Marlborough ETF OEIC: Marlborough ETF Commodity Fund Marlborough ETF Global Growth Fund. (For Retail Investors) Published 1 st March 2012

Transcription

1 Marlborough ETF OEIC: Marlborough ETF Commodity Fund Marlborough ETF Global Growth Fund (For Retail Investors) Published 1 st March Customer Support / enquiries@marlboroughfunds.com Dealing Intermediary Support / intersupport@marlboroughfunds.com Marlborough Fund Managers Ltd, Marlborough House, 59 Chorley New Road, Bolton BL1 4QP The Financial Services Authority is the independent financial services regulator. It requires us, Marlborough Fund Managers Ltd, to give you this important information to help you to decide whether our Marlborough ETF OEIC subfunds are right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference.

2 The document is split into various sections: Introduction Risks Charges, Expenses and Taxation Buying and Selling Shares Further Information for Investors Past Performance Investing via a Stocks and Shares ISA Stocks and Shares ISA Terms and Conditions At Marlborough Fund Managers Ltd we concentrate on providing unit trust and OEIC investments and so do not provide any investment advice. For this you should consult a financial adviser. If you have any technical questions about the funds our Customer Support Team will be happy to help. You can call free between 9am and 5pm, Monday to Friday on The full prospectus and the annual and half-yearly reports of the funds can be obtained free of charge by contacting our Customer Support Team at any time. Who is Marlborough Fund Managers Ltd? Marlborough Fund Managers Ltd is a unit trust and OEIC manager, offering a range of collective investments covering a number of the world s markets. Originally launched in 1986 Marlborough has grown to offer access to many expert fund managers. As a UK financial services provider Marlborough is Authorised and Regulated by the Financial Services Authority and is a member of the Investment Management Association. What is an Open Ended Investment Company (OEIC)? An OEIC is an investment company which may have one or more sub funds, into which you may invest. Each sub fund is a collective investment scheme, which means that your money is pooled with other investors money. It is then used to invest in a number of different shares, bonds, funds or other assets. This means you can easily gain access to a wide spread of various investments designed to achieve growth, income or a combination of the two. What type of investor are the funds aimed at? The Marlborough ETF Commodity and Global Growth Funds are aimed at investors wishing to achieve long term, i.e. over 5 years, capital growth from exposure to the UK or overseas stock markets. The objective of each fund is shown below but investors will be aware that returns are not guaranteed and they may get back less than they originally invested. If you are unsure whether an investment is suitable for your needs you should consult a financial adviser. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 1

3 What are the Investment Objectives and Policies of the Marlborough ETF Commodity and Global Growth Funds? Each fund aims to achieve either growth, income or a combination of the two by investing primarily in a range of Exchange Traded Funds. Exchange Traded Funds are collective investment schemes whose investments are traded on investment exchanges worldwide. Full details of their objectives and how each fund aims to achieve them are as follows along with details of the Investment Advisers to the funds (The Investment Advisers aim to achieve the objectives by deciding which investments to buy and when): Fund Name & Investment Adviser Investment objective and policy The investment objective of the Fund is to prioritise capital growth. Marlborough ETF Commodity Fund Investment Adviser: ifunds Asset Management Limited. The asset classes in which the fund is permitted to invest includes units and shares in collective investment schemes, transferable securities, money market instruments and deposits as permitted for non-ucits retail schemes under COLL. The fund may invest in derivative instruments and forward transactions for limited purposes. Marlborough ETF Global Growth Fund Investment Adviser: ifunds Asset Management Limited. The investment objective of the Fund is to prioritise capital growth. The asset classes in which the fund is permitted to invest includes units and shares in collective investment schemes, transferable securities, money market instruments and deposits as permitted for non-ucits retail schemes under COLL. The fund may invest in derivative instruments and forward transactions for limited purposes. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, Marlborough House, 59 Chorley New Road, Bolton, BL1 4QP. Cheques should be made payable to Marlborough Fund Managers 2

