Re: Performance fee terms
Henderson Smaller Cos Inv Tst PLC
30 September 2005
HENDERSON GLOBAL INVESTORS
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
30 September 2005
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Management and Performance Fees
The Henderson Smaller Companies Investment Trust plc ('the Company') hereby
gives notification that it has agreed revised fee arrangements with its
Investment Manager, Henderson Global Investors Limited ('Henderson').
Background
The fee arrangements with Henderson are subject to formal review every three
years. A triennial review was scheduled for 2005 with any changes to take effect
from 1 January 2006. However, as stated in the preliminary results for the year
ended 31 May 2005 and in the Report & Accounts for the same period, the Board
decided that it wished to bring the review date forward with the intention of
negotiating revised fee arrangements to apply with effect from 1 June 2005.
The Board considers it to be essential to shareholders' interests to have in
place a fee structure that aligns shareholder and manager interests and enables
Henderson to incentivise and retain the Company's talented and successful fund
management team.
The terms now agreed include:
(i) a reduction in the annual management fee, which is already the lowest in
the Company's market sector; and
(ii) the introduction in addition of a performance fee, subject to a cap which
will ensure that, even if the cap applies, the total fees payable remain
comparable with the average for the sector.
The Board, which has been advised by Ernst & Young LLP, believes that the
proposed changes are fair and reasonable and in the best interests of
shareholders.
Since 1 June 2003 the Company's benchmark has been the Hoare Govett Smaller
Companies (excluding investment companies) Index.
The new arrangements
The base management fee is reduced from 0.1 per cent per quarter to 0.0875 per
cent per quarter, calculated, as before, quarterly in advance on the value of
the assets under management.
The performance fee is calculated as 15% of any outperformance of the benchmark,
on a total return basis, over the Company's accounting year, subject to a limit
on the total management fees payable in any one year of 1.0 per cent of the
average value of the net assets of the Company during the year (calculated
monthly) and an absolute limit to the performance fee of £2 million in any one
year. No performance fee will be payable if the net asset value per share on
the last day of the Company's year, calculated, in accordance with the Company's
accounting policies, net of costs (including any performance fee) is equal to or
lower than the net asset value per share as at the preceding year end. Any
underperformance relative to the benchmark, or any unrewarded outperformance
(for example as a result of the cap), will be carried forward and set against
any outperformance or underperformance respectively in subsequent years.
The notice period under the management agreement between Henderson and the
Company remains at 12 months, but the amount of compensation would be reduced
pro rata to any notice given. In the event that the continuation vote to be put
to the annual general meeting in 2007, or a continuation vote put to a
subsequent annual general meeting, is not passed, no compensation would be
payable on the subsequent termination of the contract.
The new fee arrangements are effective from 1 June 2005 and the next review will
be in 2008.
For further information, please contact :
Dudley Fishburn
Chairman
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4458
James de Sausmarez
Head of Investment Trusts
Henderson Global Investors
Telephone: 020 7818 3349
Neil Hermon
Fund Manager
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4351
This information is provided by RNS
The company news service from the London Stock Exchange
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