UK Equity Growth Fund Quarterly eport R Summer 2021 Contents

Note from Managers 3

The Economic & Market Background 4

Stock Overview 5

Asset Attribution 7

UK Equity Growth Fund Quarterly eport R Summer 2021 Note from Managers

Whilst the main Q2 Asset Attribution Review domestic market The second quarter of the year started with a bang and the Spring reporting season remained quiet that full of strong company results. did not mean there However, the latter two months of the quarter were remarkably dull as the FTSE 100 stayed range-bound in and around 7000 points. In contrast, the S&P 500 and DAX in was little to no action Germany continued making all-time highs over the quarter. in the portfolio. Nevertheless, whilst the main domestic market remained quiet that did not mean there was little to no action in the portfolio.

Our Industrials have performed strongly over the quarter; in particular, Diploma, Halma and Spirax-Sarco Engineering. These UK listed names are all global leaders in their fields. Diploma and Spirax-Sarco were especially helped by the fact they operate across sectors, and are in the sweet spot of industrial recuperation as the economy recovers and ongoing healthcare demand.

Similarly enjoying these tailwinds, Halma boosted its dividend as it reported full-year profit growth, even though revenue edged down over the financial year.

In May, resumed their share buyback as recovery for the global drinks manufacturer gathers pace. The Guinness brewer and Johnnie Walker distiller saw good recovery across all regions, particularly in North America, whilst off-trade sales in Europe remained robust. With the business’s pricing power and customer/brand loyalty, Diageo should continue to outperform as the world gradually returns to ‘normality’. Roche, one of our international holdings, had a very strong quarter, with share price performance up 15% over the quarter on the back of strong phase III trial data for a drug combatting Alzheimer’s disease.

We added two new positions in June. One of the lagging sectors in the UK over the second quarter has been Technology and we took this opportunity to initiate a position in Kainos. Kainos is a leading, up-and-coming UK technology business, focusing on providing digital services to much of the UK government agencies and NHS. If you have recently renewed your passport or driving licence, you will have done so via Kainos developed and powered systems.

Secondly, we initiated a new position in Genus, a London listed mid-cap business focusing on animal genetics. Genus offers its customers access to best-in-class genetic Fred Mahon winners, e.g. the highest yielding pigs and cows for farmers across the world. Genus was Fund Manager founded pre-WWII by the Milk Marketing Board, but was spun out in 1994. It is unique as the only truly scalable animal genetics business in the world, with most of its rivals much more home market focussed and lacking Genus’s R&D capacity.

We funded these acquisitions by selling our holding in Clinigen. Clinigen had performed exceptionally well for the fund in its five year stint in the portfolio. However, we sold the holding as the stock hit our target price, aiming to diversify into a more specialised animal healthcare (Genus) to complement our other remaining healthcare names Rory Campbell- (Roche, AstraZeneca, Smith & Nephew and Dechra). Lamerton Fund Manager

Quarterly Report | Summer 2021 3 The Economic & Market Background

UK sector returns Q2/21

20

15

10

5

0

-5

-10 7 Apr 21 2 Jun 21 9 Jun 21 5 May 21 14 Apr 21 14 16 Jun 21 16 21 Apr 21 28 Apr 21 23 Jun 21 30 Jun 21 31 Mar31 21 12 May 21 12 19 May 21 19 26 May 21

Energy Consumer discretionery Financials Industrials Utilities Consumer staples Healthcare Source: Berenberg

UK sector relative returns Q2/21 (%)

20

15

10

5

0

-5 Energy Utilities Staples Financials Consumer Consumer Industrials Healthcare Discretionary

Source: Berenberg

Quarterly Report | Summer 2021 4 Stock Overview Q2 Performance

CHUK Performance vs FTSE 350

9%

8%

7%

6%

5%

4%

3%

2% CHUK 1% FTSE 350 0%

-1% April May June

Source: Bloomberg

Q2 Attribution Analysis

£

Asset Allocation Stock Selection Currency Total Attribution 0.34% 2.61%£ 0.12% 2.84%

£

Quarterly Report | Summer 2021 5

£ Stock Overview | Q2 Performance

Top 5 Bottom 5 Contributors to Return Contributors to Return

Contribution Average CHUK Contribution Average CHUK to Return Weighting to Return Weighting