4 As with any investment, there are certain risks associated with investing in the funds. Some risks are specific to each fund whilst some are more general and apply to all funds. The following risks are those which apply to all funds: Investments in the range of funds offered by Marlborough are all subject to normal stock market fluctuations and other risks inherent in all investments where market prices can change. This risk is managed by Market Risk spreading the investments the fund holds so that it is not exposed too excessively to the investments of any one company or issuer. Performance Risk Charges Inflation Risk Regulation and Tax There will be a variation in performance between different funds with similar objectives due to the different assets selected. There is no guarantee for the performance of your investment. The value of investments and the income from them may go down as well as up and you may not get back the amount you originally invested. As there is an initial charge on your investment withdrawing early may mean that any growth achieved is not sufficient to recover that charge and you may get back less than you originally invested as a result. Inflation may have the affect of eroding the value of your investment. The regulatory and taxation regime under which the funds operate may be subject to change. The following risks are specific to certain funds, depending on their objectives and the kind of investments they make. The funds to which each risk applies is also shown: Liquidity Risk The shares in some companies, particularly some smaller companies, which the funds hold may be more difficult to buy and sell. This means they may be subject to greater price movements both up and down. Marlborough ETF Commodity Fund Marlborough ETF Global Growth Fund Exchange or Currency Risk Investments made overseas by these funds may be traded in a foreign currency. Movements in these currencies will cause the value of the investment to rise and fall. Marlborough ETF Commodity Fund Marlborough ETF Global Growth Fund Concentrated Portfolio The funds may invest in a relatively small number of securities and as such may experience more volatile performance. Marlborough ETF Commodity Fund Marlborough ETF Global Growth Fund Details of all the risks mentioned above may be found in the full prospectus. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 3

5 What are the charges when investing in the funds? Initial Charge When you buy shares in an OEIC you will pay an initial charge. This is shown as a percentage and is deducted from the amount you invest. The price at which you buy shares is known as the single price. Annual Management Charge This is an annual percentage of the total value of the fund, which is paid to Marlborough Fund Managers Ltd for managing and administering the fund. The amount is calculated each day and taken from the fund, rather than from your individual investment. This charge is taken from the fund s income meaning it will reduce the income that the fund pays. The actual charges and rates can be found in the table that follows. Are there any other charges or expenses? In addition to the initial and annual charges the funds will also pay other additional expenses. Like the annual management charge, these are taken from the fund rather than from your investment and will therefore be reflected in the price at which you may buy or sell shares. The additional expenses include fees for trustees, custody, registration, audit and regulation. What is the Total Expense Ratio? This is a percentage figure which is used to show the total expenses a fund will have to pay each year. It includes the annual management charge and the additional expenses but does not include the initial charge. It is calculated according to complex guidelines provided by our regulator and is the internationally accepted standard for the comparison of the expenses for a fund. As these funds invest primarily in other collective investments, the TER also includes the annual charge on each of those investments. Past TER figures can be found on our website at What is the Portfolio Turnover Rate and how does it affect my investment? When the fund buys or sells its investments there are transaction charges which must be paid. These may include Government Stamp Duty, currently 0.5% on the purchase of shares, and commission to brokers. If the fund buys and sells investments frequently these charges may have a higher impact on your investment. On the other hand, active management may mean that the fund performs well enough to outweigh these charges. To show the level of buying and selling in the funds, the Portfolio Turnover Rate is calculated. Like the Total Expense Ratio it must be calculated in accordance with the guidelines issued by our regulator. The formula for this rate is as follows; (Purchase of Securities + Sales of Securities) Minus (Subscription of Shares + Redemption of Shares) (Average fund value over 12 months) Multiplied by 100 Marlborough ETF Commodity Fund (Class A Accumulation Shares) ETF Commodity Fund (Class C Accumulation Shares) ETF Global Growth Fund (Class A Accumulation Shares) ETF Global Growth Fund (Class C Accumulation Shares) Initial Charge % Annual Management Charge % Total Expense Ratio % Portfolio Turnover Rate % * * *Please note the TER has been adjusted to reflect the reduction in AMC from 1.75 to 1.5 on Class A shares on 1 st March 2012 The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 4

