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Diverse Inc Trust (DIVI)


Tuesday 31 January, 2012

Diverse Inc Trust

Half-yearly Report



The Directors present the Half-Yearly Financial Report of the Company for the
period from incorporation on 30 March 2011 to 30 November 2011.


Investment Objective

The Company's investment objective is to provide shareholders with an
attractive level of dividends coupled with capital growth over the long term.

Investment Policy

The Company will invest primarily in quoted or traded UK companies with a wide
range of market capitalisations but a long-term bias towards small and mid cap
equities. The Company may also invest in large cap companies, including FTSE
100 constituents, where it is believed that this may increase shareholder

The Manager will adopt a stock specific approach in managing the Company's
portfolio and therefore sector weightings will be of secondary consideration.
As a result of this approach, the Company's portfolio will not track any
benchmark index.

The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing 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 Company's direct investments, as described below. The Company will not
enter into uncovered short positions.

Risk diversification

Portfolio risk will be mitigated by investing in a diversified spread of
investments. In compliance with section 1158 of the Corporation Tax Act 2010,
investments in any one company, other than holdings in another investment
company, shall not, at the time of acquisition, exceed 15% of the value of the
Company's investment portfolio. Typically it is expected that the Company will
hold a portfolio of between 80 and 120 securities, most of which will represent
no more than 1.5% of the value of the Company's investment portfolio as at the
time of acquisition.

The Company will not invest more than 10% of its gross assets, at the time of
acquisition, in other listed closed-ended investment funds, whether managed by
the Manager or not, except that this restriction shall not apply to investments
in listed closed-ended investment funds which themselves have stated investment
policies to invest no more than 15% of their gross assets in other listed
closed-ended investment funds.

Unquoted investments

The Company may invest in unquoted companies from time to time subject to prior
Board approval. Investments in unquoted companies in aggregate will not exceed
5% of the value of the Company's investment portfolio as at the time of

Borrowing and gearing policy

The Board considers that long-term capital growth can be enhanced by the use of
gearing which may be through bank borrowings and the use of derivative
instruments such as contracts for differences. The Company may borrow (through
bank facilities and derivative instruments) up to 15% of net asset value
("NAV") (calculated at the time of borrowing).

The Board will oversee the level of gearing in the Company, and will review the
position with the Manager on a regular basis.

In the event of a breach of the investment policy set out above and the
investment and gearing restrictions set out therein, the Manager shall inform
the Board upon becoming aware of the same and if the Board considers the breach
to be material, notification will be made to a Regulatory Information Service.

No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.

                                    At 30 November 2011     At 28 April 2011
Total net assets                                 £45.33m              £48.75m
Number of ordinary shares in                        100m                 100m
Net asset value per ordinary                      45.33p               48.75p 
Ordinary share price (mid)                        44.50p               50.00p 
(Discount)/premium to net asset                   (1.83)%               2.56%
Market capitalisation                             £44.5m               £50.0m
Return per ordinary share                         (3.05)p                 n/a
Dividend per ordinary share*                        0.8p                  n/a

*Dividend per ordinary share includes the first interim dividend paid and
second interim dividend declared in respect of the period ending 31 May 2012
and will differ from the amounts disclosed in the Statement of Changes in Net

                                            3 months to      Since launch to
                                       30 November 2011     30 November 2011
                                                       %                    %
Ordinary share price                               (5.1)               (10.4)
Net asset value*                                   (2.5)                (6.4)

*After launch expenses.

Total return assumes that dividends are reinvested.


January            Announcement of Half-Yearly Financial Report                
February           Payment of second interim dividend for period ending 31 May 
May                Payment of third interim dividend for the period ending 31  
                   May 2012                                                    
August             Payment of fourth interim dividend for period ending 31 May 
August/September   Announcement of Annual Results                              
October            Annual General Meeting    

CHAIRMAN'S STATEMENT                                  

This is my first interim statement to shareholders since The Diverse Income
Trust ("DIT" or the "Company") was incorporated. The overall aim of DIT is to
pay an attractive level of income and invest in stocks that can grow their
dividends at a faster rate than average. Importantly, the dividends will be
generated from a diverse portfolio so as to avoid the disproportionate risk
taken by many comparable funds that invest in the small number of large
companies that pay high dividends - just six companies represent nearly 50% of
the FTSE 100 dividend payments. The equivalent for DIT is that 23 companies
represent about 50% of the dividends generated by the portfolio in the year to
date. It is envisaged that by selecting our holdings from all quoted companies,
the Company will be able to do better than those restricted mainly to the
largest quoted businesses.

The Company is well on track to deliver an annualised yield of 4% on the
initial capital raised, paid through four dividends to shareholders. In the
period, our first interim dividend for those holding shares on 30 September
2011 of 0.3p per share was paid to shareholders on 30 November 2011. A second
interim dividend for those holding shares on 30 December 2011 of 0.5p has been
declared, and is due to be paid to shareholders on 29 February 2012.

