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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Inv.Perp.Sel Hd | LSE:IVPH | London | Ordinary Share | GB00B1DQ6696 | HEDGE FD SHS 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 90.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMIVPU TIDMIVPG TIDMIVPH TIDMIVPM INVESCO PERPETUAL SELECT TRUST PLC HALF-YEARLY FINANCIAL REPORT SIX MONTHS ENDED 30 NOVEMBER 2011 . Invesco Perpetual Select Trust plc (`the Company') is an investment trust which is intended as a long-term investment vehicle for investors and has an indefinite life. The Company provides shareholders with a choice of investment policies and objectives, each intended to generate attractive risk-adjusted returns from segregated portfolios. The Company's share capital comprises the following four classes of shares each of which has its own separate portfolio of assets and liabilities: * UK Equity; * Global Equity Income (formerly Global Equity); * Hedge Fund (to be renamed Balanced Risk); and * Managed Liquidity. Invesco Asset Management Limited manages the UK Equity, Global Equity Income and Managed Liquidity Share Portfolios. The Hedge Fund Share Portfolio is currently advised by Fauchier Partners, a hedge fund specialist. Investment Policy The Company's Investment Policy to 15 November 2011, which includes the investment objectives, policies and risks and investment limits for the Company and the separate Portfolios, is disclosed in full on pages 25 to 28 of the 2011 annual financial report, which is available to view at or download from www.invescoperpetual.co.uk/investmenttrusts. Within this report, the investment objective of each Portfolio is shown at the start of the applicable Portfolio Manager's Report. At a General Meeting held on 15 November 2011 shareholders approved changes to the Global Equity and Hedge Fund Portfolios (the UK Equity and Managed Liquidity Portfolios remain unchanged) that were set out in a circular to shareholders dated 14 October 2011. The new Global Equity Income investment objective and policy are now in effect and are set out in an appendix to this report. The Hedge Fund Portfolio will be renamed the Balanced Risk Portfolio in February 2012 when its new investment objective and policy, which are set out in the appendix, become effective. Share Class Conversion The Company enables shareholders to tailor their asset allocation to reflect their view of prevailing markets through the opportunity to convert between share classes every three months. Conversions should not be treated as disposals for the purposes of capital gains tax. . PERFORMANCE STATISTICS The Company commenced trading on 23 November 2006. | Source: Thomson Reuters UK Equity Share Portfolio SIX MONTHS YEAR SIX MONTHS ENDED ENDED ENDED 30 NOVEMBER 31 MAY 30 NOVEMBER 2011 2011 2011 TOTAL RETURN Net asset value| - total return -3.2% Share price| - total return -12.5% Discount at period end 13.6% 4.1% FTSE All-Share Index| - total -7.4% return Revenue return per share 2.1p 4.1p Dividend - first interim 2.00p 1.65p - second interim 0.85p 2.55p - total 2.85p 4.20p Global Equity Share Portfolio SIX MONTHS YEAR SIX MONTHS ENDED ENDED ENDED 30 NOVEMBER 31 MAY 30 NOVEMBER 2011 2011 2011 TOTAL RETURN Net asset value| - total return -11.1% Share price| - total return -14.5% Discount at period end 8.6% 5.3% MSCI AC World Index (GBP)| - total -8.4% return Revenue return per share 0.8p 2.0p Dividend - first interim 1.00p 0.45p - second interim 0.45p 1.25p - total 1.45p 1.70p Hedge Fund Share Portfolio SIX MONTHS YEAR SIX MONTHS ENDED ENDED ENDED 30 NOVEMBER 31 MAY 30 NOVEMBER 2011 2011 2011 TOTAL RETURN Net asset value| - total return -6.7% Share price| - total return -11.9% Discount at period end 11.2% 6.6% 3 months LIBOR +5% pa - total 5.4% return Managed Liquidity Share Portfolio SIX MONTHS YEAR SIX MONTHS ENDED ENDED ENDED 30 NOVEMBER 31 MAY 30 NOVEMBER 2011 2011 2011 TOTAL RETURN Net asset value| - total return 0.0% Share price| - total return -0.5% Discount at period end 2.8% 2.3% Revenue return per share 0.1p 0.5p Dividend - first interim - 0.5p . INTERIM MANAGEMENT REPORT INCORPORATING THE CHAIRMAN'S STATEMENT Investment Objective and Policy The Company's investment objective is to provide shareholders with a choice of investment strategies and policies, each intended to generate attractive risk-adjusted returns. The Company's share capital comprises four share classes: UK Equity Shares, Global Equity Income (formerly Global Equity) Shares, Hedge Fund Shares and Managed Liquidity Shares, each of which has its own separate portfolio of assets and attributable liabilities. Shareholders approved proposed changes to the Global Equity and Hedge Fund Portfolios at a General Meeting held on 15 November 2011 (the UK Equity and Managed Liquidity Portfolios were not changed). Transition to the new Global Equity Income investment objective and policy commenced immediately and they are now being followed. The Hedge Fund Portfolio will be renamed the Balanced Risk Portfolio in February 2012. The new investment objectives and policies of these Portfolios are set out in full in the appendix to this report. The Company enables shareholders to tailor their asset allocation to reflect their view of prevailing market conditions. Shareholders now have the opportunity to convert between share classes capital gains tax free every three months. Performance The six month period to the end of November 2011 saw extremely unsettled markets. The MSCI AC World Index total return over the period was -8.4% and that of the FTSE All-Share Index was -7.4%. During the period it became clear that, with the debt problems of the Eurozone and the risk of a sharp slowdown in China due to weakness in investment and construction, the developed world was flirting again with recession. As a result, high-quality government bonds performed very well with yields falling to levels only previously associated with depression. Equities, in contrast, reflected concerns that profits would come under pressure in such an environment. In NAV terms, the UK Equity Portfolio returned -3.2% over the period. Although the return was negative the Portfolio performed significantly better than the FTSE All-Share Index. This good relative performance was due to a cautious concentration on very stable companies, particularly in tobacco and healthcare. The Global Equity Portfolio returned -11.1% over the period, which was disappointing. It suffered from an over-optimistic view of emerging market growth and an underweight position in the US where there were signs of a slowly improving economy. As mentioned above, shareholders approved changes to the investment objective and strategy of this Portfolio on 15 November 2011 and the transition to an income biased strategy was completed on 30 November 2011. As a result, we anticipate that the future yield on these shares will be at least 3.5% based on current prices. The Portfolio has been renamed Global Equity Income Portfolio to reflect this change. In NAV terms, the Company's more secure Managed Liquidity Shares, whose objective is derived from cash returns, maintained their value, recording no change. The Hedge Fund Shares, which also had an objective derived from cash returns, disappointed again with a return of -6.7%. As stated above, shareholders have approved a proposal to change the investment objective and strategy of this Portfolio. The Paragon hedge fund assets are being redeemed and the new Balanced Risk strategy will be implemented in February, with the Portfolio renamed accordingly. The new strategy will utilise futures contracts to generate returns from exposure to equities, bonds and commodities on a balanced risk basis. It will also provide much better liquidity in the underlying assets and a lower Total Expense Ratio. The circular sent to shareholders in October described the target for the new strategy in general terms. However, the Board will gauge performance of the Portfolio against the same target that was set for the Hedge Fund strategy, namely to achieve an absolute return of 3-month sterling LIBOR plus 5% per annum over a rolling 5-year period. The Board is pleased to note that over the six months to 30 November 2011 the Luxembourg based Invesco Balanced-Risk Allocation Fund, which uses the same balanced risk strategy, returned +5.0% net of fees (expressed in euros), and its performance has continued to be satisfactory into the new year. The discounts on the Company's Share classes all widened over the period, so that share price performance suffered, particularly the UK Equity and Hedge Fund Share classes. Since the period end, the discount on the UK Equity Share class has narrowed. Dividends It remains the Directors' policy to distribute substantially all net revenues earned between each conversion date for each share class. On 18 November 2011 first interim dividends were paid as follows: UK Equity Shares: 2.00p Global Equity Shares: 1.00p Second interim dividends, payable on 15 February 2012 to the shareholders on the register on 27 January 2012, have also been declared, as follows: UK Equity Shares: 0.85p Global Equity Income Shares: 0.45p In consequence of continuing very low interest rates, the net revenue of the Managed Liquidity Portfolio has been minimal and in view of the administrative costs, the Directors have decided not to declare any interim dividends on the Managed Liquidity Shares. The net revenue earned will be taken into account in considering future dividends. Little or no net income is expected from the assets underlying the Hedge Fund