S_W Revera UK Dynamic Fund

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					            S&W Revera UK Dynamic Fund
                    A focused, UK, Special Situations Fund
                Caveat Venditor      Movers & Shakers
February’s portfolio return proved disappointing.          A number of our investments reported annual results. In each case the underlying
This was in spite of positive figures and comments         business performance was positive but was often met with a lacklustre share price
from those investments which reported during the           response. We know from experience that markets can be dismissive of business
month (of which more below). We do not own any             fundamentals in the short-term but this will ultimately correct.
mining stocks and the strong run in miners proved a        British Aerospace settled its long running disputes with the SFO and the US DoJ. Its                              February 2010
drag on performance. We adhere to our long stand-          results showed continued profit progress, a 10% dividend increase, further increase
ing belief that commodity prices are exhibiting all        in net cash and the announcement of a £500m share buyback program. We acknowl-
the signs of a speculative bubble. Markets continue        edge that there is uncertainty over UK defence budgets but only 20% of BAE’s busi-           Top Twenty           Investments
to monitor the on going EU discussions over Greece’s       ness is exposed to the MoD. BAE bid for Babcock in 2006 and will be monitoring the
fiscal position, although there are increasing signs       Babcock/VT situation closely. Reckitt Benckiser again demonstrated the strength of Top 20 Holdings                       Sector             %
of a compromise in the offing. Domestically the            its brand portfolio with strong cash generation, moving from £1bn of debt to net cash. Thorntons                    General Retailers        5.3
spectre of a hung parliament is proving a distrac-         There were further gross margin improvements reflecting Reckitt’s pricing power
                                                                                                                                                  Lloyds Banking Group               Banks              4.9
tion and providing vast copy for amateur psepholo-         and the final dividend was increased by 19%.
gists. Those of certain vintage know that what really       Lloyds Banking reported acceptable figures in the context of the upheavals of 2009. Morgan Crucible                   Electronics           4.7
counts is the arc of Peter Snow’s swingometer.             In common with its quoted peers it pointed to an easing in the rate of impairments Reckitt Benckiser                      Health             4.6
New investments comprised Babcock and Game                 but suffered in comparison by not providing a clearer roadmap to recovery. Third Restaurant Group                    Leisure & Hotels        4.5
Group. Our purchase of Babcock was to replace              quarter figures from British Land painted a picture of a strong recovery in prime
VT Group. We believe that VT’s pursuit of Mouchel          property valuations. Morgan Crucible’s figures allayed concerns over a rights issue Kewill Systems                Software & Comp Servs      4.5

Group was ill considered. Following a meeting with         to reduce its debt. Trading conditions are continuing to improve. Morgan remains Spirent Communications               Info Hardware          4.3
Babcock’s management we elected to switch from             an investment which should be capable of generating significantly higher earnings Legal & General                     Life Assurance         4.2
VT into Babcock. We did not anticipate Babcock             as the global economy normalises. William Hill finals were solid with improved
subsequently tabling a bid for VT. Given Babcock’s         performance from on line compensating for slight weakness in its retail activities. BG Group                            Oil & Gas            4.2

