Pre-Annual General Meeting Information • Dec 14, 2021
Pre-Annual General Meeting Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other appropriately qualified independent financial adviser, authorised under the Financial Services and Markets Act 2000 (as amended) ("FSMA") if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside of the United Kingdom.
If you have sold or otherwise transferred all of your Shares in Henderson Diversified Income Trust PLC (the "Company") you should pass this document (but not any Form of Proxy) as soon as possible to the purchaser or transferee or to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee.
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(Incorporated in England & Wales with registered number 10635799) (An investment company within the meaning of section 833 of the Companies Act 2006)
and
Notice of General Meeting
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Notice of a general meeting of the Company to be held at the Company's registered office, 201 Bishopsgate, London, EC2M 3AE on 25 February 2022 at 9.30 a.m. is set out at the end of this document.
Please note that as a result of the Covid-19 pandemic and the guidance published by the UK Government in response thereto, physical attendance at the General Meeting may not be possible at the time of the meeting. In addition, and in accordance with the Company's articles of association, the Company may impose entry restrictions on attendance at the General Meeting. In the light of this, the Board encourages Shareholders to submit their votes by proxy in advance by the required deadline and to appoint the Chairman of the meeting as their proxy to ensure their vote is counted.
All Shareholders are encouraged to vote in favour of the Resolution to be proposed at the General Meeting and if the Ordinary Shares are not held directly, to arrange for their nominee to vote on their behalf. To be valid, the Form of Proxy must be completed, signed and returned in accordance with the instructions printed thereon to be received by the Registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY as soon as possible and, in any event, by no later than 9.30 a.m. on 23 February 2022. You may appoint a proxy or proxies electronically by visiting www.investorcentre.co.uk/eproxy and following the instructions. Proxies submitted via www.investorcentre.co.uk/eproxy must be transmitted so as to be received by the Registrars by no later than 9.30 a.m. on 23 February 2022. If you hold your Ordinary Shares in uncertificated form (i.e. in CREST) you may vote using the CREST electronic voting service in accordance with the procedures
set out in the CREST Manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of this document). Proxies submitted via CREST for the General Meeting must be transmitted so as to be received by the Registrars as soon as possible and, in any event, by no later than 9.30 a.m. on 23 February 2022.
This document should be read as a whole. Your attention is drawn to the letter from the Chairman of the Company which is set out on pages 5 to 8 of this document and which recommends that you vote in favour of the Resolution to be proposed at the General Meeting. Your attention is drawn to the section entitled "Action to be Taken" on page 8 of this document.
| EXPECTED TIMETABLE 4 | |
|---|---|
| PART 1 LETTER FROM THE CHAIRMAN 5 | |
| PART 2 PROPOSED NEW INVESTMENT POLICY……………………………………………………… 9 | |
| PART 3 RISKS ASSOCIATED WITH THE PROPOSALS……………………………………………… …11 | |
| DEFINITIONS 13 | |
| NOTICE OF GENERAL MEETING 15 |
| 2022 | |
|---|---|
| Latest time and date for receipt of Forms of Proxy from Shareholders | 9.30 a.m. on 23 February |
| General Meeting | 9.30 a.m. on 25 February |
| Results of General Meeting announced | 25 February 2022 |
(Incorporated in England & Wales with registered number 10635799) (An investment company within the meaning of section 833 of the Companies Act 2006)
Directors: Angus Macpherson (Chairman) Denise Hadgill Win Robbins Stewart Wood Ian Wright
Registered office: 201 Bishopsgate London EC2M 3AE
14 December 2021
Dear Shareholder
At the Company's last Annual General Meeting, in order to facilitate the Company's transition away from LIBOR, Shareholders voted in favour of amending the Company's investment objective to that of seeking a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses. The Company's benchmark was also updated as a result of this process.
Following this change, and in the light of the introduction of new EU rules relating to the introduction of sustainability-related disclosures, the Board has been discussing with the Investment Manager the various ways in which Environmental, Social and Governance ("ESG") matters are integrated into the Company's portfolio construction and investment processes. The Investment Manager already seeks to incorporate certain guiding principles in constructing the Company's portfolio in a manner that promotes the application of greenhouse gas emissions ("GHG") intensity related criteria, political rights and civil liberties and support for the UN Global Compact ("UNGC") principles. As a result of these discussions, the Board is proposing to amend the Company's investment objective and policy to incorporate formally some of these principles.
