For clients:

If your tax pack income schedules include overseas unit trust dividends from Bluebay Investment Grade the income distributions may include an element of equalisation if investors have purchased or sold units in the period 1 July 2009 to 30 December 2010.

• Where the number of units has remained the same throughout the period, the equalisation will be nil and no further action is required.

• Where units have been purchased in the period the equalisation should be deducted from the dividend amount shown in the tax pack and the net amount declared in your tax return.

• If units have been sold during the period, the equalisation should be deducted from the sale proceeds for Capital Gains Tax purposes and the amount should instead be charged to Income Tax and declared accordingly in your tax return.

To calculate the equalisation amount investors should refer to the Taxable Income per Share (TIS) table relating to the period in which the units were purchased or sold:

Period 1 July 2009 to 30 June 2010 (BlueBay 01 July 2009 to 30 June 2010.pdf)

Period 1 July 2010 to 30 September 2010 (BlueBay 01 July 2010 to 30 Sept 2010.pdf)

Period 1 October to 30 December 2010 (BlueBay 01 Oct 2010 to 30 Dec 2010.pdf)

The equalisation amount is calculated by multiplying the TIS by the number of units purchased or sold on each transaction date.

Example:

Units Purchased

237.936 units purchased on 24 September 2010.

TIS on 24 September 2010 - 20.32

Equalisation adjustment - 20.32 x 237.936% = £48.34 to deducted from income.

£2,251.27    Dividend paid on 19 November 2010.
£  (48.34)    less equalisation adjustment.
£2,202.93  Adjusted income to be declared in tax return
                  for the year ended 5 April 2011.

Units Sold

440.000 units sold on 17 August 2010

TIS on 17 August 2010 – 19.18

Equalisation adjustment – 19.18 x 440.000% = £84.39 to deducted from the proceeds for Capital Gains and declared as income for income tax purposes.