OEIC | Unit Trust
Adviser guide
Fund charges and costs explained
There are a number of charges and costs that are incurred when investing. The detail below aims to make our charging structure
more transparent and easier to understand. The charges that you pay are used to cover the costs of running the fund, including
Threadneedle Investments’ charge for managing the fund, in addition to the costs of distributing it. The value of your investment
will reflect these charges and will be lower as a result.
Charges vary from fund to fund and from share class to share class. Further information about specific charges can be found in
the relevant Fund Prospectus.
Pricing policy of our funds
Funds can be either single or dual priced. A single priced fund is bought and sold at the same price, subject to a potential
dilution levy/adjustment (please see definition below). Dual priced funds have an offer price at which you buy, and a lower
bid price, at which you sell. This table shows the pricing policy for the Threadneedle Investments UK domiciled fund range.
Fund range
Pricing policy
Threadneedle Investment Funds (TIF)
Single Priced with potential Dilution Adjustment
Threadneedle Investment Funds II (TIF II)
Single Priced with potential Dilution Levy
Threadneedle Investment Funds III (TIF III)
Single Priced with potential Dilution Levy
Threadneedle Investment Funds IV (TIF IV)
Single Priced with potential Dilution Levy
Threadneedle Specialist Investment Funds (TSIF)
Single Priced with potential Dilution Adjustment
Threadneedle Focus Investment Funds (TFIF)
Single Priced with potential Dilution Adjustment
Threadneedle Managed Funds
Dual Priced
Threadneedle Navigator Funds
Dual Priced
Threadneedle UK Property Trust
Dual Priced
Single priced funds
Dilution levy/adjustment
For funds operating a single pricing policy we reserve the right to charge a dilution levy/adjustment to protect existing
shareholders from the costs of buying or selling underlying investments, as a result of large investors joining or leaving the
fund. The amount of any such dilution levy/adjustment is calculated by reference to the estimated costs of dealing in the
underlying investments. When we impose a dilution levy/adjustment on a particular investor or group of investors, this is
paid into the fund.
Dilution adjustment affects everyone who deals on a particular day when there are large investors joining/leaving the fund,
whereas Dilution levy only affects the individuals who trigger the price movement.
Dual priced funds
With dual priced funds, there is a separate price for buying and selling units in the fund. The difference between the buying
and selling prices is the bid/offer spread which broadly comprises the initial charge plus the difference between the buying
and selling prices of the underlying investments plus any other costs involved in buying or selling the underlying investments.
This means that when investments are bought or sold as a result of other investors joining or leaving the fund your investment
is sheltered from the costs of these transactions.
The buying (offer) and selling (bid) prices of the fund are generally dependent on whether the fund is experiencing more
subscriptions than redemptions (net inflows/offer basis) or more redemptions than subscriptions (net outflows/bid basis).
Offer basis
On a net inflow basis, the prices originate from the buying price of the underlying investments. The buying (offer) price will
be the price of creating a new unit (cost of buying underlying investments plus any related costs) with the addition of the initial
charge. The selling (bid) price is then derived as the buying (offer) price minus the bid/offer spread.
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Fund charges and costs explained
Bid basis
On a net outflow basis, the prices originate from the selling price of the underlying investments. The selling (bid) price will be
the price of cancelling a unit (proceeds from selling the underlying investments minus any related costs).
The buying (offer) price is then derived as the selling price plus the bid/offer spread.
One-off charges
Entry charge
This is often referred to as the initial charge and may be taken from your investment (initial or subsequent investment) before
your investment is placed or units are purchased.
Exit charge
This may also be referred to as the redemption charge and relates to the amount of money that may be taken from your
investment before the proceeds of your investment are paid out. Threadneedle Investments does not currently have an exit
charge applicable to its funds.
Switching charge
This is a charge that may be taken from your investment should you decide to switch your money from either a share class or fund
to another share class or fund. Unless otherwise notified this charge will not exceed an amount equal to the initial charge into
which the shares/fund are being switched to. For further information regarding switching please refer to the Fund Prospectus.
Stamp Duty Reserve Tax (SDRT)
SDRT is a charge made to the fund and not directly to the investor. It is charged on the sale of Shares to the fund and on certain
transfers of Shares. The SDRT due is calculated at the rate of 0.5% of the market value of Shares sold. This charge is subject
to reduction in accordance with relief available from time to time. Please note that HM Revenue & Customs has confirmed that
SDRT will be abolished from April 2014.
