Disclaimer for Equities

This document provides additional disclosures and disclaimers relevant to reasearch reports and other investment recommendations (“Recommendations”) issued by Fearnley Fonds ASA (“Fearnley”), cf. the Securities Trading Act Section 2-10 with further regulations.

Basis and methods for assessment:
Recommendation for shares and share related instruments are based on price targets fixed with different valuation methods that may include analysis of earnings multiples (absolute and relative), valuation of a company using DCF calculations (discounted cash flow) and by carrying out net asset value (NAV) assessments. Price targets are changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of the issuer’s assets changes or when factors impacting the required rate of return change.

Fearnley credit analysts provide credit ratings which is a framework for comparing the credit quality of rated debt securities. The ratings are based on the same rating scale as international rating agencies. The scale is divided in two parts, where companies within the investment grade category are assigned ratings from AAA to BBB-, while companies within the high yield category are assigned ratings from BB+ to D. The ratings represent the opinion of Fearnley as to the relative creditworthiness of securities. A credit rating on a stand alone basis should not be used as a basis for investment operations. Market price movements in bonds are influenced not only by the credit quality of individual issues but also by changes in money rates and general economic trends, as well as by the length of maturity, etc. Fearnley may also provide credit research with more specific price targets. These price targets are based on different valuation methods. These methods may include analysis of key credit ratios and other factors describing the securities creditwothiness, peer group analysis of securities with similar creditworthiness and different DCF-valuations.

Definitions of key terms:

Buy:	When price target is more than 15 % above market price.
Accumulate:	When target price is within 5-15 % above market price.
Reduce:	When target price is +5 % to -15 % below market price.
Sell:	When target price is 15 % or more below market price.

Risks related to investments and Recommendations
There is an element of risk attached to all investments in financial instruments. There may be uncertainties with respect to the accurateness and reliability of any information, interpretation and assessment. There are uncertainties and risks attached to the correctness of any Recommendation by Fearnley and with respect to forward looking statements and expectations.

Fearnley assess the risk in the recommendation in relation to Oslo Børs Benchmark index (OSEBX). Fearnley apply the beta as main risk assessment criterion to our recommendations. The risk assessment is in addition based on a consideration of the individual companies business and financial risk profile.
 

High risk:	beta above	1.2
Medium risk:	beta range	1.0 – 1.2
Low risk:	beta at or less than	1.0

Note that Fearnley Fond’s equity coverage encompasses solely companies within the following sectors: Shipping and Oil services. These two sectors are cyclical by nature and will over time presumably have a higher volatility than the overall market. The reason for choosing Oslo stock exchange as a benchmark in our risk assessment is that Oslo stock exchange has a high content of these two sectors.

Standards and supervision
Fearnley complies with the standards for recommendations issued by the Association of Norwegian Stock broking Companies and the Norwegian Society of Financial Analysts. Fearnley is under the supervision of the Financial Supervisory Authority of Norway.

No agreement with the issuer concerning Recommendations
Fearnley has no agreements with issuers with respect to dissemination of Recommendations. Generally Fearnley will however present the Recommendation for the issuer prior to dissemination to assure a correct factual basis.

Organisation and duty of confidentiality
All employees of Fearnley are subject to duty of confidentiality towards clients and with respect to handling inside information. Fearnley has established “Chinese walls” and other organisational procedures for the purpose of minimizing conflicts of interest within Fearnley and in the Fearnley group and between clients.

Compensation schemes for analysts
No part of analysts’ salaries or compensations relates directly to investment banking services or other services provided by Fearnley or consolidated companies to issuers. All analysts in Fearnley are however part of the general bonus scheme related to the total earnings of Fearnley.

Updating of Recommendations
Fearnley has no fixed schedule for updating unless stated or implied in the Recommendation.

Disclaimer
Fearnley and the analyst accept no responsibility and expressively disclaims any and all liabilities for any and all losses related to investments caused by or motivated by Recommendations from Fearnley. Any person receiving a Recommendation from Fearnley is deemed to have accepted this disclaimer. The disclaimer shall apply even if an Investment Recommendation is shown to be erroneous or incomplete or based upon incorrect or incomplete facts, interpretations or assessments or assumptions by Fearnley, and irrespective of whether Fearnley or any person related to Fearnley can be blamed for the incident.

Disclosure of positions in financial instruments
Please see the following address for an overview of positions in financial instruments held by Fearnley and related companies and persons. [ Investment recommendations ]

Disclosure of assignments and mandates etc
Please see the following address for an overview of (a) all financial instruments in which Fearnley or related companies are market makers or liquidity providers, (b) all financial instruments where Fearnley or related companies have been lead managers or co-lead managers over the previous 12 months and (c) all issuers of financial instruments to whom Fearnley or related companies have rendered investment banking services over the previous 12 months. Please be aware that agreements and services that are still subject to confidentiality are excluded. [Link til PDF fil som viser posisjoner og mandater mm]

Previous recommendations
Please see the following address for an overview of Fearnley’s Recommendations in the financial instruments of the issuing company the last 12 months, including data on changes in Recommendations. Please be aware that certain informal Recommendations may be excluded. [ www.fearnleyfonds.com ].

Statistics
Please see the following page were you will find quarterly statistics on the overall ratio of “Buy”, “Accumulate”, “Hold”, “Reduce” and “Sell” in Fearnley’s Recommendations in financial instruments, including a split with respect to issuers where Fearnley provides investment banking services the previous 12months. [ Statistics ]

Additional provisions on Recommendations distributed in the United States

This financial analysis is provided by Fearnley Fonds ASA (“Fearnley”) as a free informational service to major U.S. institutional investors. The analysis is not meant to constitute any form of advice (investment, tax, legal) or recommendations regarding the financial instruments, investments or products referred to. This report should not be construed as an offer or solicitation to buy or sell investment products or services.

