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ProspectusSeptember 2006
Lloyds TSB
Offshore FundsLimited
February 2008
LLOYDS TSB OFFSHORE FUNDS LIMITED
SUPPLEMENT TO PROSPECTUS This document is a supplement (“the Supplement”) to the Prospectus dated February 2008 for Lloyds TSB Offshore Funds Limited (“the Original Prospectus”) and, together with the Original Prospectus, constitutes a prospectus, valid as at April 2009, prepared in accordance with the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003, and also constitutes a prospectus required by the New Collective Investment Schemes Sourcebook (“the COLL Sourcebook”) published by the Financial Services Authority of the United Kingdom (“the FSA”) as part of its Handbook of Rules and Guidance made under the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”). Lloyds TSB Private Banking Limited of 25/27 Perrymount Road, Haywards Heath, West Sussex, RH16 3SP, which is authorised and regulated by the FSA has approved this Supplement and the Original Prospectus for the purposes of Section 21 of the FSMA. The Original Prospectus should be read subject to the amendments and additions set out overleaf in this Supplement.
April 2009
LLOYDS TSB OFFSHORE FUNDS LIMITED The following additions should be read in conjunction with the contents of the Original Prospectus. Page 8 (The Manager) and Sections 5 (Data Protection) and 6 (Declarations and Signatures) of the application form. With effect from 19th January 2009, Lloyds TSB Group plc changed its name to Lloyds Banking Group plc. In Section 5 of the Application form, the paragraph “*The Lloyds TSB group includes all companies with the Lloyds TSB name, Cheltenham & Gloucester plc and Scottish Widows plc, and their associated companies.” should be replaced with ““Your Group” means the Lloyds Banking Group, which includes you and a number of other companies using brands including Lloyds TSB, Halifax and Bank of Scotland, and their associated companies. More information on the Lloyds Banking Group can be found at www.lloydsbankinggroup.com. For these purposes "associated companies" includes Lloyds Banking Group plc and any subsidiary, affiliate or other firm directly or indirectly controlled from time to time by either Lloyds Banking Group plc or you.” All other references to Lloyds TSB Group plc and the Lloyds TSB Group should now be read as Lloyds Banking Group plc and the Lloyds Banking Group respectively. Page 4 The Company
As at 31st March 2009 the Net Asset Value per Share (“NAV”)* of each of the Classes is as follows: Income Funds High Income Fund £0.6976 Euro High Income Fund €1.246 Sterling Bond Fund £1.095 Sterling Deposit Fund Growth Funds
£1.015
Asian Pacific Fund £2.020 European Fund £4.671 International Fund £2.479 Japanese Fund £0.6955 North American Fund £6.959 UK Fund £4.038 Managed Fund
Capital Growth Fund £1.250 (Source Lloyds TSB Offshore Fund Managers Limited). Page 18 Fees and charges With effect from 20th May 2008, the Manager has agreed to reduce the management fee of the Sterling Deposit Fund from 0.625% to 0.20% per annum. The Custodian, Capita Trust Company (Jersey) Limited, has also agreed to reduce the Custodian fee of the Fund from 0.10% per annum to 0.05% per annum, with effect from the same date. It is the intention that these reductions are for a temporary period only and the fees will revert to their former levels at some time in the future. Investors will receive a minimum of three months prior notice of the ending of the reduction.
Pages 24 & 25 Investment limits re the Sterling Deposit Fund
Section 3 (ii) Replace the existing wording with the following:
not more than 10% in value of the property of this Fund may be on deposit or loan to the same person (and for this purpose members in the same group as the Manager are treated as one person and members in the same group as the Custodian are treated as another person), except that up to 20% or £1,000,000 (or the equivalent amount in another currency), whichever is greater, may be deposited or loaned to any one eligible institution (as defined in the Rules), providing it or its parent or subsidiary which is an eligible institution has shareholders’ funds of US$1,000,000,000 or more, and the amount as deposited or loaned does not exceed 10% of the relevant institution’s issued capital and reserves as shown in its last published accounts; Page 35 Material Contracts The Management Agreement (section i) and Custodian Agreement (section iv) have each been supplemented by side letters dated 20th May 2008 to reflect the reduction of fees referred to above.
Dated April 2009
This document is the Prospectus of LloydsTSB Offshore Funds Limited (the“Company”), valid as at February 2008,prepared in accordance with the CollectiveInvestment Funds (Recognized Funds)(Rules) (Jersey) Order 2003 (the “Order”) ofthe Island of Jersey for the purpose of themarketing and sale of participatingredeemable preference Shares of 1p each(“Shares”) in the Company.
The Company is a recognized fund as definedin the Collective Investment Funds (Jersey)Law, 1988, as amended and permits havebeen granted by the Jersey Financial ServicesCommission (the “Commission”) under thislaw to the Company, Lloyds TSB OffshoreFund Managers Limited (the “Manager”) andCapita Trust Company (Jersey) Limited (the“Custodian”). The Commission is protected bythis law against liability arising from thedischarge of its functions under this law.
The Company is a recognised scheme underSection 270 of the Financial Services andMarkets Act 2000 (the “FSMA”) of the UnitedKingdom. This document also constitutes theprospectus required by the CollectiveInvestment Schemes Sourcebook (the ‘COLLSourcebook’) published by the FinancialServices Authority of the United Kingdom(“FSA”) as part of its Handbook of Rules andGuidance made under the FSMA (the “FSARules”) as issued, amended or replaced by theFSA from time to time. This document isdistributed in the United Kingdom by, and onbehalf of, the Company and is approved forthe purpose of Section 21 of the FSMA byLloyds TSB Private Banking Limited, which isauthorised and regulated by the FSA incarrying on regulated activities as described inthis Prospectus.
The consent of the Commission under theControl of Borrowing (Jersey) Order 1958, asamended, has been obtained for the issue ofShares. The Commission is protected by theControl of Borrowing (Jersey) Law 1947, asamended, against liability arising from thedischarge of its function under this law.
The Shares have been introduced to, and arelisted on the Channel Islands Stock Exchangeand the Malta Stock Exchange.
This Prospectus includes particulars given incompliance with the Listing Rules of theChannel Islands Stock Exchange for thepurpose of giving information with regard tothe Company. The Directors and the Manager,whose names appear on page 3, accept fullresponsibility for the information contained inthis Prospectus and confirm, having made allreasonable enquiries, that to the best of theirknowledge and belief there are no other factsthe omission of which would make anystatement herein misleading.
Neither the admission of the Shares to theChannel Islands Stock Exchange nor theapproval of the Prospectus pursuant to thelisting requirements of the Channel IslandsStock Exchange shall constitute a warranty orrepresentation by the Channel Islands StockExchange as to the competence of the serviceproviders to or any other party connected withthe Company, the adequacy and accuracy ofinformation contained in the Prospectus or thesuitability of the Company for investment or forany other purpose.
The information contained in this Prospectusdoes not constitute an invitation to buy or thesolicitation of an offer to sell securities oraccept deposits or to provide any otherproducts or services in any jurisdiction to anyperson to whom it is unlawful to make suchan offer or solicitation, nor should it beconstrued to constitute any investment advice.Legislation or regulations in your homejurisdiction may prohibit you from entering intosuch a transaction with us. We reserve theright to make final determination on whetheryou are eligible for any products or services.Residents or Nationals of certain jurisdictionsmay be subject to exchange controls andshould seek independent advice beforeentering into any transactions with us.
Attention is drawn to the compulsoryredemption provisions under the heading
1
important information
“Qualified Holders” on page 16.
Persons interested in acquiring Shares shouldinform themselves as to (i) the legalrequirements within the countries of theirnationality, residence, ordinary residence ordomicile for such acquisition; (ii) any foreignexchange control requirement which theymight encounter on acquisition or sale ofShares; and (iii) the income tax and other taxconsequences which might be relevant to theacquisition, holding or disposal of Shares.
The Shares have not been registered under theUS Securities Act of 1933 and except, in atransaction which does not violate this Act,may not be directly or indirectly offered or soldto, or for the benefit of, a US person.
For these purposes a US person is a residentof the USA, a partnership organised or existingin any state, territory or possession of theUSA, a corporation organised under the lawsof the USA or of any state, territory orpossession thereof or areas subject to itsjurisdiction, or any estate or trust other thanan estate or trust income of which arises fromsources outside the USA (which is noteffectively connected with the conduct of atrade or business within the USA) and is not included in gross income for the purposes of computing USA federal incometaxation. The attention of US persons isdrawn to the compulsory redemptionprovisions on page 16 under the heading“Qualified Holders”.
An investor will not have the right providedunder Section 6.7 (Cancellation andWithdrawal) of the Conduct of BusinessSourcebook published by the FSA as part ofthe FSA Rules to cancel any investmentagreement entered into with the Company orthe Manager.
The Financial Services Compensation Schemeestablished under section 213 of the FSMAdoes not apply to the Company or theManager. However, the Collective Investment
Funds (Recognized Funds) (Compensation forInvestors) (Jersey) Regulations, 1988, asamended, provide for a scheme ofcompensation for investors in the event of thedefault of a functionary who has becomebankrupt or is unable to satisfy civil liabilityclaims in connection with a recognized fund.The maximum amount of compensationpayable under the scheme to any one investoris £48,000 but is subject to the total amountof compensation in any one year under thescheme being limited to £5,000,000.
Neither the delivery of this Prospectus, nor theallotment or issue of Shares by the Companyor the sale of Shares by the Manager, shallcreate any implication that there have notbeen any changes in the affairs of theCompany since the date of this Prospectus.
The Directors of the Company and theManager have taken all reasonable care toensure that the facts stated herein are true andaccurate in all material respects and that thereare no other material facts, the omission ofwhich would make misleading any statementherein whether of fact or opinion. TheManager and all of the Directors acceptresponsibility accordingly.
If you are in any doubt about the contents ofthis Prospectus, you should consult yourstockbroker, bank manager, solicitor,accountant or other financial adviser.
The Manager conducts its business inaccordance with local legal and regulatoryrequirements, including anti-money launderingrequirements which require the Manager todisclose information that would otherwise beconfidential in circumstances where theManager suspects its client of benefiting fromor engaging in criminal activity including taxfraud.
The supply of the product described in thisdocument meets the provisions of TheDistance Marketing of Consumer FinancialServices Directive Instrument (2002/65/EC).
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Further copies of this Prospectus and of the Company’s most recent Annual Report & Accounts and any subsequent Interim Report& Accounts may be obtained free of charge from Lloyds TSB Offshore Fund Managers Limited, P.O. Box 311, 11-12 Esplanade, St Helier, Jersey JE4 8ZU.Telephone Jersey +44 (0) 1534 845555. Facsimile +44 (0) 1534 845556. Website www.lloydstsb-offshore.com/funds. E-mail: [email protected]. Messages sent by email may not be secure and may be intercepted by third parties. Forthese reasons, please do not use email to send us communications which contain confidential information or instructions as werequire these instructions to be in writing. If you disregard this warning and choose to send us confidential information, you agreethat you do so at your own risk and that you will not hold the Manager responsible for any loss that you suffer as a result.
The CompanyLloyds TSB Offshore Funds LimitedDirectors:Ross Davey Willcox (Chairman)Ian Mark Jeremie HardyTimothy Joseph HerbertBrian Charles JamesNigel Ross Jeacock-FewtrellRegistered OfficeP.O. Box 16025 New Street, St Helier,Jersey, Channel Islands JE4 8RG
Company SecretaryLloyds TSB Offshore CorporateServices Limited P.O. Box 160 25 New Street, St Helier,Jersey, Channel Islands JE4 8RG
Manager and RegistrarLloyds TSB Offshore Fund ManagersLimitedRegistered OfficeP.O. Box 16025 New Street, St Helier,Jersey, Channel Islands JE4 8RG
Principal Place of BusinessP.O. Box 311, 11 – 12 Esplanade, St Helier, Jersey, Channel Islands JE4 8ZU
CustodianCapita Trust Company (Jersey) LimitedRegistered Office12 Castle Street,St. Helier,Jersey, Channel Islands JE2 3RT
Investment ManagerScottish Widows InvestmentPartnership LimitedRegistered Office10 Fleet Place, London EC4M 7RH
AuditorPricewaterhouseCoopers CI LLPTwenty Two Colomberie,St Helier, JerseyChannel Islands JE1 4XA
Legal AdvisersIn Jersey:Mourant du Feu & JeuneP.O. Box 8722 Grenville Street, St. Helier,Jersey, Channel Islands JE4 8PX
In England:LinklatersOne Silk StreetLondon EC2Y 8HQ
In Guernsey:Ozannes1 Le Marchant StreetSt Peter Port, GuernseyChannel Islands GY1 4HP
Channel Islands StockExchange SponsorOzannes Securities Limited1 Le Marchant StreetSt Peter Port, GuernseyChannel Islands GY1 4HP
Principal BankersLloyds TSB Offshore LimitedP.O. Box 16025 New StreetSt Helier, JerseyChannel Islands JE4 8RG
Paying AgentLloyds TSB Offshore Paying Agent(HK) Limited26/ F Oxford House, Taikoo Place,Quarry Bay, Hong Kong
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management andadministration
The Company was incorporated in Jersey on 11th July 1983. It is a public company withlimited liability under the Companies (Jersey)Law 1991, as amended (the “Companies Law”).
