22 January 2026
Smithson Investment Trust plc
Publication of Circular
Recommended proposals for the reconstruction and members’ voluntary winding up of the Company
Introduction
On 12 November 2025 the Board of Smithson Investment Trust plc (the “Company“) announced that it would put forward proposals for a scheme of reconstruction and members’ voluntary winding up of the Company under section 110 of the Insolvency Act (the “Scheme“) pursuant to which Shareholders would have the option to roll over their investment in the Company (in whole or in part) into Smithson Equity Fund (the “Fund“), a UK OEIC established in conjunction with the Scheme that would be managed by Fundsmith LLP, or elect to receive cash (the “Proposals“). Further to this announcement, the Board of the Company is pleased to announce the publication of a Circular in relation to the Scheme (the “Circular“).
Accordingly, under the Proposals, which are conditional upon, among other things, the approval of Shareholders at the General Meetings,each Shareholder eligible to receive Fund Shares pursuant to the Scheme that ison the Register on the Record Date will be entitled, in respect of some or all of their Shares, to:
- receive class S accumulation shares in the Fund (“Fund Shares“) (the “Rollover Option“); and/or
- elect for cash (the “Cash Option“).
The Board considers the Proposals to be in the best interests of Shareholders as a whole and recommends that Shareholders vote in favour of the Resolutions required to implement the Proposals at the General Meetings,as the Directors who hold shares intend to do in respect of their own beneficial holdings, which, in aggregate, amount to 12,078 Shares (representing approximately 0.01 per cent. of the Company’s issued Share capital (excluding Shares held in treasury) as at the Latest Practicable Date).
In addition, certain Managing Partners of Fundsmith, including Mr Terry Smith, the CEO and CIO of Fundsmith, have delivered non-binding letters of intent to vote (or procure the voting) of such Shares in the Company that are held directly or beneficially by them, or over which they exercise voting control, in favour of the Resolutions to be proposed at the General Meetings. As at the Latest Practicable Date, those Managing Partners of Fundsmith held directly or beneficially, or exercised voting control over, in aggregate, 2,524,248 Shares, representing approximately 2.3 per cent. of the Company’s issued Share capital (excluding Shares held in treasury) as at that date. Each of those Managing Partners of Fundsmith have advised that they intend to elect for the Rollover Option in respect of their entire holding of Shares.
Saba has also undertaken to use best endeavours, in respect of such Shares in the Company as are beneficially held by the Saba Investment Vehicles as at the Voting Record Time in respect of each General Meeting, to vote (or procure the voting) in favour of the Resolutions to be proposed at the General Meetings. As at the Latest Practicable Date, so far as the Company is aware Saba’s clients had an economic interest in 17,350,253 Shares, representing approximately 16.15 per cent. of the Company’s issued Share capital (excluding Shares held in treasury) as at that date.[1]
Background to and reasons for the Proposals
As announced on 12 November 2025, the Board is, and continues to be, acutely aware of the persistent discount to NAV at which the Company’s Shares have traded since early 2022. During this time, demand for the Shares has been impacted by a number of factors, including relative underperformance in part due to the Investment Manager’s style being out of favour. The Company has delivered, as at the Latest Practicable Date, a NAV total return of +57.0 per cent. since inception and -20.0 per cent. since the start of 2022 compared to +87.6 per cent. and +27.0 per cent. for the MSCI World SMID Index £ Net over the same periods.
Despite the Board’s efforts to reduce the discount through its significant share buyback programme, with over £993 million deployed since buybacks began in April 2022 (repurchasing approximately 69.7 million Shares, representing approximately 39.3 per cent. of the Company’s issued share capital as at 31 March 2022), the Shares have continued to trade at a substantial discount to NAV.
While the Board continues to have conviction in the Company’s investment strategy and Fundsmith, as the Company’s investment manager, it recognises Shareholders’ ongoing frustration with the discount to NAV at which the Shares continue to trade. The Board has therefore explored solutions which would reduce or eliminate the discount to NAV at which the Company’s Shares trade, whilst maintaining the current investment strategy and Fundsmith as the Company’s investment manager.
After considering a number of options and consulting with some of the Company’s largest Shareholders, the Board decided that offering a rollover into a UK OEIC, which would allow investors to redeem their shares at the prevailing net asset value per share and which would reflect the Company’s existing investment strategy, coupled with an uncapped cash exit opportunity at NAV less costs, would offer the best outcome for Shareholders as a whole. As the investment strategy does not employ certain key attributes of the closed-end structure, such as gearing and investments in private assets, and given that the underlying portfolio is liquid (the median market capitalisation of the holdings in the Company’s portfolio is c. £6.18 billion), the Board believes that rolling into a UK OEIC is unlikely to have a detrimental impact on the delivery of the investment strategy, whilst having the benefit of removing the discount to NAV at which Shareholders can realise their investment.
Benefits of the Proposals
The Board believes that the Proposals have the following benefits for Shareholders:
- Continuity of investment manager and strategy:The Fund will be managed by Fundsmith, with Simon Barnard as lead portfolio manager, continuing the Company’s current investmentstrategy of long-term investing in small and mid-sized listed or traded companies globally to deliver long term capital growth.
- No NAV dilution for rolling Shareholders:Shareholders who roll their investment in the Company into the Fund should not suffer any NAV dilution as a result of the Proposals.[2]
- Full cash exit available:Shareholders will have the option to realise some or all of their holding in the Company for cash. Shareholders who elect, or are deemed to have elected, for the Cash Option will receive the Cash FAV per Share for each Share so elected, or deemed to have been so elected. No discount will be applied to this cash exit, although the value of the Company Transaction Costs will be applied against the Cash FAV and assets held within the Cash Pool will be subject to market movement until realised for distribution.
- Ability to trade at NAV:Shareholders in the Fund will be able to purchase and redeem Fund Shares at a price calculated by reference to the NAV per Fund Share on a daily basis, subject to any adjustment which may be imposed in accordance with the Fund Prospectus. The open-ended unlisted structure of the Fund will eliminate the persistent discount to NAV at which Shareholders in the Company have had to sell their Shares in the market since March 2022.
- Ability to stay invested in a tax efficient manner:UK Shareholders who roll over their investment in the Company into the Fund may do so without triggering a charge to UK capital gains tax. See paragraph 6 of Part 4 of the Circular for further information regarding taxation.
- Cost contribution by Fundsmith:Fundsmith is making a significant cost contribution in connection with the Proposals which will benefit all Shareholders and should ensure that there is no NAV dilution for Shareholders rolling over into the Fund (as set out above).
Summary information on the Fund
Under the terms of the Scheme, Shareholders are being offered the opportunity to roll over their investment in the Company into the Fund.
The Fund is a newly incorporated open-ended investment company with variable capital (i.e. with redeemable shares), incorporated in England and Wales under the OEIC Regulations which it is intended will launch, solely for the purpose of the Scheme, on 2 March 2026. “Launch” in this context means that the assets to be transferred to the Fund in connection with the Scheme will be the only assets of the Fund as at the Effective Date.
The Fund will be managed by Fundsmith. Simon Barnard, the Company’s portfolio manager, will be the lead portfolio manager of the Fund. The Fund will be managed in accordance with the Company’s existing investment strategy and policy, subject to minor modifications to reflect the regulatory requirements that arise from the different way the relevant rules require the Fund to be operated.
Further information on the Fund is set out in Part 2 of the Circular and in the Fund Documents. Shareholders should also refer to the risk factors set out in Part 6 of the Circular and should not make any decision to invest in the Fund except on the basis of information provided in the Fund Documents. Please note that the Board takes no responsibility for the contents of the Fund Documents.