1 Diploma +0.67% 4.85% 1 Trainline -0.79% 1.79%

Spirax-Sarco +0.65% 3.36% Shaftesbury -0.18% 1.54% 2 Engineering 2

3 Diageo +0.63% 4.19% 3 -0.15% 1.77%

4 Roche +0.54% 3.42% 4 Judges Scientific -0.14% 1.58%

Melrose Halma +0.52% 4.02% -0.12% 1.87% 5 5 Industries

Diploma continued its presence in top 5 best Trainline had a turbulent quarter as investors contributors to return for the fund. The business jumped to the worst possible conclusions from delivered promising half-year results in May and we the Williams-Shapps rail review published in May. had an encouraging meeting with management. The This stated that Great British Railways would create business is enjoying being in a sweet-spot of ongoing its own mobile and online ticketing platform, clearly a Healthcare demand and increasing recovery in the threat to Trainline. We feel that the market overreacted Industrials sector. Their big acquisition of Windy City to the news and, in fact, added to our investment on Wiring is going well so far and management are now weakness. We are sceptical that the Government (or guiding for revenue to be +40% in 2021. quasi Government) will be able to replicate a platform of Trainline’s quality (just look at how expensive and Also operating across the themes of industrial recovery tricky Track and Trace has been) and it might even and increasing healthcare demand is Spirax-Sarco be that Trainline is called upon to white-label their Engineering. The steam and peristaltic pump offering to GBR. We believe that Trainline’s technology, engineer raised their 2021 forecasts after a better than experience and platform are all valuable and that this expected performance in the start of their financial is being overlooked at present. year. Global industrial production was better than management had predicted as economies recovered Shares in West End landlord Shaftesbury remain faster than expected. Similarly enjoying these tailwinds, depressed, surprisingly in our opinion as footfall in Halma boosted its dividend as it reported full-year profit their estates is clearly improving and consumer growth, even though revenue edged down over the demand is healthy. A return of overseas tourists will financial year. be the next step to really kick-start trading as and when this is allowed. Barclays shares have come In May, Diageo resumed their share buyback as back somewhat after rallying strongly in Q1, despite recovery for the global drinks manufacturer gathers encouraging recent trading. pace. The Guinness brewer and Johnnie Walker distiller saw good recovery across all regions, in Shares in Judges Scientific and Melrose both also particular in North America, whilst off-trade sales in retrenched somewhat after running-up into the end Europe remained robust. With the business’s pricing on 2020. Long-term, our investment case for both power and customer/brand loyalty, Diageo should businesses remains unchanged and we are confident continue to outperform as the world gradually returns that shares will retain momentum in time. to ‘normality’. Roche, one of our international holdings, had a very strong quarter, with shares up 15% over the quarter on the back of strong phase III trial data for a drug combatting Alzheimer’s disease.

Source: Bloomberg

Quarterly Report | Summer 2021 6 Asset Attribution Q2 Performance

Attribution Summary

Total attribution CHUK: 2.84%

Industrials 0.22 Financials 0.52 Consumer Staples 1.06 Health Care 0.24 Consumer Discretionary -0.22 Information Technology 0.72 Materials 0.31 Communication Services 0.41 Real Estate -0.32 Not Classified -0.06 Energy 0.01 Utilities -0.06

-0.5% -0.25% 0% 0.25% 0.5% 0.75% 1.0% 1.25%

Source: Bloomberg

Average Total Contribution Allocation Selection Currency Tot Weight Return to Return Effect Effect Effect Attr (% ) (%) (%) (%) (%) (%) (%) Port Bench +/- Port Bench +/- Port Bench +/- CHUK 100.00 100.00 0.00 8.33 5.49 2.84 8.33 5.49 2.84 0.34 2.61 0.12 2.84

Industrials 19.70 11.98 7.72 7.74 7.35 0.39 1.55 0.88 0.67 0.15 0.06 0.00 0.22

Financials 17.87 16.80 1.07 3.66 0.49 3.17 0.67 0.12 0.55 -0.07 0.50 0.04 0.52 Consumer Staples 15.33 15.44 -0.11 12.93 5.86 7.07 1.92 0.90 1.03 0.02 1.04 0.02 1.06

Health Care 13.58 8.94 4.64 14.83 16.55 -1.71 1.93 1.41 0.53 0.48 -0.19 0.06 0.24 Consumer Discretionary 12.18 9.63 2.54 -0.75 -0.17 -0.58 -0.07 -0.01 -0.06 -0.15 -0.02 0.00 -0.22 Information Technology 9.27 1.91 7.36 13.29 5.57 7.72 1.21 0.11 1.10 0.01 0.15 0.00 0.72 Materials 4.40 12.29 -7.89 13.87 5.82 8.05 0.59 0.71 -0.12 -0.02 0.94 0.00 0.31 Communication Services 3.43 4.42 -0.99 16.89 5.26 11.63 0.57 0.23 0.34 0.00 0.52 0.00 0.41 Real Estate 2.71 2.65 0.06 -4.57 6.66 -11.23 -0.12 0.17 -0.30 0.00 -0.31 0.00 -0.32 Not Classified 1.54 4.99 -3.45 4.69 6.34 -1.65 0.07 0.32 -0.25 -0.03 -0.07 0.00 -0.06 Energy 0.00 7.61 -7.61 5.31 -5.31 0.41 -0.41 0.01 0.00 0.00 0.01 Utilities 0.00 3.34 -3.34 7.43 -7.43 0.25 -0.25 -0.06 0.00 0.00 -0.06

