PROPOSAL TO MERGE THREADNEEDLE S RANGE OF MULTI MANAGER FUNDS INTO THE 7IM INVESTMENT FUNDS

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or actions to be taken please call free on or consult your financial adviser, if you have one, immediately. PROPOSAL TO MERGE THREADNEEDLE S RANGE OF MULTI MANAGER FUNDS INTO THE 7IM INVESTMENT FUNDS This document contains a Notice of a Meeting of the Shareholders of each of the Multi Manager Funds (each, a Meeting ). Each meeting is to be held at 60 St Mary Axe, London EC3A 8JQ, United Kingdom on 6 March 2015 at the time stated in the relevant notice of Meeting. If you wish to appoint a proxy to vote on your behalf at the Meeting, we request that you return the enclosed Form of Proxy (and power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof) indicating how your vote should be cast in respect of each Multi Manager Fund in which you hold shares in the pre-paid envelope provided. The Form of Proxy should be returned no later than 48 hours before the time appointed for the relevant Meeting(s).

2 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Contents Timetable... 1 Glossary of Terms used in this document Shareholders in the Multi Manager Funds Why are we proposing these Mergers? What are the main differences between the Merging Funds and the 7IM Funds?... 5 What are the terms of the proposed Scheme? What are the key steps in the proposal? Will there need to be any restructuring of the underlying assets of the Funds before or after the Effective Date? What is the procedure for the shareholder meetings?... 8 Who will pay for the costs of the merger? What are my options?... 9 Recommendation... 9 Appendix 1 Comparison of the Merging Funds with the relevant 7IM Funds Appendix 2 Scheme of arrangement for the Merger of each of the Multi Manager Funds with the relevant sub-fund of 7IM ICVC Appendix 3 Shareholder meeting procedure, consents and clearances Appendix Notice of Meeting of the Balanced Fund, a sub-fund of Investment Funds III ICVC Notice of Meeting of the Diversified Income Fund, a sub-fund of Investment Funds IV ICVC Notice of Meeting of Portfolio 3, a sub-fund of Investment Funds IV ICVC Notice of Meeting of Portfolio 4, a sub-fund of Investment Funds IV ICVC Notice of Meeting of Portfolio 5, a sub-fund of Investment Funds IV ICVC Notice of Meeting of Portfolio 6, a sub-fund of Investment Funds IV ICVC Notice of Meeting of Portfolio 7, a sub-fund of Investment Funds IV ICVC

3 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Timetable Key dates Shareholder Meetings Date and Time Qualification date for Shareholder voting 9 February 2015 Despatch of Circular and Forms of Proxy to Shareholders 18 February 2015 Last date to receive Forms of Proxy 4 March 2015 Extraordinary General Meeting 6 March 2015 If the Scheme is duly approved in respect of the Merger proposal for a Merging Fund: Last valuation for dealing purposes p.m. 23 April 2015 Last dealing day in Existing Shares p.m. 23 April 2015 Effective date of Merger 24 April 2015 Mailing of letters to inform Shareholders of allocation and number of New Shares issued Commencement of dealing in New Shares issued in the 7IM Funds under the Mergers 8 May April

4 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Glossary of Terms used in this document The following definitions apply throughout this document unless the context otherwise requires 7IM 7IM Fund 7IM ICVC 7IM ICVC Depositary ACD Effective Date Existing Shares Extraordinary Resolution FCA FCA Rules Form of Proxy Fund ICVCs Investor Meeting Seven Investment Management LLP, the ACD of 7IM ICVC 7IM Cautious Fund, 7IM Moderately Cautious Fund, 7IM Balanced Fund, 7IM Moderately Adventurous Fund and 7IM Adventurous Fund each being a sub-fund of 7IM ICVC (together the 7IM Funds ) 7IM Investment Funds, a UK authorised investment fund constituted as an open ended investment company of which 7IM is the ACD Northern Trust Global Services Limited, the depositary of 7IM Investment Funds in respect of the relevant ICVC its authorised corporate director, in the case of a ICVC being and in respect of 7IM ICVC being 7IM 24 April 2015 or such later date as may be agreed by, the ICVC Depositary, 7IM and the 7IM ICVC Depositary shares of the appropriate class in a Merging Fund which are to be exchanged for shares in a 7IM Fund on the terms set out in the Scheme and Existing Shareholder has the corresponding meaning in respect of a Merging Fund, the extraordinary resolution to be proposed at the Meeting which must be approved by a majority of 75% of votes validly cast at the Meeting the Financial Conduct Authority in relation to the Funds, the FCA Rules as applicable to those Funds including the Collective Investment Schemes (COLL) Sourcebook and, in the case of the Merging Funds which are subfunds of Investment Funds IV ICVC, the Investment Funds (FUND) Sourcebook in respect of a Merging Fund, the Form of Proxy in relation to that Merging Fund which is enclosed with this document a Merging Fund or a 7IM Fund, as appropriate (together the Funds ) together, the ICVCs and 7IM ICVC for the purposes of the shareholder meetings, a person who is a shareholder in a Merging Fund on 9 February 2015 but excluding persons who are known to not to be shareholders in the Fund at the time of the Meeting in respect of a Merging Fund, the Extraordinary General Meeting of Existing Shareholders of the Merging Fund to be held on 6 March 2015 being convened by the Notice of Meeting set out in Appendix 4 to this document 2

