INTREPID CAPITAL MANAGEMENT p.l.c.

Transcription

1 INTREPID CAPITAL MANAGEMENT p.l.c. An open-ended umbrella investment company with variable capital and segregated liability between sub-funds incorporated with limited liability in Ireland under the Companies Acts 1963 to 2014 with registration number SUPPLEMENT INTREPID SMALL CAP FUND Dated 26 June 2015

2 1. IMPORTANT INFORMATION The Directors (whose names appear under the heading Management of the Company Directors in the Prospectus), accept responsibility for the information contained in this Supplement and the Prospectus. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Supplement and in the Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The Directors accept responsibility accordingly. This Supplement contains information relating specifically to Intrepid Small Cap Fund (the Fund ), a fund of Intrepid Capital Management p.l.c. (the Company ), an open-ended umbrella fund with segregated liability between sub-funds authorised by the Central Bank as a UCITS pursuant to the Regulations. The Fund may invest in Financial Derivative Instruments for the purposes of hedging. This Supplement forms part of and should be read in the context of and in conjunction with the Prospectus for the Company dated 3 March 2015 (the Prospectus ). As the price of Shares in each Fund may fall as well as rise, the Company shall not be a suitable investment for an investor who cannot sustain a loss on their investment. Profile of a Typical Investor The Fund is designed to provide an investment option that allows investors to participate in the growth of small capitalization companies without having to invest in individual equity securities. Through detailed fundamental analysis and by focusing on established business with strong balance sheets and above-average free cash flows, the Fund is designed for the investor who is looking to limit risk inherent with small capitalization companies while still wanting to participate in a higher growth segment of the equity market. A typical investor will be seeking to achieve a return on their investment over the medium to long term and will be willing to accept a medium to high level of volatility. DMI/ / v30 2

3 2. DEFINITIONS Base Currency means US Dollar; Business Day means any day (other than a Saturday or Sunday) on which commercial banks are open for business in Dublin and New York and/or such other day or days as may be determined by the Directors from time to time and as notified to Shareholders in advance; Dealing Day means each Business Day and/or such other day or days as the Directors may in their absolute discretion determine and notify in advance to Shareholders provided that there shall be at least two Dealing Days in each Month (with at least one Dealing Day per two week period); Dealing Deadline means noon (Irish time) on the Business Day immediately preceding the relevant Dealing Day, or such other time for the relevant Dealing Day as may be determined by Directors and notified in advance to Shareholders provided always that the Dealing Deadline is no later than the Valuation Point; Minimum Fund Size means US$5,000,000 or such other amount as the Directors may in their absolute discretion determine; Small Capitalization Companies means companies having a capitalization that does not exceed the upper limit of the capitalization ranges of the highest of the Russell 2000 Index, the S&P Small Cap 600 Index or the Dow Jones Wilshire US Small Cap Index during the most recent 12 months. Valuation Point means the close of business in the relevant market where assets are listed or traded on the relevant Dealing Day by reference to which the Net per Share of the Fund is determined provided such point will in no case precede the latest point at which subscription, repurchase or exchange applications may be accepted. All other defined terms used in this Supplement shall have the same meaning as in the Prospectus. DMI/ / v30 3

