IMPORTANT: IF YOU ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS PROSPECTUS YOU SHOULD CONSULT YOUR PROFESSIONAL ADVISER.

Transcription

1 IMPORTANT: IF YOU ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS PROSPECTUS YOU SHOULD CONSULT YOUR PROFESSIONAL ADVISER. Maitland Institutional Services Ltd, the Manager of the Scheme, is the person responsible for the information contained in this Prospectus. To the best of its knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained herein does not contain any untrue or misleading statement or omit any matters required by the Collective Investment Schemes Sourcebook to be included in it. Maitland Institutional Services Ltd accepts responsibility accordingly. PROSPECTUS OF THE MI DISCRETIONARY UNIT FUND This document constitutes the Prospectus for The MI Discretionary Unit Fund which has been prepared in accordance with the Collective Investment Schemes Sourcebook. This Prospectus is dated, and is valid as at 5 January Copies of this Prospectus have been sent to the Financial Conduct Authority and the Trustee.

2 1 INTRODUCTION This document, along with Appendix 1, constitutes the Prospectus for The MI Discretionary Unit Fund ( the Scheme ) (an authorised unit trust) which has been prepared in accordance with the rules contained in the Collective Investment Schemes Sourcebook ( COLL Sourcebook ) which forms part of the Specialist Sourcebooks of the FCA Handbook of Rules and Guidance ( the Regulations ) and complies with the requirements of of the COLL Sourcebook. A copy has been delivered to Northern Trust Global Services Limited ( the Trustee ) and to the Financial Conduct Authority ( FCA ). Maitland Institutional Services Ltd, the manager of the Scheme ( Manager ), is the person responsible for the information contained in this Prospectus. The Manager has taken all reasonable care to ensure that the information contained in this document is accurate as at the date of issue. Existing and intending holders should note that nothing contained herein can be relied upon as giving a binding indication of future policies to be adopted either in respect of the Scheme or the management and administration thereof. The Scheme is authorised by the FCA (effective 29 April 1988) under the Financial Services and Markets Act 2000 ( the Act ) as a UCITS scheme (as defined in the COLL Sourcebook). The distribution of this Prospectus and the offering of units in certain jurisdictions may be restricted. Persons into whose possession this Prospectus comes are required by the Scheme to inform themselves about and to observe any such restrictions. This Prospectus does not constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Units in the Scheme may not be offered or sold in the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia or offered or sold to US Persons as defined in rule 902 of regulation 5 of the United States Securities Act Potential investors should not treat the contents of this Prospectus as advice relating to legal, taxation, investment or any other matters and are recommended to consult their own professional advisers concerning the acquisition, holding or disposal of units. This Prospectus is based on information, law and practice at the date hereof. Purchases must be made on the basis of the information contained in the most recently published Prospectus and supplementary documentation, including key investor information documents, supplementary information documents and the latest reports when issued, which are available from the registered office of the Manager. Investors should check with the Manager that this is the most recently published version of the Prospectus. Obligations have been imposed on financial sector professionals to prevent the use of funds such as The MI Discretionary Unit Fund for money-laundering purposes. Within this context a procedure for the identification of subscribers is required. That is, the application form of a subscriber must be accompanied, in the case of individuals, by a copy of a passport or identification card and/or in the case of legal entities, a copy of its statutes and an extract from its commercial register (in the case of a non-uk entity any such copy must be certified to be a true copy by one of the following authorities: ambassador, consulate, notary, local police). Any such information provided is collected for money-

3 2 laundering compliance purposes only. These specific requirements may be waived by the Manager where other suitable evidence is available which in its sole judgement allows the Manager to cover its obligations under money-laundering legislation. Neither the Manager nor any of its officers, representatives or advisers, shall be regarded as giving any advice, representation or warranty (express or implied) to any person in connection with the proposals contained in this Prospectus. No part of this Prospectus may, be reproduced, stored in a retrieval system or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the Manager. Overseas transfers The Manager may transfer unitholders personal information to countries located outside the European Economic Area (the EEA ). This may happen when the Manager s servers, suppliers and/or service providers are based outside the EEA. The data protection laws and other laws of these countries may not be as comprehensive as those that apply within the EEA. In these instances the Manager will take steps to ensure that unitholders privacy rights are respected. Details relevant to a unitholder may be provided upon request. The Trustee Except for the information about itself as Trustee for which the Trustee is responsible, the Trustee is not responsible for the information contained in this Prospectus and accordingly does not accept any responsibility for such information under the Regulations or otherwise Important: If you are in any doubt about the contents of this Prospectus you should consult your Financial Adviser.

