liontrust ea uk smaller companies fund

For professional investors and advisers only

Anthony Cross, Julian Fosh, Victoria Stevens, Matthew Tonge and Alex Wedge

October 2021

Economic Advantage:Liontrust UK Smaller Companies Fund

2021

For UK audience

Market opportunity

2

The Small Cap effect

“Over the last 60 years, UK smaller companies have delivered truly astonishing returns to investors” Professors Elroy Dimson and Paul Marsh, London Business School

Source: Numis, January 2021. The chart shows cumulative value with dividends reinvested

Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. Please refer to the Key Risks slide for more information

• The Numis 1000 XIC index tracks the returns of the bottom 2% of the UK market

• The Numis Smaller Companies XIC Index tracks the returns of the bottom 10% of the UK market

• The Numis Mid Cap XIC Index tracks the returns of the smallest 20% less the bottom 5% of the UK market

• The Numis Large Cap Index tracks the returns of the top 80% of the UK market

£21,186

£8,316

£3,820£1,0310

5,000

10,000

15,000

20,000

25,000

1954 1960 1965 1971 1976 1982 1987 1993 1998 2004 2009 2015 2020

Numis Mid Cap XIC Index NSCI XIC IndexNSC 1000 XIC Index Numis Large Cap XIC Index

3

Potential pitfalls

Liquidity• Low turnover

• Long term approach

• Experienced team

Market bubbles• No loss makers

• Valuation discipline

• Strict process

Governance• UK headquartered companies

• Grading for risk

Volatility• Diversified portfolio

• Weighting approach

• Long investment horizon

Economic Advantage process

5

The Economic Advantage process

Liontrust UK Micro Cap

Fund

Liontrust UK Smaller

Companies Fund

LiontrustSpecial Situations/

GF Special Situations Funds

Liontrust UK Growth/

GF UK Growth Funds

Holdings must be profitable and headquartered in the UK

Management ownership of over 3%

Invest according to long-standing Liontrust Economic Advantage principles

Micro Cap Micro / Small Cap Small / Mid / Large Cap Mid / Large Cap

6

Economic Advantage assets

Intangible company strengths that competitors struggle to reproduce = Barriers to Competition

Intellectual property

Distribution channels

Repeat business

Franchises and licences

Customer databases and relationships

Procedures and formats

Culture Brand

Other intangible strengths:

7

Distribution network

Recurring income

Intellectual property

AJ Bell, Brooks Macdonald, Curtis Banks, Fintel, Integrafin,

iomart, JTC, Smart Metering Systems

Attraqt, Big Technologies, Craneware, Dotdigital,

Eckoh, GlobalData, Ideagen, Medica, Microlise

AB Dynamics, Animalcare, Bango, EKF Diagnostics, FRP Advisory, Instem, K3

Business Technology, Keywords Studios, Learning Technologies,

Lendinvest, Mind Gym, Mortgage Advice Bureau, Musicmagpie, Netcall, Quartix, Quixant, RWS, Sumo Group,

Tribal, YouGov

Economic Advantage assets | UK Smaller Companies portfolio

Source: Liontrust as at 31.08.21. Liontrust UK Smaller Companies portfolio. Provided as an example only of the occurrence of Economic Advantage assets in stocks typically purchased across the portfolio range

Alpha FX, Bioventix, Big Technologies, Cohort, Concurrent Technologies, Focusrite,

FW Thorpe, James Cropper, Judges Scientific, Kainos, Next Fifteen Communications, Plexus, Team 17, Trellus Health, Tristel

Arbuthnot, Charles Stanley, Clipper Logistics, Foresight, Gresham

House, Impax Asset Management, Mattioli Woods, Tatton Asset

Management

Brickability, Caretech, Gateley, Hilton Food, Inspecs, Keystone

Law, Kitwave, LSL Property Services, Midwich, On The Beach,

Pebble Group, Robert Walters

Distribution of portfolio stocks across the three hardest to replicate Economic Advantage assets

8

0%

1%

2%

3%

4%

5%

6%

7%

8%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e

UK Smaller Market CFROC Cost of capital

Evaluating company returns | cash flow return on capital for the UK smaller companies market

What does the UK stock market look like?

