clients within this service have a bespoke portfolio created for their specific needs. A bespoke portfolio is invested predominantly in individual company shares and bonds with a select number of pooled funds for specific asset classes or to capture investment themes. ii. Managed Service – clients within the Managed Service invest their assets wholly into one Multi Asset fund which aligns with their risk appetite, return objectives and ethical requirements. The Rathbones Investment Management Fee which will be deducted from your portfolio for each service are shown below. Bespoke Service % Managed Service % First £1.5m 0.75% + VAT First £1.5m 0.35% + VAT Next £3.5m 0.50% + VAT Next £3.5m 0.10% + VAT Above £5m 0.45% + VAT Above £5m 0.05% + VAT Minimum p.a fee £5,000 Minimum p.a fee £1,000 The ongoing charges figures (OCF) is a metric which encapsulates all fees within a portfolio, both direct and indirect, and should be used for accurate comparisons across providers. The table below shows an illustrative OCF for each service for a portfolio of £1.8m Bespoke Service Managed Service Type of Cost % £ % Rathbones Investment Management Fee 0.71% £12,750 0.31% £5,550 VAT @ 20% 0.14% £2,550 0.06% £1,110 Page 52 of 62
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Rathbones Group Plc Third Party Costs (do not accrue to Rathbones) 0.20% £3,600 Fund Costs for Rathbones Managed Fund - - 0.48% £8,640 Ongoing Charges figure 1.05% £18,900 0.85% £15,300 Points to note The Rathbones investment management fee and VAT are deducted from the value of your portfolio at the end of each quarter, these are referred to direct costs. Third Party Costs represent the costs associated with the bespoke portfolio holding a limited number of funds within the portfolio to access specific asset classes or themes. These costs are encapsulated in the market price of the fund and so are not cash costs. This is an illustrative figure and can change over time. The Rathbones Managed Fund quote here is our Charity specific fund – Rathbones Charity Growth & Income Fund. This represents the underlying costs of the that fund being manged by Rathbones Asset Management. 6) In terms of client engagement and issuance of pertinent information, would Rathbones provide periodic financial updates on fund performance with such information also enabling statutory accounting requirements? We shall provide regulatory reporting on a quarterly basis which can be received as hard copy, soft copy or through our secure online portal. This report includes performance reporting, portfolio valuation, details of transactions, cash report and dividend information as well a commentary on the market environment. Year-end report are also produced to coincide with your Financial Year end. Should you require bespoke reporting outwith the quarterly pack then we will be delighted to discuss that with you and provide in the most appropriate form, for example excel downloads. In between quarterly reporting, you may nominate individuals to have access to our on-line portal, MyRathbones, which provides real time and historical information and has the functionality to download reports as required. It is also possible to note your external auditors as a correspondent status on our system allowing them to request information directly. In additional the formal reporting, your appointed investment managers will be on hand to deal with any queries which may arise, and to attend meetings with Trustees to review the portfolio and performance as required. 7) Whilst managing the assets of The Trust, what other support and / or information would Rathbones provide to The Trust / Trustees as part of your standard contractual terms? In addition to the management and administration of your portfolio, and alongside our regular reporting and attendance at meetings, we also provide additional services for our clients, a selection of which are listed below. These are all included within the management fee. Page 53 of 62
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Rathbones Group Plc i. Bespoke Reporting: In addition to our regular quarterly reporting, we would be delighted to provide you with any additional material which you may require, or which will assist you in communicating with your stakeholders. Some of our charity clients find use in the following, - ESG credentials of your portfolio including alignment with appropriate United National Sustainable Development Goals, and carbon intensity reporting - income forecast reports - details of engagement activities regarding your investments - voting activity ii. Trustee / Leadership training sessions and Seminars, often in tandem with specialists in charity law and accountancy. iii. Bespoke training for your Board, stakeholders and colleagues may be of interest depending on your circumstances, most often around key investment principles for those less familiar or understanding our approach to responsible investing for those with a keen interest in that area. iv. We publish charity-focused research papers on investment topics that may be of interest. Recent papers have included A Guide for Trustees, the Fossil Fuel Divestment Debate, Absolute vs. Relative Return Investing, Income-only vs. Total Return Investing, Passive vs. Active investing. v. We host Charity Roundtables and Events which offer the chance to explore a range of topics with the chance to network and share experiences with other organisations. vi. Cash / Treasury management - This service, provided through our banking service, does not attract any fees and offers competitive rates of interest for balances over £50,000. vii. Support in creating your Investment Policy statement - your Investment Policy Statement is in effect a governing document owned by Trustees which details your approach to investing and objectives. This can be useful for both internal and external stakeholders. We are more than happy to assist in putting this together viii. Support in setting your Responsible/ethical investment policy 8) Can The Trust / Trustees specify if they do or do not want to invest in particular companies, sectors etc? Yes, this is an important part of constructing an investment strategy for clients. We are happy to discuss an appropriate ethical policy which reflects the values and purposes of your specific organisation and share our extensive experience as a specialist team investing for charities. 9) In terms of income yield, are you able to provide an indication of the estimated annual income for The Trust based on a fund of c. £1.8m? We have two services which we offer charities as mentioned earlier Page 54 of 62
