Half Yearly Report

RNS Number : 7340S

Monks Investment Trust PLC

05 December 2012

RNS Announcement

The Monks Investment Trust PLC

Over the six month period, the net asset value total return (capital and dividends) was minus 5.9% and the share price total return was minus 8.0%. The FTSE World Index total return for the same period was +2.7%.

¾ The divergence in performance between Monks and the index was mainly due to stock selection. Larger and often higher yielding companies, including those in the oil, pharmaceutical and technology sectors, which were not held by Monks, were the major contributors to the rise in the index while performance of the Monks portfolio was mixed.

¾ The share prices of Monks holdings are more volatile than most of the market which contributed to our holdings being out of favour in the current fearful climate. External analysis shows that the Monks holdings have characteristics that exhibit higher historic and forecast earnings growth than the FTSE World Index as well as having less debt relative to equity. This suggests that the companies held are not using excessive leverage to generate returns.

¾ Earnings per share were 2.47p (3.30p in the corresponding period last year). The interim dividend is 0.5p (also 0.5p in the corresponding period last year).

¾ Quantitative easing may continue to support markets but may have negative consequences for long term returns arising from the distortion of prices. For the long term, investing in the right companies is likely to be more important than investing in a portfolio that replicates broad market indices.

The Monks Investment Trust PLC invests internationally in order to achieve capital growth, which takes priority over income and dividends. Monks is managed by Baillie Gifford & Co, the independent Edinburgh based fund management group with around £84 billion under management and advice as at 3 December 2012.

Past performance is not a guide to future performance. Monks is listed on the stock market. As a result, the value of the shares, and any income from them, can fall as well as rise and investors may not get back the amount invested.

Investment Trusts are UK public listed companies and are not authorised or regulated by the Financial Services Authority.

You can find up to date performance information about Monks at www.monksinvestmenttrust.co.uk^‡

‡ Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

For further information please contact:

James Budden, Baillie Gifford & Co

Tel: 0131 275 2816 or 07507 201208

Roland Cross, Director, Broadgate Mainland

Tel: 0207 776 0512 or 07831 401309

The Monks Investment Trust PLC

The following is the unaudited Half-Yearly Financial Report for the six months to 31 October 2012.

Responsibility statement

We confirm that to the best of our knowledge:

a) the condensed set of financial statements has been prepared in accordance with the Accounting Standards Board's statement 'Half-Yearly Financial Reports';

b) the Half-Yearly Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (indication of important events during the first six months, and their impact on the financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year); and

c) the Half-Yearly Financial Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

JGD Ferguson

Chairman

4 December 2012

The Monks Investment Trust PLC

Half-yearly management report

Results

Over the six months to 31 October, the net asset total return, with borrowings deducted at fair value, was -5.9% and the share price total return was -8.0% while the FTSE World Index in sterling terms returned +2.7%.

In the half year the performance of our portfolio diverged significantly from that of markets. This divergence was most marked from the start of June to the end of the period, during which time the comparative index returned +6.7% while our net asset value total return was -1.5% and the share price return was -0.7%.

The most important factor in this divergence was stock selection. The biggest contributors to the rise in the index were, almost without exception, stocks we do not own. Large pharmaceutical companies, big oil companies and other high yielding shares perceived to be among the most defensive available to investors led the market higher along with Apple and Google. The Manager believes that many of these apparently defensive companies are in fact declining businesses that are struggling to re-invest at attractive rates of return and he also has concerns about the sustainability of margins at Apple and about capital allocation at Google. This was also a good period for the markets of the eurozone, to which we have relatively little exposure. Among our holdings performance was also decidedly mixed. Our early stage oil and gas exploration holdings suffered from disappointing drilling results, Facebook fell dramatically in price following a messy IPO and our largest holding, IP Group (overall a strong performer since originally purchased in June 2011), also fell in price in the absence of any news. These and other setbacks more than offset strong gains from the majority of our biotech holdings and gains among our holdings of gold mining shares.

