Implementation

Implementation of the City of London investment philosophy is a dynamic process. It is based upon our assessment of the outlook for the stock markets within the benchmark, coupled with the value available via our universe of emerging market closed-end funds.

While snap-shots of these two components are taken on a quarterly basis, both day-to-day and intra-day stock market and discount volatility in funds create the need for regular portfolio adjustments. The quarterly, monthly, weekly and daily review and implementation process is as follows:

Quarterly: Asset Allocation, Stage 3 Meeting

A formal review of the Macroeconomist’s stock market recommendations for the new quarter is undertaken. This is the key forum for discussing and reaching consensus on overall strategy for the forthcoming quarter. The Investment Management Team re-rank stock markets based upon prevalent value within our universe of closed-end funds. Target weightings for all markets in the universe are established versus the benchmark and input into Investment Management computer models for implementation on a day-to-day basis, via buy and sell decisions.

Monthly: Investment Management Strategy Meeting

Strategy for the coming month is discussed between Portfolio Managers, Research Analysts and the Macroeconomist. The last quarter’s target asset allocations are amended, if necessary, to reflect changes in discount levels of funds, index weightings and anticipated and actual stock market movements.

Weekly: Macroeconomist Presentation

The Macroeconomist makes a presentation to the full Investment Management Team on significant economic, political or social events that have developed over the previous week. Forecasts are provided on any potential impact these developments may have on the relevant stock market indices or currencies. The Portfolio Managers discuss these issues and, in conjunction with the current value available in our universe decide what amendments should be made to the portfolios we manage.

Weekly: Portfolio Managers Meeting

Portfolio Managers meet to discuss important administrative matters that may impact on the investment management process, including business development, enhancements to the investment process and personnel and training issues.

Daily: Daily 8:15 am GMT / 4:15 pm Singapore Time Meeting

The Investment Management Team (IMT) in the UK review overnight stock market performances in Latin America and Asia in conjunction with the Asian Portfolio Manager in a meeting at 8:15 am GMT. Research Analysts discuss new stock-specific information and input is received regarding any important corporate action news released overnight affecting any stock within City of London’s closed-end fund universe. The UK and Asian Portfolio Managers formulate buy and sell decisions based upon the input at this meeting, as well as our longer term strategy and the relative value of London traded or offshore funds versus US or locally domiciled funds.

Daily: Daily 1:30 pm GMT / 8:30 am EST Meeting

At 8:30 am EST the Investment Management Team in the UK and the US jointly review and discuss stock market performances, stock-specific research and other important news. UK buy and sell orders placed and completed in the morning are reviewed, as well as US orders to be placed at 9:30 am EST. This is the key forum to exchange market and stock-specific news items and the implications of these developments on CoL portfolios. The Macroeconomist addresses significant economic events in detail and the Portfolio Managers assess the impact of these events and determine the relevant action to be taken to exploit potential opportunities.

Portfolio Managers are responsible for execution in all instances. At the point at which the Portfolio Manager in any one particular centre is not available another centre will assume responsibility.

Buy and sell orders are placed with a variety of brokers in the UK, the US and a number of local brokers in emerging markets. City of London endeavors to negotiate competitive rates of commission from the brokerage community. We also maintain a minimum deal size and minimum holding size for each portfolio, which ensures fund portfolio friction costs and expenses are minimised.