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Rathbones Group Plc i. Bespoke Service – clients within this service have a bespoke portfolio created for their specific needs and so the income yield is aligned to clients requirements and is flexible. We would also explore with Trustees the merits of expending income only, or whether the organisation has permission to expend from capital also which would allow an annual withdrawal rate to be set within a total return strategy. As a guide our client base generally have a range of income yields of between 2.5% and 3.5%. Those working on a total return basis (i.e can expend a blend of income and capital gain) typically withdraw 3.5% - 4.5% per annum. ii. Managed Service – clients within the Managed Service invest their assets wholly into one Multi Asset fund which aligns with their risk appetite, return and ethical requirements. We have a specific charity managed proposition which is investment in The Rathbones Charity Growth & Income Fund which distributes 3% per annum. Whilst we feel this suits many charities meet their needs, we do have alternative strategies which can be considered. 10) In terms of income remittance, and for cash flow purposes, what mechanism(s) do Rathbones employ to distribute the income accrued back to The Trust? The income remittance tends to be distributed directly to a nominated bank account on a quarterly basis but can be monthly where a bespoke portfolio is being managed. 11) The Trust currently has an asset portfolio consisting of cash and stocks / shares, what process would Rathbones undertake to realign the current portfolio into the new managed fund? The initial step would be to assess whether your current investments are able to be transferred to Rathbones. This would be an exercise carried out by our Transitions team. Where investments can be transferred our team will manage that process. For those investments which cannot be transferred - typically where a specific share class is held – those investments should be sold, and the cash remitted to Rathbones. This may require instruction from Trustees. Investments which are transferred to Rathbones, will then be sold, assuming they are not part of our proposed portfolio, with reinvestment into our preferred holdings. Transition will be managed in a thoughtful manner taking into account the prevailing market conditions and any specific considerations for each investment which may impact the timing of a sale. We typically offer clients a 3 month fee holiday at the outset to allow this thoughtful transition approach 12) Linked to the above, and where applicable, what key actions would The Trust have to undertake to facilitate this process? The transition process, and trustee actions, will be dependent on the existing platform/manager’s own account closer processes. There will likely be some form of instruction required from Trustees. Page 55 of 62
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Rathbones Group Plc Our transition team will manage the process as much as they can, should a platform be involved who cannot transfer investments to us, it may require your team to instruct investment sales and remit cash. We can advise with more information. Page 56 of 62
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Cazenove Capital Asset Management Query - North Lanarkshire Council Educational Endowments 30 July 2025 ____________________ 1) If appointed, is there a standard type of contract that The Trust would enter with Cazenove Capital and, if so, what are the main terms of reference? Yes – please find our contractual Terms of Business attached. We already work in partnership with 373 charities in the Education sector, who have entrusted us with £4.1bn of investments. 2) What key actions would The Trust have to undertake prior to formal engagement with Cazenove Capital? If you became a client there would be an onboarding process (which is broadly similar for most managers) – we would help you with this process to ensure you are onboarded efficiently. 3) What is the typical contractual term to engage with Cazenove Capital? There is no minimum contractual term. 4) What happens should either party wish to exit the contract prior to the contract cessation date? As there is no minimum contractual term, this would not be an issue. 5) In terms of fees, what type of structure does Cazenove Capital apply on a contract of this nature? For both approaches (detailed in section 8 the cost will be as follows. Please note there are no costs to buy or sell units in the fund. Option One Based on investment in the Sustainable Multi-Asset Fund £1.8m 1. Cazenove Investment Management Fee p.a. Fully inclusive of investment advice, reporting, administration, custody and Cazenove dealing costs (no commissions, front-end or exit charges) 0.25% Page 57 of 62