Being less than fully invested was also a drag on performance during a period of rising markets but had a smaller impact than stock selection.

Of the major markets, those in Europe experienced the greatest gains in sterling terms over the six months to 31 October. The Japanese, Brazilian and Chinese markets all suffered falls while the UK and broader US markets recorded modest gains, in the latter case despite a decline in the NASDAQ index. The Brazilian currency weakened significantly during the period while Asian currencies and the US dollar strengthened against sterling.

The rise in markets coincided with a deterioration in corporate results with earnings coming under pressure around the world, increasing caution in the forward looking statements of company managements and downgrades to forecasts of economic growth. Monetary stimulus in the form of a new round of quantitative easing in the United States and a promise by the head of the European Central Bank (ECB) to "do whatever it takes" to save the euro followed by the announcement of a mechanism through which the ECB can buy unlimited quantities of the debt of troubled eurozone governments, seem to have been more powerful influences on markets than the outlook for earnings. The uncertain outlook was, however, reflected in the relative performance of the shares of different types of companies.

Earnings per share were 2.47p, down from 3.30p in the corresponding period a year ago. The most significant factor behind this decrease was a reduction in overseas dividend income, which was partly offset by a decrease in borrowing costs. The Board has declared an interim dividend of 0.50p, to be paid on 30 January 2013.

Investment Changes

During the six months to 31 October we made a net reduction to equities of £58m and a net reduction in bonds of £19m. Within equities net reductions were made in the UK, Europe and Emerging Markets and the only significant net addition was in North America. The Brazilian index-linked bonds were sold with part of the proceeds being reinvested in US dollar denominated Venezuelan bonds.

The £40m 11% debenture stock was repaid on maturity in June and the £40m short-term bank loan was repaid in October. The 30-year interest rate swap put in place in order to lock in long rates was unwound in June owing to the decreased likelihood of a rise in long term UK interest rates.

Gearing is managed using futures and options as well as holding cash. In light of renewed quantitative easing in the United States and the reinforcement of the European bailout mechanisms, effective gearing was increased in October by reducing the size of the short futures positions. These developments have reduced the near term risk of a major correction in markets but risks remain and we are maintaining some insurance against such an event. Effective gearing taking into account futures and options positions rose from 93% of shareholders' funds at the end of April to 100% at the end of October.

The derivative positions also alter our effective geographical exposure and are reflected in the figures in the table below showing the distribution of investments by geography at the end of October and the end of April.

Share buybacks

During the period 2.7m shares were bought back at a cost of £8.5m. The discount widened during the period but the use of share buybacks helped to absorb surplus supply while at the same time enhancing net asset value for continuing shareholders.

Outlook

In the short term, monetary policy measures that involve the purchase of financial assets such as government bonds or mortgage-backed securities force up the price of the assets being purchased and lower expected future returns for holders of those assets, encouraging them to switch into other assets with less certain but potentially greater prospective returns. In this way the money created through quantitative easing has a fairly direct and positive impact on the price of most widely traded financial assets, including shares as well as government and corporate bonds. Its impact on the broader economy is less clear, but it remains the favoured policy response of the US Federal Reserve to any form of economic disappointment and the impact of US quantitative easing spreads far beyond its shores. The latest round of quantitative easing in America has been explicitly linked to the unemployment rate and so as long as this remains high there should be some support for markets from this source. This may, however, have negative consequences for long term investment returns arising from the distortion of market prices. For the long term, investing in the right companies is likely to be more important than investing in a portfolio that replicates broad market indices.

The share prices of many of our holdings are more volatile than most of those in the market, which has contributed to our holdings being out of favour in our current fearful times, but they have other characteristics that are consistent with companies that should deliver superior performance over the long term. According to external analysis carried out on our holdings, the companies in our portfolio exhibit higher historic growth in earnings and higher forecast earnings growth than the FTSE World Index. They also achieve a higher return on equity than the corresponding figure for the index despite having less debt relative to equity. This suggests that the companies held are not using excessive leverage to generate these returns.

