UNOFFICIAL TRANSLATION, ONLY THE ORIGINAL VERSION IN FINNISH IS VALID FOR LEGAL PURPOSES

Transcription

1 SELIGSON & CO FUND MANAGEMENT COMPANY 8 th October 2007 OMX Helsinki 25 Exchange Traded Fund All times mentioned are Finnish time, and all value dates mentioned are Finnish trading days. 1 Investment Fund The name of the fund is Mutual Fund OMX Helsinki 25 Exchange Traded Fund, in Finnish Sijoitusrahasto OMX Helsinki 25 indeksiosuusrahasto, and in Swedish placeringsfonden OMX Helsinki 25-indexandelsfond (hereafter the Fund ). The Fund is a classified as a special mutual fund because it aims to track the OMX Helsinki 25 Index and, due to the structure of the index, investments exceeding 5 % of the Fund s assets may total 40 % of the Fund s assets. 2 Fund Management Company The Fund is administered by Seligson & Co Rahastoyhtiö Oyj (hereafter the Management Company ). The management company represents and acts on behalf of the Fund in matters related to the Fund and uses the rights related to the property within the Fund. The Fund s administration is based on the OMX license, and the administration is put to tender by OMX Helsinki Stock Exchange, and the tender is open to fund management companies registered as members of the Finnish Association of Mutual Funds at the time of the bidding. The result of the tender is decided based on the overall evaluation of the bids, considering, among other things, the readiness of the bidding fund management companies to manage the Fund. The management of the Fund may be handed over to another fund management company on the basis of the tender result provided that the transfer is in the interest of the unit holders and the Financial Supervision Authority grants the permission to carry out the transfer. 3 Using an Agent The Management Company may outsource operations to agents. The functions that the Management Company has outsourced to agents are accounted for in the Fund Prospectuses. 4 Custodian The Finnish branch of Svenska Handelsbanken AB acts as a Custodian of the Fund s assets. The Custodian has its registered office in Helsinki and its main business is credit institution operations. 5 Investing the Fund s Assets The Fund invests its assets in shares included in the OMX Helsinki 25 Index calculated by Helsinki Stock Exchange. The objective of the Fund s investments is to track the performance of the OMX Helsinki 25 Share Index (hereafter the Index), and by doing so, offer in simple and cost-efficient manner the possibility to invest in a diversified share portfolio representing the trend of the most traded shares at Helsinki Stock Exchange. Normally the Fund owns directly the shares included in the Index, in addition to which the Fund s liquid assets are kept as low as possible, but large enough to cover the operations of the Fund. The Fund invests its entire assets in those countries that are represented in the OMX Helsinki 25 Index.

2 The objective of the Fund is that the value of the Fund unit is equivalent to a hundredth part of the Index. It is possible that the Fund is unable to fully track the development of the Index, in which case the value of the unit differs from the objective. The following factors, among others, may cause a deviation from the Index: - the reduction of the Fund s assets caused by redemption. - the Fund s portfolio not being identical with the Index due to, for example, rounding of the number of share - the re-weighting of the portfolio is timed differently from that of the Index - the Fund has cash funds or the Fund has accumulated revenue from dividend or executed lending contracts - the revenues and expenses of the Fund are not identical with those of the share basket representing the Index - the revenue of the Fund does not suffice to cover the expenses of the Fund, in which case the expenses must be covered by realising Fund assets If the weight of a single company included in the Index changes significantly, the Fund re-weights its ownership accordingly as soon as the transaction is in the interest of the unit holders. The Fund s assets can be invested in: 1) Shares and stock option instruments, such as a convertibles, warrants, staff incentive options, subscription rights and certificates of deposits in those countries that are represented in the OMX Helsinki 25 Share Index. 2) In money market instruments and other interest bearing bonds emitted or guaranteed by a central bank within the European Economic Area, the Central Bank of Europe, the European Union or the European Investment Bank. 3) In order to enhance portfolio management and to hedge risk in standardized and non-standardized derivative instruments whose underlying security may be a bond, money market instrument, in a mutual fund or fund company, a deposit with a credit institution, derivative instrument, financing index, exchange rate or currency. The counterparty to a non-standardized derivative instrument may be a credit institution or investment service company whose domicile is in a country belonging to the European Economic Area. The counterparty risk of investments in non-standardized derivative instruments may for one counterparty not exceed 20 % of the Fund s assets if the counterparty is a credit institution as stated under 3, and in other cases it may not exceed 5 % of the Fund s assets. The securities, money markets instruments and standardized derivative instruments under 1-3 above are subject to public trade on a stock exchange list or are traded on another regulated, regular and wellestablished publicly open marketplace where shares and derivative instruments included in the OMX Helsinki 25 Index are traded. A list of the market places that the Management Company employs can be obtained at the Management Company. 4) Credit institution deposits, upon the condition that the investment is paid back upon request or can be withdrawn and is due for payment no later than 12 months from the investment date and that the domicile of the credit institution is in a country belonging to the European Economic Area. Deposits in one credit institution may not exceed 20 % of the Fund s assets. 5) Securities whose issuing terms and conditions determine that the securities are to be subjected to public trade on such a marketplace as stated in the Finnish Mutual Funds Act (69, subsection 1, article 1) within one year from the issue, upon the condition that trading in the securities can begin, with optimal likelihood, within the set time limit.

