MI Chelverton UK Equity Income Fund

Monthly Manager Commentary

There was some good news on the domestic front as announcements of increases in public spending Monthly Fact Sheet and a better than expected July GDP number, led by the services sector, dispelled fears of a UK 31 August 2019 recession. Brexit continued to dominate the news headlines however and all possible outcomes still appear to be open. This uncertainty continues to influence investor sentiment and short term share prices and as a small and mid cap ‘value’ fund we remain firmly in the eye of the storm, almost Launch Date 4th December 2006 slavishly following the daily movements in Sterling up or down. We remain convinced however that Fund Size £602m almost irrespective of the outcome the companies that we invest in are largely resilient and will be able to adapt to the new threats and opportunities as we finally reach a resolution. A more long Historic Yield (%)* 5.34 term concern would be a protracted Global trade war that undermined economic growth, and some of the more bearish commentators are now starting to build this into forecasts. The good news Share Price (as at 31.08.19) remains the level of dividend that our investments are consistently able to pay us in a world where it Shares Income Accumulation is proving increasingly difficult to find positive real yields. B Shares 112.09p 224.42p At the stock level our best performer was Greene King which was the subject of an agreed cash offer Investment Objective and Policy and we sold half of our holding. This continues the recent trend of private equity or overseas investors buying undervalued UK small and mid cap assets as prices are depressed by Brexit worries The objective of the Fund is to provide a and Sterling is relatively weak. History suggests that if the corporate activity continues, as we progressive income stream and achieve long-term believe it will, acquisition valuations will rise as investors have a growing tendency to hold out for capital growth by investing primarily in a higher prices. This bid had the knock on effect of boosting the Marstons share price which was portfolio of fully listed and AIM traded UK another strong contributor for us in the month. GVC, , XP Power and Rank also equities. The Fund will invest in UK companies performed well. On the downside Shoe Zone had an earnings downgrade and the fact that the which aim to provide a high initial dividend, shares fell by substantially more than the downgrade serves to highlight the volatility of domestic progressive dividend payments and long term earners at the moment. Other fallers included Wood Group Ashmore and Hostelworld. We raised capital appreciation. money from Phoenix, Convatec and BBA and added to positions in , FDM and Northgate.

Fund Managers Cumulative Performance David Horner Joined 3i Corporate Finance 1 m 3 m YTD 1 yr 3 yrs 5 yrs 7 yrs Limited in 1986 where he Fund (%) -1.98 -3.34 6.41 -10.45 18.45 37.08 120.73 was a manager giving corporate finance advice. In Sector Rank 11/86 77/86 58/86 78/84 5/77 4/73 1/69 May 1993 he joined Strand Quartile Ranking 1st 4th 3rd 4th 1st 1st 1st Partners Limited, and was appointed a director in IA UK Equity Income (%) -3.49 0.13 7.95 -4.40 10.04 22.60 66.01 January 1994, where he carried out a range of corporate finance Source: Lipper, NAV to NAV, B Shares Acc, Total Return to 31.08.2019 assignments identifying, structuring and managing investments in quoted and unquoted companies. In October 1997 he left to set up Discrete Annual Performance Chelverton Asset Management Limited and was 31.08.18 31.08.17 31.08.16 31.08.15 31.08.14 responsible for setting up, in May 1999, the Small 31.08.19 31.08.18 31.08.17 31.08.16 31.08.15 Companies Dividend Trust, which he still manages. He has co-managed the Chelverton UK Fund (%) -10.45 8.07 22.41 4.08 11.18 Equity Income Fund since launch. IA UK Equity Income (%) -4.40 3.71 10.84 8.88 2.51

David Taylor Source: Lipper, NAV to NAV, B Shares Acc, Total Return to 31.08.2019 began his career as an analyst in the research department at Wedd Durlacher and moved Dividend History into fund management in 1987 with the Merchant Navy Q1 Q2 Q3 Q4 Total Officers Pension Fund. He 2016 B Income 0.75p 1.20p 1.20p 1.93p 5.08p joined Gartmore Investment Limited in 1991, during this 2017 B Income 0.78p 1.25p 1.25p 2.48p 5.76p time, he ran a combination of institutional funds and investment trusts, namely the Clydesdale 2018 B Income 0.79p 1.40p 1.40p 2.29p 5.88p Investment Trust and London & Strathclyde Trust. In 1995, he moved to LGT to manage small 2019 B Income 0.80p 1.50p cap retail funds and latterly spent nearly seven years as head of UK smaller companies at HSBC History of dividends declared per share. Source: Chelverton Asset Management Limited Asset Management. He joined Chelverton Asset Management in January 2006 and has co- managed the Chelverton UK Equity Income Fund since launch.

*The historic yield reflects distributions over the past 12 months as a percentage of the bid price of the B share class as at the date shown. It does not include any initial charge and investors may be subject to tax on their distributions. MI Chelverton UK Equity Income Fund

Top 20 Holdings

Monthly Fact Sheet Holding Sector % of Portfolio

31 August 2019 1. Ultra Electronics Aerospace & Defence 2.20 2. BCA Marketplace Support Services 1.91 3. Marston’s Travel & Leisure 1.78 4. XP Power Electronic & Electrical Equipment 1.76 5. TT Electronics Electronic & Electrical Equipment 1.75 ACD Maitland Institutional Services Limited 6. Travel & Leisure 1.61 7. IMI Industrial Engineering 1.59 Investment Advisor Chelverton Asset Management Ltd 8. Morgan Advanced Materials Electronic & Electrical Equipment 1.58 9. Elementis Chemicals 1.56 Administrator Maitland Institutional Services Limited 10. Go-Ahead Group Travel & Leisure 1.55 11. Ashmore Financial Services 1.53 12. Sabre Insurance Group Nonlife Insurance 1.52

Income Paid Quarterly 13. Rank Group Travel & Leisure 1.52 14. Support Services 1.51 XD Dates 31 March, 30 June 30 September, 31 December 15. DFS Furniture General Retailers 1.48 16. Senior Aerospace & Defence 1.42 Valuation 12 Noon, Daily 17. Household Goods & Home Construction 1.42 18. Support Services 1.41 19. Utilities 1.39 SEDOL Codes 20. Diversified Gas & Oil Oil & Gas 1.37 Income Accumulation Source: Chelverton Asset Management Limited B Shares B1FD646 B1Y9J57

Market Cap Breakdown

Initial Charge (%) % of Portfolio No. of Stocks B Shares 5.0* Above £1bn 28.45 24

Annual Management Fee (%) £500m - £1bn 22.10 17 B Shares 0.75 £250m - £500m 25.16 22 £100m - £250m 13.68 18 Minimum Investment B Shares £1,000 Below £100m 4.13 12 Cash and Income 6.48 - Ongoing Charge (%) Total 100.00 93 B Shares 0.86 Source: Chelverton Asset Management Limited * or any such lower amount agreed with the ACD

Dealing Line 0345 305 4217

Dealing Fax 0845 280 0188

Disclaimer: This fund invests in smaller companies and carries a higher degree of risk than funds investing in larger companies. The shares of smaller companies may be less liquid and their performance more volatile over shorter time periods. The fund can also invest in smaller companies listed on the Alternative Investment Market (AIM) which also carry the risks described above. This document is provided for information purposes only and should not be interpreted as investment advice. If you have any doubts as to the suitability of an investment, please consult your financial FURTHER INFORMATION adviser. The information contained in this document has been obtained from sources that Chelverton Asset Management Limited (“CAM”) considers to be reliable. However, CAM cannot Please contact Spring Capital Partners, in the first instance. guarantee the accuracy or completeness of the information provided, and therefore no investment decision should be based solely on this data. Past performance is not a guide to future performance. Tel +44 (0)20 3195 0076 This document is issued by CAM, Authorised and regulated by the Financial Conduct Authority. Email [email protected] This document does not represent a recommendation by CAM to purchase shares in this Fund. We Visit springcapitalpartners.com recommend private investors seek the services of a Financial Adviser. Maitland Institutional Services Limited are the Authorised Corporate Director of this fund and prospectuses for the fund are obtainable directly from them. Please email [email protected] or call +44 (0) 1245 459 962.