The principal risks and uncertainties facing the Company are set out in note 10.

Past performance is not a guide to future performance.

The Monks Investment Trust PLC

Thirty largest equity holdings at 31 October 2012 (unaudited)

Name	Region	Business	Value £'000	% of total assets
IP Group	United Kingdom	Venture fund	31,296	3.2
Seadrill	Continental Europe	Contract drilling services	25,438	2.6
Aggreko	United Kingdom	Temporary power units	24,876	2.5
Samsung Electronics	Emerging Markets	Electronic goods	17,204	1.7
The Biotech Growth Trust	United Kingdom	Investment trust	16,267	1.6
Kone	Continental Europe	Lifts	15,816	1.6
Odontoprev	Emerging Markets	Health care providers and services	15,748	1.6
Petrofac	United Kingdom	Oilfield services company	15,270	1.5
Fuchs Petrolub	Continental Europe	Lubricant manufacturer	14,531	1.5
Genus	United Kingdom	Agricultural services	14,421	1.5
Kunlun Energy Company	Emerging Markets	Oil and gas exploration and production	14,339	1.4
Eldorado Gold	North America	Gold mining	14,181	1.4
National Oilwell Varco	North America	Drilling equipment manufacturer	13,196	1.3
Doric Nimrod Air Two	United Kingdom	Aircraft leasing	13,140	1.3
First Republic Bank	North America	Banking	12,474	1.3
Silver Wheaton	North America	Silver mining	12,258	1.2
Harley-Davidson	North America	Motorcycle manufacturer	12,224	1.2
Tui Travel	United Kingdom	Travel and tourism	12,106	1.2
Seek	Developed Asia	Online recruitment	11,971	1.2
Renishaw	United Kingdom	Electronic measuring instruments	11,941	1.2
Better Capital Fund	United Kingdom	Private equity	11,749	1.2
Sun Art Retail Group	Emerging Markets	Retail hypermarkets	11,681	1.2
TJX	North America	Clothing store	11,679	1.2
Imax	North America	Designs and manufactures digital imaging and sound technologies	11,613	1.2
Taiwan Semicon Manufacturing	Emerging Markets	Semiconductor manufacturer	11,539	1.2
Seattle Genetics	North America	Biotechnology	11,460	1.2
Naspers	Emerging Markets	Media company	11,388	1.2
Ultra Petroleum	North America	Oil and gas exploration and production	11,231	1.1
Credicorp	Emerging Markets	Banking	11,084	1.1
Novozymes	Continental Europe	Enzyme producer	11,069	1.1
			433,190	43.7

The Monks Investment Trust PLC

Distribution of portfolio (unaudited)

Geographical Analysis

	At 31 October 2012		At 30 April 2012
Region	Total Assets %	Effective Exposure * %	Total Assets %	Effective Exposure * %
North America	26.3	28.3	21.2	25.4
United Kingdom	25.8	23.4	24.6	21.6
Emerging Markets	20.4	21.3	23.1	19.2
Continental Europe	12.3	9.4	13.4	8.8
Japan	6.3	8.0	6.4	11.4
Developed Asia	1.8	2.0	1.5	1.8
	92.9	92.4	90.2	88.2
Bonds	5.5	5.9	6.3	7.6
Net liquid assets	1.6	1.7	3.5	4.2
	100.0	100.0	100.0	100.0

* The effective exposure takes into account the exposure of derivative holdings which may differ substantially from their market value. The Company's derivative holdings include sales of index futures and purchases of index call options.