4 3 MANAGEMENT AND ADMINISTRATION Regulatory Status The Manager and the Investment Manager are authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS. The Trustee is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. With effect from 1 April 2016, the Manager changed its name from Phoenix Fund Services (UK) Ltd to Maitland Institutional Services Ltd. This does not affect the ongoing management of the Scheme. Manager General The Manager is Maitland Institutional Services Ltd which is a private company limited by shares incorporated in England and Wales on 18 May The executive directors of the Manager are:- P J Foley-Brickley S Georgala D Jones R W Leedham R Ackermann No director, other than S Georgala, is engaged in any significant business activity not connected with the business of the Manager or other Maitland Institutional Services subsidiaries. S Georgala also holds directorships of other companies within the Maitland Group, and is engaged in significant activities within these companies. Registered Office: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Principal Place of Business: Share Capital: Ultimate Holding Company: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW It has a share capital of 950,000 issued and paid up. Maitland International Holdings PLC, a company incorporated in Malta. The Manager is responsible for managing and administering the Scheme s affairs in compliance with the COLL Sourcebook. The Manager may delegate its management and administration functions, but not responsibility, to third parties, including associates subject to the rules in the COLL Sourcebook. It has therefore delegated to the Investment Manager the function of managing and acting as the investment manager for the investment and reinvestment of the assets of the Scheme (as further

5 4 explained below). The Manager has, in terms of a separate distribution agreement, delegated to the Investment Manager the responsibilities for distribution and marketing of the units (hereafter the Distributor ), and pursuant to which the Distributor has the right to appoint sub-distributors upon terms acceptable to the Manager. Terms of Appointment The appointment of the Manager has been made under the terms of a trust deed, as described below. A copy of the trust deed is available to investors and will be sent on request. Pursuant to the trust deed, the Manager manages and administers the affairs of the Scheme in accordance with the Regulations, the Trust Deed of Incorporation and this Prospectus. Subject to certain limited exceptions set out in the Regulations, the Manager may retain the services of any person to assist it in the performance of its functions. Details of the fees payable to the Manager are set out below. The Manager is under no obligation to account to the Scheme for any profit it makes in connection with any business similar to, or in competition with, the Scheme. The Manager is the manager of certain authorised unit trusts, open-ended investment companies and alternative investment funds, details of which are set out in Appendix 2. The Trustee and Depositary General The Trustee of the Scheme is Northern Trust Global Services Limited, a private company limited by shares, incorporated in England and Wales on 11 June 2003 with registered number , having its registered and head office at 50 Bank Street, London, E14 5NT, United Kingdom. The ultimate holding company of the Trustee is Northern Trust Corporation, a company which is incorporated in the State of Illinois, United States of America. Northern Trust Global Services Limited is also the Depositary of the Scheme for the purpose of the UCITS Directive (No. 2009/65/EC) as amended. Duties of the Depositary The Depositary is responsible for the safekeeping of all the Scheme Property of the Scheme and has a duty to take reasonable care to ensure that the Scheme is managed in accordance with the Trust Deed and the provisions of the COLL Sourcebook relating to the pricing of, and dealing in, Units and relating to the income and the investment an borrowing powers of the Scheme. The Depositary is also responsible for monitoring the cash flows of the Scheme, and must ensure that certain processes carried out by the Manager are performed in accordance with the FCA Handbook, this Prospectus and the Trust Deed. Delegation of Safekeeping Functions

6 5 Subject to the Regulations, the Depositary has full power under the Depositary Agreement to delegate (and authorise its delegate to sub-delegate) any part of its safekeeping duties as Depositary. It has delegated custody services to The Northern Trust Company, London Branch. The Custodian has sub-delegated custody services to sub-custodians in certain markets in which the Company may invest. A list of sub-custodians is given in Appendix 3. Investors should note that the list of subcustodians is updated only at each Prospectus review. An updated list of sub-custodians is maintained by the Manager at Updated Information Up to date information regarding (i) the Depositary s name, (ii) the description of its duties and any conflicts of interest that may arise between the Fund, the Unitholders or the Manager and the Depositary, and (iii) the description of any safekeeping functions delegated by the Depositary, the description of any conflicts of interest that may arise from such delegation, and the list showing the identity of each delegate and sub-delegate, will be made available to Unitholders on request. Terms of Appointment The appointment of the Depositary has been made under an agreement between the Manager and the Depositary (the Depositary Agreement ). The Depositary Agreement is terminable on receipt of six months written notice given by either party. The Depositary may not retire voluntarily except on the appointment of a new depositary. The Depositary Agreement contains provisions indemnifying the Depositary and limiting the liability of the Depositary in certain circumstances. The Depositary and the Custodian will receive a fee from the Scheme Property of the Sub-funds as detailed under the heading Trustees Fees and in the Section Valuation of Property, Charges and Distributions. The Investment Manager General The Manager has appointed the Investment Manager, Thornbridge Investment Management LLP, to provide investment management services to the Manager. The Investment Manager is authorised and regulated by the Financial Conduct Authority. The Investment Manager s registered office is at 1 Fore Street, London, EC2Y 9DT. The principal activity of the Investment Manager is the provision of investment management services. Terms of Appointment The terms of the Investment Management Agreement between the Manager and the Investment Manager include the provision of investment management in accordance with the investment

