autumn 2013 talking shop - isa-ltd.co.uk · 2013/14 £11,520 p.a. ... 100 shares in a fund the...

The promoter and publisher of this booklet is Individual Savings Accounts Limited, and its content is representative of the views we hold on investment planning and personal financial structuring. The company operates in association with The PEP Shop Ltd (which pioneered the

discount marketing of PEPs in 1992). Both companies are appointed representatives of Expatriate Advisory Services Plc who are authorised and regulated by the Financial Services Authority. Each company is, therefore, dedicated to a specialist market whilst operating within a group of

independent financial advisors. The companies are registered at, and operate from 16 High Street, Kegworth, Derby DE74 2DA.

Autumn 2013

TALKING SHOP

INDIVIDUAL SAVINGS ACCOUNTS LIMITEDA N A S S O C I A T E D C O M P A N Y O F T H E P E P S H O P L T D

A SIMPLE LIFEIn an ideal world, all information would be provided in a concise, digestible form, leading to straightforward conclusions. Decision making would be easy.

Unfortunately, the investment services industry does not operate in such a straightforward manner. Competing investment management groups backed up by skilled advertising can always construct arguments designed to steer you towards their products. However, with 2100 collective investments available on Cofunds and FundsNetwork and 95 investment management groups competing with each other, someone has to narrow the options, and provide ‘facts without embellishment’.

Our objective is to provide you with general information rather than personal advice. We believe that if information is straightforward enough, most investors should experience little difficulty in making decisions. Our ‘short list’ is therefore only the beginning of the selection process. The suitability of any of the funds can only be determined by you in the full knowledge of your own circumstances and personal preferences.

telephone 01509 670918 [email protected]

www.isa-ltd.co.uk

Contents

Investing In An ISA

Welcome to your Autumn edition of Talking Shop. Investing in an ISA can be as straightforward or as complex as you would like it to be. To simplify the process we have set out three alternative portfolios each containing six different funds. These packages are described in this brochure on pages 12-17 and if you wish to proceed it should take you no more than fi ve minutes to complete the forms.

We would like to draw your attention to the enclosed letter, which contains details of how you can access the platform key features, terms and conditions for Cofunds / FundsNetwork and Key Investor Information Documents (KIIDs), please see page 11 for more details.

Pages

Introduction & ISA Allowances 1

Risk Reduction – 6 Golden Rules 2-5

The Past 6

The Present 7

The Future 8-9

The Haydn Green Charitable Trust 9-10

Before You Invest 11

The Equity Income Portfolio 12-13

The Growth Portfolio 14-15

Pages

The Star Managers’ Portfolio 16-17

Frequently Asked Questions 18

Online Investing (Cofunds) 19

Online Investing (FundsNetwork) 20

Portfolio Options 21

Completing Your Application Form 22

Promoter’s Notice 23

Please note that past performance should not be seen as a guide to future performance. The value of any investment and income from it can fall as well as rise as a result of market and currency fl uctuations and you may not get back the amount you originally invested.

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1Introduction & ISA Allowances

For most people, investment is a tedious time-consuming exercise. They tolerate it only because of its importance to their long-term future. For anyone with a low boredom threshold the ISA approach is like watching paint dry. After all, equities only outperform bank and building society deposits on average by a few percentage points each year, and because stockmarkets fall 30% of the time, the entire approach is only worthwhile for long term investors.* The harsh reality is that serious investment necessitates a painstaking commitment, along with success in all other forms of human endeavour. The expression ‘by the inch it’s a cinch’ will have resonance with anyone who believes in a systematic and disciplined savings approach. Unfortunately however the world contains dreamers as well as realists and many people believe that somehow there is an easy way to invest in funds and make money quickly. It is these people who are most vulnerable to the ‘fashionable investment’ argument.

Emerging Markets: The Time To Buy Not Sell!

2013 has been another diffi cult year for emerging market investors, with sentiment undermined in recent months by announcements in both the United States (US) and China. First the US Federal Reserve announced it would start to wind down its monetary easing program and this has led to emerging market currency weakness, raising concerns over infl ation and interest rates as ‘hot money’ exits the asset class. Second, Chinese policymakers have clamped down on non-bank lending to cool rampant credit growth.

The reality is that emerging markets have suffered a setback rather than an unmitigated disaster. We strongly believe that the three pillars of the emerging opportunity remain fully intact; emerging markets continue to have growing populations, with less debt, and who are getting wealthier.

Naturally markets always ‘overshoot’ but this phenomenon is even more prevalent in the developing world, where there are sometimes more speculators than investors. Investors look for a steady long-term profi t, whereas speculators try to make money quickly.

Amid the gloomy economic backdrop emerging market valuations have fallen to very attractive levels. On numerous stock market valuation ratios emerging market shares are at levels that historically have been consistent with positive future returns. With the structural story of rising domestic demand and on-going infrastructure development still very much in place, current valuations appear to offer a buying opportunity for long term investors.

ISA Recommendations

The recommended portfolios which we have set out in this booklet (pages 12-17) recognise the diversifi cation principle. Each of the funds we have selected are, in our view, amongst the most promising in their sector. One or other of our ‘portfolios’ will suit the majority of investors. Alternatively, you may decide to pick and mix from our preferred funds or consider the full range of funds available on the Cofunds or FundsNetwork platform. The choice is yours.

ISA Allowances

2013/14 £11,520 p.a.

The Cash ISA limit is half the value of the Stocks and Shares ISA Limit (e.g. the maximum an investor can save in a Cash ISA is £5,670).

Additional Investment

Some of our clients wish to invest amounts which exceed their ISA allowance. If you fall into this category the fund supermarkets which we favour can provide you with the same funds on the same discounts as they would for an ISA investment. Further information is available on request.

* Source Barclays Capital

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2

Only a minority of Britain’s population invests in Collective ISAs (Unit Trusts/Open Ended Investment Companies [OEICs]). Amongst those who do not, the vague notion of risk is the most widely held concern. So how much of the risk is real, and how much is imagined, if indeed it does exist can it be reduced or eliminated?

Rule No 1: Buy Collectives Not Individual Shares

Everyone knows that if you buy shares you can lose money as well as make profi ts. When you buy shares you are investing in companies (i.e. businesses) which can, and sometimes do, go bust. Alternatively they may fall from grace and become a shadow of their former selves. Many of yesterday’s famous companies are no longer successful and their share prices have fallen, sometimes considerably. Nothing will eliminate this process – the rise and fall of companies (and therefore the stockmarket) will always be with us. However, investing in collective ISAs can dramatically reduce the impact of this risk. By holding (say) 100 shares in a fund the impact of one or two companies going bankrupt will be minimal. Similarly, if the prices of some of the shares held by the fund fall, others may rise in value, thereby reducing the overall impact. This is best illustrated by the deteriorating share price performance of some of Britain’s leading companies between 2010-2012.

Whilst many UK share prices have fallen over the last three years, those unit trusts which concentrate on the UK stockmarket have proven to be far safer than individual shares. Out of a total of more than 400 funds which specialise in UK shares, only two have fallen in value over the three years to January 1st 2013. This record of consistency speaks for itself. The clear message is that there is safety in numbers.

The fact that so many so-called ‘blue chip’ shares fell dramatically during a period when the UK stockmarket rose shows the extent of the risk which individual share purchase entails. Obviously, the opposite side of the coin also applies. Some individual shares have made vast profi ts for investors. The reality, however is that investors who are most likely to choose the real winners are those with the greatest knowledge (i.e. the stockmarket professionals, rather than the general public who have limited time to study the market).

