The Trust aims to deliver an attractive return in the form of dividends and/or capital returns, together with the potential for capital growth. The portfolio is managed in two parts, an equities portfolio and a higher yield portfolio. The equities portfolio represents the majority of the Trust's assets and is invested in UK large and mid-sized companies while the higher yield portfolio is currently invested in predominantly investment grade corporate bonds.

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Key points

Investors Capital aims to provide shareholders with an attractive level of income together with the opportunity for capital growth. The majority of the Company's assets are invested in an equities portfolio comprising large and mid size UK companies.

The Company has two classes of share - A shares and B shares - which pay the same level of quarterly cash distributions. The cash distributions on the A share are paid as dividends while those on the B shares are paid by way of capital distributions and therefore taxed under capital gains tax (CGT) rules which can provide tax benefits to certain types of investors. Each unit consists of three A shares and one B share.

Fund facts
Investment manager F&C Investment Business Limited
Benchmark FTSE All-Share Capped 5% Index
AIC sector UK High Income
Launch date 1 March 2007
Total assets £145.8 million (as at 31.08.14)
Currency Sterling
ISIN (Units) GB00B1N4H933
(A Shares) GB00B1N4G299
(B Shares) GB00B1N4H594
SEDOL (Units) B1N4H93
(A Shares) B1N4G29
(B Shares) B1N4H59
Key dates
Annual general meeting June
Year end 31 March
Dividend payment date(s) February, May, August, November
Ex-dividend date(s) July, October, January and April

Fund manager commentary

The Company’s net asset value increased 1.9% in total return terms during the month. This compares with a 2.2% increase in the FTSE All Share 5% Capped Index over the same period.

Additions were made across a wide range of existing portfolio holdings including Rio Tinto, Howden Joinery and Royal Dutch Shell.

The position in Rio Tinto, the diversified international metals and mining company, was further increased. We believe mining sector fundamentals are slowly improving after a protracted period of poor performance. The improvement in both US and European economic growth prospects should help stabilise commodity prices while at the same time cost cutting across the industry together with greater capital discipline will improve cash flows and strengthen balance sheets.

The position in Howden Joinery was increased following a meeting with the company’s senior management team. Howden designs, manufactures and sells fitted kitchens through a network of depots in the UK. Howden continues to gain market share from its peers while at the same time improving profitability and expanding its footprint. The company is highly cash generative and already has net cash on the balance sheet suggesting scope for special dividends in the year ahead.

The new CEO at Royal Dutch Shell, Ben Van Beurden, has increased the company’s focus on profitability, capital efficiency and investment returns. Reduced capital expenditures together with increased divestments, such as the recently announced $5 billion disposal of the company’s stake in Woodside Petroleum, should result in a much improved cash flow profile. Royal Dutch Shell has one of the highest dividend yields amongst the oil majors.

The position in Experian was sold following a meeting with the company. Organic revenue growth has been weak across Experian’s business especially so in the company’s key North American and Brazilian markets. New competitive threats appear to be emerging in the company’s consumer business. Returns are under pressure from recent acquisitions raising questions over capital discipline.

Against a background of improving global growth, increasing business confidence and low borrowing costs, we expect the recent upturn in merger and acquisition activity to continue to gather pace and remain supportive for equity markets. As a result of the rally and re-rating of equity markets in recent years, valuation levels now appear less compelling despite strong corporate sector fundamentals.

As at 31 August 2014

Percentage growth, total return, bid to bid price with net income reinvested in sterling. Basis in accordance with the regulations of the Financial Conduct Authority. Past performance is not a guide to future performance. Stock market movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount originally invested. A fund investing in a specific country carries a greater risk than a fund diversified across a range of countries. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. If markets fall, gearing can magnify the negative impact on performance. The discrete annual performance table refers to 12 month periods, ending at the date shown.

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