6 How will these charges and expenses affect my investment? The following tables give an example of how the charges and expenses will affect your investment over a number of years. They are calculated using the Total Expense Ratio and the initial charge and use an example growth rate of 6% per year. It is important to remember that this growth rate is in no way guaranteed, it is used simply to illustrate the effect of charges on an investment. Each table shows a reduced rate of return or reduction in yield figure. This shows how the example growth rate of 6% per year has been reduced by the charges and expenses. The Marlborough ETF Global Growth Fund has been used as an example to demonstrate the effect of charges on an investment. A single direct investment in the Marlborough ETF Global Growth Fund (Class A Retail Accumulation Shares): The effect of charges on a 1,000 lump sum investment in the fund assuming a growth rate of 6% a year. At end of year Investment to date Effect of deductions to date What you might get back 1 1, , , , , , ,390 The third column in the table shows that over 10 years the total effect of charges and expenses could amount to 399. In other words, if the growth rate were 6% a year (which is not guaranteed) the deductions would have the effect of reducing that growth rate to 3.36%. A single direct investment in the Marlborough ETF Global Growth Fund (Class C Retail Accumulation Shares): The effect of charges on a 500,000 lump sum investment in the fund assuming a growth rate of 6% a year. At end of year Investment to date Effect of deductions to date What you might get back 1 500,000 33, , ,000 47, , ,000 63, , , , ,000 The third column in the table shows that over 10 years the total effect of charges and expenses could amount to 119,000. In other words, if the growth rate were 6% a year (which is not guaranteed) the deductions would have the effect of reducing that growth rate to 4.50%. How does tax affect the funds? The Funds are exempt from United Kingdom capital gains tax which is payable when investments are disposed of or sold. If the Funds receive dividends from UK companies or other funds in which they invest, there will be a tax credit attached and the Funds will not have to pay any additional tax. Overseas dividends are now not normally taxable. Interest paid to the funds is paid gross and is therefore liable to UK corporation tax, charged at 20%. The Funds are able to offset allowable management expenses against this 20% corporation tax. Where overseas income is liable to tax, any overseas tax paid on it may be deducted from the UK tax due on that income. Further details are available in the full prospectus. How does tax affect my investment? The following information reflects the taxation situation in the United Kingdom; however the tax that you may have to pay for income or on capital gains depends on the tax law that applies to you. If you are unclear about tax then you should seek professional advice. Income distributions, whether they are paid to you or reinvested to purchase more units, or accumulated into the fund, are treated by HM Revenue & Customs (HMRC) as income, and you will therefore be liable to income tax. The precise income position depends on whether the income distribution derives from share dividend distributions or interest. The Marlborough ETF OEIC sub-funds pay dividend distributions. They will be paid net of a notional tax credit equivalent to a deduction of 10% of the gross dividend. For dividend distributions, you cannot reclaim the 10% tax credit even if you are a non-taxpayer. If you are a non-taxpayer or basic rate taxpayer you will not have any further income tax liability. Higher rate taxpayers may have an additional liability to income tax. Any gains made on the full or partial disposal of your investment, including regular withdrawals, are liable to The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 5

7 capital gains tax (CGT) only if they cause your total gains for the tax year to exceed your personal exemption. What is stamp duty reserve tax (SDRT)? The Funds bear Stamp Duty Reserve Tax (SDRT) levied on transactions in shares in the Funds rather than it being charged to the individual investor. SDRT is payable when shares in a fund are repurchased. The amount payable is reduced where repurchases exceed sales over a two week period which is also the basis period for calculating and paying the tax. SDRT is only payable in relation to funds that invest in certain UK assets. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 6

8 Can I buy shares? You may buy shares in the Marlborough ETF OEIC if you are aged 18 or over. You may also buy shares within an ISA, further details are given later in this document. You may also invest on behalf of a child in an adult s name by designating the account for the child. How much can I invest? You may invest a lump sum (single payment). There is no maximum amount that you may invest directly but the minimum is 1,000 for Class A shares and 500,000 for Class C shares which are available to both retail and institutional investors. The minimum amount for subsequent purchases is 1,000 for Class A shares and 10,000 for Class C shares. How do I invest? Please complete the appropriate application form and send it by post to your financial adviser or to Marlborough Fund Managers Ltd together with a cheque for the full amount. Alternatively, you may telephone our Dealing Team free on to place your investment (this option is not available to ISA investments). Calls to this line may be recorded for your protection. You may buy further shares in the same way. Placing a Deal Important Information Whether you place a deal by sending an application form or by telephone you will need to be able to provide us with all the information we need such as; Details of Holders You will need to give us the full name and residential address of all registered holders. If you are buying shares for yourself only then you will need only your own details. If the investment is to be jointly held, for example by yourself and a spouse, we will need their details too. What happens next? We will place your deal straight away. Shares will then be bought in the fund on the next available valuation point. The Marlborough ETF Commodity and Global Growth Funds are valued each business day at 12 noon. When your shares have been bought we will send you a contract note. This will give you all the details about your investment such as the number of shares you receive, the price you paid and the date your investment was made. You should keep this document safe for future reference. How do I sell my shares? You can instruct us to sell some or all of your shares at any time, either by writing to us (your instruction must be signed) or by calling our Dealing Team on If you instruct us by telephone you will be required to sign and return a renunciation form before we can pay you. This will be sent to you with your contract note which will be sent the day after your shares are sold. Providing that we have received your signed confirmation we will send you a cheque covering the payment on the fourth business day after the valuation point at which the shares were sold. Otherwise payment will be made four business days after receipt of the confirmation. It is important to note that the minimum value of shares which may be held in each fund is 1,000 for Class A shares and 500,000 for Class C shares. What is a dilution levy? When you sell shares in an OEIC fund we may charge a dilution levy. This is calculated by considering the cost to the fund of selling some of its underlying assets and may be up to 1% of the value of the shares being sold. The reason for this is to ensure that the cost to the fund of selling some of its assets to pay for those shares being sold (such as transaction costs or bid / offer spreads) does not disadvantage any of the remaining investors. This charge is paid back into the fund. It is usually only charged where a large deal or series of small deals take place, the value of which are 1% or more of the total fund value. Can I switch between different Marlborough funds? Yes, you may switch from one Marlborough fund to another by writing to us (your instruction must be signed) or you may telephone our Dealing Team on If you place the deal by telephone we will require written confirmation by post. We will sell your existing shares and buy your new ones simultaneously at the next available valuation point. Can I withdraw my application? (Cancellation Rights) If you have received investment advice we will send you a letter detailing your cancellation rights. This means that you will have 14 days from the day you receive our letter in which to cancel your investment should you change your mind. You can do this by completing the cancellation notice we send you and returning it to us in the post. We will then send the amount you invested back to you. If the value of your investment has decreased you may not get back the full amount. Cancellation rights do not apply to business or professional investors. Regular Savings (Class A Shares only) You may invest in the funds by making regular, monthly contributions by Direct Debit. The minimum amount that you may invest each month is 100. There is no maximum. Please complete the appropriate application form and send it to your financial adviser or to Marlborough Fund Managers Ltd together with a cheque for your first instalment. Your initial investment will be made at the next valuation point following our receipt of your application form and cheque. Subsequent investments will then be made each month by direct debit. The date on which payments are taken from your account will depend on the fund(s) you choose. A statement showing the transactions in the past 6 months will be sent to you within 25 business days of the 6th April and 6th October of each year. If you wish to cancel your regular savings or sell the shares you hold with us you will need to write to us with your instructions. You will also need to cancel the direct debit instruction with your bank. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 7