Purchasing individual shares is more akin to speculation than investment. Britain’s best performing share throughout the eighties decade, for example, was Polly Peck. In the nineties, Polly Peck went bankrupt.

Risk Reduction – 6 Golden Rules

Bottom 10 performers (based on stock’s average weight)

Contribution to returnof the FTSE 100

Share priceTotal return

BP PLC (-2.06%) (-20.1%)

Anglo American PLC (-0.70%) (-26.7%)

HSBC Holdings PLC (-0.58%) (-3.0%)

Barclays PLC (-0.36%) (-12.5%)

Tesco PLC (-0.35%) (-16.3%)

Man Group Plc (-0.29%) (-70.6%)

Lloyds Banking Group PLC (-0.23%) (-20.0%)

Xstrata PLC (-0.16%) (-8.6%)

Vedanta Resources PLC (-0.15%) (-54.0%)

Lonmin PLC (-0.15%) (-51.4%)

(Source: Schroders. *Contribution to return – this is the stock’s contribution to the return of the index (it is the product of its weight in index multiplied by the stock’s total return) – so if you

sum this column for all the stocks in the index it would equal the index total return.)

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3Risk Reduction – 6 Golden Rules...

In recent years it has been the turn of the major banks and even giant multi-national companies like BP who have fallen from grace. It seems fair to conclude that whilst buying individual shares can be fun, this investment approach is likely to prove an unreliable system of money management. For anyone of modest means (whose savings are key to a comfortable retirement) direct share purchase is a high risk strategy.

Rule No 2: Invest In Several Funds

Most of the effort which goes into promoting ISAs is geared towards persuading you to commit your annual contribution to just one fund. The reason is simple – it is easier to promote an argument for one fund than a diversifi ed portfolio of (say) fi ve or six funds. What is easiest for the fund providers and their salesforce, however, may not be in the best interests of the investor. There are many different unit trust sectors to invest in, the ISA rules and the introduction of fund supermarkets allow you to do this. Investors should not, therefore, restrict themselves exclusively to one fund. Over the last ten years returns on the alternative stockmarkets have varied greatly. The following table (which highlights developed market returns) illustrates the wisdom of diversifying across a range of geographical areas.

With the introduction of the Retail Distribution Review (RDR) many ISA promoters will be looking to provide low cost solutions to investors. One ‘gimmick’ that has been suggested is the so called ‘decision trees’ and fl ow charts which are used in an attempt to persuade investors that this simplistic technique will enable them to identify the most suitable ISA. In fact, these are pseudo-scientifi c systems which work against the investors’ interests in two ways. Firstly, by using terms such as ‘adventurous’, ‘realistic’ and ‘conservative’ a misleading impression is conveyed that it is possible to identify and invest in certain collective ISAs which are inherently less risky. This is untrue – all funds rise and fall and none can accurately claim they are less likely to fall than others. Secondly, these systems are often designed to persuade you to invest your entire ISA in one single fund – the exact opposite of what you should be doing.

World Stockmarket Returns (Local Currency)

2004 2005 2006 2007 2008 2009 2010 2011 2012

MSCI EM 16.4%

Japan TOPIX 45.2%

MSCI EM 28.9%

MSCI Asia ex Japan 38.0%

UK FTSE 100

(-28.3%)



US S&P 5002.1%

Japan TOPIX 20.9%

MSCI Euro ex UK 13.3%

MSCI EM 35.8%


MSCI EM 33.5%

US S&P 500 (-37.0%)

MSCI EM 62.8%

US S&P 500 15.1%

UK FTSE 100

(-2.2%)





UK FTSE 1007.4%

Japan TOPIX (-40.6%)


MSCI EM 14.4%

MSCI Euro ex UK

(-12.1%)


Japan TOPIX 11.3%


US S&P 500 15.8%


MSCI Euro ex UK

(-42.7%)

UK FTSE 100 27.3%

UK FTSE 100 12.6%

MSCI EM (-12.5%)

MSCI EM 17.4%

UK FTSE 100 11.2%

UK FTSE 100 20.8%

UK FTSE 100 14.4%

US S&P 5005.5%

MSCI EM (-45.7%)

US S&P 500 26.5%


MSCI Asia ex Japan (-14.6%)

US S&P 500 16.0%

US S&P 500 10.9%

US S&P 5004.9%

Japan TOPIX 3.0%


MSCI Asia ex Japan (-47.7%)

Japan TOPIX 7.6%

Japan TOPIX 1.0%


UK FTSE 100 10.0%

(Note: Total return indices. Source: J.P. Morgan Asset Management. As at 31 December 2012.Past Performance is not a guarantee of future results.)

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4 Risk Reduction – 6 Golden Rules...

Quite simply, if you are investing for capital growth and wish to reduce risk, it makes little sense to allocate your entire ISA contribution solely to one fund. Instead, you should spread your investments across a wide range of funds.

Rule No 3: Avoid ‘King For A Day’ Funds

Perhaps the most widespread mistake amongst investors is to buy last year’s top performing fund. Almost always this proves to be a disaster. Examples include the tech bubble, the property bubble, the commodity bubble and now we could be half way through the bond bubble (see Recommendations 2013). If an investment sector rises by over 50% in a brief period the likelihood is that it has gone from undervaluation to overvaluation. This results in what stockmarket professionals term a ‘correction’ (i.e. the overvalued investment eventually ‘corrects itself’ by falling soon afterwards). Specialist funds contain the greatest risks. People who buy these funds usually do so under the infl uence of advertising or sensational newspaper articles. Typically the sector concerned will have risen strongly and the subliminal advertising message is that the rapid growth will continue. Despite the fact that funds which have produced exceptionally high short-term returns are notoriously unreliable, a ‘must have’ frenzy takes over. Without doubt there are many people who are attracted to this kind of excitement (just as there are people who enjoy the atmosphere of the casino). However this approach is not for the typical ISA investor who simply wishes to plan for their retirement using a reliable system of investment.

The ‘common thread’ with these funds is that the providers would have you believe that the investment offers a new or unexploited opportunity with extraordinary growth prospects. The picture painted by the media is one of great excitement and the implication is that you should get on the bandwagon without delay. The main thrust is usually geared to persuade you to buy without due consideration.

No-one should get carried away by such hype and frenzy. The simple argument against these funds is that any one of the many hundreds of non-specialist collective ISAs can invest in (say) technology shares if they appear good value but they are not exclusively committed to this or any other narrow sector. Not only is it hazardous for small investors to select specialist funds, it is equally risky to concentrate most of your investment on a single country, hence the need for funds based on a wider region (such as Europe or South East Asia).

Rule No 4: Never ‘Double Up’

Many investors will seek to invest each year. Those who do so should ensure that successive years’ ISAs are invested in different funds. Likewise husband and wives should avoid using the same funds. At the end of the day there are enough attractive arrangements to invest in without over-committing yourself to any one single fund.

The fi rst four golden rules (above) extend the ‘safety in numbers’ principle to its logical limits, fi rstly by using funds (instead of individual shares) then by selecting a wide spread of funds (instead of an individual fund) and fi nally by utilising different fund providers in successive years (instead of the same one). Few people would disagree with any of these disciplines. There are, however, two fi nal rules which confl ict with human nature and accordingly harder for many to accept.