7 6 objectives of the Scheme, the purchase and sale of investments and on the exercise of voting rights relating to such investments. The Investment Manager has authority to make decisions on behalf of the Manager on a discretionary basis in respect of day to day investment management of the Scheme Property including authority to place purchase orders and sale orders with regulated dealers and preparation of the Investment Manager's report half yearly for inclusion in the Scheme's Report for circulation to unitholders. The Agreement may be terminated by either party on not less than six months' written notice or earlier upon the happening of certain specified events, or immediately if the Manager considers that it is in the interests of the unitholders to do so. The Investment Manager is entitled to a fee out of that paid to the Manager. The Investment Manager will not be considered as a broker fund adviser under the FCA Handbook in relation to the Scheme. The Registrar General The Manager acts as registrar to the Company. The registered office of the Registrar is Springfield Lodge, Colchester Road, Chelmsford, Essex, CM2 5PW. The register is kept and maintained at Springfield Lodge, Colchester Road, Chelmsford, Essex, CM2 5PW. Register of unitholders The Register of unitholders will be maintained by the Registrar at the address of its office as noted above, and may be inspected at that address or the principal place of business of the Manager during normal business hours by any unitholder or any unitholder s duly authorised agent. The Auditors The auditors of the Company are KPMG LLP, whose address is 15 Canada Square, London E14 5GL. CONSTITUTION AND OBJECTIVES OF THE SCHEME The name of the Scheme is The MI Discretionary Unit Fund. The Scheme was authorised on 8th August 1963 and is a UCITS Scheme with Product Reference Number It was established by Trust Deed dated 8th August 1963 (as amended by Supplemental Deeds) (the Trust Deed ) and the duration of the Scheme is unlimited. The base currency of the Scheme is pounds sterling. Unitholders are not liable for the debts of the Scheme.

8 7 INVESTMENT OBJECTIVE The investment objective of the Scheme is to provide maximum appreciation with above average yield for a growth fund. INVESTMENT POLICY It is envisaged that the Scheme will normally be fully invested subject to market considerations. The Scheme is to concentrate on smaller and medium sized UK companies. The policy does not envisage hedging either against price or currency fluctuations. Smaller and medium sized companies display characteristics of lower liquidity and investors should therefore recognise that the Manager reserves the right to control the rate of investment of new monies. The consequence of this is that from time to time the Scheme may hold liquidity in the range of 0% 10%. INVESTMENT LIMITS The Manager invests the property of the Scheme with the aim of achieving the investment objective and policy set out above subject to the limits on investment set out in the COLL Sourcebook. These limits are summarised below: Generally the Scheme will invest in transferable securities which are approved securities. An approved security is a transferable security that is admitted to official listing in an EEA State or is traded on or under the rules of an eligible securities market. 1. Transferable Securities 1.1 A transferable security is an investment falling within article 76 (Shares etc), article 77 (Instruments creating or acknowledging indebtedness), article 77A (an alternative debenture), article 78 (Government and public securities), article 79 (Instruments giving entitlement to investments) and article 80 (Certificates representing certain securities) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the Regulated Activities Order ). 1.2 An investment is not a transferable security if the title to it cannot be transferred, or can be transferred only with the consent of a third party. 1.3 In applying paragraph 1.1 above to an investment which is issued by a body corporate, and which is an investment falling within articles 76 (Shares, etc), 77 (Instruments creating or acknowledging indebtedness), or 77A (an alternative debenture) of the Regulated Activities Order, the need for any consent on the part of the body corporate or any members or debenture holders of it may be ignored. An investment is not a transferable security unless the liability of the holder of it to contribute to the debts of the issuer is limited to any amount for the time being unpaid by the holder of it in respect of the investment.

9 8 1.4 The Scheme may invest in a transferable security only to the extent that the transferable security fulfils the following criteria: the potential loss which the Scheme may incur with respect to holding the transferable security is limited to the amount paid for it; its liquidity does not compromise the ability of the Manager to comply with its obligation to redeem units at the request of any qualifying unitholder under the FCA Handbook; reliable valuation is available for it as follows: in the case of a transferable security admitted to or dealt in on an eligible market, where there are accurate, reliable and regular prices which are either market prices or prices made available by valuation systems independent from issuers; in the case of a transferable security not admitted to or dealt in on an eligible market, where there is a valuation on a periodic basis which is derived from information from the issuer of the transferable security or from competent investment research; appropriate information is available for it as follows: in the case of a transferable security admitted to or dealt in on an eligible market, where there is regular, accurate and comprehensive information available to the market on the transferable security or, where relevant, on the portfolio of the transferable security; in the case of a transferable security not admitted to or dealt in on an eligible market, where there is regular and accurate information available to the Manager on the transferable security or, where relevant, on the portfolio of the transferable security; it is negotiable; and its risks are adequately captured by the risk management process of the Manager. 1.5 Unless there is information available to the Manager that would lead to a different determination, a transferable security which is admitted to or dealt in on an eligible market shall be presumed: not to compromise the ability of the Manager to comply with its obligation to redeem units at the request of any qualifying unitholder; and to be negotiable.