Quarterly Report | Summer 2021 7 Asset Attribution | Q2 Performance

Top 20 Contribution to Return

Diploma Plc 0.67 Spirax-Sarco Engineering Plc 0.65 Diageo Plc 0.63 Roche Holding Ag-Genusschein 0.54 Halma Plc 0.52 Dechra Pharmaceuticals Plc 0.51 Plc 0.49 Smith & Nephew Plc 0.46 Investor Ab-B SHS 0.44 Greggs Plc 0.43 Astrazeneca Plc 0.43 Fevertree Drinks Plc 0.38 Microsoft Corp 0.37 Alphabet Inc-cl A 0.33 Relx Plc 0.33 London Stock Exchange Group 0.28 Heineken NV 0.27 Plc 0.26 L’Oreal 0.25 Plc 0.05

1.0% -0.75% -0.5% -0.25% 0% 0.25% 0.5% 0.75% 1.0%

Source: Bloomberg

Bottom 20 Contribution to Return

Derwent London Plc 0.05 0.05 Integrafin Holdings Plc 0.03 Clinigen Group Plc 0.02 Plc 0.01 Craneware Plc 0.01 Kainos Group Plc 0.00 Odyssean Investment Trust Pl 0.00 British Pound 0.00 Bioventix Plc -0.02 Close Brothers Group Plc -0.03 Beazley Plc -0.06 Intercontinental Hotels Group -0.07 Arix Bioscience Plc -0.09 RWS Holdings Plc -0.10 Plc -0.12 Judges Scientific Plc -0.14 Barclays Plc -0.15 Shaftesbury Plc -0.18 Trainline Plc -0.79

-1.0% -0.75% -0.5% -0.25% 0% 0.25% 0.5% 0.75% 1.0%

Source: Bloomberg

Quarterly Report | Summer 2021 8 Asset Attribution | Q2 Performance

Portfolio Allocation

Real Estate 2.52 Not Classified 1.57 Communication Services 3.75 Industrials 19.40

Materials 4.47

Information Technology 9.89

Financial Consumer Discretionary 17.6 3 12.08

Consumer Staples 15.12 Health Care 13.57

Source: Bloomberg

Sector Port Bench +/- Top 10 Holdings Value Not Classified 1.57 5.05 -3.48 Diploma Plc 4.79

Real Estate 2.52 2.68 -0.16 Relx Plc 4.33

Communication Services 3.75 4.43 -0.68 Diageo Plc 4.20 Materials 4.47 12.17 -7.70 Halma Plc 4.07

Information Technology 9.89 1.91 7.98 Plc 3.74 Consumer Discretionary 12.08 9.62 2.46 Roche Holding Ag-Genusschein 3.62 Health Care 13.57 9.48 4.10 Spirax-Sarco Engineering Plc 3.54 Consumer Staples 15.12 15.54 -0.42 Smith & Nephew Plc 3.31 Financials 17.63 16.00 1.63 Greggs Plc 3.20 Industrials 19.40 12.06 7.34 Croda International Plc 3.14 Energy 7.84 -7.84 Utilities 3.23 -3.23

Quarterly Report | Summer 2021 9 Asset Attribution | Q2 Performance

Allocation

Benchmark and portfolio

Industrials 19.40 12.06 Financials 17.6 3 16.00 Consumer Staples 15.12 15.54 Health Care 13.57 9.48 12.08 Consumer Discretionary 9.62 9.89 Information Technology 1.91 4.47 Materials 12.17 3.75 Communication Services 4.43 2.52 Real Estate 2.68 1.57 Not Classified 5.05

0% 5% 10% 15% 20%

Portfolio Benchmark

Source: Bloomberg

Relative

Information Technology 1.10 Consumer Staples 1.03 Industrials 0.67 Financials 0.55 Health Care 0.53 Communication Services 0.34 Consumer Discretionary -0.06 Materials -0.12 Not Classified -0.25 Utilities -0.25 Real Estate -0.30 Energy -0.41

-1.5% -1% -0.5% 0% 0.5% 1% 1.5%

Source: Bloomberg

Quarterly Report | Summer 2021 10 This report is for Professional clients, distributors and existing unitholders only ('relevant persons'). It is not intended to represent investment advice nor does it constitute an offer or a solicitation to any person in any jurisdiction to purchase or sell any investment.

The value of investments and the income from them may fall as well as rise and there is no guarantee that any investor will get back the full amount invested. The opinions expressed in this report are those held by Church House Investments Limited (CH) at the time of going to print and are subject to change. Any forward- looking statements contained in this report regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No reliance should be placed on any forward-looking statements, which speak only as at the date of this report. This report should not be construed as a recommendation relating to the acquisition or disposal of investments referred to within it.

This report based on CH's understanding of the law and regulation as at 30 June 2021. This report is issued in the United Kingdom by CH to relevant persons only and, as such, has not been approved as a financial promotion for the purposes of section 21 (2)(b) of the London Office Financial Services and Markets Act 2000 by CH or the Financial Conduct Authority. 50 Grosvenor Street Mayfair London W1K 3HW

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