Markets have been distinctly unsettled in the period since launch, given
worries about the impact of austerity budgets and a slowdown in world growth.
As markets have fallen, the universe of stocks with good and growing dividend
yields has increased. This has widened the range of stocks that can be included
in the portfolio. By investing your capital over an extended period, DIT has
taken full advantage, as well moderating our shareholders' exposure to falling

After initial costs our Net Asset Value ("NAV") has fallen 7.0% between 28
April 2011 and 30 November 2011, which compares with a fall of 10.1% in the
FTSE All-Share. Many of the smallest quoted companies have fallen back to a
greater extent, and thereby offer even more attractive entry points. At the end
of November, the Company was close to being fully invested.

Markets are likely to remain volatile whilst policy-makers address the debt
burden taken on over the last two decades. However, history shows that the
greater part of long-term investment returns comes from dividend growth and
this will be particularly important in the current low growth environment. If
our Manager is successful at identifying many of those stocks with better
prospects for dividend growth, we can expect DIT to deliver premium returns.

Michael Wrobel Chairman

31 January 2012



Although markets were relatively stable over the early summer after the launch
of the Company, they have seen increased volatility in the period up to the end
of November. In addition, stock specific risk remains high and the market has
been quick to punish disappointments without regard to valuation or the
long-term franchise value of the underlying business. Unsurprisingly in times
of uncertainty, there has been very little differentiation; stock and sector
moves have been highly correlated. Financials are either "all good" or "all
bad" on a weekly, daily or even hourly basis. But as favourable announcements
are made by individual companies, individual share prices do start to move
against the daily trend.


In the seven month period since the launch of the Company the FTSE All-Share
has fallen back 10.1% to the end of November. This compares with a fall in the
Company's NAV of 8.5% in capital terms excluding the accrued income in the
period. All indices have sold off in the seven months since launch. However,
the FTSE 100 had rallied at the end of November helped by being perceived as a
"safe haven" market outside of Euroland. The FTSE SmallCap (Ex Investment
Trust) Index fell 19.8% in the period and have yet to recover. We anticipate
that individual stocks will catch up with the market trend as results of our
holdings come through.

It should be remembered that the portfolio is valued on a bid basis.
Unsurprisingly given the current stresses in the market the bid/ask spread for
certain of the smaller companies can be quite wide, and in this regard the
valuation basis stands further from mid prices than many others.


In the prospectus we set out an aim to generate a 4% annualised dividend yield
in the first year. We also sought to stock pick on the basis the portfolio will
have scope to grow the dividend at a faster rate than most other UK Equity
Income Funds.

Initially the capital was only invested slowly given our concerns about risks
of a market setback. In the later months we were able to take advantage of the
falls, to buy into many businesses at more attractive entry prices, with better
dividend yields than previously offered. In spite of holding significant
balances of low yielding cash for quite some months our revenue account is on
target to generate sufficient income to meet that indicated in the prospectus.
Our maiden interim dividend of 0.3p went ex-dividend on 28 September 2011, and
a second interim dividend of 0.5p was declared after the end of the half year,
going ex-dividend on 28 December 2011. Two further dividends are anticipated to
be declared on the earnings in the second half of the year up to 31 May 2012.


The flexibility of a multi-cap approach within The Diverse Income Trust gives
us good opportunity to identify stocks with good levels of income plus the
prospect of ongoing dividend growth. The greatest number of opportunities is in
smaller companies, including those quoted on the AIM market, and so 65% of the
portfolio is currently invested outside the FTSE 350.

Although we have invested across a broad range of sectors, there has been an
emphasis on the providers of "essential" products and services such as
insurance, telecoms and food manufacturers. These are expected to be more
resilient in the challenging economic conditions. We also favour businesses
with strong net cash and robust balance sheets. These businesses will be able
to best capitalise on the weakness of others. It also limits the financial risk
and market volatility in the portfolio.

The largest holdings at the end of November are set out below. Overall the
volatility of the portfolio has been pleasingly low. Twelve stocks exceed 1.5%
of the portfolio, and the majority of holdings are weighted around 1% with
around 100 holdings in the portfolio.


There are some indications that investors' attitude to the small quoted stocks
is changing. The interest in the launch of The Diverse Income Trust was perhaps
an early example of this. But it should be noted that three other funds have
issued with very similar mandates, including our own OEIC. Finally towards the
end of the year there were indications that trading volumes in the smallcap end
of the market were actually increasing over prior years, a trend if sustained
that is different from other parts of the UK market. As yet, this change in
perception has not been reflected in the premium return of the smallcap sector
overall. But the relatively good performance of our portfolio might be a result
of some buying interest in higher yielding smallcap stocks.