3 Investment restrictions: I) No more than 20 % of the Fund s assets may be invested in securities or money market instruments by the same issuer. However, investments in one issuers securities and money market instruments, deposits received by the organization, or such non-standardized instruments that put the Fund in a counterparty risk position towards the organization may not exceed 20 % of the Fund s assets. II) The Management Company does not increase the total risk of the Fund by employing derivatives, compared to the situation where all the Fund s assets are invested on the stock markets. The combined risk of the securities, money market instruments and derivative instruments will be followed daily, as measured by the collateral requirement and the delta of the total position. The total delta of the position shall not exceed 1. III) The Fund must hold enough liquid assets to cover the operations of the Fund. IV) With the approval of the Financial Supervision Authority the Fund shall be entitled to temporarily raise credit for it s common fund activity. Any such credit shall not exceed 10% of the value of the Fund. The total collateral requirement of derivative instruments and purchased and sold futures agreements may not exceed 25% of the value of the Fund's assets. To promote efficient asset management, the Fund can conclude loan and repurchase agreements for securities and money market instruments in the Fund, upon the condition that they are cleared by a clearinghouse as defined in the Securities Markets Act, or by a corresponding international organization. If the clearing takes place elsewhere, the counterparty to the agreement should be a securities intermediary and the terms of the agreement should be typical to the market and commonly known and accepted. The value of the securities lending must not exceed 25 % of the value of Fund s securities and money market instruments. This restriction does not apply to lending contracts that can be terminated and the securities of which can be reclaimed instantly upon demand. 6 Fund Unit Register and Fund Units The Fund is divided into Fund units. The Fund units are equal in size and they entitle to a share of the Fund s assets that is calculated based on the total number of Fund units. The Fund unit is subject to public trade on Helsinki Stock Exchange. A Fund unit can be traded on Helsinki Stock Exchange in equal manner to a share, at quantity not necessarily divisible with quantity of Subscription Units. The Fund units belong to the book-entry system. The Fund s unit register is maintained at the Finnish Central Securities Depositary Ltd. The role of the unit register is specified in 11. The Fund only contains yield units. 7 Subscription and Redemption of Fund Units The subscription and redemption of Fund units are executed against the Subscription Unit or its multiple (This procedure can be called Primary Subscription/Redemption). A subscription unit corresponds to 25,000 Fund units. The board of the Management Company may change the Subscription Unit to a multiple of 25,000, provided that the change is justified by reasons related to the development of the market value. Fund units are available for subscription and redemption at the Management Company each Finnish trading day. Subscription Unit Upon subscription the subscriber obtains from the Fund a quantity of Fund units corresponding to one (1) Subscription Unit or the multiple, and the Fund obtains from the subscriber a portfolio and a cash payment (Subscription Unit) which correspond to the Index and the Fund s assets.

