To achieve long-term capital growth by investing in a diversified portfolio primarily of quoted US smaller and medium sized companies.
Net asset value ("NAV") per share
Russell 2000 Index
Premium/(discount) to NAV
Three month review
The NAV per share rose by 3.6% in the three months to 31 March 2012. This compares to an increase of 9.0% in the benchmark, the Russell 2000 Index (sterling adjusted) during the same period.
The quarter was notable for very strong performance by high risk stocks following steps to support the Euro. The Company's investment approach is conservative, emphasising capital preservation, and normally underperforms in periods when high risks stocks lead the market.
Stocks that lagged and had a particular impact on overall performance included Rex Energy, FTI Consulting, Crawford & Co, Atlantic Tele-Network and Orbital Sciences. There was good performance, however, from Conn's and Prestige Brands; the latter received an unsolicited bid.
We bought one new holding, Grand Canyon (secondary education) and sold another, CapitalSource (business lending).
The Company is not currently geared.
There have been no share buybacks during the period but the Company issued 380,000 shares. Shares have been issued at an average premium of 1.4% to the published NAV on the day of issue.
Ten Largest Holdings
Retailer of home appliances and consumer electronics
Distributor of bottled gases
Used car retailer
Mobile phone tower owner and operator
Distributor of swimming pool supplies
Civil construction contractor
Manufacturer of floor coverings
Manufacturer of high performance analogue semiconductors
Provider of software for electronic funds transfer
31 March 2012
Percentage of total investments
31 December 2011
Materials & Processing
The US economy has shown some signs of growth since the slowdown in the second half of 2011 and is managing to maintain that momentum despite weakness elsewhere in the world. Uncertainties continue around the Euro and Middle East tension.
The Board is not aware of any significant events or transactions which have occurred between 31 March 2012 and the date of publication of this statement which would have a material impact on the financial position of the Company.
Daily and Key Information
Further information regarding the Company, including monthly factsheets and daily NAVs published since the end of the period are available on the internet at www.fandcussmallers.com
By order of the Board
F&C Management Limited, Secretary
24 April 2012
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