Gervais Williams and Martin Turner

Midas Capital Partners Limited

31 January 2012

as at 30 November 2011

Top forty holdings by market value

                                                     Valuation Portfolio  Yield*
 Rank Company                     Sector                 £'000         %       %
    1 Greencore                   Consumer Goods           832      2.11    7.48
    2 Abbey Protection            Financials               805      2.04    5.12
    3 32 Red                      Consumer Services        780      1.97    2.35
    4 CML Microsystems            Technology               773      1.96    1.81
    5 Paypoint                    Support Services         693      1.75    5.04
    6 Stobart                     Industrials              663      1.68    5.22
    7 Randall & Quilter           Financials               658      1.67    8.06
      Investment Holdings                                                       
    8 Stadium                     Industrials              653      1.65    4.12
    9 Laird                       Technology               630      1.60    5.08
   10 London Capital Group        Financials               627      1.59    3.87
   11 KCOM                        Telecommunications       612      1.55    5.48
   12 British Polythene           Industrials              608      1.54    3.70
   13 Zotefoams                   Basic Materials          581      1.47    3.78
   14 Secure Trust Bank           Banks                    569      1.44    7.20
   15 CRH                         Industrials              567      1.44    4.44
   16 Office2Office               Support Services         563      1.42    8.27
   17 Drax                        Utilities                560      1.42    4.41
   18 Catlin                      Financials               559      1.41    6.77
   19 Amlin                       Financials               557      1.41    7.00
   20 Chamberlin                  Industrials              550      1.39    2.44
   21 Sainsbury (J)               Consumer Service         548      1.39    5.32
   22 ECO Animal Health           Health Care              538      1.36    3.89
   23 IMI                         Industrials              527      1.33    3.96
   24 Hilton Foods                Consumer Goods           526      1.33    4.12
   25 Vodafone                    Telecommunications       517      1.31    7.55
   26 Charles Taylor Consulting   Financials               500      1.27    8.25
   27 National Grid               Utilities                500      1.27    6.38
   28 Dairy Crest                 Consumer Goods           496      1.26    6.14
   29 Berendsen                   Support Services         496      1.26    5.96
   30 KBC Advanced Technologies   Oil & Gas                495      1.25    3.32
   31 Interserve                  Support Services         489      1.24    5.67
   32 Fairpoint                   Financials               484      1.22    7.73
   33 4imprint                    Consumer Services        482      1.22    6.27
   34 Consort Medical             Health Care              478      1.21    3.80
   35 Cineworld                   Consumer Services        476      1.21    5.45
   36 Hansard Global              Financials               470      1.19    8.68
   37 Hornby                      Consumer Goods           462      1.17    3.95
   38 McBride                     Consumer Goods           456      1.15    5.93
   39 Go-Ahead                    Consumer Services        447      1.13    6.43
   40 DCC                         Industrials              432      1.09    4.03
      Top 40 Holdings                                   22,659     57.37        
      Balance held in 64 holdings                       16,838     42.63        
      Total Portfolio                                   39,497    100.00        

Unless otherwise stated all investments are in the ordinary shares of the
investee company.

*Yield is based on the Investment Manager's estimated annual income for each of
the forty holdings.

Portfolio exposure by sector

Financials                                  21.2%
Industrials                                 17.3%
Consumer Services                           13.9%
Support Services                            13.2%
Consumer Goods                              11.5%
Technology                                   5.9%
Telecommunications                           5.8%
Basic Materials                              4.2%
Health Care                                  3.1%
Utilities                                    2.7%
Oil & Gas                                    1.2%

Portfolio by asset allocation

AIM/PLUS                                    29.7%
FTSE SmallCap                               26.8%
FTSE 250                                    23.7%
FSTE 100                                     8.4%
FTSE Fledgling                               6.5%
International                                4.9%

Portfolio by spread of investment income to 30 November 2011

FTSE 250                                    42.5%
FTSE SmallCap                               22.4%
FTSE 100                                    17.7%
AIM/PLUS                                    14.1%
International                                1.9%
FTSE Fledgling                               1.4%

Source: Midas Capital Partners Limited


Interim Management Report

The Company was incorporated on 30 March 2011. The ordinary shares were
admitted to trading on the London Stock Exchange on 28 April 2011.

The important events that have occurred during the period under review, the key
factors influencing the financial statements and the principal risks and
uncertainties for the remaining six months of the financial year are set out in
the Chairman's Statement and the Manager's Report above and also below.

Principal Risks and Uncertainties

The principal financial risks and the Company's policies for managing these
risks and the policy and practice with regard to financial instruments are
summarised in note 8 to the financial statements.

The Board has also identified the following additional risks and uncertainties:

Investment and strategy

There can be no guarantee that the investment objective of the Company will be
achieved. The Company is an investment trust which invests mainly in UK
equities. However, the Company has a very wide investment policy and may also
invest in cash and bonds, unquoted investments, derivative instruments and
other investments and securities, as appropriate.

The Company does not follow any benchmark. Accordingly, the portfolio of
investments held by the Company will not mirror the stocks and weightings that
constitute any particular index or indices, which may lead to the ordinary
shares failing to follow either the direction or extent of any moves in the
financial markets generally (which may or may not be to the advantage of

Smaller companies

The Company will invest primarily in quoted UK companies with a wide range of
market capitalisations but a long-term bias toward small and mid equities.
Smaller companies can be expected, in comparison to larger companies, to have
less mature businesses, a more restricted depth of management and a higher risk
profile. In addition, the relatively small market capitalisation of such
companies can make the market in their shares illiquid. Prices of smaller
capitalisation stocks are often more volatile than prices of larger
capitalisation stocks and the risk of bankruptcy of many smaller companies
(with the attendant losses to investors) is higher.

