Key Information Document

Value Assessment

Caledonia Investments undertook a value assessment in May 2023 for the purposes of the FCA’s Consumer Duty. This was reviewed and approved by the board.

The assessment focused on the returns earned by Caledonia, when compared with its costs, as expressed by its OCR calculated in accordance with guidance provided by the Association of Investment Companies. The value assessment considered a medium to long term timeframe, consistent with investors’ recommended holding periods. The assessment also considered the returns earned by Caledonia and its costs compared with a suitable comparator set.

Based on this review, Caledonia’s shares were considered to represent fair value to investors based on the attributes and costs of the shares themselves.

PRIIPs Regulation Key Information Document

Under the EU’s Packaged Retail and Insurance-based Investment Products (‘PRIIPs’) Regulation, Caledonia is required to produce a Key Information Document (‘KID’) setting out prescribed information regarding our ordinary shares.

The performance and costs disclosures contained in the KID and the methods by which they are calculated are strictly prescribed by the PRIIPs Regulation and differ from the ways in which we present our own financial information. It may therefore be helpful to investors to understand these differences:

Performance – the KID presents stress, unfavourable, moderate and favourable performance scenarios which are derived from historic share prices with dividends reinvested (known as ‘Total Shareholder Return’). Caledonia measures actual performance by our net asset value per share total return (‘NAVTR’). Further information on Caledonia’s NAVTR can be found in the monthly factsheets on this website.

Costs – the KID presents a table of costs which incorporates items not included within Caledonia’s ongoing charges ratio, a measure of expenses prepared in accordance with guidance published by the Association of Investment Companies and broader market practice and published in Caledonia’s annual report and accounts. Broadly, these differences relate to Caledonia’s look-through share of the management costs of our underlying fund investments, certain transaction costs and performance-related compensation paid to staff.

The purpose of a KID is to provide retail investors with standardised illustrations of theoretical risk and returns to enable the comparison of different investment products available across a very wide range of financial sectors. In the case of investment trust companies, these illustrations are based on daily share price total returns over the previous five years, which are then projected forward over various time periods and adjusted for risk. Equity markets have, however, experienced a period of high returns and low volatility in recent years, which under the KID’s prescribed methodology could lead to projections which are potentially over-optimistic. We would therefore remind investors that past performance is not a reliable guide to future returns.

We believe that Caledonia’s NAVTR remains the most appropriate measure of our investment strategy and how we manage our portfolio focused on quoted and unquoted equities and funds, and we will therefore continue to report our actual performance on this basis, in addition to publishing a KID.