4 3. INFORMATION ON THE FUND 3.1 Investment Objective, Investment Policies and Investment Strategy Investment Objective: The investment objective of the Fund is to seek long-term capital appreciation, principally through investing in a diversified portfolio of Small Capitalisation Companies which are believed to be undervalued; i.e. the market value of the outstanding equity security is less than the intrinsic value of the company issuing the equity security. There will be no industry focus. There can be no assurance that the Fund will achieve its investment objective Investment Policies and Investment Strategy: In order to achieve its investment objective, the Fund will primarily invest in equity securities of Small Capitalisation Companies. Such Small Capitalisation Companies will be principally located in the United States. In addition the Fund may invest in equities in Small Capitalisation Companies located in Member States, Guernsey, Jersey, Isle of Man, Australia, Hong Kong, South Africa and any other countries as the Investment Manager deems appropriate. Under normal market conditions, the Fund has a policy to normally invest a minimum of 50% of its net assets in equity securities of Small Capitalization Companies (up to 20% of the investments in the equity securities of Small Capitalization Companies will be attributable to non-us companies). Furthermore, it is expected that the Fund will typically hold equity securities of approximately 20 to 75 different companies. Although the Fund generally purchases equities securities that at the time of initial purchase are issued by Small Capitalization Companies, the Fund may retain or augment positions in such companies even if they subsequently grow beyond this range. Such positions are not expected to represent a significant proportion of the Fund's assets at any given time. As indicated above, the Fund will not have a specific industry focus and instead it may invest across a range of economic sectors, including, but not limited to financial services, industrials, utilities, consumer discretionary, energy, information technology, materials, heath care, consumer staples, and telecommunication services. When limiting its holdings to a relatively small number of positions, the Fund will invest in only the best ideas of the Investment Manager. However, by limiting the number of holdings in the Fund, each position is likely to have a more meaningful impact on performance as of result of which the Fund may be more volatile than a fund that is invested in a greater number of securities. The Fund will typically hold a position until either the price reaches the target valuation level (i.e. the equity securities intrinsic value as calculated by the Investment Manager) or the Fund determines that the price is unlikely to reach that level. The Fund may hold stocks for several years or longer, if necessary. The securities of such Small Capitalization Companies will be quoted or traded on the markets and exchanges set out in Appendix II to the Prospectus, but may also be unlisted securities that are traded over-the-counter (subject to a maximum of 10% of the net assets of the Fund being invested in such unlisted securities). Equity securities of companies traded over-the-counter may not be traded in the volumes typically found on a national securities exchange. Consequently, the Fund may be required to dispose of such securities over a longer (and potentially less favourable) period of time than is required to dispose of the securities of listed companies. The Investment Manager believes an equity security is undervalued if the market value of the outstanding DMI/ / v30 4

5 equity security is less than the intrinsic value of the company issuing the equity security. The Fund considers the intrinsic value of a company to be the present value of a company s expected future stream of free cash flows discounted by an appropriate discount rate (as based upon the operational and financial risk of the business. After estimating the intrinsic value of a company, the Fund adjusts for debt, cash, and other potential capital (such as minority interest) on the company s balance sheet. The Investment Manager then makes buy/sell decisions, on behalf of the Fund, by comparing a company s market value with its intrinsic value estimates. The Fund seeks to invest in internally financed companies generating cash in excess of their business needs, with predictable revenue streams. In determining the presence of these factors, the Fund s Investment Manager reviews periodic reports filed with the Securities and Exchange Commission ( SEC ) and the relevant regulatory bodies of any other jurisdictions, as well as industry publications. The duration which the Fund holds a particular equity security will not influence the buy/sell decisions of the Investment Manager in respect of that particular equity security. Because of this disciplined process, the Fund may engage in short-term trading: i.e. trading strategies in the stock market in which the time duration between entry and exit is within a range of few days to few weeks. The Fund may also, pending reinvestment, or if it is considered appropriate to the investment objective or if adverse market, economic or other conditions warrant it, or if required for liquidity or operational reasons, invest on a short term basis in cash, cash equivalents and money market instruments (including, but not limited to, US Treasury Bills, cash deposits, commercial paper, short term money market funds and certificates of deposit). Portfolio sale decisions are made based on valuation and are independent of whether the Fund has found a replacement idea; therefore, in market environments when the Fund struggles to find undervalued investments, cash levels are likely to increase. This can reduce performance in rising markets. The Fund intends to deploy capital only when undervalued investments are identified. As a result, a Fund may not be able to achieve its investment objective of long-term capital appreciation to the extent it holds cash. Currency Hedging The Fund may enter into spot currency exchange transactions and forward foreign exchange contracts ( Forwards ) for efficient portfolio management purposes to seek to hedge against declines in the values of one or more Share Classes of the Fund as a result of changes in currency exchange rates. All hedging transactions will be clearly attributable to a specific Share Class and therefore currency exposures of different Share Classes shall not be combined or offset and currency exposures of assets of the Fund shall not be allocated to separate Share Classes. Furthermore, if the Company on behalf of the Fund enters into a FDI with the Approved Counterparty, the Fund could be exposed to credit risk from the creditworthiness of the counterparty. It is expected that the extent to which such currency exposure will be hedged will range from 95% to 105% of the Net attributable to the relevant Share Class. Where the value of the hedges in place in respect of a given Share Class is more than 100% of the Net attributable to that Share Class, the Investment Manager shall keep the situation under review and will ensure that over hedged positions do not exceed 105% of the Net. Positions materially in excess of 100% of the Net Asset Value will not be carried forward from month to month. While it is not the intention of the Fund, overhedged or under-hedged positions may arise due to factors outside the control of the Fund. To the extent that hedging is successful for a particular Class the performance of the Class is likely to move in line with the performance of the underlying assets with the result that investors in that Class will not gain/lose if the Class currency falls/rises against the Base Currency. Where applicable, the Approved Counterparty may be required under the terms of the relevant FDI agreements to provide Collateral to the Company if the exposure of the Fund to the Approved Counterparty exceeds certain limits so that the Company's risk exposure to the relevant Approved Counterparty is reduced to the extent required by the Central Bank. The costs associated with providing such Collateral will be charged to the Fund through the FDI, and will therefore ultimately impact the Net of the Shares. DMI/ / v30 5

