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Dirs' Dealing InvTst (DDIT)

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Thursday 19 November, 2009

Dirs' Dealing InvTst

Interim Management Statement

The Director's Dealing Investment Trust plc

Interim Management Statement for the period from 1 July 2009 to 19 November 

Investment Policy

The investment policy of The Directors' Dealing Investment Trust plc (the
"Company") is to achieve returns for shareholders, primarily through capital
appreciation, by investing in companies listed on regulated exchanges in the
United Kingdom which are identified by Knox D'Arcy Asset Management ("KAM") as
having patterns of directors' trading which suggest that following such
patterns could lead to attractive investment returns.

Net Asset Value Total Return Performance

The aggregate net assets of the Company currently comprise three categories of
asset. These are investments made pursuant to the previous investment policy
which had not been sold by 30 September 2009 (the "Legacy Portfolio");
investments made pursuant to the current investment policy (the "Directors'
Dealing Portfolio" or "DDP"); and cash equivalents which were held in
anticipation of the cash tender scheduled for November 2009.

Whilst the DDP outperformed the FTSE All Share Index (excluding investment
companies) and increased in value by 30.4% between 30 June and 30 September
2009, the Legacy Portfolio underperformed the index and increased in value by
only 15.8%. In addition, the Company built its cash balances over the period in
anticipation of the tender offer which was approved by shareholders on 10
November 2009. The aggregate increase in the Company's Net Asset Value,
including the impact of the Legacy Portfolio and the high cash balance, was
12.2% in the period 30 June 2009 to 30 September 2009. This compares to a rise
of 21.4% in the FTSE All Share Index (excluding investment companies).

                                  3 months to 30 1 year to 3 years   5 years  
                                  September 2009 30 June   to 30     to 30    
                                                 2009      June 2009 June 2009
DDIT                              12.2%          2.6%      (17.1%)   (6.5%)   
DDP                               30.4%          na        na        na       
FTSE All Share Index (excl. inv.  21.4%          (24.0%)   (27.0%)   (3.1%)   
DDIT Outperformance/              (9.2%)         26.6%     9.9%      (3.4%)   
DDP Outperformance/               9.0%           na        na        na       

Performance Summary

                 As at 30          As at 30 June           Movement
                 September 2009    2009                            
                            £`000            £`000                %
Gross assets                32,408           28,897           +12.2
Net assets                  32,408           28,897           +12.2
Cash                         7,386            9,656           -23.5
Value of                    24,972           18,848           +32.5
Net asset value            368.60p          328.67p           +12.2
per share                                                          
current period                                                     
Share price                317.00p          260.00p           +21.9
Discount                  (14.00%)         (20.89%)                
current period                                                     

Investment Manager's Review

Following the change of name and investment policy the Company has been
realising actively investments contained in the Legacy Portfolio which were
made pursuant to the previous investment policy and acquiring investments for
the Directors' Dealing Portfolio ("DDP") pursuant to the new investment policy.
Notwithstanding the challenging market conditions, the Company continues to
realise Legacy Portfolio holdings at a premium to net asset value by applying
an activist approach where appropriate.

Investments pursuant to the new policy commenced on 22 April 2009 and, whilst
this provides a limited amount of performance data, the initial results are
encouraging. As at 30 September 2009 the Directors' Dealing Portfolio had
increased in value by 46.6% compared to like-for-like increases of 44.1% and
28.4% in the FTSE Small Cap and FTSE 250 indices respectively.

Over the twelve month period ending 30 September 2009, your Company's NAV
outperformed that of its Association of Investment Companies ("AIC") UK Smaller
Companies peer group index by 6.0% and was ranked third out of 14 trusts in
that peer group (Source: AIC).

The market for the smaller/micro capitalisation companies in which the Legacy
Portfolio is predominantly invested remains very illiquid. Even on the
assumption that the Company could carry out 50% of the 10 day average volume
traded in the market, then 54% of the Legacy Portfolio holdings would still
require in excess of 240 trading days to sell. In order to achieve disposals in
such circumstances at close to NAV, the Company has pursued an activist
approach to certain of the portfolio holdings where value could be realised
from such an approach.