The Company is an umbrella fund and is theholder of a recognized fund certificate issuedunder the Order, and holds a permit as acollective investment fund under Article 7 ofthe Collective Investment Funds (Jersey) Law,1988, as amended and is a recognisedscheme under Section 270 of the FSMA.
The Company’s Shares are divided intoclasses, each of which has a separate portfolioof investments or assets (“Funds”) and adifferent investment objective, providinginvestors with opportunities to invest in a
range of equity, bond and deposit funds. TheShares are issued, sold, redeemed andrepurchased and exchanges effected betweenFunds by reference to the net asset values(“NAV”) of the relevant Funds. Subject to theprovisions of the Order, the Directors maycreate new classes (Funds) from time to timeby adopting fund rules approved by theCustodian specifying the relevant informationin respect of the class being created.
Except for the Sterling Deposit Fund all of theFunds are classified as securities funds underthe Order. The Sterling Deposit Fund isclassified as a money market fund.
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the company
Fund ClassesNAV at 31st
Fund Initial Issue Initial Price December 2007***
Income FundsHigh Income Fund June 1995 £1 £0.9133Euro High Income Fund * May 1990 £1 e1.626Sterling Bond Fund July 2001 £1.441** £1.427Sterling Deposit Fund July 1983 £1 £1.025
Growth FundsAsian Pacific Fund May 1990 £1 £2.871European Fund May 1990 £1 £7.704International Fund May 1990 £1 £3.440Japanese Fund July 2001 £1 £0.8860North American Fund May 1990 £1 £9.156UK Fund May 1990 £1 £6.641
Managed FundCapital Growth Fund January 1995 £1 £1.871
* The Euro High Income Fund was initially launched in May 1990 as the International Bond Fund. On 2nd October 2006 followingapproval from the Shareholders the name of the Fund was changed to the Euro High Income Fund, the base currency was changedto euro and the investment objectives and policy were changed to those shown in this Prospectus.
** The Sterling Bond Fund was launched on 27th July 2001 initially in connection with a scheme of amalgamation with Hill SamuelSterling Fixed Interest Fund Limited and the initial net asset value per Share was the same as that of Hill Samuel Sterling FixedInterest Fund Limited.
*** Source: Lloyds TSB Offshore Fund Managers Limited (January 2008).
The investment objectives and policy of eachof the Funds is set out below.
Income FundsHigh Income Fund
Objective To seek a high income from aspread of fixed interest securities.
Policy The investment policy will bedirected to supporting the paymentof dividends above the level of shortterm sterling interest rates. Thispolicy will result in a gradualreduction in the capital value of theShares, except when bond pricesgenerally are rising. The Fund willnormally hold a relatively widerange of securities in order to keepa low level of exposure to individualbond issues other than governmentsecurities. The Fund may also holda substantial part of its assets inbank deposits and money marketinstruments from time to time. TheFund is permitted to invest insecurities denominated incurrencies other than sterling. Thecurrent policy of the Directors is thatany such investments in non-sterling denominated securitiesshould be fully hedged againststerling to eliminate the effects ofany exchange rate movements.
Euro High Income Fund
Objective To maintain a high income throughinvestment in a spread of fixedinterest securities denominatedpredominately in euro.
Policy The investment policy will bedirected to supporting the paymentof dividends above the level of shortterm euro interest rates. This policywill result in a gradual reduction in
the capital value of the Shares,except when bond prices generallyare rising. The Fund will normallyhold a relatively wide range ofsecurities in order to keep a lowlevel of exposure to individual bondissues other than governmentsecurities. The Fund may also holda substantial part of its assets inbank deposits and money marketinstruments from time to time. The Fund is permitted to invest insecurities denominated incurrencies other than euro. Thecurrent policy of the Directors is thatany such investments in non-eurodenominated securities should befully hedged against euro toeliminate the effects of anyexchange rate movements.
Sterling Bond FundObjective To provide a regular income from a
managed portfolio of sterling fixedinterest securities with a particularemphasis on those securities onwhich interest is paid gross to non-residents of the United Kingdom.
Policy The assets of the Fund are generallyinvested in a managed portfolio ofsterling fixed interest securitieswhich have been issued bygovernments, local authorities,public utilities and corporations. Ifit appears advisable to hold assetshaving a short term maturity, thenthe Fund may also place money onbank deposit (subject to certainlimitations) or purchase moneymarket instruments. Similarly,derivative instruments such astraded options and financial futuresmay be used to reduce risk.
5
investment objectivesand policy
Sterling Deposit Fund Objective To seek to maintain the capital
value of the Shares and tomaximise income primarily throughinvestment in bank and buildingsociety deposits, fixed interestsecurities and other monetaryinstruments denominated insterling.
Policy The investment policy will be toinvest primarily in short termsterling deposits placed with majorbanks and building societies.Security of capital will be a primaryconsideration.
Growth FundsAsian Pacific Fund
Objective To seek long term capitalappreciation through investment inthe securities of Asia andAustralasia (excluding Japan).
Policy To be invested primarily in adiversified portfolio of Asian(including Australasian) equitiesand from time to time in securitiesconvertible into equities.
European Fund
Objective To seek long term capitalappreciation through investment inEuropean securities.
Policy To be invested primarily in adiversified portfolio of European(excluding the United Kingdom)equities and from time to time insecurities convertible into equities.
International Fund
Objective To seek long term capitalappreciation through investment insecurities world-wide.
Policy To be invested primarily in adiversified portfolio of internationalequities and from time to time insecurities convertible into equities.
Japanese Fund
Objective To seek long term capitalappreciation through investment inthe securities of Japan.
Policy To be invested primarily in adiversified portfolio of Japaneseequities and from time to time insecurities convertible into equities.
North American Fund
Objective To seek long term capitalappreciation through investment inNorth American securities.
Policy To be invested primarily in adiversified portfolio of NorthAmerican equities and from time totime in securities convertible intoequities.
UK Fund
Objective To seek long term capitalappreciation through investment inUnited Kingdom securities.
Policy To be invested primarily in adiversified portfolio of UnitedKingdom equities and from time totime in securities convertible intoequities.
Managed FundCapital Growth Fund
Objective To seek long term capitalappreciation through investment ininternational equity and fixedinterest securities with a focus onUnited Kingdom securities.
Policy The Fund will be invested in adiversified portfolio of equities andfixed interest securities. Generally, itis anticipated that the major part ofthe Fund’s assets will be in UnitedKingdom equities with the balancein international equities and fixedinterest securities denominated inboth sterling and other currencies.
6
7
It should be remembered that the price ofShares and the income from them can godown as well as up. Consequently, andparticularly in the case of early encashment,you might not get back the amount originallyinvested. Dividends are not guaranteed andmay fluctuate in money terms. The dividendpolicy of the High Income Fund and the EuroHigh Income Fund is to pay an above averagelevel of income and this will lead to a gradualreduction in capital except when interest ratesgenerally are falling.
In the case of the Sterling Bond Fund, HighIncome Fund and Euro High Income Fund itshould be noted that the interest rate oncorporate bonds and most government bondsis fixed and will not increase in line with therate of inflation.
You should consider holding your investment ona medium to long-term basis, for a minimum offive years but preferably ten years or more.
Market price riskInvestments are principally in equities, fixedinterest securities and bank depositsdependent on each Fund’s investment policy.The value of these investments is not fixed(other than bank deposits) and may go downas well as up. This may be the result of aspecific factor affecting the value of anindividual stock or be caused by generalmarket factors (such as interest rates,government policy or the health of theunderlying economy) which could affect theentire portfolio of a Fund. Each Fund willinvest in a portfolio of securities in line with itsinvestment objectives and policy as detailed onpages 5 and 6. In the case of the equitybased Funds, the nature of the markets inwhich these Funds invest means that the shortterm returns may be volatile.
Interest rate riskEach Fund receives income from its variousinvestments. For the Sterling Bond Fund, HighIncome Fund and Euro High Income Fund theincome is received from investments in bonds
and loan stock. The Sterling Deposit Fundreceives its income from its investments insterling fixed interest bank and building societydeposits. The Capital Growth Fund receivespart of its income from its investments in UKGilts, loan stock and international bonds.
The income received by each of these Funds isprimarily fixed in nature. Income is derivedfrom the securities held in the portfolio of eachFund which may be varied from time to timein accordance with its investment objectiveand policy.
Liquidity riskEach Fund’s financial assets are considered bythe Manager to be readily realisable inaccordance with the market practices of theexchange on which they are traded. Oncertain occasions this may not be possiblesuch as at times of high volatility of worldstock markets or where a stock exchange isclosed or has suspended trading. TheManager manages each Fund’s cash to meetits liabilities. Where investments cannot berealised in time to meet any redemptions ofShares, each Fund may borrow up to 10% ofits value to ensure settlement of its liabilities.
Foreign currency riskThe Euro High Income Fund is denominated ineuro. Each of the other Funds is denominatedin sterling.
Shareholders: Investors will need to considerthe implications of investing in a Fund with abase currency which is different to their ownreference currency. Such investments will besubject to the movement of foreign exchangerates which may cause additional favourableor unfavourable changes in value.
Funds: With the exception of the SterlingDeposit Fund, Sterling Bond Fund and UKFund, each Fund may purchase securitiesdenominated in a currency other than its basecurrency, and hence take a position in othercurrencies. A substantial portion of thefinancial assets of most Funds are
risk warnings
8
denominated in currencies other than theirbase currency with the effect that the balancesheet and each Fund’s total return can besignificantly affected by currency movements.
The High Income Fund is permitted to investin securities denominated in currencies otherthan sterling and the Euro High Income Fundis permitted to invest in securitiesdenominated in currencies other than euro.The current policy of the Directors is that anysuch investments in securities denominated incurrencies other than the Fund’s base currencyfor either fund should be fully hedged againsttheir base currency to eliminate the effects ofany exchange rate movements.
Capital growthFor the High Income Fund and the Euro HighIncome Fund the annual management fee istreated as a capital expense rather than anincome expense. This has the effect ofreducing the capital of the Funds by 0.073%per month.
The Registrar’s fees are also treated as acapital expense. Charging these expenses tocapital will increase the amount of incomeavailable for distribution but will constraincapital growth.
DerivativesDerivatives will only be used for the purpose ofreducing risk where they accord with existinginvestment objectives and policy. They maynot be used independently of investmentstrategy in respect of the underlying physicalassets or for merely speculative purposes.Derivatives will only be used for efficientportfolio management. Derivatives may not beused for the purposes of gearing or leveraging
or for the purposes of producing, enhancing orgenerating income. No derivative can betraded on an Over the Counter (“OTC”) basis,and no uncovered positions, where anyliability is not matched by correspondingphysical assets, are allowed.
StocklendingThe Directors have considered the risksassociated with stocklending and have agreedthat any such risks would be mitigated byentering into an arrangement only with asuitably experienced partner, lending only toapproved counterparties and ensuring that thecounterparty deposited collateral of a readilyrealisable nature and of sufficient value tocover the cost of the security being lent.
The Directors also propose that no sucharrangement would be initiated unless theCompany was in a position to derive sufficientbenefit as to outweigh any potential costs andrisks associated with the programme.
Counterparty riskCertain transactions that the Company entersinto expose it to the risk that the counter-partywill not deliver the investment (purchase) orcash (sale) after the Company has fulfilled itsresponsibilities.
It is the policy of the Manager to buy and sellinvestments only through approved brokers.
Cross Fund liabilityShareholders should be aware that in theevent of the Company being unable to meetliabilities attributable to any particular Fundout of the assets attributable to such Fund, theexcess liabilities may have to be met out of theassets attributable to the other Funds.
9
the investment manager
The Manager has appointed Scottish WidowsInvestment Partnership Limited as theinvestment manager (the “InvestmentManager”) which is an “authorised person” forthe purposes of the FSMA and is regulated bythe FSA in carrying on regulated activitiesrelevant to the Company as described in thisProspectus. The address of the FSA is 25 TheNorth Colonnade, Canary Wharf, London E145HS. The Investment Manager is not requiredto and does not hold a permit under theCollective Investment Funds (Jersey) Law,1988, as amended.
The Company and the Manager have agreed tothe delegation of certain investmentmanagement functions from the Manager tothe Investment Manager. The powers of theManager which have now been delegatedinclude the power to manage the investmentand reinvestment of the Company’s assetssubject to the limitations to which theManager is subject from time to time. TheManager retains ultimate responsibility for theinvestment management.
The Investment Manager is in the same groupof companies as the Manager. Its principalactivity is the management of the investmentportfolios of certain collective investmentfunds, unit trusts, offshore funds, pensionfunds and insurance funds.
The Investment Manager is entitled to a fee forits services which is payable by the Managerout of its own fees. This fee is not paid on acommission basis but is based on the value ofthe assets under management.
The appointment of the Investment Manager inrespect of the Sterling Deposit Fund wasterminated with effect from 31 March 2006.The investment management function for theSterling Deposit Fund is now performed by theManager. The Directors of the Company havemade the decision on the basis that theManager already has extensive investmentmanagement experience in this area and that itwould be more cost effective for the SterlingDeposit Fund if this function were carried out bythe Manager. The Manager does not receiveany additional fees for carrying out this function.
The Company has entered into a managementagreement with Lloyds TSB Offshore FundManagers Limited which is also the Managerof Lloyds TSB Offshore Gilt Fund Limited,Lloydstrust Gilt Fund Limited, Lloyds TSBMoney Fund Limited and Lloyds TSB OffshoreMulti Strategy Fund Limited which arerecognized funds under the Order and arerecognised schemes under Section 270 of theFinancial Services and Markets Act 2000. TheManager is the holder of a permit under Article 7 of the Collective Investment Funds(Jersey) Law, 1988, as amended.
