The Trust seeks to exploit the high investment potential of smaller companies listed on global equity markets. Many smaller companies are not widely researched, opening up the potential for our detailed fundamental analysis to identify valuation anomalies. The greater inherent ability of smaller enterprises to grow faster than more mature, larger companies, is also positive for the long term outlook.

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Key points

This trust remains the only investment trust to offer investor access to a broadly spread global smaller companies portfolio. The portfolio consists of individual smaller company investments within the US, UK and European markets, and fund holdings targeting smaller companies in Japan, Asia, Latin America and other smaller territories The dividend of the Company has risen for 42 years in a row, benefiting from a growing income stream from the investment portfolio.

Past performance is not a guide to future performance.

Fund facts
Investment manager F&C Management Limited
Benchmark 30% Numis UK Smaller Companies (excluding investment companies) Index / 70% MSCI all country World ex UK Small Cap Index
AIC sector Global Growth
Launch date 1889
Total assets £438.5 million (as at 28.02.14)
Currency Sterling
ISIN GB0000175058
SEDOL 17505
Key dates
Annual general meeting Thursday 24 July 2014 Chartered Accountants Hall
Year end 30 April
Dividend payment date(s) August and January
Ex-dividend date(s) July and December
Announcement dates Half year results: Monday 15 December 2014
Final results: Monday 16 June 2014

Fund manager commentary

Stock markets rose again in February after the consolidation in January, as fears surrounding emerging markets dissipated to a degree. European markets were notably stronger and Asian stocks also rallied nicely. The NAV and share price advanced, albeit not by as much as the Benchmark.

Stock selection in February was generally disappointing, particularly on the UK part of the portfolio. Hyder Consulting and Digital Barriers announced profit warnings, and a number of our resources stocks came under pressure. More positively, shares in storage company Safestore rose as the company announced solid trading and moved to strengthen its balance sheet by way of a placing, while Amerisur Resources rose after another successful well result in Colombia.

In the US, we were just behind the Russell 2000 index. Retailer Conn’s announced disappointing results and lowered earnings guidance because of weakness in the company’s credit division. FTI Consulting, a provider of specialty consulting services, released earnings guidance that was below expectations. On the positive side, shares of Pernix Therapeutics Holdings (a producer of paediatric medicines) surged after the company appointed a new CEO, secured financing and settled legal liabilities, while ICF International lifted its earnings expectations.

Corporate news on the European portfolio was mixed. Pleasing updates from automotive supplies business Plastics Omnium and Aareal Bank were offset by cautionary announcements from another car parts business SHW and wealth management business EFG International, while sausage skin company Viscofan also lagged as indications of a weaker market backdrop emerged.

Japanese small caps lagged performance in Asia as a whole, with investors seemingly losing confidence in the reform agenda of the government and the near term economic outlook ahead of the upcoming increase in sales taxes. We added to our Japanese fund holdings on the weakness, and also topped up the Scottish Oriental Smaller Companies fund as its discount widened out to an attractive level.

As at 28 February 2014

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market movements. Past performance is not a guide to future performance. When you sell your shares, you might get back less than you originally invested. If markets fall, gearing can magnify the negative impact on performance. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Emerging Markets, Unquoted Companies and Smaller companies carry a higher degree of risk and their value can be more sensitive to market movement; their shares may be less liquid and performance may be more volatile. The fund may invest in hedge funds or private equity funds which are not normally available to individual investors, exposing the fund to the performance, liquidity and valuation issues of these funds. Such funds typically have high minimum investment levels and may restrict or suspend redemptions or repayment to investors. The asset value of these shares and its prospects may be more difficult to assess.

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