Shares and no dividends will be paid. It is expected that this will continue to be the case when the Balanced Risk strategy is implemented. Share Buy Backs During the six months to 30 November 2011, the Company purchased and placed in treasury 598,000 UK Equity Shares, 272,000 Global Equity Shares, 497,000 Hedge Fund Shares and 366,000 Managed Liquidity Shares. No shares have been repurchased since the period end. The Board intends to use the Company's buy back authorities when this will benefit existing shareholders as a whole and will ask shareholders to renew the authorities at the Company's AGM each year and at other times should it be in shareholders' interest to do so. The Board's policy is to maintain a very narrow discount in the Managed Liquidity Share class. There is currently no formal discount policy in the other Share classes. At the AGM held on 15 November 2011, shareholders renewed the authority to make market purchases of ordinary shares up to a maximum number of shares equating to 14.99% of the total shares then in issue of each Share class. This authority will be utilised when financial and stock market conditions allow and in the best interests of the Company and of its shareholders as a whole. Outlook The Board is confident that with the changes made in November we now have Share classes matching our aspiration to provide a range of attractive investment solutions for existing and prospective shareholders and that all offer advantages to holders in the current unsettled market conditions. The outlook remains extremely uncertain. However, there is a much heightened awareness of the risks and there is no doubt that for some time both companies and financial institutions have been actively seeking to protect themselves. Their actions are likely to have an adverse effect through weaker fixed investment than might otherwise have been the case, but should also mean that they are more resilient if the worse outcomes materialise. The problem for government is how to harness excess capacity without increasing already high debt levels. At the asset class level, high quality government bonds appear to be discounting a very severe setback and must be vulnerable to better economic news and particularly a recovery in loan demand. Equities look cheap provided they manage to avoid a complete mean reversion in profits as a share of National Income. Any forecast in this area is extremely uncertain, though it obviously depends significantly on overall economic activity. So far companies have survived the weakness of the last three years surprisingly well. It would be disappointing if they were to be routed now. We are somewhat protected because both the Company's equity based Share classes depend on income greater than that available from bond markets for a large part of their return and this appears to be relatively stable. Patrick Gifford Chairman 23 January 2012 . Related Party Invesco Asset Management Limited (`IAML'), a wholly owned subsidiary of Invesco Limited, acts as Manager and Company Secretary to the Company. Details of IAML's services and fee arrangements are summarised in note 2 and are more fully described in the 2011 annual financial report, a copy of which can be found on the Manager's website at www.invescoperpetual.co.uk/investmenttrusts. . Principal Risks and Uncertainties A detailed explanation of principal risks and uncertainties can be found on pages 33 to 36 of the Company's 2011 annual financial report, which is available on the Manager's website. These are summarised as follows: * Investment Policy - the investment policies may not achieve the published investment objectives; * Risks Applicable to the Company - the prices of shares in the Company may not appreciate and the level of dividends may fluctuate; * Compulsory Conversion of a Class of Shares - if ownership of a class of shares becomes too concentrated the Directors may serve notice on holders of the affected class requiring them to convert to another class; * Liability of a Portfolio for the Liabilities of Another Portfolio - in the event that any portfolio was unable to meet its liabilities, the shortfall would become a liability of the other portfolios; * Market Movements and Portfolio Performance - falls in stock markets will affect the performance of the portfolio and individual investments; * Gearing - borrowing will amplify the effect on shareholders' funds of portfolio gains and losses; * Hedging - where hedging is used there is a risk that the hedge will not be effective; * Regulatory and Tax Related - whilst compliance with rules and regulations is closely monitored, breaches could affect returns to shareholders; * Additional Risks Applicable to Managed Liquidity Shares - the Shares are not designed to replicate a bank or building society deposit or money market fund; * Additional Risks Applicable to Hedge Fund Shares - the Fauchier Managed Funds may be exposed to additional gearing via their investments being themselves geared, hedge funds may engage in short selling, which could expose the investee hedge fund to the risk of uncapped losses until the position is `closed-out', and may invest in derivative instruments that entail greater than ordinary investment risks. Also, hedge funds may not permit frequent redemptions, meaning that investments may be relatively illiquid; and * Reliance on Third Party Service Providers - the Company has no employees, other than the Board, so is reliant upon the performance of third party service providers, particularly the Manager, for it to function. In the view of the Board these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review. The Balanced Risk Shares will be subject to similar risks to the Hedge Fund Shares save that there will be no exposure to short selling and the investments are all expected to be liquid. . Going Concern The financial statements have been prepared on a going concern basis. The Directors consider this the appropriate basis as the Company has adequate resources to continue in operational existence for the foreseeable future. In reaching this conclusion, the Directors took into account the value of net assets; the Company's Investment Policy; its risk management policies; the diversified portfolio of readily realisable securities which can be used to meet funding commitments; the credit facility and the overdraft which can be used for both long-term and short-term funding requirements; the liquidity of the investments which could be used to repay the overdraft in the event that the facility could not be renewed or replaced; and the ability of the Company in the light of these factors to meet all its liabilities and ongoing expenses. . DIRECTORS' RESPONSIBILITY STATEMENT in respect of the preparation of the half-yearly financial report The Directors are responsible for preparing the half-yearly financial report using accounting policies consistent with applicable law and UK Accounting Standards. The Directors confirm that, to the best of their knowledge: - the condensed set of financial statements contained within the half-yearly financial report have been prepared in accordance with the Accounting Standards Board's Statement "Half-Yearly Financial Report"; - the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R of the FSA's Disclosure and Transparency Rules; and - the interim management report includes a fair review of the information required on related party transactions. The half-yearly financial report has not been audited or reviewed by the Company's auditors. Signed on behalf of the Board of Directors. Patrick Gifford Chairman 23 January 2012 . SHARE CLASS CONVERSION DETAILS Shares are convertible at the option of holders into any other class of Share on or around 1 February, 1 May, 1 August and 1 November each year. Notice from a shareholder to convert any class of Share on any conversion date will be accepted up to ten business days prior to the relevant conversion date. Forms for conversion are available on the Manager's web site: www.invescoperpetual.co.uk/ipst and from the Company Secretary. Conversion from one class of Shares into another will be on the basis of a ratio derived from the prevailing underlying net asset value of each class of relevant Share, calculated shortly before the date of conversion. The Directors have been advised that conversion of one class of Share into another will not be treated as a disposal for the purposes of UK Capital Gains Tax. . UK EQUIITY SHARE PORTFOLIO MANAGER'S REPORT Investment Objective The investment objective of the UK Equity Share Portfolio is to provide shareholders with an attractive real long-term total return by investing primarily in UK quoted equities. Market and Economic Review Global news, particularly the European sovereign debt and banking crisis, dominated investor sentiment over the six months to the end of November 2011 and the performance of the stock market was notable for a high level of volatility. The UK government's preferred measure of inflation, the Consumer Prices Index (`CPI'), remained above its target of 2.0% while the Bank of England continued to keep interest rates on hold at 0.5% and confirmed a further GBP75 billion of quantitative easing. The extreme volatility of the period saw November witnessing the stock market's longest losing streak since 2003 and then rallying strongly at the end of the month, as co-ordinated action from central banks, led by the US Fed, helped to assuage fears of the Eurozone credit crisis escalating. The stock market paid little attention to the Chancellor's autumn statement, which confirmed forecasts of