Notice of Unitholder Meeting for SKAGEN Global B

The equity fund SKAGEN Global is managed by SKAGEN AS (SKAGEN). SKAGEN Global is an actively managed fund with a global investment mandate. The fund’s strategy is to invest in undervalued, high quality companies where the portfolio managers can identify clear catalysts for their true value to be realised. In order to reduce risk, the fund seeks to maintain a reasonable balance between geographical regions and industrial sectors.

Unitholders in SKAGEN Global B are hereby invited to attend a unitholder meeting to consider a proposal to amend §7 Unit classes of the Articles of Association.

The proposed amendment to the Articles of Association was considered and unanimously approved by SKAGEN’s Board of Directors on 24 September 2021.

The unitholder meeting will be held at SKAGEN’s offices at Skagen 3 (Torgterrassen 5th floor), Stavanger, Norway on 27 October 2021 at 14:00.

1. Background and reasoning for the amendment to the Articles of Association

The performance fee for SKAGEN Global, unit class Global B, is regulated by §7 (Unit Classes) of the Articles of Association. According to the current Articles of Association, the fund's performance fee is calculated daily and charged annually on 31 December. The calculation period (reference period) starts on 1 January each year, lasts one year and does not take into account whether the fund has generated a lower return than the benchmark index the previous year (underperformance).

The European Securities and Markets Authority (ESMA) recently published new guidelines on performance fees in mutual funds. It recommends a reference period for performance fees of at least five years.

In line with the ESMA guidelines, SKAGEN proposes extending the fund's reference period from one to five years. The length of the reference period also reflects the recommended investment horizon for SKAGEN Global. If the relative value development is negative at year end, this is carried over to the following year. A reference period of five years means that underperformance during a given year must be recuperated over the ensuing four years before it can be reset.

In practice, the proposed amendment to the Articles of Association can be exemplified as follows:

• If the fund underperforms the benchmark index in 2022 and 2023, no performance fee will be charged for these years. If the fund recovers the underperformance of the previous two years in 2024 and achieves excess return relative to the benchmark index, a performance fee may be charged for 2024.
• If the fund significantly underperforms its benchmark index in 2025, and the fund does not recover the underperformance in the following four years despite positive relative value development, the fund will not be charged a performance fee in the years 2026 to 2029. In 2030, the underperformance from 2025 will be excluded from the performance fee calculation (as it is now outside the five-year reference period) so that a performance fee for that year may be charged.

The proposed amendment is in the best interests of unitholders and is in accordance with best practice. It incentivises the portfolio manager to continue trading in the fund's best interests and not take short-term risk. The investment process will not be affected by the amendment to the articles of association. Unitholders may attain better returns over time since the underperformance must be recuperated over a longer reference period. Please note that a performance fee may be charged even if the fund's units have decreased in value if the fund's return has fallen less than that of the benchmark index.

The variable performance fee for any outperformance versus the benchmark index remains unchanged at 10%.

2. Proposal for amendment to the Articles of Association

An overview of the current wording in § 7 as well as the proposed amendment to the provision are included in Appendix 1. The full proposal for the revised Articles of Association is available on SKAGEN's website. Please contact Customer Services if you would like a copy of the revised Articles of Association to be sent to you by post free of charge.

The implementation of the proposed amendment requires that a minimum of 75 percent of the units at the unitholder meeting – represented either in person or through advance voting – have voted in favour of the amendment. Assuming that the proposal receives the endorsement of the unitholders at the unitholder meeting, the Financial Supervisory Authority (FSA) will subsequently ensure that the legal requirements for amending the Articles of Association are met. If the proposal is approved, we expect the change to be implemented on 1 January 2022. Confirmation of this will be announced on SKAGEN's website.

In the period between the announcement of the amendment and the amendment coming into force, it is a legal requirement that units may be redeemed free of charge. None of SKAGEN's funds have redemption fees, so the requirement for charge-free redemptions is fulfilled.

3. Unitholder meeting and voting

Decisions regarding the amendment to the Articles of Association will be taken by the fund’s unitholders during the unitholder meeting, which will be held at SKAGEN’s offices at Skagen 3, Torgterrassen, 5th floor, Stavanger, Norway on 27 October 2021 at 14:00.

The agenda for the unitholder meeting will be:

1. Election of chairman and two unitholders to countersign the minutes
2. Presentation of the rationale behind the amendment to the Articles of Association by Director of     Product Management, Arild Risanger Sunde
3. Review of submitted questions from unitholders
4. Vote

At the unitholder meeting, each unit will carry one vote. The holdings as of 25 October 2021 will be the basis for the number of votes.

Votes at the unitholder meeting may be cast in person or by proxy. Proxy forms may be obtained here or by contacting Customer Services. Please remember to bring your ID and, if applicable, your company certificate.

Advance voting

Votes may be cast in advance by sending the ballot by email to legal@skagenfunds.com or by post to SKAGEN AS, P.O. Box 160, N-4001 Stavanger. Ballot forms may be obtained here.

Advance voting ballots must be received by SKAGEN no later than 25 October 2021.

You may register to attend the unitholder meeting by email legal@skagenfunds.com or by post to SKAGEN AS, P.O. Box 160, N-4001 Stavanger, Norway. Registrations must be received by SKAGEN no later than 25 October 2021.

We reserve the right to cancel the physical unitholder meeting in the event that we are obliged to do so to comply with Covid 19 infection prevention guidance.

Do you have any questions?

For questions related to the suggested amendment to the Articles of Association or regarding the unitholder meeting, please contact SKAGEN at legal@skagenfunds.com or call +47 51 80 39 00.

Unitholders are entitled to discuss issues related to the amendment to the Articles of Association during the unitholder meeting. Questions must be directed to SKAGEN’s Board of Directors in written format within a week of the meeting being held. Please use the following email address: legal@skagenfunds.com  

The unitholder meeting may not make any decisions that bind the fund or the management company, apart from the amendment to the Articles of Association.

Board of Directors SKAGEN AS
Jan Erik Saugestad,
Chairman of the Board

Appendix 1: Amendment to the Articles of Association § 7 Unit classes