Source: Canaccord Genuity Quest™ ‘UK small’ universe; prices as at 25.08.21. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted average cost of capital. 2021 is an estimated value. The market CFROC and market COC are on a rolling twelve-month forward basis

Market Cash Flow Return On Capital Long Term Cost

of Capital

9

Cash flow return on capital | UK Smaller Companies portfolio

Economic Advantage process captures value creators

Source: Canaccord Genuity Quest™; prices as at 27.07.21. Cash flow returns on capital of the fund is a portfolio weighted average cash flow return on capital FY1. UK Small and Mid universe market average. FY(1) is the next (prospective) annual unreported period


13.90%

4.60%

Liontrust UK SmallerCompanies Fund CFROC

UK Small & Mid universeCFROC

FY1

10

The role of valuation

New holdings must be profitable

Valuation evaluated on a case by case basis against a basket of companies with similar characteristics

Use of a range of valuation metrics, including P/E, EV/EBITDA, FCF yield and dividend yield

Process is naturally valuation aware but high valuation alone is not a reason to exit a position

EV/EBITDA EV/ Sales FCF yield Dividend

YieldP/E

P/E – Price-Earnings ratio; EV/EBITDA – Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization; EV/Sales – Enterprise Value to Sales; FCF yield – Free cash flow yield

11

Employee motivation | the importance of the “owner manager culture”

Why motivate? Academic and statistical evidence shows better company performance

Less financial gearing and fewer acquisitions

Management ownership of at least 3% required

Monitoring equity ownership – signals and relevance to all companies

“…To be successful in business and investing, you’ve got to have skin in the game, a stake in the company…” – Warren Buffett

12

Building the portfolio | risk scoring: UK Smaller Companies Fund

Risk evaluated to determine a company’s weight in the portfolio

Source: Liontrust as at 30.09.21. NAV = Net asset value; ESG = Environmental, Social, & Governance

Financial risk(gearing, cash generation, dangling liabilities, accounting, loss-making)

Product dependency

Customer dependency

Pricing risk

Regulatory change

Licence dependency

Acquisition risk

Valuation

ESG risk

45 companies

20 companies

6 companies

0%

10%

20%

30%

40%

50%

1% 2% 3%

% N

AV

Risk weights

13

Sell discipline

The company loses its tier 1 Intellectual Capital (either Intellectual Property / Distribution Channels / Repeat Business)

The company is unable to translate its theoretical Intellectual Capital advantage into superior returns

The risk scoring (particularly financial and accounting risk) is of significant concern

Management shareholdings fall below 3%

1

2

3

4

Stock examples

15

Stock example | RWS

• Global market leader in patent and life sciences translations, as well as providing technology-enabled localisation services to large corporates

• Customers include global leaders in the medical, pharmaceutical, chemical, automotive, technology and telecoms industries

• Intellectual property: know-how through considerable combined language and scientific knowledge of employees

• Distribution network: global presence across the UK and Europe, North America and Asia

• Customer relationships: counts approximately half of the top 20 patent filers worldwide as customers

• Strong financial returns; grown its dividend every year since listing in 2004

Financial advantage

RWS share price (pence)

Source: as at 16.02.21, Canaccord Genuity QuestTM. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted averagecost of capital. 2021 & 2022 are estimated numbers. Estimates are not a reliable indicator of actual performance. Share price source: Bloomberg, data 31.01.07 to 30.09.21.All use of company logos, images or trademarks in this presentation are for reference purposes only


0%

10%

20%

30%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

e

2022

e

Cash Flow Returns on Capital Cost of Capital

0100200300400500600700800

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

16

Stock example | Alpha FX Group

• Provider of foreign exchange risk management consulting and alternative banking solutions

• FX consultancy offering targets medium to large scale businesses with complex global operations. High-level consultative sale encourages clients to take a measured, long-term strategic approach to FX risk management.

• Alternative banking, a new and potentially very high-growth division, encompasses payments, collections and bank account portals – leveraging highly-prized relationship with Citigroup’s worldwide local banking network

• Strong Intellectual Property within the deep know-how of staff (it takes 6-7 years for members of the sales team to reach their full potential) and software

• Emerging distribution network strength: scale leads to pricing advantage in FX rates, while Citi relationship provides a significant barrier to entry in alternative banking (scale / lengthy onboarding process)

• Rich in ‘second-tier EA intangibles’ such as culture, customer relationships, formats & procedures

Financial advantage

Alpha FX Group share price (pence)