lower economic growth for the UK - down to 0.9% from 1.7% for this year and to 0.7% from 2.5% next. In contrast to the economic news, there was some positive corporate news flow, with share buy backs a growing theme and certain businesses continuing to deliver resilient operational performance. Portfolio Strategy and Review The net asset value total return of the Portfolio over the six months to the end of November 2011 was -3.2%, compared to a negative total return of -7.4% recorded by the FTSE All-Share Index. In a difficult period for the stock market, amidst growing concerns over the economic outlook, the performance of the Portfolio relative to the FTSE All-Share Index benefited from its focus on taking advantage of the strength of large quoted companies. Corporate news flow from these companies over the period was typically positive, underlining the portfolio manager's confidence in their ability to deliver through tough times. The Portfolio's investments in the tobacco sector delivered a positive contribution over the six months, with investors increasingly appreciating the resilience of the sector's earnings and cash flow. The holdings in Reynolds American and British American Tobacco performed particularly strongly, with the former additionally benefiting from the strength of the US dollar. The Portfolio is also heavily invested in the pharmaceutical sector and this performed relatively well in the challenging market conditions. Other examples of the health of the Portfolio's major investments came from Vodafone, whose interim results included a comment on the continued strong momentum in emerging markets such as India and Turkey, from Wm Morrison Supermarkets, which confirmed that the strategy of margin recovery and geographic expansion remained on track, and from Tate & Lyle, which noted strong demand in a number of its markets. Shares in Drax rose strongly on proposals from the Department of Energy & Climate Change, particularly with regard to subsidies for renewable energy. The Portfolio's new holding in Rolls Royce performed strongly after the company revealed the disposal of its interest in International Aero Engines (`IAE') to Pratt & Whitney for US$1.5 billion. A visit to Rolls Royce's civil aerospace operations in Derby confirmed the portfolio manager's view that it is justifiably recognised as an industry leading, world class engineering business. There was, however, disappointing news from the Portfolio's investment in Homeserve, the shares of which fell sharply on news that, following an independent review, it was to suspend part of its telesales operation pending a re-training of its sales staff. The investment in Chemring detracted from the Portfolio's performance over the period. The company announced that unexpected delays in customer orders would hit full year revenues and profits. Concerns over the outlook for defence spending also hit the shares of BAE Systems. The investment in Rentokil also performed disappointingly over the period, detracting from performance. The company announced a decline in half yearly pre-tax profit as trading deteriorated at its struggling parcels division, City Link. There were relatively few significant changes to the Portfolio's holdings during the period. Exposure was reduced to Daily Mail & General Trust and Tate & Lyle and the holding in Bunzl was sold. The proceeds were used to make a new investment in Rolls Royce and to add to existing holdings in BAE Systems and Brown (N). Outlook The recent news from the UK economy has provided strong evidence of the fragile condition of the domestic economic situation. This was not a surprise to the portfolio manager who expects this challenging environment to persist for several years to come. Investment strategy has focused on taking advantage of the strength of large quoted companies; in sharp contrast to the household and government sectors, corporates look to be in a position of strength, not just in the UK but globally. Large companies, in particular, are mostly well managed and have flexibility in their use of capital and labour. This has allowed them to gradually reduce debt levels in recent years, to the extent that company balance sheets in general are now in excellent shape. This is in stark contrast to most sovereign balance sheets, which have been vastly expanded to provide the large stimulus packages that have characterised the post-crisis world and leave many sovereign credit ratings at risk of downgrades. Many of the biggest holdings in the Portfolio have delivered solid levels of earnings, cash flow and dividend growth over the last few years. This operational progress has been achieved despite the financial crisis and the deepest recession in post-war history. This gives the portfolio manager confidence that these businesses can continue in similar vein in the future, notwithstanding the continued probable weakness of developed world economies. Despite this dependability and their proven ability to grow through the most testing of economic circumstances, the valuations of the shares are low both in absolute terms and relative to other asset classes. The portfolio manager believes that equities are lower risk now than for many years given the scale of the de-rating witnessed. As an equity investor he believes this represents an extraordinary opportunity to invest in some of the biggest and best companies in the market at very attractive valuations. Mark Barnett Portfolio Manager Invesco Asset Management Limited 23 January 2012 . UK EQUITY SHARE PORTFOLIO LIST OF INVESTMENTS AT 30 NOVEMBER 2011 Ordinary shares listed in the UK unless stated otherwise MARKET VALUE % OF COMPANY INDUSTRY GROUP| GBP'000 PORTFOLIO Imperial Tobacco Tobacco 2,570 5.6 Reynolds American - US Tobacco 2,565 5.6 Common Stock British American Tobacco Tobacco 2,386 5.2 GlaxoSmithKline Pharmaceuticals and 2,250 4.9 Biotechnology Vodafone Mobile Telecommunications 2,227 4.9 BT Fixed Line Telecommunications 2,084 4.6 BG Oil and Gas Producers 2,011 4.4 AstraZeneca Pharmaceuticals and 1,893 4.2 Biotechnology Tesco Food and Drug Retailers 1,468 3.2 Babcock International Support Services 1,438 3.2 BAE Systems Aerospace and Defence 1,407 3.1 Reckitt Benckiser Household Goods and Home 1,332 2.9 Construction Roche - Swiss common stock Pharmaceuticals and 1,250 2.8 Biotechnology Capita Support Services 1,200 2.6 Centrica Gas, Water and Multiutilities 1,169 2.6 Hiscox Non-Life Insurance 1,137 2.5 Drax Electricity 1,104 2.4 Compass Travel and Leisure 1,079 2.4 Provident Financial Financial Services 984 2.2 Pennon Gas, Water and Multiutilities 978 2.1 International Power Electricity 893 2.0 KCOM Fixed Line Telecommunications 868 1.9 Amlin Non-Life Insurance 844 1.9 BTG Pharmaceuticals and 803 1.8 Biotechnology Balfour Beatty Construction and Materials 798 1.8 Beazley Non-Life Insurance 765 1.7 Wm Morrison Supermarkets Food and Drug Retailers 716 1.6 SSE Electricity 671 1.5 Tate & Lyle Food Producers 633 1.4 A J Bell - Unquoted Financial Services 625 1.4 Serco Support Services 613 1.3 Ladbrokes Travel and Leisure 519 1.1 Rentokil Initial Support Services 512 1.1 Chemring Aerospace and Defence 509 1.1 Homeserve Support Services 509 1.1 TalkTalk Telecom Fixed Line Telecommunications 453 1.0 Daily Mail & General Trust Media 331 0.7 Brown (N) General Retailers 327 0.7 Impax Environmental Markets Investment Companies 313 0.7 Rolls Royce - Ordinary and Aerospace and Defence 265 0.6 C Shares Vectura Pharmaceuticals and 218 0.5 Biotechnology UK Coal Mining 166 0.4 Barclays Bank - Nuclear Electricity 149 0.3 Power Notes 28 February 2019(1) XCounter(4) Healthcare Equipment and 148 0.3 Services Landkom International(3) Food Producers 83 0.2 PuriCore Healthcare Equipment and 67 0.1 Services HaloSource(2) Healthcare Equipment and 66 0.1 Services Renovo Pharmaceuticals and 44 0.1 Biotechnology Yell Media 44 0.1 Ecofin Water and Power Equity Investment Instruments 39 0.1 Opportunities - 6% Convertible Loan Stock 2016 Helphire Financial Services 6 - Total 45,529 100.0 |FTSE Industry Classification Benchmark. (1) Contingent Value Rights (`CVRs') referred to as Nuclear Power Notes (`NPNs') were offered by EDF as a partial cash alternative to its cash bid for British Energy (`BE'). The NPNs were issued by Barclays Bank. The CVRs participate in BE's existing business. (2) Listed on AiM. (3) Listed in Isle of Man. (4) Listed in Sweden. . UK EQUITY SHARE PORTFOLIO INCOME STATEMENT YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED 31 MAY 30 NOVEMBER 2011 30 NOVEMBER 2010 2011 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (Losses)/gains on - (1,801) (1,801) - 2,586 2,586 7,668 investments Foreign exchange gains - 4 4 - - - 10 Income 989 - 989 851 - 851 2,206 Management fee - note 2 (44) (104) (148) (40) (93) (133) (267) Performance fee - note 2 - (217) (217) - - - (111) Other expenses (85) (1) (86) (79) - (79) (144) Net return before finance 860 (2,119) (1,259) 732 2,493 3,225 9,362 costs and taxation Finance costs (19) (45) (64) (19) (42) (61) (128) Return on ordinary 841 (2,164) (1,323) 713 2,451 3,164 9,234 activities before tax Tax on ordinary (11) - (11) (13) - (13) (31) activities Return on ordinary 830 (2,164) (1,334) 700 2,451 3,151 9,203 activities after tax for the financial period Basic return per ordinary 2.1p (5.5)p (3.4)p 1.8p 6.3p 8.1p 23.6p share - note 4 SUMMARY OF NET ASSETS AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 GBP'000 GBP'000 GBP'000 Fixed assets 45,529 43,346 49,734 Current assets 362 137 596 Creditors falling due within one year, (625) (519) (563) excluding borrowings Overdraft - (52) - Bank loan (5,625) (6,900) (7,550) Net assets 39,641 36,012 42,217 Net asset value per share - note 5 100.1p 92.4p 105.3p Gearing: Gross 14.2% 19.3% 17.9% Net 14.0% 19.3% 17.8% . GLOBAL EQUITY INCOME SHARE PORTFOLIO (FORMERLY GLOBAL EQUITY SHARE PORTFOLIO) MANAGER'S REPORT Investment Objective The investment objective of the Global Equity Portfolio changed on 15 November 2011 to provide an attractive and growing level of income return and capital appreciation over the long term, predominantly through investment in a diversified portfolio of equities worldwide, and has been renamed Global Equity Income. It should be noted that, although the portfolio at 30 November 2011 reflects the new strategy, the performance over the period described in this Report derives from the former investment objective and policy as set out in the 2011 annual financial report. Market and Economic Review The global economic backdrop deteriorated over the summer months although macro-economic data has since surprised on the upside, particularly in the US. Nonetheless the outlook remains one of slow and prolonged economic recovery, as fiscal austerity and an extended period of deleveraging restrain growth. Against this backdrop, and with increased Eurozone sovereign debt worries, markets moved quickly, and often indiscriminately, to price in a sharp deterioration and volatility is likely to remain high in the near term. Many corporates, however, are in good health as they have restructured their cost bases and rebuilt balance sheets following the financial crisis, and recent market weakness has left a lot of quality companies trading at very attractive valuations, discounting a more severe earnings outlook than we believe is likely. Portfolio Performance The net asset value total return of the Portfolio over the 6 months to the end of November 2011 was -11.1%, compared to a negative total return of -8.4% recorded by the MSCI AC World Index. Portfolio Strategy and Activity Over the period the core of the portfolio comprised sustainable growth, cash generative names in areas like pharmaceuticals and tobacco, and companies with a strong aftermarket or services element supporting earnings stability, many of which in industrial sectors. Being entirely stock driven, the portfolio also had a number of turnaround and special situation investments that it was thought the market was mis-pricing. Exposure to commodity cyclicals like materials, and to consumer discretionary spend, was modest in the portfolio. The Portfolio's high exposure to attractively valued sustainable growth names in the UK made a positive contribution to returns, most notably within the consumer staples and healthcare sectors. Much of the exposure to these areas came through cash generative tobacco and pharmaceutical companies. Imperial Tobacco did well, as did pharmaceutical holdings Roche, Glaxo and Novartis. Vodafone was another strong performer. Continental Europe was a weak market and the Portfolio's relatively high exposure detracted from performance. Healthcare was important here as the high level of Swiss pharmaceutical exposure mitigated, to an extent, the weakness from some of our consumer and industrial cyclicals (Daimler, UPM, Safran) and financials holdings. The financials sector was under pressure and the Portfolio's European banks exposure was a drag on performance. Consumer discretionary stocks were also weak. Utilities finally proved defensive, but having no exposure in the Portfolio this was a negative relative to the index. Low exposure to telecoms also had a negative impact. Country-wise, Japan as a market proved defensive, but the Portfolio's exposure, focussed on financials and autos, was not the best place to be over the review period. As mentioned above, shareholders passed a resolution to change the investment policy and objective of the Global Equity Portfolio at a General Meeting of the Company held on 15 November 2011. From that date, the Portfolio's investment management transferred to Invesco Perpetual's Global Equity Income team of Paul Boyne and Doug McGraw. The transition was completed by 30 November 2011, which is reflected in the list of investments at that date. The reasoning behind this change was a belief by the Directors, after consulting shareholders, that a higher and growing level of investment income from this portfolio is, and is likely to remain, a prized commodity if prevailing levels of interest rates stay at present low levels for some time. Outlook The new portfolio managers' outlook is one of slow and prolonged economic recovery, against a backdrop of sovereign debt concerns and fiscal austerity in Europe, and worries that growth in China is slowing. The strategy being followed to achieve the new investment objective is to look for companies with attractive valuations that can sustain profit margins and deliver returns through the economic cycle and which offer growing and sustainable dividends. Companies are sought that are high quality, with attractive franchises and balance sheets with a conservative level of debt. The portfolio managers believe that these types of companies are more likely to be able to return cash to investors in the form of growing dividends. Sustainability of margins and dividends are key to this approach. Bob Yerbury Paul Boyne and Doug McGraw Portfolio Managers Invesco Asset Management Limited 23 January 2012 . GLOBAL EQUITY INCOME SHARE PORTFOLIO LIST OF INVESTMENTS AT 30 NOVEMBER 2011 MARKET VALUE % OF COMPANY INDUSTRY GROUP| COUNTRY| GBP'000 PORTFOLIO Roche Pharmaceuticals, Switzerland 1,177 3.6 Biotechnology and Life Sciences Reynolds American Food, Beverage and Tobacco US 1,154 3.5 Philip Morris Food, Beverage and Tobacco US 1,089 3.3 International Tyco International Capital Goods US 1,082 3.3 Johnson & Johnson Pharmaceuticals, US 1,059 3.2 Biotechnology and Life Sciences Amcor Materials Australia 1,034 3.2 Novartis Pharmaceuticals, Switzerland 968 3.0 Biotechnology and Life Sciences British Sky Media UK 881 2.7 Broadcasting Vodafone Telecommunication Services UK 862 2.6 Canon Technology Hardware and Japan 796 2.4 Equipment SES Media France 788 2.4 Total Energy France 726 2.2 Zurich Financial Insurance Switzerland 691 2.2 Viacom Media US 686 2.1 Pearson Media UK 686 2.1 Time Warner Media US 679 2.1 HSBC Banks UK 675 2.1 Macy's Retailing US 669 2.0 Wolters Kluwer Media Netherlands 660 2.0 Bilfinger Berger Capital Goods Germany 657 2.0 Exxon Mobil Energy US 657 2.0 Chevron Energy US 656 2.0 Auto Data Software and Services US 649 2.0 Processing Emerson Electric Capital Goods US 623 2.0 Baxter Healthcare Equipment and US 594 1.8 Services CRH - ADR Materials Ireland 561 1.7 Raytheon Capital Goods US 526 1.6 Honda Automobiles and Components Japan 521 1.6 Kraft Foods Food, Beverage and Tobacco US 515 1.6 Pfizer Pharmaceuticals, US 510 1.6 Biotechnology and Life Sciences United Technologies Capital Goods US 509 1.6 ComfortDelGro Transportation Singapore 500 1.5 Time Warner Cable Media US 497 1.5 Hutchison Whampoa Capital Goods Hong Kong 487 1.5 Sysco Food and Staples Retailing US 484 1.5 Mitsubishi Estate Real Estate Japan 466 1.4 Accenture Software and Services US 449 1.4 Orkla ASA Capital Goods Norway 435 1.3 QBE Insurance Australia 432 1.3 BG Energy UK 425 1.3 Venture Technology Hardware and Singapore 425 1.3 Equipment Covidien Healthcare Equipment and US 413 1.3 Services Lawson Food and Staples Retailing Japan 367 1.1 Robert Half Commercial and Professional US 364 1.1 Services United Parcel Transportation US 338 1.0 Service Home Depot Retailing US 338 1.0 AT&T Telecommunication Services US 330 1.0 Procter & Gamble Household and Personal US 327 1.0 Products Catlin Insurance UK 326 1.0 British American Food, Beverage and Tobacco UK 310 0.9 Tobacco Kon KPN Telecommunication Services Netherlands 306 0.9 Jardine Matheson Capital Goods Hong Kong 305 0.9 Northern Trust Diversified Financials US 303 0.9 Telefonica Telecommunication Services Spain 249 0.8 HKR International Real Estate Hong Kong 205 0.6 Sky Deutschland Media Germany 131 0.4 Canon Marketing Retailing Japan 75 0.2 NEC Fielding Software and Services Japan 73 0.2 Alfresa Healthcare Equipment and Japan 72 0.2 Services Total 32,772 100.0 |MSCI and Standard & Poor's Global Industry Classification Standard. . GLOBAL EQUITY INCOME SHARE PORTFOLIO (FORMERLY GLOBAL EQUITY SHARE PORTFOLIO) INCOME STATEMENT YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED 31 MAY 30 NOVEMBER 2011 30 NOVEMBER 2010 2011 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (Losses)/gains on - (4,462) (4,462) - 172 172 2,984 investments Foreign exchange losses - (80) (80) - (14) (14) (42) Income 387 - 387 364 - 364 944 Management fees - note 2 (38) (89) (127) (39) (92) (131) (279) Other expenses (80) - (80) (76) (1) (77) (141) Net return before finance 269 (4,631) (4,362) 249 65 314 3,466 costs and taxation Finance costs (1) (2) (3) - - - - Return on ordinary 268 (4,633) (4,365) 249 65 314 3,466 activities before tax Tax on ordinary activities (29) - (29) (27) - (27) (74) Return on ordinary 239 (4,633) (4,394) 222 65 287 3,392 activities after tax for the financial period Basic return per ordinary 0.8p (14.6)p (13.8)p 0.7p 0.2p 0.9p 10.5p share - note 4 SUMMARY OF NET ASSETS AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 GBP'000 GBP'000 GBP'000 Fixed assets 32,772 36,319 38,170 Current assets 797 617 589 Creditors falling due within one year, (185) (115) (121) excluding borrowings Net assets 33,384 36,821 38,638 Net asset value per share - note 5 106.1p 112.4p 120.9p Gearing: Gross 0.0% 0.0% 0.0% Net (1.7)% 1.3% (0.9)% . HEDGE