FIT Framltn.IN.Gwth

 
TIDMFIT 
 
FRAMLINGTON INNOVATIVE GROWTH TRUST PLC: COMPLETION OF REVIEW AND PROPOSED 
CHANGES 
 
At the Annual General Meeting of Framlington Innovative Growth Trust PLC (the 
"Company") it was announced that the Board would undertake a review of the 
Company's management arrangements with AXA Investment Managers UK Limited ("AXA 
Framlington" or the "Manager") following the statement by Brian Watson that he 
intended to retire from AXA Framlington by 30 June 2010. Brian is the manager 
with day to day responsibility for the Company and a Director of the Company. 
The Board and its advisers have now completed their review. 
 
As part of the review, the Board has consulted with institutional shareholders 
representing over 59 per cent. of the Company's issued share capital who have 
all indicated their support for what is being proposed by the Board for the 
future management and direction of the Company. 
 
Certain of the Board's proposals will take immediate effect and some will take 
effect, subject to shareholder approval where required, after 30 June 2010, at 
which time there is a triennial review of the Company's investment performance 
for the three year period ending on that date, in accordance with the Company's 
articles of association. 
 
The Board believes that there is an attractive case for continuing to invest in 
smaller companies and that the implementation of these proposals will 
strengthen and enhance the Company's investment proposition. 
 
Summary of the proposals 
 
The following changes to the Company's management arrangements will take 
immediate effect:- 
 
  * George Luckraft, a senior fund manager with AXA Framlington, has assumed 
    responsibility for the Company's investment management, working with the 
    Manager's UK smaller companies team, headed by Chris St John. 
 
  * Brian Watson will continue to assist in the transition of individual 
    responsibilities and remain as a Director of the company until he retires 
    from AXA Framlington. 
 
  * Substantial revisions to the investment management agreement with AXA 
    Framlington have been agreed with the Manager. As from 1 January 2010, the 
    basic management fee will be calculated as 0.2 per cent per quarter based 
    on the Company's market capitalisation rather than on total assets. The 
    Board believes that this will better align the interests of the Company and 
    the Manager. 
 
  * The performance fee, if any, for the three year period ending 30 June 2010 
    will be capped at 3 per cent of the average quarter end net assets of the 
    Company for the preceding three years. Previously, any performance fees for 
    this period would have been uncapped. 
 
The following proposals are intended to take effect after 30 June 2010:- 
 
  * If the Company outperforms its benchmark index for the three years ending 
    30 June 2010 no continuation vote is triggered under the articles of 
    association. The Board intends nevertheless to propose a tender offer in 
    July 2010, giving shareholders on the register at close of business on 25 
    January 2010 the opportunity to realise their investment, should they wish 
    to do so, at a discount expected to be no more than 5 per cent. below 
    realisation value. 
 
  * If the Company fails to meet its performance targets and the continuation 
    vote is triggered (which would, if passed, give rise to an opportunity for 
    shareholders to realise their investment in the Company for cash at 
    realisation value), or if the tender offer in July is significantly 
    oversubscribed, the Board intends to reconstruct the Company and to offer 
    cost effective rollover alternatives as well as a full cash exit for those 
    who want it. This process is dependent upon the liquidity in the market for 
    the Company's holdings and may therefore take some time to complete. 
 
  * If the Company meets its performance targets, it is proposed that the 
    performance fee payable to the Manager will be amended with effect from 1 
    July 2010. The fee would be paid as to 10 per cent. of the outperformance 
    against the FTSE SmallCap (ex Investment Companies) Index (the "Index") and 
    will take into account any underperformance from any previous calculation 
    periods that will need to be recovered before any future performance fees 
    are paid. The performance fee will continue to be determined over a 
    three-year period and paid at the end of three years and will continue to 
    be subject to a cap of 3 per cent of average quarter end net assets over 
    the relevant three-year period and will be calculated on a total return 
    basis. It will also carry forward any out-performance not paid through the 
    imposition of the cap. 
 
  * If the Company meets its performance targets and there is no reconstruction 
    of the Company, then the Board intends to propose revisions to the 
    investment objective, which would be subject to shareholder approval, to 
    permit the Company to invest more generally in the Index constituents. 
 