Source: as at 26.04.21, Canaccord Genuity QuestTM. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted averagecost of capital. 2021 & 2022 are estimated numbers. Estimates are not a reliable indicator of actual performance. Share price source: Bloomberg, data from 07.04.17 to 30.09.21. All use of company logos, images or trademarks in this presentation are for reference purposes only


0

500

1,000

1,500

2,000

2,500

Apr-

17

Jul-1

7

Oct

-17

Jan-

18

Apr-

18

Jul-1

8

Sep-

18

Dec-

18

Mar

-19

Jun-

19

Sep-

19

Dec-

19

Mar

-20

Jun-

20

Sep-

20

Dec-

20

Mar

-21

Jun-

21

Sep-

21

0%10%20%30%40%50%60%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

e

2022

e


17

Stock example | Craneware

• Largest provider of pricing and billing software for US hospitals

• Growth driven by structural change resulting from changing demographics (ageing population, obesity and narcotics-linked problems) and the need for patients to get better value for their healthcare dollar

• Distribution network: 25% market share of all US hospitals

• Recurring income: software-as-a-service (‘SaaS’) model; multi-year contracts (3-9 years); customer renewals consistently running at >100% in $ value terms

• Strong financial returns, grown its dividend every year since it listed in 2007

• Intellectual property: software

Financial advantage

Craneware PLC share price (pence)

Source: as at 16.02.21, Canaccord Genuity QuestTM. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted averagecost of capital. 2021 & 2022 are estimated numbers. Estimates are not a reliable indicator of actual performance. Share price source: Bloomberg, data 12.09.07 to 30.09.21.All use of company logos, images or trademarks in this presentation are for reference purposes only


0%

10%

20%

30%

40%

50%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

e

2022

e


0500

1,0001,5002,0002,5003,0003,5004,000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2015

2016

2017

2018

2019

2020

2021

Performance

19

Liontrust UK Smaller Companies | Performance YTD to 30 September 2021

25.8%

32.0%

24.5%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21

Liontrust UK Smaller Companies Fund FTSE Small Cap ex ITs Index IA UK Smaller Companies Sector

Source: Data at 30.09.21, FE Analytics, primary share class, bid-to-bid, net of fees, income reinvested basis, total return. Percentage returns 31.12.20 – 30.09.21 versus comparator benchmarks FTSE Small Cap ex ITs (Investment Trusts) Index and IA UK Smaller Companies Sector


20

Liontrust UK Smaller Companies | Performance attribution YTD to 30 September 2021

Top 10 stock contributors to performance (%)

Average weight

Total return

Contribution to return

Next Fifteen Communications 2.04 116.41 1.70

dotDigital 2.74 51.38 1.33

Robert Walters 2.22 59.36 1.18

Impax Asset Management 2.04 66.92 1.14

Mortgage Advice Bureau 2.64 35.38 1.11

Big Technologies 0.52 81.50 1.02

Tatton Asset Management 1.42 87.39 0.98

Clipper Logistics 2.64 28.32 0.91

Animalcare 1.08 111.32 0.89

Brooks Macdonald 1.66 58.43 0.88

Bottom 10 stock contributors to performance (%)

Average weight

Total return


iomart 1.36 -30.69 -0.48

IG Design 0.66 -17.65 -0.28

Cohort 1.44 -10.76 -0.18

Bioventix 1.23 -8.38 -0.13

Concurrent Technologies 0.43 -19.14 -0.13

musicMagpie 0.57 -9.84 -0.10

Eckoh 0.87 -11.40 -0.09

IntegraFin 1.34 -6.15 -0.08

AB Dynamics 1.18 -3.98 -0.07

Team17 1.46 -3.41 -0.06

Top 10 performance contributors Bottom 10 performance contributors

Source: Liontrust, Factset 30.09.21


1.7%1.3%

1.2%1.1%

1.1%1.0%

1.0%0.9%0.9%0.9%

Next Fifteen CommunicationsdotDigital

Robert WaltersImpax Asset Management

Mortgage Advice BureauBig Technologies

Tatton Asset ManagementClipper Logistics

AnimalcareBrooks Macdonald

-0.5%-0.3%

-0.2%-0.1%-0.1%-0.1%-0.1%-0.1%-0.1%-0.1%

iomartIG DesignCohortBioventixConcurrent TechnologiesmusicMagpieEckohIntegraFinAB DynamicsTeam17

21

46.9%

72.4%

51.1%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Sep-

20

Oct

-20

Nov

-20

Dec-

20

Jan-

21

Feb-

21

Mar

-21

Apr-

21

May

-21

Jun-

21

Jul-2

1

Aug-

21

Sep-

21

Liontrust UK Smaller Companies Fund FTSE Small Cap ex ITs Index IA UK Smaller Companies Sector

Liontrust UK Smaller Companies | Performance 12 months to 30 September 2021

Portfolio return versus benchmark and peer group

Source: Data at 30.09.21, FE Analytics, primary share class, bid-to-bid, net of fees, income reinvested basis, total return. Percentage returns 30.09.20 – 30.09.21 versus comparator benchmarks FTSE Small Cap ex Its (Investment Trusts) Index and IA UK Smaller Companies Sector


22

Liontrust UK Smaller Companies | Performance attribution 12 months to 30 September 2021

Top 10 stock contributors to performance (%)

Average weight

Total return


Sumo Group 1.85 112.66 1.94

Next Fifteen Communications 1.89 124.07 1.79

dotDigital 2.75 71.18 1.77

Mortgage Advice Bureau 2.55 67.72 1.77

Impax Asset Management 1.83 128.46 1.73

Robert Walters 2.10 93.14 1.65

Clipper Logistics 2.66 52.16 1.53

Ideagen 2.05 67.35 1.44

YouGov 2.70 49.59 1.41

Kainos Group 1.69 91.56 1.38

Bottom 10 stock contributors to performance (%)

Average weight

Total return


iomart 1.51 -37.53 -0.80

Eckoh 0.81 -17.78 -0.15

Cohort 1.48 -7.75 -0.13

musicMagpie 0.42 -9.84 -0.10

Gamma Communications 0.76 0.61 -0.09

GlobalData 1.88 -3.65 -0.09

AJ Bell 0.93 -10.06 -0.08

LSL Property Services 0.06 -6.84 -0.05

Hilton Food Group 1.49 0.04 -0.03

Eco Animal Health 0.00 -4.83 -0.01

Top 10 performance contributors Bottom 10 performance contributors

Source: Liontrust, Factset 30.09.21


1.9%1.8%1.8%1.8%

1.7%1.6%

1.5%1.4%

1.4%1.4%

Sumo GroupNext Fifteen Communications

dotDigitalMortgage Advice Bureau

Impax Asset ManagementRobert Walters

Clipper LogisticsIdeagenYouGov

Kainos Group

-0.8%-0.1%-0.1%-0.1%-0.1%-0.1%-0.1%-0.1%

0.0%0.0%

iomartEckohCohortmusicMagpieGamma CommunicationsGlobalDataAJ BellLSL Property ServicesHilton Food GroupEco Animal Health

23

Big Technologies

Foresight

Inspecs

Keystone Law

Kitwave

Lendinvest

LSL Property Services

Microlise

musicMagpie

On The Beach

Trellus Health

Tribal Group

Liontrust UK Smaller Companies | Portfolio activity last 12 months

Source: Liontrust, 12 months to 30.09.21

Takeovers Management ownership < 3% Other

Stocks bought

Accesso Technology

Castings

Eco Animal Health

Gamma Communications

IG Design

IMImobile

Nucleus Financial

Paypoint

Pennant International

Trifast

Stocks sold

A

A

A

A

A

A

A

A

A

A

Fund positioning

25

Liontrust UK Smaller Companies | Fund exposures

Top 10 holdings (%)

Yougov 2.6%

Dotdigital Group 2.6%

Next Fifteen Communications 2.5%

RWS 2.4%

Robert Walters 2.3%

Mortgage Advice Bureau 2.1%

Impax Asset Management 2.1%

Big Technologies 2.0%

Clipper Logistics 2.0%

Learning Technologies 2.0%

Source: Liontrust as at 30.09.21. Fund versus FTSE Small Cap ex-ITs index, a comparator benchmark. FTSE AIM (Alternative Investment Market) Index


21.7%

21.2%

20.4%

16.6%

8.9%

1.9%

0.8%

0.7%

7.7%

26.3%

12.4%

3.8%

20.6%

0.4%

4.6%

23.1%

2.7%

4.5%

0.7%

0.8%

Industrials

Financials

Technology

Consumer Discretionary

Health Care

Consumer Staples

Real Estate

Basic Materials

Energy

Telecommunications

Utilities

Cash

Sector allocation (%)

Liontrust UK Smaller Companies Fund FTSE Small Cap ex-ITs index

7.0%8.3%

68.4%

8.6%7.7%

Asset allocation (%)

FTSE 250 Index

FTSE Small Cap ex- ITs Index

FTSE AIM

Other

Cash

26

Fund facts | Liontrust UK Smaller Companies Fund

71Number of

holdings

20.9%Average

management equity ownership

69.0%Holdings paying

a dividend

64.8%Holdings with

net cash

30.3xAverage P/E of

holdings

15.7%Average earnings

growth rate

100%UK headquartered*

Source: Liontrust / Style Analytics as at 30.09.21. FTSE Small Cap ex-ITs index is a comparator benchmark. *Map represents a sample of the portfolio spread. P/E Price to Earnings ratio

27

IA Smaller Companies sector

Source: Liontrust / Bloomberg as at 30.10.20. The Tellworth fund and Stonehenge fund have been excluded as data was unavailable at time of sourcing. AUM: Assets under management

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IA UK Smaller Companies – Fund Average & Median Market Caps

Fund Average Market Cap Fund Median Market Cap

£7,011m43.5% AUM

£3,466m21.5% AUM £3,857m

23.9% AUM £1,185m7.4% AUM

£601m3.7% AUM

Conclusion

29

Conclusion

A unique process that identifies intangible barriers to competition and looks for evidence of strong financial returns

A focus on the importance of employee motivation in smaller companies

A sensible approach to evaluating risk

A bottom-up approach that benefits from the long-term structural growth of its individual companies

A style that is attentive to the current macro economy via day-to-day company newsflow but no attempt is made to forecast the future macro-economic outlook

A long-term/low turnover portfolio with an emphasis on IP-rich manufacturing, information technology, service companies and fee-based fund management

A long-term performance track record and committed, experienced Fund Managers

IP: Intellectual Property

30

Cumulative returns (since manager inception)Annualised returns (since manager inception)

Liontrust UK Smaller Companies Fund (UK Small Cap portfolio)

No.1 highest Alphain the sector since manager inception

1stquartile

performance over 3, 5, 10 years

and manager inception

425.2%

966.3%

Source: Data as at 30.09.21, FE Analytics, primary share class, bid-to-bid, net of fees, income reinvested basis, total return. Percentage returns from manager inception (08.01.98), versus comparator benchmarks FTSE Small Cap ex ITs (Investment Trusts) Index and the IA UK Smaller Companies Sector. Note: there were only 21 funds in the sector since launch of the UK Smaller Companies Fund. Quartile performance correct as at 30.09.21, generated 08.10.21. Alpha: A measure of the excess return generated by a fund manager. This is intended to be an indicator of manager skill rather than his or her exposure to market volatility (beta).


14.0%

7.2%

10.5%

Liontrust UK SmallerCompanies Fund

FTSE Small Cap ex ITsIndex

IA UK SmallerCompanies Sector

-500%

0%

500%

1,000%

1,500%

2,000%

2,500%

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2021

Liontrust UK Smaller Companies FundFTSE Small Cap ex ITs IndexIA UK Smaller Companies Sector

2,120% return

since manager inception

2,119.8%

31

Discrete performance

Source: FE Analytics as at 30.09.21, total return, (net of fees, income reinvested), bid-to-bid, primary share class. Funds versus comparator benchmarks. Quartile performance and sector rankings correct as at 30.09.21, generated 06.10.21.


To previous quarter 12 months ending (%) Sep-21 Sep-20 Sep-19 Sep-18 Sep-17Liontrust UK Smaller Companies I Inc 46.9 12.8 -5.0 19.7 23.8FTSE Small Cap ex-ITs Index 72.4 -12.7 -7.8 0.6 17.8IA UK Smaller Companies 51.1 -0.4 -7.1 10.8 25.0Quartile 3 1 2 1 3

32

Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested.

The portfolio is primarily invested in smaller companies and companies traded on the Alternative Investment Market. These stocks may be less liquid and the price swings greater than those in, for example, larger companies.

The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisablevalue of the investment, particularly in the short term. Investments should always be considered as long term.

Key risks

33

For investment professionals only

This document is issued by Liontrust Fund Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518165) to undertake regulated investment business.

It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy.

The document contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.

All the information provided should be treated as confidential, information may constitute material non-public information, the disclosure of which may be prohibited by law, and the legal responsibility for its use is borne solely by the recipient. This presentation has been produced for a professional audience it should not be distributed to, or relied upon by, retail investors. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust

Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.

Citywire. Anthony Cross and Julian Fosh are AA rated by Citywire and Victoria Stevens and Matt Tonge are AAA rated by Citywire for risk-adjusted performance from 31.07.18 to 31.07.21. Citywire information is proprietary and confidential to Citywire Financial Publishers Ltd (‘Citywire’), may not be copied and Citywire excludes any liability arising out of its use.

FE Crown Fund Ratings do not constitute investment advice offered by FE and should not be used as the sole basis for making any investment decision. All rights reserved.

© 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Sustainability Rating as of 31.07.21. Sustainalytics provides company-level analysis used in the calculation of Morningstar’s Sustainability Score. © 2021 Morningstar. All rights reserved. The information contained herein:(1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

This fund is rated by Fund Calibre, for more information go to: www.fundcalibre.com.

21/867 AP/HC: 15.10.21 | 21/883 AP

Disclaimer

All our documents are printed on recycled paper or paper from a sustainable source in accordance with either the FSC, PEFC or EUEcolabel criteria to help keep our environmental impact to a minimum.

Appendices

35

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Dec-

19

Jan-

20

Feb-

20

Mar

-20

Apr-

20

May

-20

Jun-

20

Jul-2

0

Aug-

20

Sep-

20

Oct

-20

Nov

-20

Dec-

20

Liontrust UK Smaller Companies FTSE Small Cap ex ITs IA UK Smaller Companies

UK Smaller Companies | 12 month performance to 31 December 2020


Source: Data at 31.12.20, FE Analytics, bid-to-bid, net of fees, income reinvested basis, total return, primary share class. Percentage returns 31.12.19 – 31.12.20 versus comparator benchmarks FTSE Small Cap ex-ITs and IA UK Smaller Companies


15.2%

6.5%1.7%

36

UK Smaller Companies | Fund performance 2020


Source: FE Analytics 31.12.19 – 31.12.20, Liontrust UK Smaller Companies Fund, bid-to-bid, net of fees, income reinvested basis, total return, primary share class, versus comparator benchmarks FTSE Small Cap ex-ITs and IA UK Smaller Companies


+17.7%+14.3%

+23.4%-37.1%-30.4%

-41.2%

Vaccine Rally31st Dec

+43.9%+45.0%

+40.0%

Market Rebound6th Nov

Market Fall23rd Mar

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Dec-

19

Jan-

20

Feb-

20

Mar

-20

Apr-

20

May

-20

Jun-

20

Jul-2

0

Aug-

20

Sep-

20

Oct

-20

Nov

-20

Dec-

20

Liontrust UK Smaller Companies FTSE Small Cap ex ITs IA UK Smaller Companies

37

Economic Advantage team

The process seeks to identify companies that possess intangible assets which produce barriers to competition and provide a durable competitive advantage that allows the companies to defy industry competition and sustain a higher than average level of profitability for longer than expected. In the fund managers’ experience, the hardest characteristics for competitors to replicate are three classes of intangible asset: intellectual property, strong distribution channels and significant recurring business.

Anthony Cross, Julian Fosh, Victoria Stevens, Matt Tonge and Alex Wedge

Anthony Cross, Julian Fosh, Victoria Stevens, Matt Tonge and Alex Wedge manage the Liontrust Economic Advantage Process. Anthony, who was previously at Schroders, has managed the Liontrust Special Situations and UK Smaller Companies Funds since launch and he started working with Julian at Liontrust in 2008. Julian has previously managed money at Scottish Amicable Investment Managers, Britannic Investment Managers, Scottish Friendly Assurance Society and Saracen Fund Managers. Victoria Stevens and Matt Tonge joined the team in 2015. In Victoria’s previous role as deputy head of corporate broking at FinnCap, she built up an extensive knowledge of the smaller company investment universe. Matt had previously spent nine years on the Liontrust dealing desk, winning an industry award for his work in mid and small cap stocks. Alex Wedge joined the existing Economic Advantage team in March 2020 from N+1 Singer, where he was latterly a senior member of the equity sales team.

Economic Advantageinvestment process

38

Liontrust UK Smaller Companies portfolio style tilt as at 30 September 2021

Source: 30.09.21. Style Analytics, Liontrust UK Smaller Companies versus a comparator benchmark, FTSE Small Cap ex-ITs Index. MT = Medium term; ST = Short term; EBITDA = Earnings Before Interest, Taxes, Depreciation & Amortization

Value

Growth

Volatility

Momentum

Other factors

Yield

Size

Quality

-6.3-0.1

-2.6-5.7

0.5-1.7

4.88.5

-3.25.0

1.40.1

-4.13.3

-1.71.7

-5.11.8

-8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0

Book to PriceEarnings Yield

Cash Flow YieldSales to Price

EBITDA to PriceDividend Yield

Earnings GrowthSales Growth

Forecast Growth 12MReturn on Equity

Net Profit MarginMarket Cap

Market BetaMomentum ST

Momentum MTForecast FY1 Revisions

Debt to EquityForeign Sales

Style TiltTM

Styl

e F

acto

rs

39

Victoria Stevens & Matthew Tonge AAA rated by Citywire for their risk-adjusted performance from 31.07.18 to 31.07.21

Anthony CrossAA rated by Citywire for their risk-adjusted performance from 31.07.18 to 31.07.21. FE Alpha Manager 2012-14, 2016-21, FE Fundinfo Alpha Manager Awards 2020 – Best Alpha Manager of the Year and FE Fundinfo Alpha Manager Awards 2020 – Best Alpha Manager UK Equities

Julian FoshAA rated by Citywire for their risk-adjusted performance from 31.07.18 to 31.07.21. FE Alpha Manager 2012-14, 2016-21, FE Fundinfo Alpha Manager Awards 2020 – Best Alpha Manager of the Year and FE Fundinfo Alpha Manager Awards 2020 – Best Alpha Manager UK Equities

Liontrust

UK Growth Fund2, 3, 5, 6, 7, 15

UK Smaller Companies Fund1, 2, 3, 5, 7, 8, 9, 10, 14, 15

Special Situations Fund1, 2, 3, 11, 4, 5, 7, 8, 9, 12, 13, 15

UK Micro Cap Fund2, 5, 6, 8, 15

Economic Advantage | Awards and ratings

Source: Liontrust have been awarded the FT Adviser 100 Club Awards 2019 and 2020 – Small to Mid Investment Group of the Year, Professional Paraplanner Awards 2020 – Best Active Investment Solution Provider, Fund Calibre Elite Rated Provider 2021 - Equities and Investment Week Fund Manager of the Year Awards 2021 – Global Group of the Year. 1. Rayner Spencer Mills Rated Fund, 2. Morningstar Rating, 3. Morningstar Analyst Rating, 4. Morningstar Sustainability Rating, 5. FE Crown Rating, 6. FE Invest Approved List, 7. Square Mile, 8. Fund Calibre Elite Rated, 9. Money Observer Rated Fund 2019, 10. FT Adviser 100 Club Awards 2019 and 2020 – UK Smaller Companies Fund of the Year, 11. Morningstar Awards 2019 – Best UK Equity Fund, 12. AJ Bell Fund & Investment Trust Awards 2018 and 2020 – UK Equity (Active), 13. AJ Bell Fund and Investment Trust Awards 2020 – UK Equity – Active, 14. Adviser Centre – Established, 15. Defaqto Individual Fund Diamond Rating 2021


Fund Manager Awards

2021

40

Composite: Economic Advantage – UK Small Cap Growth EquitiesComposite Inception Date: 01 January 2000Reporting Currency: GBPReporting Date: 31 December 2020Benchmark: FTSE Small Cap (Ex-IT) Index

GIPS | Economic Advantage – UK Small Cap Growth Equities

1. Liontrust Asset Management PLC (“Liontrust” or the “Firm”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with GIPS standards. Liontrust has been independently verified for the periods 1st January 2000 to 31st December 2019 inclusive. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

2. For the purposes of GIPS, the Firm is defined as all funds under the management of Liontrust Asset Management PLC.

3. The “Firm” is known as Liontrust, and this encompasses the combined investment management activities of Liontrust Investment Partners LLP, Liontrust Fund Partners LLP and Liontrust Investment Management Limited. Liontrust is a specialist fund management company launched in 1995 and listed on the London Stock Exchange in 1999. All Liontrust entities are authorised and regulated by the Financial Conduct Authority.

