Investment Policy

Chelverton UK Dividend Trust plc will invest in equities in order to achieve its investment objectives, which are to provide both income and capital growth, predominantly through investment in mid and smaller capitalised UK companies admitted to the Official List of the UK Listing Authority and traded on the London Stock Exchange Main Market, traded on AIM or traded on other qualifying UK marketplaces.

It will not invest in preference shares, loan stock or notes, convertible securities or fixed interest securities or any similar securities convertible into shares; nor will it invest in the securities of other investment trusts or in unquoted companies. The Company may retain investments in companies which cease to be listed after the initial investment was made, so long as the total is non-material in the context of the overall portfolio; however, the Company may not increase its exposure to such investments.

Investment Approach

The Board appoints Chelverton Asset Management Limited due to its specialisation in the small to mid-cap income area of the UK marketplace.

From an income perspective the key is to find companies that generate cash on a sensible and sustainable basis, which is then used to grow the business and reward shareholders.

The Investment Manager actively search for management teams which strike an appropriate balance between current and future income.

Investment process

The Investment Manager screens all UK small and mid-cap companies on a regular basis to identify potential investments. It is important to note that just because a company has a high yield does not necessarily mean it may be worth investing in.

Balance sheets are tested to ensure that there is not too much debt and that the working capital requirements are not too onerous. Sales growth and margins are examined, leading to a measure of likely dividend growth.

This fund is designed to deliver a high initial yield and we look for investments that are capable of increasing those returns over future years.

This is a closed end fund, effectively a sealed unit, which is not affected by daily inflows and withdrawals by investors.