LSAM SF 3 plc SUPPLEMENT TO PROSPECTUS

Transcription

1 LSAM SF 3 plc (the Company ) An open-ended investment company with variable capital incorporated in Ireland with registered number established as an umbrella fund with segregated liability between sub-funds. Independent Aktiv Max (the Fund ) SUPPLEMENT TO PROSPECTUS 8 May 2017 McCann FitzGerald Solicitors Riverside One Sir John Rogerson s Quay Dublin 2 CFRG\

2 Independent Aktiv Max is a Fund of LSAM SF 3 plc, an umbrella investment company with variable capital established pursuant to the UCITS Regulations as an umbrella fund with segregated liability between sub-funds. A description of LSAM SF 3 plc, its management and administration, taxation and risk factors is contained in the Prospectus. This Supplement relates to the Independent Aktiv Max and forms part of the Prospectus. There are currently 11 other sub-funds in the Company, namely: - Lantern Solidar Aggressive Fund; - Lantern Solidar Ethical Fund; - Lantern Solidar Flex 40 Fund; - Lantern Solidar Flex 70 Fund; - Lantern Solidar Flex 100 Fund; - Independent Aktiv Mix; - Independent Fonddoktorn Plus; - UBS Risk Controlled Growth Fund (SGD); - UBS Risk Controlled Growth Fund (USD); - UBS Liquidity Premium Commodity XAL T5 UCITS; and - VPV Wachstum Fund. The information contained in this Supplement should be read in the context of, and together with, the information contained in the Prospectus, and distribution of this Supplement is not authorised unless accompanied by or supplied in conjunction with a copy of the Prospectus. The Fund will invest in structured financial derivative instruments for investment purposes. While the prudent use of such derivatives can be beneficial, derivatives also involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. Structured derivative transactions are complex and may involve a high degree of loss. The Fund is not capital protected. Potential investors should note that the Fund is subject to market fluctuations and that there can be no assurance that any appreciation in value will occur. The value of investments and the NAV of the Fund can go down as well as up and an investor may not get back the amount invested. An investment in the Fund should not constitute a substantial proportion of an investment portfolio and may not be appropriate for all investors. The difference at any one time between the sale and repurchase price of shares in the Fund means that the investment should be viewed as medium to long term. The Directors of the Company, whose names appear on page (iv) of the Prospectus, accept responsibility for the information contained in this Supplement. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Supplement is in accordance with the facts and does not omit anything likely to affect the import of such information. Unless otherwise stated, all capitalised terms shall have the same meaning herein as in the Prospectus.

3 Contents Definitions 1 The Fund 3 Profile of a Typical Investor 3 Investment Objective 3 Investment Strategy 3 Investment Policy 4 Risk Factors 7 Investment and Borrowing Restrictions 9 Dividend Policy 9 Taxation 9 Subscriptions 10 Redemptions 10 Publication of Net Asset Value 11 Establishment Expenses 12 Service Provider Fees 12 Swap Counterparty Charges 12 Miscellaneous 13 The Investment Manager to the Investment Basket 14 Tax Information for Swedish Investors 15

4 Contents DEFINITIONS The following definitions apply throughout this Supplement unless the context requires otherwise:- Base Currency Central Bank Central Bank UCITS Regulations means SEK; means the Central Bank of Ireland or any successor thereto; means the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015, as may be amended, supplemented or modified from time to time and any other statutory instrument, regulations, rules conditions, notices, requirements or guidance of the Central Bank issued from time to time applicable to the Company pursuant to the UCITS Regulations and the Delegated Regulations or either of them as the case may be; Effective Date means 19 September 2012; EUR Fund Investment Manager to the Asset Portfolio means Euro; means Independent Aktiv Max; means the Manager in its capacity as investment manager with discretionary power over the Asset Portfolio; Investment Manager to the Investment Basket means Independent Investment Group Sweden AB, the sub-investment manager to the Fund with discretionary power over the Investment Basket; Irish Business Day Manager Minimum Subscription means a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in Ireland; means Lantern Structured Asset Management Limited; means the minimum amount for the initial subscription of Shares that must be subscribed for by an investor, details of which are set down in the Subscriptions section on page 10; Prospectus means the prospectus of the Company dated 2 August 2016 and all relevant supplements, addenda and revisions thereto; Redemption Date Sales Agent means each Valuation Date; means an entity duly appointed by the Global Distributor for the marketing of Fund Shares; 1