Sectoral diversification

The Company is not constrained from weighting to any sector. This may lead to
the Company having significant exposure to portfolio companies from certain
business sectors from time to time. Greater concentration of investments in any
one sector may result in greater volatility in the value of the Company's
investments and consequently its NAV.

Unquoted companies

The Company may invest in unquoted companies from time to time. Such
investments, by their nature, involve a higher degree of valuation and
performance uncertainties and liquidity risks than investments in listed and
quoted securities and they may be more difficult to realise.

Use of derivative instruments

The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing and investment

Cash holdings

A proportion of the Company's portfolio may be held in cash, depending on the
Manager's view on the market, from time to time. This proportion of the
Company's assets will not be invested in the market and will not benefit from
positive stock market movements.


The Company's investment objective includes the aim of providing shareholders
with a dividend income. There is no guarantee that any dividends will be paid
in respect of any financial year or period. The ability to pay dividends is
dependent on a number of factors including the level of dividends earned from
the portfolio and the net revenue profits available for that purpose.

The redemption of shares pursuant to the redemption facility may also reduce
distributable reserves to the extent that the Company is unable to pay

Share price volatility and liquidity/marketability risk

The market price of the Company's shares, like shares in all investment
companies, may fluctuate independently of the NAV and thus may not reflect the
underlying NAV of the shares. The shares could trade at a discount or premium
to NAV at different times, depending on factors such as supply and demand for
the shares, market conditions and general investor sentiment.


The Company's investment strategy may involve the use of gearing to enhance
investment returns, which exposes the Company to risks associated with
borrowings. Gearing may be generated through the use of options, futures,
options on futures, swaps and other synthetic or derivative financial
instruments. Such financial instruments inherently contain much greater
leverage than a non-margined purchase of the underlying security or instrument.

While the use of borrowings should enhance the total return on the shares where
the return on the Company's underlying assets is rising and exceeds the cost of
borrowing, it will have the opposite effect where the return on the Company's
underlying assets is rising at a lower rate than the cost of borrowing or
falling, further reducing the total return on the shares. As a result, the use
of borrowings by the Company may increase the volatility of the NAV per share.

C shares

The Directors have been authorised to issue up to 100 million C shares without
the application of pre-emption rights. If the Directors decide to issue C
shares on a non-pre-emptive basis the proportions of the voting rights held by
ordinary shareholders will be diluted on the issue of such C shares as each C
share carries the right to one vote. The voting rights may be diluted further
on conversion of the C shares depending on the applicable conversion ratio.

Redemption facility

The operation of the annual redemption facility may lead to a more concentrated
and less liquid portfolio which may adversely affect the Company's performance
and value. Further, redemptions may also adversely affect the secondary market
liquidity of the ordinary shares.


The affairs of the Company are conducted so as to satisfy the conditions of
approval as an investment trust under Chapter 4 of Part 24 of the Corporation
Tax Act 2010, including any amended conditions arising from the recent review
of the investment trust rules.

Any change in the Company's tax status or in taxation legislation or practice
generally could affect the value of the investments held by the Company, affect
the Company's ability to provide returns to shareholders, lead the Company to
lose its exemption from tax on chargeable gains or alter the post-tax returns
to shareholders.

Compliance with laws or regulations

The Company is subject to compliance with the Companies Act 2006 and the
continuing obligations imposed by the UK Listing Authority on investment
companies whose shares are listed on the Official List. A breach of any of
these could lead to suspension of the listing of the Company's shares on the
London Stock Exchange and/or financial penalties, with the resulting
reputational implications.

The Alternative Investment Fund Managers' Directive is expected to be brought
into force shortly, and it seems likely that there will be an increase,
potentially a material increase, in the Company's governance, administration
and custodian expenses as a result of its implementation.

Engagement of third party advisers

The Company has no employees and the Directors have all been appointed on a
non-executive basis. Whilst the Company has taken all reasonable steps to
establish and maintain adequate procedures, systems and controls to enable it
to comply with its obligations, the Company is reliant upon the performance of
third party service providers for its executive function.


The Directors confirm that to the best of their knowledge:

● the condensed set of financial statements has been prepared in accordance
with the Statement on Half-Yearly Financial Reports issued by the UK Accounting
Standards Board and gives a true and fair view of the assets, liabilities and
financial position of the Company; and

● this Half-Yearly Financial report includes a fair review of the information
required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first eight months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first eight months of the current
financial year and that have materially affected the financial position or
performance of the Company during that period; and any changes in the related
party transactions that could do so.

This Half-Yearly Financial Report was approved by the Board of Directors on 31
January 2012 and the above responsibility statement was signed on its behalf by
Michael Wrobel, Chairman.



We have been engaged by the Company to review the condensed set of financial
statements in the Half-Yearly Financial Report for the period ended 30 November
2011 which comprises the Income Statement, Statement of Changes in Equity,
Balance Sheet, Cash Flow Statement and related notes 1 to 10. We have read the
other information contained in the Half-Yearly Financial Report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK and Ireland) "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The Half-Yearly Financial Report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
Half-Yearly Financial Report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Company will be
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this Half-Yearly Financial
Report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the Half-Yearly Financial Report based on our

Scope of review

We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.


Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half-Yearly
Financial Report for the period ended 30 November 2011 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.

Ernst & young LLP


31 January 2012


for the period from 30 March 2011 (incorporation) to 30 November 2011

                                              Period ended 30 November 2011
                                               Revenue    Capital           
                                                return     return      Total
                                    Note         £'000      £'000      £'000 
Losses on investments held at fair                   -     (3,862)    (3,862)
value through profit or loss                                               
Income                                 3         1,377          -      1,377 
Investment management fee                          (72)      (217)      (289)
Other expenses                                    (269)         -       (269)
Return on ordinary activities                    1,036     (4,079)    (3,043)
before taxation                                                            
Taxation                                            (2)         -         (2)
Return on ordinary activities after              1,034     (4,079)    (3,045)
                                                 pence       pence      pence
Basic and diluted return per          4           1.03      (4.08)     (3.05)
ordinary share                                                             

The Company does not have any income or expense that is not included in the net
profit for the period. Accordingly the net return after taxation for the period
is also the Total Comprehensive Income for the period and consequently no
separate Statement of Comprehensive Income has been presented.

The total column of this statement is the Income Statement of the Company
prepared in accordance with International Financial Reporting Standards
("IFRS"), as adopted by the EU. The Supplementary revenue return and capital
return columns are presented in accordance with the Statement of Recommended
Practice issued by the Association of Investment Companies ("AIC SORP").

All revenue and capital items in the above statement derive from continuing


for the period from 30 March 2011 (incorporation) to 30 November 2011

                                Share   premium   Capital   Revenue         
                              capital   account   reserve   reserve    Total
                                £'000     £'000     £'000     £'000    £'000 
At the start of the period          -         -         -         -        - 
Total comprehensive income:                                                
Net return for the period           -         -    (4,079)    1,034   (3,045)
Transaction with                                                           
shareholders recorded                                                      
directly to equity:                                                        
Issues of ordinary shares         100    49,900         -         -   50,000 
Expenses of share issue             -    (1,322)        -         -   (1,322)
Equity dividends paid               -         -         -      (300)    (300)
As at 30 November 2011            100    48,578    (4,079)      734   45,333 

as at 30 November 2011

                                                                 30 November
                                                  Note                 £'000 
Investments held at fair value through                                39,497 
profit or loss                                                              
Current assets:                                                             
Other receivables                                                        653 
Cash and cash equivalents                                              6,370 
Current liabilities:                                                        
Other payables                                                        (1,187)
Net current assets                                                    45,333 
Total net assets                                                      45,333 
Capital and reserves:                                                       
Share capital                                      6                     100 
Share premium account                                                 48,578 
Capital reserve                                                       (4,079)
Revenue reserve                                                          734 
Shareholders' funds                                                   45,333
Net asset value per ordinary share                 7                   45.33


for the period from 30 March 2011 (incorporation) to 30 November 2011

                                                                 30 November
Net cash inflow from operating activities                                768 
Withholding tax paid                                                      (2)
Net cash outflow from taxation                                            (2)
Investing activities:                                                       
Purchases of investments                                             (59,211)
Sales of investments                                                  16,437 
Net cash outflow from investing activities                           (42,774)
Cash inflow from placing and offer for subscription                   50,000 
Cash outflow from expenses of placing and offer for                   (1,322)
Equity dividends paid                                                   (300)
Net cash inflow from financing                                        48,378 
Increase in cash and cash equivalents                                  6,370 
Reconciliation of net cash flow to movements in net funds:                  
Net cash inflow from cash and cash equivalents                         6,370 
Cash and cash equivalents at the end of the period                     6,370 


1 General information

The Diverse Income Trust plc is a company incorporated and registered in
England and Wales. The principal activity of the Company is that of an
investment trust company within the meaning of Section 1158 of the Corporation
Tax Act 2010.

The financial information contained in this Half-Yearly Financial Report does
not constitute statutory financial statements as defined in Section 434 of the
Companies Act 2006. This Half-Yearly Financial Report has been reviewed by the
Company's Auditors, their report is shown above. As this is the Company's first
accounting period, annual statutory financial statements have not yet been
filed with the Registrar of Companies. Initial Accounts for the period to 31
August 2011 have been filed with the Registrar of Companies.

2 Accounting policies

The half-yearly financial information covers the period from incorporation, on
30 March 2011, to 30 November 2011 and has been prepared in accordance with
International Accounting Standard ("IAS") 34, `Interim Financial Reporting'. As
this is the first reporting period since the Company was incorporated no
comparative figures have been shown.

The Company's annual financial statements for the period to 31 May 2012 will be
prepared in conformity with International Financial Reporting Standards
("IFRS") as adopted by the European Union, which comprise standards and
interpretations approved by the International Accounting Standards Board
("IASB"), and as applied in accordance with provisions of the Companies Act
2006. The annual financial statements will also be prepared in accordance with
the Statement of Recommended Practice ("SORP") (as amended in January 2009) for
the financial statements of investment trust companies and venture capital
trusts, except to any extent where it is not consistent with the requirements
of IFRS. The accounting policies adopted in the preparation of the half-yearly
financial statements are the same as will be applied in the forthcoming Annual
Report and are summarised below.