unique assets we would not rule out further parties        Results from the oil majors benefitted from a recovery in the oil price. Dividends do BAE Systems                  Aerospace & Defence       4.2
entering the bidding process. Game Group, a High           not appear under threat. Interim results from Thorntons were very well received and Total for top 10                                        45.4
St retailer of gaming software, has a cash rich bal-       led to a round of full year upgrades.
                                                                                                                                                  William Hill                  Leisure & Hotels        4.1
ance sheet and we believe will benefit from the in-        Share price weakness was occasioned by investor sentiment rather than any corpo-
troduction of new consoles later in the year. We con-      rate news. Fears of sovereign defaults depressed Life Assurers and Resolution fol- Astrazeneca                       Pharmaceuticals         4.1
sider this a good entry point as retailers are so out of   lowed suit. UK retailers were unloved which drove Game Group lower. Despite the Next                                General Retailers        3.9
favour with investors.                                     stockmarket rise, Brewin Dolphin was hit by poor sentiment towards financial stocks.
                                                                                                                                                  Carluccio’s                   Leisure & Hotels        3.8
Portfolio cash continues to reduce and we remain           Babcock’s fall was the easiest to rationalise as investors considered the terms of its
buyers of cash generative businesses where we be-          prospective bid for VT Group. We don’t believe that Babcock will overpay to gain De La Rue                           Support Services        3.8
lieve that short term market sentiment is obscuring        control of VT- on the right terms there is very clear logic in the combined grouping. British Land                     Real Estate           3.7
their fundamental long-term value.
                                                                                                                                                 Babcock Intl                   Support Services        3.7
                                                           Rolling Performance
Discrete Performance                                                                                                                             Brewin Dolphin               Speciality Financials     3.7
                                                                            1 month   3 months   6 months   1 year   launch    FTSE AllShare
                                                                                                                                                 BP plc                            Oil & Gas            3.6
                  Launch-    Dec 2008-                                                                                         since launch
                  Dec 2008   Dec 2009                       Retail           (0.6)%     1.3%       2.5%      44.5%    23.5%        16.5%
                                                                                                                                                 Game Group                    General Retailers        3.5

Retail              (6.0)%     32.9%         -              Institutional    (0.6)%     1.3%         -          -     (3.5)%       2.4%          Total for top 20                                      83.4

Institutional         -          -           -              Founder          (0.6)%     1.3%       2.6%      44.7%     7.3%        5.3%          Other equity holdings (3)                              9.3

Founder            (18.5)%     33.1%         -              FTSE AllShare     2.4%      2.3%       7.7%      40.9%      -            -           Bonds and net liquidity                                7.3
                                                                                                                                                 TOTAL                                                100.0
NAV and Indices priced at midday. Source: Smith & Williamson Fund Administration Ltd. FTSE AllShare Launch priced at close of day.
Launch Dates: Retail Shares 7 Oct 2008; Institutional Shares 17 September 2009; Founder Shares 26 September 2008.
Fine Canvas                                                           Market Analysis                                                    Risk Factors

