Notice of unitholder meeting for SKAGEN m²

SKAGEN m² is an actively managed equity fund, investing in listed property companies from all over the world. The 4 star rated fund* has a stable long term performance and has recently been ranked the world’s best global property fund on a three year basis**.

Unitholders in SKAGEN m² are hereby invited to attend a unitholder meeting in order to consider a proposal to change the fund’s reference index as stated in §7 of the Articles of Association.

The suggested change to the Articles of Association was considered and unanimously approved by SKAGEN’s Board of Directors on 29 April 2019.

The unitholder meeting will be held at SKAGEN’s offices at Skagen 3, Torgterrassen, 5th floor, Stavanger, Norway on Thursday 23 May at 13:00.

Unitholders may vote in advance by submitting voting ballots either by email or by post. Ballots must be received by SKAGEN no later than 21 May 2019.  

1.     Background and reasons for changing the benchmark index for SKAGEN m²

SKAGEN m² was established on 31.10.2012 with the MSCI ACWI Real Estate IMI Net total return index USD as its benchmark index. In July 2017, the index was changed to MSCI ACWI Real Estate IMI ex REITS Net total return index USD, i.e. to exclude REITs from the benchmark index. REITs are a company type for real estate investments with special tax rules in a number of countries. The rationale for the decision at the time was to reduce operational complexity and to remove the tax drag. In this context, the tax drag is related to the REITs’ tax liability on capital gains, which reduced the return on the security and consequently the fund’s net asset value. The reason for excluding REITs in SKAGEN m²’s index was therefore to reflect the adjustments done in the fund to reduce the tax burden.

However, two years after changing index, SKAGEN has experienced that more countries are now considering REITs legislation to access investment in real estate market. By changing back to the standard index – MSCI ACWI Real Estate IMI Net total return index USD – from the current tailor-made index, an additional 60% of the global real estate space will be re-included in the index. As the fund’s investment universe is linked to the index, the current universe is shrinking as more countries, such as India and China, consider REITs legislation. Consequently, the proposed index has a better diversification and risk allocation as REITs have high dividends, more stable operations and are geographically diversified.

The proposed change will not require any alteration of the fund’s mandate as such, but will affect the performance-based management fee calculation set out in the Articles of Association, since the index will change.

SKAGEN considers the proposed change to the Articles of Association to be in the best interests of unitholders, and expects the change to have a positive effect on the fund’s performance. We do not anticipate that the proposed change will result in a higher risk for the fund, as it implies a possible better diversification and risk allocation.

2.     Suggested changes to the Articles of Association for SKAGEN m²

The change of benchmark index entails the need to change §7 of the Articles of Associations (Unit Classes, including costs). The following change to the Articles of Association is proposed:

Wherever §7 of the Articles of Association mentions the reference index MSCI ACWI Real Estate IMI ex REITs Net total return index USD, this should be replaced by the reference index MSCI ACWI Real Estate IMI Net total return index USD.

Please refer to appendix 1 to see the current wording in §7 of the Articles of Association and the suggested change. A comprehensive proposal for the revised Articles of Association is available here. 

The implementation of the proposed amendment requires that a minimum of 75 percent of the units represented at the unitholder meeting, in person or in advance, have voted in favour of the amendment. Assuming that the proposal receives the endorsement of the unitholders at the unitholder meeting, the FSA will subsequently ensure that the legal requirements for content and procedures for amending the Articles of Association are met. Subject to endorsement, the amendment is expected to come into force September/ October 2019.

In the period between the announcement of the change and the change 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 change 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 Thursday 23 May 2019 at 13:00.

The agenda for the unitholder meeting will be:

1. Election of chairman and two unitholders from the Fund to countersign the minutes
2. Presentation of the rationale behind the amendment to the Articles of Association
3. Review of submitted questions from unitholders
4. Vote

At the unitholder meeting, each unit will carry one vote. Holdings as of Tuesday 21 May 2019 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. Ballots may be obtained here.

Advance voting ballots must be received by SKAGEN no later than 21 May 2019.

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 21 May 2019.

Do you have any questions?

For questions related to the suggested amendments 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 changes 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 change to the Articles of Association.

Board of Directors SKAGEN AS

Jan Erik Saugestad
Chairman of the Board

*As rated by Morningstar as of 31 March 2019
**Ranked 1 out of 139 funds over three years by Citywire as of 31 March 2019