5 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Merger Merging Funds or Multi Manager Funds New Shares Prospectus Regulations Retained Amount Scheme in respect of each Merging Fund, the merger of that Merging Fund with the relevant 7IM Fund under the terms of the Scheme Balanced Fund, (a sub-fund of Investment Funds III ICVC), Diversified Income Fund, Portfolio 3, Portfolio 4, Portfolio 5, Portfolio 6 and Portfolio 7 (each a sub-fund of Investment Funds IV ICVC) shares in a 7IM Fund which are to be issued pursuant to the Scheme in the case of each Fund, its Prospectus document which, in the case of the Balanced Fund shall be the Prospectus of Investment Funds III ICVC; in respect of the other Merging Funds, shall be the Prospectus of Investment Funds IV ICVC; and, in the case of a 7IM Fund, shall be the Prospectus of 7IM ICVC the FCA Rules, the Financial Services and Markets Act 2000 and/or the Open-Ended Investment Companies Regulations 2001 as amended the amount retained by the ICVC Depositary in respect of the relevant Merging Fund under the Scheme in respect of actual and contingent liabilities in respect of that Merging Fund, with the intention that this will make proper provision for such liabilities for the Merging Fund the scheme for the Merger of each Merging Fund into the relevant 7IM Fund, which is set out in full in Appendix 2 to this document Shareholder an Investor in a Merging Fund on 9 February 2015 ICVCs ICVC Depositary Multi Manager Fund Transferred Property Investment Services Limited, which is ACD of various UK authorised investment funds including Investment Funds III ICVC and Investment Funds IV ICVC Investment Funds III ICVC and Investment Funds IV ICVC of which the Merging Funds are sub-funds as set out in the definition of the Merging Funds HSBC Bank plc which is the depositary of each of the ICVCs to which the proposed Scheme relates Balanced Fund, (a sub-fund of Investment Funds III ICVC), Diversified Income Fund, Portfolio 3, Portfolio 4, Portfolio 5, Portfolio 6 and Portfolio 7 (each a sub-fund of Investment Funds IV ICVC) (together, the Merging Funds ) in respect of a Merger, the property of the relevant Merging Fund (less the Retained Amount) 3

6 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds 18th February 2015 Investment Services Limited PO Box Chelmsford CM99 2AL Tel: +44 (0) * Fax: +44 (0) (for non-uk residents): Tel: * Fax: *calls may be recorded To: Shareholders in the Multi Manager Funds Dear Shareholder, We are writing to you as a shareholder in one or more of the Multi Manager Funds to inform you of our proposal to merge each of these Funds into comparable Funds offered by Seven Investment Management (7IM). Details of the procedure by which the Mergers will be effected, the action you should take and the implications for you as an existing Shareholder are set out in this document. We set out below the reasons for the proposed Mergers and, if approved, the terms for their implementation. Each Merger proposal requires the passing of an extraordinary resolution at an extraordinary general meeting of the relevant Merging Fund. Meetings of the Merging Funds will be held on 6 March We encourage you to vote either in person at the meeting or by proxy at the meetings of the Merging Fund(s) in which you hold shares. A Form of Proxy is enclosed with this letter. Why are we proposing these Mergers? In 2011 took on a range of multi-manager funds from LV= and has managed the range since then. The Multi Manager Funds are funds that instead of investing directly into shares and bonds invest into funds run by other investment houses, which in turn invest in a range of different companies across varying sectors, regions and asset types. They are also often referred to as funds of funds. The principal aim of this type of fund is to gain greater diversification than is possible when investing directly into shares, and also to harness the expertise of other investment managers. Following a recent review of the Multi Manager Funds, we believe that it is in the best interests of investors for the Merging Funds to be managed by a specialist multi-manager provider. We have carried out a selection process to find a company that has the expertise and experience required to effectively manage and support the Merging Funds in the best interests of investors. 7IM, an independent investment manager with a strong institutional backing, was chosen due to its significant experience in managing multi manager funds. Founded in 2002, 7IM has built its reputation on delivering great service and steady performance and had 8 billion in assets under management and administration as at 31 January In IM won the prestigious Money Facts Best Multi Manager Award followed by the award for the Most Progressive Fund Group 2014 at the Rayner Spencer Mills Research annual awards in The current multi manager investment team that has managed the Merging Funds for the last three years will be transferring to 7IM. This will enable the proven expertise of the current fund managers of the Multi Manager Funds to be combined with 7IM s extensive experience, resource and long term track record to the benefit of existing investors. Investment Services Limited (TISL) Registered No Authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered office: 60 St Mary Axe, London, EC3A 8JQ, United Kingdom. Investments is a brand name and both the Investments name and logo are trademarks or registered trademarks of the group of companies. threadneedle.com 4

