30 JUNE 2021 ES River and Mercantile UK EQUITY INCOME FUND CLASS B GBP (Income)

PAST PERFORMANCE INVESTMENT OBJECTIVE The chart and tables below show the performance of the fund’s GBP B (Inc) share class To generate an average annual income since the launch of the share class on 3 February 2009. above the dividend yield of the benchmark Source: River and Mercantile Asset Management LLP. Fund performance is calculated using midday published over a rolling 3-year period and achieve a prices. Benchmark performance is calculated using close of business mid-market prices. total return (income and growth in the Past performance is not a reliable guide to future results. value of your investments (known as "capital growth")) above the total return of PERFORMANCE SINCE INCEPTION 300% the benchmark over a rolling 5-year period, after the deduction of fees. 250%

200% PORTFOLIO MANAGER

150% Daniel Hanbury 100% YIELD 50% Historic yield 2.74% 0% Current yield 3.69% -50% PORTFOLIO & RISK CHARACTERISTICS Number of holdings 70 ES R&M UK Equity Income Fund B share class MSCI UK IM Index Fund Volatility 14.0% CUMULATIVE PERFORMANCE Since Benchmark Volatility 14.1% 1 Month % 3 Months % 1 Year % 3 Years % 5 Years % 10 Years % inception % Beta 0.95 Active Money 63.8% B share class (Inc) -0.5 4.8 19.1 8.8 43.9 110.6 250.6 KEY FACTS MSCI UK IM Index 0.0 5.5 20.2 3.0 32.3 77.9 194.2 Fund launch date 03/02/2009 DISCRETE 12 MONTH PERFORMANCE Share class launch date 03/02/2009 12 months to 12 months to 12 months to 12 months to 12 months to Benchmark MSCI UK Investable 30/06/2017 30/06/2018 30/06/2019 30/06/2020 30/06/2021 Markets index IA sector UK Equity Income B share class (Inc) 22.4% 8.1% -5.1% -3.8% 19.1% Total fund size £140.8m MSCI UK IMI 17.5% 9.2% 0.5% -14.7% 20.2% Domicile UK TOP 5 PERFORMANCE TOP 5 OVERWEIGHTS & Fund type UK UCITS SEDOL B3KQG44 CONTRIBUTORS & DETRACTORS UNDERWEIGHTS ISIN GB00B3KQG447 The best and worst contributors to the The securities in which the portfolio Bloomberg RMUKEIB portfolio’s performance relative to the weight differs most from that of the Distribution type Income benchmark benchmark Smart Metering Systems Biffa (+) FEES & CHARGES Supermarket Income REIT HSBC Holdings (-) Initial charge Up to 5.25% Tate & Lyle Strix (+) Direct Line Insurance AMC 0.75% (-) Ongoing charge (including AMC) 0.94% (+) Direct Line Insurance (+) BHP Barrick Gold (+) Benckiser DEALING INFORMATION Polymetal International (+) BP Dealing frequency Daily AstraZeneca (-) Dealing cut-off time 12pm (UK) 'A' (-) Royal Dutch Shell 'A' Valuation point 12pm (UK) -0.4% -0.2% 0.0% 0.2% -6 -4 -2 0 2 4 Settlement T+4 Active Weight (%) Minimum investment £1000 Contribution + Overweight - Underweight Source: River and Mercantile Asset Management LLP Source: River and Mercantile Asset Management LLP SYNTHETIC RISK & REWARD INDICATOR (SRRI) SECTOR WEIGHTS TOP 10 HOLDINGS Portfolio weightings within specific The ten largest positions by weight held in industrial sectors. the portfolio. Weight (%) Energy 2.9 Materials 7.0 4.0 Industrials 17.9 4.0 Consumer Disc 9.2 AstraZeneca 3.4 CONTACT DETAILS Consumer Staples 14.0 Health Care 10.9 National Grid 3.3 Telephone 0345 603 3618 Financials 17.8 Smart Metering Systems 2.9 Email [email protected] Info Technology 3.3 Aviva 2.9 Comms Svcs 2.0 Utilities 5.2 GlaxoSmithKline 2.8 Real Estate 3.9 RELX Group 2.6 0 5 10 15 20 Supermarket Income REIT 2.5 Weight (%) HSBC Holdings 2.5 Source: River and Mercantile Asset Management LLP Source: River and Mercantile Asset Management LLP MARKET CAPITALISATION CATEGORIES OF POTENTIAL Comparison of portfolio and benchmark weightings across a range of The weighting of the portfolio across the four categories of potential, sizes based on company value. related to stages of a company’s life cycle.

Fund Benchmark Active Growth 16.8%

Mega Cap £20bn + 31.6% 58.2% -26.6% Quality 61.3% Large Cap £4bn - £20bn 23.0% 26.8% -3.9% Recovery 14.3% Mid Cap £2bn - £4bn 9.0% 7.6% 1.5%

Small Cap £100m - £2bn 30.5% 7.3% 23.1% Asset-backed 7.5% Micro Cap £0m - £100m 0.0% 0.0% 0.0%

Source: River and Mercantile Asset Management LLP 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Source: River and Mercantile Asset Management LLP, excludes cash.

PORTFOLIO STYLE SKYLINE This chart shows the Style Tilts of the portfolio against the benchmark as calculated by StyleAnalytics.