10 9 1.6 Closed end funds constituting transferable securities 1.7 A unit or a share in a closed end fund shall be taken to be a transferable security for the purposes of investment by the Scheme, provided it fulfils the criteria for transferable securities set out in paragraph 1.3 and either: where the closed end fund is constituted as an investment company or a unit trust: it is subject to corporate governance mechanisms applied to companies; and where another person carries out asset management activity on its behalf, that person is subject to national regulation for the purpose of investor protection; or Where the closed end fund is constituted under the law of contract: it is subject to corporate governance mechanisms equivalent to those applied to companies; and it is managed by a person who is subject to national regulation for the purpose of investor protection. 2. Transferable securities linked to other assets 2.1 The Scheme may invest in any other investment which shall be taken to be a transferable security for the purposes of investment by the Scheme provided the investment: fulfils the criteria for transferable securities set out in 1.3 above; and is backed by or linked to the performance of other assets, which may differ from those in which the Scheme can invest. 2.2 Where an investment in 2.1 contains an embedded derivative component, the requirements of this section with respect to derivatives and forwards will apply to that component. 3. Transferable securities generally to be admitted or dealt in on an Eligible Market 3.1 Transferable securities and approved money-market instruments held within the Scheme must be: admitted to or dealt in on an eligible market as described in 4.3.1; or dealt in on an eligible market as described in 4.3.2; or admitted to or dealt in on an eligible market as described in 4.4; or recently issued transferable securities provided that:

11 the terms of issue include an undertaking that application will be made to be admitted to an eligible market; and such admission is secured within a year of issue. 3.2 However, the Scheme may invest no more than 10% of its Property in transferable securities other than those referred to in Eligible markets regime: purpose and requirements 4.1 To protect unitholders, the markets on which investments of the Scheme are dealt in or traded on should be of an adequate quality ( eligible ) at the time of acquisition of the investment and until it is sold. 4.2 Where a market ceases to be eligible, investments on that market cease to be approved securities. The 10% restriction in 3.2 above on investing in non approved securities applies and exceeding this limit because a market ceases to be eligible will generally be regarded as an inadvertent breach. 4.3 A market is eligible for the purposes of the rules if it is: a regulated market as defined in the FCA Handbook; or a market in an EEA State which is regulated, operates regularly and is open to the public. 4.4 A market not falling within paragraph 4.3 above is eligible for the purposes of COLL 5 if: the Manager, after consultation with and notification to the Trustee, decides that market is appropriate for investment of, or dealing in, the property of the Scheme; the market is included in a list in the prospectus; and the Trustee has taken reasonable care to determine that: adequate custody arrangements can be provided for the investment dealt in on that market; and all reasonable steps have been taken by the Manager in deciding whether that market is eligible. 4.5 In paragraph 4.4.1, a market must not be considered appropriate unless it is regulated, operates regularly, is recognised by an overseas regulator, is open to the public, is adequately liquid and has adequate arrangements for unimpeded transmission of income and capital to or for the order of unitholders. 4.6 The eligible securities markets for the Scheme are markets established in the United Kingdom on which transferable securities admitted to official listing in the United Kingdom are dealt in or traded. Specifically the Manager and Trustee in consultation have decided that the AIM market is an eligible securities market.

12 11 5. The Manager s investment policy may mean that at times it is appropriate not to be fully invested but to hold cash or near cash. This will only occur when the Manager reasonably regards it as necessary to enable units to be redeemed or for the efficient management of the Scheme in accordance with its objectives or a purpose which may reasonably be regarded as ancillary to the investment objective of the Scheme. 6. The Manager shall ensure that, taking into account the investment objectives and policy of the Scheme, the property of the Scheme aims to provide a prudent spread of risk. Particular requirements as to this spread of risk are set out below. 7. No more than 5 per cent in value of the property of the Scheme may be invested in transferable securities (other than Government and other public securities) issued by any one issuer. As an exception to this, up to 10 per cent in value of the property of the Scheme may be invested in such securities issued by the same issuer, if the value of all such holdings combined does not exceed 40 per cent of the value of the property of the Scheme (covered bonds need not be taken into account for the purposes of applying the limit of 40%). 8. Not more than 20% in value of the property of the Scheme may consist of transferable securities issued by the same group. 9. Up to 35 per cent of the property of the Scheme may be invested in Government and other public securities issued by any one issuer. Subject to this restriction, there is no limit on the securities issued by any one issuer or of any one issue. 10. The Scheme may not hold transferable securities (other than debt securities) which: 10.1 do not carry a right to vote on any matter at a general meeting of the body corporate that issued them, and 10.2 represent more than 10 per cent of those securities issued by that body corporate. 11. The Scheme must not hold more than 10 per cent of the debt securities issued by any single issuing body. 12. The Manager must not acquire or cause to be acquired for the Scheme of which it is the Manager transferable securities issued by a body corporate and carrying rights to vote (whether or not on substantially all matters) at a general meeting of that body corporate if: 12.1 immediately before the acquisition, the aggregate of any such securities held for the Scheme taken together with any such securities already held for other authorised unit trusts of which it is also the Manager, gives the Manager power significantly to influence the conduct of business of that body corporate; or 12.2 the acquisition gives the Manager that power. 13. For the purposes of this paragraph the Manager is to be taken to have power significantly to influence the conduct of business of a body corporate if it can, because of the transferable securities held for all of the authorised units trusts of which it is the Manager,