Under the management agreement theManager is responsible for the investmentmanagement and administration of theCompany. The Manager is a companyincorporated in Jersey on 10th July 1973 with limited liability and is subject to theprovisions of the Companies Law, and willexist until dissolved by Special Resolution. Ithas an issued share capital of 100,000 sharesof £1 each, fully paid. The ultimate holdingcompany of the Manager is Lloyds TSB Groupplc, a company incorporated in Scotland.
the manager
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the registrarThe Custodian is ultimately responsible formaintaining the register of shareholders, butthe Company and the Custodian haveappointed the Manager to maintain the registeron behalf of the Custodian and perform theduties of registrar to the Company. The
register of shareholders in the Company is keptin Jersey and may be inspected at c/o Lloyds TSB Offshore Fund Managers Limited,P.0. Box 311, 11-12 Esplanade, St Helier,Jersey JE4 8ZU.
the paying agentThe Manager has appointed Lloyds TSBOffshore Paying Agent (HK) Limited to act aspaying agent for the Company under the termsof a paying agency agreement. The PayingAgent is responsible for the remittance of alldistributions and proceeds of redemptions toshareholders. Any fees due to the PayingAgent will be paid by the Manager out of itsown fees.
The Paying Agent is in the same group ofcompanies as the Manager. Its principalactivity is the payment of distributions andredemption proceeds on behalf of collectiveinvestment schemes.
Further particulars of the agreement referred toabove are given on page 36.
the custodianThe Custodian of the assets of the Company isCapita Trust Company (Jersey) Limited, acompany incorporated in Jersey on 28th April1956 with limited liability under theCompanies Law. The ultimate holdingcompany of the Custodian is Capita Group Plc,a company incorporated in England whoseregistered office is 71 Victoria Street,Westminster, London SW1H 0XA and which islisted on the London Stock Exchange.
The Custodian has an authorised, issued andfully paid up share capital of 53,975 sharesdivided into 50,000 shares of £1 each issuedat par and 3,975 shares of £1 each issued ata price of £1,000 each.
The principal business activity of theCustodian is that of acting as custodian tocollective investment funds. The Custodian isthe holder of a permit under Article 7 of theCollective Investment Funds (Jersey) Law,1988, as amended.
The duties of the Custodian in respect of theCompany, which are set out in full in theCustodian agreement, include (withoutlimitation):-
– taking all necessary steps, including co-ordinating the execution of documents, toensure that acquisitions, disposals andloans properly made by the Manager areimplemented;
– taking into its custody or placing under itscontrol all of the property of the Company;
– collecting any income due to be paid to theCompany;
– verifying the procedures for the creationand cancellation of Shares;
– preparing the Custodian’s annual report toShareholders; and
– performing all other duties which theCustodian is required by law to perform.
The Directors and the Manager intend todistribute substantially the whole of the netincome of each Fund, if any, by way ofdividends payable as set out below:
Dividends paid
High Income Fund Monthly on 22nd ofeach month
Euro High Income Fund Quarterly on 22ndSterling Bond Fund February, May, AugustSterling Deposit Fund and November
Asian Pacific Fund Annually onCapital Growth Fund 22nd NovemberEuropean FundInternational FundJapanese FundNorth American FundUK Fund
Dividends will normally be paid on or beforethe dividend payment date to theShareholder’s account nominated in section 4of the application form, or sent by post.Dividends on the Euro High Income Fund arepaid in euro. All other dividends are paid insterling.
In the case of the Euro High Income Fundwhere dividend payments are in excess ofe100 and Shareholders have requested thatthe dividends are not automatically reinvested,these payments will be made by telegraphictransfer direct to the Shareholder’s account.The Manager does not charge for making suchpayments, however intermediate agents maycharge in accordance with their published feescales. Dividends on this Fund of less thane100 will automatically be reinvested.
The Manager cannot accept liability for non-delivery or late delivery of dividends.
When the dividend payment date is not aDealing Day, it will be paid on the previousDealing Day.
Dividends will be paid out of the incomeavailable for distribution of each Fund toholders of Shares of the Fund on the Registerat the last business day in March, June,September or December, as the case may be,prior to the respective dividend payment dateset out above (the last business day of themonth in the case of the High Income Fund).
Dividends will be paid out of net income (lessexpenditure) standing to the credit of therevenue account (including any revenuereserve) of the relevant Fund. It is not intendedto pay dividends out of any profits or gainsarising from the realisation of securities orother assets held for investment, or out of anyunrealised surplus arising from a revaluation ofsuch securities or assets or monies in thenature of accretion to capital, except to theextent necessary to enable the Company topursue a full distribution policy for each Fundwithin Part I of Schedule 27 of the UK Incomeand Corporation Taxes Act 1988.
Included in the dealing prices of Shares, andso reflected as a capital sum in those prices,will be an income equalisation amountrepresenting the value of income attributable tothe Shares accrued since the last record datefor dividends. The Articles of Associationpermit grouping of Shares for equalisation overa dividend period so that the total of suchsums which is included in the dealing price ofShares over that period is averaged, and in thefirst dividend payment after the purchase of aShare, or the dealing price if it is repurchasedbefore a dividend is declared, there will beincluded as a capital sum an amountrepresenting the average equalisation.
Any dividend unclaimed after a period of tenyears from the date of declaration of suchdividend will be forfeited and will revert to thatFund.
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dividends and equalisation payments
Applications for SharesApplications for Shares may normally be madebetween the hours of 9.00 a.m. and 5.00p.m. on any business day in Jersey (otherthan Saturdays, Sundays and Bank Holidays)(“Dealing Days”), and should be made on theCompany’s application form.
The application form, duly completed, shouldbe sent to Lloyds TSB Offshore Fund ManagersLimited, PO Box 311, 11–12 Esplanade, St Helier, Jersey JE4 8ZU. Applications willnot be acknowledged, but contract notes willnormally be posted on the next business dayfollowing the Dealing Day on which thetransaction is effected. Share certificates arenot issued.
Shares will be sold by the Manager at forwardprices which are calculated at the nextvaluation point (“the Valuation Point”). TheValuation Point is generally 10.00 a.m. oneach Dealing Day. Applications received byletter post must be received not later than theclose of business on the business day
immediately preceding the relevant DealingDay.
Applications received by other means (namelyby registered or recorded delivery, by handdelivery, by telephone, or by facsimile) mustbe received not later than the Valuation Pointon the Dealing Day. In any event, applicationsreceived after the Valuation Point by whatevermeans will be held over to the next DealingDay and Shares will be allotted at the dealingprice calculated at that day’s Valuation Point.Instructions received by e-mail are notaccepted. The Manager may require clearedfunds and may seek to confirm the identity ofthe applicant(s) and the source of funds beinginvested before effecting a sale. The Managermay, at its discretion, delay or refuse anapplication for Shares if it believes suchapplication may involve either the applicant,the Manager or the Company in acontravention of any law, rule or regulation.The Manager shall not be liable for any lossthe applicant may incur as a result of suchdelays or its refusal to accept an application.
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the issue and redemption, saleand repurchase ofshares
Reinvestment of DividendsDividends may be reinvested in further Sharesof the same Fund by ticking the appropriatebox on the application form except (i) wherethe Shares have been priced in euro or USdollars or acquired through the RegularSavings Plan, where reinvestment is automaticand (ii) in the case of the Euro High IncomeFund where dividends which are payable ineuro, will automatically be reinvested unless
Shareholders advise the Manager in writing.
Dividends for reinvestments will be paid to theManager who will reinvest them in thepurchase of Shares on the dividend paymentdate at the dealing price (which includes theinitial charge and any applicable dilution levy,as set out on page 14) or such other price asmay from time to time be agreed. A statementof reinvestment will be sent to the Shareholder.
The Manager may satisfy any application forallotment of Shares by selling or procuring thetransfer to the applicant of fully-paid Shares ofthe relevant Fund. Shares will be allotted insterling, euro or US dollars as specified on theapplication form. If no currency is specifiedthe Shares will be allotted in the base currencyof the relevant Fund.
Prices for each Fund are calculated in the basecurrency of the Fund, and in addition, pricesfor the growth and managed Funds (AsianPacific, European, International, Japanese,North American, UK and Capital GrowthFunds) are also calculated in US dollars andeuro.
No allotment or sale will be made in respect ofan application for Shares having a value byreference to their dealing price of less than£1,000 or in the cases of the High IncomeFund and Sterling Bond Fund £5,000 ande5,000 in the Euro High Income Fund (“theMinimum Holding”) or their currencyequivalent except for the Regular Savings Plan(see below), or where the applicant is alreadyholding Shares of that Fund having a value atthe time of their allotment equivalent to or inexcess of the Minimum Holding, of not lessthan £50 (Euro High Income Fund e100) orcurrency equivalent or such other amount asthe Company, with the approval of theCustodian, may from time to time determine.The Minimum Holding may be changed fromtime to time and different amounts may beimposed for different Funds.
Regular Savings PlanThe Regular Savings Plan is available insterling in respect of all Funds with aminimum investment of £50 per month perFund selected.
In addition to being available in sterling theRegular Savings Plan is also available in USdollars and euro to individuals who holdLloyds TSB International accounts in US dollarand/or euro. The minimum investment isUS$100 or e100 per month per Fundselected. Deals carried out under the RegularSavings Plan will be carried out on the lastbusiness day of each month. Investors’sterling bank accounts will be debited after the20th of each month by Direct Debit. If aninvestor is investing in more than one Fund
their account will be debited by a separateDirect Debit for each Fund, although only oneDirect Debit form needs to be completed.
Deals carried out in US dollars and / or eurowill be carried out on the last business day ofeach month. Investors’ currency accounts willbe debited on or after the 22nd of each monthby Standing Order. An investor saving in morethan one Fund will have their account debitedby a separate Standing Order for each Fund,although only one Standing Order form shouldbe completed for each currency. An investorwishing to save in both US dollars and euroshould complete a separate Standing Orderform for each currency.
Dividends must be reinvested in the purchaseof Shares in the same Fund.
Shareholders wishing to stop investing in theRegular Savings Plan should inform theManager in writing as well as cancelling theirStanding Order or Direct Debit with the branchwhich holds the account. The Manager willstop all further investments. The Sharesacquired may be retained at the investor’soption where payments equal to or greater thanthe Minimum Holding have been made.Otherwise they will be sold by the Managerand the proceeds remitted to the investor.
Redemptions of SharesThe Manager will repurchase Shares on anyDealing Day except where there is asuspension by the Company of redemptions ofShares or of repurchases by the Manager.Although the Company is under an obligation,subject to the provisions of the Articles ofAssociation and to Jersey law, to redeem atthe dealing price, the Manager, as principal,will repurchase any Shares for which a requestfor redemption is received. In such a case theprice would be not less than the dealing price,subject to any applicable dilution levy. Shareswill be repurchased by the Manager at forwardprices.
The Valuation Point is generally 10.00 a.m. oneach Dealing Day. Redemption instructionsreceived by letter post must be received notlater than the close of business on thebusiness day immediately preceding therelevant Dealing Day. Redemption instructionsreceived by other means (namely by registered
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or recorded delivery, by hand delivery, bytelephone, or by facsimile) must be receivednot later than the valuation point on theDealing Day. The Manager may, in certaincircumstances, seek to confirm the validity ofsuch instructions by contacting theShareholder. In any event, redemptioninstructions received after the valuation pointby whatever means will be held over to thenext Dealing Day and Shares will be redeemedat the dealing price calculated at that day’svaluation point. Instructions received by e-mail are not accepted. A redemption requestmay not be withdrawn except where there is asuspension by the Company of cancellations ofShares or of redemptions of Shares by theManager.
To realise all or part of a holding, aShareholder to whom a certificate has beenissued should complete and sign the form onthe back of each share certificate and send thecertificate to the Manager. Shareholders towhom no certificate has been issued mayinstruct the Manager to repurchase Shares bytelephone or fax where the Shareholder(s)have previously provided details of aNominated Bank Account (section 3 of theapplication form). In any other circumstancesredemption instructions will need to be inwriting, signed by all parties to the account.Instructions received by e-mail are notaccepted.
Any amount payable to a Shareholder inconnection with requests for redemption willnormally be paid on the due settlement date tothe bank and account nominated in section 3of the application form. If this is not practicalor no Nominated Bank Account details havebeen given, redemption proceeds will be paidby cheque, except in the case of the Euro HighIncome Fund where proceeds will be paid byeuro denominated draft. Payments will onlybe made to, or for the account of theregistered Shareholder(s). Any charges inrespect of effecting transfers are deductiblefrom repurchase proceeds. When settlementis made by cheque the redemption proceedswill be posted to the Shareholder (at theirrisk); in the case of the Sterling Deposit Fundnot later than the close of business on thebusiness day next following, and in the case ofthe other classes not later than the close ofbusiness on the fourth business day following
the later of the date of the next valuation pointoccurring after receipt by the Manager of therequest to redeem the Shares and the date ofreceipt by the Manager of a duly endorsedcertificate (if any) for the Shares to beredeemed. The Manager may, at its discretion,delay or refuse payment if it believes suchpayment may not be practicable or mightinvolve either the Shareholder, the Manager orthe Company in a contravention of any law,rule or regulation. The Manager shall not beliable for any loss the Shareholder mayincur as a result of such delays.
