One of the best performing investment funds

FAQ GOLD&DISCOVERY FUND

Answers to the most frequently asked questions on the Gold&Discovery Fund.

What are the consequences for the fund and its participants, of the exemption limit raise to 100,000 Euros that will become effective as per 1st January 2012?

The manager, Gold&Discovery Management B.V., has applied for an AFM license. This will have the following implications for the fund and the participations:

• Until 1st January 2012, the fund is permitted to issue participations greater than 50,000 euros, and existing participants may expand their holdings to amounts under 100,000 euros.
• From 1st January 2012 until the actual license authorization, the fund may only issue participations exceeding 100,000 euros. Existing participants that hold less than 100,000 euros in the fund, will not need to expand their holdings. However, should they decide to add to their participations, the cumulative participations must amount to a value of at least 100,000 euros.
• Once the license has been formally authorized, the fund will issue participations starting at a minimum of 45,000 euros.

Can I compare this fund to a savings account?

No, a savings account returns interest, whereas value development of the Gold&Discovery Fund is dependent on the share price of various positions in the stock market.

What kind of returns are you expecting as a fund manager?

This is very hard to predict. We would strive for an annual return of 15%, over a three year period

Will I always be able to withdraw my participations in the fund?

Yes, participations can be withdrawn on a monthly basis. You can exit the fund every month, on the last day of the month. However, a notice period of 10 working days is applicable.You can also withdraw a part of your participation, although the remaining sum must (as of January 1, 2012) always amount to at least 100,000 euros.
Click here to download the redemption form.

How do I participate?

At our website page participation, a full explanation of how to participate is given. However, a simple email to info@gdfund.nl is sufficient to get you started.

Have the fund managers invested personally in the fund?

Yes, the managers have invested over 2.5 million euros in the fund. Should their personal participation change, an official announcement will be made in the monthly report.

What are the costs involved in participating in the fund?

The subscription costs are 0.5% of the participation sum, whilst the exit fee amounts to 1% of the exit sum. There is also a fixed management fee of 0.5% of the invested capital, which is deducted every quarter (amounting to 2% per year). In the case of a performance exceeding 1.5% per quarter, a performance fee of 20% will be charged for all returns over 1.5%.

What is the role of Circle Partners?

Circle Partners are in charge of administering all participations, and independently calculate their intrinsic value on a monthly basis. They will report the value of your participations every month, via email or post, as per request. Circle Partners perform these services for dozens of other investment funds.

How often will I receive notice of the fund's performance?

We will send you a monthly report containing the latest developments related to the fund. Circle Partners will also send you a report of the current value of your participations. And we publish the fund's net asset value on our website (performance Gold&Discovery Fund), on a weekly basis.

Will the participants gain insight in the complete portfolio?

No, due to competitive considerations, we will not publish a full list of all our positions. We do cover a number of specific newsworthy investments in our monthly report.

What do you do about the foreign currency exposure?

We aim to achieve returns on our investments, not by anticipating currency fluctuations. We aim to achieve returns on our investments, not by anticipating currency fluctuations. When we buy shares denominated in a currency other than euro, we will buy that currency for the same amount, so that we will not incur a currency exposure between the moment we buy the shares and the moment we actually pay for the shares. Shares denominated in a currency other than euro that have already been paid for may decrease in value when expressed in euro as a result of currency fluctuations. We will not take any action to prevent this.

Does the fund have a position in physical metals?

Not directly. We do currently have a position in an ETF that is covered completely by physical gold.

Is my cash well protected?

We have deliberately chosen a construction where we are only mandated to trade with the money deposited, and cannot actually access it in any other way. Circle Partners, the administrator, is the actual guardian of the fund's cash deposit and its positions.

Is this a gold-focused fund, or a natural resources fund?

The Gold&Discovery Fund is actually a natural resources fund, but is currently heavily weighted towards companies active in the exploration and mining of precious metals, mainly because this is where the biggest gains are to be made for the moment. Should market sentiments change, however, we can easily shift the relative weight in favour of other metals or natural resources in our pursuit of opportunities. For example, we are also exposed to the energy markets through our positions in uranium, coal, and oil & gas exploration companies.

Will the founders publish any sales of their participations?

Yes, all mutations in investments by the founders will be published.

Why is the management fee set at 2%, and the performance fee at 20%?

In contrast to the average fund investing in index-related stocks, the Gold&Discovery Fund spends an inordinate amount of time researching the large pool of small companies that are target for investments. This elaborate research is extremely valuable to the fund in terms of performance, but also rather costly. It is these costs that are covered by the 2% annual management fee, a construction often used in the hedge fund environment. Similarly, we also apply a free return over the first 1.5% per quarter gains (the hurdle rate), and charge a 20% performance fee over all gains exceeding 1.5% per quarter. Thus, the first 1.5% per quarter are exempt from the performance fee charge. The 1.5% per quarter hurdle rate is calculated seperately for every individual participant.

What does the 1.5% per quarter hurdle rate imply?

This is the part of the return which is not subject to the performance fee charge. Because of the higher risk nature of investments, we feel it imprudent to charge a management fee if no gains have been made. Thus, we have decided to exempt the first 1.5% per quarter returns from the performance fee. The 1.5% per quarter hurdle rate is calculated seperately for every individual participant, and is settled every quarter with the performance fee.

What is a high water mark?

The high water mark is the highest value the fund has obtained over the period of an individual's participation. This is of importance in calculating the performance fee. Should the value of the fund drop below its highest mark, the participant will not be charged a following performance fee unless the initial high water mark is once again surpassed.

 

In addition it is important to note that, because the performance fee is deducted once every quarter, the value of the fund at the close of the quarter will be considered the high water mark, even if the value of the fund has been at higher levels during the course of the previous three months.

Does the fund use debt capital?

No, the fund does not borrow money for investment purposes. We will not invest more than the total value of deposits that participants have added to the fund.

Will I ever have to supply additional funds?

No, the fund will never force participants to supply additional money. You are, naturally, welcome to add to your participations if you so wish. Your initial investment needs to be (as of January 1, 2012) in excess of 100.000 euros, and any additions must be in steps of 10.000 euros.

How can I add to my participations? Will I need to fill out another subscription form?

Every addition to your participations is considered a new participation and requires filling out a new subscription form. However, we can make things easier if you send an email stating your intention to expand your participation to info@gdfund.nl, upon which we will provide you with a pre-filled subscription form. All you would need to do is fill in the sum, sign the document and return it to us. Wiring the money would be the last step in this simple process.

What are the effects of participation in your fund on taxation?

This varies per case. We would recommend seeking advice from a tax counselor or the government tax service.

Lends Gold&Discovery Fund also shares in favor of such "Shorter"?

We have with our brokers agreed that they should never borrow shares of our.