6 The Company may incur transaction costs in respect of entering into any currency hedging. Any costs and gains/losses of the hedging transactions will accrue solely to the relevant Share Class. In addition, the Fund may engage in transactions in FDI s (detailed below) to protect against exchange risks at instrument level. The Investment Manager will look to ensure that the techniques and instruments used are economically appropriate in that they will be realised in a cost-effective way. 3.2 Financial Derivative Instruments (FDI s) The Fund may enter into forward foreign exchange contracts (discussed further below) for the purposes of hedging currency risks associated with underlying assets denominated in a non-base currency. The aim of such transactions will be to alter the currency characteristics of the relevant assets held by the Fund. In this regard, the total expected level of leverage of the Fund as a result of such investments shall not exceed 30% of its Net. Forward Contracts A forward contract locks in the price at which an asset may be purchased or sold on a future date. In forward foreign exchange contracts, the contract holders are obligated to buy or sell from another a specified amount of one currency at a specified price (exchange rate) with another currency on a specified future date. Forward contracts cannot be transferred but they can be closed out by entering into a reverse contract. Forward foreign exchange contracts are OTC derivatives. Risk Methodology and Measurement The Fund will use the commitment approach to measure market risk and calculate its exposures. The Fund will use the market value of the underlying securities and/or forward contracts to calculate a simple sum of the absolute values of the underlying exposures as its gross exposures (or simple sum of the value of the underlying exposures as its net exposures). Hedging positions, if used, will not be included in the calculation of the total gross or net exposures. The Company on behalf of the Fund has filed with the Central Bank its risk management policy which enables it to accurately measure, monitor and manage the various risks associated with the use of FDIs. The Company will, on request, provide supplementary information to Shareholders relating to the risk management methods employed, including the quantitative limits that are applied and any recent developments in the risk and yield characteristics of the main categories of investments. 3.3 Efficient Portfolio Management The Fund may invest in financial derivative instruments as referred to above for efficient portfolio management purposes. The use of techniques and instruments relating to transferable securities, money market instruments and/or other financial instruments in which the Fund invests for efficient portfolio management purposes will generally be made for one or more of the following reasons: (i) (ii) (iii) the reduction of risk; the reduction of cost; or the generation of additional capital or income for the Fund with an appropriate level of risk, taking into account the risk profile of the Fund and the risk diversification rules set out in the UCITS Notices issued by the Central Bank. In addition, the use of such techniques and instruments must be realised in a cost-effective way and must not result in a change to the investment objective of the Fund or add substantial supplementary risks not covered in the Prospectus or this Supplement, as appropriate. Please refer to the section of this Supplement entitled "Risk Factors" and more particularly the section entitled "Efficient Portfolio Management Risk" for more details together with the section entitled "Risk Factors" in the Prospectus, as DMI/ / v30 6