Rule No 5: Time Not Timing

Probably the greatest myth held by the general public is that a successful investment strategy revolves around the constant buying and selling of shares or collective investments. These people believe that the successful investors are those that main skill is to carefully time their entrance and exit from the stockmarket. Nothing could be further from the truth. There are simply too many unpredictable factors to make this approach worthwhile.

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A good investment strategy is more a marathon than a sprint, and short term performance can never provide long term solutions. Stockmarkets fall on approximately 30% of all individual days, but seldom over a period of years. The UK stockmarket, for example has fallen on only seven of the last 35 calendar years (in 1990, 1994, 2000-2002, 2008 and 2011). Moreover, years following stockmarket declines are traditionally good for investors. During the last three ‘recovery’ years (i.e. 2003, 2009 and 2012) the average annual rise of the UK stockmarket exceeded 16%.

Only by remaining in the stockmarket can an investor guarantee to be there when it rises. It is often said that trying to move out falling stockmarkets is like ‘catching a falling knife’ (i.e. diffi cult and dangerous). Similarly when markets move up it is always without warning. Investors need to be there, and to remain there!

Rule No 6: Avoid Greed And Fear

There are two motivational forces which adversely infl uence the way people handle money, namely greed and fear. It is greed which encourages people to behave irrationally in their pursuit of wealth. By taking wild and uncalculated risks with their investments some people hope to ‘get rich quick’. At the other end of the spectrum are those who harbour irrational fears about the so-called dangers of stockmarket investment. In their case, it is inertia which may leave them less well-off than they otherwise might have been. Funds can be a calming infl uence on those to prone to fear, and a dampener on those susceptible to greed. Collective ISAs are unlikely to provide a fast road to either untold riches or poverty. Instead their role is to assist people to improve their fi nancial well-being in a slow, reliable and unexciting manner. Boring it may be, but history has proven this approach to be devastatingly effective!

Many people experience diffi culty in avoiding the ‘emotional roller-coaster’ of investment. They become elated when short-term returns are high, and dejected when their investments fall in value. This is irrational. The simple reality is that no-one can get hurt by falling stockmarkets unless they encash their investments when the market is down. Anyone who is not prepared to retain their investments through periods when they decline in value ought not to invest in the fi rst place. Collective ISAs work, but they will only produce meaningful results in the long-run.

Fear of falling stockmarkets is irrational. People who have allowed ‘fear of stockmarket risk’ to hold them back from investment over recent years have much to regret.

Risk Reduction – 6 Golden Rules...

Effect Of Missing Best DaysAnnualised returns for 15 years ending 31.10.12

Index Fully investedBest days missed

10 days 20 days 30 days 40 days

FTSE All Share (UK) 5.13% 0.92% (-1.84%) (-4.17%) (-6.18%)

S&P 500 (US) 4.80% 0.06% (-3.00%) (-5.62%) (-8.00%)

DAX 30 (Germany) 4.54% (-0.92%) (-4.62%) (-7.79%) (-10.57%)

CAC 40 (France) 4.64% (-0.94%) (-4.57%) (-7.49%) (-10.03%)

Hang Seng (Hong Kong) 8.43% 1.40% (-2.80%) (-6.24%) (-9.14%)

(All fi gures show annualised, total returns, taken from 15 year periods, starting each consecutive month, from 31.10.97 to 31.10.12, in local currency terms. Source: Datastream as at 31.10.12.

Basis: bid-bid with net income reinvested. These returns do not take into account initial fees.)

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6

The Early Years

We established ourselves as independent fi nancial advisors in September 1973. As fate would have it, within three months business confi dence fell to its lowest level since the 1930’s. In December 1973 we had Anthony Barber’s emergency budget. This was swiftly followed by the ‘three day week’ as the miners’ strike and an oil price crisis took hold. In hindsight we could not have chosen a more diffi cult time to set up in business. The UK stockmarket lost over half of its value in just a few months and it was diffi cult to fi nd people willing to invest.

Next came the election of Dennis Healey. This was hardly a ‘fun time’. School leavers were paying 35% National Insurance. Anyone with an income of £20,000 was paying a top tax rate of 83% on earned income and 98% on investment income. Although the state of the country rapidly went from bad to worse, these high levels of taxation had a silver lining for fi rms like ourselves. There were a wide variety of investment schemes which saved taxation in one way or another and we made a living specialising in this area.

The following decade brought a change of atmosphere and we became attracted to the potential of the expatriate market. In 1981 we fi nally decided to commit most of our time and resources to this area. Within ten years we had clients in 50 different countries, most of whom had portfolios with us which exceeded £100,000.

The early years of the ‘Nineties decade’ provided another (very different) opportunity. We could see the mass market potential of PEPs. Our intention was to provide a service that offered PEPs at a discounted price, but with the right level of written information necessary for investors to take their own decisions. We believed that not only would it be possible to eliminate face to face advice but, in this area at least, it would be desirable. At the time our approach was considered radical (and we were originally told by a fi nancial services bureaucrat that what we proposed could not legally be done!). The rest is history – not only did we do it, but many organisations have since emerged to copy the easiest part of what we do (i.e. execute discounted ISAs). This is a pity since any worthwhile extension of consumer choice relies on innovation and not imitation. In particular, the public need is for fact without embellishment. In an age of so called ‘spin doctors’ the only information which has credibility is information without spin.

Historically, the fi nancial services industry has struggled to meet the needs of the small investor. All too often, the literature published by the product providers (i.e. unit trust groups, pension and life assurance companies) has a promotional slant, and lacks objectivity. To counterbalance this, advisors ought to be acting as the ‘interface’ between the public and product providers. Unfortunately, however, the costs associated with individually tailored advice renders the ‘personalised’ advisory approach uneconomic for the investment of small sums.

On balance we believe that the future appears more promising for small investors than the past. That said following the Retail Distribution Review (RDR), the new regime brings both new opportunities and additional complexities making the right guidance even more essential. Each of the last three decades has seen changes in the way we do things and we expect this to continue in future decades.

The Past

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Everything can be improved upon, but the fi nancial services industry is slow to reform. In particular the personalised nature of the customary ‘face to face’ consultancy process (on which the industry is based) renders the cost of investment advice prohibitive to the overwhelming majority of small investors.

Research from Deloitte has indicated that in the coming years there will be up to 5.5million customers who will cease using a fi nancial adviser or lack access to one. These customers account for 11% of the UK adult population and this represents a signifi cant post RDR advice gap.

Our view is that much of the apparatus of the advisory system is simply unnecessary. This is particularly the case where elements of an investment product are straightforward, or where the need for ‘individually tailored’ taxation advice is much reduced. We believe ISAs offer a unique opportunity to deliver affordable managed investment services to the majority of the population. However, none of this is achievable without an effective ‘two step’ process which works as follows. First, we summarise the main features of the products we recommend. Then we invite you to request more information, review the funds and if happy with the information provided, invest. This two-step process saves you time but most crucially however the system is user friendly in that any product literature you receive is at your request. As with medicine, information can be ineffective unless delivered in the right dosage.

Our own service has three dimensions. We are Financial Advisors, ISA Specialists and Discount Brokers. We believe you need all three.

