What is the Discovery Fund?

The Discovery Fund (“the Fund”) is a unit trust (also known as mutual fund) that pools investors funds together and invests in shares of companies quoted on the Nigerian Stock Exchange (NSE), real estate investments, money market instruments (such as treasury bills), fixed income investments, and government bonds issued by the Central Bank of Nigeria(CBN). The Fund was established in 1995 and privately managed as the ARM Equity Growth Fund for 7years. In 2002, the Fund was re-branded, publicly offered and listed on the floor of the Nigerian Stock Exchange as the Discovery Fund.

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What do you mean by unit?

A unit trust (or mutual Fund) is a pool of funds from several investors who share similar investment objectives. The investors’ contributions to the unit trust are invested and managed on their behalf by a professional investment manager. The investment manager invests the pool of money in a variety of financial assets, and each investor becomes a unit holder; i.e. a part owner of the Fund. The units held give the investor the right to participate in any profits or income derived from the Fund’s investments.

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So, who manages the Discovery Fund?

The Discovery Fund is managed by Asset & Resource Management Co. Ltd. ARM has offices in Lagos at No 1 Mekunwen Road, Off Oyinkan Abayomi Drive, Ikoyi, Lagos and in Abuja on Plot 129 Adetokunbo Ademola Crescent, Wuse II, Abuja. Our Port Harcourt office is located at 12 Circular road, Presidential Estate II, off GRA Junction, Port Harcourt.

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Who monitors ARM’s activities?

Unit trusts (mutual funds) in Nigeria are regulated by the Nigerian Securities and Exchange Commission (SEC) and, as the regulator of the Nigerian capital market, SEC has the primary duty to protect the interest of investors. ARM and the Discovery Fund are registered with, and regulated by SEC. Furthermore, the law stipulates that unit trusts must have independent Trustees, for the benefit of the unit-holders.

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Who are the Trustees of the Discovery Fund, and what is their role?

The Trustee is First Trustees Nigeria Limited - a subsidiary of First Bank of Nigeria PLC. The Trustee has a legal duty to protect the interest of the unit-holders and, in effect, acts as the ‘policeman’ to the unit trust. In addition, the investments are bought in the name of the Fund.

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How much can I invest in the Fund?

With as little as N10,000, you can start an investment in the Discovery Fund. You can also increase your investment by making periodic additional investment of a minimum of N5,000 each. This is to enable you build up your investment without putting undue strain on your standard of living.

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How can I start an investment?

You may start investing in the Fund by completing a subscription form and making the necessary payments at Discovery Fund’s offices in Lagos or Abuja, any branch of Guaranty Trust Bank Plc. near you or one of our Discovery Account Executives will visit you.

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Can I start an investment in the Discovery Fund with other stocks that I have?

No. The structure of The Fund does not allow for individuals to invest with stocks previously held in other companies.

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What happens after you receive my money?

As soon as your payment clears, the Fund Manager will allocate units to you, based on the current price of a unit of the Discovery Fund.

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Will I get a certificate as evidence of my investment?

Yes. For initial investments, the registrar will issue certificates to investors and subsequent payments will be acknowledged with the Investment Receipts only, sent via email.

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How soon after I invest will I get my certificate?

Immediately your subscription process is completed, the Registrar to the Fund, First Registrars, will prepare and send the certificate confirming your investment interest in the Fund. In the interim, we will send an investment receipt to you confirming the number of units that you have bought.

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What will you invest my money in?

The Trustee to the Fund and SEC have approved a percentage range of long-term assets which the Fund can invest in. These comprise shares, real estate investment, fixed income investments, and cash. However, on a day to day basis, the Fund Manager repositions the Fund within the defined percentage holding in each asset to take advantage of any opportunity that may arise in the market.

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Why do I have to invest over a long term?

The structure of the Fund makes it suitable for long-term investors because it holds equity investments which may go up or come down. Research shows that equity investments may fluctuate over a short period, but on the long-run, they tend to appreciate better. If you invest in the Fund for the short term, you may not realize the full value/benefit of having invested in the Discovery Fund. Therefore, the Fund is only suitable for investors that have medium to long term investment goals.

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Do I have a say in what you invest my money in?

No. The Fund has a defined and approved distribution of funds amongst approved categories of assets. The Fund''s full-time Manager uses its expertise to determine where to invest in.

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What is the minimum guaranteed rate of return?

The Fund can not guarantee any rate of return on any investment, because it holds investments in shares which may go up or come down. Just as it is difficult for companies to guarantee return on their shares in any year, so it is for the Discovery Fund because the Fund invests in these companies. However, the track record of the Fund shows a performance which surpasses inflation.

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What has been the performance of the Fund?

The Fund has returned 777% since 1995. Which means if you had invested N10,000 in 1995 as of December 2005, your money would be worth over N85,000.

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How can I profit from my investment?

Whenever the value of the Fund appreciates, the value of your investment will also increase, and you can realize gains on your investment by selling some of the Units you hold in the Fund. However, as with all equity investments, the value of your Units can also fall.

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Will the Fund pay dividends?

Yes, the Fund will distribute income to Unit-holders on a basis to be jointly determined by the Trustee and the Fund Manager. The income will comprise interest from cash deposits, dividends from shares and/or capital gains realized from the Fund’s investments. The Fund paid dividends of N5.00, N5.85 and N6.00 in 2003, 2004 and 2005 respectively.

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Can I sell my investment at any time?

Yes, you can sell your investment to the Fund at any time. However, you will be required to fill out a redemption form (available on the website and at our offices), sign at the back of your certificate indicating how many units you want to sell, and send your request to the Fund Manager. This redemption process should not exceed 7 working days from the time the Fund Manager receives your letter and certificate. However, for part redemption, you will need to leave a minimum balance of N10,000 to keep your investment active in the Fund.

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What happens if I lose my Initial investment certificate?

If you lose your certificate, you will be required to swear an affidavit, get a police report, and fill an indemnity form (obtainable from the Discovery office). These 3 documents should be sent to our office for the issuance of a duplicate certificate.

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Can I use my investment as collateral in a Bank?

Yes, you can use your investment as collateral to acquire a loan or other facilities from a bank. However, you may be required to deposit your certificate with the bank who will decide the limit of the loan in relation to the value of your investment.

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How can I keep track of my investment?

You can access your account online by registering on the home page of the website. Also, The prices at which units of the Fund may be sold (bid price) and bought (offer price) by Unit Holders is stated under the memorandum quotation on the Nigerian Stock Exchange (NSE) daily list, as well as Thisday, Punch and Financial Standard newspapers. The price of the Fund is quoted on the website.

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What are the main benefits of investing in the Discovery Fund?

The Fund provides a flexible opportunity to build wealth at your own convenience, with moderate risk, over the long-term. For small savers, the Fund is also a cost-effective way of spreading investments across a range of assets.

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