Charges and costs

Sometimes called the ‘entry charge’, this is an upfront charge paid when you invest in a fund and is deducted from your investment before you invest. This covers the costs of setting up your investment, such as administration and marketing costs.

Artemis does not apply an initial charge to any of its funds.

This is a fee charged before the proceeds of your investment are paid out.

Artemis does not apply an exit charge to any of its funds.

A dilution adjustment is not a charge but it may affect the amount of money you invest, or the proceeds you receive when you exit a fund.

Artemis operates a single pricing methodology for its funds. This means on any dealing day, each share/unit class of a fund has only one price at which deals are made.

To determine the price of a fund (and the underlying share/unit classes), the administrator refers to the mid-market value of the underlying investments. The mid-market value is the price between the quoted bid (sell) and offer (buy) prices available in the market. The overall difference between the lower bid price and the higher offer price is known as the ‘bid / offer spread’.

A dilution adjustment is something that can happen on any dealing day - the pricing basis of a fund is changed from mid-market pricing to towards either the lower ('bid') or higher ('offer') pricing. The amount of a dilution adjustment, either up or down, is calculated by reference to the estimated costs of dealing in the underlying investments, including any dealing spreads, broker commissions and taxes.

This adjustment mechanism is used only to protect investors from the cost of investments being bought and sold as a result of other investors joining or leaving the fund. The costs associated with this can reduce – or dilute – the value of the fund for existing investors. The adjustment is triggered only when significant net inflows or net outflows take place. ‘Net inflows’ means the total value of subscriptions into the fund exceeds the total value of redemptions, i.e. there are more buyers than sellers. ‘Net outflows’ means the opposite, where the total value of redemptions exceeds the total value of subscriptions. ‘Significant’ typically means large, as a percentage of the fund’s value, and in excess of a pre-defined threshold.

For net inflows above the threshold, the price is adjusted above the mid-market value, reflecting the costs of purchasing underlying investments. For net outflows above the threshold, the price is adjusted below the mid-market value, reflecting the costs of selling underlying investments. This is illustrated in the following table:

* Illustrative only – the actual adjustment amount will depend on the type of investments held by the fund.

Please refer to a fund’s prospectus for the typical range of dilution adjustments for each fund.

Ongoing charges are calculated by adding together:

1. the Annual Management Charge, which is paid to Artemis for managing each fund. It is a fixed percentage which is set depending on the fund and class in which you invest. The fee is calculated daily, based on the value of the fund’s net assets and is reflected in the daily value of the fund’s assets. Different charges are applied for different classes of units/shares.
2. an Administration Fee, which covers other costs incurred in operating each fund, such as fees paid to the independent trustee of the funds, to the funds’ administrator, and to other service providers such as custodians, lawyers and accountants. It excludes transaction costs or performance fees (see ‘Performance fees’ below).

While the annual management charge component is a fixed percentage, the administration fee can change, meaning that the ongoing charges are variable.

The administration fee is paid to Artemis, who use it to pay the costs the fund incurs.

The administration fee is calculated by:

• taking each fund’s base administration fee, as set out in the fund’s prospectus; and then
• applying a discount based on the size of the fund, as set out in the table below.

The base administration fee for each fund, and the minimum fee which can apply after the discount, is set according to each fund’s overall investment strategy and the type of instruments the fund invests in. For example, funds which focus on investing in markets other than the UK, or which have a more specialist investment objective, usually incur higher costs.

Each fund’s net asset value is reviewed on the first business day of every calendar month.  The discount rate is then applied to the base administration fee until the next monthly review date.

If the administration fee paid to Artemis is not enough to cover all of the other ongoing costs of a fund, Artemis is responsible for any shortfall from its own resources.  On the other hand, if the administration fee paid to Artemis is higher than the actual amount of the other ongoing costs, Artemis retains any excess.  The fund size discount is intended to offset this, as costs tend to be proportionately lower for larger funds due to economies of scale.

Artemis reviews the fees and the fund size discount levels and thresholds at least annually to make sure that they remain appropriate. Artemis will not make any adjustments to the discounts or threshold levels described above without notifying existing investors in accordance with the UK Financial Conduct Authority’s rules.

For NURS funds there is a slightly different approach for the administration fees: there is no base administration fee, as there is for UK unit trusts and OEICs. Instead, the other administrative charges (such as fees paid to the independent trustee of the funds, to the funds’ administrator and to other service providers such as custodians, lawyers and accountants) are variable and do change from time to time. Therefore, the ongoing charge is variable, although the annual management charge component is a fixed percentage.

The Artemis Funds (Lux) range of funds are domiciled in Luxembourg and available to investors in the UK and certain European countries depending on the local registration of each fund and share class.

The components of the ongoing charges are slightly different to the UK-domiciled funds. Instead of adding together an annual management charge and the administration fee, the SICAV sub-funds have a Fund Management Fee (FMF) which covers both the annual management charge and the administration fee.

The ongoing charges for SICAV sub-funds are then calculated by adding together the FMF and a subscription tax.

The FMF is taken from the fund’s assets and paid to Artemis for managing each fund. It is similar in nature to a combined annual management charge and administration fee.  The FMF is a fixed percentage which is set depending on the fund and class. The FMF is accrued daily at each valuation point and paid on a monthly basis in arrears. Different charges are applied to different classes of shares.

If the FMF is not enough to pay all of the ongoing costs of a fund, Artemis is responsible for meeting any shortfall from its own resources. On the other hand, if the FMF paid to Artemis is higher than the actual amount of the ongoing costs, Artemis retains any excess.

To pass on economies of scale, a discount will be applied to the base FMF (except for founder share classes) depending on the total net asset value of the relevant fund. See the table below for the discounts and thresholds.

Discount to be applied to the base Fund Management Fee to arrive at the Fund Management Fee

Where a fund’s net asset value is greater than a threshold set out above, the corresponding discount will be applied, on a daily basis, to the base FMF applicable to all general share classes of that fund. Note: founder share classes are only available to certain institutional and professional investors approved by Artemis and: a) who subscribe within a certain period of the launch date of a fund; b) who meet the minimum investment criteria, and c) who have a prior written agreement with Artemis.

The directors of Artemis Funds (Lux) will review the base FMF, the discount and the items which are included in and/or excluded from the Fund Management Fee, at least annually.

Following the review, the directors may decide to change: (i) the level of the base FMF applicable to each share class; (ii) the thresholds at which a particular level of discount will apply, and/or the level of discount applicable at a particular threshold; and/or (iii) the items which are included in and/or excluded from the FMF. Shareholders will be notified as required by law prior to any such change taking effect.

The Subscription Tax is taken from the fund’s assets and paid to the Luxembourg regulator. It is a fixed percentage which is determined by the share class invested in and by whether the investors in that share class are retail or institutional investors. The tax is calculated daily, based on the value of the fund’s net assets and is reflected in the daily value of the fund’s assets. Different charges are applied to different classes of shares. Please refer to the SICAV prospectus for more information on the level of subscription tax applied.