Sector Analysis

		At 31 October 2012 %	At 30 April 2012 %
Equities:	Oil and Gas	12.6	12.9
	Basic Materials	8.3	8.8
	Industrials	12.6	13.2
	Consumer Goods	3.9	4.3
	Health Care	7.5	6.3
	Consumer Services	11.7	13.6
	Utilities	-	1.1
	Financials	23.2	20.5
	Technology	13.1	9.5
		92.9	90.2
Bonds		5.5	6.3
Net liquid assets		1.6	3.5
		100.0	100.0

The Monks Investment Trust PLC

Income statement (unaudited)

	For the six months ended 31 October 2012			For the six months ended 31 October 2011			For the year ended 30 April 2012
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains/(losses) on sales of investments	-	2,864	2,864	-	78,321	78,321	-	(9,297)	(9,297)
Changes in investment holding gains and (losses)	-	(65,764)	(65,764)	-	(186,752)	(186,752)	-	(51,766)	(51,766)
Currency losses	-	(2,907)	(2,907)	-	(1,386)	(1,386)	-	(890)	(890)
Income from investments and interest receivable	12,359	-	12,359	17,635	-	17,635	31,415	-	31,415
Other income	-	-	-	9	-	9	9	-	9
Investment management fee (note 3)	(2,280)	-	(2,280)	(2,574)	-	(2,574)	(5,087)	-	(5,087)
Other administrative expenses	(460)	-	(460)	(595)	-	(595)	(1,013)	-	(1,013)
Net return before finance costs and taxation	9,619	(65,807)	(56,188)	14,475	(109,817)	(95,342)	25,324	(61,953)	(36,629)
Finance costs of borrowings	(2,889)	-	(2,889)	(5,256)	-	(5,256)	(10,434)	-	(10,434)
Net return on ordinary activities before taxation	6,730	(65,807)	(59,077)	9,219	(109,817)	(100,598)	14,890	(61,953)	(47,063)
Tax on ordinary activities	(425)	-	(425)	(630)	-	(630)	(1,001)	-	(1,001)
Net return on ordinary activities after taxation	6,305	(65,807)	(59,502)	8,589	(109,817)	(101,228)	13,889	(61,953)	(48,064)
Net return per ordinary share (note 4)	2.47p	(25.78p)	(23.31p)	3.30p	(42.14p)	(38.84p)	5.35p	(23.86p)	(18.51p)
Note: Dividends per share paid and payable in respect of the period (note 5)	0.50p			0.50p			3.95p

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

The Monks Investment Trust PLC

Balance sheet (unaudited)

	At 31 October 2012 £'000	At 31 October 2011 £'000	At 30 April 2012 £'000
Fixed assets
Investments held at fair value through profit or loss	976,474	1,071,733	1,098,327
Current assets
Debtors	7,876	63,937	37,107
Investments held at fair value through profit or loss	157	-	10,553
Cash and short term deposits	16,682	19,594	39,519
	24,715	83,531	87,179
Creditors
Amounts falling due within one year:
Bank loan (note 6)	-	(40,000)	(40,000)
Debenture stock (note 6)	-	(40,000)	(40,000)
Other creditors	(8,639)	(44,922)	(36,140)
	(8,639)	(124,922)	(116,140)
Net current assets/(liabilities)	16,076	(41,391)	(28,961)
Total assets less current liabilities	992,550	1,030,342	1,069,366
Creditors
Amounts falling due after more than one year:
Bank loan (note 6)	(40,000)	(40,000)	(40,000)
Debenture stock (note 6)	(39,663)	(39,631)	(39,647)
	(79,663)	(79,631)	(79,647)
Total net assets	912,887	950,711	989,719

Capital and reserves
Called up share capital	12,671	13,001	12,806
Share premium	11,100	11,100	11,100
Capital redemption reserve	6,727	6,397	6,592
Capital reserve	841,229	880,542	915,546
Revenue reserve	41,160	39,671	43,675
Shareholders' funds	912,887	950,711	989,719
Net asset value per ordinary share (after deducting borrowings at fair value) (note 6)	356.6p	361.8p	382.8p
Net asset value per ordinary share (after deducting borrowings at par)	360.1p	365.5p	386.3p
Ordinary shares in issue (note 7)	253,421,859	260,014,859	256,124,859

The Monks Investment Trust PLC

Reconciliation of movements in shareholders' funds (unaudited)

