Policy on handling conflicts of interest

SKAGEN AS is an investment firm authorised to provide portfolio management pursuant to the Securities Trading Act. SKAGEN is 100% owned by Storebrand Asset Management AS. SKAGEN manages the SKAGEN funds (equity funds and combination funds) pursuant to an outsourcing agreement with Storebrand Asset Management. When managing funds, SKAGEN must always act in the best interests of the funds and the clients.

However, instances could arise where the interests of the funds or the clients are in conflict, or where a conflict of interest occurs between SKAGEN employees and the funds. The aim of this policy is to identify possible conflicts of interest which could arise in SKAGEN's activities and to describe the measures instigated to prevent or handle these in accordance with relevant laws and regulations. The objectives of the policy are as follows:

• The way SKAGEN organises and manages all business activities is done in a way to reduce potential conflicts of interest
• Establishment of sufficient internal control measures to identify and manage potential conflicts of interest
• Managing conflicts of interest in the best interests of clients

These guidelines follow the "Guidelines for handling conflicts of interest in the Storebrand Group", sections 2-20 to 2-23 of the Securities Fund Regulations and section 10-9 of the Securities Trading Act.

Conflicts of interests may arise between SKAGEN, SKAGEN's funds, other funds in the Storebrand Group, external funds, clients/unit holders, between different roles/functions in the Storebrand Group, Board members and employees. Consideration must also be given to conflicts of interest that may arise as a result of the integration of sustainability risks in SKAGEN's business activities, including conflicts of interest that may arise from a client's sustainability preferences.

In addition to legal requirements, it is important to ensure all employees have the competence to identify potential conflicts of interest in order for them to be managed according to this policy.

Conflicts of interest

Identification and measures for handling conflicts of interest

A description of specific potential conflicts of interest which could arise in connection with SKAGEN's activities, and SKAGEN's procedures and actions for dealing with them are set out below.

Potential conflicts of interest arising from the management of the funds

SKAGEN’s existence is predicated on delivering the best risk-adjusted returns to clients. SKAGEN is a long-term manager and has no incentive to prioritise short-term profits over patient long-term operations. However, a potential conflict of interest lies at the heart of the company, as persons connected with the management company or the Storebrand Group may prioritise the company's earnings over the long-term interests of the funds and their unit holders. To avoid such conflicts of interest becoming a reality, it is important to ensure the independence of a number of functions, and SKAGEN has instigated general measures to achieve this:

• Procedures for determining the fund price (NAV), in which dedicated employees set the fund prices independently of the portfolio managers. Price-setting is thus subject to checks by Storebrand Asset Management's compliance function.
• Each fund must have a custodian. A custodian is a financial institution with licence to act as a custodian. The custodian's duties include safekeeping the funds’ assets or maintaining accounts of them in a securities register. The custodian must also perform several checks. These relate partly to whether movements in the funds have been performed in accordance with the law, regulations or rules and whether the unit value has been calculated in accordance with the law, regulations or fund rules.
• Procedures for preventing insider trading and market manipulation in the performance of fund management or personal transactions.
• Policy and procedure for best execution to ensure SKAGEN will take all reasonable steps to obtain the best possible result for the unit holders.
• Ethical guidelines for preventing SKAGEN employees from obtaining benefits at the expense of SKAGEN's business.

Potential conflicts of interest between SKAGEN AS and the SKAGEN funds

SKAGEN will normally not deal in financial instruments but may exceptionally make individual strategic investments in companies. Before SKAGEN makes such investments, the Managing Director must certify that the investments do not conflict with SKAGEN's obligations under the Norwegian Act on Securities Funds or with the interests of the SKAGEN funds. In the case of significant business decisions, safeguarding the client perspective will be documented.

Potential conflicts of interest between the owner of SKAGEN  and funds managed by SKAGEN

The interests of the owner of SKAGEN could potentially differ from those of the funds. The owner could influence the operation of SKAGEN through their representation on the Board. This conflict of interest is handled by ensuring that unit holders represent at least one third of the Board members.

The Board of SKAGEN does not make decisions related to the SKAGEN funds as this is handled by the Board of Storebrand Asset Management. Unit holders are represented by at least 1/3 of the board members of Storebrand Asset Management. The unit holder-elected members of the Board shall safeguard the interests of unit holders.

Potential conflicts of interest between SKAGEN employees and the SKAGEN funds

SKAGEN employees are able to trade financial instruments on their own account. This may conflict with the interests of the funds, for instance if the fund and the employee attempt to buy the same security or the employee attempts to exploit knowledge that the fund is about to sell a security by buying it at a reduced price. To avoid employees trading in securities in a way judged to conflict with the interests of the funds, or exploiting information received for their own benefit, or exploiting their position to obtain special advantages, SKAGEN has drawn up internal rules for personal account trading by employees. The rules include pre-trade clearance of buying and selling financial instruments, a ban on trading in funds, a tied period and restriction on permitted intermediaries.

From time to time, SKAGEN employees may be offered gifts or other benefits by the funds' unit holders, suppliers, or other service providers to SKAGEN or the SKAGEN funds. To avoid a conflict arising between the interests of the employee and those of the funds, the company has internal rules governing the acceptance of gifts and/or other benefits by employees.

Potential conflicts of interest between the SKAGEN funds

To avoid conflicts of interest arising between the various funds managed by SKAGEN, the company has established comprehensive procedures for the management of securities.

For example, the procedures include:

• Registration and logging of all orders placed, and transactions executed.
• If several funds intend to buy or sell the same security, the trades must be placed with the broker at the same time. If financial instruments are purchased for several portfolios and the order is partially filled, the shortfall must be allocated pro rata between the funds.
• SKAGEN may only in exceptional cases trade between funds.

Potential conflicts of interest between different roles/functions in the Storebrand Group

The legal company structure and functional organisational structure within the Storebrand Group may represent potential conflicts of interest. If such a situation is identified, it is documented with mitigating actions. All employees have specific role descriptions with reporting lines. In addition, intragroup agreements govern the services provided by roles/functions to different companies within the Storebrand Group.

Handling of conflicts of interest

SKAGEN must ensure that the interests of the clients and the integrity of the market are safeguarded in the best possible way.

In areas where conflicts of interest have been identified between clients, between clients and SKAGEN, between different companies and/or business areas in the Group or between different roles/functions, measures must be taken to handle the most significant conflicts of interest in order to secure the clients' interests in the best possible way.

The compliance function in Storebrand Asset Management must ensure that management confirms that conflicts of interest are identified, assessed, documented and handled adequately. Objective and documented criteria must be used insofar as possible when handling conflicts of interest.

The company must regularly assess whether any conflicts of interest that have been identified have been adequately handled. The assessment from management will be submitted to the Board of Storebrand Asset Management at least annually.