9 Keeping track of your investment You may telephone our Customer Support Team on freephone to request a valuation of your investments with Marlborough. You will also be sent annual and half yearly short reports for the funds you have invested in. Fund prices are available on our website along with other useful information such as fund fact sheets and fund manager profiles. We also publish some price information in the Financial Times. Making a complaint At Marlborough Fund Managers Ltd we try our very best to ensure we provide the high level of service that we ourselves would expect to receive. We recognise however that sometimes you may not be completely satisfied and have cause to complain. If this is the case we would encourage you to write to our Compliance Officer at Marlborough Fund Managers Ltd, Marlborough House, 59 Chorley New Road, Bolton, BL1 4QP with details of your complaint. We will then carry out a full investigation and respond to you as soon as possible. Full details of our complaints procedure are available on request. If you are not satisfied with our response you may then contact the Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London, E14 9SR ( ) who may then review your complaint independently. Compensation Marlborough is covered by the Financial Services Compensation Scheme. You may be entitled to compensation from the scheme if Marlborough cannot meet its obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for 100% of the first 50,000. Further information about compensation arrangements is available from the Financial Services Compensation Scheme. further documentation. Overseas investors should contact us to discuss documentation which may be sent. If you have any queries on money laundering prevention please call us on Regulatory Status The funds are sub-funds of the Marlborough ETF Open Ended Investment Company (IC000396) which is an Authorised Investment Company with Variable Capital ( ICVC ). The Marlborough ETF Commodity and Global Growth Funds are classified as non-ucits retail schemes. They are governed by the Collective Investment Schemes Sourcebook (COLL) and the instrument of incorporation. All documentation will be provided in English and contracts are subject to English law. The date of incorporation and the FSA number for each fund can be found in the table at the end of this section. Client Money In the, exceptional, event that a transaction is not processed within the time limits set by the FSA s regulations, any cash will be held in a client bank account. Interest will be payable at a rate not less than the minimum deposit rate for the amount in question, unless the amount of interest is less than 20 or the amount held is 10,000 or less and is held for less than 10 business days. Soft Commission and Commission Sharing Soft commission is a benefit, for example free research analysis that might be provided by a broker who buys and sells the underlying investments in a portfolio. In exchange a fund manager would be expected to give the broker a certain level of business. Marlborough has no soft commission arrangements in place at this time for the funds covered by this document. Client Classification All investors are classified as Retail Investors. Data Protection Marlborough Fund Managers Ltd is registered under the Data Protection Act If you have any queries about data protection issues, please write to: Data Protection Officer, Marlborough Fund Mangers Ltd, Marlborough House, 59 Chorley New Road, Bolton BL1 4QP. Anti Money Laundering / Combating Terrorist Financing Money laundering regulations require financial service companies to make checks on the source of all new business. All applications will be processed on receipt, however we reserve the right not to issue shares to you nor make payments in respect of your investment until satisfactory proof of your identity is obtained. We will verify the identity of all investors and beneficial owners by checking details on various databases via a credit reference agency. This will not have any impact on your credit score. It will be an identity verification check only, not a credit check. If we are unable to verify your identity in this way we will contact you to request The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 8

