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City of London IT (CTY)

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Thursday 05 December, 2002

City of London IT

Management Fee

City of London Investment Trust PLC
05 December 2002


Stock Exchange Announcement

The City of London Investment Trust plc - Changes to the management fee
arrangements.

The Directors of City of London ("the Company") have reviewed the operation of
the performance related element of the management fee with Henderson Global
Investors ("Henderson") and have, as a result, agreed a simplified fee structure
with Henderson.

The previous arrangement of measuring performance over rolling three year
periods could mean that a performance fee was payable even in individual years
where the manager under performed the Company's benchmark index, the FTSE
All-Share Index. This has now been replaced with a new arrangement whereby a
performance fee is payable based on performance relative to the benchmark index
only in the accounting year in question. As a consequence of the new structure
measuring performance over one, rather than three, years, the Company and
Henderson have agreed additional "high water mark" provisions, as set out 
below:-

  • In the event of under performance in any accounting year, such under
    performance must be made good in full before a performance fee is payable in
    any subsequent accounting year; and
  • In the event that out performance is such that a performance fee is
    subject to the 0.5% cap described below, any excess out performance may be
    carried forward solely for the purpose of making good subsequent under
    performance for a maximum of the next two accounting years.

The following elements of the fee structure will remain unchanged:-

  • A base fee of 0.30% of assets under management up to £400 million and
    0.25% of assets above that figure;
  • A performance fee equivalent to 0.1% for every 1% out performance of the
    Company's benchmark index; and
  • An overall limit for the aggregate fee of 0.50% of assets under management
    in each accounting year.

These new arrangements will be applied retrospectively so as to take effect from
1st July 2001. As a result of these new arrangements, the fifty per cent. of the
performance fee earned for the period to 30th June 2002 and currently retained
by the Company will immediately become payable to Henderson. This will not
affect the net asset value, as this amount was already accrued. The Company's
stated net asset value has been increased by 0.16% with effect from 21st October
to reflect the fact that the out performance in the period ended 30th June 2002
will no longer count towards performance fees for subsequent accounting periods.

Enquiries

Simon de Zoete

Chairman, The City of London Investment Trust plc

020 7818 5517

Stephen Westwood

Head of Investment Trusts, Henderson Global Investors

O20 7818 5517


                      This information is provided by RNS
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