5 SEK Shares Share Classes Subscription Date Supplement Swap Agreement Swap Counterparty UBS Funding Rate USD Valuation Date Valuation Point means Swedish Kroner; means the Shares of the Fund; means the classes of Shares of the Fund; means each Valuation Date; means this supplement; means a swap transaction entered into between the Company, in respect of the Fund, and the Swap Counterparty; means UBS AG, London Branch; means a rate compiled from a range of interest rates across maturities which approximates the UBS cost of financing on the global market; means United States Dollar; means every day that is an Irish Business Day or such other date as the Directors and the Swap Counterparty shall agree pursuant to the terms of the Swap Agreement; and means p.m. (Dublin time) on each Valuation Date. 2

6 The Fund This Supplement is issued in connection with the offer of Shares of Independent Aktiv Max. There is one Share Class available for the Fund, namely the SEK/IA class. The Directors of the Company may create new Share Classes from time to time, provided that the creation of any such new Share Classes is notified in advance to and cleared by the Central Bank. A separate pool of assets will not be maintained for each of the Share Classes. Profile of a Typical Investor The Fund is suitable for investors seeking capital appreciation, with a medium to long term investment horizon and who are prepared to accept a high level of volatility. Investment Objective The investment objective of the Fund is capital appreciation through a dynamic exposure to global equity markets. Investors should be aware that the Fund does not have a protection feature and as such the full amount subscribed is at risk. Investment Strategy The Fund will enter into one or more Swap Agreements which may include funded swaps (a swap where cash is paid up front to the swap counterparty in exchange for the return on an Investment Basket (as such term is defined below)), unfunded swaps (a swap where no cash is exchanged initially; instead the Fund exchanges the return on the Asset Portfolio (as such term is defined below) to the swap counterparty in exchange for the return on an Investment Basket or total return swaps (a swap where a fixed or floating return (typically interest rate based) is exchanged for the return of an Investment Basket). Under the terms of each of the Swap Agreements, the Fund will receive the performance of (i) a basket of assets from the Swap Counterparty (each, an Investment Basket ) and/or (ii) a return based on exposure to interest rates as described in the section headed Strategy Leverage below. The relative exposure of the Fund, via the Swap Agreements, to an Investment Basket and to interest rates will depend on the Target Total Exposure as defined and discussed below. Each Investment Basket may have different components and the components will be chosen periodically by the Investment Manager to the Investment Basket. The Investment Manager to the Investment Basket has been appointed by the Manager as a sub-investment manager to the Fund with discretionary power over the assets of an Investment Basket. The Fund does not own the components of an Investment Basket. However, through the Swap Agreements, the Fund will receive the performance of an Investment Basket (positive and negative) i.e. the value of the return on the Swap Agreements will fluctuate with changes in the value of the relevant Investment Basket. In the case of a fully funded swap, the Fund will transfer the notional amount (the nominal or face amount that is used to calculate payments made on a financial instrument) to the Swap Counterparty at the Effective Date and the Swap Counterparty will return the notional amount on the maturity date together with the return on the Investment Basket(s). In the case of an unfunded swap, the Fund will swap the return on the Asset Portfolio in exchange for the return on the Investment Basket(s). In the case of a total return swap, the Fund will swap an agreed fixed or floating return in exchange for the return of the Investment Basket(s). The Investment Manager to the Investment Basket has wide discretion to choose the components of the Investment Basket. The components of an Investment Basket will at all times be eligible assets for UCITS purposes (which will provide up to 100% exposure to global equity markets). The components will include equity indices in developed markets and emerging markets, including but not limited to America, Europe and Asia (each such component of the Investment Basket is a Component ). A component may in some instances include an exposure to the relevant equity index/indices and the UBS Funding Rate through the relevant Swap Agreement; such component s performance will therefore be affected by movements in the UBS Funding Rate. The Investment Manager to the 3