10 Looking after your interests and investments Authorised Corporate Director (ACD) - Marlborough Fund Managers Ltd is the sole ACD for the Marlborough ETF OEIC. The ACD markets shares in the OEIC sub-funds and provides facilities to process instructions for and to administer holdings in the fund. It also carries out the pricing and accounting of the fund. Marlborough Fund Managers Ltd is Authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS. Depositary & Custodian - Each fund has a depositary and custodian that ensures that the interests of shareholders and the fund assets are safeguarded. They are independent bodies that ensure that the ACD acts in accordance with the Prospectus and adheres to the relevant regulations. The Depositary for the funds is HSBC Bank plc, 8 Canada Square, London, E14 5HQ. HSBC Bank plc is Authorised and regulated by the Financial Services Authority. Competent Authority - The Financial Services Authority, (FSA), is the competent authority for investment funds authorised in the United Kingdom. They can be contacted in writing at 25 The North Colonnade, Canary Wharf, London, E14 5HS. Their website is and their consumer helpline is Auditors - The Auditors check that the annual accounts have been prepared in accordance with the regulations and report to shareholders or unitholders on the truth and fairness and basis of preparation of the annual accounts. The Auditors are Barlow Andrews, 78 Chorley New Road, Bolton BL1 4BY. Fund Information The following table gives further technical details of the Marlborough ETF Commodity and Global Growth Funds. Marlborough ETF Commodity Fund Class A ETF Commodity Fund Class C ETF Global Growth Fund Class A ETF Global Growth Fund Class C FSA Authorisation No. & Date of Incorporation Shares Available Accumulation Accumulation Accumulation Accumulation Reduction in yield / 100 / 7% Direct ISA Accounting Dates Payment Dates Distribution Type Annual Interim Annual Interim 31-Mar 30-Sep 31-Jul 30-Nov Dividend - 31-Mar 30-Sep 31-Jul 30-Nov Dividend Mar 30-Sep 31-Jul 30-Nov Dividend - 31-Mar 30-Sep 31-Jul 30-Nov Dividend Reduction in yield figures are based on a lump sum investment of 1,000 and regular savings investments of 100 per month in Class A shares and a lump sum investment of 500,000 in Class C shares. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 9

11 The following page provides you with information on the historical performance of the funds. The bar charts show the Annual Returns for each of the last ten calendar years, or for as many full years as are available where the funds have launched more recently. The table shows the cumulative returns for the last ten calendar years. Again, where funds do not have ten years data we have used as many full years as are available. The performance is on a mid to mid basis, which means it does not take initial charges into account and is net of tax. Past performance is not a guide to future performance. The value of your shares may go down as well as up. Marlborough ETF Global Growth Fund Class A Shares were first issued during 2007 and do not therefore have performance data for the 2007 calendar year. Fund Period of Performance Cumulative Return Commodity Class A to % Commodity Class C to % Global Growth Class A to % Global Growth Class C to % Note: On 31 March 2011 Marlborough ETF Global Income Fund merged into Marlborough ETF Global Growth Fund. Source : Morningstar The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd, 10