Where We Go From Here

With regard to sound investment planning we are convinced that the only view worth taking is the disciplined long-term approach. This said, there are reasons to believe that an untypical era is coming to an end, and investors will need to pose some questions. What will replace it, and how do you position yourself? Above all what ambitions are now realistic? As always investors should draw on the lessons of history to enable them to plan ahead.

Naturally, we have our own views on these issues, and the type of service which we believe is most relevant. Over the coming year we intend to put fl esh on these bones and set out our own blue print for the future. The end of the ‘commission era’ (or more accurately the end of the ISA-sales era) will spawn a wide variety of new entrants. There are now dozens of ‘mass market ISA discounters’, but in our opinion only a minority of these make any serious efforts to provide the service we believe investors need. With the new regime we anticipate that many of these ‘execution only’ fi rms will disappear from view, only to re-emerge during periods of ‘investor-hysteria’ (such as the Technology bubble). The paradox is that investment guidance is needed as much in the bad times as good.

We are convinced that an information and execution service is what the majority of investors now require and we will be continuing to provide a service along these lines in the years to come.

As before, we will be communicating with clients only when we have something to say. Since the next few years promise to be of great change, investors will require a higher level of information than usual. We are preparing to respond to this need and you will hear from us frequently during this time.

The Present

Adviser Numbers

Type of advisor FSA estimates Dec 2011 FSA Figures 31 Dec 2012

Financial Advisors 25616 20453

Bank Advisors 8658 4809

Wealth Managers 4043 3718

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Understandably, most of our clients were initially drawn towards our services because of the discounts we offer. Most people accept the compelling logic of reducing the cost of acquiring investments. However, we have always maintained a dual objective which includes identifying for our clients the small number of ISAs which we regard as the most promising. The quality of the investment is, for us, paramount and central to this philosophy is the belief that you should “never let the discount tail wag the investment dog”. A discount service which promotes investments without conviction (as some do) is, in our view, unsustainable in the long run. We have clear vested interest, (as well as a moral obligation) in trying to steer you towards successful investments.

Due to the impending regulatory changes the current tax year 2013/14 will be the last year where we will be offering clients a discount via a commission structure; from April 6th 2014 onwards our discounts will remain, but the way you pay for your ISA will change.

Currently when investing into an ISA you pay for setting up the ISA (i.e. the initial charge) then the management and the administration of the ISA. For example, if you were to invest directly with Rathbone then you would pay an initial charge of 2.5% and AMC of 1.5%, this would cover the investment management, administration and support.

*In addition to the AMC there are a number of other costs and operational expenses associated with managing the fund. These fees, together with the AMC, make up what is known as the Total Expense Ratio (TER). For information on the TER for a specifi c fund, please see page 11.

The Future

AMC for the Rathbone Global Opportunities Fund

This was called a bundled model where all the charges were collated and refl ected in the daily price of the fund. For example, a £1,000 investment would result in a £25 initial charge and a £15 annual management charge being applied to the fund.

Bundled AMC (Old System) = 1.5%

Unbudled AMC (New system) = 1.5%

In our example an Investment of £1,000 in the Rathbone Global Opportunities fund would result in a payment of £7.50 being taken during the year from the fund and paid to Rathbone Unit Trust Managers. In addition a payment of £7.50 will be split between the fund supermarket (Cofunds) and ISA Ltd to cover the cost of administration and support for the fund. By separating the costs the FCA are hoping for greater transparency.

From 2014 this model will change to refl ect the Financial Conduct Authority (FCA) view that all charges should be shown separately. ISA Ltd Investors will still receive our discount and pay no initial charge however the AMC will be charged differently. For example, the annual management charge will only include the management charge imposed by Rathbone Unit Trust Managers, say 0.75%, instead of the administration cost being deducted from the unit price, the cost of the administration of the fund will be taken as a separate charge. See Below:

As you can see in our example, under the new system the cost to the investor is exactly the same as before.

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In The Memory Of Our Founder

Born in Nottingham in 1947, a keen sportsman from an early age, Haydn would be a regular at Trent Bridge to watch the cricket and in the winter would travel over the River Trent to support his local football club, Notts County.

After completing his education, Haydn started as a salesman in Copenhagen. A diffi cult task, made even trickier when he didn’t even speak the language. But in typical fashion, he went on to become the company’s best salesmen.

Eventually heading home, in 1973 Haydn started his fi rst company LIAISON providing fi nancial advice to Nottingham residents. This was followed in 1979 by the formation of a new company, Expatriate Advisory Services, which led to travel all around the world, starting in the Middle East and then expanding to Asia, in particular Hong Kong and also Latin America predominately in Rio de Janeiro and Sao Paulo.

In the early 1990’s Haydn pioneered discount broking in the United Kingdom by setting up The PEP Shop, which was the fi rst company to rebate all the initial commission from fi nancial products back to the client, a radical step which was met with fi erce resistance by the industry at the time. This company went from strength to strength and eventually alongside its twin Individual Savings Accounts Ltd would take up most of Haydn’s time.

The main reason for this change has been the explosion of deals completed (without the investor’s knowledge) where a broker has demanded an additional slice of the fund manager’s costs without passing this saving on to the investor.

While there is nothing inherently wrong in using your size to negotiate better deals for your clients, we do not agree with then retaining a signifi cant amount of this discount in order to improve your profi t margin. Our fi rm belief is that any additional saving made on the AMC should be passed directly on to the client and we can confi rm that ISA Ltd has never retained any additional part of the AMC. Going forward our aim, as always, will be to reduce the cost of your ISA. With over £1/2billion in assets we will be using our size with both the fund managers and the fund supermarkets to negotiate the best possible discounts and passing on these savings to you, the investor.

We support the increase in transparency however by unbundling all the various costs the regulator has made the process dramatically more diffi cult to follow. Going forward it will be necessary for investors to either pay upfront for their administration costs or more likely they will request the appropriate amount of units are sold each year to pay for these costs. For clients of ISA Ltd, due to our position within the market we expect these costs to fall.

So far as our own position is concerned, there will be no change in approach to the service we offer. As a ‘discount broker’, our primary task will be to ensure that our clients receive the largest possible discounts on their ISAs, just as we have always done. We will also be continuing to provide information to assist those clients who would like to have our views on the various competing themes. This said, we are conscious that it is your money which is being invested, and as such it is you who should decide. So even if you hold views which differ from ours we will ensure that you still benefi t considerably in arranging your ISAs via ourselves.

Another certainty is that we will not be compromising our beliefs, no matter how unpopular some of these may temporarily be. Many intermediaries promote only those products which are easy to sell. We do not and never will!

The Future...

The previous articles hopefully give you an idea of the journey we have taken over the years and where we intend to go from here. Regrettably the future will be without the man who began it all back in 1973. The founder of The PEP Shop Ltd Haydn Green passed away in May 2007, sadly missed, Haydn was a unique individual and below we pay tribute to his life and also explain how his legacy lives on.

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10

Later on, Haydn orchestrated the fi nancial rescue of his local football club Notts County FC. In their hour of greatest need the club were saved by the generosity of Haydn a sacrifi ce he made without any media coverage, a unique occurrence in this day and age of celebrity.

Sadly in 2007, just as Haydn was beginning to enjoy the fruits of decades of hard work, fate stepped in to deprive us of a successful businessman, a mentor, a raconteur but most importantly a friend. Haydn believed in meritocracy and hard work. He believed in helping people who could not help themselves and assisting those who needed the greatest assistance. A liberal thinker with a sharp mind, Haydn was a living example of meritocracy at its best.