7 Investment Basket will determine the components of the relevant Investment Basket based on fundamental analysis, using output from its own macro model and external analysis. The level of risk exposure will be based on trend indicators (a statistical measure or measure(s) based on security prices, traded volumes or related parameters used in an attempt to predict future trends) such as relative strength (a comparison of stock price performance relative to other stocks in an index or sector). It is not intended that the Investment Baskets will have any sectoral or geographical focus. However, the Fund, through the Components of the Investment Basket, may at times have a significant exposure to emerging markets. Exposure to an emerging market may also include an exposure to Russia. Although exposure to Russian securities is not the principal focus of the Fund and shall only constitute an element of the Fund s anticipated exposures, the Fund may be exposed to more Russian securities than securities from any other single emerging market if the Investment Manager to the Investment Basket identifies more investment opportunities in Russia than in other emerging markets. Nevertheless, exposure to Russian securities will not constitute a major element of the Fund s investment strategy. The Fund will have a long exposure to all Components of the Investment Basket i.e. the value of the Fund will increase if the value of the Components increases. Strategy Leverage The Fund s exposure to the relevant Investment Basket through the Swap Agreements may be leveraged i.e. the performance of the Swap Agreements will fluctuate by a greater percentage amount than the performance of the relevant unleveraged Investment Basket. The Investment Manager to the Investment Basket has the discretion to periodically increase or decrease the level of the leveraged exposure. The level of leveraged exposure chosen (the Target Total Exposure ) will be within the range of 80% of Net Asset Value to 150% of Net Asset Value. The maximum leverage is 50% of Net Asset Value (i.e. the maximum Target Total Exposure is 150% of Net Asset Value). Where the Target Total Exposure is 150% of Net Asset Value, the performance of the Swap Agreements (not including fees and costs) will fluctuate one and a half times as much as the performance of the relevant unleveraged Investment Basket. Where the Target Total Exposure is 80% of Net Asset Value, the performance of the Swap Agreements (not including fees and costs) will fluctuate four fifths as much as the performance of the relevant unleveraged Investment Basket. Where the Target Total Exposure is greater than 100% of Net Asset Value, the Fund, through the Swap Agreements, and in accordance with the terms of each Swap Agreement, will incur a cost calculated at market interest rates to finance the leveraged portion. Where the Target Total Exposure is less than 100% of Net Asset Value, the Fund, through the Swap Agreements, will earn a return linked to the Swedish Interbank Offer Rate (STIBOR) on that portion of the Swap Agreements not exposed to the relevant Investment Basket. Investment Policy The investment objective will be achieved by obtaining exposure to the investment strategy outlined above by the Company, on behalf of the Fund, investing all or substantially all of the net proceeds of any issue of Shares in the following: (i) (ii) Swap Agreements with the Swap Counterparty providing (i) exposure to an Investment Basket and/or (ii) a return based on exposure to interest rates; a portfolio of transferable securities or other eligible assets listed or traded on a Recognised Market or other eligible assets permitted pursuant to the UCITS Regulations (each such instrument is an Eligible Asset and the portfolio is the Asset Portfolio ). These may include (without limitation) equity and equity-related securities such as American Depository Receipts and Global Depository Receipts; fixed income securities such as government and corporate bonds (such bonds may be rated investment grade (by Standard & Poor, Fitch or Moodys) or unrated, fixed and/or floating), money market instruments, floating rate instruments, convertible securities (for example, bonds) and commercial paper; and/or units of other openended collective investment schemes in accordance with the parameters set out in the Investment and Borrowing Restrictions section below. Any of the foregoing may 4