7 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds 7IM have Funds that are similar to the Merging Funds. We believe that instead of keeping the Merging Funds as separate funds and just passing their management to 7IM, it is in the best interests of clients to merge these Funds into the 7IM Funds so investors will benefit from the economies of scale of being part of a larger Fund. Details of the Merger proposals are set out in this document. What are the main differences between the Merging Funds and the 7IM Funds? While the 7IM Funds have broadly the same investment philosophy as the Merging Funds, there are certain differences between them that you should be aware of. Appendix 1 of this document highlights the key differences between the Merging Funds and the 7IM Funds. General approach: decides how to allocate investments into the Multi Manager Funds using a process called risk targeting. A company called Distribution Technology ( DT ) provides a guide to asset allocation (the proportion of shares, bonds and cash) that each Merging Fund should hold based on how risky the assets have been in the past. Our fund managers then decide which investments best suit this risk profile. The 7IM Funds are not risk targeted but risk rated. This means that 7IM decides on the asset allocation mix. The 7IM Funds are then assessed by DT in accordance with DT s own methodology. The main difference between these approaches is that the Multi Manager Funds are committed to ensuring that the asset allocation for each fund is in keeping with DT s asset allocation recommendations so, if your risk appetite is number 4 on DT s scale, then the Portfolio 4 will always remain within this risk profile. 7IM provides asset allocation expertise but does not commit to managing the 7IM Funds to the DT risk profiles. This approach potentially gives the fund managers greater flexibility to run the portfolios as they see fit but there is no guarantee that you will always remain in the same DT risk profile. It is unlikely that the 7IM Funds will fluctuate significantly between the DT risk profiles, but this is not guaranteed. Comparable Funds It is proposed that each of the Merging Funds be merged into the relevant 7IM Fund as set out against it in the table below: Merging Fund Balanced Fund Diversified Income Fund Portfolio 3 Portfolio 4 Portfolio 5 Portfolio 6 Portfolio 7 7IM Fund 7IM Moderately Adventurous Fund 7IM Balanced Fund 7IM Cautious Fund 7IM Moderately Cautious Fund 7IM Balanced Fund 7IM Moderately Adventurous Fund 7IM Adventurous Fund A comparison of the Merging Funds with the comparable 7IM Funds is set out in Appendix 1 for your information. Further information about the 7IM Funds is set out in the Key Investor Information Documents (KIIDs) which are relevant to the 7IM Funds in which you will become a shareholder if the Mergers take place. The Key Investor Information Documents for each of the 7IM Funds is also available at Under the Merger proposals, each Merging Fund will merge into the relevant 7IM Fund and the investment objectives and policies of the 7IM Fund will apply to the 7IM Fund s portfolio including the Transferred Property of the Merging Fund. 5

8 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Objectives Generally the investment objectives of each Merging Fund are considered to be comparable with the 7IM Fund into which it is to be merged. However we would highlight to investors in the Diversified Income Fund that the 7IM Balanced Fund, whilst being in the same sector of the Investment Association aims to provide a balance of income and capital appreciation while the Diversified Income Fund aims to achieve income with long term growth potential. This means the 7IM Balanced Fund has historically paid a lower income than the Diversified Income Fund but has historically achieved more capital growth. In addition, the 7IM Balanced Fund also makes income distributions twice a year rather than quarterly. Investments The main investment related differences to which we would draw your attention are as follows: nderivative use: The 7IM Funds use derivatives to improve portfolio efficiency and to hedge currency exposure and have the power to use them for investment purposes. The Merging Funds do not use derivatives. ncommodity investments: In 2014 the Merging Funds (except the Diversified Income Fund) expanded their investment policies to enable investment in commodity-linked investments. None of the Merging Funds have taken advantage of this power. The 7IM Funds may hold commodities indirectly. Neither the Merging Funds nor the 7IM Funds are permitted to hold commodities directly. nproperty exposure: All the Merging Funds other than the Balanced Fund are able to gain some direct exposure to real property. The 7IM Funds are unable to do this and have no intention of investing in property directly, but invest in listed equity securities of property companies (known as Real Estate Investment Trusts or REITs). Risk factors The risks relating to each Merging Fund are largely the same as the risks relating to the 7IM Fund into which it is proposed they are merged. All the risks currently identified as being applicable to the Merging Funds and to the 7IM Funds are set out in the relevant sections of the relevant Prospectus, and the KIIDs for the 7IM Funds set out the key risks for those Funds. What are the terms of the proposed Scheme? The Merger will only take place in the event that Extraordinary Resolutions of Shareholders for all the Merging Funds are approved. The Scheme is set out in full in Appendix 2 to this letter. If any of the Extraordinary Resolutions fail to be approved, the Merger will not take place for any of the Merging Funds. Under the terms of each proposed Merger under the Scheme, the scheme property of the Merging Fund will be transferred to the 7IM Fund and Existing Shareholders will receive New Shares in the 7IM Fund of an equivalent value to their Existing Shares (or a value that is as near as practicable to that amount). What are the key steps in the proposal? If the Scheme is approved by Existing Shareholders in all Merging Funds, a welcome pack will be sent to you from 7IM to inform you of the successful outcome and provide more information on doing business with 7IM; the Scheme will be implemented for each Merging Fund as follows: nshareholders who do not wish to receive New Shares may choose to redeem their Existing Shares at any time up to 2.00 p.m. on 23 April 2015 (which will be the last dealing day in the Merging Fund); nall dealings in shares in the Merging Fund will cease immediately at the deal cut-off point of 2.00 p.m. on 23 April Instructions received after this time will be rejected; n The Valuation Point for the Merging Fund will move to noon (as opposed to 2.00 p.m.) on the Effective Date. 6

