IFDS Brown Shipley. MultiManager Investment Company. Interim Short Report

Transcription

1 IFDS Brown Shipley MultiManager Investment Company Interim Short Report For the six months ended 30 September 2012 MultiManager Income Fund MultiManager Growth Fund MultiManager International Fund

2 contents Page The 3 Funds in this report are listed below: IFDS Brown Shipley MultiManager Income Fund 2 IFDS Brown Shipley MultiManager Growth Fund 10 IFDS Brown Shipley MultiManager International Fund 18 General Information 26 Contact Information 28 1

3 IFDS Brown Shipley MultiManager Income Fund Profile As at 30 September 2012 Investment Objective and Policy The investment objective of the Fund is to provide a high and potentially rising level of income along with the prospect for capital growth. The investment objective will be achieved through an actively managed portfolio which will predominantly be derived from Open-Ended Investment Companies, Unit Trusts, Exchange Traded Funds and other Collective Investment Schemes. The underlying funds will invest in a range of differing asset classes encompassing markets around the world. The Fund may also invest, at the ACD s discretion, in transferable securities, money market instruments, cash and near cash, deposits and any other permitted asset types deemed appropriate to meet the investment objective. Use may also be made of stock lending, borrowing, cash holdings, derivatives for hedging and other investment techniques of efficient portfolio management permitted in the COLL Sourcebook. Risk Profile Please refer to the Full Prospectus or Simplified Prospectus for details of all the risks. Credit Risk The Fund may find that companies in which it invests fail to settle their debts on a timely basis. The value of securities issued by such companies may fall as a result of the perceived increase in credit risk. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit credit risk. Market Risk The investments of the Fund are subject to normal market fluctuations and other risks inherent in investing in securities. There can be no assurance that any appreciation in the value of investments will occur. The value of investments and the income derived from them may fall as well as rise and investors may not recoup the original amount they invest in the Fund. There is no certainty that the investment objective of any Fund will actually be achieved and no warranty or representation is given to this effect. Counterparty Risk Transactions in securities entered into by the Fund give rise to exposure to the risk that the counterparties may not be able to fulfil their responsibility by completing their side of the transaction. The Investment Manager minimises this risk by conducting trades through only the most reputable counterparties. 2

4 IFDS Brown Shipley MultiManager Income Fund Profile (continued) As at 30 September 2012 Net Asset Value Date Net Asset Value of share class ( ) Shares in issue Net Asset Value pence per share Share Class A Income 31/03/10 14,338,620 11,019, /03/11 13,996,003 10,362, /03/12 12,685,034 9,777, /09/12 12,803,289 9,755, Share Class A Accumulation 31/03/10 5,428,007 3,584, /03/11 5,531,911 3,447, /03/12 5,009,419 3,116, /09/12 4,958,634 2,989, Share Class I Income 31/03/10 8,369 7, /03/11 130, , /03/12 479, , /09/12 499, , Share Class I Accumulation 31/03/10 217, , /03/11 36,979 32, /03/12 48,776 42, /09/12 41,954 35,

5 IFDS Brown Shipley MultiManager Income Fund Profile (continued) As at 30 September 2012 Price and Revenue History Calendar year Highest Published share price (p) Lowest Published share price (p) Net Revenue per share (p) Share Class A Income ** Share Class A Accumulation ** Share Class I Income 2009* ** Share Class I Accumulation 2009* ** * From 1 December to 31 December ** From 1 January to 30 September Payable 30 November Share Class I Income was launched 1 December Share Class I Accumulation was launched 1 December Distribution The distribution for Share Class A Income is p per share, payable 30 November The distribution for Share Class A Accumulation is p per share, payable 30 November The distribution for Share Class I Income is p per share, payable 30 November The distribution for Share Class I Accumulation is p per share, payable 30 November

6 IFDS Brown Shipley MultiManager Income Fund Performance Information As at 30 September 2012 Total Expense Ratio Date AMC Fee Other expenses Synthetic expense ratio Rebates from underlying Funds Transaction costs Total expense ratio 30/09/12 Share Class A Share Class I /03/12 Share Class A Share Class I The Total Expense Ratio ( TER ) is the total expenses paid by the Fund in the period, annualised, against its average Net Asset Value. The TER will fluctuate as underlying costs change. Following guidance issued by the Investment Management Association ( IMA ) in August 2012, the TER now includes transaction costs. The purpose of this is to bring the TER into line with the recent inclusion of transaction costs in the ongoing charge figure as now being disclosed by UCITS funds. Under the guidance there is no requirement to restate prior year figures. The Fund has invested in Collective Investment Schemes during the period and the expenses incurred by these schemes are included in the above as the Synthetic TER. Risk Warning An investment in an Open-Ended Investment Company should be regarded as a medium to long term investment. Investors should be aware that the price of shares and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. As a Fund is not a legal entity, if the assets of one Fund are insufficient to meet the liabilities attributable to it, the ACD may re-allocate such liabilities between the Funds then in existence in a manner which is fair to Shareholders generally. This re-allocation will normally be performed on the basis of the respective Net Asset Values of the Funds. However, please note, on the 21 December 2011, the Open Ended Investment Companies Regulations (2001) as amended ( the Regulations ) were amended to introduce a Protected Cell Regime for OEICS. Under the Protected Cell Regime, each Fund represents a segregated portfolio of assets and accordingly, the assets of a Fund belong exclusively to that Fund and shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including any other Fund and shall not be available for any such purpose. The Regulations allow a transitional period for implementation of the Protected Cell Regime, but it must be in place before 20 December As at the date of these accounts the Protected Cell Regime has not been implemented for IFDS Brown Shipley MultiManager Investment Company. 5

