ASCENT FUND

MAY 2011

R E V I E W

&

O U T LOO K
MONTHLY

STATISTICS
since Jan 2006 ANNUALISED RETURN STANDARD DEVIATION DOWNSIDE DEVIATION SHARPE RATIO (vs 3%) SORTINO RATIO (vs 3%)

IVC ASCENT - MASTER FUND since inception

Jan Feb
-0.3% 0.5% 1.4% 1.2% 0.7% 2.6% 1.8% -1.2% 0.0% 0.8%

Mar
0.2% 0.0% 0.2% -0.2% 1.1% 0.6% -1.3% -0.2% 0.8% -0.3%

Apr
0.7% 0.2% -1.0% -1.5% 0.9% 1.4% -0.5% -0.5% 0.7% 0.5%

May
0.3% 0.7% -0.6% -0.1% -1.9% 1.6% 1.9% 0.3% -1.4% -0.1%

Jun
-0.2% -0.8% 0.1% 1.3% -0.7% 0.5% 1.0% 1.0% -0.7%

Jul
-1.0% -0.4% -0.6% 1.3% 1.3% 1.9% -1.2% 0.7% 0.5%

Aug
0.2% -0.6% -0.3% 0.2% 0.8% -2.4% -0.3% 1.1% 0.1%

Sep
0.8% 0.4% 0.9% 0.5% -0.1% 0.9% -0.8% 0.7% 1.1%

Oct
-0.2% 1.2% 0.3% -1.5% 1.6% 2.9% 2.1% -0.7% 1.7%

Nov
-0.1% -0.6% 0.6% 2.5% 0.7% 1.3% -0.9% 2.2% 0.6% -0.2%

Dec
0.5% 0.3% 1.1% 1.4% 0.8% 1.7% 0.0% 0.4% 0.4% 0.8%

YTD 0.4% 0.3% 3.5% 5.8% 2.4% 9.2% 11.3% 4.17% 4.24% 3.17% 1.64%

6.5% 3.9% 2.0% 0.9 1.7

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0.0% 0.6% 1.4% -0.2% 2.2% 1.7% -1.3% 1.9% -0.2% 0.6%

PORTFOLIO THIS MONTH

Best Month Blue, Worst Month Red, Max Peak/Trough Drawdown Orange

ytd est. as of 10th May

IVC Ascent gained 0.53% in April. As of the end The US Dollar fell during April as US rate expecof April, IVC Ascent was up 1.65% for the year. tatins (lower for longer) dominated the market. This drove commodities higher, and also IVC Ascent invests primarily in funds on the helped the US treasury bond market. The dual Lyxor managed account platform, a division of rally of commodities and bonds played strongly Socit Gnrale. The best performing funds in to Bridgewaters macro positioning. However, the IVC Ascent portfolio during April were the sharp reversals in May will be a severe test. Bridgewater (Global Macro) +4.5%; Paulson Bridgewaters continued bullishness on US International (Event Driven & Risk Arb) +2.8%; treasuries should help (a view strongly opposed Ellington (Fixed Income Arb) +2.2%; and Sabre by Pimco - see next page). Thus far treasuries Style Arbitrage (L/S Equity) +1.4%. have rallied across both April and May, unaffected by the speculative gyrations in the volatile The main detractors in the portfolio were Apollo commodities markets. (Event Driven & Risk Arb) -0.9%; Lazard Rathmore (CB & Volatility Arb) -0.4%; and Paul- Many of our managers expect the economic son Advantage (Event Driven & Risk Arb) -0.3%. environment to remain choppy. They are generally positioned defensively and have been Old Mutual Global Statistical Arbitrage is being taking risk levels down. However, with the clasbrought back into the portfolio from May, as sic panic months of August, September and explained below. October rapidly approaching, any resulting increase in equity volatility should benefit statistical arbitrage specialists such as Old Mutual, who

are being brought back into the Ascent portfolio for this reason. The VIX index hit a low of 14.6% at the end of April, and has risen slightly but not dramatically, to currently stand at 17.6%. This seems somewhat low given the growing uncertainties of the US recovery. Earnings though have been robust, showing no signs of panic in the Q2 reporting season, with approximately three out of every four companies beating expectations. The Ascent portfolio also has significant exposure to M&A specialists. With deal flow improving (April saw 2,116 deals totalling $210bn) the takeover environment is improving steadily. Though deal spreads remain tight, the increased flow will certainly help. Nevertheless our managers are still cautious and making only judicious trades. Competitive topping bids can lead to considerably higher returns and analysing which deals are likely to attract better offers is a key focus at present.