8 be issued or arranged by a member of the UBS AG Group. It is not intended that the Asset Portfolio will have any sectoral or geographical focus. Such direct investment by the Fund in Eligible Assets is termed Direct Investment ; and (iii) financial derivative instruments, namely OTC options, providing economic exposure to an Eligible Asset by giving the right to the Fund to acquire interests in such assets. Such indirect investment by the Fund in Eligible Assets (i.e. exposure through a financial directive instrument) is termed Indirect Investment. It is intended that the Fund will always invest in the Swap Agreements. The Fund may from time to time also invest in Eligible Assets, through Direct Investment and/or Indirect Investment. Where the Fund invests in Eligible Assets, either through Direct Investment or Indirect Investment, the Fund will enter into one or more Swap Agreements with the Swap Counterparty to exchange the price performance and income received in relation to the Eligible Assets for the performance of the relevant Investment Basket(s) thereby providing the Fund with exposure to the investment strategy. Accordingly, the performance of the Fund will not be impacted by the performance of the Eligible Assets. Options An option is a contract which gives the contract buyer the right, but not the obligation, to exercise a feature of the option, such as buying a specified quantity of a particular product, asset or financial instrument, on, or up to and including, a future date (the exercise date). The 'writer' (seller) has the obligation to honour the specified feature of the contract. Since the option gives the buyer a right and the seller an obligation, the buyer pays the seller a premium. Call options are contracts that give the option buyer the right to buy from the seller of the option the underlying product or financial instrument at a specified price on, or before, the exercise date. The commercial purpose for utilising the options is to gain exposure to an Eligible Asset instead of purchasing the physical asset. Certain transferable securities may embed options, such as convertible bonds. A convertible bond entitles the holder to convert it into a predetermined amount of the issuer s equity at certain times during the life of the bond, usually at the discretion of the holder. Investment Basket (managed by the Investment Manager to the Investment Basket) The Investment Manager to the Investment Basket has the discretion, as sub-investment manager, to amend an Investment Basket (at all times in accordance with the investment objective and investment policy of the Fund) as follows: (a) (b) (c) (d) change the proportion of the Investment Basket allocated to each Component; introduce one or more new Components into an Investment Basket; remove one or more existing Components from an Investment Basket; and amend the Target Total Exposure (within the range outlined in the Investment Strategy section) to be applied to an Investment Basket. Any such changes are made subject to the agreement of the Manager and in consultation with the Swap Counterparty. Such changes are expected to occur infrequently, and in normal circumstances, approximately once every one or two months. However, more frequent changes may also occur if considered necessary by the Investment Manager to the Investment Basket, in consultation with the Manager and the Swap Counterparty. Asset Portfolio (managed by the Investment Manager to the Asset Portfolio) The Investment Manager to the Asset Portfolio has discretion to invest in a diversified basket of Eligible Assets. As outlined above, where the Fund invests in Eligible Assets, either through Direct Investment or Indirect Investment, the Fund will enter into one or more Swap Agreements with the Swap Counterparty to exchange the price performance and income received in relation to the Eligible Assets for the performance of the relevant Investment Basket. In this instance, the Fund will have neither market nor credit exposure to the Eligible Assets, except in the event of a default on the part of the Swap Counterparty. 5

9 The Fund will receive the performance of an Investment Basket as a consequence of adopting the Investment Policy described above. Operation of Swap Agreements and Collateral The Swap Agreements will be valued on a consistent and daily basis by the Swap Counterparty and verified independently by the Fund at least weekly. The Swap Counterparty will provide on each Valuation Date a trading price at which the Fund can increase or decrease the Swap Agreements notional amount to permit the necessary adjustments upon the issue and redemption of Shares. The Swap Counterparty will provide collateral to the Fund, where required, so that the Fund's risk exposure to the Swap Counterparty is reduced to the extent required by the Central Bank. The Fund s net exposure to the Swap Counterparty will not exceed 10% of the Net Asset Value of the Fund. Collateral means assets delivered pursuant to the relevant arrangements under the Swap Agreement and which constitute acceptable collateral in accordance with the requirements of the Central Bank. Securities Financing Transactions The maximum proportion of the Fund's total assets that can be subject to SFTs or total return swaps is 100%. The expected proportion of the Fund's total assets that can be subject to SFTs or total return swaps should be in the range of 0 and 95%. The assets underlying the SFTs will typically be equities, fixed income securities or the constituents of the Asset Portfolio. For further information on SFTs please see section entitled Securities Financing Transactions in the Prospectus. 6

