COVID-19: Q1 Update

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Dear Investors,

Like viruses, every market sell-off has its own unique character. And like the rest of Europe and America, we had assumed that the Asian countries would see off COVID-19 as efficiently as they dispatched the SARS outbreak in 2002. Well, Hubei-aside, they did. But the difference this time was that air travel between China and the rest of the world had increased exponentially. From 90m passenger journeys in 2002 to over 650m in 2019. In the world of mass air travel, Hubei is now only around the corner, not around the world. That was an expensive lesson but it won’t be forgotten. Nor will we forget that pandemics come, and then they go.

A handful of companies will benefit from the virus to some degree or will see minimal adverse impact on their operations. Most will suffer to some degree. Our initial priority was to establish whether we own companies whose survival might be in doubt. Having satisfied ourselves that we are not exposed to any potential failures, we have been looking to invest opportunistically. The main challenge is that different businesses will take varying amounts of time to get back to something approximating normality. We are taking a conservative approach with businesses across a range of sectors being careful to ensure that we are not dependent on getting any short term forecasts precisely right. The next year or so is going to be messy – GDP numbers and corporate earnings will not be pretty. We are much more interested in what happens after that. If a company’s share price offers the prospect of high returns on a three to five year view and has a balance sheet that will enable it to tough out the next year or two, we are very happy to look “over the valley” and invest today. Markets have been extremely volatile and there are many challenges ahead. However, we believe that a sensible, disciplined and patient approach to investment is likely to be rewarding.

Best Wishes,

Slater Investments Limited

Risk warning: Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. Investors may not receive back their original investment. The Slater Funds have a concentrated portfolio, which means greater exposure to a smaller number of securities than a more diversified portfolio. Charges are not made uniformly throughout the period of the investment. The Slater Funds invest in smaller companies and carries a higher degree of risk than funds investing in larger companies. The shares of smaller companies may be less liquid and their performance more volatile over shorter time periods. The Slater Fund can also invest in smaller companies listed on the Alternative Investment Market (AIM) which also carry the risks described above. The Slater Funds may invest in derivatives and forward transactions for the reduction of risk or costs, or the generation of additional capital or income with an acceptably low level of risk which is unlikely to increase the risk profile of the fund significantly. This document is provided for information purposes only and should not be interpreted as investment advice. If you have any doubts as to the suitability of an investment, please consult your financial adviser. The latest Key Investor Information Documents and Prospectuses are available free of charge from Slater Investments Ltd. You are required to read the Key Investor Information Document before making an investment. Telephone calls may be recorded. Slater Investments Ltd, which is authorised and regulated by the Financial Conduct Authority, is the manager of the Slater Growth Fund. Slater Investments Ltd address is Nicholas House, 3 Laurence Pountney Hill, London, EC4R 0EU.