FUND SHARE INVESTMENT ADVISER'S REPORT Investment Objective The investment objective of the Hedge Fund Share Portfolio has been to achieve an absolute return of 3-month sterling LIBOR plus 5% per annum over a rolling five year period, coupled with low volatility. Capital preservation has been a priority. The Portfolio investment objective and policy will change in February 2012 as explained in the Outlook section below. The new objective and policy are set out in full in the appendix to this half-yearly financial report. Portfolio Since 1 June 2010 the principal hedge fund assets underlying the Portfolio have been shares in Paragon Capital Appreciation Fund (`PCAF'). The Portfolio also holds directly residual holdings of the predecessor funds of hedge funds. The remainder of this report describes the activities of PCAF in the period under review. Performance For the six months to 30 November 2011, PCAF produced a return of -5.6%, net of fees. Since 30 November 2006, the PCAF and the predecessor Fauchier Allocator Funds have achieved an average annual compound return of 2.5%. Over the same period the annualised volatility of the same has been 9.4%, and the "beta" to the FTSE All-Share Index (Total Return) some 0.34 and the Citigroup UK Gilt Index (greater than 5 years) -0.25. Market Review Markets were again dominated by overarching macro-economic and political concerns as the predicament of the Eurozone and its banking system lurched from bad to worse. The long-anticipated rescue package for Greece announced at the end of October produced a short-lived rally until cracks appeared in the political will to see through reforms and the spotlight fell on Italy, Spain and, significantly, France. Yields on 10-year Italian bonds hit a euro-era high of 7.56% before Mr Berlusconi was forced to resign to be replaced by a government of technocrats. Hopes for the global economy outside of Europe were dampened as Chinese reports indicated a contraction in manufacturing. In the US, Congress produced a political impasse of its own, wrangling until the eleventh hour before raising its debt ceiling and averting an almost inconceivable default, while the precarious state of the US balance sheet was underlined when after two months of negotiations, the cross party "super committee" failed to reach its minimum target of agreeing $1.2 trillion in government savings. In the final days of November, concerted intervention by central banks to ease funding pressure on the beleaguered banking system resulted in a sharp month-end rally after a period of intense concern about the very viability of the euro's survival. Global equity markets were extremely volatile with the VIX Volatility index peaking around 43, a level not seen since 2008. After a rollercoaster ride, the MSCI AC World (Total Return) Index ended down -8.4%. Hedge Fund Strategies Macro managers were down in aggregate as some struggled with the sharp reversals in sentiment. The best performer had positions designed to profit from the divergence of Eurozone sovereign credits and despite finding himself wrong-footed by the initial rally in reaction to the Greek bailout package, generated good gains overall. Trading equities proved a thankless task for other managers, while our commodities specialist was down as gains from precious metals positions were subsumed by losses in petrochemicals and soft commodities. The Fixed Income manager was up, making gains from euro interest rate positions, short euro and trades profiting from the continuing bank stress. There was a wide range of outcomes for the Equity Hedged managers. Inevitably the performance of those with the highest overall net exposure was dragged down by the drop in the broader indices, but in most cases hedges were able to mitigate the worst of the markets' decline. On the positive side our Technology specialist performed well as low net exposure and good stock selection helped to generate an overall gain. Financials proved troublesome for a couple of managers; for example one was positioned net short of Banks during November, which, as the target of the central banks' concerted intervention, were among the chief beneficiaries of the rally. Unsurprisingly, the Short Bias managers performed well, demonstrating some most welcome signs of alpha generation. The Event Driven managers struggled with the market volatility. Special situations equities detracted for one manager, while the longer bias of the activist managers meant that they were more directly impacted by the volatility and ended down slightly. Credit markets were no less challenging and the Specialist Credit strategy was down. The best performing funds were those managers with low net exposure and defensive names. Special situation and distressed names were amongst the hardest hit in the high-yield sell-off. The Multiple Strategy managers were also down in aggregate. The best performer made gains predominantly from direct commodity exposure, particularly in precious metals and energy. Losses arose mainly from managers' equity and credit books. The PCAF Portfolio During the last 6 months, there have been limited changes to the PCAF portfolio composition. Allocation to Macro and Equity Long Bias has increased by one manager per strategy. As at 30 November 2011, PCAF had holdings in 34 hedge funds across 11 different strategies. Approximately 67% of the assets invested were in Absolute Value strategies with the balance in Relative Value strategies. Fauchier Partners LLP Investment Adviser 23 January 2012 . Outlook Shareholders approved proposed changes to the Hedge Fund Portfolio at a General Meeting held on 15 November 2011. The Portfolio will be renamed Balanced Risk Portfolio in February 2012 when its new investment objective and policies, which are set out in the appendix to this half-yearly financial report, become effective. The new strategy, which will be managed by the Invesco Global Asset Allocation investment team, based in Atlanta, USA, is aimed at delivering returns in different economic environments with low volatility. The team seeks to achieve this through investment in three asset classes, being equities, bonds and commodities. The asset class weightings are determined using a proprietary investment process, with assets being selected according to three key criteria: a correlation matrix to ensure diversification, the ability to generate excess returns and specific liquidity and transparency criteria. Exposure to the asset classes is principally obtained through highly liquid and transparently priced exchange-traded futures contracts, with cash and cash equivalents being held as collateral. It is hoped that this will provide shareholders with an attractive total return in differing economic and inflationary environments, and with low correlation to equity and bond market indices. The US based Premia Plus Fund, which launched the strategy in 2008, has produced encouraging returns over a range of economic and market conditions with an annualised total return from inception to 30 November 2011 of 13.55% (before fees), compared with a traditional balanced portfolio benchmark (60% MSCI World Index/40% Barclays Aggregate Bond Index) over the same period of 5.02% (all expressed in US dollar terms). Invesco Asset Management Ltd 23 January 2012 . HEDGE FUND SHARE PORTFOLIO LIST OF INVESTMENTS AT 30 NOVEMBER 2011 Hedge Fund Investments At 30 November 2011 the investments of the Hedge Fund Share Portfolio consisted principally of two Certificates, the performance of each of which is linked to the performance of Paragon Capital Appreciation Fund (`PCAF'). PCAF is an open-ended investment company domiciled in Guernsey and listed on the Irish Stock Exchange. Fauchier Partners act as investment manager to PCAF. % OF STRATEGY FUND NAME PORTFOLIO Underlying investments of PCAF Macro COMAC Global Macro Fund 4.0 Fortress Macro Fund 3.2 Wexford Offshore Spectrum Fund 2.8 Fortress Commodities Offshore Fund 2.0 Drawbridge Global Macro Fund 0.1 Drawbridge Global Alpha Fund V - 12.1 Equity Long Bias Bay Resource Partners Offshore Fund 3.7 Equity Hedged High Dabroes Offshore Investment Fund 4.5 Volatility Elm Ridge Value Partners Offshore Fund 3.9 Criterion Capital Partners 3.8 Brahman Partners II Offshore 3.4 Lansdowne Global Financials Fund 3.2 Lansdowne UK Equity Fund 3.0 21.8 Equity Hedged Low Volatility Alydar Fund 2.6 Walker Smith International Fund 2.4 Ascend Fund II FP 2.1 7.1 Short Bias Fauchier Partners Counterpoint Fund 3.3 Specialist Credit CFIP Overseas Fund 3.7 Knighthead Offshore Fund 3.4 Riva Ridge Overseas Fund 3.1 Claren Road Credit Fund 1.1 11.3 Event Driven Empyrean Capital Overseas Fund 3.7 RoundKeep Icho Global Fund 3.5 Trian Partners 3.5 Pershing Square International 3.0 Harbinger Capital Partners Offshore 1.9 Fund I Perry Partners International 0.1 15.7 Volatility Trading Vicis Capital Fund (International) 0.8 Fixed Income Brevan Howard Fund 3.9 Multiple Strategy Sunbeam Opportunities Offshore 3.9 OZ Europe Overseas Fund II 2.8 Shepherd Select Asset 0.5 Highbridge Asia Opportunities Fund 0.1 7.3 Incubator Fauchier Partners Incubator Fund 2.3 Other Jubilee Special Situations Fund 3.0 Cash 5.9 Assets Held Directly Plainfield 2009 Liquidating 1.1 Harbinger Class PE Holdings 0.5 CCM SPV III 0.1 Indus Pacific Opportunities 0.1 Distribution Harbinger Class L Holdings - 1.8 Total Fixed Assets 100.0 . HEDGE FUND SHARE PORTFOLIO INCOME STATEMENT YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED 31 MAY 30 NOVEMBER 2011 30 NOVEMBER 2010 2011 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Losses on investments - (803) (803) - (44) (44) (17) Net losses on foreign - (1) (1) - - - (20) currency Income - - - - - - - Management fees - note 2 - (14) (14) - (18) (18) (34) Other expenses (28) (25) (53) (41) (29) (70) (64) Return on ordinary (28) (843) (871) (41) (91) (132) (135) activities before finance costs Finance costs - (11) (11) - (8) (8) (15) Return on ordinary (28) (854) (882) (41) (99) (140) (150) activities before tax Tax on ordinary - - - - - - - activities Return on ordinary (28) (854) (882) (41) (99) (140) (150) activities after tax for the financial period Basic return per ordinary (0.3)p (8.0)p (8.3)p (0.3)p (0.7)p (1.0)p (1.2)p share - note 4 SUMMARY OF NET ASSETS AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 GBP'000 GBP'000 GBP'000 Fixed assets 10,873 14,647 13,412 Current assets 210 1,005 40 Creditors falling due within one year, (26) (47) (38) excluding borrowings Overdraft - - (124) Bank loan - (1,525) (950) Net assets 11,057 14,080 12,340 Net asset value per share - note 5 104.2p 111.8p 112.1p Gearing: Gross 0.0% 10.8% 8.7% Net (1.9)% 4.1% 8.7% . MANAGED LIQUIDITY SHARE PORTFOLIO MANAGER'S REPORT Market and Economic Review UK interest rates have remained unchanged at 0.5% throughout the last six months and the Monetary Policy Committee (`MPC') of the Bank of England has extended quantitative easing to loosen monetary conditions in the face of persistently weak economic growth in the UK and a deepening sovereign debt crisis in the Eurozone. In May the nine-member committee was split 6:3 in favour of maintaining the 0.5% rate, with the minority preferring rate rises. One of these three, Andrew Sentance, retired after this meeting and the other two, Spencer Dale and Martin Weale, changed their position during the summer as indicators for UK growth weakened. In the August meeting the committee was unanimous on holding rates steady. Believing that the downside risks to future growth and inflation were growing, the committee then voted in October to extend its programme of asset purchases (quantitative easing) from GBP200 billion to GBP275 billion. Both of these policies retain unanimous support to date. As headline inflation was 5% in October, this policy appears inconsistent with the bank's medium term target of 2%. However, the committee remains confident that disinflationary pressures in the economy together with the diminishing influence of oil price increases and the VAT hike in January 2011 will lead to lower inflation in the coming quarters. Slack in the economy is not being eroded quickly as growth remains low. Quarterly growth was 0.1% in the second quarter of 2011 and 0.5% in the third, leaving the annual rate at 0.5%. Indications of consumption are also weak. The unemployment rate rose from 7.7% in April to 8.3% in October and wage growth remains low at an annual rate of 2.3%. Consumer confidence has fallen over the period and is now considerably below 2010 levels. Retail sales growth is weak, rising just 0.8% in volume terms in the year to October. The 2 year Gilt yield fell from 0.92% at the end of May to 0.46% at the end of November. Ongoing concerns about bank exposure to the sovereign debt crisis meant that sterling three-month interbank lending rates rose over the same period from 0.83% to 1.04%. Corporate bond yields rose in a market environment of risk aversion. Portfolio Strategy and Review The investment strategy is achieved by investing in the Invesco Perpetual Money Fund and, to a lesser extent, in Short-Term Investments Company (Global Series) plc, which invests in a diversified portfolio of high quality Sterling denominated short-term money market instruments. The Invesco Perpetual Money Fund (`Fund') has maintained holdings in floating-rate notes (`FRNs') where yields are reset every three months to reflect changes in the London Interbank Offered Rate (`LIBOR'), the rate at which the largest banks lend money to one another. As UK interest rates are widely expected to remain near their current low level for a considerable time, the Fund also holds a number of government, quasi-government and corporate bonds. These have higher interest coupons than those currently available on FRNs. In order to limit risk exposure, these bonds are both short dated and of high quality. Outlook The portfolio manager shares the Bank of England's view that inflation will moderate from here as poor earnings growth and limited credit availability retard consumption. Therefore it is not expected that UK interest rates will move significantly higher over the next year. Stuart Edwards Portfolio Manager Invesco Asset Management Limited 23 January 2012 . MANAGED LIQUIDITY SHARE PORTFOLIO INVESTMENTS AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 MARKET MARKET MARKET VALUE VALUE VALUE FUND GBP'000 GBP'000 GBP'000 Invesco Perpetual Money Fund 8,285 9,998 8,277 Short-Term Investments Company (Global 95 415 340 Series) 8,380 10,413 8,617 . MANAGED LIQUIDITY SHARE PORTFOLIO INCOME STATEMENT YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED 31 MAY 30 NOVEMBER 2011 30 NOVEMBER 2010 2011 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Losses on investments - (14) (14) - - - (3) Income 28 - 28 39 - 39 81 Management fees - note 2 - - - (1) - (1) - Other expenses (17) - (17) (21) - (21) (30) Net return before finance 11 (14) (3) 17 - 17 48 costs and taxation Tax on ordinary - - - - - - - activities Return on ordinary 11 (14) (3) 17 - 17 48 activities after tax for the financial period Basic return per ordinary 0.1p (0.1)p - 0.1p - 0.1p 0.5p share - note 4 . SUMMARY OF NET ASSETS AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 GBP'000 GBP'000 GBP'000 Fixed assets 8,380 10,413 8,617 Current assets 68 80 64 Creditors falling due within one year, (162) (329) (161) excluding borrowings Overdraft (99) - (3) Net assets 8,187 10,164 8,517 Net asset value per share - note 5 102.4p 102.2p 102.3p . CONDENSED INCOME STATEMENT YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED 31 MAY 30 NOVEMBER 2011 30 NOVEMBER 2010 2011 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (Losses)/gains on - (7,080) (7,080) - 2,714 2,714 10,632 investments Foreign exchange losses - (77) (77) - (14) (14) (52) Income 1,404 - 1,404 1,254 - 1,254 3,231 Management fees - note 2 (82) (207) (289) (80) (203) (283) (580) Performance fees - (217) (217) - - - (111) Other expenses (210) (26) (236) (217) (30) (247) (379) Net return before finance 1,112 (7,607) (6,495) 957 2,467 3,424 12,741 costs and taxation Finance costs (20) (58) (78) (19) (50) (69) (143) Return on ordinary 1,092 (7,665) (6,573) 938 2,417 3,355 12,598 activities before tax Tax on ordinary activities (40) - (40) (40) - (40) (105) Return on ordinary 1,052 (7,665) (6,613) 898 2,417 3,315 12,493 activities after tax for the financial period Basic return per ordinary share - note 4 UK Equity Share Portfolio 2.1p (5.5)p (3.4)p 1.8p 6.3p 8.1p 23.6p Global Equity Income 0.8p (14.6)p (13.8)p 0.7p 0.2p 0.9p 10.5p Share Portfolio Hedge Fund Share (0.3p) (8.0)p (8.3)p (0.3)p (0.7)p (1.0) (1.2)p Portfolio p Managed Liquidity Share 0.1p (0.1)p - 0.1p - 0.1p 0.5p Portfolio The total column of this statement represents the Company's profit and loss account, prepared in accordance with UK Accounting Standards. The supplementary revenue and capital columns are both prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations and the Company has no other gains or losses, therefore no statement of recognised gains or losses is presented. No operations were acquired or discontinued in the period. CONDENSED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS CAPITAL SHARE SHARE SPECIAL REDEMPTION CAPITAL REVENUE CAPITAL PREMIUM RESERVE RESERVE RESERVE RESERVE TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 SIX MONTHS ENDED 30 NOVEMBER 2011 At 31 May 2011 1,071 1,290 89,617 324 9,403 7 101,712 Share buy backs - - (1,723) - - - (1,723) Net return on - - - - (7,665) 1,052 (6,613) ordinary activities Interim dividend for - - (48) - - (1,059) (1,107) 2012 At 30 November 2011 1,071 1,290 87,846 324 1,738 - 92,269 YEAR ENDED 31 MAY 2011 At 31 May 2010 1,071 1,290 96,896 323 (872) - 98,708 Cancellation of - - (1) 1 - - - deferred shares Shares bought back - - (7,278) - - - (7,278) and held in treasury Realised gains on - - - - 2,261 - 2,261 disposal of investments Movement in - - - - 8,371 - 8,371 investment holding gains Foreign exchange - - - - (52) - (52) losses Special dividend - - - - 328 - 328 taken to capital Charged to capital: - management fees - - - - (416) - (416) - performance fees - - - - (111) - (111) - other expenses - - - - (2) - (2) - finance costs - - - - (104) - (104) Revenue return on - - - - - 2,218 2,218 ordinary activities per the income statement Dividends - - - - - (2,111) (2,211) At 31 May 2011 1,071 1,290 89,617 324 9,403 7 101,712 SIX MONTHS ENDED 30 NOVEMBER 2010 At 31 May 2010 1,071 1,290 96,896 323 (872) - 98,708 Cancellation of (1) - - 1 - - - deferred shares Share buy backs - - (4,170) - - - (4,170) Net return on - - - - 2,417 898 3,315 ordinary activities Interim dividend for - - - - - (776) (776) 2011 At 30 November 2010 1,070 1,290 92,726 324 1,545 122 97,077 . CONDENSED BALANCE SHEET REGISTERED NUMBER 5916642 GLOBAL UK EQUITY HEDGE MANAGED EQUITY INCOME FUND LIQUIDITY TOTAL GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 AT 30 NOVEMBER 2011 Fixed assets Investments held at fair value 45,529 32,772 10,873 8,380 97,554 through profit or loss Current assets Debtors 279 238 3 68 588 Cash and short-term deposits 83 559 207 - 849 362 797 210 68 1,437 Creditors: amounts falling due (6,250) (185) (26) (261) (6,722) within