The purpose of this document is to explain the proposed changes to the Company's existing investment objective and policy, the Company's integration of ESG considerations into its wider investment strategy and to explain why the Board recommends you vote in favour of the Resolution to be proposed at the General Meeting.
The Company's current investment objective is to seek a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes. However, the Board believes that the potential for meaningful capital gains in the current low interest rate environment is limited and therefore it is proposed that, subject to Shareholder approval, the Company's investment objective be amended to
that of providing Shareholders with a high level of income and preservation of capital, through the economic cycle.
The Board also proposes to include additional formal restrictions related to ESG considerations in the Company's investment policy; these reflect restrictions already applied by the Investment Manager in constructing the Company's portfolio. For the avoidance of doubt, there will be no material change to the Company's investment process or strategy as a result of the proposed amendments to the investment objective and policy as these amendments largely reflect the current strategy and processes employed by the Investment Manager on behalf of the Company.
The Company's existing investment objective and policy and the New Investment Objective and Policy are set out in full in Part 2 of this document.
The Listing Rules require any proposed material changes to the Company's published investment policy to be submitted to the FCA for prior approval; the FCA has approved the New Investment Objective and Policy. The Listing Rules also require Shareholder approval prior to any material changes being made to the Company's published investment policy; this approval will be sought at the General Meeting. Any future material changes to the New Investment Objective and Policy will also require the prior approval of Shareholders.
The Company promotes the application of GHG intensity related criteria, political rights and civil liberties and support for the UNGC principles as part of the portfolio construction process. In order to meet the environmental and social characteristics promoted by the Company, the Investment Manager applies binding criteria to the selection of underlying assets as part of its investment decision making process. In connection with the foregoing, the Company is proposing to formalise the following investment restrictions in its published investment policy in order to strengthen this integration:
In addition to adhering to the above investment restrictions, as part of its portfolio construction process the Investment Manager also applies the following measures.
The Investment Manager monitors the Company's portfolio against the formal investment restrictions and additional measures set out above on an ongoing basis. If an existing investment becomes ineligible based on exclusionary screens, it will be divested within a reasonable period.
Investors should note that a specific index is not designated as a reference benchmark to determine whether the Company is aligned with the environmental and/or social characteristics promoted.
The Investment Manager aims to ensure that the companies in which the Company invests follow good governance practices. The good governance practices of investee companies are assessed by the Investment Manager prior to making an investment on behalf of the Company and periodically thereafter in accordance with the Investment Manager's Sustainability Risk Policy ("SRP"). The SRP sets minimum standards against which investee companies will be assessed and monitored by the Investment Manager prior to making an investment and on an ongoing basis. Such standards may include, but are not limited to: sound management structures, employee relations, remuneration of staff and tax compliance. In addition, the Investment Manager is a signatory to the UN Principles for Responsible Investment ("UNPRI"). The SRP can be viewed in full at https://cdn.janushenderson.com/webdocs/Sustainability+Risk+Policy\_EU.pdf.
The adoption of the New Investment Objective and Policy is subject to Shareholder approval. A notice convening the General Meeting which is to be held at the Company's registered office, 201 Bishopsgate, London, EC2M 3AE on 25 February 2022 at 9.30 a.m. is set out at the end of this document. The Resolution will, if passed, result in the adoption of the New Investment Objective and Policy as set out in Part 2 of this document, with effect from the passing of the Resolution. The Resolution will be proposed as an ordinary resolution and will require the approval of Shareholders representing a simple majority of the votes cast.
All Shareholders are entitled to vote at the General Meeting. In accordance with the Company's articles of association, all Shareholders entitled to vote and present in person or by proxy at the General Meeting shall upon a show of hands have one vote and upon a poll shall have one vote in respect of every Share held.
The Board takes the health, safety and wellbeing of all the Company's stakeholders very seriously and Shareholders should note that as a result of the Covid-19 pandemic and the guidance published by the UK Government, physical attendance at the General Meeting may not be possible at the time of the meeting. In addition, and in accordance with the Company's articles of association, the Company may
impose entry restrictions on attendance at the General Meeting. In the light of this, the Board encourages Shareholders to submit their votes by proxy in advance by the required deadline and to appoint the Chairman of the meeting as their proxy to ensure their vote is counted. If the Company intends to restrict physical attendance at the General Meeting, the Company will notify Shareholders of this, or any other change to the proposed format of the General Meeting, as soon as possible via RIS and its website (www.hendersondiversifiedincome.com.)
If Shareholders do not vote in favour of the New Investment Objective and Policy, the Company will continue to be managed under its existing investment objective and policy.
