FP Charteris Strategic  Fixed Income Fund An innovative Fixed Income  Strategy

September  2016

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Designed for a period of rising interest rates

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Fund denominated in Sterling but can Invest up to 30% in US Dollar & Euro denominated Bonds

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Use of Giltsoft – A State of the Art Gilt Proprietary Analysis Tool

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Top Priority - Capital preservation in a market with a lot of asymmetric risk

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All assets are liquid and tradable in the secondary market.

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Yield on Portfolio rises as Interest Rates increase plus potential capital gains on Perp FRN’s offset potential losses on Gilts

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Still aims to provide a competitive yield to existing conventional Bond Funds

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1st Fund Manager – Top of UK Gilt IMA Sector 2007, 2009 & 2013

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2nd Manager – Former Head Trader Standard & Chartered Bank FRN book

For professional intermediaries only

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20% in High Yielding Blue Chip Equities such as National Grid, Centrica etc Average Yield circa 5% (with expected dividend increases every year on top)

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Approx. 40% in A i Floating Fl ti rate t notes t split lit b between t R Redeemable d bl FRN’ FRN’s ((which hi h are iin Sterling) & Perpetual FRN’s – Split between Sterling and US Dollar FRN’s

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Approx. 40% in short dated UK Gilts :- Longer dated stocks may be acquired if yields rise to more historical average levels – If Interest rates rise to higher levels the percentage in Gilts may increase to a maximum of 80% of the portfolio.

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Long only Fund suitable for SIPPs, SSAS, ISAs & JISAs

For professional intermediaries only

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US Treasuries and UK Gilt Yields are around their lowest for 200+ years

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The average yield for a 10 Year UK Gilt over the last 300 years is y 0.6% (approx) ( pp ) between 3%-5% - currently (as at

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31st August ‘16) 16)

The average yield for a 50 Year (Irredeemable) Gilt is between 4%-6% - currently 1% st

(as at 31 August ‘16)

For professional intermediaries only

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I N V EST M EN T P R O C E S S

Aims

Key Points & Fundamentals Key Points & Fundamentals

Technical analysis: writing  options in practice

Risk management

Platforms

For professional intermediaries only

{Source: US Treasury *as at 31st Dec 2013 – Annual Data}

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Yi ld Yield

Year For professional intermediaries only

{Source: DMO / Bank of England}

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{Source: Bloomberg)

Example p 1 – UKT 1 ¾ % 2018 ((1-2 Year UK Gilt)) Price

Capital Loss (%)

Current GRY

0.10%

102.00

n/a

To Yield

2.9%

98.6

‐3.3%

To Yield

3%

96.8

‐5.0%

To Yield

4%

95.07

‐6.7%

To Yield

5%

93.35

‐8.4%

Price

Capital Loss (%)

Example 2 – UKT 1 ½ 2026 (10 Year UK Gilt) Current GRY Current GRY

0 8% 0.8%

107 6 107.6

To Yield

2%

95.5

‐11.2%

To Yield

3%

87.2

‐19%

To Yield

4%

79.7

‐25%

To Yield

5%

73.0

‐32%

Price

Capital Loss (%)

Example 3 – UKT 3 ½ 2068 (50 Year UK Gilt) Current GRY

1.15%

191.0

To Yield

2%

148.2

‐22%

To Yield

3%

113.1

‐40%

To Yield

4%

89.1

‐53%

To Yield

5%

72.3

‐62%

For professional intermediaries only

{Source: Bloomberg – Prices correct as at 31st August 2016

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{Source: Bloomberg)

% in each  sector

Security

% Of the Fund

Current Yield

Future Yield & Future Prices

Nationall Grid d

5%

4%

Income Increases as Dividend Increases d d Price should also rise

Centrica

5%

5.1%

Income Increases as Dividend Increases Price should also rise

20%

40%

SSE

5%

5.8%

Income Increases as Dividend Increases Price should also rise

United Utilities

5%

4%

Income Increases as Dividend Increases Price should also rise

UKT 1 ¾ % 2017

13%

0.10%

UKT 2 ¼ % 2018

13%

0.13%

UKT 1 ¾ % 2019

13%

0.13%

For professional intermediaries only

Average Yield Static g 0.12% ‐ Prices WILL  fall as  Yield Rise

(as at 31st August ‘16)