In the loving memory of Haydn, in July 2012, the Trustees of the Haydn Green Estate established ‘The Haydn Green Charitable Trust(HGCT)’ for the benefi t of such exclusively charitable objects and purposes in any part of the world to help those who are in need by such means and help to further the research in the different fi elds to help the mankind.

In September 2012, HGCT joined forces with Smile Train UK, a charity working to relieve the suffering of children with cleft lips or palates and the education and training of the public, including doctors, nurses and medical support staff in all matters relating to cleft lip and palate surgery. Smile train is heading for a million surgeries by April 2014. HGCT will continue to support the charity’s effort to make the world free from cleft lip and palate defects so that the children all over the world can lead a normal life.

In February 2013, the HGCT made a signifi cant donation to The University of Nottingham to promote Innovationand Entrepreneurship.

This substantial gift will build on the achievements of the University’s Institute for Enterprise and Innovation (UNIEI), which since its launch in 2000 has become a key national centre for entrepreneurship education. In the same month Dr Vince Cable MP, Secretary of State for Business Innovation & Skills joined Trustees of the Charity and other special guests at the University where in honour of the endowment the University of Nottingham renamed its UNIEI to ‘The Haydn Green Institute for Innovation and Entrepreneurship’.

Dr Cable stressed the importance of teaching Entrepreneurship at university. He said, “more than 40 years ago, students rioted at Warwick school when a business school was proposed. Today, we understand it is possible to have creative relationship between entrepreneurs and universities.”

Universities had become places where business ideas could be tested and a substantial part of the growth in the UK economy has come from university spin out companies, he added.

Professor David Greenaway, Vice-Chancellor of The University of Nottingham, said: “We are proud to be associated with the Haydn Green Charitable Trust, and delighted they wish to collaborate with the University to develop the Haydn Green Institute.”

Currently, the HGCT is working with the Nottingham’s Children’s Brain Tumour Research Centre to raise money to buy an Intraoperative MRI scanner, which the research team emphasises will make a massive impact to the treatment of children in their care. Presently, this scanner is not available from NHS in UK

In the future, the HGCT will continue to support and encourage those organisations, which are making structural changes for the betterment of the society.

http://www.nottingham.ac.uk/uniei/index.aspxhttp://www.smiletrain.org/

Hardev Singh – Director EAS PLC and Trustee HGCTBSc(Hons), MSc,DMS,MBA

The Future...

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11

If you decide to invest via this publication or our website www.isa-ltd.co.uk it is essential that you read the relevant Key Features Documents before investing. These documents include the Key Features, Key Investor Information Document (KIID) and the Terms and Conditions for both Cofunds and FundsNetwork.

The purpose of these documents is to provide in a clear and concise way, the important information about the product and funds on offer via this publication. As this brochure covers both Cofunds and FundsNetwork you must ensure that you read the documents that refer to the fund supermarket investment you are considering.

There are three ways to access this information:

1. Enclosed with this brochure is a letter providing a password which will allow you to access the necessary documents online and store for future reference. Simply go to www.isa-ltd.co.uk/disclosure and enter your personalised password.

2. Visit our website www.isa-ltd.co.uk/Autumn2013/keyfeatures here you will be able to view and print the necessary information.

3. If you would prefer a paper version of the Key Features documents and Terms & Conditions you can either e-mail us at [email protected] or telephone 01509 670918 requesting the Cofunds or FundsNetwork Key Features documents.

Once you have referred to the key features and are happy with the investment you are making simply complete the relevant application form (see pages 23-36) or alternatively you can invest online via our websitewww.isa-ltd.co.uk (see pages 19 and 20).

Before You Invest

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12

One of the benefi ts of income investing is that dividends are not necessarily subject to market sentiment, which can affect share prices positively and negatively. Indeed companies are particularly keen to maintain dividends during tough times as an indication of their long term health. We believe this means that dividend paying companies have the potential to generate long-term performance with lower volatility.

Investing in companies who produce goods consumers buy, almost regardless of the economic backdrop, provides an investor with exposure to companies who are able to protect their margins when costs go up, i.e. during an infl ationary period. With the recovery from the credit crisis sluggish at best, the outlook for investors remains unsettled. This is why we feel that in an uncertain environment where capital returns are volatile, a focus on dividends becomes increasing pertinent.

The portfolio below is, in our view appropriate to an equity income investor wishing to allocate their ISA allowance. However, investors intending to transfer existing holdings into equity income funds may wish to broaden their portfolio by including some additional funds, in particular Lazard Global Equity, Schroder Income, Invesco Perpetual Global Equity Income, Threadneedle Global Equity Income and Newton Asian Income.

All statistics are quoted ‘bid to bid’, or its OEIC equivalent (in both cases with net dividends reinvested) to 30th June 2013. Where funds have less than a fi ve year record the periods quoted are those in respect of complete calendar years only. Past performance is not necessarily a guide to future performance and may not be repeated. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fl uctuations and you may not get back the original amount invested. Investors electing to receive an annual income should be aware that the dividends (on which the investor’s income is based) are not guaranteed.

The above funds’ annual management charges are charged to capital. This has the effect of increasing the distribution and constricting the funds’ capital performance to an equal extent.

*Historic yields are not indicative of future yields. As at 30th June 2013.

#Please note from 14/12/09 the Schroder Far East Income Fund changed its name to the Schroder Asian Income Fund to refl ect the fact that it no longer invests in Japan. The fund also changed its benchmark to refl ect the change in investment

objective. Performance up until 14/12/09 relates to the Schroder Far East Income Fund and the benchmark includes Japan.

The Equity Income Portfolio

Fund

Discrete Annual Performance (To 30th June) %

2013 2012 2011 2010 2009 Yield*

Artemis Global Income 32.1 (-5.6) - - - 4.2

Invesco Perpetual High Income 20.7 7.4 19.2 16.2 (-12.5) 3.4

M&G Global Dividend 23.4 (-0.9) 25.2 31.4 - 3.6

Marlborough Multi-Cap Income 30.3 1.7 - - - 4.3

Newton Emerging Income This fund only launched in October 2012 3.8

Schroder Asian Income# 20.7 0.2 19.7 36.7 (-5.4) 4.0

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13The Equity Income Portfolio...

■ Artemis Global Income Date of InceptionManager: Jacob de Tusch-Lec July 2010

DiscountTo Investor 5.25%

The Artemis Global Income fund seeks to generate income and long term growth through investment in a collection of global equities. The manager had a strong year in 2012 where his deep value investing philosophy paid dividends. This fund pays a higher income than the average equity income fund and therefore will be more volatile.

■ Invesco Perpetual High Income Date of Inception Manager: Neil Woodford February 1988

DiscountTo Investor 5%

Neil Woodford remains one of the best known and best performing fund managers in the UK market today. His large positions continue in the more defensive tobacco and healthcare sectors. During the recent bull market Neil positioned his funds defensively and therefore they underperformed, however historically Neil has always bounced back from periods of poor performance and we expect him to do so again.

■ M&G Global Dividend Date of Inception Manager: Stuart Rhodes July 2008


This fund aims to deliver an income above the market average by investing mainly in a range of global equities. The fund invests across a wide range of geographies, sectors and market capitalisations. This approach has led to an impressive track record since launch. The M&G fund has been one of the most successful global funds in recent years, even when compared to the more traditional growth funds.