2.4 1.5 1.4 1.1 0.7 0.4 0.4 0.0 0.1

-0.1 -0.6 -0.3 -1.2 -1.2 -1.6 -1.8 -2.5 -2.8 -2.8

Source: StyleAnalytics

FUND RATINGS OTHER INFORMATION Authorised Corporate Equity Trustees Fund Services Limited Director Investment manager River and Mercantile Asset Management LLP Depositary The Bank of New York Mellon (International) Limited MANAGER’S REVIEW Investment background exited a small position in Kinross Gold.

The UK equity market was broadly flat in June after a positive Outlook period through the second quarter (+5.5%) leaving it up 11.2% year-to-date. UK small caps underperformed a little after their Share prices have moved a long way from the lows of 12 months strong run (Numis Smaller Companies ex IT inc AIM benchmark ago and high valuations in the context of history for many (but was down 1% in June). Some cyclical segments of the market gave certainly not all) assets suggest we should be prepared for back some of their year-to-date outperformance and higher quality volatility as markets try to price the baton change from early-cycle growth stocks returned to market leadership. Oil prices generally reflationary conditions to what comes next. In the short-term, moved higher (Brent oil +3%) but a number of other commodities this includes understanding the impact from a reducing level of fell, in particular the volatile lumber price which has halved from stimulus in China (the credit impulse1 went negative last month). the highs of the ‘inflation is taking off’ days of a couple of months We have mentioned before that globally fiscal policy has a loose ago. IPO activity remained strong and while animal spirits remained tone, quite different to the desire to ‘balance the books’ of public elevated in certain pockets of global equity markets, economic finances coming out of the Global Financial Crisis. In the US, the recovery was viewed with a more cautious optimism and stocks Biden administration has made it clear that it sees higher nominal that would benefit from reduced Covid-19 related restrictions economic growth as a tool for societal ‘levelling up’ and have made underperformed. large commitments to fiscal spending towards this goal.

Strategy update In this context, we still think the UK market remains relatively cheap despite the most recent rally. Valuation dispersion gaps, Performance while closing, remain higher than in other regions on our preferred composite measure. This provides an attractive environment to The fund finished down 0.5% over the month, just behind the blend our Growth, Quality, Recovery and Asset-backed categories. benchmark (0.0%). This capped a reasonable quarter with the We are buying high quality undervalued income stocks, where we fund delivering 4.8% versus 5.5% for the benchmark. Year-to-date believe dividend growth will be stronger and more sustainable than the fund is up 10.2%, again just behind the benchmark return of the market believes. We continue to execute on a sell discipline 11.2%. Biffa was a significant positive contributor after a positive that enables us to recycle capital into new exceptional high yield trading update and further explanation of their sustainable equity investments. This in turn means we are not aggressively approach to waste management. Another undervalued industrial skewed to any macroeconomic outcome, but instead should see growth company, Strix, performed well as it continued to execute our returns predominantly driven by bottom-up stock selection. its strategy growing into water filtration. Positive contributions also came from being underweight poorly performing mega caps Thank you for your interest and support. such as HSBC and . On the downside, our gold stocks Polymetal and Barrick Gold continued to lag a broader market and whilst we have built a significant position inAstraZeneca , which performed strongly, we were still underweight the benchmark. Dan Hanbury Activity Portfolio Manager There were no material new purchases as we continue to focus July 2021 the portfolio into our best ideas. We sold our holding in steel consumables supplier Vesuvius after a reasonable recovery and

1The credit impulse is the change in new credit issued (the flow of credit) as a percentage of GDP.

This document has been prepared and issued by River and Mercantile Asset Management LLP (“R&M”), registered in England and Wales under Company No. OC317647, with its registered office at 30 Coleman Street, London EC2R 5AL. R&M is authorised and regulated by the UK Financial Conduct Authority (FRN 45308) and is a subsidiary of River and Mercantile Group PLC which is registered in England and Wales under Company No. 04035248, with its registered office at 30 Coleman Street, London EC2R 5AL. Equity Trustees Fund Services Ltd is the Authorised Corporate Director (the “ACD”) of the ES River and Mercantile Funds ICVC and of its sub-funds, including this fund. The ACD is authorised in the United Kingdom and regulated by the Financial Conduct Authority (FRN 227807) and has its registered office at Pountney Hill House, 4th floor, 6 Laurence Pountney Hill, London EC4R 0BL.

This document is intended for use by individuals who are familiar with investment terminology. Please contact your financial adviser if you need an explanation of the terms used. For further details of the specific risks and the overall risk profile of this fund; as well as the share classes within it, please refer to the Key Investor Information Documents and ES River and Mercantile Funds ICVC Prospectus which are available on our website www.riverandmercantile.com.

The value of investments and any income generated may go down as well as up and is not guaranteed. An investor may not get back the amount originally invested. Past performance is not a reliable guide to future results. Changes in exchange rates may have an adverse effect on the value, price or income of investments. Please refer to the ES River and Mercantile ICVC principal prospectus for further details of the financial commitments and risks involved in con- nection with an investment in this Fund. The information and opinions contained in this document are subject to updating and verification and may be subject to amendment. The information and opinions do not purport to be full or complete. No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by R&M, its partners or employees. No liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained in this document.

Please note that individual securities named in this report may be held by the Portfolio Manager or persons closely associated with them and/or other mem- bers of the Investment Team personally for their own accounts. The interests of clients are protected by operation of a conflicts of interest policy and associat- ed systems and controls which prevent personal dealing in situations which would lead to any detriment to a client.

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