All Shareholders are encouraged to vote in favour of the Resolution to be proposed at the General Meeting and if the Ordinary Shares are not held directly, to arrange for their nominee to vote on their behalf.
Shareholders are requested to complete and return proxy appointments to the Registrar by one of the following means:
In each case, the proxy appointment must be received by the Company as soon as possible and, in any event, so as to arrive by no later than 9.30 a.m. on 23 February 2022. To be valid, the relevant proxy appointment should be completed in accordance with the instructions accompanying it and lodged with the Registrar by the relevant time.
The Board considers that the Proposals, as set out in this document, and the Resolution to be proposed at the General Meeting are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting.
The Directors intend to vote in favour, or procure votes in favour, of the Resolution at the General Meeting in respect of their own beneficial holdings of Shares, which in aggregate amount to 188,988 Shares (representing 0.1 per cent. of the issued Share capital of the Company as at the date of this document).
Yours faithfully,
The full text of the Company's current investment objective and policy and proposed new investment objective and policy are set out below:
The Company's investment objective is to seek a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes.
The Company uses a dynamic approach to portfolio allocation across asset classes and is permitted to invest in a single asset class if required. The Company seeks a sensible spread of risk at all times. It can invest in assets of any size, sector, currency or issued from any country.
The Company has adopted the following allocation limits for each asset class:
As a matter of policy, the Company will not invest more than 10% in aggregate of its net assets in a single corporate issue or issuer.
The Company may use financial instruments known as derivatives to enhance returns. They may also be used to reduce risk or to manage the Company's assets more efficiently. The use of derivatives may include credit derivatives (including credit default swaps) in addition to interest rate futures, interest rate swaps and forward currency contracts. The credit derivatives,
The Company's investment objective is to provide shareholders with a high level of income and preservation of capital, through the economic cycle.
The Company invests in a diversified portfolio of global fixed income and floating rate asset classes. The Company uses a dynamic approach to portfolio allocation across asset classes and is permitted to invest in a single asset class if required. The Company seeks a sensible spread of risk at all times. It can invest in assets of any size, sector, currency or issued from any country.
The Company has adopted the following allocation limits for each asset class:
As a matter of policy, the Company will not invest more than 10% in aggregate of its net assets in a single corporate issue or issuer.
The Company has adopted the following investment restrictions:
• The Company will not make any direct investments in corporate issuers who derive more than 10 per cent. of their revenue from oil and gas generation and production, oil sands extraction, shale energy extraction, thermal coal extraction and power
interest rate futures and swaps are used to take a synthetic exposure to, or to hedge, an investment position where the derivative contract is more efficient or cost effective than a position in the underlying physical asset. The Company's exposure to derivatives is capped at a maximum net long or net short position of 40% of net assets. The Company may also employ financial gearing for efficient portfolio management purposes and to enhance investment returns but total gearing (both financial gearing and synthetic gearing combined) may not exceed 40% of net assets. Forward currency contracts are used to hedge other currencies back to sterling.
Any material change to the investment policy of the Company will only be made with the approval of shareholders.
generation, and Arctic oil and gas extraction.
The Company may use financial instruments known as derivatives to enhance returns. They may also be used to reduce risk or to manage the Company's assets more efficiently. The use of derivatives may include credit derivatives (including credit default swaps) in addition to interest rate futures, interest rate swaps and forward currency contracts. The credit derivatives, interest rate futures and swaps are used to take a synthetic exposure to, or to hedge, an investment position where the derivative contract is more efficient or cost effective than a position in the underlying physical asset. The Company's exposure to derivatives is capped at a maximum net long or net short position of 40% of net assets.
The Company may also employ financial gearing for efficient portfolio management purposes and to enhance investment returns, but total gearing (both financial gearing and synthetic gearing combined) may not exceed 40% of net assets. Forward currency contracts are used to hedge other currencies back to sterling.
Any material change to the investment policy of the Company will only be made with the approval of shareholders.
Shareholders should consider carefully all of the information set out in this document including, in particular, the risks associated with the Proposals described below prior to making any decision as to whether to vote in favour of the Resolution.
The Company's business, financial condition or operations could be materially and adversely affected by the occurrence of any of the risks described below. In such circumstances, the market price of the Shares could decline and investors could lose all or part of their investment. In particular, Shareholders should note that the past performance of the Company or the Investment Manager should not be used as a guide to the Company's future performance.
Additional risks and uncertainties which were not known to the Board at the date of this document or that the Board considers at the date of this document to be immaterial (based on the assumption that the Resolution are passed at the General Meeting) may also materially and adversely affect the Company's business, financial condition or results or prospects.