■ Marlborough Multi-Cap Income Date of Inception Manager: Giles Hargreave June 2011


With the respected Giles Hargreave as joint manager and his consistent record of selecting smaller companies it is not diffi cult to see why this fund has performed so well in its fi rst year. As an aggressive holding, we would expect this fund to be more volatile than an average equity income fund.

■ Newton Emerging Income Date of Inception Manager: Sophia Whitbread October 2012


With over £9bn invested in equity income funds, Newton is a widely recognised leader in the fi eld of income focused investment. The introduction of an income fund which specialises in emerging markets is one that combines the discipline of equity income investing with the growth prospects of emerging markets. While we acknowledge that this will make the fund more volatile than a traditional equity income fund we believe this is an attractive opportunity for the more adventurous income seeking investor.

■ Schroder Asian Income Date of InceptionManager: Richard Sennitt February 1990


The emphasis of this fund will be investment in the Asia Pacifi c Rim (excluding Japan, but including Hong Kong, Australia and Singapore), aiming to provide a growing capital and income. The fund offers investors the potential for impressive returns in the medium to long term supported by strong economic and corporate fundamentals.

Discount Effect: A client investing a lump sum in any of the abovefunds via this brochure will pay no initial charge.

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14

For those investors not in need of an immediate income we recommend a portfolio based on an internationally diversifi ed selection of unit trusts/OEICs.

Over the years we have maintained a consistent stance on the most effective approach for clients who are investing for capital growth. For growth investors the key elements of diversifi cation and patience are as valid today as they were ten, twenty and thirty years ago. It will doubtless be the same in the years and decades ahead. To obtain a truly international spread, investors should invest in different geographical markets (such as Europe, Asia and emerging markets).

Whilst we continue to recommend funds with exposure to emerging markets we would caution that these funds are traditionally more volatile than the established markets of the Western World. Nevertheless, we believe that experiencing periods of extreme volatility is a price worth paying in return for better long-term returns.

All statistics are quoted ‘bid to bid’, or its OEIC equivalent (in both cases with net dividends reinvested) to 30th June 2013. Past performance is not necessarily a guide to future performance and may not be repeated.

The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fl uctuations and you may not get back the original amount invested. Some of the funds listed above invest in emerging markets or Pacifi c Rim economies. These investments are more volatile and as such they expose the investor to greater risks than mature markets such as the UK. These risks include currency movements and exchange control restrictions, as well as political and economic instability in the countries concerned. In addition, under certain circumstances investors may suffer if the underlying investments become illiquid, or experience other problems due to the underdeveloped nature of the securities markets in some emerging countries.

The Growth Portfolio

Fund


2013 2012 2011 2010 2009

Aberdeen Asia Pacifi c 11.3 (-3.7) 16.1 42.6 (-1.2)

Artemis UK Growth 28.5 (-4.6) 31.2 17.1 (-20.2)

AXA Framlington American Growth 13.4 5.4 25.6 24.5 (-9.3)

Henderson European Special Situations 34.5 (-14.9) 31.6 - -

JPM Emerging Markets 8.5 (-12.8) 15.8 35.3 (-10.7)

Rathbone Global Opportunities 19.5 (-4.4) 27.5 22.7 (-26.4)

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15The Growth Portfolio...

■ Aberdeen Asia Pacifi c Date of Inception Managers: Asian Equities Team April 2006


The management team of this fund continues to seek to identify good quality companies that are expanding and have the capacity to deal with that expansion, and lean toward companies who generate signifi cant levels of cash and spend it wisely. Geographically 70% is held within fi ve Far East stock markets: Hong Kong, Singapore, India, Australia and Taiwan.

■ Artemis UK Growth Date of Inception Manager: Tim Steer April 1998


Having taken over the management of this fund in July 2009, Tim Steer has stamped his authority on the fund and produced an impressive performance record putting the fund amongst the top performers in its sector. Currently favouring companies that have most of their activities outside of the UK and Europe.

■ AXA Framlington American Growth Date of Inception Manager: Stephen Kelly December 1992


This fund has been managed by Stephen Kelly since 1997. It has a bias towards mid-small sized companies although the manager does not invest in any company below US$5bn in size. With economic data suggesting the United States are the fi rst developed country to emerge from the recent malaise in economic activity this fund looks ideally placed to participate in any future growth.

■ Henderson European Special Situations Date of Inception Managers: Richard Pease October 2009


Managed by one of the most consistent managers in Europe, Richard Pease, this fund offers investors exposure to a concentrated portfolio with an emphasis on mid-small sized companies. While Europe is currently going through a sovereign debt crisis the manager believes that there are many European companies with dominant global businesses which offer some degree of protection should the economy worsen whilst permitting participation in any upside.

■ JPM Emerging Markets Date of Inception Manager: Leon Eidelman & Austin Forey February 1994


This fund has an impressive performance record and the manager believes this is a refl ection of the long running, proven investment process specifi cally designed for emerging markets and the continuity of having the same portfolio manager in place since inception.

■ Rathbone Global Opportunities Date of Inception Manager: James Thomson May 2001


Managed by James Thomson since November 2003 this fund offers investors an aggressively managed global portfolio of predominately mid-small sized companies, primarily selected for their growth prospects. The fund is fairly concentrated and usually comprises between 50 and 60 stocks.


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16

In the investment arena, as in any other walk of life, some people are more successful than others. Why not, therefore, invest with fund managers whose long-term performance record is better than most?

There are many approaches to fund management, but the ‘star managers’ concept differs radically from all others. Backing so-called ‘star managers’ is a worthwhile investment strategy providing you are completely mindful of the limitations of the concept. The most noteworthy of these is that such managers usually have concentrated portfolios, i.e. only a small number of holdings, typically in the region of only 30-35 shares compared to a more traditional unit trust which would typically have over 70 shares within the portfolio. For the purist there is a compensating disadvantage to following this investment approach. By investing most or all of their savings in concentrated holdings investors lose the opportunity for risk reduction which a diversifi ed spread traditionally confers. Anyone who follows a narrow approach, therefore, is likely to be motivated primarily by a sense of adventure rather than the orthodox one of portfolio discipline.

Where funds have less than a fi ve year record the periods quoted are those in respect of complete calendar years only. All statistics are quoted ‘bid to bid’, or its OEIC equivalent (with net dividends reinvested) to 30th June 2013. Past performance is not necessarily a guide to future performance and may not be repeated. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fl uctuations and you may not get back the original amount invested. Some of the funds listed above invest in emerging markets or Pacifi c Rim economies. These investments are more volatile and as such they expose the investor to greater risks than mature markets such as the UK. These risks include currency movements and exchange control restrictions, as well as political and economic instability in the countries concerned. In addition, under certain circumstances investors may suffer if the underlying investments become illiquid, or experience other problems due to the underdeveloped nature of the securities markets in some emerging countries. Where funds invest in relatively few individual assets the performance of the fund is signifi cantly infl uenced by a small number of companies. Where fund managers use derivatives this may increase the funds volatility and may restrict growth in a rising market.

Companies in the infrastructure sector (utilities, transportation and energy industries) are subject to a variety of factors which may adversely affect their business or operations. Adverse developments within these industries may affect the value of the underlying securities of the Fund. Companies involved in these industries are subject to environmental considerations, taxes, government regulation, price and supply considerations and competition.