PERFORMANCE vs Benchmark
55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
07-03 08-03 09-03 10-03 11-03 12-03 01-04 02-04 03-04 04-04 05-04 06-04 07-04 08-04 09-04 10-04 11-04 12-04 01-05 02-05 03-05 04-05 05-05 06-05 07-05 08-05 09-05 10-05 11-05 12-05 01-06 02-06 03-06 04-06 05-06 06-06 07-06 08-06 09-06 10-06 11-06 12-06 01-07 02-07 03-07 04-07 05-07 06-07 07-07 08-07 09-07 10-07 11-07 12-07 01-08 02-08 03-08 04-08 05-08 06-08 07-08 08-08 09-08 10-08 11-08 12-08 01-09 02-09 03-09 04-09 05-09 06-09 07-09 08-09 09-09 10-09 11-09 12-09 01-10 02-10 03-10 04-10 05-10 06-10 07-10 08-10 09-10 10-10 11-10 12-10 01-11 02-11 03-11 04-11

STATISTICS
55%

since inception
BEST MONTH
(OCT07)

IVC Ascent Fund (Net) USD 1 mth Libor + 300bp HFR Investible Hedge Fund Index

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5%

2.9% -2.4% 3.5% 16.8% 0.2% -2.6% 6 mths

WORST MONTH (AUG07) LAST 12 MTHS BEST 12 MTHS

(AUG06-JUL07)

WORST 12 MTHS
(OCT02SEP03) MAX DRAWDOWN (MAYJUN06)

-5%

RECOVERY TIME
(MAYOCT06)

IV Capital Limited, 86 Brook Street, London W1K 5AY Tel: 44 (0) 207 016 1600 Fax: 44 (0) 207 016 1601 Authorised and Regulated by the Financial Services Authority

ASCENT FUND

MAY 2011

R E V I E W
MONTHLY

&

O U T LOO K

SECTOR WEIGHTS Current

FI & Credit 15% Event 36%

GLOBAL REVIEW & OUTLOOK

IVC Ascent, a multi-manager fund-of-hedge-funds, was launched in November 2001. The fund has enjoyed remarkable consistency since inception, with no rolling 12 month negative return nor any peak-to-trough drawdown exceeding 2.6%. IVC Ascent has a rolling compound return of 6% per annum over the last five years and uses the Lyxor institutional managed account platform.

Cash Cash Canyon, Lazard, Mohican, Convertibles Quest Bridgewater, GAM Macro

Equity Variable 9%

Cash 6%

Macro 12%

Convertibles 22%

SECTOR WEIGHTS Historic

Diversification failed spectacularly for most funds-of-funds during 2008. The alternative asset management industry mis-understood Event the underlying linkage between strategies that appeared diverse Andromeda, Pramerica, FI & Credit on the surface but were largely driven by hedge funds dependent Observatory, Ellington on leverage from banks. IVCs focus on return drivers and the conBlackrock, Sabre Equity Variable hunt for cheap volatility to protect our downside allowed tinual Ascent to sidestep the 2008 fiasco with a gain of 4.2%, placing the fund in the top 1% of the multi-strategy universe over 5 years.
Apollo, Carlson, Canyon, Havens, Paulson

Understanding macro drivers is central to our approach. Although most fund managers pay lip service to this, IVC focus on macro self -consistency. This does not mean we claim to be able to predict the future more accurately. Rather, it means we seek to understand the contradictions that exist in the markets and to identify how such contradictions could eventually resolve. For example, a contradiction in force today is German economic growth while peripheral Europe teeters on the brink of default. Rate rises in response to German economic strength will cause Greece, Portugal and Ireland to require restructuring or re-profiling but this is well understood by the markets. We believe the real problem could be Spain, el gordo. Rising interest rates could be disastrous for Spain due to the property and banking crisis that lurks within. Spain needs rates at zero, like the US, UK and Japan, but this is not yet understood by the ECB. German growth could be very bad news for Spain. IVC will be ready.
RMF PARADIGM Tradex Swiss Optimal Lemania Stenham Opus JF Stenham Lyxor Liongate Crown Key Eddington Muirfield Coronation Schroder Unicorn Thames SGAM Lyster Essex Signet Gems Old Selectinvest Millennium Integrated Momentum Opus Thames RMB 3A Selectinvest Antarctica Optimal Aurora SGAM ART Montier Permal Plenum Ivy Optima SAIL Ivy La Fayette HSBC Momentum Wimbledon Dinvest Austin Aurora DGC Mellon Leveraged Edison Hamilton QSAM Lemania Gottex Optima Penjing Semper 3A ABN LODH Asian BoE RMF Basso Lemania Vesta Signature Sanlam Gottex Leeds Nedgroup

CHART
OF THE MONTH This month we highlight the fact that IVC Ascent ranks #1 for the lowest drawdown in the multi-strategy fund-offunds universe since 2006 (approx. 400 fundssource Bloomberg). Our maximum peak/trough drawdown is 2.6%. NB. many funds either closed or stopped reporting during this period.
Maximum Drawdown since 2006

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Source: Bloomberg & IVC

IVC

IVC Maximum Drawdown = 2.6% since inception

This document is not intended to be an offer or a solicitation of an offer, to buy or sell relevant securities. The information and opinions contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. No representation or warranty, express or implied, is made by IV Capital Limited as to the accuracy and completeness of the information contained herein. Past performance is no guarantee of future returns. All opinions expressed here are subject to change without notice. This