Manchester&lon. Regulatory News (MNL)

Manchester & London Investment Trust PLC Recommended proposal for modification of the Company's Investment Policy and General Meeting 25 October 2013 The Board of Manchester & London Investment Trust PLC (the "Company") announcesproposed changes to the Company's investment policy, which are subject toShareholders' approval as required by the Listing Rules. A Circular setting out the Board's Proposal, its effect on The Company and thereasons why the Board unanimously recommends that shareholders vote in favourof its implementation at the General Meeting, has been posted to shareholderstoday. 1. The Proposal The Company is seeking approval to amend its investment policy by removing thefollowing text referring to trading (including the use of Derivatives) from the`Asset allocation and risk diversification' section of its investment policy: "These investments may be used for hedging positions against movements in, forexample, equity markets, currencies and interest rates. In addition, theseinstruments will only be used for efficient portfolio management purposes. Forthe avoidance of doubt, the use of such instruments to engage in tradingtransactions is strictly against the Company's investment policy. Any tradingtransactions will be carried out through dealing subsidiaries of the Company.The Company would not maintain derivative positions should the total underlyingexposure of these positions exceed one times the adjusted total capital andreserves." There are two reasons for the Company seeking to remove this text: 1. Until recent changes in the tax rules, if an investment trust was party toany trading transaction, then not only was any income from the transactiontaxable but it could result in the investment trust breaching the conditionthat at least 70 per cent of its income was derived from shares and securities,with the resultant loss of investment trust status. Following theimplementation of HM Treasury's enactment of the Investment Trusts (ApprovedCompany) (Tax) Regulations 2011 (SI 2011/2999) ("the Regulations") as well asthe amendment in 2012 of Sections 1158 and 1159 of the Corporation Tax Act2010, the Company is no longer required to use a trading subsidiary forundertaking trading transactions. 2. Additionally, following the introduction of the European Union's ("EU")Alternative Investment Fund Managers Directive ("AIFMD"), which investmentcompanies within the EU must adhere to by 22 July 2014, the Company will berequired to appoint a depositary if its gross assets exceed €100m. It appears increasingly likely that in order to appoint a depositary, theCompany will have to appoint a prime broker and fund administrator. Frominitial discussions with depositaries, it appears that depositaries are mostkeen to offer their services when bundled with a fund administration servicewhereby the actual custody of assets is predominantly outsourced via a primebroker. The prime broker offers a platform service which allows the fund tosource, execute and settle its chosen market transactions in one location,often as Derivatives. The proposed amended investment policy will permit the Company to invest inderivatives, money market instruments, currency instruments, contracts fordifferences ("CFDs"), futures, forwards and options for the purposes of (i)holding investments and (ii) hedging positions against movements in, forexample, equity markets, currencies and interest rates. Some of the investments above may have the same effect as a geared investment,but the Company does not intend to make any effective change to its gearingpolicy, which permits Company to incur borrowing up to a sum equal to two timesthe adjusted total of capital and reserves. 2. New Policy If the Proposal is approved, the Company's investment objective and policy willbe as set out below. Investment objective The investment objective of the Company is to achieve capital appreciationtogether with a reasonable level of income. Investment policy Asset allocation The Company's investment objective is sought to be achieved through a policy ofactively investing in a diversified portfolio, comprising UK and overseasequities and fixed interest securities. The Company seeks to invest incompanies whose shares are admitted to trading on a regulated market. However,it may invest in a small number of equities and fixed interest securities ofcompanies whose capital is not admitted to trading on a regulated market.Investment in overseas equities is utilised by the Company to increase the riskdiversification of the Company's portfolio and to reduce dependence on the UKeconomy in addressing the growth and income elements of the Company'sinvestment objective. The Company may invest in derivatives, money market instruments, currencyinstruments, contracts for differences ("CFDs"), futures, forwards and optionsfor the purposes of (i) holding investments and (ii) hedging positions againstmovements in, for example, equity markets, currencies and interest rates. There are no maximum exposure limits to any one particular classification ofequity or fixed interest security. The Company's investments are not limited toany one industry sector and its current investment portfolio is spread across arange of sectors. The Company has no specific criteria regarding marketcapitalisation or credit ratings in respect of investee companies. Risk diversification The Company intends to maintain a relatively focused portfolio, seeking capitalgrowth by investing in approximately 20 to 40 securities. The Company will notinvest more than 15 per cent of the gross assets of the Company at the time ofinvestment in any one security. However, the Company may invest up to 50 percent of the gross assets of the Company at the time of investment in aninvestment company subsidiary, subject always to other restrictions set out inthis investment policy and the Listing Rules. The Company intends to be fully invested whenever possible. However, duringperiods in which changes in economic conditions or other factors so warrant,the Investment Manager may reduce the Company's exposure to one or more assetclasses and increase the Company's position in cash and/or money marketinstruments. Gearing The Company may borrow to gear the Company's returns when the InvestmentManager believes it is in shareholders' interests to do so. The Company'sinvestment policy and the Articles permit the Company to incur borrowing up toa sum equal to two times the adjusted total of capital and reserves. Any changeto the Company's borrowing policy will only be made with the approval ofshareholders by special resolution. The effect of gearing may be achieved without borrowing by investing in a rangeof different types of investments including derivatives. The Company will notenter into any investments which have the effect of increasing the Company'snet gearing beyond the above limit. General In addition to the above, the Company will observe the investment restrictionsimposed from time to time by the Listing Rules which are applicable toinvestment companies with shares listed on the Official List of the UKLA underChapter 15. In accordance with the Listing Rules, the Company will manage and invest itsassets in accordance with the Company's investment policy. Any material changesin the principal investment policies and restrictions (as set out above) of theCompany will only be made with the approval of shareholders by ordinaryresolution. In the event of any breach of the investment restrictions applicable to theCompany, shareholders will be informed of the remedial actions to be taken bythe Board and the Investment Manager by an announcement issued through aRegulatory Information Service approved by the FCA. 3. General Meeting The Circular contains a notice convening a General Meeting of the Company,which is to be held at St. Anne's Church, St. Anne Street, Manchester, M2 7LF,at 1.00 p.m. on Monday 2 December 2013 to consider a resolution to amend theinvestment policy of the Company. 4. Publication of the Circular The Circular is available at http://www.manchesterandlondon.co.uk/investorRelations.php A copy of the Circular has been filed at the National Storage Mechanism andwill shortly be available for inspection at: www.morningstar.co.uk/uk/NSM. For further information, please contact: Manchester & London Investment Trust plcTel: 0161 228 2389 Midas Investment Management LimitedTel: 0161 228 1709