7 appropriate. All the revenues arising from efficient portfolio management techniques shall be returned to the Fund following the deduction of any direct and indirect operational costs and fees arising. Such fees and expenses (which are all fully transparent) and which shall not include hidden revenue, arising from efficient portfolio management techniques, which will be at normal commercial rates together with VAT, if any, thereon, will be borne by the Fund in respect of which the relevant party has been engaged. Details of Fund revenues arising and attendant direct and indirect operational costs and fees as well as the identity of the entities to which the costs and fees shall be paid shall be included in the Company s semi-annual and annual report. 3.4 Collateral Policy In the context of efficient portfolio management techniques and/or the use of derivative instruments for hedging, collateral may be received from a counterparty for the benefit of the Fund or posted to a counterparty by or on behalf of the Fund. Any receipt or posting of collateral by the Fund will be conducted in accordance with the requirements of the Central Bank and the terms of the Company s collateral policy in respect of the Fund as outlined below. The Fund will require receipt of the necessary level of collateral so as to ensure counterparty exposure limits are not breached. Non-cash collateral Collateral received by the Fund must, at all times, meet with the following criteria: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Liquidity: Collateral received other than cash should be highly liquid and traded on a regulated market or multilateral trading facility with transparent pricing in order that it can be sold quickly at a price that is close to pre-sale valuation. Collateral received should also comply with the provisions of regulation 74 of the Regulations. Valuation: Collateral received should be valued on at least a daily basis and assets that exhibit high price volatility should not be accepted as collateral unless suitably conservative haircuts are in place. Issuer credit quality: Collateral received should be of high quality. Correlation: Collateral received should be issued by an entity that is independent from the counterparty and is not expected to display a high correlation with the performance of the counterparty. Diversification (asset concentration): Collateral should be sufficiently diversified in terms of country, markets and issuers with a maximum exposure to a given issuer of 20% of the Fund's Net. When the Fund is exposed to different counterparties, the different baskets of collateral will be aggregated to calculate the 20% limit of exposure to a single issuer. Immediately available: Collateral received should be capable of being fully enforced by the Fund at any time without reference to or approval from the counterparty. Safe-keeping: Collateral received on a title transfer basis should be held by the Custodian or its agent. For other types of collateral arrangement, the collateral can be held by a third party custodian which is subject to prudential supervision, and which is unrelated to the provider of the collateral. Haircuts: The Investment Manager, on behalf of the Fund, shall apply suitably conservative haircuts to assets being received as collateral where appropriate on the basis of an DMI/ / v30 7

8 assessment of the characteristics of the assets such as the credit standing or the price volatility, as well as the outcome of any stress tests performed as referred to above. Generally if issuer or issue credit quality of the collateral is not of the necessary quality or the collateral carries a significant level of price volatility with regard to residual maturity or other factors, a conservative haircut must be applied in accordance with more specific guidelines as should be maintained in writing by the Investment Manager on an on-going basis. However, the application of such a haircut should be determined on a case by case basis, depending on the exact details of the assessment of the collateral. The Investment Manager, in its discretion, may consider it appropriate in certain circumstances to resolve to accept certain collateral with more conservative, less conservative or no haircuts applied if they so determine, on an objectively justifiable basis. Any extenuating circumstances that warrant the acceptance of relevant collateral with haircut provisions containing levels other than the guideline levels should be outlined in writing as documentation of the rationale behind this is imperative. Non-cash collateral cannot be sold, pledged or re-invested. Cash collateral Cash collateral may only be invested in the following: (i) (ii) (iii) (iv) deposits with relevant institutions; high-quality government bonds; reverse repurchase agreements provided the transactions are with credit institutions subject to prudential supervision and the Fund is able to recall at any time the full amount of cash on an accrued basis; short-term money market funds as defined in the ESMA Guidelines on a Common Definition of European Money Market Funds (ref CESR/10-049). Invested cash collateral should be diversified in accordance with the diversification requirement applicable to non-cash collateral outlined above. Invested cash collateral may not be placed on deposit with the counterparty or a related entity. Exposure created through the reinvestment of cash collateral must be taken into account in determining risk exposures to a counterparty. Reinvestment of cash collateral will expose the Fund to the risk associated with such investments, such as failure or default of the issuer of the relevant security or the relevant counterparty on its obligations under the relevant contract. 3.5 Borrowing The Company may only borrow on a temporary basis for the account of the Fund and the aggregate amount of such borrowings may not exceed 10% of the Net of the Fund. In accordance with the provisions of the Regulations, the Company may charge the assets of the Fund as security for borrowings of the Fund. 3.6 Investment Restrictions Investors must note that the Company and the Fund adheres to the restrictions and requirements set out under the Regulations, as may be amended from time to time. These are set out in Appendix I to the Prospectus. The following restrictions will apply (where applicable): (a) Investment in any CIS (UCITS or Non-UCITS) may not exceed 10% of the Net of a Fund. In accordance with the requirements of the Central Bank, the Fund will apply for a derogation from some of the investment restrictions for six months following the date of the first issue of Shares of the Fund pursuant to the Regulations but will observe the principle of risk-spreading. DMI/ / v30 8