9 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds nin order to facilitate implementation of the Scheme, income of each of the Merging Funds will be cleared immediately prior to 12 noon on the Effective Date so that no income is transferred to the relevant 7IM Fund. For each of the Merging Funds other than the Balanced Fund, the current accounting period for the Merging Fund will end at 11:59 p.m. on the Effective Date. The annual accounting date of Investment Funds IV ICVC will be the Effective Date instead of 31 March 2015 (such change having been approved by the FCA). For Investors who receive income, the income payment date will be slightly later than would normally have been the case: income will be paid out by 29 May Investors who have chosen to reinvest the income they receive will receive a one-off income payment which will be sent on 29 May 2015 either by direct credit to a bank account holds on record, or if does not hold any bank account details, by cheque. This is because is not able to reinvest income in relation to this particular income payment. It will be possible to reinvest future income earned on the 7IM Funds following the Merger. Further details will be set out in the welcome pack that will be sent to you if the Mergers are approved. In the case of accumulation shares, income allocated will be accumulated and reflected in the value of those shares before the Merger is implemented. For the Balanced Fund, the Effective Date will be an additional interim income allocation date. Any income will be allocated to the accumulation shares in issue and will be accumulated and reflected in the value of those accumulation shares before the Merger is implemented. non the Effective Date: the assets of the Merging Fund (except for the Retained Amount) will be allocated to the 7IM Fund; New Shares will be issued to the holders of Existing Shares in place of their Existing Shares. The detailed explanation of the share class of the New Shares to be issued in respect of Existing Shares in each of the Merging Funds is set out in paragraph 4 of the Scheme on page 23. In summary, Existing Shareholders of the types of shares set out in the left hand column below will receive 7IM shares of the share class set out in the right hand column below: Existing Shares: Funds Retail Income Shares Retail 2 Income Shares Z Income Class Shares Retail Accumulation Shares Retail 2 Accumulation Shares Institutional Accumulation Shares Z Class Accumulation Shares New Shares: 7IM Funds 7IM C Class Income Shares 7IM C Class Income Shares 7IM C Class Income Shares 7IM C Class Accumulation Shares 7IM C Class Accumulation Shares 7IM S Class Accumulation Shares 7IM C Class Accumulation Shares Essentially, if an investor currently holds a number of income shares in the Merging Fund, they will receive a holding of income shares in the relevant 7IM Fund or if an investor holds a number of accumulation shares in the Merging Fund, they will receive the relevant number of accumulation shares in the relevant 7IM Fund. The value of the New Shares issued to an investor in the 7IM Fund shall be, as nearly as practicable, equivalent in value to the value of their Existing Shares immediately prior to the implementation of the Scheme. Will there need to be any restructuring of the underlying assets of the Funds before or after the Effective Date? Whilst the investment objectives of each Merging Fund and the 7IM Fund it will be merged into are similar, their underlying portfolios of assets are not aligned. Therefore, following approval of the Scheme, during the period prior to the Effective Date, some changes will be made to each Merging Fund in order to enable a transition to the 7IM Funds in an effective manner. Costs incurred in aligning the Merging Funds in preparation for the Scheme will be borne by the Merging Funds. We expect these costs arising from restructuring the Merging Funds to be small given the similarity between the Merging Fund and the 7IM Fund. 7

10 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds In addition, when the Portfolio 3 merges into the 7IM Cautious Fund there will be some further restructuring required as the 7IM Cautious Fund invests in exchange traded funds and passive funds to a greater extent than Portfolio 3. We expect these costs arising from restructuring in the 7IM Cautious Fund following the Merger will be small and will be borne by all investors in the 7IM Cautious Fund after the Merger. What will you own following the Merger? You will be sent a letter of notification of the New Shares issued to you under the Scheme as soon as practicable after the Effective Date. Contract notes will not be sent for the New Shares. From 27 April 2015, you may deal in your New Shares in the relevant 7IM Fund(s) as set out in the 7IM Funds Prospectus. Please note that you will not have cancellation rights in respect of the New Shares which are issued to you under the Scheme. What will happen to Direct Debit mandates? Any Direct Debit mandates or other instructions which you have given in relation to your Existing Shares will, after the Effective Date, cease to be effective. 7IM will contact you with a welcome pack if the Merger is approved but before the Effective Date. What will happen to ISA investors? If you hold shares in a Merging Fund through a ISA, please see the separate ISA Circular which is sent to you with this document which sets out the consequences of the proposal and implementation of the Mergers for your ISA contract. Taxation Assuming that the tax clearance we have applied for from HMRC is granted, the exchange of Existing Shares with New Shares will not constitute a disposal of Existing Shares for capital gains tax purposes for any shareholder. Accordingly New Shares issued by 7IM Funds will be deemed to have the same acquisition cost and acquisition date for the purposes of tax on capital gains as the Existing Shares which they replace. What is the procedure for the shareholder meetings? In order for the Merger for a particular Merging Fund under the Scheme to be implemented, the approval of an Extraordinary Resolution of Shareholders in that Merging Fund is required. In these circumstances a resolution requires the approval of at least 75% of the votes validly cast in order to be passed. Details of the shareholder meeting procedure are set out in Appendix 3. Meetings of Existing Shareholders of each of the Merging Funds has been arranged for 6 March Notices convening these meetings are set out in Appendix 4. A Form of Proxy is enclosed for your use in respect of each of the Merging Funds in which you hold Existing Shares. Please read the notes on the Form of Proxy carefully. Please complete and return the enclosed Form(s) of Proxy, to Electoral Reform Services, The Election Centre, 33 Clarendon Road, London N8 0NW even if you intend to come to the meeting, and return it not later than 48 hours before the time appointed for the relevant meeting(s). There is no requirement for you to complete the Form of Proxy if you are attending the Meeting in person. 8