4 Upon redemption the redeemer obtains from the Fund a Portfolio corresponding to one (1) Subscription Unit or its multiple, and the Fund obtains from the redeemer a number of Fund units corresponding to the Subscription unit or its multiple. The possibility to cash redemption is specified below in 7 under Cash Redemption. The Management Company confirms the content of the Subscription Unit at the time of the valuation of the Fund unit. The Subscription Unit contains a predetermined number of securities that are part of the index. A confirmed Subscription Unit is valid until 3 pm the next day. The content of a Subscription Unit is defined so that its value corresponds to the value of the given Fund units. The Subscription Unit is formed as follows: - securities: relative number of securities forming part of the Index rounded to the nearest whole number - cash: the difference between the value of the securities in the Subscription Unit and the value of the Fund units corresponding to the Subscription Unit Procedure at subscription of Fund units Upon subscription the subscriber subscribes the Fund units that equal a Subscription Unit to the value of the Subscription Unit and the Fund purchases from the subscriber the shares forming the Subscription Unit. The bilateral transactions take place on the first trading day after the subscription, and the reciprocal receivables of the subscriber and the Fund are netted. The deal is executed in public trade. Subscription takes place by delivering the subscription order to a stockbroker accepting subscriptions (subscription broker). A binding order must be made before 3 pm. If the subscription arrives at the Management Company after 3 pm. the subscription lapses. The subscriber is responsible for ensuring that the shares equivalent to the Subscription Unit or its multiple are on his book-entry account and the cash is paid to the stockbroker within the given time. A condition of the subscription is that the stockbroker has performed the deal on the shares forming the Subscription Unit at public trade by 4 pm. The deals are cleared the following clearance day. On the following trading day the Management Company delivers to the subscriber the number of Fund units that equals the subscribed Subscription Unit or its multiple. In case of disturbance in the clearance of the deal of the shares in the subscription or the cash part of the subscription has not been delivered, the Management Company issues the Fund units with a restriction on transfer. The restriction on transfer is in force until the Subscription Unit is entirely at the Management Company s disposal. The subscriber stands for the expenses caused by entering the restriction on transfer. The information on stockbrokers accepting subscriptions is available at the Management Company and the Fund s Internet page. Subscription orders can be cancelled only with the approval of the Management Company. Procedure at redemption of Fund units Upon redemption of Fund units the Fund redeems the Fund units that equal the Subscription Unit to the value of the Subscription Unit and the redeemer buys from the Fund the shares forming the Subscription Unit. Bilateral transactions take place on the following trading day after the redemption and the reciprocal receivables of the redeemer and the Fund are netted. The deal is executed in public trade. Redemption takes place by delivering a binding redemption to a stockbroker that accepts redemptions (subscription broker). Redemption orders must be made before 3 pm. If the redemption arrives at the Management Company after 3 pm. the redemption lapses. The redeemer has to ensure that the Fund units forming the Subscription Unit are on the redeemer s book-entry account within the given time. The redeemer s book-entry account is charged with a restriction on transfer in favour of the Fund. A condition of the redemption is that the stockbroker has performed the deal on the shares in the

5 Subscription Unit or its multiple at public trade by 4 pm. The deals are cleared the following clearance day. On the following trading day of the redemption the Management Company delivers the redeemed Subscription Unit or its multiple in full to the redeemer after having ensured that Fund units equaling the Subscription Unit have been transferred to the Fund. If the securities needed for the redemption are temporarily unavailable by reason that the Fund has invested assets in securities outside the Index as described in 5, the Management Company must instantly acquire the securities needed for the redemption. If the redemption order was delivered before 3 pm. the redeemer gets the shares that equal the Subscription Unit of that day as well as the cash portion that was applicable on the day of the redemption order. Redemption orders can be cancelled only with the approval of the Management Company. The Management Company has the right to turn down redemption orders if it has good reason. The information on stockbrokers accepting redemptions is available at the Management Company and the Fund s Internet page. Cash redemption The Management Company allows cash redemptions below the Subscription Unit. The redemption takes place by delivering a binding written redemption order to the Management Company by 3 pm. The redeemer has to ensure that the Fund units to be redeemed are on the redeemers book-entry account by the given time. The redeemer s book entry account is charged with a restriction on transfer in favour of the Fund. The redemption price is the price of the Fund unit calculated according to 10 on the trading day that follows the redemption order, deducted by the redemption fee authorised by the Management Company. If the Fund units are not at the Fund's disposal on the day that follows the redemption order the redemption does not take effect. The redeemer stands for the expenses caused to the Fund or the Management Company for such an aborted redemption. If the cash to meet redemptions has to be raised by selling securities owned by the Fund, the sale should be executed without unnecessary delay and at the latest within two weeks from the redemption order. In this case the redemption shall be performed at the unit price of the day the securities were sold. The redemption will be performed without unnecessary delay, once the proceeds from selling of securities have been received. Cash redemption orders can be cancelled only with the approval of the Management Company. 8 Fund Unit Order Fees For a subscription and redemption with a Subscription Unit the Management Company charges a fee that, disregarding the Subscription Unit multiple, may not exceed EUR 1,000. The redemption fee on cash redemptions is 3 % of the value of the redemption, but at least EUR Calculating the Value of the Fund The net asset value of the Fund is calculated by deducting the Fund s liabilities from its assets. The value of the Fund is given in euros. Stocks and stock option instruments as well as standardized and non-standardized derivative instruments The securities and the standardized and non-standardized derivatives owned by the Fund are valued at their current market value, which is the price of the last official trade at the Helsinki Stock Exchange.

