Fund prospectus. PriorNilsson Yield PriorNilsson Idea PriorNilsson Sverige Aktiv PriorNilsson Realinvest PriorNilsson Smart Global

Transcription

1 Fund prospectus PriorNilsson Yield PriorNilsson Idea PriorNilsson Sverige Aktiv PriorNilsson Realinvest PriorNilsson Smart Global

2 PriorNilsson Fonder This prospectus consists of the information for the funds listed below with the prospectuses, in accordance with the Swedish Investment Funds Act (2004:46) about mutual funds ( LVF ) and the Swedish Financial Supervisory Authority s regulations (2013:9) governing mutual funds and the Act (2013:561) on Alternative Investment Funds and the Financial Supervision regulations (FFFS 2013:10) on managers of alternative investment funds. More information about each fund can be found in its prospectus. A brief description of the funds, their risk level and investment policies can be found in the funds fact sheets (Key Investor Information document, KIID). The Fund Manager Prior&Nilsson Fond och Kapitalförvaltning AB (hereinafter referred to as the Company ) Oxtorgsgatan 4 Box 7136 SE Stockholm, Sweden Telephone: +46 (0) info@pnfonder.se Corporate ID number: The company was founded on 5 June 2002, Share capital: SEK 1,250,000 The Company s domicile is in Stockholm Managing Director: Lars-Ove Wijk Deputy Managing Director: Torgny Prior Complaints Manager: Bertil Villard, Advokat (lawyer, member of the Swedish Bar Association) Risk Manager: Tomas Sjöberg Compliance: Gustav Sälgström, Lawyer, Harvest Advokatbyrå AB Internal Auditor: PriceWaterhouseCoopers AB The Company is 100 percent owned by Prior&Nilsson och Partners AB. Funds managed by Prior&Nilsson Fond och Kapitalförvaltning AB The information in this brochure encompasses the following funds: PriorNilsson Yield, Corp. ID number ISIN code: SE PriorNilsson Idea A, Corp. ID number ISIN code: SE PriorNilsson Idea B, Corp. ID number ISIN code: SE PriorNilsson Sverige Aktiv A, Corp. ID number ISIN code: SE PriorNilsson Sverige Aktiv B, Corp. ID number ISIN code: SE PriorNilsson Sverige Aktiv C, Corp. ID number ISIN code: SE PriorNilsson Realinvest A, Corp. ID number ISIN code: SE PriorNilsson Realinvest B, Corp. ID number ISIN code: SE PriorNilsson Smart Global, Corp. ID number ISIN code:se

3 Board of Directors Dan Brändström, born in 1941, Professor, Chairman of the Board, Per Olof Nilsson, born in 1963, Manager PriorNilsson Torgny Prior, born in 1957, Manager PriorNilsson Bertil Villard, born in 1952, Lars-Ove Wijk, born in 1963, Managing Director PriorNilsson The Company earned its license from the Swedish Financial Supervisory Authority to perform discretionary fund management the 24 September 2002 as well as a license to operate a fund business since 24 October The company also received a license to operate a fund business according to the Swedish Investment Funds Act (SFS 2004:46), a so-called reauthorization was granted by the Swedish Financial Supervisory Authority the 18 November The 14 of May 2012, the Swedish Financial Supervisory Authority granted a renewed license to operate a fund business as well as a license to perform discretionary fund management of financial instruments, supported by Chapter 1 Section 4 of the Swedish Investment Funds Act (SFS 2004:46). On June 25 th, 2015, The Swedish Financial Supervisory Authority issued pursuant to Chapter 3, Section 1 and 9 Act (2013:561) managers of alternative investment funds, authorization to manage open alternative investment funds with hedge fund strategies. On June 25th, 2015, The Swedish Financial Supervisory Authority issued pursuant to Chapter 3.2 of the Act (2013:561) on managers of alternative investment funds, permits for discretionary management of investment portfolios

4 Auditors Deloitte AB, with Auditor in Charge Johan Stenbäck, Authorized Public Accountant. Custodian Swedbank AB (publ), with its domicile in Stockholm and banking services as its main business. The custodian should monitor the funds cash flows, safe keep the funds assets and enact the company s instructions. Furthermore, the custodian should ensure that sales and redemption of fund units, valuation of funds and usage of the funds capital come in accordance with the law and the funds rules. Swedbank AB (publ) have commissioned for JP Morgan N.A., London Branch to act in cohesion for securities that are kept outside of Sweden. Swedbank AB (publ) has procedures to be able to identify, manage, monitor and report possible conflicts of interests. Since the custodian is a part of Swedbank AB, conflicts of interests can emerge between the custodian s operations and other operations within Swedbank AB and its subsidiaries. The custodian has a legal obligation to identify and manage such conflicts of interests and in addition report the conflicts of interests to the funds investors. Examples of activities that may mean conflicts of interests are: (i) (ii) The Provision of förvaltarregistrering, the execution of fund administration, the establishment of list of unit holders, analysis, the managing of securities lending, asset management, investment advisory and/or other advisory services to the fund. Participation in banking operation, securities trade including exchange trade, derivatives trade, lending, brokerage, market making or other financial transactions with the fund, either on their own behalf or on the behalf of other customers. In order to not let potential conflicts of interests impact the fund and its investors negatively, the custodian and other activities within Swedbank AB are functionally and organizationally separated. The custodian operations are always managed in such way that it serves the funds unit holder s interests, in accordance with existing market terms. Engagement agreement The Company has agreements for distribution and brokering of fund units with Avanza Bank AB, Corp. ID number , Danske Bank, Corp. ID number , Handelsbanken, Corp. ID number , MFEX Mutual Funds Exchange AB, Corp. ID number , Movestic Livförsäkring AB, ID number , Nasdaq OMX, Corp. ID number , Nordnet Bank AB, Corp. ID number and Swedbank AB, Corp. ID number The Company has commissioned an external party to maintain the compliance function. The external party so commissioned is currently Harvest Advokatbyrå AB. The Company has commissioned an external party to maintain the external audit function. The external party so commissioned is currently Deloitte AB. The Company has commissioned an external party to maintain the internal audit function. The external party so commissioned is currently PriceWaterhouseCoopers AB. The Company has commissioned an external party to maintain the IT support and maintenance function. The external party so commissioned is currently Nordic IP AB