Segmental analysis

The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment business and therefore segmental
information is not disclosed.

Basis of preparation

The financial statements have been prepared on a going concern basis and on the
assumption that approval as an investment trust company will be granted.

The financial statements are presented in sterling, which is the Company's
functional currency as the UK is the primary environment in which it operates,
rounded to the nearest £'000, except where otherwise indicated.

Presentation of the Income Statement

In order to better reflect the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and capital nature has
been prepared alongside the Income Statement. In accordance with the Company's
status as a UK investment company under Section 833 of the Companies Act 2006,
net capital returns may not be distributed by way of dividends. Additionally,
the net revenue return is the measure the Directors believe appropriate in
assessing the Company's compliance with certain requirements set out in Section
1158 of the Corporation Tax Act 2010.

Accounting developments

At the date of authorisation of the financial statements, the following
Standards which have not been applied in these financial statements were in
issue but were not yet effective (and in some cases had not yet been adopted by
the European Union):

International Accounting Standards (IAS/     Accounting periods begin on or 
IFRS)                                        after                          
IFRS 9 Financial Instruments: Classification 1 January 2013                 
& Measurement                                                               
Improvements to IFRS                         Various dates                  

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts in the Balance Sheet, the
Income Statement and the disclosure of contingent assets and liabilities at the
date of the financial statements. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these

The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future period if the revision affects both current and
future periods.

Valuation of investments

All investments held by the Company are classified as 'fair value through
profit or loss'. Investments are initially recognised at cost, being the fair
value of the consideration given.

All investments are recognised on trade date, i.e. the day that the Company
commits to purchase or sell the investment.

After initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments and impairment of investments
recognised in the Income Statement and allocated to capital. Gains and losses
on investments sold are calculated as the difference between sale proceeds and
cost and recognised in the Income Statement and allocated to capital. In
accordance with the Company's status as an investment company under Section 833
of the Companies Act 2006, net capital returns may not be distributed by way of

For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted bid prices and SETS
at last trade price at the close of business on the Balance Sheet date, without
adjustment for transaction costs necessary to realise the asset.

In accordance with the AIC SORP the Company includes transaction costs within
gains/(losses) on investments.

Cash and cash equivalents

Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents
are short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in


Dividends receivable on quoted equity shares are taken to the revenue return on
an ex-dividend basis except where, in the opinion of the Directors, the
dividend is capital in nature, in which case it is taken to the capital return.
Dividends receivable on equity shares where no ex-dividend date is quoted are
brought into account when the Company's right to receive payment is
established. All other income is accounted for on an accruals basis and is
recognised in the Income Statement.


All expenses are accounted for on an accruals basis. On the basis of the
Board's expected long-term split of total returns in the form of capital and
revenue returns of 75% and 25%, respectively, the Company charges 75% of its
investment management fee to capital. All other administrative expenses are
charged through the revenue column in the Income Statement.


There is no charge to United Kingdom income tax as the Company's allowable
expenses exceed its taxable income. The total tax assessed is however higher
than 0% due to irrecoverable withholding tax paid on overseas investment
income. Deferred tax assets in respect of unrelieved excess expenses are not
recognised as it is unlikely that the Company will generate sufficient taxable
income in the future to utilise these expenses. Deferred tax is not provided on
capital gains and losses because the Company meets the conditions for approval
as an investment trust company.

Dividends payable to shareholders

Dividends to shareholders are recognised as a liability in the period in which
they are paid or approved in general meetings and are taken to the Statement of
Changes in Net Equity. Dividends declared and approved by the Company after the
Balance Sheet date have not been recognised as a liability of the Company at
the Balance Sheet date.

Capital reserve

Gains or losses on disposal of investments and changes in the fair value of
investments held at the period end are transferred to the capital reserve.

Also, certain other expenses net of any related taxation effects are charged to
this reserve in accordance with the expenses policy above.

Share issue costs

Costs incurred directly in relation to the placing and offer for subscription
of ordinary shares have been deducted from equity.

3 Income
                                                                 30 March to
                                                                 30 November
Income from investments:                                                    
UK dividends                                                           1,242
Overseas dividends                                                       127
Other income:                                                               
Deposit interest                                                           4
Underwriting income                                                        4
Total income                                                           1,377

4 Return per share

                                                    30 March to             
                                                    30 November             
                                                      number of             
                                          Net          Ordinary           Per
                                       return            shares         share
                                        £'000                           pence
Return per ordinary share              (4,079)       100,000,000       (4.08)
Return per ordinary share               1,034        100,000,000        1.03 
Return per ordinary share              (3,045)       100,000,000       (3.05)

Normal and diluted return per share are the same as there are no dilutive
elements on share capital.