For the six months ended 31 October 2012

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2012	12,806	11,100	6,592	915,546	43,675	989,719
Net return on ordinary activities after taxation	-	-	-	(65,807)	6,305	(59,502)
Shares purchased for cancellation (note 7)	(135)	-	135	(8,510)	-	(8,510)
Dividends paid during the period (note 5)	-	-	-	-	(8,820)	(8,820)
Shareholders' funds at 31 October 2012	12,671	11,100	6,727	841,229	41,160	912,887

For the six months ended 31 October 2011

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2011	13,038	11,100	6,360	992,780	37,601	1,060,879
Net return on ordinary activities after taxation	-	-	-	(109,817)	8,589	(101,228)
Shares purchased for cancellation	(37)	-	37	(2,421)	-	(2,421)
Dividends paid during the period (note 5)	-	-	-	-	(6,519)	(6,519)
Shareholders' funds at 31 October 2011	13,001	11,100	6,397	880,542	39,671	950,711

For the year ended 30 April 2012

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2011	13,038	11,100	6,360	992,780	37,601	1,060,879
Net return on ordinary activities after taxation	-	-	-	(61,953)	13,889	(48,064)
Shares purchased for cancellation	(232)	-	232	(15,281)	-	(15,281)
Dividends paid during the year (note 5)	-	-	-	-	(7,815)	(7,815)
Shareholders' funds at 30 April 2012	12,806	11,100	6,592	915,546	43,675	989,719

* The Capital Reserve balance at 31 October 2012 includes investment holding gains on investments of

£115,966,000 (31 October 2011 - gains of £88,980,000; 30 April 2012 - gains of £179,839,000).

The Monks Investment Trust PLC

Condensed cash flow statement (unaudited)

	Six months to 31 October 2012 £'000	Six months to 31 October 2011 £'000	Year to 30 April 2012 £'000
Net cash inflow from operating activities	10,220	16,186	24,825
Net cash outflow from servicing of finance	(4,952)	(5,333)	(10,498)
Total tax paid	(76)	(616)	(972)
Net cash inflow/(outflow) from financial investment	76,258	(2,862)	27,912
Equity dividends paid	(8,820)	(6,519)	(7,815)
Net cash inflow before use of liquid resources and financing	72,630	856	33,452
Shares purchased for cancellation	(13,300)	(792)	(10,478)
Borrowings repaid	(80,000)	-	-
(Decrease)/increase in cash	(20,670)	64	22,974

Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period	(20,670)	64	22,974
Translation difference	(2,167)	618	(2,367)
Net cash outflow from borrowings	80,000	-	-
Other non-cash changes	(16)	(17)	(33)
Movement in net debt in the period	57,147	665	20,574
Net debt at start of the period	(120,128)	(140,702)	(140,702)
Net debt at end of the period	(62,981)	(140,037)	(120,128)

Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation	(56,188)	(95,342)	(36,629)
Net losses on investments	62,900	108,431	61,063
Currency losses	2,907	1,386	890
Amortisation of fixed income book cost	(896)	(442)	(986)
Changes in debtors and creditors	1,497	2,153	487
Net cash inflow from operating activities	10,220	16,186	24,825

The Monks Investment Trust PLC

Notes to the condensed financial statements (unaudited)