5 List of unit holders The Company maintains a list of all the shareholders holdings of units in the funds. Statements of accounts to the unit holders takes form annual and semi-annual, which also contain statements of dividends. The registration of a unit, which is performed immediately after the customer s purchase, is decisive to the right to units in the fund and the accompanying rights. All fund units are equal in size and convey the same rights to the fund s holdings. Customer complaints We want our customers to be satisfied with us and our management. If you are dissatisfied with any of our services, please describe the reason for your dissatisfaction on the customer complaint platform which you will find on our website. A complaint paper may also be ordered by telephone on +46(0) Please include relevant documents. Complaints are handled by Board Member Bertil Villard, in consultation with the Managing Director Lars-Ove Wijk. Send your letter to PriorNilsson Fonder, Attn: Complaints Manager, Box 7136, SE Stockholm, Sweden, or by to info@pnfonder.se. The Complaints Manager will quickly and efficiently ensure that justified complaints are addressed. If it can be proven that the company has made an error, it should be corrected immediately if possible. The person who made the complaint will receive a written reply stating the Company s view of what occurred. If we feel that we cannot investigate and respond to the issue within 14 days of receiving the message, we will inform you and state an approximate time when you can expect a reply. Liability for damages According to Chapter 2 Section 21 of the Swedish Investment Fund Act (SFS 2004:46) and Chapter 8 Section 2-31 and Chapter 9, section 22 of the Alternative Investment Fund Managers Act (2013:561) the Company is liable for damages. If a unit holder has suffered losses because the Company violated these Acts or the prospectus, the Company shall reimburse the loss. If a unit holder or a company experience a loss because the custodian violated the Act or the prospectus the custodian reimburses the loss

6 Management philosophy The Company s objective is to deliver the best risk-adjusted returns to its unit holders. We accomplish this through active management which does not depend on indices. We invest based on the relationship of a company s future valuation to the prevailing market valuation, based on fundamental analysis. We invest in companies on the basis of their own merits, and not because they are included in an index. We collect new information on a daily basis based on worldwide economic trends and the different equity, currency and interest rate markets. A small number of holdings in each fund enables us to follow our holdings closely. PriorNilsson Idea is a Swediish special fund and AIF. The fund differs from traditional mutual funds since it has the possibility to invest in multiple different areas and sectors compared to the traditional equity funds. At times its holdings may be strongly concentrated into a small number of companies. When an investment is made into a single company, that investment could be as high as 30 percent of the funds value. The funds may take larger single positions, make use of derivatives to increase leverage or for hedging purposes, and take short positions. PriorNilsson Yield, PriorNilsson Sverige Aktiv, PriorNilsson Realinvest and PriorNilsson Smart Global are mutual/ucits funds. Sverige Aktiv focuses on investments in Swedish listed shares. Sverige Aktiv may also invest in shares and equity-related instruments issued by companies from the other Nordic countries, or which are admitted to or traded on a regulated market in the Nordic countries, to a maximum of 10 percent of the fund s value. Realinvest may invest in shares worldwide, with a concentration on Nordic companies with a large share of real assets. Smart Global may invest in shares worldwide, with a concentration on mediumsized and large companies with a long history of stable dividends. Smart Global has no geographical or industry constrains. The fund s assets may be invested in transferable securities, money market instruments, fund units and accounts with credit institutions. The funds may use derivatives, including OTC derivatives, as part of their investment focus. The underlying assets comprises of/or are attributable to assets referred to in Chapter 5 Section 12 paragraph 1 of the Swedish Investment Funds Act (SFS 2004:46), abbreviated henceforth as LVF. Risks of investing in funds All investments in funds are subject to risk, i.e. that the money invested may decline in value. However higher risk provides the opportunity for higher returns. Investing in equities entails the risk of large price fluctuations and should therefore be for the long term. The funds are exposed to market, credit and liquidity risks, while the Company may experience operational risks. Market risk refers to the risk of share price fluctuation. Credit risk is the risk that the issuer of a security does not fulfil its obligations when they are due. Counterparty risk arises in the event that a business counterparty in a financial transaction does not meet its obligations. Liquidity risk refers to the risk that the investments in the funds cannot be converted into cash within the planned timeframe or for the desired price. If the Company is forced to sell fund investments at an unfavorable time, this could affect the funds unit price. Equity - 6 -

