Change of Investment Manager

RNS Number : 3913D

Edinburgh Investment Trust PLC

15 September 2008

 



THE EDINBURGH INVESTMENT TRUST PLC

15 September 2008

Change of Investment Manager and Company Secretary

The Edinburgh Investment Trust PLC ('the Company') has accepted the resignation of its Investment Manager and Secretary, Fidelity International. Invesco Asset Management Limited ('Invesco Perpetual') has, with immediate effect, been appointed in its place. Mr Neil Woodford, Invesco Perpertual's Head of Investment, will be the Company's lead manager.

Set out in the Appendix below is the text of the letter that the Board proposes to send out to the Company's shareholders shortly.

Contacts for queries:

Scott Dobbie (Chairman)  020 7645 0603

The Edinburgh Investment Trust plc

Graeme Proudfoot  020 7065 3555

Invesco Asset Management Limited

APPENDIX

"Introduction

We announced on 18th June 2008 that our manager, Fidelity International ('Fidelity'), following management changes, was examining a range of options for the management of the income sub-portfolio of the Company. At that point it became apparent that there was a likelihood that the Board and Fidelity would not be able to reach a solution that was satisfactory to either the Board or Fidelity. In this event, Fidelity indicated that it would be minded to resign.

The outcome is that Fidelity and the Board have indeed been unable to agree on a solution. As a result, Fidelity has decided to resign as the Company's Investment Manager and Secretary with immediate effect, enabling the Board to appoint a new manager.

The Board's own review examined a range of options for the Company's future management. Having considered a number of structures and managers, the Board has decided that the proposition offered by Invesco Asset Management Limited ('Invesco Perpetual') is the most attractive, and in the best interests of shareholders as a whole.

Invesco Perpetual

Invesco Perpetual is part of Invesco Ltd, a leading global investment manager, and was responsible, as at 30 June 2008, for the management of £36.6bn in the UK, which includes a number of investment trusts. Neil Woodford, Invesco Perpetual's Head of Investment, who will be the lead manager of your Company's portfolio, has a record of outstanding performance as manager of high income funds. Performance record apart, the Board in its discussions with Mr Woodford and his colleagues has been impressed by Invesco Perpetual's style and investment approach and believes that shareholders will be well served by Mr Woodford and his team.

Management Terms

The Company has appointed Invesco Perpetual under a management agreement which provides for three months' notice of termination, subject to a minimum initial period of 12 months. Under this agreement Invesco Perpetual will be paid a management fee, and in addition will receive a performance fee for investment returns which exceed the FTSE All-Share Index benchmark by a defined margin. Specifically, the management fee will be 0.6% of the market capitalisation of the Fund - this is currently equivalent to about 0.45% of total assets. The Company and Invesco Perpetual have agreed a target that the net asset value (with debt at par) should out-perform the FTSE All-Share Index (Total Return) by 1.25% per annum on a three year rolling basis. If this target is achieved, Invesco Perpetual will additionally receive a performance fee of 15% of the amount of the above-target out-performance, up to a maximum of 1% of net assets in any one year. In agreeing to this target, Invesco Perpetual have accepted full responsibility for the management of the Company's gearing, in addition to that of the core equity portfolio. The Board is satisfied that these fee terms are competitive, given Invesco Perpetual's reputation in this sector. In particular, we feel it is beneficial that the performance fee aligns the interest of manager and shareholder, and of course will be payable only for material out-performance.

Savings Plans

The Board will endeavour to ensure that shareholders whose interests are held through savings plans, including PEPs and ISAs, will suffer minimum disruption through the change of manager. They will be notified in due course of any alternative administrative arrangements.

The Future

The Board looks forward to success with Invesco Perpetual's stewardship of your Company. Neil Woodford and his team have long standing expertise in income oriented fund management, and an investment philosophy which is wholly consistent with the investment objectives of the Company. We believe that these qualities are particularly appropriate in the current difficult economic climate, and continue to believe that The Edinburgh Investment Trust, in aiming to provide a balance of income and capital growth, remains an excellent vehicle for the long term saver."

 

END

 

 

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