10 Risk Factors Investors attention is drawn to the risk factors set out in the Prospectus and to the following additional risk factors. Investment risk: the Fund will be exposed to the investment risk arising from an Investment Basket underlying the Swap Agreements. In such circumstances, the Fund is therefore exposed to the risks inherent to investments in global equity markets. The Fund does not have a capital protection feature and as such the full amount subscribed by an investor is at risk. Investment horizon: The Fund is expected to produce returns over the medium to long term, and accordingly investors should consider the Fund to be a medium to long term investment. Leverage risk: the Investment Manager to the Investment Basket has the ability at any stage to increase or decrease the leverage within the Fund (within the parameters disclosed below at the Investment and Borrowing Restrictions section). In circumstances where the Fund s Target Total Exposure is greater than 1 and where the Components of the relevant Investment Basket fall, then the performance of the Fund will fall proportionately more than the performance of the relevant Components. In circumstances where the Fund s Target Total Exposure is less than 1 and where the Components of the relevant Investment Basket rise, then the performance of the Fund will increase proportionately less than the performance of the relevant Components. Foreign currency risk: the Components of an Investment Basket may be denominated in a non-base Currency. The Fund does not intend to hedge or otherwise reduce the effects of currency changes between the currency of the relevant Component and the Base Currency. Consequently, the performance of the Fund, as measured in Base Currency, will be negatively affected by the strengthening of the Base Currency against the currency of the Component. Counterparty Risk: the Fund is exposed to the risk that the Swap Counterparty may default on its obligations to perform under the Swap Agreement. In assessing this risk, investors should recognise the protection offered by the regulatory requirement that the exposure to the Swap Counterparty should not exceed 10% of the NAV of the Fund. In circumstances where the gross exposure (i.e. the Fund s counterparty credit risk amount before taking into account the value of collateral received from the counterparty) exceeds 10% of NAV of the Fund, it is intended that the Swap Counterparty will provide collateral to the Fund so that the Fund's risk exposure to the Swap Counterparty is reduced below 10%. Use of Derivatives: the Swap Agreements are structured derivative transactions. While the prudent use of such derivatives can be beneficial, derivatives also involve risks different from, and in certain cases, greater than, the risks presented by more traditional investments. Structured derivative transactions are complex and may involve a high degree of loss. The aim of the Swap Agreements is to deliver the Fund s investment objective, and, as such, the use of the Swap Agreements is not speculative in nature. Legal Risk: the application of a law or regulation that has not been anticipated or that arises because the Swap Agreements are not legally enforceable or documented correctly could result in a loss to the Fund. Avoidance of conflict of interest: the units within the UBS AG group who are providing services to the Fund operate as independent entities and in order to avoid possible conflicts of interest, all transactions between these entities and the Fund are undertaken at arms length prices, and in the best interest of the Shareholders. Early Termination Risk: The Directors may decide to terminate the Fund where the Net Asset Value is less than USD 50 million (or its foreign currency equivalent). This may result in Shareholders receiving redemption proceeds less than the amount subscribed. Risk Factors Relating to Emerging Markets and Russia: Particular components of a relevant index may give rise to the following issues associated with investment in emerging markets and Russia which 7

11 require consideration of matters not usually associated with investing in securities of issuers in developed capital markets. Emerging markets and Russia may present different economic and political conditions from those in western markets, and less social, political and economic stability. The absence, until relatively recently, of any move towards capital markets structures or to a free market economy mean that exposure to emerging markets is more risky than investing in western markets. The Net Asset Value of the Fund may be affected by uncertainties such as political or diplomatic developments, social instability and religious differences, changes in government policies, taxation and interest rates, currency conversion and repatriation and other political and economic developments in law or regulations in emerging markets and Russia, in particular, the risks of expropriation, nationalisation, confiscation or other taking of assets, debt moratoria and/or debt defaults and changes in legislation relating to the level of foreign ownership in certain sectors of the economy. There are also other risks associated with exposure to emerging markets and Russia. Such risks include a potentially low level of investor protection; poor or opaque corporate governance; legislative risk (that laws may be changed with retrospective and/or immediate effect); and political risk (that the interpretation or method of enforcement of laws may be changed with a consequent and adverse effect on the Net Asset Value of the Fund). In particular, it should be appreciated that the legislation, regulations, foreign exchange controls, and tax laws applicable to holders of emerging market countries securities and Russian securities, and their interpretation and application by the relevant authorities, is evolving and may change in the future, and that political or economic change and instability may be more likely to occur and have greater effect on the economics and markets of emerging countries. Adverse government policies, taxation, restrictions on foreign investment and on currency convertibility and repatriation, currency fluctuations and other expropriation, nationalisation or other confiscation could also result in a loss to the Fund. By comparison with more developed securities markets, most emerging countries securities markets are comparatively small, less liquid and more volatile. In addition settlement, clearing and registration procedures may be under-developed enhancing the risks of error, fraud and/or default. Furthermore, the legal infrastructure and accounting, auditing and reporting standards in emerging markets may not provide the same degree of investor information or protection as would generally apply to major markets. The emerging markets to which the Fund will be exposed are less regulated than many of the world's leading securities markets. In addition, market practices in relation to settlement of securities transactions and custody of assets in such countries can provide increased risk to the Fund. The Fund may be exposed to markets where custodial and/or settlement systems are not fully developed. Accounting, auditing requirements and financial reporting standards in emerging market jurisdictions may differ from those generally accepted in the international capital markets and consequently information available to investors in developed capital markets is not always obtainable in respect of companies in such markets. The Fund may be exposed to securities denominated in foreign currencies. The Net Asset Value of the Fund and its income may be affected by fluctuations in currency rates and exchange control regulations. 8