Notwithstanding market conditions, between 1 July 2008 and 30 September 2009
the Company has realised a number of holdings at an aggregate premium to NAV of
2.1%. Between February 2008 and 30 September 2009, a total of £63.8m of Legacy
Portfolio investments have been sold at an aggregate premium of 1.6% to NAV. As
at 30 September 2009, £4.8m of the Company's net assets were held in the Legacy

After the approval of the new investment policy and the completion of the cash
tender on 3 April 2009, the Company began investing pursuant to the new
investment policy. This involves identifying certain types of directors'
purchases in the shares of the companies that they manage (each one a "Buy
Signal"). The date on which these purchases are reported is called the Process
Date. The Buy Signal results in the purchase of a stock on or after the Process
Date (the "Investment Date"). Between the Process Date and the Investment Date,
a Buy Signal is referred to as an open trade ("Open Trade"). A purchased stock
is held for a specified number of days after the Process Date (the "Holding
Period") and then sold. The Holding Period is typically between 120 and 180
days for the strategies currently employed.

Following the cash tender of 3 April 2009, the Company had limited cash
resources and therefore funded the purchase of Directors' Dealing investments
as and when proceeds were realised from the sale of Legacy Portfolio holdings.
Investment therefore commenced on 22 April 2009 based on Buy Signals from
selected FTSE Small Cap and FTSE 250 strategies. Inevitably, this meant that
the Open Trades were already part of the way through their Holding Periods and
that part of the anticipated outperformance had already taken place as at the
Investment Date. Notwithstanding that certain purchases were made part of the
way through Holding Periods, the Directors' Dealing Portfolio is showing
encouraging initial results.

Knox D'Arcy AssetManagement Limited

19 November 2009

Developments since 30 September 2009

Further cash tender

On 12 October 2009, the Company published a circular (the "Circular") in
relation to a tender offer of up to 41 per cent. of the Company's issued share
capital (the "Tender Offer") for Shareholders (other than certain overseas
shareholders and restricted shareholders) on the Company's shareholder register
on the close of business on 15 October 2009 (the "Record Date"). The Tender
Offer was made to enable Shareholders who wished to realise their investment in
the Company for cash to do so at a price which is close to Net Asset Value,
whilst ensuring that continuing Shareholders who wished to remain invested in
the Company were not disadvantaged. Shareholders voted to approve the Tender
Offer at the General Meeting of 10 November 2009. Valid tender forms were
received in respect of 3,064,355 Shares, representing 34.9 per cent. of the
issued share capital. Accordingly, Shareholders will have their applications
satisfied in full and, subject to the terms and conditions of the Tender Offer
all such Shares will be bought back at the Tender Price of 347.3886p per Share
and cancelled by the Company.

It is expected that cheques will be dispatched and CREST accounts credited in
respect of the Tender Offer proceeds and unsold uncertificated Shares and
balance share certificates despatched in respect of unsold certificated Shares
as soon as reasonably practicable after 16 November 2009.

AGM update and Directorate change

All resolutions were passed at the Company's Annual General Meeting on 29
October 2009. Following the resignation of Nicholas Jeffrey as a Director on 28
October 2009, the Company's Nomination Committee has started the process of
identifying one or more new Directors to join the Board of the Company.

Top Ten Holdings as at 30 September 2009

Company / Holding                  Sector                            % of      
UK Treasury Gilt 07/06/2010        UK Treasury Gilts                      11.84
UK Treasury Gilt 07/12/2009        UK Treasury Gilts                      11.78
UK Treasury Gilt 25/11/2010        UK Treasury Gilts                      11.78
Galiform                           Support Services                        3.79
Property Recycling                 Real Estate                             3.60
Rapid Realisations                 Equity Investment Instruments           3.24
Opsec Security Group               Support Services                        3.18
Zetar                              Food Producers                          2.78
LSL Property Services              Real Estate                             2.60
Tullett Prebon                     General Financial                       2.59

Sector Breakdown

Sector                                             % of equity portfolio
UK Treasury Gilts                                                  35.40
Support Services                                                   14.25
Real Estate                                                         9.86
Equity Investment Instruments                                       4.77
General Financial                                                   4.63
Food Producers                                                      4.50
General Retailers                                                   3.38
Travel & Leisure                                                    3.16
Software & Computer Services                                        3.09
General Industrials                                                 2.53
Household Goods & Home Construction                                 2.24
Health Care Equipment & Services                                    1.75
Technology Hardware & Equipment                                     1.58
Chemicals                                                           1.47
Oil & Gas Producers                                                 1.46
Gas, Water & Multiutilities                                         1.39
Aerospace & Defence                                                 1.38
Beverages                                                           1.10
Media                                                               1.03
Personal Goods                                                      0.95
Non Life Insurance                                                  0.08
Total                                                             100.00

This interim management statement and up to date NAV will be available at


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