CF CHELVERTON UK EQUITY INCOME FUND ("CEIF")

An Open Ended Investment Company ("OEIC") combining the disciplines of equity income investing with the pricing inefficiencies of UK smaller companies.

Chelverton Asset Management Limited has launched its first OEIC, a UK equity income fund which focuses on the yield potential of smaller companies.

Over the past 8 years, Chelverton has carved out a niche in smaller companies income investing through its closed-end funds. Chelverton UK Equity Income Fund will mirror the portfolio of the Small Companies Dividend Trust PLC.

The outstanding track record of this London-listed Investment Trust, although enhanced by the use of a moderate amount of leverage (which will not be available to the OEIC), illustrates the potential for this strategy.

Chelverton UK Equity Income Fund, has the following characteristics:

•	Expected Gross Initial Yield of 4.2%
•	Quarterly Dividend Payments
•	Prospect of rising income and capital growth
•	Income derived entirely from a portfolio of UK Equities,

Not only will the fund have a high initial yield but there is also potential for capital appreciation. The small company sector remains the most inefficient part of the UK market creating significant investment opportunities. Equally, small companies have generated higher returns than the main market over the long term, since 1955 the average annualised return of the Hoare Govett Small Companies Index is 3.6% above the FTSE All Share Index. (Source: ABN Amro)
 
The fund will be able to exploit opportunities in a meaningful way that bigger income funds find it difficult to take advantage of. Therefore, the ultimate capacity of the fund will only be around £250m to £300m.

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