12 What is an ISA? ISA stands for Individual Savings Account. ISAs have been available since 6 April An ISA is a scheme for investment managed in accordance with the ISA Regulations under terms agreed between the ISA Manager and the Investor (ISA terms and conditions). Income and gains generated by ISA investments are exempt from any further UK income tax as well as capital gains tax in the hands of the investor. There are two ISA components available; a stocks and shares ISA and a cash ISA. Marlborough Fund Managers Ltd only offer the stocks and shares component in the form of funds it manages although you may open a cash ISA with a different provider up to the limits detailed below. Each tax year you may open one stocks and shares ISA and one cash ISA only. You may also transfer existing ISAs from previous tax years between providers without affecting your current year s allowance. With Marlborough you can invest up to 11,280 for 2012/2013 in a stocks and shares ISA, providing you have not contributed to another stocks and shares ISA with another provider already in the tax year. The limits are also inclusive of any cash ISA you may hold in the tax year meaning the total you may invest in a stocks and shares ISA is as above less any amount invested in a cash ISA. The below illustration gives examples of the limits for cash and stocks and shares ISAs in the tax year 2012/2013: If you invest 11,280 in a stocks and shares ISA, you may not invest any money into a cash ISA in this tax year. If you have the maximum 5,640 in a cash ISA, you may invest up to 5,640 in a stocks and shares ISA in this tax year. If you invest 1,000 in a cash ISA, you may invest up to 10,280 in a stocks and shares ISA in this tax year. The maximum amount that you may invest in an ISA will increase by the rate of inflation (as measured by the Retail Price Index) each year. You may contact us or your financial adviser for the latest applicable limits. Anyone aged 18 or over may invest in an ISA, provided they are resident or ordinarily resident in the UK for tax purposes. This includes members of the armed forces, the Foreign Office and other Crown employees together with their spouses or those in a civil partnership overseas. How do I invest via a Marlborough Stocks and Shares ISA? You may invest by completing an ISA Application Form, which can be obtained from our website or by calling our Customer Support Team free on We are not able to accept deals over the telephone. Can I transfer an existing ISA to Marlborough? Yes. As well as opening a new ISA each tax year you may also transfer previous year s ISAs to a new provider. To transfer an existing ISA to Marlborough Fund Managers Ltd you must complete our ISA transfer form. You may also transfer a cash ISA to a stocks and shares ISA, either from a previous tax year or from the current tax year. Doing so does not affect your cash ISA allowance for the current tax year, provided you have no more than the maximum permitted at any time in the tax year. You may not transfer from stocks and shares ISAs to cash ISAs. How does tax affect my ISA? Any capital gains or income from investments in an ISA are free from income tax and CGT. If your fund pays interest distributions they are paid without deduction of income tax at 20%. When income is reinvested we will use the gross distribution to buy additional units/shares for you at the next valuation point after the payment date. If your fund pays dividend distributions they are paid net of a notional tax credit equivalent to a deduction of 10% of the gross dividend. This tax credit cannot be reclaimed within an ISA. Are there any additional risks associated with investing in a Marlborough ISA? The risks are the same as those associated with all stock market investments and with the specific fund(s) you choose. These can be found in the simplified prospectus above. In addition, it should be noted that the favourable tax treatment given to ISA s may not be maintained. The rates of and relief from taxation depend on your own circumstances and may change over time. Regular Savings ISA You may also invest in the funds by making regular, monthly contributions into an ISA. The minimum subscription for this is 100 per month and the maximum is 940 for 2012/2013 subject to the overall ISA investment limits. As with regular savings outside an ISA, you will be sent a statement showing your transactions twice each year. When you apply for regular savings within an ISA you do so by making a continuous application. This means that you will continue making contributions each year without needing to complete a new application form. If you wish to cancel your regular savings ISA or sell the units/shares you hold with us you will need to write to us with your instructions. You will also need to cancel the direct debit instruction with your bank. Your investment will be made at the next available valuation point in the same way as with a direct investment. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd,

13 How do I sell my Marlborough ISA? You may sell all or part of your ISA holding with Marlborough by writing to us, ensuring your instruction is signed, or by calling our Dealing Team free on We will send a cheque for the proceeds to you on the fourth business day after your units/shares are sold. If you wish to transfer your Marlborough ISA to another manager, the new manager will usually provide a form for you to complete and send to them. They will then instruct Marlborough to sell your holding and we will send a cheque for the proceeds to them. Can I withdraw my application? (Cancellation Rights) If you receive advice when you invest in an ISA with Marlborough we will give you 14 days in which to change your mind and cancel your investment. You will receive a letter from us detailing your cancellation rights. It is important to note that if you cancel an ISA transfer you may lose the tax exempt ISA status of your investment. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd,

14 These terms, together with the Application Form, form a legal agreement between you and Marlborough Fund Managers Ltd (the Account Manager) which sets out how your account will be operated. Definitions Account Manager Account Investments Application Form Associate Business Day Distribution Date FSA Fund Investor ISA ISA Holder ISA Manager ISA Regulations Manager Marlborough Marlborough Funds Nominee Stocks and Shares ISA Terms Transfer Form Units/Shares Year Marlborough Fund Managers Limited, who are approved by HM Revenue and Customs to be ISA Managers Units/shares purchased in a Marlborough unit trust or OEIC A Marlborough application form or transfer application form completed by the investor Any company legally associated with the Account Manager or a subsidiary of any such company (as defined in the Companies Act 1985) Any day that is a business day as defined in the Prospectus document of the relevant fund The date the Manager of the fund distributes income or notifies the holder of any accumulation income Financial Services Authority The unit trust or OEIC in which you have invested your account investments A person who invests in one of the Marlborough funds and in so doing opens a Stocks & Shares ISA or transfers into an ISA becoming therefore an ISA Holder A Marlborough Individual Savings Account governed by these Terms and Conditions and which is a Stocks & Shares ISA A person who qualifies under the terms of the Individual Savings Account Regulations 1998, as amended, to hold an ISA and has fulfilled the requirements to become so Marlborough Fund Managers Ltd The Individual Savings Account regulations 1998, as from time to time amended and in force Marlborough Fund Managers Ltd Marlborough Fund Managers Ltd Any authorised unit trust or OEIC managed by Marlborough Fund Managers Ltd A nominee name in which your holding will be held on the fund register A stocks and shares ISA making up the whole or part of an annual ISA entitlement These Terms and Conditions (as amended from time to time) together with the Application Form The form used to transfer your holding from one ISA Plan Manager to another Units or shares in a Marlborough unit trust or OEIC which may be held in an ISA account A tax year beginning on 6 April in any calendar year and ending on 5 April in the following year The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd,