7 IFDS Brown Shipley MultiManager Income Fund Breakdown of Asset Class As at 30 September Fixed Income 32.65% United Kingdom 31.72% Europe 11.92% Net other assets 8.44% Emerging Markets 6.57% Peripheral Developed Markets 4.73% North America 3.97% As at 31 March United Kingdom 38.26% Fixed Income 31.00% Peripheral Developed Markets 7.74% Europe 6.76% Net other assets 5.60% Emerging Markets 4.77% North America 3.92% Japan 1.95% 6

8 IFDS Brown Shipley MultiManager Income Fund Top Ten Holdings The Top Ten Holdings within the Fund were: Holdings % of Fund 30/09/12 JO Hambro UK Equity Income I Income 5.40 Neptune European Opportunities B income 5.07 River & Mercantile UK Equity Income B Income 5.04 Schroder Asian Income Maximiser Income 4.73 Fidelity Money Builder Income 4.72 Chelverton UK Equity A Income 4.61 Aviva UK Equity I Income 4.58 Royal London Corporate Bond B Income 4.28 Standard Life European Equity I Income 4.17 JPM Strategic Bond C Income 4.09 Holdings % of Fund 31/03/12 JO Hambro UK Equity Income I Income 5.25 Neptune Income B Income 5.09 River & Mercantile UK Equity Income B Income 4.94 Legg Mason Western Assets Emerging Markets Bond A Income 4.77 Schroder Asian Income Maximiser Income 4.68 Fidelity Money Builder Income 4.53 Schroder Income Maximiser Z Income 4.50 Aviva UK Equity I Income 4.43 Chelverton UK Equity A Income 4.43 Henderson Strategic Bond I Income

9 IFDS Brown Shipley MultiManager Income Fund Authorised Fund Manager s Report For the six months ended 30 September 2012 Market Review Fear may not have completely disappeared from global markets, but there is no doubt that the climate for risk taking has increased in recent months. In part, this has been due to the concerted efforts of central banks, most notably the U.S Federal Reserve, the European Central Bank (ECB) and the Bank of England to continue with a strategy of monetary easing. The almost generic term of quantitative easing has been applied in a number of ways; in the USA we have recently seen substantial purchasing of mortgage backed securities, whilst in the UK there has been an on-going programme of the purchasing of Gilts. The prime purpose of these programmes has been to reduce longer-term borrowing rates, and so hopefully kick-start the economy. It is nigh on impossible to calculate the effect of these programmes, but it is a fair conclusion that the reality and the perception have combined to provide support to markets around the world, and so avoid some of the potential catastrophes that we have faced over the past four years. It is equally true, however, that the greater appetite for risk has almost become self-fulfilling, since safe assets, such as cash and government bonds, now provide an almost negligible return. Gilt purchases in the UK by the Bank of England have driven yields on a ten-year note to below 2%, and it is well known that cash gives a yield of even less. As this has occurred at a time when inflation has been in excess of 3%*, an investor in such assets is enduring a negative real return. As a consequence, the Fund has not had any holdings of Gilts throughout the year, since the yields available no longer make them suitable for income seeking investors. Almost on a global basis there has been a search for income, so that we have witnessed a drive towards corporate and high yield bonds, as well as higher-yielding equities, accelerating as the year has progressed. Our portfolio strategy has had to take due notice of this trend, and with the renewed appetite for equities we are comfortable in holding just over half of the Fund s assets in this category. Fund Review During the period under review to 30 September 2012 the Fund returned 2.85%** The global search for income has meant that High Yield Bonds have produced very strong returns in 2012 to the point where we thought it prudent to take some of the profits on the Legg Mason Emerging Markets Bond Fund and the Baillie Gifford High Yield Bond Fund. Proceeds were reinvested into the GLG Corporate Bond Fund as this aims to take advantage of global credit opportunities. Partly in order to balance the Fund s global weightings, we made a new purchase into the Polar Capital Emerging Markets Equity Income Fund, which demonstrates how strong dividend returns can now be obtained from parts of the world where not so long ago income to shareholders was a rarity. The Fund has also continued to have some exposure to smaller companies, since we not only believe there are good possibilities for capital growth here but also that the nature of these companies frequently leads to above average dividend growth as well. After taking some of the profit on our holding of the Investec UK Smaller Companies Fund a new position was opened in the Diverse Income Trust, which is an investment trust focused on UK small companies. The strongest contributors to performance were Royal London and Threadneedle UK Corporate Bond Funds, closely followed by Investec UK Smaller Companies and Legg Mason Emerging Market Bond Fund. There were only two negative contributors; RWC Enhanced Income and Polar Capital Emerging Markets Equity Income, but both of these were down by less than half of one percent**. 8