9 3.7 Cross Investing Subject to the requirements of the Central Bank, the Fund may invest in the other Funds of the Company. Any commission received by the Investment Manager in respect of such investment will be paid into the assets of the Fund. In addition, no Preliminary Charge, Repurchase Charge or Exchange Charge may be charged on the cross-investing Fund s investment. In order to avoid double-charging of management and/or performance fees, the Fund may not be charged an Investment Management Fee or performance fee in respect of that part of its assets invested in other Funds of the Company unless such investment in another Fund is made into a Class of Shares that does not attract any Investment Management Fee or performance fee. Investment may not be made by the Fund in a Fund which itself cross-invests in another Fund within the Company. 3.8 Risk Factors Investors should read and consider the section of the Prospectus entitled RISK FACTORS before investing in the Fund. However, not all of the risks disclosed in the RISK FACTORS section of the Prospectus will be material to an investment in this particular Fund. In addition, Shareholders should note that the following additional risk factors: Market Risk: There is a risk that certain stocks selected for the Fund s portfolio may decline in value more than the overall stock market; Small-Capitalization Risk: There is a risk associated with investing in the stocks of smaller companies. Small companies can be more sensitive to changing economic conditions. Stocks of smaller companies are more volatile, often have less trading volume than those of larger companies and are more difficult to sell at quoted market prices such that the Fund may require more time or have short-term difficulty establishing or liquidating a specific position that it believes is appropriate. Typical market volatility, decreased volume trading in the securities and other unforeseen events may cause a decline in the value of the stock during the time the Fund is trading a security. Furthermore, such companies, as compared with larger companies, may have a shorter history of operations, may not have as great an ability to raise additional capital, may have a less diversified product line making them susceptible to market pressure, and may have a smaller public market for their shares. In addition, the companies in which the Fund primarily invests may typically experience more market price volatility than stocks of larger companies, and the Net of the Fund may reflect this volatility. Value Investing Risk: There is a risk associated with the Fund s investment in companies it considers undervalued relative to their peers or the general stock market where these securities may decline or may not reach what the Investment Manager believes are their full value; Non-Diversification Risk: As the Fund is non-diversified (meaning that compared to diversified mutual funds, the Fund may invest a greater percentage of its assets in a particular issuer), the Fund s shares may be more susceptible to adverse changes in the value of a particular security than would be the shares of a diversified mutual fund. Accordingly, the Fund is more sensitive to economic, business and political changes which may result in greater price fluctuations of the Fund s shares; High Portfolio Turnover Risk: High portfolio turnover will produce higher transaction costs (such as brokerage commissions or markups or markdowns) which a Fund must pay, and will increase realized gains (or losses) to investors, which may lower a Fund s after-tax performance. Short-Term Trading Risk There are risks associated with the short-term trading where sudden market volatility, decreased volume DMI/ / v30 9