6 Lending agreements are valued at the market value of their underlying securities at the price of the last official trade at the Helsinki Stock Exchange. If the securities have not traded that day, their market value is equal to the last official trade. If no current market value is available for securities or derivatives, they are valued according to objective criteria that the Management Company has determined. As a rule ownership of the Fund is valued in the same way as the Index is calculated. Money market instruments and other interest bearing securities The money market instruments and other interest bearing securities in the Fund are, as a rule, valued to the mean value of the bid and offer prices, as quoted by the public quotation system at 6.20 pm Finnish time. Deposits Fund deposits include accumulated interest on the day of calculation. The Fund s foreign currency assets are converted to Euros, normally at 6.20 pm Finnish time, at a mean foreign exchange value of the last quotations by the international foreign exchange banks, registered by of the public quotation system. 10 Calculating the Fund Unit Value The Management Company calculates the value of the Fund each Finnish trading day. The Fund unit value is available at the Management Company, all subscription locations and the Internet. The value of the Fund unit is the value of the Fund divided by the number of issued units. The value of the Fund unit is calculated with two decimal accuracy. 11 Book Entry System The Fund units belong to the book entry system. The right to yield paid out of the Fund is limited to a person: 1) who is entered in the Fund unit holder register as unit holders on a given balancing date 2) whose right to payout is registered on the book-entry account recorded in the unit holder book-entry register on the balancing day 3) in whose book-entry account the Fund unit is registered in the name of a nominee, and the custodian of which is registered, on the balancing date, in the unit holder register as custodian of the Fund unit in accordance with 28 of the Act on the Book-Entry System 12 Yield Distribution The Fund aims to distribute a yield in a way that the net value of the Fund corresponds to the development of the Index. The distributable amount on each unit is the value of the unit deducted by a value which is the result of the Index value at the relevant time divided by hundred. The aim is to attach the Fund unit to one to a hundred of the Index. The Management Company s General Meeting decides the time and amount of the yield distribution. The General meeting may also decide on extra yield distribution provided it is consistent with the Fund's investment objective. The yield balancing date is set by allowing a necessary time for clearance of deals after the General Meeting that decided the yield. The yield is paid on the fifth banking day following the registration date. The yield is paid in accordance with the Central Securities Depository's rules. The right to yield by unit holder is stated in 11.