one year Net current (liabilities)/ (5,888) 612 184 (193) (5,285) assets Net assets 39,641 33,384 11,057 8,187 92,269 Shareholders' funds Share capital 458 359 137 117 1,071 Share premium - - 1,290 - 1,290 Special reserve 40,263 30,840 9,086 7,657 87,846 Capital redemption reserve 73 78 19 154 324 Capital reserve (1,391) 1,987 909 233 1,738 Revenue reserve 238 120 (384) 26 - Shareholders' funds 39,641 33,384 11,057 8,187 92,269 Net asset value per ordinary 100.1p 106.1p 104.2p 102.4p share Basic - note 5 AT 31 MAY 2011 Fixed assets Investments held at fair value 49,734 38,170 13,412 8,617 109,933 through profit or loss Current assets Debtors 560 225 40 64 889 Cash and short-term deposits 36 364 - - 400 596 589 40 64 1,289 Creditors: amounts falling due (8,113) (121) (1,112) (164) (9,510) within one year Net current (liabilities)/ (7,517) 468 (1,072) (100) (8,221) assets Net assets 42,217 38,638 12,340 8,517 101,712 Shareholders' funds Share capital 457 362 136 116 1,071 Share premium - - 1,290 - 1,290 Special reserve 40,750 31,394 9,488 7,985 89,617 Capital redemption reserve 73 78 19 154 324 Capital reserve 773 6,620 1,763 247 9,403 Revenue reserve 164 184 (356) 15 7 Shareholders' funds 42,217 38,638 12,340 8,517 101,712 Net asset value per ordinary 105.3p 120.9p 112.1p 102.3p share Basic - note 5 AT 30 NOVEMBER 2010 Fixed assets Investments held at fair value 43,346 36,319 14,647 10,413 104,725 through profit or loss Current assets Debtors 137 140 61 72 410 Cash and short-term deposits - 477 944 8 1,429 137 617 1,005 80 1,839 Creditors: amounts falling due (7,471) (115) (1,572) (329) (9,487) within one year Net current (liabilities)/ (7,334) 502 (567) (249) (7,648) assets Net assets 36,012 36,821 14,080 10,164 97,077 Shareholders' funds Share capital 441 360 144 125 1,070 Share premium - - 1,290 - 1,290 Special reserve 39,627 32,281 11,210 9,608 92,726 Capital redemption reserve 73 78 19 154 324 Capital reserve (4,394) 3,939 1,750 250 1,545 Revenue reserve 265 163 (333) 27 122 Shareholders' funds 36,012 36,821 14,080 10,164 97,077 Net asset value per ordinary 92.4p 112.4p 111.8p 102.2p share Basic - note 5 . CONDENSED CASH FLOW STATEMENT SIX MONTHS SIX MONTHS YEAR ENDED ENDED ENDED 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 GBP'000 GBP'000 GBP'000 Total return before finance costs and tax (6,495) 3,424 12,741 Adjustment for losses/(gains) on investments 7,080 (2,714) (10,632) Adjustment for exchange losses 77 14 52 Scrip dividends received as income (14) (6) (30) Decrease/(increase) in debtors 160 175 (85) Increase/(decrease) in creditors 194 (121) (94) Tax on unfranked investment income - (7) - Overseas tax (40) (40) (105) Net cash inflow from operating activities 962 725 1,847 Servicing of finance (78) (69) (140) Taxation 15 151 124 Net financial investment 5,362 3,252 5,771 Equity dividends paid (1,107) (776) (2,211) Net cash inflow before management of liquid 5,154 3,283 5,391 resources and financing Management of liquid resources - - - Financing Shares bought back (1,725) (4,989) (8,238) Movement in bank borrowings (2,903) 2,077 2,227 Increase/(decrease) in cash 526 371 (620) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash 526 371 (620) Exchange movements (77) (14) (52) Cash movement from changes in debt 2,903 (2,077) (2,227) Movement of debt in period 3,352 (1,720) (2,899) Net debt at beginning of year (8,227) (5,328) (5,328) Net debt at end of period (4,875) (7,048) (8,227) Analysis of changes in net debt 31 MAY EXCHANGE CASH 30 NOVEMBER 2011 MOVEMENTS FLOW 2011 GBP'000 GBP'000 GBP'000 GBP'000 Cash 400 (77) 526 849 Overdrafts (127) - 28 (99) Bank loan (8,500) - 2,875 (5,625) Net debt (8,227) (77) 3,429 (4,875) . NOTES TO THE CONDENSED FINANCIAL STATEMENTS 1. Accounting Policy The condensed financial statements have been prepared using the same accounting policies as those adopted in the 2011 annual financial report, which are consistent with applicable United Kingdom Accounting Standards and with the Statement of Recommended Practice `Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies, in January 2009. 2. Management Fees Basis of Management and Performance Fees (a) for the six months to 30 November 2011 Invesco Asset Management Limited (`IAML'), is entitled to a basic fee (payable quarterly) in respect of each Portfolio (0.75% per annum of net assets in the case of the UK Equity and Global Equity Portfolios and 0.25% per annum of net assets in the case of the Hedge Fund and Managed Liquidity Portfolios). IAML is also entitled to receive performance fees in respect of the UK Equity and Global Equity Portfolios of 12.5% of the performance of the net asset value per relevant Share in excess of a hurdle of the relevant benchmark plus 1% per annum. The amount of the performance fee payable in any one year is limited to 0.75% of the net assets of the relevant Portfolio. Any underperformance of the benchmark, or performance above the cap, is carried forward to subsequent periods. After underperformance brought forward, the UK Equity Portfolio earned a performance fee of GBP217,000 in the period (six months ended 30 November 2010: none and in the year ended 31 May 2011: GBP111,000) which is charged wholly to capital. No performance fee was earned for the Global Equity Portfolio in the period (six months ended 30 November 2010 and in the year ended 31 May 2011). Fauchier Partners Management Limited (`Fauchier`) charges the Fauchier Managed Funds an annual management fee of 1% of those funds' net asset values. In addition, the managers of the underlying hedge funds in which Fauchier Managed Funds invest will typically charge an annual management fee (generally 1 to 1.5% of assets) plus a performance fee (generally 20% of any outperformance, subject to a high watermark). Further details of the above fees are disclosed in the 2011 annual financial report. (b) for the six months to 31 May 2012 At the General Meeting held on 15 November 2011 shareholders approved changes to the Global Equity and Hedge Fund Portfolios. The new Global Equity Income investment objective and policy were effected by 30 November 2011; the management and performance fee basis remained substantially unchanged. The Hedge Fund Portfolio will be renamed the Balanced Risk Portfolio in February 2012, when its new investment objective and polices become effective. At this time Fauchier will be replaced by IAML as manager. IAML will be entitled to a basic fee (payable quarterly) of 0.75% per annum of net assets of the new Balanced Risk Portfolio). No performance fee will be payable on this Portfolio. At present, 100% of the management fees and finance costs applicable to the Hedge Fund Portfolio are charged to capital. In accordance with the Board's expected split of long-term returns, in the form of capital gains and income, of the Portfolio following the adoption of the new investment strategy, the Directors intend to charge 70% of the management fees and finance costs applicable to the Balanced Risk Portfolio to capital and the balance to revenue. This change will become effective in February 2012. 3. Tax expense represents the sums of tax currently payable and any deferred tax, with any tax payable being based on the taxable profit for the period. Investment trusts which have been approved under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains. 4. Basic Return per Ordinary Share Basic revenue, capital and total return per ordinary share is based on each of the return on ordinary activities after taxation as shown by the income statement for the applicable Share class and on the following number of shares being the weighted number of shares in issue throughout the period for each applicable Share class: WEIGHTED AVERAGE NUMBER OF SHARES SIX MONTHS SIX MONTHS YEAR ENDED ENDED ENDED 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 UK Equity 39,710,856 38,837,982 38,981,102 Global Equity Income 31,774,563 32,402,548 32,455,572 Hedge Fund 10,689,872 13,290,668 12,736,626 Managed Liquidity 8,215,987 11,585,057 10,514,144 5. Net Asset Values per Share The net asset values per share were based on the following Shareholders' funds and shares (excluding treasury shares) in issue at the period end: AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY 2011 2010 2011 PORTFOLIO SHAREHOLDERS' FUNDS GBP'000 GBP'000 GBP'000 UK Equity 39,641 36,012 42,217 Global Equity Income 33,384 36,821 38,638 Hedge Fund 11,057 14,080 12,340 Managed Liquidity 8,187 10,164 8,517 AT AT AT 30 NOVEMBER 30 NOVEMBER 31 MAY PORTFOLIO SHARES IN ISSUE AT PERIOD END 2011 2010 2011 UK Equity 39,601,495 38,979,957 40,081,381 Global Equity Income 31,454,464 32,759,274 31,971,638 Hedge Fund 10,613,223 12,599,287 11,009,810 Managed Liquidity 7,995,000 9,946,029 8,324,385 6. Movements in Share Capital and Share Class Conversion IN THE SIX MONTHS ENDED 30 NOVEMBER 2011 GLOBAL UK EQUITY HEDGE MANAGED EQUITY INCOME FUND LIQUIDITY Ordinary 1p shares (number) At 31 May 2011 40,081,381 31,971,638 11,009,810 8,324,385 Shares bought back into (598,000) (272,000) (497,000) (366,000) treasury October 2011 conversion 118,114 (245,174) 100,413 36,615 At 30 November 2011 39,601,495 31,454,464 10,613,223 7,995,000 Treasury shares 6,163,000 4,488,000 3,125,000 3,691,500 Total shares in issue 30 45,764,495 35,942,464 13,738,223 11,686,500 November 2011 Treasury Shares (number) At 31 May 2011 5,565,000 4,216,000 2,628,000 3,325,500 Shares bought back into 598,000 272,000 497,000 366,000 treasury At 30 November 2011 6,163,000 4,488,000 3,125,000 3,691,500 Average buy back price 94.8p 102.6p 101.4p 99.1p As part of the conversion process 6,404 deferred shares of 1p each were created. All deferred shares are cancelled before the year end and so no deferred shares are in issue at the start or end of the year. 7. Share Prices GLOBAL UK EQUITY HEDGE MANAGED PERIOD END EQUITY INCOME FUND LIQUIDITY 30 November 2010 89.5p 108.5p 103.3p 99.5p 31 May 2011 101.0p 114.5p 105.0p 100.0p 30 November 2011 86.5p 97.0p 92.5p 99.5p 8. Dividends on Ordinary Shares The following interim dividends were paid on 18 November 2011: NUMBER DIVIDEND TOTAL PORTFOLIO OF SHARES RATE GBP'000 UK Equity 39,510,181 2.00p 790 Global Equity Income 31,699,638 1.00p 317 1,107 9. It is the intention of the Directors to conduct the affairs of the Company so that it satisfies the conditions for approval as an investment trust company set out in section 1158 of the Corporation Tax Act 2010. 