There is no minimum number of Shares, orminimum value of Shares, which may beredeemed in any one transaction, unless theredemption of part only of their holding ofShares would if carried out leave the applicantholding less than the Minimum Holding forthat Fund.
Large DealsWhere a redemption accounts for more than5% of the value of the Fund (a “Large Deal”),the Manager is entitled to offer the requisiteproportion of the Fund’s net assets insettlement. In such circumstances, the holderof Shares may serve a notice on the Managerrequiring the Manager to arrange for the saleof such net assets and the payment of the netproceeds.
Other than the application of any applicabledilution levy the Manager does not levy anycharges for redemptions of Shares.
As Shares are priced on a single pricing basisthe costs associated with realising assets tomeet a large redemption can lead to a dilutionof the value for the remaining Shareholders.The Order provides that where a Fundcalculates prices on a single pricing basis, adilution levy can be applied to the redemptionproceeds. Details of the Company’s policy onthe application of dilution levies to Large Dealsare set out below.
Dilution LeviesA dilution levy is a mechanism to protectexisting Shareholders’ and potentialShareholders’ interests. High levels of buyingand selling by investors in Shares may lead toan increase in the underlying dealing costs
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borne by a Fund. The effect of this is that thevalue of a Fund may be reduced (or diluted).In order to prevent this dilution effect, theManager has the discretion to charge adilution levy on the creation, sale, redemptionor repurchase of Shares (including conversionsbetween different classes of Shares). Whencharged, the dilution levy will be paid into therelevant Fund in order to mitigate the effect ofthe dilution. When applied the dilution levywill be added to the purchase cost or deducted from the redemption proceeds, asappropriate.
For example the Manager may impose adilution levy on a Fund in circumstanceswhere:
● a Fund experiences large levels of netpurchases (i.e. purchases lessredemptions) relative to its size;
● a Fund experiences large levels of netredemptions (i.e. redemptions lesspurchases) relative to its size;
● the Manager believes that the imposition ofa dilution levy is required to safeguard theinterests of Shareholders and potentialShareholders.
For these purposes the term “large levels” ofnet purchases or net redemptions occurs whenthe net dealing position would create a dilutionlevy of more than 1 basis point of the netasset value of a Fund or £5,000, whichever isthe lower.
The Manager is also entitled to impose adilution levy on a Large Deal.
As dilution is directly related to the inflows andoutflows of monies from the Fund it is notpossible to predict accurately whether dilutionwill occur at any future point. In decidingwhether to impose a dilution levy the Managerwill consider a number of factors including thesize of the transaction relative to the overallvalue of the Fund, the level of transactioncosts within that particular market, theliquidity of the underlying investments withinthe Fund, the amount of investments to bebought/sold and the likely time that this willtake, the likelihood of an adverse impact onthe value of investments as a result of the
accelerated rate of disposal /acquisition andthe length of time for which the Shares inquestion were held.
On the occasions when a dilution levy is notapplied there may be an adverse impact onthe total assets of the Fund, as the Fund willhave to meet the costs of dealing in theunderlying assets.
The dilution levy for each Fund may vary overtime because the dilution levy for each Fundwill be calculated by reference to the costs ofdealing in the underlying investments of thatFund, including any dealing spreads, andthese can vary with market conditions. Atypical dilution levy for a Fund may range from0.01% to 1% of a Fund’s share price.
TransfersThe Company may decline to register atransfer of shares in certain circumstances:
● Where such transfer would be in breach ofthe Minimum Holding restrictions (seepage 13).
● Where the instrument of transfer has notbeen accompanied by such other evidenceas the Manager may reasonably require toshow the right of the transferor to make thetransfer.
● Where any transfer would result in thenames of more than four Shareholdersbeing jointly registered.
● Where the instrument of transfer relates tomore than one class of Shares.
Prices and ValuationsIssues and redemptions of Shares may only beeffected on Dealing Days. Shares may beissued and redeemed only pursuant to creationand cancellation applications made by theManager to the Custodian within two hours ofthe Valuation Point. For the purpose ofdetermining dealing prices applicable onDealing Days, the assets of the Company willgenerally be valued on a mid market basis asat 10.00 a.m. on each Dealing Day (the“Valuation Point”).
The Order contains detailed provisions forcalculating the value of the property of eachFund by categories of assets and liabilities.Reference should be made to the Order for adetailed understanding of such provisions.
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16
The dealing prices per Share of each Fund aredetermined in accordance with the Order.
The Manager may not sell or repurchaseShares at a price which is higher than thedealing price plus the initial charge plus anyapplicable dilution levy (in the case of a sale)or lower than the dealing price less anyapplicable dilution levy (in the case of arepurchase). The Manager is not under anobligation to account to the Company or theShareholders for any profits made by theManager from the sale, repurchase orexchange of Shares.
The dealing prices shall be calculated to atleast four significant figures.
The dealing price last notified to the Custodianis available on request from the Manager.
Publication of PricesSale and repurchase prices of Shares arepublished each day in the Managed FundsService section of the London “FinancialTimes”. Prices quoted in this way will be theprices calculated on the previous Dealing Dayand will not therefore be the prices at whichtransactions will be effected on the day suchprices are published. Please note that theManager cannot accept responsibility for theaccuracy of the information published innewspapers.
SuspensionsOn receipt of a creation or cancellationapplication from the Manager, the Company orthe Custodian may give notice to the Managerrefusing to create or cancel Shares or toconsent thereto respectively if in the case ofthe Company, the Directors are, or if in thecase of the Custodian, the Custodian is of theopinion that it is not in the interests ofparticipants for the Shares the subject of thenotice to be issued or redeemed.
The Manager may with the prior agreement ofthe Custodian and the Directors, or shall if theCustodian or the Directors of the Companywith the prior agreement of the Custodian sorequires or require, at any time for a period notexceeding one month suspend the repurchaseof Shares of a Fund if:
(a) the Manager is of the opinion that there isgood and sufficient reason to do so havingregard to the interests of the Shareholdersof that Fund; or
(b) the Custodian is, or the Directors of theCompany are, of that opinion in the caseof any requirement by it or them.
If the repurchase of Shares of a Fund issuspended, the Manager shall forthwith ceaseselling Shares of that Fund.
The first sale and repurchase of Shares of suchFund following such period of suspension shalltake place on the first Dealing Day followingthe end of such period at prices calculated byreference to the next valuation point.
The circumstances under which a suspensionof dealing may occur include, for example,those where the Manager cannot reasonablyascertain the value of assets or realise theassets of the Fund, or the closure orsuspension of dealing on a relevant stockexchange.
Qualified HoldersThe Company has the power to require anyShareholder who holds Shares in breach ofany law or requirement of any country orgovernmental authority or who is disqualifiedfrom holding Shares so as to cause theCompany a financial or tax disadvantage totransfer such Shares or to request theirredemption.
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death of an investorInvestors should be aware that upon theirdeath the executors of their estate will, incertain circumstances, be required to take outa Grant of Probate or Letters of Administrationin Jersey in order for the investment to bereleased. Other than personal application bythe appointed executor/administrator, they mayonly be obtained through a Jersey advocate orsolicitor or an authorised Jersey trust companywhich will be at a charge.
It will be necessary to take out a Jersey Grantof Probate or Letters of Administration onwhich Stamp Duty is payable on the death ofa sole holder of Shares except that theManager may, at its absolute discretion, waivethe requirement for Jersey Grant of Probate orLetters of Administration on receipt ofsatisfactory documentary or other informationas to entitlement and security where:
● the holder dies domiciled in the UnitedKingdom, Guernsey or the Isle of Man; and
● the aggregate value of the deceased’sJersey Estate held by the Company doesnot exceed £10,000 (or other amountprescribed from time to time); and
● where the release of the asset is to theperson who would be entitled to receivesuch asset under a will or intestacy. TheManager may require an indemnity fromthe receiving party for such payment to bemade.
Other than in the circumstances describedabove, Stamp Duty is levied according to thesize of the Jersey Estate and in the case of anEstate not exceeding £10,000 in value, nosum would be payable; for Estates notexceeding £100,000 in value the sumcurrently payable would be £50 per £10,000or part thereof; for Estates above £100,000the sum currently payable would be £500 forthe first £100,000 and thereafter £75 per£10,000 or part thereof. No Stamp Duty islevied in Jersey on the inter vivos transfer orrepurchase of Shares other than in thecircumstances described above.
The Manager is entitled to make an initialcharge of 4% of the amount available forinvestment in the case of the High IncomeFund, Euro High Income Fund and SterlingBond Fund. The initial charge in respect of allother Funds, with the exception of the SterlingDeposit Fund, is 5% of the amount availablefor investment. There is no initial charge in thecase of the Sterling Deposit Fund. The Articlesof Association and Management Agreementprovide that any initial charge may be
increased to an amount not exceeding 6% ofthe dealing price but the Manager hasundertaken to give Shareholders at least threemonths’ notice of any increase.
The initial charge is payable by theShareholder and is included in the cost of theShares. The initial charge is also payable tothe Manager where dividends are reinvested inthe purchase of additional Shares.
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fees and charges
exchange ofparticipating shares
Shareholders may on application to theManager on any Dealing Day exchange Sharesof one Fund by reference to their dealing priceless any applicable dilution levy for those ofanother Fund by reference to their dealingprice plus any applicable dilution levy andexcluding any charge. Exchanges are subjectto the Minimum Holding restrictions (see page 13).
Where the exchange is from the SterlingDeposit Fund, Sterling Bond Fund, HighIncome Fund or the Euro High Income Fundinto one of the other Funds, the Manager isentitled to make a charge equal to thedifference between the initial charge previouslypaid by the Shareholder in respect of theShares being exchanged and the initial chargewhich would be payable on a sale of theShares which the Shareholder will receive as aresult of the exchange. On any otherexchange other than the first in any annualaccounting period, which will otherwise befree of charge, the Manager may make a
charge in accordance with the Order, andwhere such charge may only be of a fixedamount, it will not exceed £50 per exchange.
An application for an exchange must be forShares having a minimum value of £1,000 (orcurrency equivalent) and the resultantShareholdings must meet the minimumholding requirements for the respective Funds(see page 13). In some jurisdictions,including the United Kingdom, an exchange ofShares of one Fund for Shares of another Fundmay be a disposal of Shares of the originalFund for the purposes of taxation.
In no circumstances will a Shareholder whoexchanges or applies to exchange Shares ofone Fund for Shares of another Fund be givena right by law to withdraw from or cancel thetransaction except where there is a suspensionof sale or repurchase of Shares of the relevantFunds.
The Manager is entitled to receive a fee for itsservices out of each Fund (accrued daily andpaid monthly) equal to an annual rate basedon the mid market value of the net assets ofthe Funds as follows:
Sterling Deposit Fund 0.625%High Income Fund 0.875%Euro High Income Fund 0.875%Sterling Bond Fund 0.875%Asian Pacific Fund 1.5%Capital Growth Fund 1.5%European Fund 1.5%Japanese Fund 1.5%International Fund 1.5%North American Fund 1.5%UK Fund 1.5%
The Directors of the Company and theManager may agree a higher fee for any Fundsubject to a maximum annual rate of 1.5% onthe mid-market value of the net assets of theFund. If such a higher fee is agreed,Shareholders of the relevant Fund will be givenat least three months’ written notice before itcomes into effect.
The Custodian is entitled to: (a) an annual feepayable monthly by the Company, in respectof each Fund, at the rates set out below byreference to the net asset value of each Fundcalculated on a mid-market basis and subjectto a minimum overall fee of £20,000 perannum for the Company as a whole which willbe apportioned between the Funds on a basisapproved by the auditors; and (b) transactioncharges at such rates as shall be agreed withthe Manager from time to time.
Fund NAV of each FundSterling Funds up to £1OM £25M
£1OM to £25M Plus
Asian Pacific 0.15 0.125 0.10
Capital Growth 0.15 0.125 0.10
European 0.15 0.125 0.10
High Income 0.10 0.075 0.05
International 0.125 0.10 0.075
Japanese 0.15 0.125 0.10
North American 0.15 0.125 0.10
Sterling Bond 0.10 0.075 0.05
Sterling Deposit 0.10 0.075 0.05
UK 0.125 0.10 0.075
Euro Fund up to e15M e40Me15M to e40M Plus
Euro High Income 0.10 0.075 0.05
These fees are subject to annual review(subject to a maximum rate of 0.25% for anyFund) and Shareholders will be given threemonths’ notice before any increase becomeseffective. No notice need be given of anyreduction.
The Custodian is entitled to reimbursement bythe Company of its expenses in connectionwith its duties as Custodian.
In consideration of its performance of thefunctions of Registrar, the Company has agreedthat the Manager may charge a fee payable bythe Company of £12.00 each annual and half-yearly accounting period for each shareholdingwhich appears on the Register on the lastbusiness day of each annual and half-yearlyaccounting period and for each holding forwhich nominee shareholder facilities areprovided on the last business day of eachannual and half-yearly accounting period. TheManager and the Company may agree ahigher fee.
As Registrar the Manager is entitled toreimbursement of certain out-of-pocketexpenses.
The Manager has agreed to suspend chargingRegistrars fees on the Sterling Deposit Funduntil further notice. This suspension tookeffect from 1st April 2005. Investors willreceive prior written notice on anyreinstatement of the Registrars fees.