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VAT (20%) 0.05% Invoiced investment management fee (including VAT) p.a. 0.30% 2. Schroder Annual Charge p.a. Includes the fund's annual management fee and underlying administrative costs 0.40% 3. Look-through costs (incl. third party manager fees) p.a. 0.17% Ongoing Charges Figure (including VAT) p.a. 0.87% Source: Cazenove Capital. Based on charges as of 30 April 2025. Changes in asset allocation and underlying holdings, as well as transaction costs and FX, will impact the Ongoing Charges Figure through time. Within the Charity Sustainable Multi-Asset Fund price are ex-post transaction costs, which currently amount to 0.11% per annum. Ex-post transaction costs include both explicit and implicit transaction costs and are based on the previous 12 months of ex-post costs at an average level of assets under management. Option Two Source: Cazenove Capital. Based on charges as of 30 April 2025. Changes in asset allocation and underlying holdings, as well as transaction costs and FX, will impact the Ongoing Charges Figure through time. Within the Charity Multi-Asset Fund price are ex- post transaction costs, which currently amount to 0.15% per annum. Ex-post transaction costs include both explicit and implicit transaction costs and are based on the previous 12 months of ex-post costs at an average level of assets under management. Page 58 of 62
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6) In terms of client engagement and issuance of pertinent information, would Cazenove Capital provide periodic financial updates on fund performance with such information also enabling statutory accounting requirements? Portfolio valuations We provide our clients with clear, accurate and timely information. We produce a portfolio valuation after each month, quarter and year, typically five working days after the end of each period. If required, real time versions are available immediately from our secure online portal, eServices. A portfolio valuation consists of: − holdings’ details with book cost and market value − sector allocation − transaction details − cash account records − portfolio performance Online access Our secure online portal, eServices, allows access to portfolio valuations, real time positions, investment commentaries along with a comprehensive library of market views, investment articles and other content. Because of our continual development of eServices, a significant number of clients are relying on eServices as a platform to receive up-to-date information with ease. You can watch a video of eServices’ capabilities here. Our app We also have an app which allows you to access your portfolio information – anytime, anywhere. It provides: − instant access to your portfolio value, performance and asset allocation − an easy and quick way to contact your team − our latest market insights, helping keep you up to date − sustainability insights (available to inform you on the characteristics of your portfolio. Unless requested the strategy is not managed to seek improved sustainability characteristics) Page 59 of 62
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7) Whilst managing the assets of The Trust, what other support and / or information would Cazenove Capital provide to The Trust / Trustees as part of your standard contractual terms? Additional services As the largest manager of charity investments in the UK*, we can build on our collective experience to research and share best practice. We use this knowledge to represent our client’s best interests through regular dialogue with the Charity Commission and other policy makers. Indeed, we liaised with the Charity Commission to help update their guidance on CC14 – we published our thinking on the update on the same day as the Commission. You are able to view recordings of our related webinars, during which we discussed the guidance further. We test and share our findings by taking part in conferences and contributing to industry magazines. We are delighted that Cazenove Charities is an official partner of the Association of Charitable Foundations. *Source: Civil Society Fund Management Survey, November 2024. Publications Through talking to trustees and understanding their needs, we identify the issues facing decision-makers today and seek to publish useful, relevant and thought-provoking material. Events We run a wide variety of events for our clients, such as seminars, trustee training, workshop sessions, economic updates and our flagship annual investment forum . We are also closely involved in a variety of events organised by third parties. Please see our website for further details. 8) Can The Trust / Trustees specify if they do or do not want to invest in particular companies, sectors etc? For a fund of £1.8m we have two options available. Page 60 of 62
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• Our Sustainable Multi-Asset Fund for Charities which excludes common areas of charity concern and is used by many of our educational clients. • Our Charity Multi-Asset Fund for Charities which has no formal exclusions but integrates ESG factors into investment decisions. We would provide advice (included in cost) to ensure any strategy we put forward is suitable for NLC. 9) In terms of income yield, are you able to provide an indication of the estimated annual income for The Trust based on a fund of c. £1.8m? For both funds the target distribution yield is 4% (which is paid 1% per quarter) which would equate to £72,000 per annum (on the basis of £1.8m) and if you require less then we can adjust the dividend to suit your requirements. 10) In terms of income remittance, and for cash flow purposes, what mechanism(s) do Cazenove Capital employ to distribute the income accrued back to The Trust? For both funds Income is paid quarterly as per the above. 11) The Trust currently has an asset portfolio consisting of cash and stocks / shares, what process would Cazenove Capital undertake to realign the current portfolio into the new managed fund?; and We would look at your existing portfolio and look to move assets across in order to minimise risk and cost. We would look at the portfolio and produce a transition plan. 12) Linked to the above, and where applicable, what key actions would The Trust have to undertake to facilitate this process? Once we agree a transition plan (with you) then we would liaise with your existing manager – there would be no action for you and we do not charge for this service. Page 61 of 62
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