10 IFDS Brown Shipley MultiManager Income Fund Authorised Fund Manager s Report (continued) For the six months ended 30 September 2012 Outlook The outlook is perhaps not as grim as it was two or three years ago but if one had to select an issue which was of the greatest magnitude and could create the greatest likelihood of pushing global economies back into recession then it would be the fiscal cliff (US Government tax issues) in the United States. Even with the uncertainty created by the impending US presidential election, there was always going to be a slowdown in the third quarter. We are also now faced with a whole raft of tax cuts, which were largely put in place by George Bush five years ago, expiring with an estimated USD 800 billion contraction being the end result. This would equate to 3.8%*** being wiped off the GDP and because the numbers are so large, most investors around the world have adopted the well they wouldn t be that stupid philosophy. Unfortunately we know from experiences last year, when Congress prevaricated until the final minutes of the deadline to extend government borrowing limits, that American politicians are not averse to embracing the absurd. We can only conclude that some form of compromise extension and curtailment programme will be thrashed out, such that overall spending will decline but in a measured and controlled manner. Under this scenario we foresee a steady continuation of the progress seen in 2012: high single-digit gains to investors where income will be at least a third of the total return and, with interest rates unlikely to move up before 2015, the necessity of creating a real return from savings becoming an ever greater issue for us all. Source: * Office of National Statistics ** Source: Lipper / Hindsight, A Income Shares, percentage growth total return, mid to mid in UK Sterling with net income reinvested. *** Financial Times Investment Manager Brown Shipley & Co. Limited 15 October

11 IFDS Brown Shipley MultiManager Growth Fund Profile As at 30 September 2012 Investment Objective and Policy The investment objective of the Fund is to achieve long term capital growth. The investment objective will be achieved through an actively managed portfolio which will predominantly be derived from Open-Ended Investment Companies, Unit Trusts, Exchange Traded Funds and other collective investment schemes. The underlying funds will invest in a range of differing asset classes encompassing markets around the world. The Fund may also invest, at the ACD s discretion, in transferable securities, money market instruments, cash and near cash, deposits and any other permitted asset types deemed appropriate to meet the investment objective. Use may also be made of stock lending, borrowing, cash holdings, derivatives for hedging and other investment techniques of efficient portfolio management permitted in the COLL Sourcebook. Risk Profile Please refer to the Full Prospectus or Simplified Prospectus for details of all the risks. Credit Risk The Fund may find that companies in which it invests fail to settle their debts on a timely basis. The value of securities issued by such companies may fall as a result of the perceived increase in credit risk. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit credit risk. Market Risk The investments of the Fund are subject to normal market fluctuations and other risks inherent in investing in securities. There can be no assurance that any appreciation in the value of investments will occur. The value of investments and the income derived from them may fall as well as rise and investors may not recoup the original amount they invest in the Fund. There is no certainty that the investment objective of any Fund will actually be achieved and no warranty or representation is given to this effect. Interest Rate Risk This Fund is invested in interest bearing securities. The performance of the Fund may therefore be affected by changes in interest rates. The active monitoring and adjustment of the investments in the portfolio manages this risk. Counterparty Risk Transactions in securities entered into by the Fund give rise to exposure to the risk that the counterparties may not be able to fulfil their responsibility by completing their side of the transaction. The Investment Manager minimises this risk by conducting trades through only the most reputable counterparties. 10

12 IFDS Brown Shipley MultiManager Growth Fund Profile (continued) As at 30 September 2012 Net Asset Value Date Net Asset Value of share class ( ) Shares in issue Net Asset Value pence per share Share Class A Income 31/03/10 6,358,383 4,024, /03/11 7,119,407 4,192, /03/12 6,282,069 3,805, /09/12 6,187,151 3,775, Share Class A Accumulation 31/03/10 9,376,836 5,504, /03/11 9,928,001 5,391, /03/12 9,816,174 5,455, /09/12 9,829,086 5,483, Share Class I Income 31/03/10 4,443 4, /03/11 19,220 16, /03/12 32,841 29, /09/12 32,645 29, Share Class I Accumulation 31/03/10 20,918 19, /03/11 17,629 15, /03/12 37,943 33, /09/12 37,896 33,