The Directors of the Company are entitled tosuch remuneration which shall be payable bythe Company as may be voted to them by theCompany in General Meeting. ExecutiveDirectors do not currently receive anyremuneration. In the case of Non-ExecutiveDirectors, it is proposed that this amountshould be £5,000 per annum. The Companymay also pay the Directors and any alternateDirectors all the travelling, hotel and otherexpenses properly incurred by them inattending and returning from meetings of theDirectors or any committee of the Directors orGeneral Meetings of the Company or inconnection with the business of the Company.
The Company may, in addition to suchremuneration, grant special remuneration toany Director who, being called upon, shall
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perform any special or extra services to or atthe request of the Company. Such specialremuneration shall be payable by theCompany in such amounts as the Directorsmay determine from time to time.
In addition to the fees and expenses of theManager and the Custodian, the Company isalso responsible for other expenses incurred inits operation.
Each Fund is charged with costs and expensesspecifically attributable to it. These costs andexpenses include but are not limited to:-● costs of dealing in the property of each
Fund; and● interest on permitted borrowings and
charges incurred in effecting or varying theterms of such borrowings; and
● any costs incurred in respect of meetings ofholders convened on a requisition byholders; and
● any periodic charge payable to theManager; and
● any costs incurred in respect of theestablishment and maintenance of theregister; and
● audit fees and any expenses of the auditor;and
● costs incurred in respect of the distributionof income to holders; and
● costs reasonably incurred in respect of thepublication of Share prices and in thepublication and distribution of theProspectus, Annual and Interim Report andAccounts; and
● legal and professional fees reasonablyincurred in ascertaining the rights ofholders other than the Manager or anassociate of the Manager; and
● costs and expenses in respect of theformation of the Company or of a Fund,and for obtaining a listing for Shares in anyFund on the occasion of the initial offeramortised over a period not exceeding 10years as stated in the Prospectus; and
● costs and expenses in respect of obtaininga listing for Shares in a Fund on a stockexchange on an occasion other than that ofthe initial offer, if agreed by holders; and
● taxation and duties payable in respect ofthe property of each Fund or the sale ofShares; and
● any costs incurred in modifying the Articlesof Association, the Management and
Custodian Agreements including costsincurred in respect of meetings convenedfor these purposes, which includesmodifying the Articles, where themodification is:-
(i) necessary to implement a change inthe law (including changes to theOrder), or
(ii) necessary as a direct consequence ofany change in the law (includingchanges to the Order), or
(iii) expedient having regard to anychange in the law made by or underany fiscal enactment and which theDirectors and the Custodian agree isin the interests of holders, or
(iv) to remove obsolete provisions fromthe Articles; and
● the fees of the Custodian
● expenses or disbursements of theCustodian to which it is entitled under theCustodian Agreement which include, butare not limited to:
the fees, expenses and disbursements ofany agent, legal or accountancy adviser,valuer, broker or other professional person;all stamp duty and other taxes or duties; allfees, expenses and disbursements incurredin relation to the safe custody, insurance,acquisition, holding or realisation or otherdealing with the property of the Company;all expenses incurred in the collection anddistribution of income; all other expensesand disbursements including telex,facsimile, and long distance telephonecalls; all such charges, expenses anddisbursements as it is entitled to chargeunder the general law; and
● costs incurred by the Company in makingits annual return and in complying withother statutory requirements imposed onthe Company; and
● Director’s fees and expenses; and
● fees chargeable to the Company by theCommittee and by any other regulatoryauthority in any jurisdiction in whichShares are marketed but excluding anysuch fees payable in respect of theManager and Custodian; and
● any safe custody charges reasonablyincurred by the Custodian where the
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The Order generally requires that investmentsare dealt on an eligible market. Securitiesmarkets are eligible if they are established inEuropean Union Member States on whichtransferable securities admitted to officiallistings are dealt or traded. Other securitiesmarkets and derivative markets are eligiblemarkets, where the Manager, in consultationwith the Custodian, has decided that they areappropriate for the Company having regard tothe relevant regulations and guidance issuedby the Commission. Such markets must beregulated, operate regularly, be recognised andopen to the public. Additional markets may beadded either without notice, where theManager and the Custodian agree in writingthat the amendment is of minimalsignificance, or after the Custodian andshareholders have been informed in writing ofthe intended amendment and at least 90 dayshave elapsed since the revised Prospectuscontaining such information has becomeavailable. Where the addition of a market willresult in a departure from the statedinvestment objective of a Fund, an
Extraordinary Resolution of holders of Sharesof that Fund is required to approve suchaddition.In addition to the eligible securities marketsestablished in European Community MemberStates, the eligible markets for the Funds areas follows:
Eligible securities marketsThe Bolsa de Comercio de Buenos Airesof Argentina; The Australian StockExchange Limited; Bermuda StockExchange; Rio de Janeiro and Sao PauloStock Exchanges of Brazil; Montreal andToronto Stock Exchanges of Canada; TheSantiago Stock Exchange of Chile; TheShanghai and Shenzen Stock Exchangesof China; The Bolsa Colombia; TheZagreb Stock Exchange of Croatia; ThePrague Stock Exchange of The CzechRepublic; The Cairo and Alexandria StockExchanges of Egypt; Stock Exchange ofHong Kong and the growth EnterpriseMarket of Hong Kong; The BudapestStock Exchange of Hungary; The National
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eligible markets
property of any Fund is deposited outsideJersey; and
● the remuneration and expenses of anyrepresentative appointed in anotherjurisdiction in compliance with the laws orother requirements of that jurisdiction; and
● any amount payable under any indemnityprovisions contained in the Articles or anyagreement with a functionary other thanprovisions indemnifying the functionaryfrom claims arising from its failure toexercise due care and diligence; and
● legal and other professional fees incurred inany proceedings instituted or defended inaccordance with written legal advice toenforce, protect, safeguard, defend orrecover the rights or property of a Fund.
Shareholders are advised of the possibility thatthere may be other costs or taxes imposed bythird parties in connection with this product inaddition to those described in this document.However, at the date of this document, the
Directors are not aware of any such costs.Costs and expenses not attributable to aparticular Fund are allocated between Fundsby the Directors after consulting the Custodianon a basis approved by the auditors, normallypro rata to the respective net asset value ofeach Fund. With the exception of the HighIncome and Euro High Income Funds allcharges and expenses are charged to income.Shareholders should note that the applicationof charges and expenses to income mayreduce income distributions paid toShareholders. For the High Income and EuroHigh Income Funds, the annual managementfee is charged to capital. This has the effect ofreducing the capital of the Funds by 0.073%per month.
The Registrar’s fees are also treated as acapital expense. Charging these expenses tocapital will increase the amount of incomeavailable for distribution but will constraincapital growth.
There are limits on investments of the propertyof each Fund in the Order. The Ordercategorises the Funds as securities funds andmoney market funds and imposes differentlimitations for each category of fund. Thecombination of these sets of provisions isdescribed below.
(A) All Funds1. Hedging transactions are permitted,
provided the total of all sums to bereceived by way of premium andobligations to pay by way of premium or
initial margin or obligation attributable tohedging transactions not closed out donot exceed 10% of the value of theproperty of the Fund. Hedginginstruments other than those againstfluctuations in exchange rates will berestricted to traded options and otherinstruments traded on or under the rulesof an eligible derivatives market andwhich are instruments relating to theproperty of the fund with respect towhich, or to an index or other factor byreference to which, instruments of that
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Stock Exchange of India, The StockExchange, Mumbai, The Bombay StockExchange, The Calcutta Stock Exchange,The Delhi Stock Exchange, The InterConnected Stock Exchange, The LudhianaStock Exchange and the Pune StockExchange of India; Jakarta StockExchange of Indonesia; The Tel Aviv StockExchange of Israel; Fukuoka, Nagoya,Osaka, Sapporo, Tokyo Over the CounterMarket and Tokyo Stock Exchanges ofJapan; Korea Stock Exchange andKOSDAQ Exchange of Korea; KualaLumpur Stock Exchange of Malaysia; TheMexican Stock Exchange and BolsaMexicana de Valores of Mexico; NewZealand Stock Exchange; OBX StockExchange of Norway; The Karachi StockExchange of Pakistan; The Lima StockExchange of Peru; The Philippines StockExchange; The Warsaw Stock Exchange ofPoland; The Bucharest Stock Exchange ofRomania; The Moscow and RTS StockExchanges of Russia; The Singapore StockExchange and SESDAQ Exchange ofSingapore; The Johannesburg StockExchange of South Africa; The ColomboStock Exchange of Sri Lanka; The SWXStock Exchange of Switzerland; TheTaiwan Stock Exchange and Gre TaiSecurities Market of Taiwan; the IstanbulStock Exchange of Turkey; Stock Exchangeof Thailand; The American, Boston
NASDAQ, National, New York, OTC BondMarket, Pacific and Philadelphia StockExchanges of the United States ofAmerica and The Vietnam StockExchange.
Eligible derivatives markets:The London International FinancialFutures and Options Exchange; SydneyFutures Exchange of Australia; AustrianFutures and Options Exchange; BrazilianMercantile and Futures Market andBOVESPA (Sao Paulo) Exchange of Brazil;Montreal Exchange of Canada; Euronext;Eurex Exchange of Finland; EurexExchange of Germany; Hong Kong FuturesExchange; Milan Stock Exchange of Italy;Osaka Securities Exchange and TokyoFutures Exchange of Japan; KoreanFutures Exchange; New ZealandExchange; SIMEX Exchange of Singapore; South Africa Futures Exchange; Renta Fijaand Renta Variable Exchanges of Spain;OM Stockholm Stock Exchange ofSweden; Eurex Exchange of Switzerland;Euronext LIFFE of the United Kingdomand American Stock Exchange, ChicagoBoard Options Exchange, Chicago Boardof Trade, Chicago Mercantile Exchange,Globex, NASDAQ, New York FuturesExchange, New York Stock Exchange andPhiladelphia Stock Exchanges of theUnited States of America.
investment Iimits
kind have been traded for a period of atleast six months. Hedging transactionsare only to be entered into to reduce oreliminate risk and not for speculation. Nouncovered positions may be entered into.No OTC derivatives are allowed. Nooptions may be purchased unless theproperty of the Fund includes cash ornear cash sufficient to discharge allpremia payable thereon.
2. The borrowing of foreign currency ispermitted as part of a back-to-backarrangement to reduce or eliminate riskarising by reason of fluctuations inexchange rates.
3. The Order permits borrowings fromeligible institutions which are repayableout of the property of the Fund, but allsums borrowed and outstanding at anyone time must not amount in aggregate toa sum greater than the total of all sumswhich are to become part of the propertyof the Fund within three calendar monthsof the borrowing and, if immediatelyrepayable, would not require more than10% of the value of the property of theFund to be used for repayment.
4. The property of a Fund shall not includeany transferable securities if (to theknowledge of the Manager) calls are to bemade within three months for any sumsunpaid thereon, unless the calls could bemet in full out of cash or near cash.
5. A Fund may not acquire any investmentwhich would require the assumption bythe Company of any unlimited liability(including participation in partnerships) orindulge in short selling of securities (i.e.,selling any security unless it is part of theproperty of the Fund or rights exist for theFund to acquire the security to enable itto discharge its obligations).
6. Underwriting and sub-underwritingagreements may be entered into on behalfof a Fund provided they do not infringethe other investment restrictions and theCustodian is holding cash or near cashsufficient to discharge the obligationsunder such agreements unless these areto be satisfied from the sale of Shares inthe Fund or permitted borrowing.
7. None of the money in the property of theCompany may be used for lendingpurposes.
8. The Company will ensure that at least90% of securities must be listed onExchanges having obtained fullmembership of the World Federation ofExchanges.
The provisions set out hereunder applyspecifically to the existing Funds in addition tothe above provisions which are of generalapplication.
(B) Bond Funds and Equity Funds(securities funds under the Order)1. Generally, these Funds must be invested
in transferable securities which are tradedon an eligible market, as explained onpages 21 and 22 under the heading“Eligible Markets” (including secondarymarkets such as the AlternativeInvestment Market in the UnitedKingdom, Second Marché in France andthe Tokyo Over-The-Counter Market), andin recently issued transferable securitieswhich are to be traded on an eligiblemarket.
2. In addition these Funds may invest:
(i) up to 10% in value of their propertyin transferable securities which arenot traded on an eligible market;
(ii) in certain other authorised unit trustschemes, recognised schemes, andother overseas collective investmentschemes; and
(iii) in cash or near-cash to enableShares to be redeemed or for theefficient management of the Fund.Cash may only be placed withAuthorised Institutions (as defined inthe Order). Near cash includes debtinvestments issued by certainsovereign borrowers, internationalorganisations and local authoritiesspecified by the Order.
3. There are limitations on the investmentswhich may be made, the most importantof which are:
(i) not more than 5% in value of theproperty of each Fund may be
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invested in another securities fund,an authorised securities scheme (asdefined in the FSMA) and certainother collective investment fundsincluding those managed by theManager or its associates;
(ii) investments may only be made incollective investment funds managedby the Manager or its associates ifthe deeds or Articles constituting thefunds state that their object isinvestment in a particulargeographic area or economic sector;
(iii) each Fund may not hold shares in acompany which carry the right tomore than 10% of the votes ingeneral meeting;
(iv) each Fund and all securities fundsand money market funds collectivelymay not hold more than 10% of anyother shares in a company (otherthan an open-ended investmentcompany), any investment issued bythe same issuer other than certaingovernment and other publicsecurities, or units in a collectiveinvestment fund.
