The management agreement between the Company and Henderson provides for the payment of a composite management fee which is calculated and paid quarterly in arrears. The fee is calculated as a percentage of the value of the Company’s net chargeable assets as at the last day of each calendar quarter. (The net chargeable assets are defined as total assets less current liabilities before deducting prior charges; prior charges include any short term borrowings to be used for investment purposes).
The management fee is calculated as 0.60% per annum on the first £100 million of net chargeable assets and as 0.50% per annum thereafter.
The performance fee is calculated as 15% of any outperformance of the benchmark, on a net asset value total return fully diluted basis, over the Company’s accounting year, subject to a limit on the total management fees payable in any one year of 1.65% of the average value of the net assets during the year.
No performance fee will be payable if on the last day of the Company’s accounting year the Company’s share price is lower than the share price as at the preceding year end. If on the last day of the Company’s accounting year the net asset value per share, calculated in accordance with the Company’s accounting policies, net of costs (including any performance fee), is equal to or lower than the net asset value per share as at the preceding year end, the performance fee payable will be restricted to such amount, if any, as will result in the net asset value per share being higher than the net asset value per share at the preceding year end.
Any underperformance relative to the benchmark or any unrewarded outperformance (for example, as a result of the cap), will be carried forward and set against any outperformance or underperformance respectively in subsequent years.
Morningstar calculates all expenses for the financial year, consisting of management fees, performance fees, directors' fees, administration fees, custody fees, audit fees, marketing fees, loan interest, tax, restructuring costs and all other expenses given in the Statement of Total Return and notes in the Report and Financial Statements. They subtract performance fee, restructuring costs, transaction costs, compensation scheme expenses and trail commission then calculate the average daily net assets on a cum fair basis, then divide the total expenses by the average daily net assets and multiply the resulting figure by 100 to arrive at this ratio.
Please note, not all companies have yet adopted ‘ongoing charges’ as the methodology in their Annual Report and Financial Statements. This may mean there are differences between the charges shown on our factsheets and website and the TER shown in the Annual Report.