11 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Who will pay for the costs of the merger? All costs and expenses relating to the proposed Merger (including the costs of calling the meeting of Shareholders) will be met by us. The costs of any changes to the underlying assets required in the Merging Fund prior to the Effective Date (see the question Will there need to be any restructuring of the underlying assets of the funds before or after the Effective Date? above for more details) will be borne by the Merging Fund. The costs of any changes to the underlying assets in the 7IM Cautious Fund as a result of the proposed Merger will be borne by the 7IM Cautious Fund. What are my options? We very much hope that you will wish to vote in favour of the Merger proposal(s) for the Merging Fund(s) in which you hold shares. If however you do not wish to do so, you have the right to either request the redemption of your shares without charge on or before 23 April 2015 on the usual dealing basis for the Merging Fund(s) or switch for free into shares of any other Fund that you are eligible to invest it. Please note that if the Scheme is approved and implemented by Existing Shareholders in a Merging Fund, it will be binding on all shareholders whether or not they vote in favour of it or vote at all. All investors who vote against the proposal, who do not vote at all or who do not make use of their rights to redeem their shares on or before 23 April 2015 will become investors in the relevant 7IM Fund. Recommendation We consider that the Scheme is in the best interests of the Multi Manager Funds and their shareholders. We believe the combined proven expertise of the current portfolio managers of the Multi Manager Funds along with 7IM s extensive experience, resource and long term track record will benefit existing investors. Accordingly it is recommended that you vote in favour of the Extraordinary Resolution(s) and return the Form of Proxy duly completed by the date specified, whether or not you intend to attend the Meeting(s). If you have any questions about the 7IM Funds, or the terms of the Scheme, please contact your financial adviser or on Yours faithfully, Campbell Fleming Director, Investment Services Limited (as authorised corporate director of Investment Funds III ICVC and Investment Funds IV ICVC) 9

12 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Appendix 1 Comparison of the Merging Funds with the relevant 7IM Funds Comparison of the Merging Funds with the 7IM Funds of 7IM Investment Funds The principal features of the Funds are outlined, and compared, in this Appendix. Feature Merging Funds 7IM Funds Fund structure Legal Structure Type of scheme Open ended investment company Balanced Fund is a sub-fund of Investment Funds III ICVC. The other Merging Funds are sub-funds of Investment Funds IV ICVC. Each of the ICVCs is an umbrella company comprising a number of sub-funds. Balanced Fund, as a sub-fund of Fund III ICVC, is a UCITS scheme. The other Merging Funds are non- UCITS retail schemes (NURS), being sub-funds of Fund IV ICVC. At no stage has there been a need for the Balanced Fund to invest in real property and that is the reason this fund was not established as a NURS. Open-ended investment company Each of the relevant 7IM Funds which are recipient funds for the purposes of the Merger proposals are sub-funds of 7IM ICVC, which is an umbrella company comprising a number of sub-funds. UCITS schemes Management Investment Services Limited Seven Investment Management LLP Investment Manager Asset Management Limited 7IM Depositary Fund administration HSBC Bank plc The Depositary is responsible for the safekeeping of all of the scheme property entrusted to it, for the collection of income due to be paid for the account of each Fund, taking all the necessary steps to ensure instructions for the exercise of rights attaching to ownership of the scheme property are carried out and taking reasonable care to ensure that the each Fund is managed by the ACD in accordance with the relevant investment and borrowing powers and valuation and pricing provisions, all in accordance with the terms of the FCA Rules as applicable and the relevant Prospectus and Instrument of the relevant ICVC. The ACD has appointed International Financial Data Services (UK) Limited to carry out some of the registration functions of the ICVCs. The ACD has delegated its administration functions to HSBC Bank plc, as Administrator, to provide fund accounting and administration services to each ICVC. Auditors Ernst & Young LLP Ernst & Young LLP Investment matters Investment objective and policy Northern Trust Global Services Limited The Depositary is responsible for the safekeeping of all of the scheme property entrusted to it, for the collection of income due to be paid for the account of each Fund, taking all the necessary steps to ensure instructions for the exercise of rights attaching to ownership of the scheme property are carried out and taking reasonable care to ensure that the each Fund is managed by the ACD in accordance with the relevant investment and borrowing powers and valuation and pricing provisions, all in accordance with the terms of the FCA Rules as applicable and the relevant Prospectus and Instrument of the 7IM ICVC. The ACD has appointed Northern Trust Global Services Limited to act as registrar and to provide fund accounting and other administration services to 7IM Investment Funds. The respective investment objectives and policies of each of the Merging Funds are set out below so that you may compare and contrast these with the investment objective and policies of the relevant 7IM Fund which is set out alongside it: Balanced Fund The objective of Balanced Fund is to achieve long term capital growth and to maximise the capital return whilst moderating the risk of equity investment at any particular point in the economic and business cycle. The policy of the Fund is to invest principally in a range of collective investment schemes, including sub-funds from other OEICs which provides exposure to equities. Investment of the Fund may be in any geographic or economic sectors of the world although there will be a bias towards the UK and Europe. The Fund may also invest in other collective investment schemes, including those that provide an exposure to fixed interest securities and also transferable securities, money market instruments, deposits and cash and near cash and commodity linked investments. 7IM Moderately Adventurous Fund 7IM Moderately Adventurous Fund aims to provide a total return primarily by way of growth in capital. There is a risk of fluctuations in capital values. The Fund invests predominantly in a range of collective investment vehicles and securities managed by selected fund managers and includes a holding in UK Equity Fund. While assets with scope for capital growth in real terms are likely to represent a significant part of the portfolio, the portfolio may also include other assets held primarily for income generation. The Fund may use different asset classes, with a substantial proportion in equities. Investment may also be made in warrants, deposits, cash and near cash, money market instruments and other transferable securities, derivatives and forward transactions and other investments to the extent that each is permitted in the stated investment and borrowing powers of 7IM ICVC. There is no guarantee that a positive return will be delivered. 10