7 funds are generally riskier than fixed-income funds. Funds may increase or decrease in value, and there is no guarantee that you will get back all of the capital invested. Historic returns are no guarantee of future performance. Funds investment focus (with risk profile and target group) PriorNilsson Yield: This fund is a UCITs fund with an equity market neutral strategy designed to create positive returns regardless the market developments. The investments are made in order to achieve the highest risk adjusted return for the unit holders invested capital. The fund intends to create the return based on active management on the different international financial markets. The funds assets are invested in small, medium and large companies, predominantly in the Nordic countries. The equity market is the funds main area of operation, thereof, it is within the equity markets its suppose to produce most of the profits. Liquid assets will be invested in the best way that produces returns on the assets that are not currently needed for equity positions. The profile of the fixed-income investments will be designed to provide the fund with the flexibility to move from interest rate instruments to equity investments. Risk Profile: The funds risk / return indicator in the fact sheet is category 2, i.e. low-medium risk. In general, the fund is exposed to market, credit and liquidity risks, while operational risks are occurring in the Company. Market risk refers to the that the value of the funds assets and liabilities will change in the market. Market risks are found in the forms of share price risks, interest rate risks and currency risks. Derivative instruments are used in order to increase and reduce the market risk. The fund has a lower risk than traditional equity funds since a lower market risk in general. However, the fund has fewer holding which increases the risk, but the net exposure to the market is ordinarily substantially lower than an equity fund. The liquidity risk is limited by the fact that the fund invests to some extent in extremely liquid assets. The fund aims a volatility in the range of 1-4 percent. Returns cannot be expected to be linear over time, and therefore an investment in the fund should be considered as a long-term investment. Target group: The fund is suitable for an investor who is looking for a good alternative to fixedincome funds or bank deposits and searching for a low level of risk, compared to equity funds. Investors will receive a daily managed hedge fund with a low monetary limit. The minimum subscription amount is SEK 500. PriorNilsson Idea: The fund is a Swedish special fund, that is an AIF, with a long/short strategy designed to create positive returns regardless of the market developments, through active management in the equity markets. The fund is a special fund in which it could invest with a higher variability compared to traditional equity funds. The fund invests mainly in large companies but can also invest in small and medium- sized companies, predominantly in the Nordic countries but also in Europe. The equity market is the fund s main area of operation, but it may also take positions in the interest rate markets and currency markets. For the investments to provide maximum returns, the fund may utilize several different strategies that distinguish it from traditional mutual funds. The fund may take larger single positions, make use of derivatives to increase leverage or for hedging purposes, and - 7 -

8 take short positions. A single company could be a maximum of 30 percent of the fund s value. The fund may also own up to 30 percent of the capital or votes in a single company. The fund may also invest in unlisted securities. Securities loans may be taken out, making sold positions, i.e. short positions possible. These amounts could maximum be 200 percent of the fund s value. The fund could also raise cash loans up to a maximum of 50 percent of the fund s value. The objective is to provide our unit holders with a high riskadjusted return on their invested capital and to have an annual return between percent in the long term. Returns cannot be expected to be linear over time, and therefore an investment in the fund should be considered as a long-term investment. The fund s net exposure towards the equity markets will vary over time with the managers view of the markets. The fund has two-unit holders classes, A and B. Risk profile: The funds risk / return indicator in the fact sheet is category 5, i.e. high risk. In general, the fund is exposed to market, credit and liquidity risks, while operational risks are found in the Company. Market risk refers to the risk that the value of the fund s assets and liabilities will change in the market. Market risk is found in the forms of share price risk, interest rate risk and currency risk. Derivative instruments are used both to increase and reduce market risk. The fund s risk level will resemble the equity market s total risk over time but may vary sharply. The fund has few holdings/positions, which increases concentration risk. Positions in derivative instruments along with varying net exposure to the market may cause wide fluctuations in returns and the level of risk. Liquidity risk is limited by the fact that the fund invests to some extent in very liquid assets. The fund aims a level of volatility in the range of percent. Target group: The fund is suitable for a long-term investor who wishes to have an actively managed special fund and can accept major price fluctuations. It is also suitable for investors who wish to have a daily managed hedge fund with a low monetary limit. The minimum subscription amount is SEK 500. PriorNilsson Sverige Aktiv: The fund is an equity fund with a special focus on investments in Swedish listed shares. The objective is to provide our unit holders with returns that outperform the OMXS GI index in the long term by active management that does not depend on indices. The fund s assets may be invested in transferable securities, money market instruments, fund units, derivative instruments and accounts with credit institutions. The fund may use derivatives, including OTC derivatives, as part of its investment focus. The fund has three share classes, A shares, B shares and C shares. Where A is non-dividend shares and B is dividend shares. B shares are primarily meant for institutional investors that need dividends. C shares are also non-dividend but with special agreements for distribution. Risk profile: The fund s risk/return indicator in the fact sheet is category 5, i.e. high-risk. Investing in equities always entails market risk, in the form of fluctuations in share prices. This risk is reduced in a fund through the fund s ownership of several shares (diversification), the prices of which do not undergo the same fluctuations. The fund s focus on the Swedish equity market means that the risk is concentrated to a limited market. The liquidity risk can be considered extremely small, since the fund s size is extremely small in relation to the - 8 -

