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CORE Incentive Fees

WHAT ARE INCENTIVE FEES?

An incentive fee may be deducted by some of the fund managers within the CORE Fund if they achieve certain investment returns on the funds they manage. Depending on the particular fund, circumstances in which an incentive fee may be deducted by the fund manager include the following:

  • If the investment return is positive in any calendar quarter
  • If the investment return exceeds a certain level each year
  • If the investment returns achieved in a particular year are greater than the previous highest investment return
  • If the returns achieved by these funds exceed the performance of a benchmark

Where an incentive fee is deducted this will be reflected in the unit price.

INCENTIVE FEES IN CORE FUND:

Within the CORE Fund four of the external managers can earn incentive fees linked to their performance.

  • Abbey Capital and the underlying managers can earn a fee of 22% of the increase in the fund value in each calendar quarter, provided the underlying fund price (Net Asset Value) at quarter end has risen from the previous quarter end fund price. The incentive fee is calculated after the external management fee is paid.
  • GMO, a manager in Strategic Asset Return Fund, can earn a fee of 10% on the increase in the value of the fund each year above inflation (G7 Consumer Price Index). The incentive fee is calculated after the external management fee is paid.
  • AQR Capital Management, LLC (“AQR”), in Strategic Asset Return Fund, can earn a fee of 10% on the increase in value above the inter-bank interest rate for the sub-fund it manages. The incentive fee is calculated on a daily basis (after the external management fee is paid) and is paid annually.
  • MontLake Dunn, in Strategic Asset Return Fund, can earn a fee of 20% of the increase in the fund value in each calendar quarter, provided the underlying fund price (Gross Asset Value) at quarter end has risen from the previous quarter end fund price. The incentive fee is calculated daily and deducted and paid quarterly after the external management fee is paid.

Information is correct as at 21 September 2015 but is subject to change.