Annual charges
There are a number of charges and costs borne by the funds each year as described below. The Ongoing Charges Figure (OCF)
is an industry standard way of measuring the aggregate effect of a number of these charges.
Ongoing charges figure (OCF)
The OCF is based on the last year’s expenses and may vary from year to year. It includes charges such as the fund’s annual
management charge, registration fee, custody fees and distribution cost but excludes the costs of buying or selling assets for
the fund (unless these assets are shares of another fund).
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Fund charges and costs explained
The following form part of the OCF:
nnAnnual management charge
This is a charge paid annually to Threadneedle for managing your investment in a fund.
nnRegistrar fee*
This is a fee paid in return for Threadneedle Investments paying or satisfying certain ongoing registration and general expenses.
At any particular time the actual amount of ongoing registration and general expenses may be more or less than Threadneedle
Investments collects from the fund, however, Threadneedle Investments is under no obligation to account to the Depositary or
investors for any surplus it retains in relation to the payment it receives.
The following form part of the registrar fee:
nn fees and expenses in respect of establishing and maintaining the register of Shareholders and related functions including
the fees of the registrar;
nn expenses incurred in distributing income to Shareholders;
nn fees in respect of the publication and circulation of details of the NAV and prices;
nn fees and expenses of tax, legal and other professional advisers of the Company;
nn costs of convening and holding Shareholder meetings (including meetings of Shareholders in any particular Fund, and a
particular Class within a Fund);
nn costs of printing and distributing reports, accounts and any prospectus, publishing prices and any costs incurred as a result
of periodic updates of any prospectus and any other administrative expenses;
nn fees connected with the listing of Shares on the Stock Exchange; and
nn Report & Account fees.
*For TIF II, III and IV the Registrar Fee only covers external fees and expenses in respect of establishing and maintaining the register of Shareholders and related functions
including the fees of the registrar and expenses incurred in distributing income to Shareholders. All other expenses listed, if charged to the fund, are charged directly. An admin
fee, which covers costs attached to fund accounting, is applicable to TIF II, III and IV only.
nnCustody (Safe keeping) fee – fee charged by the Depositary and Custodian who are the legal owners of the fund’s property
and are responsible for safe keeping of the assets.
nnCustody transaction fee – transaction expenses incurred by the Depositary and Custodian who are the legal owners of the
fund’s property and are responsible for safe keeping of the assets.
nnAudit fee – fees and expenses of the funds’ Auditors.
nnRegulatory fee – fees of the FCA and the corresponding periodic fees of any regulatory authority in a country or territory
outside the United Kingdom in which Shares are or may be marketed.
nnStocklending fee – Whilst stocklending activity undertaken by the manager may generate income for the fund, there are
costs associated with this which include oversight of the activity (which may be outsourced to a third party).
In addition, there are some annual charges and costs that are not part of the OCF:
Performance fee
There are a number of Threadneedle funds that may charge a performance fee. For further information please refer to the Fund
Prospectus.
The performance fee is a payment made to Threadneedle Investments, or any sub advisors, for generating returns in excess of
a set target. It is paid in addition to the annual management charge. If the fund does not meet this target, a performance fee
will not be payable. There is no maximum fee.
Portfolio transaction costs (PTC)
This includes the expenses that arise from selling or buying investments in the fund, including redemption fees, transfer
fees and broker commissions. Costs for a property fund may be significantly higher than an equity or bond fund, due to the
additional transaction costs associated with buying or selling property. Please note that the PTC is likely to be incurred as a
result of investing or selling securities in order to satisfy large subscription/redemption requests are factored into the Dilution
levy/adjustment rates applied to these deals.
Please note that your investment may not be subject to all of the above charges and costs.
The UK’s Investment Management Association (IMA) provides guidance and explanation regarding the costs associated with
investing. For further information visit http://www.investmentfunds.org.uk/current-topics-of-interest/charges/trading/
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To find out more visit threadneedle.com
Important information: Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports,
which can be obtained free of charge on request, and the applicable terms & conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund.
Threadneedle Investment Services Limited. Registered in England and Wales, No. 573204. Registered Office: 60 St Mary Axe, London EC3A 8JQ. Authorised and regulated in the UK by the Financial
Conduct Authority. Threadneedle Investments is a brand name and both the Threadneedle Investments name and logo are trademarks or registered trademarks of the Threadneedle group of companies.
threadneedle.com
Issued 04.13 | Valid to 06.13 | T4123_Adviser
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