15 1 The ISA Holder's offer to enter into the ISA contained in the completed Application Form/Transfer Form will, subject to the Regulations and provisions therein, be accepted by the ISA Manager on receipt. 2 The ISA will, subject to the Regulations, be managed by the ISA Manager in accordance with the ISA Holder's directions set out in the Application/Transfer Form under terms agreed in writing between the ISA Manager and the Investor. 3 You may invest one or more lump sums into your ISA during the Year subject to the Regulations. The initial investment or any additional lump sum contributions are subject to the minimum as specified in the Application Form. A cheque must accompany your Application Form. 4 An ISA can also be transferred from another ISA Manager (in whole or in part) subject to the Regulations. 5 The ISA Manager will accept a correctly completed ISA Application Form or ISA Transfer Form under a Power of Attorney or Curator Bonis provided that a sealed copy of the Power of Attorney or Court Appointment is received into the office of the ISA Manager. 6 The ISA Manager is not obliged to accept the ISA transfer. 7 After acceptance of correctly completed ISA Application Form by the ISA Manager, purchases of ISA lump sum investments will be carried out at the next valuation point as specified in the fund s Prospectus. Contract notes will be dispatched to ISA Holders not later than the Business Day immediately following any investment. 12 Only designated investments may be included within the ISA. 13 Marlborough Fund Managers can, as ISA Managers, only accept investments into Marlborough funds into a Stocks & Shares ISA. 14 The ISA Manager shall not advise on the suitability of investments for individual circumstances. If there is any doubt the ISA Holder should consult his or her Financial Adviser. 15 Documents evidencing title to ISA investments will be held by the ISA Manager or as the ISA Manager may direct. 16 The title to the ISA investments will be registered in the name of the ISA Holder and the ISA Manager s Nominee. 17 At the written request of the investor and within the time stipulated by the Investor an ISA or part of an ISA with all rights and obligations of the parties to it may be transferred to another ISA Manager in accordance with the ISA Regulations. 18 Where an ISA is transferred either at the request of the Investor or because the previous Plan Manager is no longer offering or able to offer ISAs, all the tax benefits are preserved. 19 The Investor may at any time, by notice in writing to the ISA Manager terminate the ISA. On the instructions of the Investor and within the time stipulated by the Investor, all or part of the investments held in the ISA and proceeds arising from those investments shall be transferred or paid to the Investor. 8 After acceptance of an ISA Transfer Form by the ISA Manager the form will be forwarded to the previous ISA Manager within the period set by the current legislation. In the case of an ISA transfer, the ISA Holder can in accordance with current legislation stipulate the date on which he or she wishes the holding or part of a holding to be sold by the previous ISA Manager so as to avoid exit or penalty charges if he or she so wishes. 9 On receipt of the proceeds of the sale of units/shares from the previous ISA Manager purchases of the units/shares in the Marlborough fund(s) will be carried out at the next valuation point as specified in the fund s Prospectus. Contract notes will be dispatched to ISA Holders not later than the Business Day immediately following any investment. 10 In the case of ISA transfers we reserve the right to reject income distributions paid by your previous plan manager after the date of transfer where these are 20 or less. In these circumstances the distribution cheque will be returned to your previous plan/account manager for reissue direct to you. 20 If the ISA is terminated or transferred the ISA Manager shall make or cause to be made such payments, subject to any reasonable retentions or deductions which the ISA Manager may be entitled or bound to make for any purpose, including recovery of expenses properly incurred by the ISA Manager. 21 Following the appointed date to sell or transfer an ISA a contract note will be sent to the ISA Holder or the new ISA Manager no later than the Business Day following that on which the units/shares were sold. Redemption proceeds will be remitted within four Business Days after the date on the contract note. If the ISA Manager has not previously been notified by an ISA Holder of a change of name or address, this may delay remittance of redemption proceeds. When the proceeds are received by the ISA Holder, these are no longer part of the ISA Account. 22 Purchasers of new ISAs may be entitled to cancellation rights under the Financial Services Authority s Conduct of Business Rules if they have received investment advice. Where applicable you will have the right to cancel your account within 14 days after receiving notice of your cancellation rights from the ISA 11 The ISA investments will be and must remain in the Manager. If you exercise your right to cancel, any beneficial ownership of the Investor and must not be money paid to the ISA Manager will be repaid (subject used as security for a loan. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd,

