Why Invest?


“The Merchants Trust has a long and distinguished history of focusing on income for it shareholders.

In today’s low interest rate environment this, combined with Allianz Global Investors’ investment expertise and the ongoing dedication and responsibility of the board of directors, make the Merchant Trust a compelling proposition.”

Simon Fraser

Income in retirement? An early start could pay dividends.

We all want our retirement income to be enough for the life we'd like. That means an income that has the potential to increase over time, keeping up with rising living costs – and with the resilience to ride out any difficult economic conditions along the way. In the short-term, share prices can be volatile and can fall as well as rise at any time. But history shows that investing in FTSE 100 companies has provided long-term growth for investors.

The Merchants Trust is no stranger to early starts – we began investing in 1889. We buy stocks mainly in FTSE 100 companies with the aim of providing a rising income as well as long term capital growth. And because we are an investment trust, Merchants is able to draw on revenue reserves to support dividend payments in tough times.

Earning a reputation for success
Established in 1889, the Trust is the oldest and largest investment trust managed by Allianz Global Investors. The Trust’s portfolio is managed by Simon Gergel, Chief Investment Officer of UK Equities at Allianz Global Investors, who has more than 25 years of experience in managing UK equity income investments.

The best of Britain
The Merchants Trust invests in a diversified portfolio of UK “blue chip” companies; well-established, wellknown companies that we determine are well-run, with strong balance sheets and, importantly, the potential to pay attractive dividends. The UK stock market is good environment in which to invest as many of the companies listed on the London Stock Exchange have business activities worldwide. This provides investors with global exposure in the portfolio whilst benefitting from the UK’s leading corporate governance standards.

34 consecutive years of dividend growth
Although income is not guaranteed and could go down as well as up, the Trust has paid increasingly higher dividends to its shareholders year-on-year for the last 34 years – from 4.2 pence per share in 1982 to 24.0 pence per share in 2016. Please note that past performance is not a reliable indicator of future performance. You should not make any assumptions on the future on the basis of performance information. The value of an investment and the income from it can fall as well as rise as a result of market fluctuations and you may not get back the amount originally invested.

Ten Year Net Dividend Record in Pence (to year end 31 January)


Source: The Merchants Trust Report and Accounts, to year-end 31.01.16.

Discrete Past Performance - Total Return (%)
Share Price45.
FTSE All-Share TR22.
Source: Lipper, percentage growth, mid to mid, total return to 31.07.2017.

The Merchants Trust is an independent company listed on the London Stock Exchange which provides additional benefits for investors looking for income.

A cost-effective and diversified portfolio
Investment trusts own shares in a variety of different companies, so buying shares in The Merchants Trust will effectively give you a diversified portfolio of UK stocks. This spreads your risk, as you are not reliant on the success of just one or two companies. And buying shares in an investment trust can be less costly than purchasing the underlying stocks individually.

Looking after shareholder interests
Because The Merchants Trust is an investment trust and an independent company listed on the London Stock Exchange, the investment manager is accountable to the Trust’s board of directors. The board is completely autonomous and ensures that the interests of shareholders are looked after.

The Merchants Trust board of directors is particularly experienced as its members also sit on the boards of a number of large companies. So as well as providing investors with the reassurance of a diligent environment of checks and balances, they also provide the Trust with invaluable knowledge and economic insight.

With unit trusts or ‘open-ended funds’, the total number of shares is flexible. The larger the number of investors, the smaller the dividend each receives. But because investment trusts have a fixed number of shares in circulation at any one time, there is no potential for dividend dilution. Although an investment trust can issue more shares in special circumstances, shareholder interests are taken into account before such a decision is taken.

Investment trusts are amongst the oldest forms of investment vehicle. Established in 1889, The Merchants Trust has successfully navigated a variety of market conditions throughout its history. Today’s investor may find the longevity and experience of The Merchants Trust reassuring.

Revenue reserves
In periods of falling income such as in recent years, the Trust can draw on revenue reserves to maintain its dividend payouts to shareholders. These reserves help smooth the Trust’s dividend payments during shortterm periods of difficult economic conditions.

Investment trusts are able to employ gearing – which means borrowing money to buy more investments. The Merchants Trust seeks to enhance returns for its shareholders through gearing in the form of longterm, fixed rate debentures. This may mean that the performance is boosted when markets are up. However, investors should be aware that losses are magnified when markets fall, which could lead to a substantial loss on your initial investment.


Income in retirement? An early start could pay dividends.

"The companies listed on the London Stock Exchange provide investors with a means to gain exposure to business across the globe whilst benefiting from the UK's leading corporate governance."

Simon Gergel
Fund Manager

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