Fund


2013 2012 2011 2010 2009

Artemis Strategic Assets 21.9 (-6.0) 13.4 20.9 -

CF Miton Special Situations Portfolio 4.5 1.8 3.2 10.6 9.0

Fidelity South-East Asia 10.6 (-14.0) 23.6 35.3 3.9

First State Global Listed Infrastructure 16.0 (-0.6) 21.9 20.6 (-12.7)

Marlborough Special Situations 24.1 3.9 48.7 25.6 (-17.0)

Schroder Asian Alpha Plus 15.3 (-3.3) 25 40.5 0.3

The Star Managers’ Portfolio

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17The Star Managers’ Portfolio...

■ Artemis Strategic Assets Date of Inception Manager: William Littlewood May 2009


In the 1990’s William Littlewood successfully managed the Jupiter Income fund for nine years. The Strategic Assets fund is a highly fl exible structure which allows him to harness his experience as both a successful long only manager and as a hedge manager. The fund will take a multi-asset approach with the intention to perform well when markets are favourable, and preserve capital when markets are poor.

■ CF Miton Special Situations Portfolio Date of Inception Manager: Martin Gray December 1997


Managed with the aim of delivering positive returns over the long term this fund of funds invests in equities, bonds, cash and alternative assets classes. The manager Martin Gray (rated by the Daily Telegraph as one of its top ten managers of the decade) has been the lead manager since launch. This is a multi-asset fund and may hold signifi cant cash positions as part of its defensive core.

■ Fidelity South-East Asia Date of Inception Manager: Allan Liu (Teera Chanpongsang) October 1984


Fidelity has confi rmed that Allan Liu will be stepping down as manager of the South East Fund. From January 1st 2014 Teera Chanpongsang will manage the fund, Teera brings 19 years’ of Asian investment experience, a proven investment approach and an outstanding track record. We have recently met both managers and although Teera will reduce the number of holdings within the fund his style is very similar to Allan’s and we believe the fund should continue to outperform its peers.

■ First State Global Listed Infrastructure Date of Inception Manager: Peter Meany October 2007


This fund aims to deliver strong capital growth and infl ation protected income by investing in essential services – like roads, railways and ports that form the backbone of any recovering economy. Despite being launched during a period of economic turmoil the fund has built an impressive track record over the past fi ve years.

■ Marlborough Special Situations Date of Inception Manager: Giles Hargreave July 1995


This fund aims to provide capital growth by following a speculative policy of investing in smaller companies, new issues and companies going through a diffi cult period with good recovery prospects. The fund, managed by Giles Hargreave, is not keen on taking big bets within the portfolio, instead the manager prefers to hold a large selection of shares to reduce the risk and volatility within the fund.

■ Schroder Asian Alpha Plus Date of Inception Manager: Matthew Dobbs November 2007


The fund offers exposure to a diversifi ed portfolio of companies listed or operating in the Asia Pacifi c region (excluding Japan), run by experienced portfolio manager Matthew Dobbs. His approach is pragmatic – valuation is crucial in the long term. The fund may also invest in collective investment schemes, cash, deposits, derivatives, warrants and money market instruments.


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18

Q. Can I invest online?

Yes, (see pages 19 and 20). Please note, a debit card in your own name (not credit card) will be requiredto invest online.

Q. What is the difference between Income (Inc) and Accumulation (Acc) units?

Income (Inc) units pay out income in the form of dividends/interest and therefore are more suited to people who wish to invest in order to generate a stream of income.

Of course, it is possible to hold income units and reinvest the dividends if you do not immediately need the income.

Accumulation (Acc) units do not pay out any income (income generated by the investment will be retained within the fund) and are more suited for investors who are primarily seeking capital growth.

Q. What is an OEIC?

An OEIC is an Open Ended Investment Company. First made available in 1997, they were introduced as a more fl exible alternative to established unit trusts.

Q. Who do I make the cheque payable to?

Cheques should be made payable to either ‘Cofunds Ltd’ or ‘Fidelity’ as appropriate.

Personal cheques must be drawn either on your own bank account or one held jointly with your partner. Cheques issued by building societies or internet banks must identify your name on the cheque itself. Please telephone us if you are unsure of the correct procedure. Investors contemplating other forms of payment are advised to contact us fi rst.

NB. Any cheque alterations must have a full signature against them, not just initials.

Q. Where do I post my application?

Please post your application form and cheque to: Individual Savings Accounts Ltd, 16 High Street,Kegworth, Derby, DE74 2DA.

Q. Can I invest monthly?

For anyone investing on a monthly basis a direct debit mandate must be completed. A cheque for the fi rst month’s payment should also accompany the application, this cheque must be drawn in the applicant’s name and from the same account shown on the direct debit mandate.

Q. Who do I contact if I have any queries?

We can be contacted on 01509 670918 or via e-mail at [email protected]

Q. Do I need to include any identifi cation (anti-money laundering) documents?

No. As authorised agents we are required to take additional steps to assist in verifying the identity and place of residence of each investor. In some circumstances we may need to request additional evidence from you, especially if you have moved house during the last two years. Whilst we cannot accept responsibility for delays arising from these new procedures, we will endeavour to assist if requested. Anti-money laundering vetting procedures will not usually result in a delay in the allocation of your investment.

Frequently Asked Questions

19

www.isa-ltd.co.uk

You can also invest online and benefi t from our discount and terms by going to www.isa-ltd.co.uk. Select the Invest Now page and confi rm that you have read the Promoter’s Notice, Terms & Conditions and Key information. To proceed select the fund platform, Cofunds, where you want to open your ISA account for the current tax year.

1. Select “New Customer? Buy funds and open a Cofunds portfolio”.

2. Enter your details e.g. name, date of birth and National Insurance Number and home address.

3. Select next > for Product & Fund Details. Now select the product you wish to invest in (i.e. Cofunds Investment ISA) from the drop down list, followed by the Fund Manager and Fund.

4. Click “add fund” and if required repeat for any additional funds you require.

5. Add in the amount you wish to invest or indicate the percentage % you want to allocate to each fund, ensuring the total is 100%.

6. Now download or print the relevant documents and tick the box to confi rm you have read them.

7. Select next > for Payment details. In this section you need to: 1. Provide payment details for income funds. 2a. Select re-invest or payaway income (income funds only). 2b. Select Cofunds Cash account or Consolidated monthly income. 3. Provide your bank details for income payments.

8. Select next > for Legal Information. Carefully read the declaration and tick the box to acceptand confi rm the information provided.

9. Select next > for Summary. This section is a summary of the personal and investmentinformation you have provided. PLEASE double check this is correct and then:

10. Select next > for Debit Card Payment details. Select your payment method and provideyour debit card details.

11. Check before clicking on submit to complete your application.

12. Wait for a confi rmation, this may take 30 seconds...

13. DO NOT click again or try to re-submit!

Please be aware that in order to invest online you will require a debit card (not credit card). All online applications and paper based applications will receive the same levels of discount.

Online Investing (Cofunds)

Cofunds online Investor Service

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20

You can invest online by going to our website www.isa-ltd.co.uk. To proceed click on the icon of your selected supermarket and confi rm you have read our terms and conditions (a copy is available on the website).

1. If you are new to FundsNetwork click on “Open an ISA” under the heading “New Customer”.Then select “Register & Buy”.

2. Select lump sum or monthly savings plan.

3. Check adviser ID is set to 1046381 to obtain discount. Click inside ID box then outside. Select “No” to personal recommendation.