(v) generally, not more than 5% invalue of the property of each Fundmay be invested in transferablesecurities issued by the same issuer.As an exception to this, up to 10%in value may be invested insecurities issued by the same issuerprovided all such holdings do notamount to more than 40% of thevalue of the Fund; and up to 35%in value may be invested inGovernment and other publicsecurities issued by the same issuer;
(vi) warrants may be held provided theexercise of the rights conferred bythe warrants will not infringe theother limits and that, if theiraggregate value exceeds 5% of thevalue of the property of the Fund,the cost of acquiring the investmentto which the warrants relate can bemet out of cash or near-cash nottaken into account for otherpurposes or out of sums whichcould be borrowed without
contravening the borrowingrestrictions.
(C) Sterling Deposit Fund(a money market fund under theOrder)1. Not more than 80% in value of this Fund
shall consist of transferable securities.
2. Apart from hedging transactions, theproperty of this Fund may only beinvested in:-
(i) cash and deposits which must berepayable within six months or ondemand within that period subjectonly to a penalty not exceeding sevendays’ interest at commercial rates,and may only be made withAuthorised Institutions as defined inthe Order;
(ii) Government and other publicsecurities as defined in the Orderwith a maturity date of two years orless;
(iii) bills of exchange or other specialisedinstruments repayable within twelvemonths issued by an AuthorisedInstitution;
(iv) certain unsubordinated debtinvestments which are only dealt inon an approved market and arerepayable within 12 months.
3. The following limitations apply:
(i) not more than 5% in value of theproperty of this Fund may consist ofinvestments which are notGovernment or other publicsecurities and are issued by thesame issuer;
(ii) not more than 10% in value of theproperty of this Fund may be ondeposit or loan to the same person(and for this purpose members in thesame group as the Manager orCustodian are treated as one person),except that up to 20% or£1,000,000 (or the equivalentamount in another currency),whichever is greater, may bedeposited or loaned to any oneAuthorised Institution which is not in
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the same group as the Manager orCustodian, providing it or its parentor subsidiary which is an AuthorisedInstitution has shareholders’ funds ofUS$1,000,000,000 or more, andthe amount as deposited or loaneddoes not exceed 10% of the relevantinstitution’s issued capital andreserves as shown in its lastpublished accounts;
(iii) up to 80% in value of the property ofthis Fund may consist of Governmentand other public securities, but if thisexceeds 35% in value of the propertyof this Fund they must comprise atleast five different issues;
(iv) not more than 30% of the propertyof this Fund shall consist ofGovernment and other publicsecurities of the same issue;
(v) at least 35% of the property of thisFund must be redeemable orrepayable within two weeks or becapable of being transferred withouta third party’s consent;
(vi) this Fund shall not hold more than10% of any investment other thancertain Government and other publicsecurities issued by the same issuer.
4. In addition to the above limitations, theDirectors have put in place the followingadditional restrictions:
(i) The Fund may only place depositswith banks and building societiesthat have been approved by theManager as an acceptable AuthorisedInstitution.
(ii) In order to provide liquidity, at least35% of the Fund’s assets will berealisable within 14 days. 0-65%will be realisable between 15 daysand 90 days. 0-25% will berealisable between 91 days and 180days.
StocklendingThe Company’s Articles of Association allowthe Custodian, on request of the Manager, toenter into stocklending transactions when itreasonably appears to the Manager to beeconomically appropriate to do so with a viewto generating additional income for theCompany with no, or an acceptable level of,risk and otherwise in accordance with theOrder.
A stocklending programme is where a lendertransfers securities to a borrower otherwisethan by way of sale and a requirement isimposed on the borrower to transfer thosesecurities back to the lender otherwise than byway of a sale. The borrower pays the lenderfor the privilege of borrowing the securities.
The Directors have considered the risksassociated with stocklending and have agreedthat any such risks would be mitigated byentering into an arrangement only with asuitably experienced partner, lending only toapproved counterparties and ensuring that thecounterparty deposited collateral of a readilyrealisable nature and of sufficient value tocover the cost of the security being lent.
The Directors also propose that no sucharrangement would be initiated unless theCompany was in a position to derive sufficientbenefit as to outweigh any potential costs andrisks associated with the programme.
Stocklending transactions must not exceed50% of the market value of the portfolio of aFund at any one time.
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taxation GeneralThe taxation of income and capital gains of theCompany and Shareholders is subject to thefiscal law and practice of Jersey, thejurisdictions in which the Company investsand the jurisdictions in which Shareholders areresident or otherwise subject to tax. Thefollowing summary of the anticipated taxtreatment in Jersey and the United Kingdom,which is not intended to be comprehensive,does not constitute legal or tax advice andapplies only to persons resident in Jersey orthe United Kingdom holding Shares as aninvestment and who are not regarded asconnected with the Company for relevant taxpurposes.
Prospective investors should consult theirown professional advisers on the implicationsof making an investment in, holding,exchanging or disposing of Shares and thereceipt of distributions (whether or not onreinvestment and/or repurchase) with respectto such Shares under the laws of thejurisdiction in which they are liable totaxation.
This summary is based on the taxation lawand practice in force in Jersey and the UnitedKingdom at the date of this Prospectus.Prospective investors should be aware that therelevant fiscal rules and practice or theirinterpretation, as well as the levels and basesof and reliefs from taxation, may change,possibly with retrospective effect. Thefollowing tax summary is not a guarantee toany investor of the tax results of investing inthe Company.
It is the responsibility of the Shareholder toaccount to the relevant tax authority for anytax due on income received.
Jersey Tax ConsiderationsThe Company
The Company has been granted ExemptCompany status in Jersey. As such it isregarded as non-resident for Jersey tax
purposes and is exempt from Jersey incometax on income arising outside Jersey and, byconcession, on any bank interest arising inJersey. The Company is otherwise liable toJersey income tax on income arising in Jersey.As an Exempt Company the Company is liableto the Exempt Company charge currently atthe rate of £600 per annum. Under proposalsto reform Jersey’s tax system, with effect from1st January 2009 the Exempt Company statuswill not exist. As such the Company will nolonger be subject to payment of tax in Jersey.
ShareholdersDividends paid by the Company may be paidwithout deduction of Jersey withholding taxesto shareholders not resident in Jersey forJersey income tax purposes. Jersey income taxat the prevailing rate will be deducted fromdividends paid to Jersey resident shareholderswhether or not reinvested in additional Sharesunless specific dispensation has been given inwriting by the Comptroller of Income Tax of theStates of Jersey for the payment of dividendswithout deduction of Jersey income tax. Nodeductions are made by way of Jerseywithholding tax on repurchase of Shares.
Jersey does not levy taxes upon capital,inheritance, capital gains, gifts, sales orturnover.
The attention of Shareholders resident inJersey is drawn to the anti-avoidanceprovisions of Article 134A of the Income Tax(Jersey) Law, 1961 as amended, which maybe invoked in certain circumstances.
Other than in the circumstances described inthe section “death of an investor” on page 17,no Stamp Duty is levied in Jersey on the intervivos transfer or repurchase of Shares.
European Union (Including UnitedKingdom) Tax ConsiderationsThe European Union Savings Tax Directive(“EUSTD”) came into effect on 1st July 2005,its purpose is to ensure that European Union
(“EU”) residents pay tax on savings income inaccordance with the tax laws in their countryof residence. Although the Channel Islandsand Isle of Man are not part of the EU, theyhave agreed (along with Switzerland and anumber of other jurisdictions) to apply similarprovisions.
The ultimate aim of EUSTD is to bring abouteffective taxation of savings income throughexchange of information between EU memberstates, however for a transitional period it hasbeen agreed that certain jurisdictions(including the Channel Islands and the Isle ofMan) may apply a withholding tax instead. Asa result financial institutions will be applyingtax, currently at the rate of 15%, to all savingsincome payments to EU residents withaccounts in the Channel Islands and the Isleof Man. With effect from 1st July 2008 thisrate is 20%. This tax is known as a retentiontax (“Retention Tax”).
Although EUSTD is aimed primarily at savingsincome, certain funds do come within scope ofthe Directive, however this Company will beout of scope of the Directive and as suchRetention Tax will not be applied to anypayments to Shareholders.
United Kingdom Tax ConsiderationsThe CompanyThe Directors intend to conduct the affairs ofthe Company in such a manner as tominimise, as far as they consider reasonablypracticable, taxation suffered by the Company.In particular, the Directors intend to conductthe affairs of the Company so that it does notbecome resident in the United Kingdom fortaxation purposes. Accordingly, and providedthat the Company does not carry on a trade inthe United Kingdom (whether or not through apermanent establishment situated therein), theCompany will not be subject to UnitedKingdom income tax or corporation tax otherthan on United Kingdom source income.Dividends, interest and other income as wellas capital gains received by the Company maybe subject to withholding or similar taxesimposed by the country in which suchdividends, interest, other income or capitalgains originate. The Company will notnormally be eligible to benefit from any treatiesfor the relief of double taxation.
ShareholdersEach Fund will be treated as a separateoffshore fund for the purposes of UnitedKingdom taxation. If a Fund does not obtaincertification as a distributing fund throughoutthe period during which Shares relating to thatFund are held, gains arising on the disposal ofthose Shares (for example, by way of transfer,exchange or repurchase) will comprise incomefor the purposes of United Kingdom taxation.Such certification is granted retrospectively bythe United Kingdom H. M. Revenue andCustoms on an annual basis. Certification hasso far been received for all relevant accountingperiods up to 30th September 2006. Theinvestment and distribution policies of theCompany are designed so as to enable eachFund to qualify as a distributing fund and it isintended to make an application forcertification for each Fund each year. Therecan, however, be no guarantee thatcertification will be granted, or that oncegranted, it will continue to be available forfuture periods of account of the Funds.
According to their personal circumstances,shareholders resident in the United Kingdomfor tax purposes will be liable to income tax orcorporation tax in respect of any dividend orother income distributions of the Company(whether or not reinvested in additionalShares) but may benefit from personal or otherreliefs and allowances in computing theirUnited Kingdom tax liabilities thereon.
The Company will operate an equalisationaccount and therefore, if Shares are acquiredotherwise than at the beginning of anaccounting period, the first distribution afteracquisition will include a refund of capital,referred to as an equalisation payment, whichis not subject to tax. The amount of theequalisation payment must be deducted fromthe original purchase cost of the Shares incomputing the allowable cost of the Shares fortax purposes. Furthermore, part of theproceeds of sale or repurchase, representingthe underlying income attributable to theShares accrued since the last distribution date(or acquisition if later) will normally constitutetaxable income in the hands of shareholderswho are United Kingdom taxpayers. Theamount so taxable will be deducted incomputing any gain or loss for tax purposes.The Manager will provide information (on
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repurchase contract notes) as to the amount ofthe accrued income to be used by UnitedKingdom investors for the purposes ofcomputing any such United Kingdom taxliabilities.
It is anticipated that the shareholdings in theCompany will be such as to ensure that theCompany would not be a close company ifresident in the United Kingdom. If, however,the Company would be a close company ifresident in the United Kingdom, any gainsaccruing to it may be apportioned to certainUnited Kingdom resident Shareholders. SuchShareholders may thereby become chargeableto capital gains tax or corporation tax onchargeable gains, on the gains apportioned tothem.
United Kingdom IndividualsProvided that the relevant Fund obtainscertification as a distributing fund for allrelevant accounting periods, gains arising onthe disposal of Shares (including by way oftransfer, exchange or repurchase) pertaining tothat Fund by United Kingdom residentShareholders will comprise capital gains forthe purposes of United Kingdom taxation.United Kingdom resident individualShareholders may benefit from taper relief andan annual exemption of £9,200 for 2007 -2008, when computing their liability to capitalgains tax on the disposal of their Shares.Individuals should note that the UnitedKingdom Government has announced that,with effect for disposals taking place on orafter 6th April 2008, capital gains tax will becharged at a rate of 18 per cent and taperrelief will be withdrawn.
United Kingdom resident individualShareholders who are liable to income tax atonly the starting or the basic rate will becharged income tax on dividends, whether ornot reinvested at the rate of 10%. In the caseof United Kingdom resident individualShareholders who are liable to income tax atthe higher rate, income tax will be charged ondividends at the rate of 32.5%.
The attention of individuals ordinarily residentin the United Kingdom is drawn to theprovisions of Chapter 2 of Part 13 of theIncome Tax Act 2007.
These provisions are aimed at preventing theavoidance of income tax by individualsthrough transactions resulting in the transfer ofassets or income to persons (includingcompanies) resident or domiciled abroad andmay render them liable to taxation in respectof undistributed income and profits of theCompany on an annual basis.
The attention of persons investing on behalf ofsettlements established outside the UnitedKingdom is drawn to certain provisions in theTaxation of Chargeable Gains Act 1992 whichmay affect the liability to tax of individualsconcerned either as settlors or beneficiaries ofsuch settlements and who are domiciled andresident or ordinarily resident in the UnitedKingdom.
The United Kingdom government published adiscussion document in October 2007 settingout proposals for changing the UnitedKingdom offshore funds rules, which would, ifenacted, change the tax treatment of UnitedKingdom investors in offshore funds andprovide a new framework for offshore fundsthemselves. Subject to responses to thediscussion paper, the United Kingdomgovernment has indicated that it intends tointroduce legislation for such changes in theFinance Bill 2008.