13 12 exercise or control the exercise of 20% or more of the voting rights in that body corporate (disregarding for this purpose any temporary suspension of voting rights in respect of the transferable securities of that body corporate). 14. Up to 5 per cent in value of the property of the Scheme may consist of warrants. See also paragraph 16 below. 15. Securities on which any sum is unpaid may be held provided that it is reasonably foreseeable that the amount of any existing and potential call for any sum unpaid could be paid by the Scheme at any time when the payment is required without contravening the Regulations. 16. No investment in other collective investment schemes will be made and warrants will only be held if there is an investment in the underlying company. 17. A potential breach of any of these limits does not prevent the exercise of rights conferred by investments held by the Scheme if the consent of the Trustee is obtained in writing but, in the event of a consequent breach, the Manager must then take such steps as are necessary to restore compliance with the investment limits as soon as practicable having regard to the interests of unitholders. 18. The Scheme will not have an interest in any immovable property or tangible moveable property. 19. Borrowing, Hedging and Efficient Portfolio Management 19.1 The Trustee may, on the instructions of the Manager and subject to the Regulations, borrow money from an eligible institution or an approved bank (each as defined in the Glossary to the FCA Handbook of Rules and Guidance ( the Glossary ) for the use of the Scheme on terms that the borrowing is to be repayable out of the property of the Scheme No sum shall be borrowed or hedging transaction entered into if, at the date it is proposed to borrow the sum, that sum, together with all other sums borrowed and not repaid, would, if they became immediately repayable, require more than 10% of the property to be utilized. The period of borrowing shall not exceed 3 months without the prior consent of the Trustee No transactions will be entered into for the purposes of efficient portfolio management or stocklending. IS THE SCHEME A SUITABLE INVESTMENT? If your investment objectives include achieving an exposure to UK Smaller companies, then this may be a suitable investment. If you have any doubts, please seek professional advice.

14 13 Typical Investor Profile The Scheme may be suitable for you if you consider collective investment schemes to be a convenient way of participating in investment markets and wish to seek to achieve defined investment objectives. You should have experience with or understand investments which place capital at risk, and must be able to accept losses. The Scheme may be suitable for you if you can set aside your capital for at least five years. If you are uncertain about whether this product is suitable for you, please contact a professional adviser. ACCOUNTING DATES The accounting reference date is 30th April with an interim accounting period to 31st October.

15 14 WHAT HAS BEEN THE PERFORMANCE? The table set out below shows performance over the past five years. accumulation shares, on a bid to bid basis. The data relates to Please remember that past performance can not be a guide to the future performance of the Scheme. The value of units and the income from them can fall as well as rise and investors may not get back the full amount originally invested. The impact of the preliminary charge can be material on the performance of your investment. Data source: Maitland Institutional Services Ltd 31/10/2014 TO 31/10/2013 TO 31/10/2012 TO 31/10/2011 TO 31/10/2010 TO 31/10/ /10/ /10/ /10/ /10/ % 5.06% 38.84% 20.36%% 8.73% CHARACTERISTICS OF UNITS IN THE SCHEME Types of units The Trust Deed permits the issue of both accumulation and income units. Currently income and accumulation units are available. An income unit represents one undivided share in the property of the Scheme and an accumulation unit represents an increasing number of undivided shares in the property of the Scheme. Each undivided share ranks pari passu with the other undivided shares in the Scheme. Unitholders are entitled to participate in the property of the Scheme and the income from that property in proportion to the number of undivided shares in the Scheme represented by the units held by them. A unitholder may convert his holding in either type by request to the Manager. Entitlement of units as to Income Allocations of income are made in respect of the income available for allocation in each accounting period. Each Income unit attracts income on the basis of its respective share of property and this is distributed to unitholders at the distribution dates. Each Accumulation unit attracts income on the basis of its respective share of property and this becomes part of the capital property of the Scheme at the accounting dates and is reflected in the price of the unit.