13 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Feature Merging Funds 7IM Funds Diversified Income Fund The investment objective of the Diversified Income Fund is to achieve income with long term growth potential. The policy of the Fund is to invest primarily through equity and fixed interest exposure using collective investments mainly operated by other fund managers. Investment may occur in regulated and unregulated collective investment schemes and also in other transferable securities, money market instruments, deposits, cash and near cash, derivative instruments and forward transactions when deemed appropriate. The aim of any use of derivative or forward transactions is to assist in meeting the investment objectives of the Fund by reducing risk and/or reducing cost and/or generating additional income or capital with a level of risk which is consistent with the risk profile of the Fund, the risk and the risk diversification rules within which it operates. The use of derivatives or forward transactions for the purposes of efficient portfolio management or hedging will not materially alter the risk profile of the Fund. Portfolio 3 The investment objective of Portfolio 3 is to generate income with the potential of some long term capital growth. The policy of the Fund is to invest mainly through a portfolio of fixed interest exposure, together with some equity, property, and with effect from 1 August 2014, commodity linked investments cash and money market instrument exposure to compliment this. Investment will occur mainly in regulated and unregulated collective investments schemes mainly operated by other fund managers and also in transferable securities, money market instruments, deposits, cash and near cash when deemed appropriate. The aim of any use of derivatives or forward transactions is to assist in meeting the investment objectives of the Fund by reducing risk and/or reducing cost and/or generating additional income or capital with a level of risk which is consistent with the risk profile of the Fund, and the risk diversification rules within which it operates. The use of derivatives or forward transactions for the purposes of efficient portfolio management (EPM) or hedging will not materially alter the risk profile of the Fund. Portfolio 4 The investment objective of Portfolio 4 is to achieve long term capital growth and income generation. The policy of the Fund is to invest primarily through a portfolio of equity and fixed interest exposure. The Fund may also obtain an exposure to property, and with effect from 1 August 2014, commodity linked investments cash and money market instruments. Investment will occur mainly in regulated and unregulated collective investment schemes mainly operated by other fund managers and also in transferable securities, money market instruments, deposits, cash and near cash when deemed appropriate. The aim of any use of derivatives or forward transactions is to assist in meeting the investment objectives of the Fund by reducing risk and/or reducing cost and/or generating additional income or capital with a level of risk which is consistent with the risk profile of the Fund, and the risk diversification rules within which it operates. The use of derivatives or forward transactions for the purposes of efficient portfolio management (EPM) or hedging will not materially alter the risk profile of the Fund. 7IM Balanced Fund 7IM Balanced Fund aims to provide a balance of income and capital appreciation. There may be some risk to capital. The sub-fund invests predominantly in a range of collective investment vehicles and securities managed by selected fund managers. The sub-fund will comprise a mixture of income generated assets and assets with scope for capital growth in real terms. The sub-fund may use different asset classes, with investment primarily in equities and fixed interest with no long term preponderance to either class. Investment may also be made in warrants, deposits, cash and near cash, money market instruments, other transferable securities, derivatives and forward transactions and other investments to the extent that each is permitted in the stated investment and borrowing powers of the 7IM ICVC. 7IM Cautious Fund 7IM Cautious Fund aims to provide a long-term total return, by way of income with some capital appreciation. There may be moderate risk to capital, but the sub-fund will be managed with the intention of limiting volatility to relatively low levels in normal circumstances. As a consequence, long-term return expectations may be lower than for higher risk portfolios. There is no guarantee that a positive return will be delivered. The sub-fund will seek to achieve its objective through direct or indirect investment in a range of asset classes, which may include government and corporate bonds, cash, near cash and equities as well as in alternative asset classes (such as real estate, private equity and close-ended funds). Investment in these alternative asset classes would be largely (and in the case of real estate, only) achieved indirectly through investing in collective investment schemes, certificates and derivatives. While bonds, cash and near cash and other income generating assets are likely to represent the main part of the sub-fund s investment exposure, this may also include assets with scope for capital growth in real terms, and assets with scope for greater volatility. The sub-fund may use derivatives for investment purposes as well as for and Efficient Portfolio Management. 7IM Moderately Cautious Fund 7IM Moderately Cautious Fund aims to provide a total return, substantially by way of income though with some capital appreciation. There may be a moderate risk to capital. The sub-fund invests predominantly in a range of collective investment vehicles and securities managed by selected fund managers. Whilst income generating assets are likely to represent a significant part of the portfolio, the portfolio may also include assets with scope for capital growth in real terms. The sub-fund may use different asset classes, with a substantial proportion in fixed interest. Investment may also be made in warrants, deposits, cash and near cash, money market instruments and other transferable securities, derivatives and forward transactions and other investments to the extent that each is permitted in the stated investment and borrowing powers of the 7IM ICVC. There is no guarantee that a positive return will be delivered. 11