United Kingdom CompaniesFor those Shareholders liable to UnitedKingdom corporation tax in respect of theirdividends from the Company, corporation taxwill generally be chargeable at the rate of 30%in the financial year 2007 - 2008 (wheresuch shareholders are subject to the full rate ofcorporation tax). The rate will be 28% in thefinancial year 2008 - 2009.
If a Fund has more than 60% by market valueof its investments in debt securities, moneyplaced at interest and certain otherinvestments then, under the rules for thetaxation of corporate and government debtcontained in the Finance Act 1996,Shareholders holding Shares pertaining to thatFund within the charge to United Kingdomcorporation tax will be subject to tax as incomeon all profits and gains arising from andfluctuations in value of those Shares at theend of each accounting period of theShareholders and at the date of disposal of
their interest in accordance with a fair valuebasis of accounting. In addition, incomedistributions of the Company with regard toShares in relation to the relevant Fund,whether or not reinvested, would be taxed asinterest. These rules will apply in respect ofShares pertaining to a Fund to suchShareholders if the 60% limit is exceeded inrespect of the relevant Fund at any time duringthe Shareholder’s accounting period, even if itwas not holding the Shares pertaining to therelevant Fund at that time.
Authorised unit trusts and open-endedinvestment companies holding Shares generallyfall within the rules for the taxation of corporateand government debt contained in the FinanceAct 1996, except to the extent that sums arisingto such entities constitute capital profits, gainsor losses (as defined for accounting purposes).
Should a Fund not have more than 60% bymarket value of its investments in debtsecurities, money placed at interest andcertain other investments then, provided thatthe Fund obtains certification as a distributingfund for the relevant account periods, gainsarising on the disposal of Shares pertaining tothat Fund by Shareholders within the charge toUnited Kingdom corporation tax will comprisecapital gains for the purposes of UnitedKingdom taxation. Such Shareholders maybenefit from indexation allowance effectivelyreducing the amount of their gain (but not
creating or increasing a loss) when computingtheir liability to corporation tax on chargeablegains tax on the disposal of their Shares.
Investors who are life insurance companieswithin the charge to United Kingdom taxationholding their Shares in the Company for thepurposes of their long-term business (otherthan their pensions business) will be deemedto dispose of and immediately reacquire theirShares at the end of each accounting period.Such Shareholders should seek their ownprofessional advice as to the tax consequencesof the deemed disposal.
The Income and Corporation Taxes Act 1988also contains provisions which subject certainUnited Kingdom resident companies tocorporation tax on profits of companies not soresident in which they have an interest. Theprovisions affect any United Kingdomcompany which is deemed to be interested inat least 25% of the profits of a non-residentcompany which is controlled for thesepurposes by residents of the United Kingdomand which does not distribute substantially allof its income and is resident in a low taxjurisdiction. It is intended that the Companywill distribute substantially all of its incomeand therefore it is not anticipated that thislegislation will have any material effect onUnited Kingdom resident corporateShareholders. The legislation is not directedtowards the taxation of capital gains.
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reports and accountsThe Company’s annual accounting date is thelast Dealing Day of September. The interimaccounting date is the last Dealing Day ofMarch.
The Report and Accounts relating to theCompany will be published and sent toShareholders in May and November each yearfor the accounting periods ending on the lastDealing Days of March and Septemberrespectively.
The Custodian is required by the Order toreport to the Shareholders annually on theconduct of the Directors of the Company andthe Manager in the management of theCompany in each annual accounting period.
Copies of the latest Annual Report andAccounts and any subsequent Interim Reportand Accounts are available from the Managerfree of charge.
meetingsAnnual General Meetings of the Company willbe held in Jersey within six months of the endof each annual accounting period.
The Directors are required to convene anExtraordinary General Meeting of the Companywhenever required to do so by Shareholdersrepresenting at least one-tenth of the Shares inissue, provided the requisition is signed bysuch Shareholders, is dated, and states thematter or matters to be submitted forconsideration at the meeting.
At General Meetings of the Company, anymember present in person or by proxy maydemand a poll.
VotesAt General Meetings of the Company, in thecase of all shares, on a vote taken by a showof hands or on a poll, members present inperson (in the case of a company itsauthorised representative) or by proxy, mayvote. Each holder of Shares is entitled on ashow of hands to one vote, and on a poll toone vote for each Share held.
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the constitution of thecompany
The Company was incorporated on 11th July1983 with registered number 26679. Thename of the Company was changed mostrecently from TSB Offshore Investment FundLimited to Lloyds TSB Offshore Funds Limitedon 30th January 1998. It will exist untildissolved by Special Resolution of itsShareholders, but all Shares if not previouslyredeemed will be redeemed on 31st December2083, or if that is not a business day in Jerseythe next succeeding business day. It is anumbrella fund under the Order.
Capital StructureThe authorised share capital of the Companyis £7,501,000 divided into 1,000 FoundersShares of £1 each and 750,000,000unclassified shares of 1p each. Theunclassified shares may be issued as Sharesor Nominal Shares. The Shares may beissued as shares of the existing Funds, or suchother Funds as the Directors subject to theprovisions of the Order may from time to timecreate.
As the Company is open-ended, the issuedcapital of the Company will fluctuate inaccordance with the volume of Sharepurchases and redemptions.
Founders SharesThe Founders Shares are necessary to satisfythe requirements of the Companies Law thatthere should be a class of non-redeemableshares in issue in order that the Shares maybe redeemable. The Founders Shares on a pollcarry one vote for each share held but do notcarry any rights to dividends. Founders Sharesare issued only to the Manager and itsnominee.
On a winding-up of the Company holders ofthe Founders Shares are entitled to participatein the assets of the Company on the terms setout below.
SharesThere are at present twelve classes of Shares,otherwise described in this Prospectus asFunds. The Directors may from time to timecreate further classes (Funds). Shares aredivided into Funds according to the type ofinvestment in which the proceeds of the issueof Shares are invested. A separate portfolio ofinvestments is maintained for each Fund.Each holder of Shares is entitled, on a poll, toone vote for each Share held. Holders ofShares have three kinds of rights to participatein the property or income of the Company:rights on a winding-up of the Company to theassets of the relevant Fund, a right to redeemthe Shares at prices related to the value of theassets attributable to the relevant Fund, and aright to dividends declared out of the profits ofthe relevant Fund. If any dividends are paid,different amounts of dividends may be payablein respect of different Funds.
If at any time the value of the property of allFunds or of any one Fund determined on thesame basis as that for calculating the dealingprice of Shares on each Dealing Day within aperiod of four consecutive weeks, shall be lessthan £5,000,000 or an equivalent amount inanother currency, the Company may, upongiving three weeks’ notice to shareholdersgiven within eight weeks of the expiry of thefour week period, redeem all the Shares of theCompany or of that Fund, as the case may be,then in issue at the relevant dealing price.
With the sanction of a Special Resolution, asdefined in the Companies (Jersey) Law 1991,of the holders of any Fund the Company may,by not less than four nor more than six weeks’notice (expiring on a Dealing Day) given to allholders of Shares of that Fund, redeem at thedealing price on such Dealing Day, all (but notsome) of the Shares of that Fund.
If all the Shares of any Fund are to beredeemed in accordance with either of the
above provisions the Directors may with thesanction of a Special Resolution of the holdersof Shares of that Fund, divide amongst thesaid holders in specie all or any part of theassets of the relevant Fund.
If all the Shares of any Fund are to beredeemed as aforesaid and the whole or anypart of the business or property of theCompany attributable to the relevant Fund orany of the assets of that Fund are proposed tobe transferred or sold to another company oranother Fund (hereinafter called the“Transferee”), the Directors of the Companymay, with the sanction of a Special Resolutionof the holders of Shares of that Fundconferring either a general authority on theDirectors or an authority in respect of anyparticular arrangement, receive incompensation or part compensation for thetransfer or sale, shares, units, policies or otherlike interests or property in or of the Transfereefor distribution among the said holders, or mayin lieu of receiving cash or property or inaddition thereto participate in the profits of orreceive any other benefit from the Transferee.
By the passing of a Special Resolution of theholders of any Fund, the Directors of theCompany may (by giving not less than fourweeks’ notice expiring on a Dealing Day)convert all Shares of that Fund into Shares ofanother Fund. Such conversion shall be effectedby the transfer in the books of the Company ofall the property and liabilities of the old Fund tothe new Fund. The issue of Shares in the newFund to the holders of Shares in the old Fundshall be pro rata to the holdings of such sharesof such aggregate value as is equivalent to thevalue attributable to the old Fund. For suchpurposes, the value of the old Fund and thenumber of Shares to be issued of the new Fundshall be determined on such basis as shall beagreed with the Custodian.
Nominal SharesThe Nominal Shares are non-participatingredeemable second preference shares. Theycan only be issued at par and only for thepurpose of providing funds for the redemptionof the nominal amount of Shares. They willonly be issued to the Manager. They carry noright to dividends. Each holder of NominalShares is entitled, on a poll, to one voteirrespective of the number of shares held.
The Manager is obliged to subscribe forNominal Shares for cash at par when Sharesare redeemed, unless the Directors decide thatthe nominal amount of such Shares is to beredeemed out of profits. Nominal Shares maybe converted into Shares by the Manager onpayment by it of the difference between thenominal value and the current dealing price.Their rights on a winding up of the Companyare set out below.
Share certificatesFounders Shares, Nominal Shares and Sharesare issued in registered form and are primafacie evidence of the title of the member.Share certificates are not issued.
Fund rulesThe Directors by resolution may adopt fundrules containing certain matters appropriate toa Fund which are not contained in the Articlesof Association. Fund rules must be certified asapproved by the Custodian and accompaniedby a Certificate of a solicitor or advocate of TheRoyal Court of Jersey as complying with therequirements of the Order as they relate totheir contents.
Fund rules, once adopted, may not be altered,modified, rescinded or substituted by new fundrules adopted by the Directors without theapproval of a Special Resolution ofShareholders except where such alteration,modification or amendments made by suchproposed new fund rules are required solely :-
(a) to implement any change in the law,including an amendment of the Order orof any other Order made under Article 10of the Law; or
(b) as a direct consequence of any suchchange in the Law; or
(c) to change the name of the Fund; or
(d) to replace the Manager or Custodianwhen it has been removed or wishes toretire or has retired; or
(e) to make an amendment which theManager and the Custodian have agreedin writing or the Directors consider doesnot involve any Shareholders or potentialShareholders in any material prejudice; or
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(f) to remove from the fund rules obsoleteprovisions.
Winding-upThe Company may be wound up at any timein accordance with the provisions of theCompanies Law. In addition, unless theCommission determines otherwise, in any ofthe following circumstances the Companymust cease the issue and redemption ofShares, the Manager must cease the sale andrepurchase of Shares in the Company, and theDirectors of the Company must convene aspecial meeting of the Company to consider aSpecial Resolution to wind-up the Company nolater than one month after the occurrence ofany of the following:
(a) the cancellation of the Company’srecognized fund certificate under theOrder;
(b) the determination of the Commission tocancel the Company’s recognized fundcertificate at the request of the Companyor the Custodian.
The procedure to be followed on a winding-upof the Company will be that laid down fromtime to time by the Companies Law.
In a liquidation, the liquidator transfers assetsto and from the funds of investments of theseparate classes of Shares in such a way as isnecessary in order that the effective burden ofcreditors’ claims is shared among the holdersof shares of different classes in suchproportion as the liquidator thinks equitable,having regard to the provisions of the Articlesas to the obligations of the different classes forsuch liabilities.
The assets available for distribution among theshareholders will then be applied in thefollowing priority:
(1) Firstly, in the payment to the holders ofthe Shares of each Fund of a sum in thecurrency in which that Fund isdesignated as nearly as possible equal (atthe middle-market rate of exchangeprevailing in the London ForeignExchange Market at a time selected bythe liquidator which is within fourteen
days preceding the date of suchpayment) to the nominal amount of theShares of such Fund held by suchholders respectively, provided that thereare sufficient assets available in theportfolio of investments of that Fund toenable such payment to be made. In theevent that, as regards any class ofShares, there are insufficient assetsavailable in the relevant Fund to enablesuch payments to be made, recourseshall be had:-
(i) firstly, to the assets of the Companynot comprised within any of theFunds; and
(ii) secondly, to the assets remaining inthe Funds for other classes of Shares(after payment to the holders ofShares of the classes to which theyrelate of the amounts to which theyare respectively entitled under thisparagraph (1) pro rata to the totalvalue of such assets remaining withineach such Fund.
(2) Secondly, in the payment to the holders ofthe Nominal Shares of sums up to thenominal amount paid up out of the assetsof the Company not comprised within anyof the Funds remaining after any recourseunder paragraph (1)(i) above. In theevent that there are insufficient assets toenable such payment in full to be made,no recourse shall be had to the assetscomprised within any of the Funds.
(3) Thirdly, in the payment to the holders ofthe Founders Shares of sums up to thenominal amount paid up out of the assetsof the Company not comprised within anyof the Funds remaining after any recourseunder paragraph (1)(i) above and afterpayment in full to the holders of theNominal Shares under paragraph (2)above. In the event that there areinsufficient assets as aforesaid to enablesuch payment in full to the holders of theFounders Shares to be made no recourseshall be had to the assets comprisedwithin any of the Funds.
(4) Fourthly, in the payment to the holders ofeach class of Shares of any balance thenremaining in the relevant Fund for that
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class, such payment being made inproportion to the number of Shares of thatclass held.
