Investment policy

The investment objective of Pacific Assets Trust plc, (“the Company”) is to achieve long-term capital growth through investment in selected companies in the Asia Pacific region and the Indian sub-continent, but excluding Japan, Australia and New Zealand (the ‘Asia Pacific Region’).

The Board remains firmly of the belief that investing in the Asia Pacific Region remains an attractive proposition. However, there are now many companies whose economic activities are predominantly within the Asia Pacific Region but whose shares are listed, or the company is incorporated, elsewhere. Consequently, up to a maximum of 20% of the Company’s total assets (at the time of investment) may be invested in companies incorporated and/or listed outside the Asia Pacific Region, but whose economic activities are predominantly within the Asia Pacific Region.

The Company invests in companies which the Investment Manager, First State Investment Management (UK) Limited, (“First State”) believes will be able to generate long term growth for Shareholders. The Company invests principally in listed equities although its policy enables it to invest in other securities, including preference shares, debt instruments, convertible securities and warrants. In addition, the Company may invest in open and closed-ended investment funds and companies.

The Company is able to invest in unlisted securities but limited to those which are expected to be listed on a stock exchange or which cease to be listed and First State considers appropriate, or is required, to continue to hold.

Risk is diversified by investing in different countries, sectors and stocks within the Asia Pacific Region. There are no defined limits on countries or sectors but no single investment may exceed 15% of the Company’s total assets at the time of investment. However, the Board has set a current limit for single investments of 7.5% of total assets at the time of investment. This limit is reviewed from time to time by the Board and may be revised as appropriate.

No more than 10% of the Company’s total assets may be invested in other listed closed-ended investment companies unless such investment companies themselves have published investment policies to invest no more than 15% of their total assets in other closed-ended investment companies, in which case the limit is 15%.

The Company can use gearing to enhance returns over the long term and its policy is that borrowings, net of cash, will not exceed 35% of shareholders’ funds at the time of borrowing, although the Board has set a current limit on gearing, net of cash, of 20% of shareholders’ funds at the time of borrowing. This limit is reviewed from time to time by the Board and may be revised as appropriate.

The Company’s loan facility was cancelled by the Board on 6 May 2011 as the Company’s Investment Manager did not envisage utilising this facility during the period when it was available. The Board, in conjunction with First State, will continue to review this strategy.

The use of derivatives is permitted with prior Board approval and within agreed limits.