16 to deduction of the amount, if any, by which the value of your ISA Investment has fallen). 23 It is important to note that if you cancel an ISA transfer you may lose the tax exempt ISA status of your investment. 24 Charges will be as those specified in the Simplified Prospectus. 25 On the appropriate distribution dates ISA Holders who have opted to receive income by cheque will receive income payments (together with a Short Report) which will consist of the distributions received from the fund. This amount will be reinvested if this is your option on the application form. ISA Holders who have selected accumulation units/shares will receive a Manager's Report and details of the income accumulation on the appropriate Distribution Date. There will be no charges added. Details of the units/shares acquired and the cost of them will be provided on the usual half yearly statements issued as at 5 April and 5 October each year. 26 The ISA Manager shall be entitled, by notice in writing to the ISA Holder, to terminate an ISA if, in their absolute discretion, the ISA Manager considers it impracticable to continue that ISA or if the ISA Holder is in breach of any provision thereof. Any termination of an ISA by the ISA Manager shall not entitle the relevant ISA Holder to any compensation or damage under this clause. Termination of an ISA will be without prejudice to the completion of incomplete transactions undertaken as part of that ISA. 27 On termination of an ISA, the relevant investments will be sold at the prevailing price or transferred in specie into the account holder s name in the same fund. 28 The ISA Manager will notify the ISA Holder if, by reason of any failure to satisfy the provisions of the ISA Regulations, an ISA has, or will, become void. 29 The ISA Manager will report to ISA Holders twice yearly at 5 April and 5 October with details of the number and value of investments held within their respective ISA, the amounts of any distributions and tax reclaims deriving thereon and details of all transactions undertaken within the ISA during the preceding half year. The statements will not include any measure of the ISAs investment performance. 30 The ISA Manager shall exercise due care and diligence in the management of all ISAs but subject to the ISA Regulations and to Sections 71 and 150 of the Financial Services and Markets Act 2000, the ISA Manager shall not be liable to ISA Holders for any costs, claims, demands, losses of expenses suffered by or arising from any depreciation in the value of the ISAs or for acts or omissions of the ISA Manager or of any third party whether or not that third party is acting as agent of the ISA Manager, except in so far as the same arises as a result of negligence or wilful default. 31 Any instructions from ISA Holders shall be sent in writing to the ISA Manager at the address specified herein. 32 The ISA Manager will satisfy himself that any person to whom he delegates any of his functions or responsibilities under the terms agreed with the investor is competent to carry out those functions and responsibilities 33 The Investor will automatically receive a copy of the annual/interim short reports in respect of units/shares which are held directly in the ISA. 34 The ISA Manager is under an obligation (subject to any provisions made by or under any other enactment) if the investor so elects, to arrange for the Investor to be able to attend and vote at unitholder/shareholder meetings and to receive any information issued to unitholders/shareholders which is in addition to the annual report and accounts which are sent to the unitholders/shareholders on the Distribution Dates. 35 The ISA Manager is regulated by the Financial Services Authority in the conduct of investment business, which includes the business of acting as ISA Manager. An ISA Holder should send to the ISA Manager (marked for the attention of the Compliance Officer) any complaints he/she may have in relation to his/her ISA and its operation. ISA Holders have the right to complain directly to the Financial Ombudsman Service. Details of ISA Account Holders rights in the event of the ISA Manager being unable to meet any of their liabilities to ISA Holders may be obtained from the ISA Manager's Compliance Officer. 36 Subject to the Regulations, the ISA Manager may, in their absolute discretion, alter any of the terms of the ISA from time to time. ISA Holders will be notified in advance of any significant changes. 37 For the purposes of constituting a quorum at any meeting of unitholders/shareholders, the ISA Manager shall be entitled to count holdings of units/shares in collective schemes operated by the Manager. 38 If an ISA Holder carries out any transactions in his/her ISA through an Independent Financial Adviser, the ISA Manager will treat that IFA as the ISA Holder's agent and may disclose full details of the ISA to any such agent and may accept instructions from any such agent in respect of the ISA. 39 Commission can be paid to IFAs where indicated on the application form. The normal maximum rate of initial commission is 3%. Renewal commission may also be paid at levels to be agreed between the IFA and the ISA Manager. 40 Governing Law. The interpretation of these Terms and Conditions and the accompanying documentation will be governed by the Laws of England and Wales, including all questions of validity and capacity and in particular the relationship between the parties hereto. The address for sending your written instructions, cheques and application forms is: Marlborough Fund Managers Ltd,