9 markets in which the fund invests. The fund will employ derivatives, primarily to make management more efficient and reduce its risks and expenses. To the extent that the fund invests in derivative instruments, an absolute Value- at-risk is used to calculate the fund s total exposure. Target group: The fund is suitable for a long-term investor who wants an actively managed equity fund, which mainly invest in large Swedish companies. Investors must be able to accept major price fluctuations. The minimum subscription amount is SEK 100. PriorNilsson Realinvest: The fund is an equity fund with a particular focus on Nordic companies with a large share of real assets, such as companies in real estate, forestry, raw material and power industry. The focus is otherwise diversified and is not restricted to any particular industry. The objective is to achieve long-term good capital growth in the concerned equity markets, which outperforms the average performance for the different type of company the fund has invested in. This is being done through active management that does not depend on indices. The fund s assets could be invested in transferable securities, money market instruments, fund units, derivative instruments and accounts with credit institutions. The fund may use derivatives, including OTC derivatives, as part of its investment focus. The fund has two share classes, A shares and B shares, with B shares paying dividends while A shares do not. B shares are primarily meant for institutional investors who need dividends. Risk profile: The fund s risk/return indicator in the fact sheet is category 5, i.e. high-risk. Investing in equities and equity-related securities always entails market risk, in the form of fluctuations in share prices. This risk is reduced within the fund as a result of the fund s ownership in multiple equities (diversification), the prices of which do not undergo exactly the same fluctuations. The fund s focus on companies with real assets, means that the risk is concentrated to certain industries. The fund will employ derivatives, primarily to make management more efficient and reduce its risks and expenses. To the extent that the fund invests in derivative instruments, an absolute Value-at-Risk is used to calculate the fund s total exposure. The absolute Value-at-Risk means that derivative instruments are measured at the exposure of the underlying assets. Target group: The fund is suitable for a long-term investor who wishes to have an actively-managed equity fund that invests in listed companies with exposure to real assets. Investors must be able to accept major price fluctuations. Minimum subscription amount is SEK

10 PriorNilsson Smart Global: The fund is an equity fund that invests in shares worldwide, with a concentration on medium-sized and large companies with a long history of stable dividends. There are no geographical or industry constraints. The long-term objective is to achieve a total return that outperforms the average return on the global stock markets. The funds assets may be invested in transferable securities, money markets instruments, fund units, derivatives instruments, and accounts with credit institutions. The fund may use derivatives, including OTC derivatives, as part of its investments focus. The funds assets may also be invested in ETF:s to a maximum of 10 percent of the funds value. Risk profile: The fund s risk/return indicator in the fact sheet is category 5, i.e. high-risk. Investing in equities and equity-related securities always entails market risk, in the form of fluctuations in share prices. This risk is reduced within the fund as a result of the fund s ownership in multiple equities (diversification), the prices of which do not undergo exactly the same fluctuations. To the extent that the fund invests in derivative instruments, an absolute Value-at-Risk is used to calculate the fund s total exposure. The absolute Value-at-Risk means that derivative instruments are measured at the exposure of the underlying assets. Target group: The fund is suitable for a long-term investor who wishes to have fund that invests in shares worldwide, with a concentration on medium-sized and large companies with a long history of stable dividends. Investors must be able to accept major price fluctuations. The minimum subscription amount is SEK 100. Investing in PriorNilsson funds An application form to start saving in our funds can be found on our website The website also has a Key Investor Information document (KIID) for each fund, with information on the fund s investment focus and risk, as well as the fund articles and additional information on investing in the funds. A new anti-money laundering law has been in effect in Sweden since 15 March As a result, we need to ask some questions if you are a new customer. Therefore, you need to fill in the KYC, which you will find on our website. Once you ve filled in the application and customer KYC, you just need to print them, sign them and post them to Prior&Nilsson Fond och Kapitalförvaltning AB, Box 7136, SE Stockholm, Sweden. Application forms, Key Investor Information document and additional information can also be ordered by telephone on +46 (0) The Company is legally obligated to verify the identity of customers who wish to purchase fund units. If the application is not completely filled out, if all of the requested information is not attached, or if the Company cannot satisfactorily identify a prospective customer, investments may not be made in the fund and the equivalent fund units issued. There is a special form for legal persons. The Company maintains a list of all fund unit holders. You can also start saving through one of our distributors. You will find them under Engagement agreement. It is not currently possible to save on a monthly basis directly through us, but this can be done through our distributors. It is the duty of anyone who is interested in investing in any of - 10

