Amendments to the IMA and Change of Benchmark

The Lindsell Train Investment Trust plc

(the “Company”)

4 June 2021

Amendments to the Investment Management Agreement and Change of Benchmark

The Board of Directors of The Lindsell Train Investment Trust plc has approved the amendment of the Investment Management Agreement (the ‘IMA’).

The amendments primarily relate to a change in the benchmark of the Company and the calculation of the Performance Fee, details of which are set out below. 

Lindsell Train Limited (‘LTL’), the Company’s investment manager, is considered a related party of the Company under the Listing Rules and the amendments to the investment management agreement therefore constitute a smaller related party transaction pursuant to Listing Rule 11.1.10 R.

Performance Fee and change of benchmark

The principal change is to reflect the new benchmark adopted by the Company, the MSCI World Index in Sterling, with effect from 1 April 2021.   The Board and Lindsell Train Limited  consider that the MSCI World Index in Sterling is a more appropriate benchmark for the Company given the nature of the Company's portfolio, which is predominantly invested in equities and is likely to remain so for the foreseeable future. Reflecting this change, the Board believes that it is also the appropriate benchmark to use for the purpose of calculating the Performance Fee.  The Board is satisfied that, on a historic analysis and based upon forward-looking projections prepared by LTL and considered by the Board and its advisers, the Performance Fee payable by the Company would have been (in respect of the historic analysis) and is generally expected to be (in respect of the projections) lower than if the Performance Fee were calculated by reference to the Company's former index, although there is no guarantee that this will be the case.

There is also an amendment to the calculation of the performance hurdle whereby the hurdle (whether the Market Capitalisation or Net Asset Value of the Company in respect of which a Performance Fee was previously paid) is adjusted by excluding any dividends that were otherwise taken into account for the purpose of calculating that previous Performance Fee as well as deducting the amount of the Performance Fee paid as a result of that calculation.  Whilst expected to have the effect of marginally increasing the level of Performance Fees payable by the Company, the Board is satisfied that this change is fair for Shareholders and in line with standard market practice, and that the effect on the level of fees is likely to be more than offset by the downward effect expected by the change in benchmark.

In each Performance Period, the Performance Fee is payable at the rate of 10 per cent. of the difference between (a) the lower of (i) the Adjusted Market Capitalisation per Ordinary Share of the Company and (ii) the Adjusted Net Asset Value per Ordinary Share of the Company, and (b) the Performance Hurdle, if this difference is positive and provided that the lower of (i) and (ii) also exceeds a high water mark such that there must be positive absolute performance in the relevant year.

The Performance Hurdle is calculated by reference to:

1. the Adjusted Market Capitalisation per Ordinary Share of the Company (using the average share price during the last calendar month of a Performance Period); or
2. the Adjusted Net Asset per Ordinary Share of the Company,

depending on which was the lower amount when used in the calculation of the most recently paid Performance Fee, adjusted to exclude any dividends that were included for the purpose of that previous calculation and to deduct the amount of the Performance Fee paid as a result of that calculation.  That amount is then increased by the percentage performance of the benchmark (on a total return basis) in the relevant period.

A Performance Fee will only be paid if the change over the Performance Period is both above the benchmark and is a positive figure. Relative performance will be carried forward in years where LTL is not eligible for a Performance Fee based on these two criteria. The Performance Fee remains subject to a maximum amount that, when aggregated with the Investment Management Fee paid over a year, shall not be equal to or greater than 5 percent. of the lower of the Net Asset Value and the market Capitalisation of the Company, save that any excess Performance Fee may be carried forward to when a future payment is due.

Reduction of the performance fee for the year to 31 March 2021.

The Company accrued a performance fee of £5,323,404 for the year to 31 March 2021 but LTL yesterday offered to waive half of that fee, reducing the performance fee due for that year to £2,661,702. This was a generous gesture which the Board has gratefully accepted.

The calculation of the next NAV of the Company on 4 June 2021 will reflect this reduction in the fee for the year to 31 March 2021.

-ENDS-

Enquiries:

Victoria Hale
Frostrow Capital LLP
Company Secretary
Tel:  [phone]