OCTOBER 2014 Miton THE DIVERSE INCOME TRUST PLC Factsheet as at 30 September 2014 Investment objective and policy Portfolio activity The Company’s investment objective is to provide shareholders with an attractive level of dividends in businesses with the prospect of dividend growth. This trend should also be reflected in some capital growth over the long term. It will invest primarily in quoted or traded UK companies with a wide range of market capitalisations and a long-term bias toward small and mid cap equities. It may also invest in large cap companies, including FTSE 100 constituents, where it is believed that this may increase shareholder value. Equities market trends have been increasingly uncomfortable over the period. In September the FTSE 100 Index fell -2.8%, with the FTSE Small Cap (ex ITs) Index was down -2.6%, and the FTSE AIM Index -3.8% although this result was impacted by ASOS again which was down a further 20% in September. The Diverse Income Trust fell -3.2% in the month. It seems that as Quantitative Easing (QE) has been phased out in the US investors are coming under renewed pressure. At times like this it is really helpful to have a really simple objective of investing in regular stocks that pay good and growing dividends. Portfolio risk will be mitigated by investing in a diversified spread of investments. The portfolio is expected to be made up of 80 to 140 investments, most of which will represent no more than 1.5 per cent of the value of the portfolio as at the time of acquisition. The Company intends to pay dividends on a quarterly basis. The Company delivered a dividend yield of 4% in its first year and plans to maintain and grow the dividend in terms of pence per share going forward. Potential investors should note that the targeted annualised dividend is a target only and not a profit forecast. Top 20 holdings Holding % 1. SQS Software Quality Systems 2.0 2. Charles Taylor Plc 2.0 3. Shoe Zone Plc 2.0 4. Fairpoint Group Plc 1.9 5. Powerflute 1.8 6. Saftestyle UK Plc 1.7 7. Bioventix Plc 1.6 8. Randall & Quilter 1.6 9. Convivality Retail 1.4 10. St Ives Plc 1.4 11. Stobart Group Ltd 1.3 12. Provident Financial Plc 1.3 13. Secure Trust Bank Plc 1.3 14. Go-Ahead Group 1.3 15. Personal Group Holdings Plc 1.3 16. Direct Line Insurance 1.2 17. Huntsworth Plc 1.2 18. 4Imprint Group 1.2 19. Bloomsbury Publishing 1.2 20. Juridica Investment 1.2 Dividend growth has generally moderated considerably over recent quarters. With lesser Earnings Per Share (EPS) growth as international economies slow, and many of the best dividend payers are already distributing 60 or 70% of their earnings, there is precious little headroom for some corporates to push dividends much higher. Whilst these economic conditions are difficult for all companies, the smallest have the advantage that they can often find ways to sustain growth in spite of the wider conditions. There are numerous smaller companies that do generate EPS growth - even at times of economic stagnation. And with higher dividend cover, and often little debt or sometimes net cash balances, most smaller companies have much greater headroom on their dividend payments too. If smaller companies are able to continue to generate faster dividend growth than the majors, it is something of a game changer for the markets. The period of substantial outperformance of the smaller company sector in the 1960’s and 1970’s, was associated with better dividend growth in spite of frequent recessions and the oil price shock at those times. The best performers in the month were Powerflute which did a stunning deal in the month that greatly enhanced their EPS growth, SQS which had strong figures in September, and Victoria plc, a carpet manufacture which distributed a huge special dividend to shareholders. Although markets are unsettled there was still good demand for shares in these kinds of stocks. They are relatively straightforward to research, with good prospects within their markets, and look well set to grow their dividends by decent percentages over the coming periods even if the economic background doesn’t improve from here. Despite the troubled market background, many smaller companies are continuing to present opportunities to improve their market positions and enhance their growth rates with additional capital. So although growth in the UK economy may peak out