Key Information Document

Value Assessment

Caledonia Investments undertook a value assessment in May 2024 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.

Key Information Document

Caledonia produces a Key Information Document (‘KID’) setting out certain information regarding our ordinary shares. Caledonia was previously required to produce a KID under the UK version of the Packaged Retail and Insurance-based Investment Products (‘PRIIPs’) Regulation. On 19 September 2024, the Financial Conduct Authority (‘FCA’) issued a statement on forbearance in relation to investment trust disclosure requirements, under which the FCA confirmed that it would not take supervisory or enforcement action if companies such as Caledonia choose not to follow the requirements of the PRIIPs Regulation, including the requirement to produce a KID.

Although a KID is no longer required for the company’s shares, we are continuing to make a KID available to aid consumer understanding.  However, the cost disclosures in the KID have been amended to recognise that no additional cost to the investor is charged by the company. The fact that Caledonia has operating expenses is recognised in the KID by including our most recent Ongoing Charges Figure (‘OCF’).  The OCF is calculated annually as a percentage of the average net assets and provides an indication of the underlying day‐to‐day running costs of the company, based on certain assumptions.

The performance disclosures contained in the KID and the methods by which they are calculated are derived from 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. 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.

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.