11 our funds to ensure that the investment is made in accordance with applicable laws and other regulations. Foreign legislation may mean that an investment may not be made by investors outside Sweden. The Company has no responsibility for verifying whether an investment from abroad is taking place in accordance with that country s laws. Disputes or claims concerning the funds must be decided according to Swedish law, and exclusively by a Swedish court. Purchase and sale of fund units Purchases and sales within the funds can be made on every banking day, and always take place at an unknown unit price. The funds are ordinarily open for trading every banking day unless the most important market or markets in which the fund invests are closed, or if an extraordinary circumstance has occurred which means that we cannot ensure that all customers have an equal right to the fund s value. PriorNilsson Yield and PriorNilsson Idea: The Company must receive a customer s purchase or sale request in writing, no later than 2pm (cut off time) on the banking day before the customer s purchase or sale. The purchase payment must be deposited into the respective fund s account or bankgiro at the custodian no later than 2pm on the banking day on which the purchase is to be made. Otherwise the purchase/sale will take place on the following banking day. On banking days when the Stockholm stock exchange closes at 1pm, the corresponding deadline is 10am. If a customer s request to sell fund units on a day that is not a banking day, or if the fund is closed for trading for some other reason, the trade is ordinarily postponed until the following banking day. This also applies if the customer s order arrives after the deadline in question. The minimum amount for a purchase is SEK 500. The customer should state both their personal/ corporate identity number and the name of the person/company under which the units will be registered. Purchase and sales forms can be found on our website. The customer cannot limit a purchase or sales order. Since the fund s valuation takes place after the deadline, units are always traded at an unknown price. When a customer requests a sale of his or her fund units there will normally be a delay by one or two banking days after the trade is completed, but it can take up to five days depending on the customer s bank. If the sales value is large in relation to the fund s value, it may happen that the fund has insufficient liquid assets to make a disbursement, in which case the fund must sell securities. In such cases it may take longer before the money is available in the customer s account. If such a redemption could be substantially unfavorable to the interests of the other unitholders, the Company may postpone the redemption after notifying the Swedish Financial Supervisory Authority (FI). Data on the most recently calculated price for a fund unit is provided by the Company. The data is also published on the Company s website. For a complete description of the rules for purchase and sales of units, please see the prospectus. PriorNilsson Sverige Aktiv, PriorNilsson Realinvest and PriorNilsson Smart Global: A customer s purchase or sale request that is received by the Company in writing no later than 2pm (cut off time) is carried out on the - 11

12 same banking day. The purchase payment must be deposited by the customer into the fund s account at the custodian no later than 2pm on the banking day on which the purchase is to take place. If the customer s request to sell fund units is submitted on a day that is not a banking day, or if the fund is closed for trading for some other reason, the trade is ordinarily postponed until the following banking day. On banking days when the Stockholm stock exchange closes at 1pm, the corresponding deadline is 10am. If a customer s request to sell fund units is submitted on a day that is not a banking day, or if the fund is closed for trading for some other reason, the trade is ordinarily postponed until the following banking day. This also applies if the order is submitted after the relevant deadline. The minimum amount for a purchase is SEK 100. Purchase and sales forms can be found on our website. The customer should state both their personal/corporate identity number and the name of the person/company under which the units will be registered. The customer cannot limit a purchase or sales order. Since the fund s valuation takes place after the deadline, units are always traded at an unknown price. When a customer requests a sale of his or her fund units there will normally be one to two banking days after the day the trade is completed, but it can take up to five days depending on the customer s bank. If the sales value is large in relation to the fund s value, it may happen that the fund has insufficient liquid assets to make a disbursement, in which case the fund must sell securities. In such cases it may take longer before the money is available in the customer s account. If such a redemption could be substantially unfavorable to the interests of the other shareholders, the Company may postpone the redemption after notifying the Swedish Financial Supervisory Authority (FI). Data on the most recently calculated price for a fund unit is provided by the Company. The data is also published on the Company s website. For a complete description of the rules for purchase and sales of units, please see the prospectus. The funds account numbers at Swedbank, IBAN and SWIFT at Swedbank PriorNilsson Yield Account number:8901-1, BG nr: PriorNilsson Idea Account number: , BG nr: PriorNilsson Idea B, Account number: , BG nr: PriorNilsson Sverige Aktiv A Account number: , BG nr:

13 (PriorNilsson Sverige Aktiv B)*. Account number: , BG nr: (PriorNilsson Sverige Aktiv C)*. Account number: , BG nr: PriorNilsson Realinvest A Account number , BG nr: (PriorNilsson Realinvest B)*: Account number: , BG nr: Prior Nilsson Smart Global Account number , BG nr: *Predominantly for institutional investors Fees and compensation The Company shall be paid compensation for its management based on the funds assets, which includes expenses for administration, custody, supervision and auditors. The Company is paid a fixed compensation. The funds do not charge sales fees or redemption fees. All costs for valuation and accounting for the fund s performance are covered. Data on the fund s returns and NAV are updated daily on the Company s website. Management fee PriorNilsson Yield: Compensation consists of two parts: a fixed management fee and a performance- based fee. The fixed management fee amounts to a maximum of 1,0 percent annually and the performance-based amounts to a maximum of 20 percent of the appreciation in value that exceeds the fund s benchmark interest rate, the so-called high watermark. The benchmark interest rate is defined as the SSVX 30-day treasury on the first banking day of each month. The performance-based compensation is calculated based on the appreciation in value after deductions for the fixed management fee. The compensation is calculated daily. There is no upper limit as a percentage of the fund assets to how high the performance-based fee may be, but it may not exceed 20 percent of returns as stated above. If the fund has underperformed in comparison with its benchmark index for one day, the performance-based fee shall not be paid until the underperformance has been compensated by an equivalent positive return. This applies at the collective level, so that all shareholders are treated equally regardless of when they invested. A person who invests after the fund underperforms does not need to pay a performance-based fee until the fund as a whole has made up the underperformance. If a unit holder redeems their units when the unit holder has a cumulative underperformance on their account, any previously paid performance-based fee is not repaid. PriorNilsson Idea A: Compensation consists of two parts: a fixed management fee and a performance based fee. The fixed management fee amounts to a maximum of 0.2 percent annually, and the performance-based fee amounts to a maximum of 20 percent of the appreciation in value. The performance based compensation is calculated based on the appreciation in value after deductions for the fixed administration fee and is calculated daily. There is no upper limit as a percentage of the fund assets to how high the - 13