Investors are demonstrating a willingness to shrug off bad            Key Parameter                   Outcome             Signal         • This OEIC is designed as a medium to long term invest-
news. Fears over the Greek fiscal crisis appear to be receding                                                                           ment, for example at least five years.
                                                                      FT All-Share PE Ratio              16.68
and may be remembered as much for German opportunism                                                                                      • The value of any investment in this fund is not guaran-
- ‘ We’ll buy Kefalonia if that would help’ -than its economic        Real Bond/Equity Yield             (0.17)                          teed and can go down as well as up. Investors may not get
impact. The corporate reporting season has offered bears little                                                                          back capital originally invested.
                                                                      Earnings revisions                Positive
to bolster their case. We remain firmly of the view that the foun-                                                                        • The OEIC’s portfolio is likely to be more concentrated
dations for a bull market are in place. Equity valuations, certain    Appetite for new equity           Neutral                          than other investment funds and therefore may be more
sectors excepted, are attractive - in part because of the back-                                                                          risky than more diversified portfolios.
                                                                      3mth market direction*             3.3%
drop of negative comment. To use a seasonal metaphor, better                                                                              • There can be no guarantee that the investment objec-
to buy before the garden is in full bloom. Relative to bonds          MARKET PHASE DECISION:           Bull Phase                        tives of the OEIC will be met.
equities appear well priced, not least as managements of fi-                                                                              • There will be times when this OEIC’s performance will
nancially strong businesses view dividend growth as a means          *trailing 3mth movement of FTSE AllShare Index                      be unlike that of any stock market index which may or may
of enhancing shareholder value. Ultimately market valuations         Indices at end of day.                                              not be advantageous to investors.
and equity returns will be determined by earnings and thus far
earnings forecasts for 2010 are improving. If forecasts are met      Fund Manager                                                        Revera Asset Management Limited (“Revera”) is a limited company
                                                                                                                                         incorporated in Scotland with registered number SC255433. Revera is
then equities are unquestionably cheap.                              Stephen Grant                                                       authorised and regulated by the Financial Services Authority. Revera’s
 Investors are demonstrating greater selectivity in the IPO mar-     Investment Director                                                 registered office is at 8a Rutland Square, Edinburgh EH1 2AS. S&W Revera
ket with a reluctance to simply refinance business currently                                                                             UK Dynamic Fund is a sub-fund of S&W Revera Fund, which is an open-
                                                                                                                                         ended investment company with variable capital (ICVC) incorporated in
sitting on private equity books. For businesses which require
                                                                     Normally disclaimers appear at the                                  England & Wales, with registration number IC000692 and authorised by the
additional capital to further growth ambitions the reception                                                                             Financial Services Authority (FSA) with effect from 12 August 2008.
has been more positive. For stockpickers this provides an ideal      end - I’ll begin with mine. Blame                                   The information in this factsheet does not constitute an offer or invitation
canvas from which to generate strong returns.                        my father. As a child he took me                                    for the sale or purchase of any units or shares in S&W Revera UK Dynamic
                                                                     to watch a football team that no-                                   Fund, in any jurisdiction, is not intended to form the basis of any investment
                                                                                                                                         decision and does not constitute or contain any recommendation by Revera,
                                                                     one else followed. Consequently,
                                                                                                                                         its shareholders, directors, employees, agents or advisers.
                                                                     the idea of going with the crowd                                    No representation or warranty (express or implied) is given as to, the
 Key Facts                                                           or trend has been alien to me. In
                                                                     almost 25 years of investment man-
                                                                                                                                         adequacy, accuracy or completeness of the information and opinions
                                                                                                                                         contained in, the factsheet materials.
Structure - UCITS OEIC                                                                                                                   The information in this factsheet is intended only for those who are
                                                                     agement experience, I’ve learned                                    considered, or would reasonably be considered, professional customers or
                                                                     to temper my contrarian instincts.                                  eligible counterparties as defined by the Markets in Financial Instruments
ACD - Smith & Williamson Fund Administration Ltd                     Sometimes the crowd is right and                                    Directive (MiFID), and are ordinarily resident in the United Kingdom.
                                                                                                                                         Any person who is unsure of their likely client classification must seek
                                                                     there is nothing to be gained by
                                                                                                                                         independent financial advice before acting on any information contained in
Price - Retail (Sedol B3BSKK3) 87.617 pence                          adopting a contrarian stance for the                                this factsheet. Persons resident in countries other than the UK should consult
        Institutional (Sedol B3BSKL4) 87.684 pence                   sake of it.                                                         their professional advisers as to whether they require any governmental or
        Founder (Sedol B3BSKJ2) 87.714 pence                                                                                             other consents in order to enable them to invest in any product or service
                                                                                                                                         described in this factsheet.
                                                                     As an investor I want to own a portfolio of businesses which        It is a condition of receipt of this factsheet that it must not be distributed
Annual Charge - Retail Shares 1.5%                                   have sustainable and durable earnings, not ones that happen         onwards to a third party.
              - Institutional Shares 1.3%                            to be in vogue. In order to make an objective assessment of         Unless expressly stated otherwise, the source of all factual information is
                                                                                                                                         Revera.
                                                                     what I believe a business is worth I track its cash generation. I
                                                                                                                                         Any prospective investor is recommended to seek his own independent
Initial Charge - Retail Shares up to 5%                              believe that the most reliable means of assessing a business’s      legal, tax and financial advice. The value of any investment in S&W Revera
                - Institutional Shares 0%                            long term performance is to monitor how much money it puts in       UK Dynamic Fund will not be guaranteed, and an investor may not get back
                                                                     the bank each year. It is a more objective measure of a compa-      all the money he/she invested.
Minimum Investment - Retail Shares £1,000                            ny’s capacity to generate shareholder wealth than either earn-
                   - Institutional Shares £100,000                   ings or management rhetoric. Profitable investment opportuni-
                                                                     ties arise most often when the prevailing view proves to be ill
All Share Classes are Accumulation Shares                            founded. Having a clear understanding of a company’s value
                                                                     remains the best means of deciding when it is right to invest
Dealing Line          0207 131 4951                                  against the flow.