13 IFDS Brown Shipley MultiManager Growth Fund Profile (continued) As at 30 September 2012 Price and Revenue History Calendar year Highest Published share price (p) Lowest Published share price (p) Net Revenue per share (p) Share Class A Income ** Share Class A Accumulation ** Share Class I Income 2009* ** Share Class I Accumulation 2009* ** * From 1 December to 31 December ** From 1 January to 30 September Payable 30 November Share Class I Income was launched 1 December Share Class I Accumulation was launched 1 December Distribution The distribution for Share Class A Income is p per share, payable 30 November The distribution for Share Class A Accumulation is p per share, payable 30 November The distribution for Share Class I Income is p per share, payable 30 November The distribution for Share Class I Accumulation is p per share, payable 30 November

14 IFDS Brown Shipley MultiManager Growth Fund Performance Information As at 30 September 2012 Total Expense Ratio Date AMC Fee Other expenses Synthetic expense ratio Rebates from underlying Funds Transaction costs Total expense ratio 30/09/12 Share Class A Share Class I /03/12 Share Class A (0.04) 2.63 Share Class I (0.04) 2.13 The Total Expense Ratio ( TER ) is the total expenses paid by the Fund in the period, annualised, against its average Net Asset Value. The TER will fluctuate as underlying costs change. Following guidance issued by the Investment Management Association ( IMA ) in August 2012, the TER now includes transaction costs. The purpose of this is to bring the TER into line with the recent inclusion of transaction costs in the ongoing charge figure as now being disclosed by UCITS funds. Under the guidance there is no requirement to restate prior year figures. The Fund has invested in Collective Investment Schemes during the period and the expenses incurred by these schemes are included in the above as the Synthetic TER. Risk Warning An investment in an Open-Ended Investment Company should be regarded as a medium to long term investment. Investors should be aware that the price of shares and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. As a Fund is not a legal entity, if the assets of one Fund are insufficient to meet the liabilities attributable to it, the ACD may re-allocate such liabilities between the Funds then in existence in a manner which is fair to Shareholders generally. This re-allocation will normally be performed on the basis of the respective Net Asset Values of the Funds. However, please note, on the 21 December 2011, the Open Ended Investment Companies Regulations (2001) as amended ( the Regulations ) were amended to introduce a Protected Cell Regime for OEICS. Under the Protected Cell Regime, each Fund represents a segregated portfolio of assets and accordingly, the assets of a Fund belong exclusively to that Fund and shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including any other Fund and shall not be available for any such purpose. The Regulations allow a transitional period for implementation of the Protected Cell Regime, but it must be in place before 20 December As at the date of these accounts the Protected Cell Regime has not been implemented for IFDS Brown Shipley MultiManager Investment Company. 13

15 IFDS Brown Shipley MultiManager Growth Fund Breakdown of Asset Class As at 30 September United Kingdom 37.10% North America 16.46% Fixed Income 7.74% Europe 7.66% Net other assets 6.90% Emerging Markets 6.50% Peripheral Developed Markets 6.05% Exchange Traded Funds 5.57% Japan 4.46% Global 1.56% As at 31 March United Kingdom 34.80% North America 16.56% Europe 10.12% Fixed Income 6.66% Emerging Markets 6.49% Exchange Traded Funds 6.45% Net other assets 6.19% Peripheral Developed Markets 5.68% Japan 5.36% Global 1.69% 14

16 IFDS Brown Shipley MultiManager Growth Fund Top Ten Holdings The Top Ten Holdings within the Fund were: Holdings % of Fund 30/09/12 JO Hambro Capital Management UK Opportunities I Accumulation 6.30 Majedie UK Equity Accumulation 5.86 Investec UK Smaller Companies I Income 5.76 Franklin Templeton UK Mid Cap A Income 5.63 ishares MSCI North America 5.57 JPM US Equity Income C Accumulation 5.55 Aviva UK Equity I Income 4.93 Schroder UK Alpha Plus A Accumulation 4.76 First State Asia Pacific B Accumulation 4.46 Henderson US Growth I Accumulation 4.39 Holdings % of Fund 31/03/12 ishares MSCI North America 6.45 JO Hambro Capital Management UK Opportunities I Accumulation 6.15 Majedie UK Equity Accumulation 5.68 Franklin Templeton UK Mid Cap A Income 5.44 JPM US Equity Income C Accumulation 5.12 Henderson US Growth I Accumulation 4.94 M&G Recovery Sterling A Income 4.78 Schroder UK Alpha Plus A Accumulation 4.72 Investec UK Smaller Companies I Income 4.37 M&G American Sterling A Income