14 performance-based fee may be, but it may not exceed 20 percent of returns as stated above. If the fund has underperformed for one day, the performancebased fee shall not be paid until the underperformance has been compensated by an equivalent positive return. This applies at the collective level, so that all shareholders are treated equally regardless of when they invested. A person who invests after the fund underperforms does not need to pay a performancebased fee until the fund as a whole has made up the underperformance. If a unit holder redeems their units when the unit holder has a cumulative underperformance on their account, any previously paid performance-based fee is not repaid. Examples of calculation of performance-based fee: Example 1: You have SEK 500,000 in the fund on day 1. Next day, the value increases to 510,000. The appreciation in value is 2% (10,000 / 500,000) Appreciation in value Performance-based fee, 20% of SEK SEK 2000 SEK Example 2: You have SEK 500,000 in the fund on day 1. The following way, the value decline to 490,000 SEK. The decline in value is 2% (10,000 / 500,000) On day 2, the fund has a positive return and the value of your assets appreciates from 490,000 SEK to 504,700 SEK. The appreciation is equal to 3% (14,700 / 490,000). Thereby, the funds underperformance must be made up before performance-fees can be taken out of the fund. Depreciation in value - 10,000 SEK Underperformance - 10,000 SEK Appreciation Available performance-fee Performance fee (20% of 4,700 SEK) + 14,700 SEK + 4,700 SEK SEK - 14

15 PriorNilsson Idea B: The management fee is 1,9 percent of the annual fund asset. Fixed compensation is calculated for each banking day and is paid at the end of next month. PriorNilsson Svergie Aktiv A and B: The management fee is 1,2 percent of the annual fund asset. Fixed compensation is calculated for each banking day and is paid at the end of next month. PriorNilsson Svergie Aktiv C: The management fee is 0,48 percent of the annual fund asset. Fixed compensation is calculated for each banking day and is paid at the end of next month. PriorNilsson Realinvest: The management fee is 1,6 percent of the annual fund asset. Fixed compensation is calculated for each banking day and is paid at the end of next month. PriorNilsson Smart Global: The management fee is 0,8 percent of the annual fund asset. Fixed compensation is calculated for each banking day and is paid at the end of next month. Applicable fees and maximum fees The table below shows the applicable fee and the maximum fee that the Company may take out for sales and redemptions of units as well as for administration (including expenses for custody, supervision and auditors), according to the prospectus for each fund. All costs for valuation and accounting for the funds performance are covered. PriorNilsson Yield Maximum fee Sales fee 0% 0% Applicable fee Redemption fee 0% 0% Fixed management fee (Incl.custody,supervision and auditors) Performance-based fee 1% 1% Maximum 20% of excess return 20% of excess return PriorNilsson Idea A Sales fee 0% 0% Redemption fee 0% 0% Fixed management fee (Incl.custody,supervision and auditors) Performance-based fee 0,2% 0,2% Maximum 20% of total return 20% of total return PriorNilsson Idea B Sales fee 0% 0% Redemption fee 0% 0% - 15

16 Management fee 1,9% 1,9% (Incl.custody,supervision and auditors) Performance-based fee 0% 0% PriorNilsson Svergie Aktiv Maximum fee Applicable fee Sales fee 0% 0% Redemption fee 0% 0% Management fee 1,2% 1,2% (Incl.custody,supervision and auditors) Performance-based fee 0% 0% PriorNilsson Realinvest Sales fee 0% 0% Redemption fee 0% 0% Management fee 1,6% 1,6% (Incl.custody,supervision and auditors) Performance-based fee 0% 0% PriorNilsson Smart Global Sales fee 0% 0% Redemption fee 0% 0% Management fee 0,8% 0,8% (Incl.custody,supervision and auditors) Performance-based fee 0% 0% Extraordinary circumstances The funds may be closed for entry and exit in the event that such extraordinary circumstances occur that a valuation of the fund s assets cannot be performed in a way that ensures the unit holders equal rights. Changes of fund regulations The company may, after permission from Swedish Financial Supervisory Authority change the regulations for the different funds. Changes within regulations may affect the funds characteristics i.e. type of investments, fees and the risk level. The Swedish Financial Supervisory Authority has - 16