16 15 If a distribution remains unclaimed for a period of six years after it has become due it will be forfeited and will revert to the capital property of the Scheme. The amount available for distribution in any accounting period is calculated by taking the aggregate of the income received or receivable for the account of the Scheme in respect of that period, and deducting the aggregate of the Manager s and Trustee s remuneration and other payments properly paid or payable out of the income account in respect of that accounting period and adding the Manager s best estimate of any relief from tax on that remuneration and those other payments. The Manager then makes such other adjustments as it considers appropriate (and after consulting the auditors as appropriate) in relation to taxation, the proportion of the prices received or paid for units that is related to income (taking into account any provisions in the Trust Deed relating to income equalisation), potential income which is unlikely to be reduced until 12 months after the income allocation date, income which should not be accounted for on an accrual basis because of lack of information as to how it accrues, transfers between the income and capital account and other matters. In respect of the interim distribution, the Manager reserves the discretion to distribute any amount up to and including the maximum distributable amount. Other Characteristics Title to units will be evidenced by entries in the register of unitholders. Bearer shares are not issued. The nature of the right represented by units is that of beneficial interest under a trust. Meeting of Holders and Voting Rights A meeting of unitholders duly convened and held may, by extraordinary resolution, require, authorise or approve any act, matter or document in respect of which any such resolution is required or expressly contemplated by the Regulations, but shall not have any other powers. Unitholders will receive at least 14 days written notice of any meeting of unitholders and are entitled to be counted in the quorum and vote at any such meeting either in person or by proxy or in the case of a body corporate by a duly authorised representative. The quorum for any a meeting is two unitholders, present in person or by proxy. At any meeting of unitholders, on a show of hands every unitholder who (being an individual) is present in person or (being a corporation) is present by its representative properly authorised in that regard, shall have one vote. On a poll, the voting rights for each unit must be the proportion of the voting rights attached to all of the units in issue that the price of the unit bears to the aggregate price or price of all of the units in issue. For joint holders, the vote of the most senior unitholder who votes must be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority must be determined by the order in which the names stand in the register of unitholders. A unitholder entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way. Except where an extraordinary resolution is specifically required or permitted, any resolution of unitholders will be passed by a simple majority of votes validly cast at a general meeting of unitholders. To be passed an extraordinary resolution must be carried by a majority of not less than 75 per cent of the votes cast at a meeting.

17 16 The Manager is only entitled to be counted in a quorum and vote at a meeting (and any adjournment thereof) in respect of units which it holds on or on behalf of or jointly with a person who, if himself the registered unitholder would be entitled to vote and from whom they have received voting instructions. Associates of the Manager are entitled to be counted in the quorum but are only entitled to vote in respect of units held by them on behalf of or jointly with a person who if himself the registered holder would be entitled to vote and from whom they have received voting instructions. If after a reasonable time from the time of the start of the meeting a quorum is not present, the meeting, if convened at the request of unitholders, must be dissolved, and in any other case must stand adjourned to a time and day which is seven or more days later. If at an adjourned meeting a quorum is not present after a reasonable time from the time of the start of the meeting, one person entitled to be counted in a quorum present at the meeting shall constitute a quorum. Unless any unit in the Scheme is a participating security, in the context of despatch of notice, unitholders means the persons who were entered on the register as at a cut off date selected by the Manager which is a reasonable time before notices of the relevant meeting are sent out. Where any unit is a participating security a unitholder means a person entered on the register at the close of business on a day to be determined by the Manager which must not be more than 21 days before the notices of the meeting are sent out. Unless any unit in the Scheme is a participating security, in the context of voting, unitholders means the persons who were entered on the register of holders at a time to be determined by the Manager and stated in the notice of meeting which must not be more than 48 hours before the time fixed for the meeting. Where every unitholder at a general meeting is prohibited under COLL 4.4.8R of the COLL Sourcebook from voting, it shall not be necessary to convene a unitholder meeting but a resolution may, with the prior written agreement of the Trustee, be passed with the written consent of unitholders representing 50 per cent or more, or for an extraordinary resolution, 75 per cent or more, of the units in issue. Investment Risks General The investments of the Scheme are subject to normal market fluctuations and other risks inherent in investing in securities. There can be no assurance that any appreciation in the value of investments will occur. The price of units and any income can fall as well as rise and the value of any unitholder s investment may fall below the original cost of the investment. The existence of the preliminary charge means that any unitholder disposing of his units within a short period of purchase may suffer loss. There is no certainty that the investment objective of the Scheme will actually be achieved and no warranty or representation is given to this effect. The level of any yield for the Scheme may be subject to fluctuations and is not guaranteed.