Equity Average Yield 4.7%

UK Gilt A Average Yield 0.12%

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{Source: Bloomberg)

% in each  sector

40%

Security

% Of the Fund

Current Yield

Future Yield & Future Prices

0.56%

Yield Increases as Interest Rates Rise Price should also Rise

KFW Redeemable FRN est. price 100

5%

Nationwide Redeemable FRN est price 100 4 est. price 100.4

5%

0.99%

Yield Increases as Interest Rates Rise Price should also Rise should also Rise

EIB Redeemable FRN est. price 100.38

5%

0.6%

Yield Increases as Interest Rates Rise Price should also Rise

Barclays B l P Perpetual FRN t l FRN est. price 70.5

5%

2 0% 2.0%

Yield Increases as Interest Rates Rise Yi ld I I t t R t Ri Price should also Rise

ANZ Perpetual FRN est. price 56

5%

1.7%

Yield Increases as Interest Rates Rise Price should also Rise

Lloyds Bank Perpetual FRN est. price 65

5%

2.0%

Yield Increases as Interest Rates Rise Price should also Rise

HSBC Perpetual FRN est. price 60

5%

1.6%

Yield Increases as Interest Rates Rise Price should also Rise

Total Portfolio Yield

For professional intermediaries only

Redeemable FRN Average Yield 0.7%

Perpetual FRN Average Yield 1.8%

1.5% approx (entire portfolio)

(as at 31st August ‘16)

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A Dynamic real-time model What Giltsoft does is allow the Yield Curve to be used dynamically, permitting users to input th i own estimates their ti t off medium-term di t changes h tto its it level l l and d shape h and d th thus make k fforecasts t of future bond market performance, thereby assisting in the active management of government bond portfolios.

For professional intermediaries only

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Equities are at multi-decade cheapness relative to both g conventional and Index Linked gilts

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(See charts overleaf)

Conclusion Due to their multi-decade relative cheapness and existing high yyields,, Blue Chip p Equities q should in theory y be more immune to rising interest rates than Gilts

For professional intermediaries only

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(as at 30 June ‘16)

Source: Giltsoft

Equities v Conventional Gilts: GY/DY 3.5

Equities q Expensive

3

2.5

2

Relative to Gilts 1.5

1

0.5

Equities Cheap

0 31/12/1980

31/12/1984

31/12/1988

31/12/1992

For professional intermediaries only

31/12/1996

31/12/2000

31/12/2004

31/12/2008

31/12/2012

31/12/2016

31/12/2020

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(as at 30 June ‘16)

Source: Giltsoft

Equities v IndexLinked: RY/DY 1.4

Equities q Expensive

1.3 1.2 1.1 1 0.9 0.8 0.7 0.6 0.5

Relative to Index Linked Gilts

0.4 0.3 0.2 0.1 0 -0 1 -0.1 -0.2 -0.3 -0.4 31/12/1980

31/12/1984

31/12/1988

31/12/1992

-0.5

For professional intermediaries only

31/12/1996

31/12/2000

31/12/2004

31/12/2008

31/12/2012

31/12/2016

31/12/2020

Equities Cheap 13

Ian Ian Williams  Williams – Chartered Chartered FCSI FCSI Ian has spent the past 35 years trading equities,  commodities and G7 government bonds as a  specialist stockbroker, Gilt Market Maker, Gilt  proprietary trader and Gilt Fund Manager He proprietary trader and Gilt Fund Manager. He  was a member of the London Stock Exchange for  many years before joining Chase Manhattan  Bank (now JP Morgan). Ian Williams awarded Trustnet Alpha  Manager in 2011 & accomplished a CityWire A rating in 2009,  Manager in 2011 & accomplished a CityWire A rating in 2009 2010 & 2011. Gilt Fund managed by Ian was top of the IMA UK  Gilt sector in calendar years 2007, 2009 & 2013.

