The investment objective of the company is to achieve absolute returns rather than relative returns over a medium-term period, principally through capital growth. The company will invest primarily in publicly quoted small cap UK equities that the Manager believes are undervalued and could benefit from strategic, operational and management initiatives. The company will also have the flexibility to invest up to 20% of the GA at the time of investment in securities listed or traded on other recognised stock exchanges and up to 20% of the GA at the time of investment in unquoted securities and in any class of debt or equity-related instrument.
Basic management fee is 0.75% of the NAV of the company, payable quarterly in arrears. The performance is 10% of any excess of the NAV total return over the higher of the Benchmark NAV per share and the high watermark. The contract is terminable on 12 months notice.
The Directors expect that any returns for shareholders will derive primarily from the capital appreciation of the Ords rather than from dividends. The Directors intend only to declare final dividends and then only to the extent necessary to maintain investment trust status.