Further details of the proposals are set out below. 
 
New management responsibilities 
 
George Luckraft assumed responsibility for leading the closed ended fund 
business of AXA Framlington in October 2009 and has assumed responsibility for 
the Company's investment management in January 2010. He will continue to work 
closely with Chris St John and AXA Framlington's UK Small cap team in the 
day-to-day management of the portfolio. Neither George Luckraft nor any other 
representative of AXA Framlington will replace Brian Watson on the Board. 
 
The AXA Framlington team intends to continue managing the Company to invest in 
companies with a market capitalisation at the time of purchase, in most cases, 
less than that of the median company in the Index, the Company's benchmark. 
However, after 30 June 2010 the Board intends to propose revisions to the 
investment objective, which would be subject to shareholder approval, to permit 
the Company to invest more generally in the Index constituents, which would 
provide greater flexibility, as compared with the current objective, to invest 
in larger companies within the Index. 
 
Changes to investment management fee and performance fee 
 
AXA Framlington has volunteered constructive revisions to its investment 
management terms with the Company, which have been agreed by the Board. 
 
From 1 January 2010, the basic management fee, which includes company 
secretarial and administration services, will be calculated quarterly, based on 
the Company's market capitalisation at quarter end, at a rate of 0.2 per cent 
per quarter. This compares to the previous basis of charging a quarterly fee of 
0.2 per cent per quarter based on the total assets less current liabilities of 
the Company. This new arrangement aligns the interests of the Manager more 
closely with shareholders insofar as there is greater incentive for the Manager 
to improve the rating of the Company's shares. 
 
The Company has also agreed with AXA Framlington that there will be a cap on 
any performance fee earned for the three-year period ending 30 June 2010 of 3 
per cent of the average quarter end net assets for the preceding three years. 
Previously the performance fees were uncapped. 
 
It has also been agreed with the Manager that, following 30 June 2010, 
depending on the outcome of other issues affecting the Company, such as its 
potential continuation vote, a new performance fee arrangement will be 
introduced which: 
 
  * will be calculated on a total return basis, thereby taking into account 
    dividends, share buybacks and allotments, whereas the current arrangement 
    is on a net asset value basis only; 
 
  * will continue to be determined over a three year period and paid at the end 
    of three years, dependent on performance; 
 
  * will be set at 10 per cent of outperformance over the Index (based on total 
    return) whereas the current arrangement is for 12.5 per cent. of capital 
    only outperformance above a one per cent per annum hurdle; 
 
  * will be capped at 3 per cent of the average quarter end net assets for the 
    preceding three years, compared to the uncapped basis formerly in place; 
    and 
 
  * will take into account any underperformance from any previous calculation 
    periods which will need to be recovered before any future performance fees 
    are paid and will also carry forward any out-performance not paid through 
    the imposition of the cap. 
 
Triennial continuation vote 
 
The Company is subject to a triennial continuation vote following the 
completion of the statutory audit for the third year of the three-year period 
under review if the Company's net asset value performance fails to outperform 
the Index for the same period. If the Company meets its current three year 
performance target for the period ending 30 June 2010, the Board proposes to 
retain a three year continuation vote beyond July 2010 but not with the current 
arrangements which operate around performance measures and provide for cash 
exit mechanics. Instead, the Board proposes to introduce a simple continuation 
vote which, if it fails, would require the Board to put forward proposals 
shortly thereafter, which would include orderly exit mechanics for those who 
want it. 
 
If the Company fails to meet its current three year performance target for the 
period ending 30 June 2010, the result of which will be known in early July 
2010, and if (based on discussions which the Board will have with the Company's 
main institutional shareholders) the potential continuation vote is likely to 
give rise to a substantial cash exit, the Board will aim to put forward 
reconstruction proposals in the summer which will include a full cash exit at 
close to realisation value for those who want to realise their investment in 
the Company and will also include cost and tax effective rollover alternatives, 
if appropriate. 
 
Tender Offer 
 
If the Company meets its performance target and therefore no continuation vote 

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