7 13 Accounting Period of the Fund and the Management Company The accounting period of the Fund and the Management Company is a calendar year. 14 Annual General Meeting of Unit Holders The Annual General Meeting of unit holders of the Fund shall be held annually at a date determined by the Management Company, but no later than the end of April. Extraordinary meetings of unit holders will be held, if the Board of Directors of the Management Company finds it necessary or if the auditor or fund unit holders, who together own at least 5% of all issued fund units so request in writing for deciding on such issues that they have requested. The agenda of the Annual General Meeting of Fund unit holders shall include at least the following subjects: 1. Election of a Chairman for the meeting. The Chairman summons a minutes-keeper 2. Listing of the votes present and approving the vote list 3. Election of two controllers of the protocol of the meeting and two persons to count the votes 4. Affirmation of the legality and decision-making authority of the meeting 5. Presentation of the financial statements and annual report of the Fund and the Management Company, as presented at the Annual General Meeting of the Management Company 6. Election of a unit holders representative into the Representative Body of the Fund Management Company s funds 7. Other subjects listed in the invitation to the Annual General Meeting Each unit in the Fund entitles to one (1) vote in a meeting of unit holders. Even if a unit holder s entire possession is less than one unit, he still has one vote in the meeting. Meeting decisions are made based on a simple majority of votes. Elections are based on the majority of votes. If the vote is a draw, the chairman of the meeting decides. Tied elections are decided by lottery. 15 Invitation and Registration to the Unit Holders Meeting The Fund unit holders meeting is summoned by the Management Company s Board of Directors. The invitation to the Fund unit holders meeting is published in at least one national daily newspaper in Finland. The invitation has to be published no earlier than four weeks and no later than two weeks before the meeting. To participate in the meeting, unit holders should notify the Management Company in the manner stated in the invitation no later than the date mentioned in the invitation. A unit holder has no right to use his unit holder s rights at the meeting before his Fund units have been registered or he has informed the Management Company of his acquisition and given an account thereof. The right to attend the Fund unit holders meeting and the number of votes is based on the situation ten days before the meeting. Other information will be communicated to unit holders by letter to the address given by the unit holder, or by publishing the information in at least one national daily newspaper published in Finland. 16 The Representative Body of Investment Funds The Funds managed by the Management Company has a common representative body. The Fund unit holders elect the members of the representative body annually at their Annual General Meeting in accordance with the articles of association of the Management Company. A member s term of office ends at the end of the first Annual General Meeting after the election. The representative body elects the members of the Management Company s Board of Directors. The number of board members is set at the Annual General Meeting of the Management Company. In addition, the Representative Body will elect an auditor and a deputy auditor for the Fund Management Company. Outcomes of the elections has to be announced to the Fund Management Company no later than one month after the Annual General Meeting of the Fund Management Company.

8 17 Prospectuses, Semi-Annual Report and Annual Report The Fund s Prospectus, the Simplified Prospectus, the Semi-Annual Report as well as the Fund s and the Management Company s Annual Reports are published in accordance with the Finnish Mutual Funds Act. The Semi-Annual Report has to be published within two months of the end of the report period, and the Fund s and Management Company s Annual Reports within three months of the end of the accounting period. The above documents can be obtained at the Management Company during open hours. 18 Changing the Fund s Rules The Board of Directors of the Management Company shall take decisions regarding changes to the Fund s rules. Changes to the rules have to be approved by the Financial Supervision Authority. Changes to the rules will take effect one month from their approval by the Financial Supervision Authority and communication to unit holders, unless the Financial Supervision Authority stipulates otherwise. Changes are deemed to have been communicated to unit holders on the fifth day from the date the letter containing the information was mailed or the announcement was published in a Finnish national daily newspaper, as a stock exchange bulletin or, with the unit holder s consent, ed or sent by other electronic media. As changes take effect they are binding on all unit holders. 19 Interruption of Subscription and Redemption If the unit holders interests so require, or if there are other weighty reasons, the Management Company may, with the permission of the Financial Supervision Authority, interrupt fund unit subscription. The Management Company may temporarily interrupt subscription and redemption of fund units if the market place that, considering the Fund s investment policy, can be regarded as the main market place is closed, or trading on the market is restricted, or if there are communication failures. 20 Information Sharing The Management Company has the right to give out information about unit holders in accordance with applicable laws. 21 Compensation Paid out of the Fund s Assets The Management Company receives as compensation for its operations a management fee that is different for different Fund unit series and is paid annually, and may not exceed 0.23 per cent of the Fund s value. The compensation to the Management Company includes the fee payable to the custodian. The fee is calculated daily according to the same calculation day (fee percentage annually/365 or /366 depending on the actual number of days in the year) and is paid to the Management Company monthly after the end of each month. The management fee has been deducted from the Fund unit s current day s value. The Management Company s board confirms the exact management fee for each Fund unit series. The Management Company publishes the amount of fees paid for portfolio management and depository in the Annual Report, Semi-Annual Report and Quarterly Report as defined in 17. Trading fees are declared in respect to individual traders. More detailed information on the above fees can be found in the current Fund Prospectuses. The Fund will also pay out of its assets some other costs directly related to investments activities, e.g. settlement transaction fees and transaction-related banking fees. These are paid according to charges levied by an external service provider. 22 Applicable Law

9 The operations of the Management Company and the Fund are governed by Finnish law.