towards the end of the year, we remain upbeat regarding the prospects for a multi cap portfolio to continue to outperform over the coming periods. Source: Miton. Top 20 holdings represent 29.9% of the portfolio. Broker desk 020 3714 1525 www.mitongroup.com [email protected] OCTOBER 2014 Miton THE DIVERSE INCOME TRUST PLC Factsheet as at 30 September 2014 Performance since inception (price in pence) Financial calendar 90 Year end: 31 May 80 Annual report: September/October 70 Final results announced: May 60 50 40 May 11 Sep 11 Jan 12 May 12 Sep 12 Jan 13 May 13 The Diverse Income IT Share Price Sep 13 Jan 14 May 14 Sep 14 The Diverse Income IT NAV Source: FE Analytics, Miton & Capita, Trust share price and NAV with income from 28.04.2011 (inception). Interim results announced: November Dividends paid in: Feb, May, Aug, Nov Next dividend: First interim Ex date: June 2014 Payable: August 2014 Asset allocation (ex cash) Cumulative performance % 1 month 3 months 6 months 1 year Since launch FTSE AIM 39.1 19.8 Trust NAV1, 2 -1.8 -2.4 -6.2 +7.4 +57.7 FTSE Small Cap Trust Share Price (Bid)1 -3.2 -2.9 -7.1 +9.7 +72.0 FTSE 250 19.3 FTSE 100 10.9 Discrete annual performance - year ending 30.09.2014 30.09.2013 30.09.2012 FTSE Fledgling 5.7 30.09.2011 30.09.2010 Other 2.0 Trust NAV1, 2 +7.4 +36.1 +16.4 n/a n/a Bond 1.4 Trust Share Price (Bid)1 +9.7 +36.8 +22.9 n/a n/a Cash 1.3 FTSE 100 Put Option 0.5 Sources: 1. FE Analytics. Net income reinvested GBP. 2. Based on initial NAV of 48.75p (after launch expenses). Fund launch date: 28.04.2011. Source: Miton as at 30.09.2014. Key facts Share class Market capitalisation Total net assets Gearing Historic net yield NAV ex. income NAV with income Share price (mid) Premium (Discount) AMC on market cap Ord. class £254.2m £251.7m up to 15% 3.13% 76.90p 77.60p 78.38p 1.0% C share £49.3m £48.4m up to 15% n/a 48.10p 48.36p 49.25p 1.84% 1.0% up to £300m market cap 0.8% on market cap above £300m Company information Contact details The Company was launched on 28 April 2011. Shares in issue Fund managers t: 020 3714 1516/1517 324,377,450 Ordinary Shares Gervais Williams [email protected] 100,000,000 C shares Martin Turner [email protected] Address: Miton Group plc 51 Moorgate, London, EC2R 6BH 1 Ongoing charges: 1.29% AGM date: October 2014 Bloomberg: DIVI LN Fax: 0203 714 1501 SEDOL: B65TLW2 Website: www.mitongroup.com/dit Financial Times: (Investment Companies) Company secretary: Capita Sinclair Henderson Limited AIC Sector: IT UK Equity Income Broker to company: Chris Lunn Cenkos Securities plc e: [email protected] t: 020 7397 1912 Benchmark: None Directors: Michael Wrobel (Chairman), Paul Craig, Lucinda Riches, Jane Tufnell, Tom Bartlam 1. As at 30.11.2013. Important information Past performance should not be seen as an indication of future performance. The information on this factsheet is as at 30.09.2014 unless stated otherwise. The value of investments and any income may fluctuate and investors may not get back the full amount invested. The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily the views of Miton and do not constitute investment advice. Whilst Miton has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content. Investment in the securities of smaller and/or medium sized companies can involve greater risk than may be associated with investment in larger, more established companies. The market for securities in smaller companies may be less liquid than securities in larger companies. This can mean that the Investment Manager may not always be able to buy and sell securities in smaller and/or medium size companies. This document is provided for the purpose of information only and if you are unsure of the suitability of this investment you should take independent advice. Before investing you should read the Trust’s listing particulars which will exclusively form the basis of any investment. Net Asset Value (NAV) performance is not linked to share price performance, and shareholders may realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital. Miton is a trading name of Miton Asset Management Limited. Miton Asset Management Limited is authorised and regulated by the Financial Conduct Authority and is registered in England No. 1949322 with its registered office at 51 Moorgate London, EC2R 6BH. MFP 14/376 Broker desk 020 3714 1525 www.mitongroup.com [email protected]