17 IFDS Brown Shipley MultiManager Growth Fund Authorised Fund Manager s Report For the six months ended 30 September 2012 Market Review Fear may not have completely disappeared from global markets, but there is no doubt that the climate for risk taking has increased in recent months. In part, this has been due to the concerted efforts of central banks, most notably the U.S Federal Reserve, the European Central Bank (ECB) and the Bank of England to continue with a strategy of monetary easing. The almost generic term of quantitative easing has been applied in a number of ways; in the USA we have recently seen substantial purchasing of mortgage backed securities, whilst in the UK there has been an on-going programme of the purchasing of Gilts. The prime purpose of all of these programmes has been to reduce longer term borrowing rates, and so hopefully kick-start the economy. It is nigh on impossible to calculate the effect of these programmes, but it is a fair conclusion that the reality and the perception have combined to provide support to markets around the world, and so avoid some of the potential catastrophes that we have faced over the past four years. The central banks have by no means ended the financial crisis that began in It will be several more years yet before the global over-indulgence of debt has been rectified. In the meantime we will probably experience very slow growth, accompanied by intermittent mini-crises. But this is almost inevitable at times, and that old adage about climbing the wall of worry sums up the outlook over the next few years. Unfortunately, the Eurozone crisis is not the only danger we can see. China is clearly slowing down and consequently its consumption of raw materials and finished goods from around the world is slowing down as well. The Chinese Government is putting in place a stimulus package to promote economic activity, but it may be 2013 before we see the benefits begin to ripple across the rest of the world. However if one had to select the issue which was of the greatest magnitude and the greatest likelihood to push global economies back into recession then one has to look at what has been dubbed the fiscal cliff (US Government tax issues) in the United States. We are now faced with a whole raft of tax cuts, which were largely put in place by George Bush five years ago, expiring with an estimated $800 billion contraction thus resulting. This would equate to 3.8% being wiped off the GDP*. We can only hope that some form of compromise extension and curtailment programme will be thrashed out, such that overall spending will decline but in a measured and controlled manner. Under this scenario we foresee a steady continuation of the progress seen in 2012: high single digit gains to investors where income will be at least a third of the total return and, with interest rates unlikely to move up before 2015, the necessity to creating a real return from savings becoming an ever greater issue for us all. Fund Review **This Fund is invested in 85% equity funds and 15% bond funds and cash. The equity proportion is 45% overseas and 34% UK. At the beginning of the period the cash and bond element was closer to 10% and since the near-term peak in equity markets towards the end of the first quarter, the Fund has become a little more defensive. The bond and cash element is now 14%, but this is only part of the story. I ve introduced an absolute return type vehicle, the Troy Trojan fund, and within most equity regions represented in the Fund, there is an equity income fund to balance out the more growth oriented funds. The JPMorgan US Income fund has been a constituent since last year, but I ve since added Standard Life European Equity Income, Jupiter Japan Income and Aviva UK Equity Income. The Aviva fund essentially replaces the River & Mercantile fund and brings a greater balance to the UK selection of holdings. More recently, in-fact since the ECB president Draghi announced he would do what ever it takes, I have sold the Baring Global Bond fund and bought the Schroder High Yield fund, increasing the risk and return profile of the bond element. 16

18 IFDS Brown Shipley MultiManager Growth Fund Authorised Fund Manager s Report (continued) For the six months ended 30 September 2012 Looking at how the overall portfolio has performed, the Fund returned -0.94% over the six months to 30 September 2012.** This is because markets had rallied quite hard in the first quarter of the year and spent the first six weeks of the second quarter falling and in some instances double digit falls. Markets then rallied again from mid May, further boosted by ECB policy commitments early in September. The Fund overall retains its growth bias, but also has some built in stabilisers reflecting the fact the economic and market environment is still far from clear. In terms of analysing what has worked and what has not, the UK, European and Asian fund selections have worked well. The US has, as usual been the biggest challenge, but equally Japan after being the best performing major market in the first quarter, has been a detraction to performance ever since. Outlook The portfolio is well positioned for the current market environment, with greater balance to its more natural growth bias. Our expectation is that the ECB announcement in early September has reduced some of the risks the market was concerned about prior to this commitment. We see opportunities in selecting funds which are differentiating between the growing valuation gap which has opened up between defensive stocks and cyclical stocks. Stock picking managers should be helped further as unusually high correlation between stocks begins to break down, as investors focus on company fundamentals, rather than just being in or out of a particular market. Source: * Financial Times ** Source: Lipper / Hindsight, A Accumulation Shares, percentage growth total return, mid to mid in UK Sterling with net income reinvested. Investment Manager Brown Shipley & Co. Limited 15 October