Opinions in the report may be subject to change without notice and should therefore be independently confirmed prior to making any investment decision.

The information in this report has been obtained from public sources believed to be reliable but we do not represent that such information is accurate or complete and it should not be relied upon as such. Fearnley, its employees, directors or officers may not be held liable for any errors or inaccuracies or incompleteness in the analysis or for the fitness of the information for any purposes and hereby expressly disclaim all liability for any loss, direct or indirect or any other kind of damage resulting from any reliance upon or use of this analysis and the information contained herein.  For further information on the limitations and terms and conditions of accessing this report, please see www.fearnleyfonds.com.

On the date of this report, Fearnley and/or companies in the Astrup Fearnley Group, their directors and/or employees may have a position in any of the investments mentioned in this report and may purchase and/or sell the investments at any time. For an overview over Fearnley and/or its employees’ positions in financial instruments please see www.fearnleyfonds.com.

Additionally, Fearnley Fonds ASA and/or companies in the Astrup Fearnley Group may have acted as an investment/commercial banker for or may have provided significant advice or investment services to the companies mentioned in this report, or may have other financial interests in transactions involving the relevant companies or investment(s).

This analysis is confidential, and may not be reproduced, in whole or in part, without the prior written consent of Fearnley. The analysis is intended for the use of professional customers only and may not be issued or passed on to any legal or physical person and/or institutions without the prior written consent of Fearnley.

This analysis is issued by Fearnley, a company established under the laws of Norway being licensed and supervised by Norwegian regulators, and all matters relating to this analysis shall be governed by the laws of Norway and be subject to the exclusive jurisdiction of Norwegian courts.

Disclaimer for Fixed Income

Our recommendations for bonds and other fixed income instruments are based on assessment of credit risk (the creditworthiness of a particular issuer or instrument as of a given date) relative to risk premium (risk premium inherent in yield relative to investment amount). 

 

Credit risk assessments: Fearnley Fonds ASA (“Fearnley”) mainly analyses fixed income instrument in the high yield segment where the credit risk is regarded as high. This includes rated instruments with ratings below BBB (S&P) or Baa3 (Moody’s) (below “investment grade”) where Fearnley will quote the ratings to the extent these are known to Fearnley. Fearnley may, with respect to certain non-rated instruments, indicate its relative credit risk assessments as “Moderately High”, “High” and “Very High”. Please be advised that Fearnley are not offering any rating service in this respect and disclaims any and all liability with respect to these assessments. All credit risk assessments reflect the creditworthiness as of a given date and may be subject to change.

 

Recommendations:  Definitions of key terms:

Buy: The risk premium is considered as favourable relative to credit risk

Accumulate: The risk premium is considered as acceptable relative to credit risk

Reduce: The risk premium is considered as not acceptable relative to risk

 

General matters: There is an element of risk attached to all investments in financial instruments, including investments where the risk may have been initially assessed as low.

 

Although Fearnley’s ambition is to provide accurate and reliable information, there are uncertainties with respect to the accurateness and reliability of any information, interpretation and assessment. This applies in particular with respect to forward looking statements and expectations.

 

Fearnley complies with the standards for recommendations issued by the Association of Norwegian Stock broking Companies and the Norwegian Society of Financial Analysts. Fearnley is under the supervision of the Financial Supervisory Authority of Norway.

 

Fearnley has no agreements with issuers with respect to dissemination of recommendations but may present a recommendation for the issuer prior to dissemination to assure a correct factual basis.

 

All employees of Fearnley are subject to duty of confidentiality towards clients and with respect to handling inside information. Fearnley has established “Chinese walls” and other organisational procedures for the purpose of minimizing conflicts of interest within Fearnley and in the Fearnley group and between clients.

 

No part of analysts’ salaries or compensations relates directly to investment banking services or other services provided by Fearnley or consolidated companies to issuers of financial instruments. All analysts in Fearnley are however part of the general bonus scheme related to the total earnings of Fearnley.

 

Fearnley has no fixed schedule for updating its recommendations.

 

Fearnley and its analysts accept no responsibility and expressively disclaim any and all liabilities for any and all losses related to investments caused by or motivated by recommendations from Fearnley.

 

Any person receiving a recommendation from Fearnley is deemed to have accepted this disclaimer, that shall apply even if an investment recommendation is shown to be erroneous or incomplete or based upon incorrect or incomplete facts, interpretations or assessments or assumptions by Fearnley, and irrespective of whether Fearnley or any person related to Fearnley can be blamed for the incident.

 

Please see www.fearnleyfonds.com for the following:

 

Overview of positions in financial instruments held by Fearnley and related companies and persons, including an updated overview of position in the financial instruments to which this recommendation relates.

 

Overview of (a) all financial instruments in which Fearnley or related companies are market makers or liquidity providers, (b) all financial instruments where Fearnley or related companies have been lead managers or co-lead managers over the previous 12 months and (c) all issuers of financial instruments to whom Fearnley or related companies have rendered investment banking services over the previous 12 months. Please be aware that agreements and services that are still subject to confidentiality are excluded.

 

Overview of Fearnley’s recommendations in the financial instruments of the issuing company the last 12 months, including data on changes in recommendations. Please be aware that certain informal recommendations may be excluded.