18 17 Market risk The Scheme will be diversified, however, the underlying investments of the Scheme will be subject to normal market fluctuations and to the risks inherent in investment in transferable securities. The Scheme invests in equities which are inherently more volatile than cash investments. The Scheme invests in a sector of the U.K. Stock market which is subject to greater volatility than the market as a whole. The Scheme also invests in the Alternative Investment Market (AIM), which is subject to substantially greater volatility than the market as a whole. Liquidity In extreme market conditions it may be difficult for the Scheme to realise an investment at short notice without suffering a discount to market value. In such circumstances, the investor may suffer a delay in realising his investment. Depending on the types of assets the Scheme invests in, there may be occasions where there is an increased risk that a position cannot be liquidated in a timely manner at a reasonable price. Tax Tax laws currently in place may change in the future which could affect the value of your investments. Inflation and interest rates The real value of any returns that a unitholder may receive from the Scheme could be affected by interest rates and inflation over time. The units do not have any inherent inflation protection and their success or failure is dependent on the investment environment and any future changes in it. Custody Where the assets of the Scheme are held in custody, there may be a risk of loss that could result from the insolvency, negligence or fraudulent action of a custodian or sub-custodian. ISSUE & REDEMPTION OF UNITS IN THE SCHEME Dealing Times The Manager will be available to receive requests for the issue or redemption of units from 8.30am to 4.30pm on Mondays to Fridays (except Bank Holidays) for the Valuation Point at 10:00am on each business day. Requests for issues or redemption received before 10:00am on a particular dealing

19 18 day will be dealt at the 10:00am Valuation Point. Requests received after 10:00am will be held over until the next following dealing day. Procedure for Dealing The procedure for dealing in units will be to submit orders either by telephone or by post. A contract note will be issued in respect of purchases no later than the next business day following the relevant valuation point at which the purchase is effected. Payment for purchases of units is due immediately and should be made by return of post on receipt of the contract note. Certificates will not be issued on the issue of units. Ownership of units is evidenced by entry on the register of unitholders. Payment for redemption of units will be made by the Manager within four days of receipt of a stock transfer form or if required other correct documentation (i.e. in the case of an estate a certified copy of probate etc). Where a unitholder requests a redemption of units representing not less than 5% of the value of the property of the Scheme, that unitholder may receive, in place of payment for the units in cash, scheme property which has either been chosen by the Manager by a notice of election on the unitholder or has been requested by the unitholder. This is known as in specie redemption. At present, transfer of title by means of electronic communication is not accepted. For postal applications payment in full must accompany the instruction. At the Manager s discretion, payment for large purchases of units may be made by telegraphic transfer. The Manager, at its discretion, has the right to cancel a purchase deal if settlement is materially overdue and any loss arising on such cancellation shall be the liability of the application. Late Settlement Charge The Manager may charge 50 each time a trade is not fulfilled by settlement date. The Manager reserves the right to apply interest charges at 2% above the Bank of England Base Rate on the value of any settlement received later than the settlement date. No interest will be paid on funds held prior to investment. Units that have not been paid for cannot be redeemed. Minimum Holding and Dealing Sizes The minimum initial investment is 3,000. There is no minimum number of units on subsequent purchases and redemptions in any one transaction, providing a participant does not maintain a holding of less than 500 units in the case of investors prior to 1 December 2001 and 3,000 in the case of investors after 1 December 2001, other than at the discretion of the Manager. Restrictions, Compulsory Transfer and Redemption The Manager may from time to time impose such restrictions as it may think necessary for the purpose of ensuring that no units are acquired or held by any person in breach of the law or governmental regulation (or any interpretation of a law or regulation by a competent authority) of any country or territory or which would result in the Scheme incurring any liability to taxation which the Scheme is not able to recoup itself or suffering any other adverse consequence. In this connection,

20 19 the Manager may, inter alia, reject in its discretion any application for the purchase, redemption or transfer of units. If it comes to the notice of the Manager that any units ( affected units ): (a) (b) (c) are owned directly or beneficially in breach of any law or governmental regulation (or any interpretation of a law or regulation by a competent authority) of any country or territory; or would result in the Scheme incurring any liability to taxation which the Scheme would not be able to recoup itself or suffering any other adverse consequence (including a requirement to register under any securities or investment or similar laws or governmental regulation of any country or territory); or are held in any manner by virtue of which the unitholder or unitholders in question is/are not qualified to hold such Shares or if it reasonably believes this to be the case; the Manager may give notice to the unitholder(s) of the affected units requiring the transfer of such units to a person who is qualified or entitled to own them or that a request in writing be given for the redemption of such units in accordance with the COLL Sourcebook. If any unitholder upon whom such a notice is served does not within 30 days after the date of such notice transfer his affected units to a person qualified to own them or submit a written request for their redemption to the Manager or establish to the satisfaction of the Manager (whose judgement is final and binding) that he or the beneficial owner is qualified and entitled to own the affected units, he shall be deemed upon the expiry of that 30 day period to have given a request in writing for the redemption or cancellation (at the discretion of the Manager) of all the affected units. A unitholder who becomes aware that he is holding or owns affected units shall immediately, unless he has already received a notice as set out above, either transfer all his affected units to a person qualified to own them or submit a request in writing to the Manager for the redemption of all his affected units. Where a request in writing is given or deemed to be given for the redemption of affected units, such redemption will (if effected) be effected in the same manner as provided for in the COLL Sourcebook. Suspension The Manager may, with the prior agreement of the Trustee, and must without delay if the Trustee so requires temporarily suspend the issue, cancellation, sale and redemption of units in the Scheme where due to exceptional circumstances it is in the interests of all the unitholders in the Scheme. The Manager and the Trustee must ensure that the suspension is only allowed to continue for as long as is justified having regard to the interests of unitholders. The Manager will notify unitholders as soon as is practicable after the commencement of the suspension, including details of the exceptional circumstances which have led to the suspension, in a clear, fair and not misleading way and giving unitholders details of how to find further information about the suspension.