10 trading in the securities and other unforeseen events may cause a decline in the value of the stock. Segregated Liability The Company is an umbrella company with segregated liability between Funds. As a result, as a matter of Irish law, any liability attributable to a particular Fund may only be discharged out of the assets of that Fund and the assets of other Funds may not be used to satisfy the liability of that Fund. In addition, any contract entered into by the Company will by operation of law include an implied term to the effect that the counterparty to the contract may not have any recourse to assets of any of the Funds other than the Fund in respect of which the contract was entered into. These provisions are binding both on creditors and in any insolvency but do not prevent the application of any enactment or rule of law which would require the application of the assets of one Fund to discharge some, or all liabilities of another Fund on the grounds of fraud or misrepresentation. In addition, whilst these provisions are binding in an Irish court which would be the primary venue for an action to enforce a debt against the Company, these provisions have not been tested in other jurisdictions, and there remains a possibility that a creditor might seek to attach or seize assets of one Fund in satisfaction of an obligation owed in relation to another Fund in a jurisdiction which would not recognise the principle of segregation of liability between Funds. Furthermore, investment in Small Capitalisation Companies involves relatively higher investment costs and accordingly investment in the Fund should be viewed as a long-term investment. The Fund may however decide to dispose of an investment made by it within a relatively short period of time for example, to meet requests for redemption of Shares or in response to a change in circumstances of a particular company or industry or in general market or economic conditions if such changes are anticipated by the Investment Manager. The Small Capitalisation Companies in which the Fund primarily invests may typically experience more market price volatility than stocks of larger companies, and the Net of the Fund may reflect this volatility. Counterparty Risk Some of the markets in which the Fund may effect transactions are over-the-counter or interdealer markets. This exposes the Fund to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the Fund to suffer a loss. Such counterparty risk is accentuated for contracts with longer maturities where market events may intervene to prevent settlement, or where the Fund has concentrated its transactions with a single or small group of counterparties. The Fund is not restricted from concentrating any or all of its transactions with one counterparty. The ability of the Fund to transact business with any one or number of counterparties and the absence of a regulated market to facilitate settlement may increase the potential for losses by the Fund. Collateral Risk: Collateral or margin may be passed by the Fund to a counterparty or broker in respect of over-the-counter financial derivative instrument transactions. Although assets deposited as collateral or margin by a fund should be segregated, there remains a possibility that segregation will not be achieved (for example assets deposited with brokers may not be held in segregated accounts by the brokers), and that such assets may therefore become available to the creditors of such brokers in the event of their insolvency or bankruptcy. Efficient Portfolio Management Risk: The Company on behalf of a Fund may employ techniques and instruments relating to transferable securities, money market instruments and/or other financial instruments in which it invests for efficient portfolio management purposes. Many of the risks attendant in utilising derivatives, as disclosed in the "Risk Factors" section of the Prospectus will be equally relevant when employing such efficient portfolio management techniques. In addition, particular attention is drawn to the sub-sections of this Supplement entitled Credit Risk and Counterparty Risk and Collateral Risk set out above. The risks described in the Prospectus and this Supplement should not be considered to be an exhaustive list of the risks which potential investors should consider before investing in the Fund. Potential investors should be aware that an investment in the Fund may be exposed to other risks from time to time. DMI/ / v30 10

11 3.9 Key Information for Buying and Selling Shares Share Classes Class A, C and D Shares may be offered to the retail sector and may be purchased by any individual or institutional investor or distributor, paying agent, broker or other financial intermediary. Class B Shares may be offered to institutional investors only who are acting for themselves or in a fiduciary, custodial or other similar capacity. Initial Offer Period The Initial Offer Period for Class A and Class B Shares has closed. The Initial Offer Period for Class C and Class D Shares will end at 5.00pm (Irish time) on 25 November The Initial Offer Period may be shortened or extended by the Directors. The Central Bank will be notified in advance of any such shortening or extension if subscriptions for Shares have been received and otherwise shall be notified subsequently, on an annual basis. Class Currency Issue Price/ Initial Issue Price Class A USD Investor Class Class B USD Institutional Class Class C - EUR Investor Shares Class D - CHF Investor Shares USD USD EUR (hedged) CHF (hedged) Current NAV Current NAV Minimum Shareholding* Minimum Investment Amount* Initial Minimum Additional Investment Amount* US$5,000 US$5,000 US$100 None US$1,000,000 US$1,000,000 US$100 None EUR 100 EUR 5,000 EUR 5,000 EUR 100 None CHF100 CHF $5,000 CHF $5,000 CHF $100 None Minimum Repurchase Amount* *The Initial Offer Period may be shortened or extended by the Directors. The Central Bank will be notified in advance of any such shortening or extension if subscriptions for Shares have been received and otherwise shall be notified subsequently, on an annual basis. **Subject to the discretion of the Directors in each case to allow lesser amounts. Applications received after the Dealing Deadline for the relevant Dealing Day shall be deemed to have been received by the next Dealing Deadline, save in exceptional circumstances where the Directors may in their absolute discretion (reasons to be documented) determine and provided the Applications are received before the Valuation Point for the relevant Dealing Day. Repurchase requests received after the Dealing Deadline shall be treated as having been received by the following Dealing Deadline, save in exceptional circumstances where the Directors may in their absolute discretion (reasons to be documented) determine and provided they are received before the Valuation Point for the relevant Dealing Day. DMI/ / v30 11