12 Investment and Borrowing Restrictions The Fund is subject to the investment and borrowing restrictions as set out in Appendix I of the Prospectus and as provided for in the Central Bank UCITS Regulations. Paragraph 3.1 of the investment and borrowing restrictions section of the Prospectus shall be disapplied and the Fund shall be subject to the following investment restriction: The Fund may not invest more than 10% in aggregate of its Net Asset Value in other collective investment schemes. Any leverage created through the use of derivatives will be measured using the commitment approach whereby such leverage cannot exceed the Net Asset Value of the Fund. The commitment approach calculates leverage by measuring the market values of the underlying exposures of the derivative instruments referred to above. The Fund s total exposure will at all times be less than 200% of Net Asset Value. Dividend Policy The Fund will pursue an accumulation policy and will not make any distributions of dividends. In the event that the Directors determine to make any distributions of dividends in respect of the Fund, full details will be provided in an updated Supplement and Shareholders will be notified in advance. Taxation Any change in the Fund s tax status or in taxation legislation could affect the value of the investments held by the Fund and could affect the return to investors. Potential investors and Shareholders should note that the statements on taxation, which are set out in the Prospectus are based on advice which has been received by the Directors regarding the law and practice in force in the relevant jurisdiction as at the date of the Prospectus. As is the case with any investment, there can be no guarantee that the tax position or proposed tax position prevailing at the time an investment is made in the Fund will endure indefinitely. The attention of potential investors is drawn to the tax risk associated with investing in the Fund. See sections headed Taxation on page 35 in the Prospectus. 9

13 Subscriptions Shares are available for subscription at the Net Asset Value (plus any applicable subscription fee) on each Subscription Date. Applicants must subscribe at least the Minimum Subscription amount. The completed signed application form (and supporting documentation in relation to money laundering prevention checks) must be received by the Administrator by post, delivery or fax (with the original to follow soon after) no later than a.m. (Dublin time) on the Irish Business Day immediately preceding the relevant Valuation Date. Cleared funds must be received, by the Administrator, for the account of the Fund, by no later than close of business (Dublin time) on the relevant Valuation Date. Such applications are not processed until cleared funds are confirmed by the Administrator. Any delay will be at the expense of the relevant Shareholder. The Minimum Subscription for Share Class SEK/IA is SEK 500,000 and one Share respectively. Investors must subscribe for at least the Minimum Subscription in the case of an initial subscription into the Fund. In calculating the subscription/redemption price for the Fund, the Directors may on any dealing day when there are net subscriptions/redemptions adjust the subscription/redemption price by adding/deducting an anti-dilution levy to cover charges, duties and other costs involved in buying or selling investments in the underlying investments of the Fund. The Directors may, in their absolute discretion, charge a subscription fee (of up to 5% of the amount subscribed) to investors, payable to the Manager and/or Global Distributor, based on the amount subscribed. Where the amount subscribed for Shares is not equivalent to an exact number of Shares, fractions of Shares may be issued rounded to the third decimal place. Redemptions Shares are redeemable at the option of the Shareholder on each Redemption Date except in the circumstances described herein and in the Prospectus. Shares may be redeemed at the Net Asset Value for the relevant Share Class (less any applicable redemption fee) on each Redemption Date. Requests for redemption may be made by post, delivery, or fax (with the signed original to follow as soon as is possible) to the Administrator on a completed redemption request form (which is available on request from the Administrator), must include payment details and must be received by no later than a.m. (Dublin time) on the Irish Business Day immediately preceding the relevant Valuation Date. Where a faxed redemption request is received, redemption proceeds will only be settled to the investor s account of record. Redemption request forms not received by this time shall be held over and applied on the next following Redemption Date, unless otherwise determined by the Directors. For the avoidance of doubt, redemption request forms received after am on the Irish Business Day immediately preceding the relevant Valuation Date will only be accepted for that relevant Valuation Date in exceptional circumstances and in any event, not later than the relevant Valuation Point. Settlement for redemptions will normally be made by telegraphic transfer or other form of bank transfer to the bank account of the Shareholder specified in the original application form up to five Irish Business Days from receipt by the Administrator of the correct documentation and in any event within ten days of the Redemption Date on which the redemption request has been processed. No payments to third parties will be effected. In the event that redemption proceeds are to be paid to an account other than the account specified in the original signed application form, redemption proceeds will not be paid until an original amendment to the original application notifying the Administrator of a change in account details and all other documentation required by the Administrator, have been received. Settlement for redemption is made at the Shareholder s risk. Redemption proceeds will not be paid where an original signed application form has not been previously received from the investor. No redemption payment may be made from that holding until any other documentation required by the Administrator, including any documents in connection with 10