21 20 Where such suspension takes place, the Manager will publish details on its website or other general means, sufficient details to keep unitholders appropriately informed about the suspension, including, if known, its possible duration. During the suspension none of the obligations in COLL 6.2 (Dealing) will apply but the Manager will comply with as much of COLL 6.3 (Valuation and Pricing) during the period of suspension as is practicable in light of the suspension. Suspension will cease as soon as practicable after the exceptional circumstances leading to the suspension have ceased but the Manager and the Trustee will formally review the suspension at least every 28 days and will inform the FCA of the review and any change to the information given to unitholders. The Manager may agree during the suspension to deal in units in which case all deals accepted during and outstanding prior to the suspension will be undertaken at a price calculated at the first valuation point (as referred to below) after the restart of dealings in units. Publication The prices of all shares are published on The prices of units may also be obtained by calling during the Manager s normal business hours. The Manager may also, at its sole discretion, decide to publish certain unit prices in other third party websites or publications but the Manager does not accept responsibility for the accuracy of the prices published in, or for the non-publication of prices by, these sources for reasons beyond the control of the Manager. As the Manager deals on a forward pricing basis, the price appears in these sources will not necessarily be the same as the one at which investors can currently deal. Large Deal For Income units this will be 30,000 or 5,000 units whichever is the higher value. For Accumulation units this will be 30,000 or 2000 units whichever is the higher value. For large deals (subject to the Regulations), the Manager may sell units at more than, or redeem units at less than, the published price. The Scheme is dual priced. Pricing Basis for Issues and Redemptions Orders received will be dealt with on a forward pricing basis. VALUATION OF PROPERTY, CHARGES & DISTRIBUTIONS Valuation The valuation of property of the Scheme will occur on each business day at a.m. The Scheme will be valued in accordance with the provisions set out in Appendix I.

22 21 The Manager reserves the right to make special valuations if the Manager considers it desirable to do so. Valuations of the Scheme will take place on each dealing day at the valuation point for the purposes of determining prices of which units may be bought or sold to the Manager being calculated on an offer basis (for the purposes of calculating the issue price of a unit) or a bid basis (for the purposes of calculating the cancellation price of a unit) respectively. The price at which the Manager sells units (the offer price), may not exceed the issue price of units plus the Manager s initial charge. The price at which the Manager redeems units (the bid price) will not be less than the cancellation price (less any redemption charge and any SDRT provision). The bid price will not exceed the relevant issue price. Large deals may be carried out at a higher offer price or a lower bid price than those published, provided these prices do not exceed the relevant maximum and minimum parameters set out in the paragraph above. Where permitted and subject to the Regulations, the Manager may, in certain circumstances (for example where a significant event has occurred since the closure of a market) substitute a price with a more appropriate price which in its opinion reflects a fair and reasonable price for that investment. The Manager will, upon completion of each valuation, notify the Trustee of the issue price, the cancellation price, the maximum offer price and the minimum bid price of units. Charges and Expenses The preliminary charge is 3% of the creation price. The Manager is remunerated by way of a periodic charge of 1% per annum of the value of the property of the Scheme. It is calculated daily and accrues at each valuation point and is payable monthly. A mid-market basis will also be used for the calculation of the Manager s and the Trustee s periodic fees. Any increase of the preliminary or the periodic charge within the relevant maximum may be made only in accordance with the rules in COLL Sourcebook. Trustee fees The Trustee receives for its own account a periodic fee which will be calculated and accrue daily and is payable monthly on the last business day in each calendar month in respect of that day and the period since the last business day in the preceding month and is payable as soon as practicable after the last business day in each month. The fee is calculated by reference to the value of the Scheme on the last business day of the preceding month except for the first accrual which is calculated by reference to the first Valuation Point of the Scheme. The rate of the periodic fee is agreed between the Manager and the Trustee and is calculated on a sliding scale for the Scheme on the following basis: