swing (S$ & US$) DBSAM CAPITAL PROTECTED FUNDS

Transcription

1 PROSPECTUS DATED 7 NOVEMBER 2002 swing (S$ & US$) DBSAM CAPITAL PROTECTED FUNDS

2 DBS SWING FUND 6.0/3 (S$) DBS SWING FUND 5.0/3 (US$) MANAGERS SOLICITORS TO THE MANAGERS DBS Asset Management Ltd Wong Partnership 6 Shenton Way, 80 Raffles Place #58-01 DBS Building UOB Plaza 1 Singapore Singapore TRUSTEE SOLICITORS TO THE TRUSTEE Dexia Trust Services Rodyk & Davidson Singapore Limited 80 Raffles Place # Raffles Place #42-01 UOB Plaza 1 Republic Plaza Singapore Singapore AUDITORS PricewaterhouseCoopers 8 Cross Street #17-00 PwC Building Singapore Societe Generale S.A. (the Guarantor ) has issued a Guarantee to guarantee (1) that the net asset value of each Unit of the DBS Swing Fund 6.0/3 (S$) on the Maturity Date of the fund will not be less than S$1.00 and (2) that each of the three S$ Payouts (as described in paragraph 13.2 of this Prospectus) will be at least S$0.01. Pursuant to the Guarantee, the Guarantor has also guaranteed that the net asset value of each Unit of the DBS Swing Fund 5.0/3 (US$) on the Maturity Date of the fund will not be less than the sum of (1) US$1.00 and (2) the sum of the four Locked-in Returns (as described in paragraph 13.3 of this Prospectus) which will be at least US$ The Guarantee will only benefit Holders who do not redeem their Units before the relevant Maturity Date. Holders who redeem before the relevant Maturity Date will be paid the net asset value for the Units at the applicable redemption date which might be less than the guaranteed amount. After its Maturity Date, each of the Funds (as defined in paragraph 1 of this Prospectus) will be terminated and the Units compulsorily redeemed, and Holders will receive the higher of the net asset value for their Units or the guaranteed amount. The Guarantee is subject to the credit risk of the Guarantor as the Guarantee is an unsecured obligation of the Guarantor. Holders may lose the benefit of the Guarantee if the Guarantee is terminated under the circumstances described in paragraph 43.4 of this 1

3 Prospectus. Prospective investors should note that there may be a dilution of the performance of the Funds due to the Guarantee being put in place. Holders should also note that the fees payable for the entire duration of the Funds will be charged upfront at the inception of the Funds (please refer to paragraph 16.2 for details) and therefore Holders who redeem before the relevant Maturity Date shall not be entitled to claim a refund of any amount of the fees paid to the Managers and Trustee or the expenses paid in advance. 2

4 DBS SWING FUND 6.0/3 (S$) DBS SWING FUND 5.0/3 (US$) (collectively, the Funds, and each, a Fund ) The collective investment schemes offered in this Prospectus are authorised schemes under the Securities and Futures Act (Act 42 of 2001). A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the Authority ). The Authority assumes no responsibility for the contents of the Prospectus. Registration of the Prospectus by the Authority does not imply that the Securities and Futures Act (Act 42 of 2001), or any other legal or regulatory requirements have been complied with. The Authority has not, in any way, considered the investment merits of the collective investment schemes. This Prospectus does not constitute an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation and may only be used in connection with this offering of securities to which it relates by distribution as contemplated herein. DBS Asset Management Ltd accepts full responsibility for the accuracy of information contained herein and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. Investors should seek professional advice to ascertain (a) the possible tax consequences, especially in connection with the receipt of any distributions intended to be made by the Funds, (b) the legal requirements which may be relevant to the subscription, holding or disposal of Units in the Funds and (c) any foreign exchange restrictions or exchange control requirements which they may encounter under the laws of the countries of their citizenship, residence, domicile and which may be relevant to the subscription, holding or disposal of Units in the Funds. Investors should carefully consider the risks of investing in the Funds which are set out in paragraphs 17 and 18 of this Prospectus. The Units are not listed on any stock exchange and can be purchased from, sold or switched through DBS Bank ( DBS ), as marketing and distributing agent for the Managers, subject to the Managers' ultimate discretion to accept or reject all applications or other instructions in respect of the Units in accordance with the 3

5 Deed. Investors should approach DBS for the purposes of investing in the Funds. Institutional investors may also apply for, redeem or switch Units through the Managers directly. All enquiries about the Funds should be directed to DBS Asset Management Ltd or The Development Bank of Singapore Ltd. 4

6 CONTENTS SECTION HEADING PAGE I BASIC INFORMATION...6 II THE MANAGER...6 III THE TRUSTEE...7 IV OTHER PARTIES...7 V STRUCTURE OF THE SCHEME...7 VI VII INVESTMENT OBJECTIVES, FOCUS & APPROACH...8 FEES AND CHARGES...14 VIII RISKS...15 IX SUBSCRIPTION OF UNITS...17 X REALISATION OF UNITS...18 XI OBTAINING PRICES OF UNITS...20 XII SUSPENSION OF DEALINGS...20 XIII PERFORMANCE OF THE SCHEME...22 XIV XV XVI XVII SOFT DOLLAR COMMISSIONS/ ARRANGEMENTS...23 CONFLICTS OF INTEREST...23 REPORTS...23 GUARANTEE BY SOCIETE GENERALE S.A...23 XVIII TERMINATION OF THE FUND...27 XIX QUERIES AND COMPLAINTS...28 XX OTHER MATERIAL INFORMATION

7 I BASIC INFORMATION 1. The collective investment schemes offered pursuant to this Prospectus are the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$) (collectively, the Funds, and each, a Fund ). 2. The date of registration and the expiry date of this Prospectus are 7 November 2002 and 6 November 2003 respectively. 3. The Funds are constituted as unit trusts in Singapore and each as a sub-fund of the DBSAM Guaranteed or Protected Funds pursuant to the Trust Deed dated 6 November 2000 entered into between DBS Asset Management Ltd (the "Managers") and Dexia Trust Services Singapore Limited (formerly known as BIL Trust (Singapore) Limited) (the "Trustee"), as amended and supplemented by the First Supplemental Deed dated 5 March 2001, the Second Supplemental Deed dated 22 May 2001, the Third Supplemental Deed dated 2 November 2001, the Fourth Supplemental Deed dated 4 January 2002, the Fifth Supplemental Deed dated 8 March 2002, the Sixth Supplemental Deed dated 23 May 2002 and the Seventh Supplemental Deed dated 31 October 2002 entered into between the same parties. Copies of the Trust Deed, First Supplemental Deed, Second Supplemental Deed, Third Supplemental Deed, Fourth Supplemental Deed, Fifth Supplemental Deed, Sixth Supplemental Deed and Seventh Supplemental Deed may be inspected at the business address of the Managers at 8 Cross Street, #27-01/06, PWC Building, Singapore The Trust Deed, as amended and supplemented by the First Supplemental Deed, Second Supplemental Deed, Third Supplemental Deed, Fourth Supplemental Deed, Fifth Supplemental Deed, Sixth Supplemental Deed and Seventh Supplemental Deed shall hereafter be referred to as the "Deed". Unless specifically defined herein, all defined terms used in this Prospectus shall have the same meaning as used in the Deed. II THE MANAGER 4. The name of the Managers for the Funds is DBS Asset Management Ltd and their registered address is at 6 Shenton Way, DBS Building, Singapore , and their business address is as indicated in paragraph 3 above. 6

8 5. The Managers have managed collective investment schemes or discretionary funds in Singapore for 20 years. The total assets under management exceed S$5.8 billion as at the date of registration of this Prospectus. III THE TRUSTEE 6. The Trustee for the Funds is Dexia Trust Services Singapore Limited and its registered address and business address is at 9 Raffles Place, #42-01, Republic Plaza, Singapore IV OTHER PARTIES 7. Societe Generale S.A. is appointed as a Guarantor to provide the capital protection for the Funds. 8. Pursuant to a deed of guarantee dated 31 October 2002 (the Guarantee ), the Guarantor has guaranteed that (1) the Net Asset Value of each Unit of the DBS Swing Fund 6.0/3 (S$) will not be less than S$1.00 as at its Maturity Date (which shall be a date falling on 29 December 2008) and (2) each of the three S$ Payouts (as described in paragraph 13.2 below) will be at least S$0.01. Pursuant to the Guarantee, the Guarantor has also guaranteed that the Net Asset Value of each Unit of the DBS Swing Fund 5.0/3 (US$) will not be less than the sum of (1) US$1.00 as at its Maturity Date (which shall be a date falling on 27 December 2007) and (2) the sum of the four Locked-in Returns (as described in paragraph 13.3 below) which will be at least US$ The registrar of the Funds is Dexia Fund Services Singapore Pte Ltd (the Registrar ) and the Register of Holders maintained by the Registrar can be inspected at 9 Raffles Place, #42-01, Republic Plaza, Singapore The auditors of the Funds are PricewaterhouseCoopers of 8 Cross Street, #17-00, PWC Building, Singapore (the "Auditors"). V STRUCTURE OF THE SCHEME 11. The Funds are constituted as sub-funds under the umbrella unit trust known as the DBSAM Guaranteed or Protected Funds. Currently, the DBSAM Guaranteed or Protected 7

9 Funds comprise 16 sub-funds, each of which will be managed as a separate and distinct collective investment scheme. A separate portfolio is also maintained for each sub-fund and any future sub-funds that may be established by the Managers and the Trustee under the Deed. 12. As at the date of registration of this Prospectus, only the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$) are available for subscription and only information applicable or relevant to the said Funds is provided in this Prospectus. All references to Fund or Funds refer only to the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$). VI INVESTMENT OBJECTIVES, FOCUS & APPROACH 13.1 The investment objective of the DBS Swing Fund 6.0/3 (S$) is to make three payouts to the Holders throughout the duration of the Fund while providing 100% capital protection at the Fund s Maturity Date. The investment objective of the DBS Swing Fund 5.0/3 (US$) is to achieve capital appreciation for the Holders throughout the duration of the Fund while providing 100% capital protection at the Fund s Maturity Date After the close of the Trade Date (as defined below) of the DBS Swing Fund 6.0/3 (S$), at intervals of twenty-four (24) months, a payout ( S$ Payout ) will be calculated for the DBS Swing Fund 6.0/3 (S$). As the duration of the DBS Swing Fund 6.0/3 (S$) will last seventy-two (72) months, the Fund will make altogether three (3) S$ Payouts. The third S$ Payout will be calculated on the Maturity Date when the Units are compulsorily redeemed and it will be paid together with the redemption proceeds of the Units after the Maturity Date. Holders may expect to receive the first S$ Payout and the second S$ Payout within 30 days from the date such S$ Payout is calculated. Each S$ Payout (in respect of each Unit of the DBS Swing Fund 6.0/3 (S$)) will be the amount which is the higher of:- (a) (b) S$0.01; or the absolute performance of the stock within the basket of eighteen stocks (named in paragraph 13.4 below) which shows the smallest price variation, and multiplied by a participation rate, during the following periods (collectively, the S$ Payout Periods and each, a S$ Payout Period ):- 8

10 (aa) in the case of the first S$ Payout, the first 24 months between the Trade Date and the First Payout Date; (bb) in the case of the second S$ Payout, the next 24 months between the First Payout Date and the Second Payout Date; and (cc) in the case of the third S$ Payout, the next 24 months between the Second Payout Date and the Maturity Date. Expressed mathematically, each S$ Payout will be the greater of the following amount:- SGD 1.00 x 1.0%; or f f f SGD 1.00 x (PR x Min( Absolute 1, Absolute 1,..., Absolute 1 1 k 18 )) Where k S i (I = 1, 2 or 3) is the closing value of the k-th stock on: - In the case of the first S$ Payout, Trade Date i.e. 27 th December, 2002 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the second S$ Payout, the First Payout Date i.e. 29 th December, 2004 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the third S$ Payout, the Second Payout Date i.e. 27 th December, 2006 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. k S f (f = 1, 2 or 3) is the closing value of the k-th stock on: - In the case of the first S$ Payout, the First Payout Date i.e. 29 th December, 2004 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the second S$ Payout, the Second Payout Date i.e. 27 th December, 2006 or if such day 9 1 S S i k S S i 18 S S i

11 is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the third S$ Payout, the Maturity Date i.e. 29 th December, 2008 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. Trade Date : Date on which the DBS Swing Fund 6.0/3 (S$) enters into the Repurchase Transaction and Exchange Transaction in respect of the DBS Swing Fund 6.0/3 (S$) PR or Participation Rate : To be determined on Valuation Date. Expected to be in the range of 25%-40% 13.3 The assets of the DBS Swing Fund 5.0/3 (US$) will be invested such that after the close of the Trade Date (as defined below) of the Fund, at intervals of fifteen (15) months the DBS Swing Fund 5.0/3 (US$) will obtain a minimum level of return which will be locked in and accreted to the Net Asset Value of the Fund (the Locked-in Return ). As the duration of the DBS Swing Fund 5.0/3 (US$) will last sixty (60) months, the Fund will enjoy four (4) Locked-in Returns. The Locked-in Returns will not be distributed to the Holders until the Maturity Date of the Fund when the Units are compulsorily redeemed. Therefore, the four Locked-in Returns will be accumulated and paid to Holders as part of the redemption proceeds of the Units after the Maturity Date. Each Locked-in Return (in respect of each Unit of the DBS Swing Fund 5.0/3 (US$)) will be the amount which is the higher of:- (a) (b) US$0.0135; or the absolute performance of the stock within the basket of eighteen stocks (named in paragraph 13.4 below) which shows the smallest price variation, and multiplied by a participation rate, during the following periods (collectively, the Locked-in Return Periods and each, a Locked-in Return Period ):- (i) (ii) in the case of the first Locked-in Return, the first 15 months between the Trade Date and the First Locked-in Return Date; in the case of the second Locked-in Return, the 10

12 next 15 months between the First Locked-in Return Date and the Second Locked-in Return Date; (iii) (iv) in the case of the third Locked-in Return, the next 15 months between the Second Locked-in Return Date and the Third Locked-in Return Date; and in the case of the fourth Locked-in Return, the next 15 months between the Third Locked-in Return Date and the Maturity Date. Expressed mathematically, each Locked-in Return will be the greater of the following amount:- USD 1.00 x 1.35%; or f f Absolute 1, Absolute 1,..., Absolute 1 USD 1.00 x (PR x Min( 1 k 18 )) Where k S i (I = 1, 2 or 3) is the closing value of the k-th stock on: - In the case of the first Locked-in Return, Trade Date i.e. 27 th December, 2002 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the second Locked-in Return, the First Locked-in Return Date i.e. 29 th March, 2004 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the third Locked-in Return, the Second Locked-in Return Date i.e. 27 th June, 2005 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the fourth Locked-in Return, the Third Locked-in Return Date i.e. 27 th September, 2006 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. k S f (I = 1, 2 or 3) is the closing value of the k-th stock on: - In the case of the first Locked-in Return, the First Locked-in Return Date i.e. 29 th March, 2004 or if such 11 1 S S i k S f S i 18 S S i

13 day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the second Locked-in Return, the Second Locked-in Return Date i.e. 27 th June, 2005 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the third Locked-in Return, the Third Locked-in Return Date i.e. 27 th September, 2006 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. - In the case of the fourth Locked-in Return, the Maturity Date i.e. 27 th December, 2007 or if such day is not a day of quotation for all stocks in the basket, the next following business day on which all the stocks are quoted on the relevant markets. Trade Date : Date on which the DBS Swing Fund 5.0/3 (US$) enters into the Repurchase Transaction and Exchange Transaction in respect of the DBS Swing Fund 5.0/3 (US$) PR or Participation Rate : To be determined on Valuation Date. Expected to be in the range of 25%-40% 13.4 The basket of stocks referred to in paragraphs 13.2 and 13.3 will initially comprise (subject to replacement by Societe Generale S.A. in circumstances as described below) BP p.l.c., Campell Soup Company, The Coca-Cola Company, E.I. du Pont de Nemours and Company, E.ON AG, Fuji Photo Film Co., General Electric Company, The Gillette Company, HSBC Holdings plc, ING Groep N.V., KBC Bankverzekeringsholding, L Oreal SA, Microsoft Corporation, Novartis AG, Pfizer Inc., Sony Corporation, Toyota Motor Corporation and Volkswagen AG To achieve the investment objectives of the Funds, each of the Funds will enter into a repurchase transaction (the Repurchase Transaction ) with Societe Generale S.A. under which certain debt securities will be sold to the Funds by Societe Generale S.A. on condition that such debt securities will be repurchased by Societe Generale S.A. on the Maturity Date of such Fund. 12

14 14.2 Interest is payable by Societe Generale S.A. to the Funds under the Repurchase Transactions. The interest would be exchanged with the pay-off of the equity-linked option hedged by Societe Generale S.A. (the Exchange Transaction ). Explanation of the option s pay-off 14.3 The option gives the Funds the opportunity to participate in the absolute performance of the stock within the basket of eighteen stocks which shows the smallest price variation during the S$ Payout Period or the Locked-in Return Period (as the case may be). At each date for calculating the S$ Payout or the Locked-in Return (as the case may be), Societe Generale S.A. will calculate the performance over the S$ Payout Period or Locked-in Return Period (as the case may be), whether positive or negative, of each of the eighteen selected stocks. It is the absolute values of these performances which are considered for the calculation of the returns and the smallest performance of this list, in absolute value term, will determine the S$ Payout or the Locked-in Return (as the case may be) for each of the Funds (taking into account the participation rate). For each S$ Payout in the case of the DBS Swing Fund 6.0/3 (S$), if the smallest absolute performance (after multiplying by the participation rate) is less than S$0.01, each Unit of the Fund will receive the minimum of S$0.01. For each Locked-in Return in the case of the DBS Swing Fund 5.0/3 (US$), if the smallest absolute performance (after multiplying by the participation rate) is less than US$0.0135, each Unit of the Fund will receive the minimum of US$ After each S$ Payout or Locked-in Return is calculated, there will be a re-setting of the strike price, for calculating the performance of the selected stocks for the next S$ Payout or Locked-in Return (as the case may be) Societe Generale S.A. as the option writer shall have the right to replace or remove without substitution any of the eighteen stocks in the basket described in paragraph 13.4 above with another equity stock in the following circumstances:- merger of the issuer of a stock with another entity de-listing or de-merger of the issuer of a stock nationalization insolvency (such stocks may be replaced for the next S$ Payout Period or the next Locked-in Return Period (as the case may be)). 13

15 In calculating the price movement, Societe Generale S.A. as the calculation agent of the value of the option is entitled to adjust, in a commercially fair and reasonable manner, the price movements to account for consolidation, subdivision or conversion of shares, capitalisation of reserves, reduction of capital and rights issues or any event similar to any of the foregoing events. 15 It is the intention of the Managers to use the pay-offs received from the option to make the S$ Payouts to the Holders of the DBS Swing Fund 6.0/3 (S$). Holders may expect to receive the first S$ Payout and the second S$ Payout within 30 days from such S$ Payout date. The third S$ Payout will be paid to the Holders together with the redemption proceeds of the Units after the Maturity Date. Investors who are not registered as Holders of the DBS Swing Fund 6.0/3 (S$) on the S$ Payout dates will not be entitled to receive the S$ Payouts. In the case of the DBS Swing Fund 5.0/3 (US$), it is not the intention of the Managers to distribute the Locked-in Returns to the Holders and the Locked-in Returns will be accreted to the Net Asset Value of the DBS Swing Fund 5.0/3 (US$). The Locked-in Returns will be paid to Holders as part of the redemption proceeds of the Units after the Maturity Date. VII FEES AND CHARGES 16.1 The fees and charges payable by the Holders or out of the assets of the Fund are as follows:- Payable by the investor (a) Initial Sales Charge - nil (b) Realisation Charge - nil Payable by the Fund (a) Management Fee % per annum for the DBS Swing Fund 6.0/3 (S$) 0.9% per annum for the DBS Swing Fund 5.0/3 (US$) (b) Trustee Fee - currently below 0.05% and not exceeding 0.2% per annum for both Funds 14

16 16.2 The total Management Fee, Trustee Fee and all other expenses in respect of the whole duration of the Funds shall be charged upfront at the inception of the Funds. For the avoidance of doubt, Holders of the Funds who redeem their Units in the Funds before the respective Maturity Date, shall not be entitled to claim a refund of any amount of the fees paid to the Managers and Trustee or the expenses paid in advance. The Holders of the Funds will also not receive any direct rebate of the fees paid to the Managers and Trustee if their Units are redeemed at the respective Maturity Date. The total Management Fee and Trustee fee, for each Fund is equal to the respective aggregate sum of the annual Management Fee and annual Trustee Fee for the Fund, payable over the duration of the Fund. VIII RISKS 17. The general risks of investing in the DBS Swing Fund 6.0/3 (S$) and DBS Swing Fund 5.0/3 (US$) are as follows:- (a) (b) (c) (d) while the Managers believe that the Funds offer income revenue and potential for capital appreciation, no assurance can be given that these objectives will be achieved. Prospective investors should read the Prospectus and discuss all risks with their financial and legal advisors before making an investment decision; prospective investors should be aware that the price of Units can go down as well as up and that past performance is not necessarily a guide to the future performance of the Funds. Investments in the Funds is designed to produce returns over the middle to long term and is not suitable for short term speculation; prospective investors should be aware that the price of Units may go down as well as up in response to changes in interest rates, foreign exchange, economic and political conditions and the earnings of corporations whose securities are comprised in the basket; and dealings in the Units and the calculation of the net asset value thereof may be suspended in certain circumstances and the redemption of Units may be suspended or deferred in certain circumstances as provided for in the Deed. 15

17 18. The specific risks of investing in the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$) are as follows:- (a) (b) (c) the ability of the Funds to return at least the initial capital invested on the Maturity Dates, and to make the S$ Payouts (for the DBS Swing Fund 6.0/3 (S$)) or obtain the Locked-in Returns (for the DBS Swing Fund 5.0/3 (US$)) will be dependent on the credit risk and counterparty risk of Societe Generale S.A.. As at the date of registration of this Prospectus, Societe Generale S.A. s senior long-term unsecured debt is rated Aa3; although there is a Guarantee to provide the capital protection for the Funds, the Guarantee will not protect against a loss in value of the investments due to any new tax imposed (between 31 October 2002 and the Maturity Dates) on the DBS Swing Fund 6.0/3 (S$) or the DBS Swing Fund 5.0/3 (US$) under Singapore laws. In addition, as the Guarantor is also the counterparty to the transactions in which the Funds would enter, the Guarantee does not protect the Funds against counterparty credit risk. For this reason, the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$) are not regulated by the Monetary Authority of Singapore as capital guaranteed unit trusts. In some other unit trusts that are regulated as capital guaranteed unit trusts, the guarantor does not act as the counterparty or issuer of the investments invested by the unit trusts. Such unit trusts would confer a higher level of protection compared to the Guarantee for the Funds; and certain stocks in the basket of eighteen stocks are not denominated in Singapore Dollars or United States Dollars but in other foreign currencies. The value of the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$) will not be affected by the depreciation of these foreign currencies against the Singapore Dollars and United States Dollars respectively as Societe Generale S.A. intends to hedge such foreign exchange risks. 16

18 IX SUBSCRIPTION OF UNITS 19. How to purchase Units 19.1 Investors of any of the Funds may apply through an ATM (as and when ATM application is made available by the Managers) or by completing an Investment Form obtained from DBS and/or the sales representatives of DBS or by any means as may be established by the Managers. The Investment Form, together with payment of the subscription monies in respect of the Units to be subscribed for, should be forwarded by hand or post to DBS and/or its sales representatives. All applications for Units received by DBS would thereafter be consolidated and forwarded by DBS to the Managers Payment for Units may be made by:- (i) (ii) (iii) (iv) (v) cash at any DBS branches; cheques made payable to "DBS Bank" or "The Development Bank of Singapore Ltd". Payment made via cheques will be accepted on a cleared funds basis; Direct Debit Authorisation from an investor's account with DBS; funds from the investor s SRS Account; and through the ATM in the case of an ATM application (as and when ATM application is made available by the Managers). In respect of institutional clients, an Investment Form may also be obtained directly from and, once duly completed, forwarded to the Managers, together with the subscription monies in respect of the application for Units Notwithstanding receipt by DBS of the Investment Forms, the Managers shall retain the absolute discretion to accept or reject any application for Units in accordance with the provisions of the Deed. In the event that an application for Units is rejected by the Managers, the application monies shall be refunded (without interest) to the investor within a reasonable time in such manner as the Managers or DBS shall determine. No certificates will be issued by the Managers. 17

19 20. The minimum initial investment is S$5,000 for the DBS Swing Fund 6.0/3 (S$) and US$5,000 for the DBS Swing Fund 5.0/3 (US$) or such other investment amount as may be determined from time to time by the Managers upon giving prior notice to the Trustee. There is no minimum subsequent investment for each Fund after the close of the initial offering period as the Managers will not be accepting any subscription for Units after the close of the initial offering period for each Fund. 21. The initial purchase price for the Funds is S$1.00 per Unit for the DBS Swing Fund 6.0/3 (S$) and US$1.00 per unit for the DBS Swing Fund 5.0/3 (US$) and the initial offering period (the Offer Period ) is from 7 November 2002 to 20 December 2002 (or such other dates as the Managers may determine in consultation with the Trustee). 22. To subscribe for Units, the application form must be received by the Managers before 5 p.m. on the last Business Day before the close of the initial offering period The following is an illustration on the number of Units that an investor will receive based on an investment amount of S$5,000 in the DBS Swing Fund 6.0/3 (S$):- S$5000 / S$ Units Your Investment Price =Number of Units (i.e. NAV per Unit) 23.2 The Issue Price excludes the Initial Sales Charge as there is currently no Initial Sales Charge payable. 24. Every successful applicant will be sent a confirmation of his/her purchase within 7 Business Days of the receipt of the application by the Managers. 25. The Managers reserve the right not to proceed with the launch of any of the Funds and to refund the contributions of the applicants to such Fund without any interest accrued if a minimum subscription level of S$5 million (or the equivalent in US$) for such Fund is not received. X REALISATION OF UNITS 26. How to sell Units A Holder may redeem Units through completing the Realisation Request (or such other form as the Managers 18

20 may approve from time to time) and forwarding the same to DBS and/or DBS's sales representatives. Institutional investors may also redeem their Units via completing the Redemption Request and forwarding the same to the Managers. However, a Holder shall not be entitled to realise any Unit issued which has not been in issue for at least five (5) Business Days or such other period as the Managers may, with the approval of the Trustee, from time to time determine The net realisation proceeds are calculated by multiplying the number of Units of the Fund to be realised by the Realisation Price of the Units of the Fund. The Realisation Price of the Units is calculated based on forward pricing and is determined based on the Value of the Units of the Fund at 7 a.m. Singapore time on the Business Day immediately following the relevant Dealing Day on which the Realisation Request is received. The dealing deadline for the Funds is, in relation to any Dealing Day, currently 5 p.m. on the Business Day immediately preceding such Dealing Day but this may be changed subsequently to any other time of the day by the Managers with the approval of the Trustee. This means that if your Realisation Request is received by the Managers before the Dealing Deadline on the Business Day immediately preceding a Dealing Day, the price will be based on the Value of the Fund for that Dealing Day. If a Realisation Request is received after the Dealing Deadline on the Business Day immediately preceding that Dealing Day, it shall be deemed to be received by the Managers only on the immediately following Dealing Day. This Realisation Price will be determined only on the Business Day following the Dealing Day and televised on Teletext and published in the Business Times 2 Business Days after such Dealing Day The Dealing Day for the Funds is every Wednesday of the week, or if that day is not a Business Day, the following Business Day thereafter. 28. The minimum holding amount and the minimum realisation amount is 1000 Units or such other number as the Managers may from time to time determine in accordance with the Deed. 19

21 29.1 The following is an illustration on the realisation proceeds that an investor will receive based on a holding of 1,000 Units and a notional Realisation Price of S$1.05 (the actual Realisation Price of the Units will fluctuate according to the Value of the Deposited Property of the Fund) x $1.05 = S$1,050 Your Realisation Realisation Holding Price Proceeds 29.2 The Realisation Price excludes the Realisation Charge as there is currently no Realisation Charge payable. 30. Payment will be made within 6 Business Days of receipt of the Realisation Request or written notice (as the case may be) subject to the provisions of the Deed. XI OBTAINING PRICES OF UNITS 31. The initial Issue Price is S$1.00 for the DBS Swing Fund 6.0/3 (S$) and US$1.00 for the DBS Swing Fund 5.0/3 (US$). As the Managers will not be accepting any subscription of Units after the initial offering period, no selling prices for the Funds after the close of the initial offering period will be published. 32. The Realisation Price for the Units in a Fund as determined after the close of the initial offering period of such Fund will be televised on Teletext and published in the Business Times. XII SUSPENSION OF DEALINGS 33. The Managers may with the prior written approval of the Trustee, and shall at the request of the Trustee, temporarily suspend the realisation of Units of the Funds:- (a) (b) any period when any Recognised Stock Exchange on which any Authorised Investment forming part of the Deposited Property (whether of any particular Fund) for the time being is listed or dealt in is closed (otherwise than for ordinary holidays) or during which dealings are restricted or suspended; the existence of any state of affairs which, in the opinion of the Managers or the Trustee, as the case 20