1.	The condensed financial statements for the six months to 31 October 2012 comprise the statements set out in the previous pages together with the related notes below. They have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 30 April 2012 and in accordance with the ASB's Statement 'Half-Yearly Financial Reports' and have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the Board. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowing and gearing as well as compliance with borrowing covenants. Accordingly, the Half-Yearly Financial Report has been prepared on the going concern basis as it is the Directors' opinion that the Company will continue in operational existence for the foreseeable future.
2.	The financial information contained within this Half-Yearly Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 30 April 2012 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.
3.	Baillie Gifford & Co are employed by the Company as investment managers and secretaries under a management agreement which is terminable on not less than six months' notice, or on shorter notice in certain circumstances. The annual fee is 0.45% of total assets less current liabilities, calculated on a quarterly basis.
4.	Net return per ordinary share	Six months to 31 October 2012 £'000	Six months to 31 October 2011 £'000	Year to 30 April 2012 £'000
	Revenue return on ordinary activities after taxation	6,305	8,589	13,889
	Capital return on ordinary activities after taxation	(65,807)	(109,817)	(61,953)
	Total net return	(59,502)	(101,228)	(48,064)
	Net return per ordinary share is based on the above totals of revenue and capital and on 255,217,191 (31 October 2011 - 260,650,729; 30 April 2012 - 259,692,291) ordinary shares, being the weighted average number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.
5.	Dividends	Six months to 31 October 2012 £'000	Six months to 31 October 2011 £'000	Year to 30 April 2012 £'000
	Amounts recognised as distribution in the period:
	Previous year's final dividend of 3.45p (2011 - 2.50p), paid 13 August 2012	8,820	6,519	6,519
	Interim dividend for the year ended 30 April 2012 of 0.50p, paid 30 January 2012	-	-	1,296
		8,820	6,519	7,815

The Monks Investment Trust PLC

Notes to the condensed financial statements (unaudited) (ctd)

5.	Dividends (ctd)	Six months to 31 October 2012 £'000	Six months to 31 October 2011 £'000	Year to 30 April 2012 £'000
	Amounts paid and payable in respect of the period:
	Adjustment to previous year's final dividend re shares bought back	(16)	-	-
	Interim dividend for the year ending 30 April 2013 of 0.50p (2012 - 0.50p)	1,267	1,300	1,296
	Final Dividend (2012 - 3.45p)	-	-	8,836
		1,251	1,300	10,132
	The interim dividend was declared after the period end date and has therefore not been included as a liability in the balance sheet. It is payable on 30 January 2013 to shareholders on the register at the close of business on 4 January 2013. The ex dividend date is 2 January 2013. The Company operates a Dividend Reinvestment Plan and the final date for elections for reinvestment of this dividend is 11 January 2013.
6.	During the period under review the Company repaid its £40m debenture stock 2012 on maturity and its £40m one year floating rate loan. At 31 October 2012, the Company's borrowings comprise a £40m three year fixed rate loan repayable in February 2014 and a £40m 6 3/8% debenture stock repayable in 2023. The fair value of borrowings at 31 October 2012 was £88.9m (31 October 2011 - £169.6m; 30 April 2012 - £168.9m).
7.	During the period under review the Company bought back 2,703,000 ordinary shares with a nominal value of £135,000 for a total consideration of £8,510,000. At 31 October 2012 the Company had the authority to buy back a further 38,321,014 shares.
8.	Transaction costs on purchases amounted to £93,000 (31 October 2011 - £280,000; 30 April 2012 - £502,000) and transaction costs on sales amounted to £137,000 (31 October 2011 - £279,000; 30 April 2012 - £673,000).
9.	Shareholders will be notified on or around 17 December 2012 that the Half-Yearly Financial Report has been published and will be available on the Monks' page of the Managers' website www.monksinvestmenttrust.co.uk ^‡
10.	Principal Risks and Uncertainties The principal risks facing the Company relate to the Company's investment activities. These risks are market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 23 of the Company's Annual Report and Financial Statements for the year to 30 April 2012. The principal risks and uncertainties have not changed since the publication of the Annual Report and Financial Statements which can be obtained free of charge from Baillie Gifford & Co and is available on the Monks' page of the Managers' website: www.monksinvestmenttrust.co.uk.‡ Other risks facing the Company include the following: regulatory risk (that the loss of investment trust status or a breach of applicable legal and regulatory requirements could have adverse financial consequences and cause reputational damage); operational/financial risk (failure of service providers' accounting systems could lead to inaccurate reporting or financial loss); and the risk that the discount can widen and gearing risk (the use of borrowings can magnify the impact of falling markets). Further information can be found on page 20 of the Annual Report and Financial Statements.