14 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Feature Merging Funds 7IM Funds Investment powers and restrictions Portfolio 5 The investment objective of Portfolio 5 is to achieve long term capital growth with some income generation. The policy of the Fund is to invest primarily in global stock markets with flexibility to gain exposure to fixed interest investments, property and, with effect from 1 August 2014, commodity linked investments, cash and money market instruments. Investment will occur mainly in regulated and unregulated collective investment schemes mainly operated by other fund managers and also in transferable securities, money market instruments, deposits, cash and near cash, when deemed appropriate. The aim of any use of derivatives or forward transactions is to assist in meeting the investment objectives of the Fund by reducing risk and/or reducing cost and/or generating additional income or capital with a level of risk which is consistent with the risk profile of the Fund, and the risk diversification rules within which it operates. The use of derivatives or forward transactions for the purposes of efficient portfolio management (EPM) or hedging will not materially alter the risk profile of the Fund. Portfolio 6 The investment objective of Portfolio 6 is to achieve long term capital growth. The policy of the Fund is to invest primarily in global stock markets with flexibility to gain a minority exposure to fixed interest investments and property and, with effect from 1 August 2014, commodity linked investments cash and money market instruments. Investment will occur mainly in regulated and unregulated collective investment schemes mainly operated by other fund managers and also in transferable securities, money market instruments, deposits, cash and near cash when deemed appropriate. The aim of any use of derivatives or forward transactions is to assist in meeting the investment objectives of the Fund by reducing risk and/or reducing cost and/or generating additional income or capital with a level of risk which is consistent with the risk profile of the Fund, and the risk diversification rules within which it operates. The use of derivatives or forward transactions for the purposes of efficient portfolio management (EPM) or hedging will not materially alter the risk profile of the Fund. Portfolio 7 The investment objective of Portfolio 7 is to achieve significant long term capital growth. The policy of the Fund is to invest principally in global stock markets. The Fund may also obtain exposure to property, fixed interest assets and, with effect from 1 August 2014, commodity linked investments, cash and money market instruments. Investment will occur mainly in regulated and unregulated collective investment schemes mainly operated by other investment managers and also in transferable securities, money market instruments, deposits, cash and near cash when deemed appropriate. The aim of any use of derivatives or forward transactions is to assist in meeting the investment objectives of the Fund by reducing risk and/or reducing cost and/or generating additional income or capital with a level of risk which is consistent with the risk profile of the Fund, and the risk diversification rules within which it operates. The use of derivatives or forward transactions for the purposes of efficient portfolio management (EPM) or hedging will not materially alter the risk profile of the Fund. The assets of the Fund must be invested so as to comply with the investment and borrowing powers and restrictions set out in the FCA Rules, Instrument and the Prospectus as summarised in the relevant Prospectus. In respect of the Balanced Fund, these are set out in Appendix 1 to the Prospectus of Investment Funds III ICVC and, in respect of the other Merging Funds, these are set out in Appendix 2 to the Prospectus of Investment Funds IV ICVC. 7IM Balanced Fund 7IM Balanced Fund aims to provide a balance of income and capital appreciation. There may be some risk to capital. The sub-fund invests predominantly in a range of collective investment vehicles and securities managed by selected fund managers. The sub-fund will comprise a mixture of income generated assets and assets with scope for capital growth in real terms. The sub-fund may use different asset classes, with investment primarily in equities and fixed interest with no long term preponderance to either class. Investment may also be made in warrants, deposits, cash and near cash, money market instruments, other transferable securities, derivatives and forward transactions and other investments to the extent that each is permitted in the stated investment and borrowing powers of the 7IM ICVC. 7IM Moderately Adventurous Fund 7IM Moderately Adventurous Fund aims to provide a total return primarily by way of growth in capital. There is a risk of fluctuations in capital values. The sub-fund invests predominantly in a range of collective investment vehicles and securities managed by selected fund managers. While assets with scope for capital growth in real terms are likely to represent a significant part of the portfolio, the portfolio may also include other assets held primarily for income generation. The sub-fund may use different asset classes with a substantial proportion in equities. Investment may also be made in warrants, deposits, cash and near cash, money market instruments and other transferable securities, derivatives and forward transactions and other investments to the extent that each is permitted in the stated investment and borrowing powers of the 7IM ICVC. There is no guarantee that a positive return will be delivered. 7IM Adventurous Fund 7IM Adventurous Fund aims to provide capital growth. There is a risk of wide fluctuations in capital values. The sub-fund invests predominantly in a range of collective investment vehicles and securities managed by selected fund managers. Assets with scope for capital growth in real terms are likely to represent a major part of the portfolio. The sub-fund may use different asset classes, with the comparison primarily in equities. Investment may also be made in warrants, deposits, cash and near cash, money market instruments and other transferable securities, derivatives and forward transactions and other investments to the extent that each is permitted in the stated investment and borrowing powers of the 7IM ICVC. The assets of each Fund must be invested so as to comply with the investment and borrowing powers and restrictions set out in the FCA Rules, Instrument and Prospectus for 7IM Investment Funds as summarised in Appendix III to the Prospectus of the 7IM ICVC. This sets out the restrictions applicable to a UCITS scheme which apply to each of the 7IM Funds. 12