4. The Firm was redefined from Liontrust Investment Partners LLP to Liontrust Asset Management PLC on 1st January 2018 as this Firm definition is the broadest definition available that includes all assets contained in the Firm’s composites.

Year Cumulative ReturnBenchmark

Cumulative ReturnNumber of Portfolios

Account Dispersion (StdDev)

3 Year Annualized Sample Standard

Deviation

Benchmark 3 Year Annualized Sample Standard Deviation

Composite Market Value Total Firm Assets

2020 16.80 1.65 2 0.05 19.48 23.57 1,372,997,813.44 27,469,312,5642019 32.84 17.68 2 0.12 11.74 10.49 1,170,561,196.00 17,873,788,6302018 -4.63 -13.80 2 0.13 12.81 11.50 845,161,145.00 10,794,064,8632017 28.49 15.61 3 0.88 10.15 9.61 1,005,153,256.00 10,210,655,0652016 15.18 12.54 3 -- 11.04 10.04 701,609,533.00 5,750,990,9152015 25.51 12.99 1 -- 8.15 9.34 432,545,000.00 4,543,690,1362014 5.87 -2.68 1 -- 8.85 11.75 318,482,000.00 4,139,397,2742013 32.40 43.86 1 -- 9.36 13.73 233,163,000.00 3,438,582,5322012 35.80 36.29 1 -- 10.81 14.96 144,218,350.00 2,530,007,7682011 2.94 -15.16 1 -- 12.97 25.00 73,975,175.00 1,364,021,162

41

GIPS | Economic Advantage – UK Small Cap Growth Equities

5. Additional information regarding policies for valuing portfolios, calculating performance and preparing compliant presentations are available on request.

6. A complete list and description of all the Firm’s composites has been constructed and is available upon request.

7. Economic Advantage is the collection of distinctive characteristics of a company that competitors struggle to reproduce. In our experience the hardest to replicate of these particular characteristics fall into the following three categories of intangible assets: intellectual property, strong distribution channels and significant recurring business. Economic Advantage in smaller companies is created and maintained by talented individuals. Research demonstrates that equity ownership motivates key employees, helps to secure a company’s competitive edge and leads to better corporate performance. It aligns the interests of the employees with outside shareholders and creates a more conservative attitude towards acquisitions and gearing. Every company held in the portfolio has at least 3% of its equity held by the main board directors. The process will invest in companies throughout the FTSE Small Cap, Fledgling and AIM Indices. Typically the portfolio will hold between 40 and 60 stocks with overweight positions of between 1-3% versus the FTSE Small Cap Index weights, where relevant, as per company risk grades. The portfolio is primarily invested in smaller companies and companies traded on the Alternative Investment Market. These stocks may be less liquid and the price swings greater than those in, for example, larger companies.

8. For the purposes of GIPS the composite was created on the 1st January 2000, however the composite has been managed by Liontrust since 8th January 1998.

9. Liontrust UK Smaller account returns are a combination of the primary Retail Share Class and the current primary Institutional Share Class. Retail - INC R GB0007420788 used from its inception in 07/08/1995 until the inception of the Primary Institutional Share class - INC I GB00B57TMD12 on 28/01/2013.

10. All performance returns and market values are denominated in Sterling.

11. The Benchmark is the FTSE Small Cap (Ex-ITs) Index.

12. All performance returns have been calculated gross of Ongoing Charges Figure (OCF). Furthermore, no other fees have been deducted bar trading expenses.

13. A representative fee schedule for this composite is an initial charge of up to 5%, along with a yearly Management Fee ranging between 1.25% - 1.50%. Note that fees for institutional investors are assessed on a case-by-case basis.

14. Throughout all time periods the number of portfolios contained within the composite was less than five, therefore no measurement of dispersion has been presented.

15. Three year standard deviation is not available when there are less than 36 months of returns available.

16. Liontrust is generally permitted to use financial derivative instruments to more effectively manage the level of investment risk and to facilitate efficient investment and management of cash and liquidity in each Fund. Liontrust may use futures, forwards (including forward rate agreements), options (both writing and purchasing), swaps (including credit default swaps) and contracts for difference, including both exchange traded and over the counter derivative instruments for any Fund. Additional information regarding investments in derivative instruments are available on request.

liontrust ea uk smaller companies fund

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