4. Click Continue > to choose funds.

5. Type the fund name in the Search for fund box and use the < and > at the bottom of the drop down box to scroll through the funds. Click “Add Fund” next to the search bar and enter the amount to invest.

6. Repeat the fund search as required until all your funds have been added successfully:

7. Click Continue > to check your selected funds.

8. In order to proceed you need to save or print the “Key Features Document, and Terms” andthe “Key Investor Information Document”. Select the tick box(es) to confi rm and also tomake the “ISA Declaration”.

9. Click Continue > to provide personal details.

10. Click Continue > to enter payment details.

11. Select payment method to see further instructions.

12. Read the information notes carefully before entering your debit card details. Please note credit cards are not accepted.

13. Click Continue > to register your security details. Choose an easy to remember PIN number and password, and answer the security questions.

14. Click Continue > to see the Submit screen.

15. Check the details shown and read the instructions before clicking Submit.

16. You may be asked for additional verifi cation of your debit card before seeing the confi rmation.

17. Print the confi rmation screen containing the reference number.

Please be aware that in order to invest online you will require a debit card (not credit card). All online applications and paper based applications will receive the same levels of discount.

Online Investing (FundsNetwork)

www.isa-ltd.co.uk

21Portfolio Options

Cofunds Investors Only

By selecting to invest in any of the portfolios on this page your ISA investment will be split equally across the corresponding six funds.

Please note the minimum investment is £3,000 lump sum or £300 per month into any of the portfolios.

If you are only investing in one fund then the minimum lump sum investment is £1,000 or £50 per month per fund.

DISCOUNT EFFECT

A client investing a lump sum in any of the portfolios on this page will pay no initial charge. This discount equates to the following savings (based on a £11,520 ISA investment split equally across the six funds):

Saving

Equity Income Portfolio £513

Growth Portfolio £446

Star Managers’ Portfolio £499

Important Information

The portfolios described on these pages are not managed for you. It will be your responsibility if you wish to switch or sell any particular fund.

ISA Ltd select the funds for these portfolios but it is up to you to decide whether the selection will suit your investment requirements. Returns cannot be guaranteed and your attention is drawn to the promoter’s notice on page 34. Discounts are subject to receipt of commission and may be subject to change if commission levels are altered.

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22

Lump Sum and Monthly Investors (Cofunds)

Cofunds Application Form Pages 23-24

This form allows you to invest both lump sums and monthly investments in the 2013/14 tax year. The form covers all three portfolios detailed in this publication and allows you to select your own funds.

Lump Sum and Monthly Investors (FundsNetwork)

FundsNetwork Application Form: Equity Income Portfolio Pages 25-26

FundsNetwork Application Form: Growth Portfolio Pages 27-28

FundsNetwork Application Form: Star Managers’ Portfolio Pages 29-30

FundsNetwork Income Form Pages 31-32

FundsNetwork Direct Debit Form Page 33

FundsNetwork Application Form: Self-Select Pages 35-36

These forms allow you to invest in the 2013/14 tax year.

Monthly Investors

For anyone investing on a monthly basis a direct debit mandate should be completed (‘Investment by Direct Debit’ on the application form for Cofunds, and the separate direct debit form (page 33) for FundsNetwork).

Important notice for monthly savers: A cheque for the fi rst month’s payment must accompany the application form; this cheque must be drawn in the applicant’s name and from the same account as shown on the direct debit mandate.

Pick Your Own ISA

Clients who wish to construct their own portfolio from the full list of options which the fund supermarkets offer can either invest online (www.isa-ltd.co.uk) or contact us for the necessary forms on 01509 670918 or [email protected].

Completing Your Application Form

Prior to posting your application form to ourselves, have you:

1. Provided your National Insurance Number?

2. Supplied your date of birth?

3. Completed the Direct Debit mandate and included a cheque for the fi rst month’s payment?

(Applicable to monthly savings only.)

4. Signed and dated the application?

5. Included your Bank/Building Society details (this is for income and redemption payments)?

6. Enclosed your personal cheque payable to either ‘Cofunds Ltd’ or ‘Fidelity’?

Application Form Checklist

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23

All opinions expressed are those of Individual Savings Accounts Limited (the promoters and publishers of this booklet).

Remuneration Declaration

In our capacity as non-advised brokers we are entitled to receive commissions on investments entered into through this publication. However, in line with our usual practice we have waived all initial commissions on investments made via this promotion. This enables you to receive a discount on each fund purchased.

We are also entitled to receive the standard annual commission (typically 0.5%) on the ongoing value of each of the funds quoted in this publication. This is paid out of the annual management charge of the unit trust/OEIC, and does not therefore constitute an extra charge to you the investor. If you elect to make an investment via either Cofunds or Fidelity FundsNetwork, our sole remuneration will, therefore, be a maximum of 0.5% p.a. For example if your fund is worth £5,760, we would receive £28.80 per annum. If it is worth £11,520 we would receive £57.60 per annum. Discounts are subject to receipt of commission and may be subject to change if commission levels are altered.

Restrictions and Regulations

The information contained in this publication is intended to enable investors to make their own decisions. If you require further information in respect of any of the products mentioned then please telephone us. Please be aware, however, that we cannot offer personal advice and if you are uncertain as to the suitability of any product offered, it may be advisable for you to obtain independent advice (elsewhere) on a ‘face to face’ basis. Cancellation rights are not applicable to applications made via this promotion. Individual Savings Accounts are long-term investments, and if you withdraw your investment in the early years you may suffer a loss. The value of shares, and the income from them, may fl uctuate or fall. Past performance is not necessarily a guide to the future. The value of any tax relief conferred by ISAs is dependant on the investor’s tax position. Levels, bases of, and relief from taxation are all subject to legislative change. The 10% dividend tax credit ceased to be available in April 2004 (but not the freedom from taxation on capital gains or gross interest). Yields are variable and neither capital values nor income are guaranteed. This publication has been issued by Individual Savings Accounts Limited. Our FSA authorisation references are 125686 and 188474.

Where investment management companies have, in recent years, adopted the OEIC system, any long-term performance statistics quoted represent the unit trust return (up to the date when the funds ceased to be operated as unit trusts) and the OEIC return thereafter. Unit trust statistics are in all cases quoted in accordance with the guidelines of the FSA, and the OEIC returns are quoted to refl ect a similar position.

Group Structure and Approach

Individual Savings Accounts Limited is an ‘information and discount broker’ specialising in ISA investments. The company operates in association with The PEP Shop Limited, which pioneered the discount-marketing of PEPs in 1992. Both companies are appointed representatives of Expatriate Advisory Services Plc who are regulated by the Financial Services Authority. All companies are registered at, and operate from 16 High Street, Kegworth, Derby DE74 2DA.

Our approach is to provide information on products rather than advice to individuals. In this way we eliminate both the time and expense associated with ‘personalised’ advice. This service is governed by the direct offer advertisement rule (where clients purchase an investment which we have promoted in our literature). Alternatively, if a client requests us to arrange the execution of an investment which he himself has independently researched and selected, this is deemed to be ‘execution-only’.

Promoter’s Notice

“There are known knowns; there are things we know that we know. There are known unknowns; that is to say, there are things

that we now know we don’t know. But there are also unknown unknowns – there are things we do not know we don’t know.”

United States Secretary of Defense, Donald Rumsfeld