12 Subscription monies should be paid to the account specified in the Application Form (or such other account specified by the Administrator) so as to be received in cleared funds by no later than three Business Days after the relevant Dealing Day. If payment in full and/or a properly completed Application Form have not been received by the relevant times stipulated above, the application may be refused. Payment of Repurchase Proceeds will normally be made by electronic transfer to the account of the redeeming Shareholder at the risk and expense of the Shareholder within three Business Days of the relevant Dealing Day and, in all cases, will be paid within ten (10) Banking Days of the Dealing Deadline for the relevant Dealing Day, provided that all the required documentation has been furnished to and received by the Administrator Dividend Policy Subject to the discretion of the Directors, dividends (if any) will be declared and paid on an annual basis in or around 30 June of each year following the finalisation of the year end financial statements. Shareholders will have the option to either receive the declared dividend (if any) or re-invest in the purchase of Shares of the relevant class. Payment will be paid by telegraphic transfer in Dollar to the Shareholder s account unless the payment is for an amount less than US$100 in which case such payment will be automatically reinvested in the purchase of Shares of the relevant class for the account of the relevant Shareholder. Please see the section entitled Dividend Policy in the Prospectus of the Company for further details Fees and Expenses The following fees and expenses will be incurred by the Company on behalf of the Fund and will affect the Net of the relevant Share Class of the Fund. Share Class Class A USD Investor Shares Class B USD Institutional Shares Class C EUR Investor Shares Class D CHF Investor Shares Investment Management Fee Up to 2.0% of the Net Up to 1.5% of the Net Up to 2.0% of the Net Up to 2.0% of the Net Preliminary Charge** Up to 3% of the Net Up to 3% of the Net Up to 3% of the Net Up to 3% of the Net Redemption Charge Exchange Charge 0% 0% 0% 0% 0% 0% 0% 0% The Investment Manager shall be entitled to a maximum annual Investment Management Fee equal to a percentage of the Net of the relevant Class as outlined in the table above. Such fee shall be calculated and accrued at each Valuation Point and payable monthly in arrears. ** All or part of such charges may be waived by the directors in their absolute discretion Other Fees and Expenses This section should be read in conjunction with the section entitled Fees and Expenses in the Prospectus Anti-Dilution Levy The Directors reserve the right to impose an Anti-Dilution Levy in the case of net subscriptions and/or net repurchases on a transaction basis as a percentage adjustment (to be communicated to the Administrator) on the value of the relevant subscription/repurchase calculated for the purposes of determining a subscription price or repurchase price to reflect the impact of market spreads, duties and charges and DMI/ / v30 12

13 other dealing costs relating to the acquisition or disposal of assets and to preserve the Net of the Fund where they consider such a provision to be in the best interests of a Fund. Such amount will be added to the price at which Shares will be issued in the case of net subscription requests and deducted from the price at which Shares will be repurchased in the case of net repurchase requests. Any such sum will be paid into the account of the Fund Establishment Expenses The Fund shall bear (i) its proportion of the fees and expenses attributable to the establishment and organisation of the Company as detailed in the section of the Prospectus entitled Fees and Expenses; Establishment Expenses for the remainder of the period over which such fees and expenses will continue to be amortised; and (ii) its attributable portion of the Operating Expenses and Fees of the Company Cap on Certain Fees and Expenses From 5 April 2012 to 31 March 2016, the Investment Manager will bear all fees and expenses associated with the Fund (other than its fees, those of the Administrator, Custodian and Distributor) in respect of Class A, C and D Shares which are above 2.5% of the Net of the Fund and in respect of Class B Shares which are in excess of 2.0% of the Net of the Fund Miscellaneous There are currently no other sub-funds of the Company in existence. Additional sub-funds of the Company may be added in the future with the prior approval of the Central Bank. DMI/ / v30 13