17 the authority to determine a certain amount of time before the new regulations will be approved due to the concerned unit holders. Concerned unit holders shall have the right to get their shares redeemed before the new regulations will come into force. Transfer or Closure of the funds The funds assets are separated from the Company s assets. The Company s board of directors may decide that a fund shall be closed or transferred. After obtaining permission from the Swedish Financial Supervisory Authority, the Company may transfer the administration of one or several funds to a different fund manager. If the Swedish Financial Supervisory Authority revokes the Company s license to operate a fund business, or if the Company enters into liquidation or bankruptcy, the fund s administration is immediately taken over by the custodian. In that case the custodian must immediately transfer the administration of the fund or funds to another fund manager, another AIFmanager or to a securities firm with the requisite license, if it is approved by the Swedish Financial Supervisory Authority. Otherwise the fund or funds must be liquidated by selling the assets and distributing the net balance to the shareholders. During the time when the custodian administers the fund or funds, sales or redemptions of fund units are not possible. Dividends from the funds Yield, Idea A and B as well as Smart Global do not pay dividends. Sverige Aktiv and Realinvest have three different share classes, A, B shares and C shares. A- shares and C-shares do not pay dividends, while B-shares may pay dividends if the board of directors so decides. Tax regulations for shareholders New tax regulations apply to funds and fund holdings as of 1 January These regulations eliminate the tax on the fund itself, while a new tax on holdings of directly-owned shares in investment funds have been introduced (this applies to both A-class and B-class shares). Unit holders must declare a standard income that amounts to 0.4 percent of the value of the units at the beginning of the calendar year. The standard income is reported as income from capital and is taxed at 30 percent. For private individuals, the standard tax is thus equivalent to 0.12 percent of the fund value at the beginning of the year. A loss is deductible if one occurs. Capital gains and losses are calculated by the Company and are being reported on the annual statement that you receive from the Company. When dividends are paid for Class B shares, 30 percent is deducted in preliminary tax for natural persons who are liable to pay taxes in Sweden. (This does not apply to legal persons.) Capital gains/ losses are reported on a statement of earnings and deductions to the Swedish Tax Agency, but a tax deduction is not withheld. For legal persons the standard income is taxed as income from business, at a current rate of 22,0 percent. A statement of earnings and deductions is submitted for natural persons and the estates of Swedish deceased persons. - 17

18 Legal persons may calculate their standard income and pay taxes on their own. The tax may be affected by individual circumstances, and people who are uncertain about any tax consequences should seek expert assistance. Reporting and information Unitholders receives annual and semi-annual statements. The annual statement also includes a statement of dividends. The customer receives a statement of account with every purchase and sale. An annual report and a semi-annual report are produced at every year and half-year. These are sent to customers who have requested them. They can also be ordered on our website. For Swedish legal persons the standard income is taxed as income from business, at a current rate of 22,0 percent. A statement of earnings and deductions is submitted for natural persons and the estates of Swedish deceased persons. Legal persons may calculate their standard income and pay taxes on their own. The tax may be affected by individual circumstances, and people who are uncertain about any tax consequences should seek expert assistance. Performance history, net return after fees Yield* 11,0 7,2 5,5 5,9 2,6-5,0 13,0 5,0 0,2 5,4 4,1 3,1 3,9 2,21 1,12 Idea 14,45 1,58-35,92 63,71 30,26-25,7 25,28 16,51 16,95 10,26 18,75 10,0 Sverige Aktiv 11,92** 23,73 22,5 6,11 19,37 10,04 Realinvest 11,07*** 31,9 13,53 23,89 16,01 Smart Global 5,37**** *Yield started in December 2002 and had during that month a return of 0,5% **Sverige Aktiv started the 1 of October The return of 11,92% is between 1 Oct 31 Dec *** Realinvest started the 2 of September The return of 11,07% is the between 2 Sep 31 Dec **** Smart Global started on March 1rst,

19 Fund Regulations PriorNilsson Yield Article 1. The legal position of the fund The name of the fund is PriorNilsson Yield. Hereinafter called the fund. According to the Swedish Investment Funds Act (2004:46), hereinafter called LVF, the fund is defined as an investment fund or UCITS. The company who manage the fund represents the unit holders in all questions regarding the fund. The fund management is regulated by LVF, these fund articles, the articles of association and other regulatory framework imposed by Swedish authorities. The fund s assets are owned jointly by the unitholders, where each unit holds an equal right to the funds assets. The fund cannot be considered as a legal person. The fund does not have the right to acquire rights or assume liabilities. Property that is not included in the fund may not be repossessed. Article 2. Fund managers The fund is managed by Prior & Nilsson fond och kapitalförvaltning, ( the company ). Corporate ID number: Article 3. Custodian The funds s assets are held in custody by Swedbank AB (publ), corporate ID: The custodian shall receive and retain the fund s property. Furthermore, the custodian shall also execute the fund manager s decisions relating to the fund, provided that they do not contravene the provisions of LVF or these fund articles. The custodian shall also receive and hold the property included in the fund, and ensure that: - Redemptions and sales of fund units take place in accordance with the provisions of LVF and the fund articles. - The value of the fund units shall be calculated according to the provisions of LVF and the fund articles. - The fund s assets shall be provided to the custodian without delay. - The fund s assets shall be used in accordance with the provisions of LVF and the fund articles. - The liquidity within the fund shall be used in accordance with the provisions of LVF and the fund articles. - The decisions that are being made by the company, shall be controlled and be in accordance with the provision of LVF and the fund articles. If foreign assets are included in the fund, the custodian has the right to transfer these foreign assets into another suitable foreign custidian. However, the custodian shall still enact in accordance with the provisions of LVF and the fund articles. The custodian shall act independently from the company and with the unitholders interest in mind. Article 4. The character of the fund Investments are aimed to provide its unitholders high, risk-adjusted return on their invested capital. The fund shall always strive for absolute return. The purpose of the fund is to provide a high absolute return by taking active risk on international financial markets. The fund can be defined as a hedge fund with a long/short strategy that involves buying shares in conjunction with short shelling. i.e. selling borrowed shares. Article 5. The fund s investments article. 5.1 Assets. The fund s assets may be invested in transferable securities, fund units (maximum 10% of the fund s assets), money market instruments, derivatives and bank cash deposits. The fund also includes the cash - 19