19 IFDS Brown Shipley MultiManager International Fund Profile As at 30 September 2012 Investment Objective and Policy The investment objective of the Fund is to achieve long-term growth. The investment objective will be achieved through an actively managed portfolio which will predominantly be derived from Open-Ended Investment Companies, Unit Trusts, Exchange Traded Funds and other Collective Investment Schemes. The underlying funds will invest in a range of differing asset classes encompassing markets around the world. The Fund may also invest, at the ACD s discretion, in transferable securities, money market instruments, cash and near cash, deposits and any other permitted asset types deemed appropriate to meet the investment objective. Use may also be made of stock lending, borrowing, cash holdings, derivatives for hedging and other investment techniques of efficient portfolio management permitted in the COLL Sourcebook. Risk Profile Please refer to the Full Prospectus or Simplified Prospectus for details of all the risks. Credit Risk The Fund may find that companies in which it invests fail to settle their debts on a timely basis. The value of securities issued by such companies may fall as a result of the perceived increase in credit risk. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit credit risk. Market Risk The investments of the Fund are subject to normal market fluctuations and other risks inherent in investing in securities. There can be no assurance that any appreciation in the value of investments will occur. The value of investments and the income derived from them may fall as well as rise and investors may not recoup the original amount they invest in the Fund. There is no certainty that the investment objective of any Fund will actually be achieved and no warranty or representation is given to this effect. Counterparty Risk Transactions in securities entered into by the Fund give rise to exposure to the risk that the counterparties may not be able to fulfil their responsibility by completing their side of the transaction. The Investment Manager minimises this risk by conducting trades through only the most reputable counterparties. 18

20 IFDS Brown Shipley MultiManager International Fund Profile (continued) As at 30 September 2012 Net Asset Value Date Net Asset Value of share class ( ) Shares in issue Net Asset Value pence per share Share Class A Income 31/03/10 17,164,558 10,240, /03/11 15,082,426 8,502, /03/12 11,584,699 6,850, /09/12 10,164,799 6,229, Share Class A Accumulation 31/03/10 5,627,605 3,314, /03/11 4,478,196 2,488, /03/12 3,669,145 2,137, /09/12 3,112,856 1,877, Share Class I Income 31/03/10 11,599 10, /03/11 18,606 15, /03/12 6,022 5, /09/12 5,818 5, Share Class I Accumulation 31/03/10 144, , /03/11 179, , /03/12 116, , /09/12 106,437 97,

21 IFDS Brown Shipley MultiManager International Fund Profile (continued) As at 30 September 2012 Price and Revenue History Calendar year Highest Published share price (p) Lowest Published share price (p) Net Revenue per share (p) Share Class A Income ** Share Class A Accumulation ** Share Class I Income 2009* ** Share Class I Accumulation 2009* ** * From 1 December to 31 December ** From 1 January to 30 September Payable 30 November Share Class I Income was launched 1 December Share Class I Accumulation was launched 1 December Distribution The distribution for Share Class A Income is p per share, payable 30 November The distribution for Share Class A Accumulation is p per share, payable 30 November The distribution for Share Class I Income is p per share, payable 30 November The distribution for Share Class I Accumulation is p per share, payable 30 November

22 IFDS Brown Shipley MultiManager International Fund Performance Information As at 30 September 2012 Total Expense Ratio Date AMC Fee Other expenses Synthetic expense ratio Rebates from underlying Funds Transaction costs Total expense ratio 30/09/12 Share Class A Share Class I /03/12 Share Class A Share Class I The Total Expense Ratio ( TER ) is the total expenses paid by the Fund in the period, annualised, against its average Net Asset Value. The TER will fluctuate as underlying costs change. Following guidance issued by the Investment Management Association ( IMA ) in August 2012, the TER now includes transaction costs. The purpose of this is to bring the TER into line with the recent inclusion of transaction costs in the ongoing charge figure as now being disclosed by UCITS funds. Under the guidance there is no requirement to restate prior year figures. The Fund has invested in Collective Investment Schemes during the period and the expenses incurred by these schemes are included in the above as the Synthetic TER. Risk Warning An investment in an Open-Ended Investment Company should be regarded as a medium to long term investment. Investors should be aware that the price of shares and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. As a Fund is not a legal entity, if the assets of one Fund are insufficient to meet the liabilities attributable to it, the ACD may re-allocate such liabilities between the Funds then in existence in a manner which is fair to Shareholders generally. This re-allocation will normally be performed on the basis of the respective Net Asset Values of the Funds. However, please note, on the 21 December 2011, the Open Ended Investment Companies Regulations (2001) as amended ( the Regulations ) were amended to introduce a Protected Cell Regime for OEICS. Under the Protected Cell Regime, each Fund represents a segregated portfolio of assets and accordingly, the assets of a Fund belong exclusively to that Fund and shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including any other Fund and shall not be available for any such purpose. The Regulations allow a transitional period for implementation of the Protected Cell Regime, but it must be in place before 20 December As at the date of these accounts the Protected Cell Regime has not been implemented for IFDS Brown Shipley MultiManager Investment Company. 21

23 IFDS Brown Shipley MultiManager International Fund Breakdown of Asset Class As at 30 September North America 32.90% Europe 14.26% Emerging Markets 12.34% Peripheral Developed Markets 10.84% Exchange Traded Funds 10.53% Japan 8.20% Global 5.54% Net other assets 5.39% As at 31 March North America 33.33% Europe 13.47% Emerging Markets 12.92% Peripheral Developed Markets 10.46% Exchange Traded Funds 9.99% Japan 9.94% Net other assets 5.04% Global 4.85% 22