Terry Farrow – Chartered MCSI, A.C.I.B. APFS C.F.P. Terry has over 40 years experience in the  investment markets having worked for  Barclays Bank and formerly ran the Standard  Chartered floating rate book for many years.  Terry became an IFA in 1990. Terry is  qualified at Level K10 Retirement options – covering all types of pension advice. Terry is also qualified both  to G60 and G70 level to cover both Pension advice and  Investment Management. There are only a handful of  Investment professionals in the UK that hold the G70  qualification. For professional intermediaries only

P i k Philli Patrick Phillips During his respected and distinguished city  career, Patrick Phillips has worked for a number of  leading financial institutions including Phillips &  Drew (now UBS Warburg), James Capel (now  ( ) ( HSBC), de Zoete & Bevan, now Barclays Capital)  and Merrill Lynch. In 1986 he was elected Deputy  Chairman of the Gilt‐Edged Market Makers Association (GEMMA)  and subsequently served as a member of the Council of the London  Stock Exchange and Chairman of its Gilt‐Edged Rules Committee.  Pat has gone on to develop one of the most technically advanced  yield curve analytics models in the world called Giltsoft and this is  used in conjunction with the Elite Charteris Strategic Bond Fund Nick Taylor – Chartered FCSI, Head of Research Nick Taylor has 38 years of international       y y Investment management experience, gained at  Morgan Grenfell, Invesco, and was Managing  Director at Cigna International Investment  Advisors and Matheson Investment Advisors and Matheson Investment  Management.  An award‐winning manager,  Nicholas has run equity portfolios for a broad range of investors,  including institutional pension funds, such as the Cadbury Schweppes  Pension Fund alongside running several million pounds of private  Pension Fund alongside running several million pounds of private client portfolios and investment trusts.  14

IMA Sector

: IMA UK STRAGEIC BOND SECTOR

Bloomberg Ticker Code

: FPCSFAI LN EQUITY (Inst Inc) : FPCSFAA LN EQUITY (Inst Acc)

ISIN number

: GB00BV8VPL71 (Inst Inc) : GB00BV8VPK64 (Inst Acc)

SEDOL S O number u be

: BV8VPK6 8 6 ((Inst st Inc) c) : BV8VPL7 (Inst Acc)

CUSTODIAN

: Citibank

Authorised Corporate Director {ACD} and Registrar:

: Host Capital (HC)

Auditor

: GRANT THORNTON UK LLP : INSTITUTIONAL INC AMC 1% : INSTITUTIONAL ACC AMC 1%

For professional intermediaries only

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I N V EST M EN T P R O C E S S

Aims

Key Points & Fundamentals

Technical analysis: writing  options in practice

Risk management

Platforms

For professional intermediaries only

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For all enquiries Ian Williams E. [email protected] T. +44 (0)20 7220 9780

London Office

Exeter Office

8-9 Lovat Lane, London, EC3R 8DW T: +44 (0) 20 7220 9780 Fax: +44 (0)20 7929 6925

Tel: +44 ((0)1392 ) 88 11 00

Find us across Social Media Twitter. @charteris_ YouTube: YT.com/user/charteristreasuryPM YT com/user/charteristreasuryPM Facebook: facebook.com/CharterisTreasuryPM/ LinkedIN: linkedin.com/company/charteris-treasuryportfolio-management-ltd portfolio management ltd

Authorised and regulated by the Financial Conduct Authority www.charteris.co.uk For professional intermediaries only

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This presentation is issued by Charteris Treasury Portfolio Management Ltd which is authorised and regulated by the Financial Conduct Authority •

Past performance is not a guide to future performance and investors may not get back the full amount invested

•

The price of shares and any income from them may fall as well as rise

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On redemption of holdings investors may not receive back the full amount invested. Management and other fees may reduce the capital invested

•

The information provided does not constitute advice or a personal recommendation for which the duty of suitability would be owed by us and you should seek your own advice as to the suitability of any investment matter mentioned here

•

Professional advisers should be aware that this document is intended for their use only and this document is not to be shown or given to any retail investors

•

presentation is made on the basis of our current understanding g of United Kingdom g Tax The p laws, which may be subject to change in the future

For professional intermediaries only

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