20 necessary for the fund s management. Transferable securities are shares and sharerelated transferable securities, as well as interest-related transferable securities. Share-related transferable securities are shares, other part-ownership rights and depositary receipts that are issues for general sale. Interest-related transferable securities are bonds and other securitized debts that are issued for general sale. For investments in derivatives, the underlying assets shall comprise or be related to assets like those stated in Chapter 5, Section 12 LVF 5.2 Allocation The fund s holdings may be invested into assets defined in article 5.1 without geographical restrictions. In general, the fund is aiming for diversification and is thereby not constrained to specific sectors. The fund may invest a maximum of 10 percent of its assets within fund units. Article 6. Markets on which the fund s assets may be invested With the limitations stated in Article 5, the fund s assets may be invested on regulated markets or their equivalent outside the EEA. Trading may also take place on markets, inside or outside the EEA, that are regulated and open to the public. Purchase or sale of fund units and fund companies as whole, can also occur directly from the respective management of the fund company. Article 7. Special investment considerations. The fund may invest in transferable securities and money-market instruments according to chapter 5, 5 of LVF. The fund may also use OTC derivatives according to chapter 5, 12 of LVF. The fund may use such leverage techniques and instruments that are covered in chapter 25, 21 within the Swedish Financial Supervisory Authority regulations. The fund may lend out financial securities, but only to a maximum value of 20 percent of the fund s total assets. Furthermore, the fund may short sell equities, moneymarkets instruments and derivatives if the possesses these kinds of instruments. The maximum value of short term loans not exceed more than 10 percent of the fund s assets according to chapter 5, 23 of LVF. Article 8. Calculation of the fund and fund units. The fund s value is calculated by deducting liabilities from assets in the fund. The fund s assets comprise: Financial instruments Cash Accrued interest Accrued dividends Non-liquidated sales Other assets and receivables due to the fund The fund s assets are valued at current market value. This means last price paid, or if this is not available, last bid price. If the Company believes that such value is misleading, the Company will assess the value on an objective basis. Such information may for example be new rights issue prices with independent parties at another value, or knowledge that a deal has been made at a particular price in the current asset with an independent party. Financial instruments and other assets that do not have a quoted market value will - 20

21 be valued by the Company on an objective basis according to a valuation, based on information about the latest price paid, or indicative bid price from a market maker if such has been appointed to the issuer. If such information does not exist or the Company considers it to be unreliable, the market value is for example obtained through information from an independent broker or other external independent sources. Such information may for example be new rights issue prices with independent parties at another value, or knowledge that a deal has been made at a particular price in the current unlisted asset with an independent party. This could also be a reference score based on the valuation of other financial instruments adjusted for differences like liquidity risk, duration or issuer risk. P/E ratio and book valuation can also be used for calculation purposes. For such derivatives instruments that are covered in chapter 5, 12 LVF. I.e. OTC derivatives shall will be valued by the company on an objective basis based on information about latest price paid, or indicative bid price from a market maker if such has been appointed to the issuer. If such information does not exist or if the company believes it is unreliable, the market value is obtained through information from an independent broker or other external independent sources. Such information may for example be new rights issue prices with independent parties at another value, or knowledge that a similar deal has been made at a particular price with an independent part. Or shall be based on the internal assets market value. If it still not possible to determine the price based on previous alternatives, the valuation shall be based on commonly used valuation models, such as Black Scholes & Black 76. Financial instruments that are covered in chapter 5. 5 in LVF, will be valued by the company on an objective basis based on information about latest price paid, or indicative bid price from a market maker if such has been appointed to the issuer. If such information does not exist or if the company believes it is unreliable, the market value is obtained through information from an independent broker or other external independent sources. Such information may for example be new rights issue prices with independent parties at another value, or knowledge that a similar deal has been made at a particular price with an independent part. Financial instruments and other assets that are quoted in foreign currencies shall be translated to Swedish kronor based on the current market listing of the currency. The fund s liabilities comprise: Management fees to the Company Payment to the custodian Non-liquidated purchases Tax liabilities Other liabilities related to the fund The value of a unit is the fund s value, calculated as above, divided by the number of outstanding units, established - 21