15 Proposal to merge s range of Multi Manager Funds into the 7IM Investment Funds Feature Merging Funds 7IM Funds Dealing and Pricing Share Classes Deal Cut Off Valuation Pricing basis Publication of prices Income allocations Under the terms of the Scheme, Existing Shareholders will receive New Shares in the 7IM Funds as indicated below: Generally: The classes of shares currently available are set out in the relevant Prospectus. Class Z shares are available at s discretion to eligible distributors that have entered into separate fee arrangements with their clients. Each sub-fund may issue income and accumulation shares. The following class of the shares may be issued in respect of each subfund: Class A, Class B, Class C, Class D, Class O and Class S shares. The applicable charges and investment minima differ depending on the share class concerned. Under the Scheme: The detailed explanation of the share class of the New Shares to be issued in respect of existing shares in each of the Merging Funds is set out in paragraph 4 of the Scheme in Appendix 2. Under the Scheme, the intention is that New Shares of a comparable share class will be issued. The mapping across will be as follows: Retail Accumulation Retail 2 Accumulation Retail Income Retail 2 Income Z Class Income Z Class Accumulation Institutional Accumulation C Class Accumulation C Class Accumulation C Class Income C Class Income C Class Income C Class Accumulation S Class Accumulation The above share classes have been chosen due to their similar nature to the existing share classes and their eligibility requirements are broadly the same. There are however some important differences in particular The minimum initial investment and holding for the Multi Manager Funds is 1,000 while it is 500 for the 7IM Funds (although the minimum regular saving amount of 100 remains the same); Income payment dates are different (as set out below). Shares in any of the Funds may be bought or sold on any dealing day between 8 a.m. and 6 p.m. A dealing day means Monday to Friday excluding public and bank holidays in England and Wales and any other days at s discretion. The dealing cut off is 2.00 p.m. The valuation point for each Merging Fund is at 2.00 p.m. on each Dealing Day (but an earlier valuation as at 12 noon will be used for the purposes of the Scheme). The property of each Fund is valued daily at the valuation point on each dealing day in order to determine the prices at which shares in the Funds may be purchased from, or redeemed by, the ACD and created or cancelled by each ICVC. deals on a forward pricing basis. A forward price is the price calculated at the next valuation point after receipt of a request for a purchase or sale. The price per share is the net asset value per share, subject to the application of any dilution levy which may be required. This dilution policy is designed to mitigate potential dilution (reduction) which might occur in the value of the scheme property of a Fund as a result of costs incurred in dealing in its investments and of any spread between the buying and selling prices of those investments. Prices of shares are published daily on the website and are available by calling s client services on the number detailed in the Directory in the relevant Prospectus. Each Merging Fund has one interim and one final income allocation point except the Diversified Income Fund which has four as below: Diversified Income Fund 31 March (final) 30 September, 30 June, 31 December (all interim) Balanced Fund 31 December (final) 30 June (interim) All other Merging Funds 31 March (final) 30 September (Interim) Shares will normally be bought and sold from a dealing office for ACD between 9 a.m. and 5:30 p.m. (London time) on each business dealing day. (A dealing day is Monday to Friday where these days are business days.) The dealing cut off is 12 noon Shares are issued at a price based on the NAV as determined on the relevant Dealing Day. The price of a share is calculated by reference to the net asset value of the sub-fund to which it relates and this is calculated at 12 noon London time this being the valuation point on each dealing day. 7IM deals on a forward pricing basis. A forward price is the price calculated at the next valuation point after the purchase or redemption is deemed to be accepted by 7IM. Shares in the Funds are single priced. To offset any reduction in value of the scheme property due to dealing costs incurred when buying and selling investments, the ACD may require payment of a dilution levy in addition to the price of shares when bought or as a deduction when sold. The prices of shares are published on the website and 7IM s website The prices of shares may also be obtained by calling during normal business hours. Each 7IM Fund has two income allocation dates 31 May (interim) 30 November (final). 13