Investment Manager’s Commentary

Your Fund returned -6.3% during the month compared to -5.9% for the IA Global (TR) sector.

January’s wave of optimism gave way to two main areas of concern; the returns from all the investment into Artificial Intelligence (‘A.I.’), and the risks that tariffs pose to consumer and corporate spending. Both themes had a particularly negative impact on U.S. equity markets. The Fund’s top five contributors in the quarter were Roche, Visa, Heineken, Novartis and Fiserv. Three of the five are European and might be categorised as traditionally defensive. The bottom five contributors were Alphabet, Adobe, Microsoft, Diageo, and PayPal. The first three fall into the A.I. debate. The others are affected by tariff risks and trends for discretionary spending.

The Fund’s performance over the quarter reflects the balance we have struck to navigate the various risks and opportunities that we see. One element of this is to select businesses that are diversified by product and geography and then combine them with similarly durable companies drawn from a range of industrial sectors. This way the Fund’s progress is not dependent on the fortunes of any one country or industry. Another is to be attentive to valuations such that the compounding in underlying cashflows per share remain the primary driver of long-term shareholder returns. This component becomes more important as technological change exerts a disruptive force and the U.S. entertains radical changes to the terms of global trade (these subjects are explored in more detail in the Strategy’s latest Newsletters, available here and here)

The outcome is a diverse portfolio of select companies that exhibit undeniable quality. They generate high returns on their capital without recourse to large amounts of financial debt. Moreover, the Fund’s businesses are reinvesting heavily at those high rates of return to sustain levels of growth that far exceed those of more average companies. Despite their extraordinary returns and growth, they are collectively valued as if their economics and growth potential are more ordinary. In these uncertain times, it is this essential discrepancy that gives us confidence in the Fund’s prospective results.

Past performance is not a guide to the future. The value of the shares and the income from them can go down as well as up and you may not get back the full amount originally invested. Source: Yealand Fund Services Limited, NAV to NAV in sterling with net income reinvested. Returns are shown net of annual management charge, other expenses and net income reinvested. Returns do not include the effect of initial charges.

Investment Objective and Policy

The Company’s investment objective is to seek to achieve long term (at least 5 years) capital growth with some potential for income.

To achieve the investment objective, the Company’s investment policy is to invest principally (at least 80%) in a portfolio of global equities, and may also invest in other transferable securities, bonds (both corporate and government debt securities), collective investment schemes (“CIS”), warrants, money market instruments, cash, near cash and deposits. The Company may borrow and may enter into underwriting arrangements. It is the ACD’s intention that derivatives and forward currency transactions will only be used for the purposes of efficient portfolio management, including hedging, as defined by the Regulations.

The Company is actively managed and has, with the exception of the above noted minimum, no limit to which it can be invested in each sector or asset type, nor is there any particular geographic focus. The Portfolio Manager has full flexibility to adjust the proportion of the property of the Company depending on their view of market conditions and the assets which it believes are most likely to achieve the Company’s investment objective. From time to time the liquidity of the Company may be increased substantially if judged to be in the interests of investors.

The Company may invest in CIS which have different investment strategies or restrictions than the Company, including the ability to invest in derivatives for investment purposes and to gain exposure to assets which are not expressly listed above. Investment in CIS will usually be limited to those which invest primarily in the assets listed above and without exception, CIS will only be held in so far as the rules permit the Company to gain exposure to the assets held by those CIS.

A Glossary of Definitions which provides definitions to some of the technical language used on this website is available from www.yealand.com/policies.

Comparator Benchmark

To gauge the relative performance of the Fund, Shareholders may compare the Fund’s performance against the Investment Association’s Global Sector. This is not a performance target nor constrains the way in which the Fund is managed. For further information on the Sector and its intended use, please refer to the Fund’s Prospectus.