Shareholders should be aware of the following considerations relating to the New Investment Objective and Policy and the Company;
events and trends, tax laws and other factors such as the COVID-19 pandemic could substantially and adversely affect the value of the Company's portfolio and, as a consequence, the Company's investment performance, Share price and prospects.
▪ Any change in the Company's tax status, or in taxation legislation or in the interpretation or application of taxation legislation, could affect the value of investments held by the Company, the Company's ability to achieve its investment objective, the ability of the Company to provide returns to Shareholders and/or alter the post-tax returns of Shareholders.
The foregoing factors are not exhaustive and do not purport to be a complete explanation of all risks and significant considerations relating to the New Investment Objective and Policy or the Company. Accordingly, additional risks and uncertainties not currently known to the Board may also have an adverse effect on the Company's business, financial condition or results or prospects.
Unless the context otherwise requires, the following words and expressions have the following meanings in this document:
| Board | the board of Directors of the Company or any duly constituted committee thereof |
|---|---|
| Company | Henderson Diversified Income Trust PLC, a company incorporated in England & Wales with registered number 10635799 |
| CREST | the facilities and procedures for the time being of the relevant system of which Euroclear has been approved as operator pursuant to the CREST Regulations |
| CREST Manual | the compendium of documents entitled CREST Manual issued by Euroclear from time to time and comprising the CREST Reference Manual, the CREST Central Counterparty Service Manual, the CREST international Manual, CREST Rules, CCSS Operations Manual and the CREST Glossary of Terms |
| CREST Regulations | the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) |
| Directors | the directors of the Company |
| Euroclear | Euroclear UK & International Limited, the operator of CREST |
| FCA | the Financial Conduct Authority of the United Kingdom including any replacement or substitute thereof, and any regulatory body or person succeeding, in whole or in part, to the functions thereof |
| Form of Proxy | the form of proxy for use by Shareholders at the General Meeting, which accompanies this document |
| Freedom House | founded in October 1941, a non-profit, non-governmental organization in Washington, D.C., that conducts research and advocacy on democracy, political freedom, and human rights |
| Freedom House Index | the index operated by Freedom House which rates people's access to political rights and civil liberties in 210 countries and territories across the world |
| General Meeting | the general meeting of the Company, notice of which is set out at the end of this document, at which the Resolution will be proposed to approve the New Investment Objective and Policy |
|---|---|
| GHG | Scope 1 and 2 greenhouse gas emissions |
| Investment Manager | Henderson Investment Funds Limited, a company incorporated in England and Wales with registered number 02678531 |
| New Investment Objective and Policy |
the proposed new investment objective and policy of the Company set out in full in Part 2 of this document |
| Paris Agreement | the international treaty on climate change made between members of the UNFCCC in 2015 which entered into force on 4 November 2016 and which covers, inter alia, climate change mitigation |
| Proposals | the proposals to adopt the New Investment Objective and Policy, details of which are set out in this document |
| Register | the register of Shareholders |
| Registrars | Computershare Investor Services PLC |
| Regulatory Information Service |
any of the regulatory information services set out in Appendix 3 of the listing rules of the FCA |
| Resolution | the ordinary resolution to approve the adoption of the New Investment Objective and Policy to the exclusion of all others, to be proposed at the General Meeting |
| Shareholders | holders of Ordinary Shares |
| Shares or Ordinary Shares | ordinary shares of 1 penny each in the capital of the Company |
| UNFCCC | United Nations Framework Convention on Climate Change |
| UNGC | United Nations Global Compact |
(Incorporated in England & Wales with registered number 10635799) (An investment company within the meaning of section 833 of the Companies Act 2006)
Notice is hereby given that a general meeting of Henderson Diversified Income Trust PLC (the "Company") will be held at 201 Bishopsgate, London, EC2M 3AE on 25 February at 9.30 a.m. to consider and, if thought fit, pass the following resolution, which will be proposed as ordinary resolution:
By order of the Board Registered office:
Henderson Secretarial Services Limited Company Secretary
201 Bishopsgate London EC2M 3AE
▪ in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures noted below,
and in each case to be received by the Company no later than 48 hours (excluding non-working days) before the time of the meeting or any adjourned meeting.
member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of voting rights. The statement of the rights of members in relation to the appointment of proxies in notes 2, 3 and 5 above does not apply to Nominated Persons. The rights described in these notes can only be exercised by members of the Company.
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