10. The financial information contained in this half-yearly financial report, which has not been reviewed or audited by the independent auditors, does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the half years ended 30 November 2011 and 30 November 2010 have not been audited. The figures and financial information for the year ended 31 May 2011 are extracted and abridged from the latest published accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and include the Report of the Independent Auditors, which was unqualified and did not include a statement under section 498 of the Companies Act 2006. By order of the Board Invesco Asset Management Limited Company Secretary 23 January 2012 . DIRECTORS, MANAGERS AND ADMINISTRATION Directors Patrick Gifford (Chairman of the Board and Nomination Committee) Sir Michael Bunbury (Chairman of the Audit and Management Engagement Committees) Alan Clifton (Senior Independent Director) David Rosier All the Directors are, in the opinion of the Board, independent of the management company and all Directors are members of the Audit, Management Engagement and Nomination Committees. Manager, Company Secretary and Registered Office Invesco Asset Management Limited 30 Finsbury Square London EC2A 1AG 020 7065 4000 Company Secretarial contact: Paul Griggs Company Number Registered in England and Wales No. 5916642 Registrars Capita Registrars, The Registry, 34 Beckenham Road Beckenham, Kent BR3 4TU If you hold your shares directly rather than through an ISA or savings scheme, and have any queries relating to your shareholding you should contact Capita Registrars on: 0871 664 0300 between 8.30 am and 5.30 pm every working day. Calls cost 10p per minute plus network extras. (From outside the UK: +44(0) 20 8639 3399.) Shareholders holding shares directly can also access their holding details via Capita Registrar's website www.capitaregistrars.com or www.capitashareportal.com Capita Registrars provide an on-line and telephone share dealing service to existing shareholders who are not seeking advice on buying or selling. This service is available at www.capitadeal.com or 0871 664 0364 (lines are open 8 am to 4.30 pm every working day). Calls cost 10p per minute plus network extras. (From outside the UK: +44(0) 20 3367 2686) Invesco Perpetual Investor Services Invesco Perpetual has an Investor Services Team available to assist you from 8.30 am to 6 pm every working day. Please feel free to take advantage of their expertise. 0800 085 8677 www.invescoperpetual.co.uk/investmenttrusts The contents of websites referred to in this document, or accessible from links within those websites are not incorporated into, nor do they form part of, this document. . APPENDIX: NEW INVESTMENT OBJECTIVES AND POLICIES Global Equity Income Portfolio The new Global Equity Income Portfolio investment objective and policy, which were approved by shareholders on 15 November 2011, are as follows: Investment Objective The investment objective of the Global Equity Income Portfolio is to provide an attractive and growing level of income return and capital appreciation over the long term, predominantly through investment in a diversified portfolio of equities worldwide. Investment Policy The Portfolio will be invested predominantly in a portfolio of listed, quoted or traded equities worldwide, but may also hold other securities from time to time including, inter alia, fixed interest securities, preference shares, convertible securities and depositary receipts. Investment may also be made in regulated or authorised collective investment schemes. The Portfolio will not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Manager will at all times invest and manage the Portfolio's assets in a manner that is consistent with spreading investment risk, but there will be no rigid industry, sector, region or country restrictions. The Portfolio may utilise derivative instruments including index-linked notes, contracts for differences, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes. Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Portfolio's direct investments, as described above. It is expected that, typically, the Portfolio will hold between 55 and 100 securities. The Directors believe that the use of borrowings (gearing) can enhance returns to Global Equity Income shareholders, and the Global Equity Income Portfolio may use borrowings in pursuing its investment objective. The Company's foreign currency investments will not be hedged to sterling as a matter of general policy. However, the Manager may employ currency hedging, either back to sterling or between currencies (i.e. cross hedging of portfolio investments). The Board has prescribed the following limits (measured at the time of investment) on the investment policy of the Global Equity Income Portfolio: * no more than 20% of the gross assets of the Global Equity Income Portfolio may be invested in fixed interest securities; * no more than 10% of the gross assets of the Global Equity Income Portfolio may be held in a single investment; * no more than 10% of the gross assets of the Global Equity Income Portfolio may be held in other listed investment companies; and * borrowings may be used to raise equity exposure up to a maximum of 20% of the net assets of the Global Equity Income Portfolio, when it is considered appropriate to do so. . Balanced Risk Portfolio The Hedge Fund Portfolio will be renamed the Balanced Risk Portfolio in February 2012. Its investment objective and policy, as approved by shareholders on 15 November 2011, will then be as follows: Investment Objective The investment objective of the Balanced Risk Portfolio is to provide shareholders with an attractive total return in differing economic and inflationary environments, and with low correlation to equity and bond market indices by gaining exposure to three asset classes: debt securities, equities and commodities. Investment Policy The Portfolio utilises two main strategies: the first seeks to balance the risk contribution from each of three asset classes (equities, bonds and commodities), with the aim of reducing the probability, magnitude and duration of capital losses, and the second seeks to shift tactically the allocation among the assets with the aim of improving expected returns. The Portfolio is constructed so as to balance risk: by asset class (bonds, equities and commodities) and by asset within each asset class. Neutral weighting is achieved when each asset class contributes an equal proportion of the total Portfolio risk and each asset contributes an equal proportion of the total risk for its respective asset class. The Manager is permitted to actively vary asset class weightings, subject to a maximum of 150% and a minimum of 50% of each asset class' neutral weight. The Manager is also permitted to actively vary individual asset weightings, subject to a maximum of 200% and a minimum of 0% of each asset's neutral weight, provided the asset class guidelines are not violated. The Portfolio will be mainly invested directly in highly liquid and transparently priced exchange-traded futures contracts, with cash and cash equivalents being held as collateral. However, the Portfolio may also be invested in equities, equity-related securities and debt securities (including floating rate notes). Financial derivative instruments (including but not limited to futures and total return swaps) are used only to achieve additional long exposure to the three asset classes. The Portfolio may also use financial derivative instruments, including currency futures and forwards, for efficient portfolio management, hedging and investment purposes. Financial derivative instruments will not be used to create net short positions in any asset class. The Portfolio will comprise between 12 and 20 investments and typically around 16 investments, the majority of which represent diversified equity or bond indices. It is expected that the Portfolio's investments will mainly be denominated in sterling. Any non-sterling derivative investments may be hedged back into sterling at the discretion of the Manager when it is economic to do so. The Board has prescribed the following limits (measured at the time of investment) on the investment policy of the Balanced Risk Portfolio: * the aggregate notional amount of financial derivative instruments positions may not exceed 250% of the net assets of the Balanced Risk Portfolio; * no more than 10% of the gross assets of the Balanced Risk Portfolio may be held in other listed investment companies; and * borrowings may be used for short-term purposes up to a maximum of 5% of the net assets of the Balanced Risk Portfolio, where it is considered appropriate. END
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