24 IFDS Brown Shipley MultiManager International Fund Top Ten Holdings The Top Ten Holdings within the Fund were: Holdings % of Fund 30/09/12 ishares MSCI North America 7.45 JPM US Equity C Accumulation 7.10 First State Asia Pacific B Accumulation 6.92 Legg Mason-Royce US Small Cap Opportunities A Income 5.43 M&G American Sterling A Income 5.29 Henderson US Growth Accumulation 5.13 Schroder US Mid Cap A Income 5.03 Morgan Stanley US Growth Z Accumulation 4.92 Jupiter Japan H Income 4.82 Aberdeen Emerging Markets A Accumulation 4.70 Holdings % of Fund 31/03/12 ishares MSCI North America 7.34 JPM US Equity C Accumulation 7.10 First State Asia Pacific B Accumulation 6.21 Henderson US Growth Accumulation 6.08 Schroder US Mid Cap A Income 5.92 Morgan Stanley US Growth Z Accumulation 5.51 M&G American Sterling A Income 5.47 Neptune Japan Opportunities B Accumulation 5.02 GLG Japan Core Alpha Accumulation 4.92 Henderson European Select Opportunities Income

25 IFDS Brown Shipley MultiManager International Fund Authorised Fund Manager s Report For the six months ended 30 September 2012 Market Review Fear may not have completely disappeared from global markets, but there is no doubt that the climate for risk taking has increased in recent months. In part, this has been due to the concerted efforts of central banks, most notably the U.S Federal Reserve, the European Central Bank (ECB) and the Bank of England to continue with a strategy of monetary easing. The prime purpose of all of these Quantitative Easing (QE) programmes has been to reduce longer-term borrowing rates, and so hopefully kick-start the economy. It is nigh on impossible to calculate the effect of QE, but it is a fair conclusion that the reality and the perception have combined to provide support to markets around the world, and so avoid some of the potential catastrophes that we have faced over the past four years. The central banks have by no means ended the financial crisis that began in It will be several more years yet before the global over-indulgence of debt has been rectified. In the meantime we will probably experience very slow growth, accompanied by intermittent mini-crises. But this is almost inevitable at times, and that old adage about climbing the wall of worry sums up the outlook over the next few years. Unfortunately, the Eurozone crisis is not the only danger we can see. China is clearly slowing down and consequently its consumption of raw materials and finished goods from around the world is slowing down as well. The Chinese Government is putting in place a stimulus package to promote economic activity, but it may be 2013 before we see the benefits begin to ripple across the rest of the world. However if one had to select the issue which was of the greatest magnitude and the greatest likelihood to push global economies back into recession then one has to look at what has been dubbed the fiscal cliff (US Government tax issues) in the United States. We are now faced with a whole raft of tax cuts, which were largely put in place by George Bush five years ago, expiring with an estimated USD 800 billion contraction thus resulting. This would equate to 3.8% being wiped off the GDP*. We can only hope some form of compromise extension and curtailment programme will be thrashed out, such that overall spending will decline but in a measured and controlled manner. Under this scenario, we foresee a steady continuation of the progress seen in 2012: high single-digit gains to investors where income will be at least a third of the total return and, with interest rates unlikely to move up before 2015, the necessity to creating a real return from savings becoming an ever greater issue for us all. Fund Review This portfolio is invested purely in equity funds across global markets excluding the UK. The asset allocation at first glance looks as though it hasn t changed much over the past six months. During the period though, the European weighting has been reduced and then more recently built back up again, following the ECB s president Draghi announcing he is prepared to do what it takes to make the Eurozone work. We view this action as providing a backstop, which gives us greater confidence in exploiting the low valuations of companies which happen to be headquartered in Europe but which have strong overseas earnings. Looking at how the overall portfolio has performed, the Fund returned -4.31% over the six months to 30 September 2012.** The most difficult area has undoubtedly been the US. Over the summer (mid May to end August) 95% of funds in the IMA North American sector failed to beat the S&P 500 index***, illustrating the challenge. In Europe however, arguably a more difficult market environment, all of our funds have been able to generate good returns over and above their benchmark. The same has been true in Asia, although the returns in the Emerging Markets have been more mixed. An example of the valuation dispersion in markets and the extent to which 24