14 anti-money laundering procedures, have been received from the Shareholder and the anti-money laundering procedures have been completed. The Directors may, in their absolute discretion, charge a redemption fee of up to 2 % to investors, payable to the Manager and/or Global Distributor based on the amount redeemed. Publication of Net Asset Value The Net Asset Value per Share of the Fund as calculated for each Valuation Point will be published daily on Bloomberg and also updated daily on the Internet ( The Net Asset Value per Share will also be available from the Administrator. Such information is published for information only; it is not an invitation to subscribe for, redeem or convert Shares at that Net Asset Value. 11

15 FEES AND EXPENSES Establishment Expenses The fees and expenses incurred in connection with the establishment of the Company and the Fund (including the registration of the Fund in any jurisdiction), the preparation and publication of the Prospectus and all legal costs and out-of-pocket expenses related thereto to be charged to the Fund will not exceed EUR 50,000. Any such expenses will be charged over a period of not less than 3 years. The expenses incurred in connection with the establishment of the Company are as set out in the section headed Fees and Expenses in the Prospectus. Any Funds of the Company which may be established at a later date may, at the absolute discretion of the Directors, be allocated from the Fund such portion of the formation expenses of the Company as the Directors consider to be fair in the circumstances. Service provider fees Fees payable to the Manager, the Investment Manager to the Asset Portfolio, the Administrator and the Depositary. The Manager will be entitled to a fee of up to 0.10% per annum of the Net Asset Value of the Fund as of the relevant Valuation Date (which fee will accrue daily and will be payable quarterly in arrears). The Administrator will be entitled to a fee of up to 0.06% per annum of the Net Asset Value of the Fund as of the relevant Valuation Date (which fee will accrue daily and will be payable quarterly in arrears (and pro rata for lesser periods)). The Depositary will be entitled to a fee of up to 0.05% per annum of the Net Asset Value of the Fund as of the relevant Valuation Date (which fee will accrue daily and will be payable quarterly in arrears (and pro rata for lesser periods)). The Investment Manager to the Asset Portfolio will be entitled to a fee of up to 0.08% per annum of the Net Asset Value of the Fund as of the relevant Valuation Date (which fee will accrue daily and will be payable quarterly in arrears). Contractual arrangements have been put in place such that the Swap Counterparty will arrange for the payment (out of its own assets) of all fees payable to the Manager, Investment Manager to the Asset Portfolio, the Administrator and the Depositary for services provided in respect of the Fund. Consequently, neither the Company nor the Fund shall be liable to pay such service provider fees. However, the price of the relevant Swap Agreement with the Swap Counterparty will take account of such payments, as further disclosed below. The Company may pay out-of-pocket expenses incurred by such service providers (including VAT thereon). Such out-of-pocket expenses may include transaction charges provided that they are charged at normal commercial rates and incurred in the performance of the duties of the relevant service provider under the relevant agreement. Further charges and expenses of the Fund are set out in the Fees and Expenses section of the Prospectus on page 32. The charges and expenses apply to the Fund, save as set out herein. Fees payable to Investment Manager to the Investment Basket The Investment Manager to the Investment Basket will be entitled to a fee of up to 2.25% per annum of the Net Asset Value of the Fund as of the relevant Valuation Date. The fee will accrue daily and will be payable monthly in arrears (and pro rata for lesser periods). Swap Counterparty charges The Swap Counterparty will take into account the following factors when determining the price of the Swap Agreements: 12

16 A B All external fees to which it is committed to pay. Such fees include those payable to the service provider as disclosed above. In addition, the Swap Counterparty has agreed to pay a fee, based on the value of the Swap Agreements, to an introducing/sales agent as compensation for increasing the notional amounts of the Swap Agreements; and Any transaction costs and charges that normally arise which may include any brokerage costs, index licence fees, and other costs of hedging the Swap Agreements (for example normal execution and transaction costs incurred by the Swap Counterparty). Such costs and charges will be levied at normal commercial rates. Accordingly, each of the above mentioned costs shall be discharged by the Swap Counterparty out of the Swap price it applies. Miscellaneous The assets of each fund are segregated from those of the other funds and a creditor of any specific fund shall have recourse only against the assets of that fund. The Directors may decide to terminate the Fund where the Net Asset Value is less than USD 50 million (or its foreign currency equivalent). Further details regarding termination are set out on page 54 of the Prospectus. 13