(5) Finally, in the payment to the holders ofthe Shares of any balance then remainingand not comprised within any of theFunds, such payment being made inproportion to the number of Shares held.
The liquidator may if authorised by SpecialResolution divide assets in specie amongstmembers.
Variation of capital and rights(1) Subject to the provisions of the
Companies Law the Company may bySpecial Resolution from time to timeincrease, reduce, consolidate and sub-divide its share capital in any way.
(2) Subject to the provisions of theCompanies Law, all or any of the specialrights for the time being attached to anyclass of Shares for the time being issuedmay from time to time be altered orabrogated with the consent in writing ofthe holders of not less than two-thirds ofthe issued shares of that class, or withthe sanction of a Special Resolutionpassed at a separate class meeting of theholders of such Shares. At such ameeting every holder of the Shares of theclass shall be entitled, on a poll, to onevote for every such share held by him.The necessary quorum at any suchmeeting is two persons at least holding orrepresenting by proxy not less than one-third of the issued Shares of that class,except that if at any adjourned meetingsuch a quorum is not present the holderswho are present shall be a quorum.
(3) The rights attached to each class ofShares shall be deemed to be varied bythe creation or issue of any share (otherthan Shares of any class, whether now inexistence or hereinafter created) rankingpari passu with or in priority to them asregards participation in the profits orassets of the Company.
(4) The special rights attached to any class ofshares having preferential rights shall,unless otherwise expressly provided bythe conditions of issue of such shares, bedeemed not to be varied by:
(a) the creation, allotment or issue offurther shares ranking pari passutherewith; or
(b) the creation, allotment or issue ofFounders Shares; or
(c) the creation of Unclassified Shares;or
(d) the allotment, issue or redemption ofShares of any Fund; or
(e) the exchange of Shares of any Fundinto Shares of another Fund; or
(f) the allotment, issue or redemption ofNominal Shares; or
(g) the conversion of Nominal Sharesinto Shares.
Directors(1) The business of the Company shall be
managed by the Directors who mayexercise all such powers as are notrequired by the Companies Law or theOrder to be exercisable by the Custodian,the Manager, or the Company in GeneralMeeting, subject to any provisionscontained in the Articles of Association,the Companies Law, the Order, orprescribed by the Company in GeneralMeeting. The Directors may exercise allthe powers of the Company and entrust orconfer any of these on the Manager.
(2) Any Director may hold any other office orplace of profit under the Company (otherthan the office of auditor) in conjunctionwith his office of Director on such termsas to tenure of office and otherwise as theDirectors may determine. Any Directormay also act in a professional capacity(other than as auditor) and he or his firmshall be entitled to remuneration for suchservices as if he were not a Director.
(3) The Directors shall have the power at anytime and from time to time to appoint anyperson to be a Director, either to fill acasual vacancy or as an addition to theexisting Directors. Any Director soappointed shall hold office only until thenext following Annual General meetingand shall then be eligible for re-election.A Director may be removed from office by
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an ordinary resolution of the Company inGeneral Meeting; and in certain otherspecific circumstances as detailed in theArticles of Association.
(4) A Director may not normally vote inrespect of any contract in which he ismaterially interested, but shall not bedisqualified by his office from contractingwith the Company. A Director is notcounted in the quorum of any meeting inrelation to a resolution on which he isdebarred from voting.
(5) There is no share qualification forDirectors.
(6) Each Director may appoint any person ashis alternate to attend meetings at whichhe is unable to be present.
IndemnityIn so far as the Law permits, every Directorand other officer of the Company is entitled tobe indemnified by the Company for anyliability incurred by reason of being an officerof the Company in respect of costs ofdefending proceedings, or to third partieswhere they acted in good faith with a view tothe best interests of the Company, or otherwisewhere relief is granted by the Court.
The Directors are entitled to arrange insurancecover in the name of and at the expense of theCompany for the benefit of the officers, thesecretary and agents, servants or employees ofthe Company against liability incurred by themholding such office or appointment.
Conflicts of InterestThe Order contains detailed provisions relatinginter alia to the powers and duties of theManager and Custodian, the removal of theManager, the cancellation of the Company’srecognized fund certificate, and the dealing asprincipal with the property of the Company bythe Manager, the Custodian, the InvestmentManager or any associate of any of them.
Material ContractsThe following contracts which are or may bematerial have been entered into otherwise thanin the ordinary course of business:
(i) Management Agreement dated 26thMarch 1991 supplemented by a letterdated 26th March 1991, an agreementdated 3rd March 1998 and side lettersdated, 1st December 1998, 31st March2001, 11th July 2001, 6th November2003, 1st April 2004, September 2005and 16th February 2006 between theCompany, Lloyds TSB Offshore FundManagers Limited in its former name ofTSB Fund Managers (Channel Islands)Limited (the “OriginaI Manager”) and theCustodian whereby the Original Manageragreed to manage the business of theCompany and act as Registrar and whichmay be terminated, inter alia, by sixmonths’ written notice by either party.
(ii) Investment Management Agreement dated27th April 2004, supplemented by anAmendment Agreement dated September2006, between the Company, theManager and Scottish Widows InvestmentPartnership Limited (the “InvestmentManager”), whereby investmentmanagement is provided by theInvestment Manager. The InvestmentManagement Agreement may beterminated, inter alia, on notice in writinggiven by the Company or the Manager tothe Investment Manager or by not lessthan 90 days’ notice in writing given bythe Investment Manager to the Companyand the Manager.
(iii) Novation Agreement dated 8th November1999 between the Company, the OriginalManager, the Custodian, the InvestmentManager and the Manager whereby theManager replaced the Original Managerunder the Management Agreement, theInvestment Management Agreement, theCustodian Agreement, the RegistrarsAgreement and the UK FacilitiesAgreement.
(iv) Custodian Agreement dated 26th March1991, supplemented by letters dated26th March 1991, 11th June 2001 and10th February 2006, between theCompany, the Manager and Capita TrustCompany (Jersey) Limited, in its formername of Sun Alliance Trust Company(Jersey) Limited whereby the latter wasappointed Custodian to the Company, and
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which may be terminated, inter alia, ontwelve months prior written notice at anytime after 1st March 2008 by either theCustodian or the Company.
(v) Secretarial Agreement dated 24thFebruary 1998 between the Companyand Lloyds TSB Offshore CorporateServices Limited in its former name ofLloyds TSB Corporate Services (Jersey)Limited whereby Lloyds TSB CorporateServices (Jersey) Limited were appointedas Secretary to the Company.
(vi) UK Facilities Agreement dated 31stJanuary 2001 between the Company,Lloyds TSB Private Banking Limited (the“Facilities Agent”) and the Managerwhereby the Company appointed theFacilities Agent in the United Kingdom,and which may be terminated, inter alia,by three months’ written notice by eitherthe Company or the Facilities Agent.
(vii) Paying Agency Agreement dated 27thJune 2005 between the Company, LloydsTSB Offshore Paying Agent (HK) Limited,the Manager and Capita Trust Company(Jersey) Limited whereby the Managerappointed the Paying Agent to providepaying agency facilities to the Company.The Paying Agency Agreement may beterminated, inter alia, by three months’written notice given by either party.
All the above agreements contain provisionsindemnifying and exempting the respectivefunctionaries from liability for any loss ordamage suffered by the Company which mayarise in the execution by the functionaries oftheir duties other than from failure to exercisedue care and diligence.
Complaints ProceduresComplaints should be addressed to theManager who will investigate all complaints. Aleaflet entitled “How to voice your concerns –resolving your complaints with us” is availablefrom the Manager or on application in writingfrom PO Box 160, 25 New Street, St Helier,Jersey JE4 8RG. Complainants have the rightto report the matter to the Jersey FinancialServices Commission, P.0. Box 267, 14–18Castle Street, St. Helier, Jersey JE4 8TP and to
ask the Commission to investigate if they arenot satisfied with the Manager’s response.
A Shareholder domiciled in the UK may alsomake a complaint about the operation of theCompany to the UK Ombudsman at thefollowing address:Financial Services Ombudsman,South Quay Plaza,183 Marsh Wall,London E14 9SR
General(1) No commissions, discounts, brokerage or
other special terms have been granted bythe Company in relation to shares ordebentures issued or to be issued by theCompany. However, on any issue or saleof Shares the Manager may, out of its ownfunds, pay commission on applicationsreceived through brokers and otherprofessional agents. Any commission dueother than trail commission will normallybe paid within one month of the Sharesbeing entered onto the register ofShareholders subject to the completion ofany necessary documentation.
(2) The Company is not engaged in anylitigation or arbitration and no litigation orclaim of material importance is known tothe Directors to be pending or threatenedagainst the Company.
(3) There are no existing or proposed servicecontracts between any of the Directorsand the Company but the Directors mayreceive remuneration as provided in theArticles. The Company has no employees.
(4) (a) Save as disclosed below, as at 31stDecember 2007, no Director or anymember of his family had anyinterest in the Company which wouldrequire to be shown in a register keptpursuant to the UK Companies Act1985 if the Company were subject tothat Act.
Ian Mark Jeremie Hardy4,403.39 Shares - InternationalFund
(b) Timothy Joseph Herbert is a partner ofMourant du Feu & Jeune, the legaladvisers in Jersey to the Company and to
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the Manager. Mourant du Feu & Jeunereceive fees in connection with advisingthe Company and the Manager.
(c) Save for investments acquired in thecourse of its ordinary business, theCompany has not purchased or acquiredor agreed to purchase or acquire anyproperty.
(d) Save as disclosed in paragraph (7)below, no Director has had any interestin the promotion of the Company or,since the date of incorporation of theCompany, in any assets acquired,disposed of or leased to or by orproposed to be acquired, disposed of orleased to or by the Company, and noDirector has a material interest in anycontract or arrangement entered into bythe Company which is significant inrelation to the business of the Company.
(5) The Company does not provide loans orguarantees to any Director or to directorsof the Manager or any other party.
(6) The Company has not established anddoes not intend to establish a place ofbusiness in the United Kingdom. TheCompany does not have any subsidiaries.
(7) The significant business activities (if any)of the Directors of the Company are asfollows:-
Ian Mark Jeremie Hardy – SeniorManager Legal & Technical, Lloyds TSBOffshore Fund Managers Limited.
Timothy Joseph Herbert – Partner,Mourant du Feu & Jeune, Jersey.
Brian Charles James – Senior Manager –Funds Administration and CustomerService, Lloyds TSB Offshore FundManagers Limited.
Nigel Ross Jeacock-Fewtrell – SeniorManager – Sales, Lloyds TSB OffshoreFund Managers Limited.
Ross Davey Willcox – Head of FundsLloyds TSB Offshore Fund ManagersLimited.
(8) The Directors of the Manager are asfollows. Their significant business
activities, not connected with thebusiness of the Manager, and not shownin (7) above are:Ian Mark Jeremie HardyBrian Charles JamesNigel Ross Jeacock-FewtrellRoss Davey Willcox
(9) Copies of the Memorandum and Articlesof Association of the Company, theCompanies Law (Jersey) 1991, asamended, the Collective InvestmentFunds (Jersey) Law, 1988, as amended,and subordinate legislation madethereunder, the material contracts, anyFund rules, the most recent AnnualReport* and any subsequent InterimReport of the Company* may beinspected free of charge and copies ofthem obtained at a reasonable charge(*no charge is made for thesedocuments), from the offices of theManager, Lloyds TSB Offshore FundManagers Limited, P.O. Box 311, 11–12Esplanade, St Helier, Jersey, ChannelIslands JE4 8ZU.
Information for United KingdomInvestors
Lloyds TSB Private Banking Limited isacting for the Company in relation to theProspectus and matters relating theretoand it or any of its associates may havean interest in Shares of the Company.Lloyds TSB Private Banking Limited isnot acting for or advising or treating as itscustomer any other person in relation toinvestment in the Company (unless otherindependent arrangements applybetween it and such person).
The Company does not carry on anyregulated activity from a permanent placeof business in the United Kingdom andUnited Kingdom investors are advisedthat most of the protections afforded bythe United Kingdom regulatory systemwill not apply to an investment in theCompany. Shareholders in the Companyare not protected by the FinancialServices Compensation Schemeestablished in the United Kingdom. Theregistered address of the Company is setout on page 3 of this Prospectus.
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UK Facilities AgentIn accordance with the terms of the UKFacilities Agreement, Lloyds TSB PrivateBanking Limited, maintains facilities in the UKfor any person to inspect (free of charge) thefollowing documents:i. the prospectus and any supplements
thereto;
ii. the Articles of Association of the Companyand any amendments; and
iii. the latest annual and semi-annual reports.
The UK Facilities Agent shall also:i. provide information about the price of the
Shares;ii. arrange for redemption of Shares on behalf
of the Shareholders;iii. arrange payments of dividends on behalf of
the Company;
iv. provide details of notices to Shareholders;and
v. pass on any complaints from Shareholdersto the Directors or the Manager.
The address of the UK Facilities Agent is,Lloyds TSB Private Banking Limited, 25/27Perrymount Road, Haywards Heath, WestSussex, RH16 3SP.
UK taxation informationA summary of the taxation information basedon the law in the UK is set out on pages 27 to29 of this Prospectus. It is intended to offerguidance only to UK investors, but does notconstitute legal or tax advice.
February 2008
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OB755 (September 2006)OB755 (February 2008)