26 IFDS Brown Shipley MultiManager International Fund Authorised Fund Manager s Report (continued) For the six months ended 30 September 2012 some defensive stocks have been bid up; Hindustan Unilever is on a P/E (price earnings) ratio of approaching 40 times. Similarly, Nestle India is on a forward P/E of approaching 50 times, which implies a huge growth expectation for the price being paid. As ever, one has to be patient in investment whilst continually re-evaluating positions to make sure they are not value traps. One such potential trap in a market context may be Japan. P/E s have not recovered in Japan post all markets de-rating following the collapse of Lehman s. The US, Europe and UK have all recovered despite Japanese company earnings leading a worldwide recovery in corporate earnings. Japan continues to have a low P/E and high earnings per share growth and remains an area of investment where there is the biggest margin for potential change in sentiment in my view. The main changes to the portfolio were switching Neptune European Opportunities into Standard Life European Equity Income. Selling Neptune Japan and buying Jupiter Japan Income. We have also switched Invesco Asian into the Schroder Asian Total Return fund. These deals represent the biggest deals, but I have also reduced the Schroder US Mid Cap fund and initiated a position in the Baring European Select fund. Outlook The portfolio is well positioned for the current market environment, with a greater balance to its more natural growth bias. Our expectation is that the ECB announcement in early September has reduced some of the risks the market was concerned about prior to this commitment. We see opportunities in selecting funds which are differentiating between the growing valuation gap which has opened up between defensive stocks and cyclical stocks. Stock picking managers should be helped further as unusually high correlation between stocks begins to break down, as investors focus on company fundamentals, rather than just being in or out of a particular market. Source: * Financial Times ** Lipper / Hindsight, A Accumulation Shares, percentage growth total return, mid to mid in UK Sterling with net income reinvested. *** Bloomberg Investment Manager Brown Shipley & Co. Limited 15 October

27 IFDS Brown Shipley MultiManager Investment Company General Information Classes of Shares The Company can issue different classes of shares in respect of any Fund. Holders of Income shares are entitled to be paid the revenue attributable to such shares, in respect of each annual or interim accounting period. Holders of Accumulation shares are not entitled to be paid the revenue attributable to such shares, but that revenue is retained and accumulated for the benefit of shareholders and is reflected in the price of shares. Valuation Point The valuation point for each Fund is 12 noon on each dealing day (being each day which is a business day in London). Valuations may be made at other times under the terms contained within the Prospectus. Buying and Selling Shares The ACD will accept orders to deal in the shares on normal business days between 9:00 am and 5:00 pm. Instructions to buy or sell shares may be either in writing to: IFDS Managers Ltd IFDS Brown Shipley Funds, PO Box 1101, Chelmsford, Essex CM99 2WS or by telephone on *. A contract note will be issued by close of business on the next business day after the dealing date to confirm the transaction. Prices The prices of shares for each class in each Fund will be posted on and can also be obtained by telephoning the Administrator on * during the ACD s normal business hours. Reports The annual report of the Company will normally be published within two months of each annual accounting period, although the ACD reserves the right to publish the annual report at a later date but not later than four months from the end of each annual accounting period and the interim report will be published within two months of each interim accounting period. Interim account period ended 30 September Annual accounts period ended 31 March Shareholders will be sent the short report automatically and the long report will be available, free of charge, upon request from the ACD. Distribution Payment Dates Interim 30 November Annual 31 July * Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors decisions. 26

28 IFDS Brown Shipley MultiManager Investment Company General Information (continued) Other Information The Instrument of Incorporation, Prospectus, Simplified Prospectus and the most recent interim and annual reports may be inspected at the office of the ACD which is also the Head Office of the Company and copies may be obtained upon application. Shareholders who have any complaints about the operation of the Company should contact the ACD or the Depositary in the first instance. In the event that a shareholder finds the response unsatisfactory they may make their complaint direct to the Financial Ombudsman Service at South Quay Plaza, 183 Marsh Wall, London E14 9SR. Data Protection Shareholders names will be added to a mailing list which may be used by the ACD, its associates or third parties to inform investors of other products by sending details of such products. Shareholders who do not want to receive such details should write to the ACD requesting their removal from any such mailing list. Effects of Personal Taxation Investors should be aware that unless their shares are held within an ISA, selling shares is treated as a disposal for the purpose of Capital Gains tax. Risk Warning An investment in an Open Ended Investment Company should be regarded as a medium to long term investment. Investors should be aware that the price of shares and the income from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. As a Fund is not a legal entity, if the assets of one Fund are insufficient to meet the liabilities attributable to it, the ACD may re-allocate such liabilities between the Funds then in existence in a manner which is fair to shareholders generally. This re-allocation will normally be performed on the basis of the respective Net Asset Values of the Funds. However, please note, on 21 December 2011, the Open Ended Investment Companies Regulations (2001) as amended ( the Regulations ) were amended to introduce a Protected Cell Regime for OEICS. Under the protected cell regime, each Fund represents a segregated portfolio of assets and accordingly, the assets of a Fund belong exclusively to that Fund and shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including any other Fund and shall not be available for any such purpose. The Regulations allow a transitional period for implementation of the Protected Cell Regime, but it must be in place before 20 December As at the date of these accounts the Protected Cell Regime has not been implemented for IFDS Brown Shipley MultiManager Investment Company. 27