17 The Investment Manager to the Investment Basket Under an investment management agreement dated 27 August 2012, the Manager has appointed Independent Investment Group Sweden AB as Investment Manager to the Investment Basket, a company incorporated in Sweden and having its registered office at Nygatan 35, SE Linkoping, Sweden. The primary function of the Investment Manager to the Investment Basket relating to the Fund is to select initially and on an on-going basis the effective weightings of components in the Investment Basket and to make periodic re-weightings and new selections for the Investment Basket. In addition, Independent Investment Group Sweden AB will determine a leverage factor that may be applied to the Investment Basket. Independent Investment Group Sweden AB will not be involved with the management of the Asset Portfolio. Independent Investment Group Sweden AB was established in 2001 and is a privately owned securities company based in Linkoping, Sweden. As of 15 July 2016, its assets under management were approximately SEK 1 billion. Independent Investment Group Sweden AB has managed both UCITS and AIF collective investment schemes since its establishment. The investment management agreement appointing Independent Investment Group Sweden AB provides, inter alia, that: (i) (ii) the appointment of the Investment Manager to the Investment Basket shall remain in effect unless terminated by not more than ninety days notice in writing by either the Investment Manager to the Investment Basket or Lantern Structured Asset Management Limited or, in certain circumstances outlined in the investment management agreement, at any time by written notice; and the Investment Manager to the Investment Basket is entitled to payment of fees for its services, as more fully described in the section headed Fees payable to Investment Manager to the Investment Basket on page

18 TAX INFORMATION FOR SWEDISH INVESTORS Below follows a summary of certain Swedish tax consequences related to the holding of Shares in the Fund for individuals and limited liability companies. The summary is intended for Shareholders who are resident in Sweden, unless otherwise indicated. The summary does not deal comprehensively with all tax issues that may arise from investing in the Fund. For instance, it does not address tax issues in connection with Shares held by trading companies or legal entities other than limited liability companies, nor does it address the tax issues where Shares are held as current assets in business operations. Special tax consequences, which are not described below, may also arise for certain categories of taxpayers, such as investment companies, mutual funds, and natural and legal persons who are not resident in Sweden. Shareholders are advised to consult their tax advisors for further information in relation to the tax consequences that may arise as a result of investing in the Fund, including the potential impact of foreign tax rules, tax treaties (where applicable) and/or other rules which may apply. 1. For individuals, capital income, including dividends received from the Fund and capital gains on sale of Shares in the Fund, are taxed as capital income. The tax rate on income from capital is 30 percent. The capital gain or capital loss on sale of Shares in the Fund and other securities is normally calculated as the difference between the sales price less any selling expenses and the acquisition cost. 2. For individuals, capital losses on listed securities that are taxed as shares of stock may, as a general rule, be fully deducted against capital gains on shares in the same year. Full deduction is also allowed against capital gains on other market-listed securities, with the exception of shares in mutual funds containing only Swedish receivables (interest funds). Losses that cannot be fully deducted in this manner are deductible against other capital income. However, the deduction available is restricted to 70% of the loss. If a net loss should arise in the capital income category such a loss may reduce tax on income from employment and business operations, as well as property tax. Tax reduction is granted at 30 percent of the net loss that does not exceed SEK and 21 percent of the remaining part. Any unutilised losses cannot be carried forward to future years. 3. For limited liability companies, all income, including taxable capital gains and dividends received from the Fund, is taxed at a rate of 26.3 percent. 4. For limited liability companies, deductible capital losses on shares that are held as capital investments may normally only be deducted against taxable capital gains on shares and other securities. Such a capital loss may also, provided that certain conditions are met, be deducted against capital gains on shares and ownership rights in companies within the same group. Losses that cannot be utilised during a given year can be carried forward to offset such capital gains in future years without limitation in time. 5. As noted above, special tax rules may apply to certain categories of enterprises, such as investment funds and investment companies. In addition to the above for income years starting 1 January 2012 or later, Swedish investors in Swedish or foreign investment funds, including investors in the Fund, are taxed on a notional income corresponding to 0.4% of the net asset value of their corresponding share in the Fund at the beginning of each year, which must be included in the investor s tax return. For individuals, the regular income tax rate is 30% on capital income with the effective tax rate amounting to 0.12 % of the value of Shares held in the Fund at the beginning of the year (0.4 * 30 %). No such income is however to be applied if the Shares in the Fund are deposited in an investment savings account ( investeringssparkonto ). In this case a notional income for investment savings account will instead be applied, based on the official interest rate. For legal entities, such as limited liability companies and other legal entities, the tax rate is 26.3% with the effective tax rate limited to % of the value of Shares held in the Fund at the beginning of the year. 15