5 Dividends per ordinary share

A first interim dividend of 0.3p per ordinary share was paid on 30 November
2011 to shareholders registered at the close of business on 30 September 2011.

                                                                 30 March to
                                                                 30 November
Revenue available for distribution                                     1,034 
First interim dividend of 0.3p                                          (300)
Undistributed revenue                                                    734

The Board has declared a second interim dividend of 0.5p per ordinary share,
payable on 29 February 2012 to shareholders registered at the close of business
on 30 December 2011.

6 Called up share capital
                                                                 30 November
Allotted, issued and fully paid:                                            
100,000,000 ordinary shares of 0.1p each                             100,000

The Company was incorporated on 30 March 2011 with an issued share capital of 
£50,000 represented by 50,000 management shares of £1 each.

On 28 April 2011, 100,000,000 ordinary 0.1p shares were issued at 50p per share
in a placing and offer for subscription.

Redemption of ordinary shares

The Company has a redemption facility through which shareholders will be
entitled to request the redemption of all or part of their holding of ordinary
shares on an annual basis. The first redemption point for the ordinary shares
will be 31 May 2012. The Board may, at is absolute discretion, elect not to

operate the annual redemption facility in whole or part.

Management shares

The 50,000 management shares with a nominal value of £1 each were allotted to
MAM Funds Plc, the parent company of the Manager, on the basis of undertaking
to pay one-quarter of their nominal value on or before 30 March 2016 and the
balance on demand. The management shares are non-participating and
non-redeemable and, upon a winding-up or on a return of capital of the Company,
shall only receive the fixed amount of capital paid up on such shares and shall
confer no right to any surplus capital or assets of the Company.

7 Net asset value per ordinary share

The net asset value per ordinary share and the net asset values attributable at
the period end were as follows:

                                          Net asset value         Net assets
                                                per share       attributable
                                              30 November        30 November
                                                     2011               2011
                                                        p              £'000
Ordinary shares                                                             
- Basic and diluted                                 45.33             45,333

Net asset value per ordinary share is based on net assets at the period end and
100,000,000 ordinary shares, being the number of ordinary shares in issue at
the period end.

8 Financial instruments

Investment objective and policy

The Company's investment objective and policy are detailed above.

The Company's investing activities in pursuit of its investment objective
involve certain inherent risks. The principal risks and uncertainties analysis
undertaken by the Board appears in the Interim Management Report above and
information on each risk is detailed in the Prospectus of the Company. In
accordance with IFRS 7, 'Financial Instruments Disclosures', this note refers
to the identification, measurement and management of risks potentially
affecting the value of financial instruments.

The Company's financial instruments comprise:

● equity shares held in accordance with the Company's investment objective and
policies; and
● cash, liquid resources and short-term debtors and creditors that arise from
its operations.

The Company has a £20 million overdraft facility in place. This facility has
not been used during the period ended 30 November 2011. This facility will be
used for short-term liquidity.

The risks identified by IFRS 7 arising from the Company's financial instruments
are market risk (which comprises market price risk, interest rate risk and
foreign currency exposure), liquidity risk, counterparty risk and credit risk.
The Board reviews and agrees policies for managing each of these risks, which
are summarised below. These policies have remained unchanged since the
beginning of the accounting period.

Market risk

Market risk arises mainly from uncertainty about future prices of financial
instruments used in the Company's business. It represents the potential loss
the Company might suffer through holding market positions by way of price
movements, interest rate movements and exchange rate movements. The Manager
assesses the exposure to market risk when making each investment decision and
these risks are monitored by the Manager on a regular basis and the Board at
quarterly meetings with the Manager.

Market price risk

Market price risk (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolio by ensuring
full and timely reporting of relevant information from the Manager. Investment
performance is reviewed at each Board meeting.

The Company's exposure to other changes in market prices as at 30 November 2011
on its investments held at fair value through profit or loss investments was 

Interest rate risk

Interest rate movements may affect the level of income receivable on cash
deposits and payable on its overdraft facility. The majority of the Company's
financial assets and liabilities are non-interest bearing. As a result, the
Company's financial assets and liabilities are not subject to significant
amounts of risk due to fluctuations in the prevailing levels of market interest

The possible effects on the fair value and cash flows that could arise as a
result of changes in interest rates are taken into account when making
investment decisions. The Board imposes borrowing limits to ensure gearing
levels are appropriate to market conditions.

The Company's exposure to interest rate risk at 30 November 2011 is limited to
its cash and cash equivalents totalling £6,370,000 and is due within one year
of the Balance Sheet date.

Foreign currency risk

Although the Company's performance is measured in sterling, a proportion of the
Company's assets may be either denominated in other currencies or are in
investments with currency exposure. The Company was not exposed to material
direct foreign currency risk during the period. At 30 November 2011 the Company
held three euro denominated equity investments with a sterling equivalent of 

Financial assets

The Company's financial assets comprise equity investment, short-term debtors
and cash.

Financial liabilities

The Company's financial liabilities are all in sterling and therefore no
currency cash flow profile has been shown.

Liquidity risk

The Company's assets primarily comprise readily realisable securities, which
can under normal conditions be sold to meet funding commitments if necessary.
They may however be difficult to realise in adverse market conditions. The
Company can achieve short-term flexibility by the use of its overdraft

Counterparty risk/credit risk

Credit risk is the risk of financial loss to the Company if the contractual
party to a financial instrument fails to meet its contractual obligations.

The carrying amounts of financial assets best represent the maximum credit risk
exposure at the Balance Sheet date.

The Company's listed investments are held on its behalf by HSBC Bank plc acting
as the Company's custodian. Bankruptcy or insolvency of the custodian may cause
the Company's rights with respect to securities held by the custodian to be
delayed. The Board monitors the Company's risk by reviewing the custodian's
internal controls report.

Investment transactions are carried out with a number of brokers whose
creditworthiness is reviewed by the Manager. Transactions are ordinarily
undertaken on a delivery versus payment basis whereby the Company's custodian
bank ensures that the counterparty to any transaction entered into by the
Company has delivered in its obligations before any transfer of cash or
securities away from the Company is completed.

Cash is only held at banks that have been identified by the Board as reputable
and of high credit quality.

None of the Company's assets are past due or impaired.

Fair value hierarchy

Under IFRS 7, the International Accounting Standards Board requires investment
companies to disclose the fair value hierarchy that classifies financial
instruments measured at fair value at one of three levels according to the
relative reliability of the inputs used to estimate the fair values.

Classification       Input                                                  
Level 1              Valued using quoted prices in active markets for       
                     identical assets or liabilities (actively traded on    
                     recognised stock exchanges)                            
Level 2              Valued by reference to valuation techniques using      
                     inputs other than quoted prices included within Level 1
Level 3              Valued by reference to valuation techniques using      
                     inputs that are not based on observable market data    

Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.

The valuation techniques used by the Company are explained in the accounting
policies in Note 2 under the heading `Valuation of investments'. At 30 November
2011 all the Company's financial assets at fair value through profit or loss
are included in Level 1.

9 Related party transactions

Under the terms of an agreement dated 7 April 2011, the Company has appointed
Midas Capital Partners Limited to be the Manager. The basic investment
management fee is calculated at the rate of one-twelfth of 1.0% of the adjusted
market capitalisation of the Company on the last business day of each calendar
month. The basic management fee accrues daily and is payable in arrears in
respect of each calendar month. For the purpose of calculating the basic fee,
the 'adjusted market capitalisation' of the Company is defined as the average
daily mid-market price for an ordinary share, multiplied by the number of
ordinary shares in issue, excluding those held by the Company in treasury, on
the last business day of the relevant month.

At 30 November 2011 an amount of £38,000, was outstanding and due to Midas
Capital Partners Limited, in respect of management fees.

The Manager and its officers and employees may from time to time act for other
clients or manage other funds, which may have similar investment objectives and
policies to that of the Company. Circumstances may arise where investment
opportunities will be available to the Company and which are also suitable for
one or more such clients of the Manager or funds. The Directors have satisfied
themselves that the Manager has procedures in place to address potential
conflicts of interest and that, where a conflict arises, the Manager will
allocate the opportunity on a fair basis and in accordance with contractual
provisions described in the Prospectus.

10 Going concern

The Directors consider that it is appropriate to adopt the going concern basis
in preparing the financial statements. The assets of the Company consist almost
entirely of securities that are readily realisable and, accordingly, the
Company has adequate financial resources to continue in existence for the
foreseeable future.

Directors (all non-executive)         Bankers and Custodians               
                                      HSBC Bank plc                              
Michael Wrobel                        8 Canada Square                      
Paul Craig                            London E14 5HQ                         
Lucinda Riches                                                             
Jane Tufnell                          Registrar and Transfer Office               
                                      Capita Registrars                          
Secretary and Registered Office       Shareholder Service Department       
Capita Sinclair Henderson Limited     The Registry                          
(trading as Capita Financial Group    34 Beckenham Road                            
- Specialist Fund Services)           Beckenham                               
Beaufort House                        Kent BR3 4TU                         
51 New North Road                     Telephone: 0871 664 0300             
Exeter Ex4 4EP                        (calls will cost 10p per minute plus                                    
Telephone: 01392 412122               network charges)                     
                                      Fax: 020 639 2342                    
                                      Email: [email protected]   
Investment Manager                                                                                              
Midas Capital Partners Limited                                                                                   
10 - 14 Duke Street                                                                                              
Reading RG1 4RU                                                            
Telephone: 0118 952 8900              Stephenson Harwood                   
Website:          1 Finsbury Circus                    
                                      London, EC2M 7SH                     
Ernst & Young LLP                                                          
1 More London Place                                                        
London SE1 2AF                                                             
Cenkos Securities plc                                                      
6.7.8 Tokenhouse Yard                                                      
London EC2R 7AS                                                            

An investment company as defined in Section 833 of the Companies Act 2006.

Registered in England No. 7584303.

A member of the Association of Investment Companies.

The Half-Yearly Financial Report will be posted to shareholders shortly. The
Report will also be available for download from the following website: or 
on request from the Company Secretary.

Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.

a d v e r t i s e m e n t