22 may be, might seriously prejudice the interest of the Holders as a whole or of the Deposited Property; (c) (d) any breakdown in the means of communication normally employed in determining the price of any of such Authorised Investments or the current price on any Recognised Stock Exchange or when for any reason the prices of any of such Authorised Investments cannot be promptly and accurately ascertained; or any period when remittance of money which will or may be involved in the realisation of such Authorised Investments or in the payment for such Authorised Investments cannot, in the opinion of the Managers or the Trustee, as the case may be, be carried out at normal rates of exchange. 34. The Managers may, with the approval of the Trustee, limit the total number of Units of the Fund which Holders may realise and which the Managers are entitled to have cancelled pursuant to Clause 11 of the Deed on any Redemption Date to ten per cent. (10%) of the total number of Units of the Fund then in issue, such limitation to be applied pro rata to all Holders who have validly requested realisations on such Redemption Date including the Managers where applicable, so that the proportion so requested to be realised or cancelled pursuant to Clause 11 of the Deed is the same for all Holders and the Managers. Any Units which, by virtue of this power conferred on the Managers, are not realised or cancelled (as the case may be) shall be realised or cancelled (subject to any further application of this power) on the next succeeding Redemption Date PROVIDED THAT if on such next succeeding Redemption Date, the total number of Units of the Fund to be cancelled or realised (as the case may be), including those carried forward from any earlier Redemption Date, exceeds such limit, the Managers may further carry forward the requests for realisation or cancellation (as the case may be) until such time as the total number of Units to be realised or cancelled (as the case may be) on a Redemption Date falls within such limit. If Realisation Requests are carried forward as aforesaid, the Managers shall, within seven (7) days, give notice to the Holders affected thereby that such Units have not been realised or cancelled and that (subject as aforesaid) they shall be realised or cancelled on the next succeeding Redemption Date. 21

23 35. If, immediately after any Redemption Date, the number of Units in issue or deemed to be in issue, having regard to realisations falling to be made by reference to that Redemption Date, would be less than such proportion (not exceeding ninety per cent. (90%)), as may be determined by the Managers from time to time, of the number of Units in issue or deemed to be in issue on that Redemption Date, the Managers may, with a view to protecting the interests of all Holders and with the approval of the Trustee, elect that the Realisation Price in relation to all (but not some only) of the Units falling to be realised by reference to that Redemption Date shall, instead of being the price calculated as hereinbefore mentioned, be the price per Unit which, in the opinion of the Managers, reflects a fairer value for the Deposited Property of the Fund having taken into account the necessity of selling a material proportion of the Investments at that time constituting part of the Deposited Property attributable to the Fund; and the Managers may by giving notice to the Holders of Units affected thereby within two (2) Business Days after the relevant day, suspend the realisation of those Units for such reasonable period as may be necessary to effect an orderly realisation of the Authorised Investments. For the purposes of this paragraph 35, the "fairer value" for the Deposited Property shall be determined by the Managers in consultation with a Stockbroker (as defined in the Deed) or an approved valuer and with the approval by the Trustee. The "material proportion" of the Authorised Investments means such proportion of the Authorised Investments which when sold will cause the reduction of the net asset value of the Deposited Property attributable to the Fund. XIII PERFORMANCE OF THE SCHEME 36. The Funds are new schemes and do not have any track record of performance as at the date of registration of this Prospectus. 37. The benchmarks against which the performance of the Funds should be measured are as follows:- DBS Swing Fund 6.0/3 (S$) DBS Swing Fund 5.0/3 (US$) Benchmark DBS Bank s 12-month SGD fixed deposit rate USD 12-month Bloomberg fixed deposit rate 22

24 XIV SOFT DOLLAR COMMISSIONS/ARRANGEMENTS 38. In its management of the Funds, the Managers will not be receiving any soft dollar commissions from, or entering into soft dollar arrangements with, stockbrokers who execute trades on behalf of the Funds. XV CONFLICTS OF INTEREST 39. An affiliate of the Trustee will be offering registrar services to the Funds. These services are provided on an arm s length basis and the fees for these services are permitted to be paid out of the Deposited Property of the Funds under the provisions of the Deed. 40. The Deed also provides that the Trustee and the Managers shall conduct all transactions with or for the Funds on an arm's length basis. XVI REPORTS 41. The financial year-end of the Funds falls on 30 June of every calendar year. A Holder can expect to receive the annual audited financial statements of the Fund within 3 months of the financial year-end. 42. A Holder of each Fund shall be entitled to receive semi-annual reports of such Fund within 2 months from the end of the period covered by each report. XVII GUARANTEE BY SOCIETE GENERALE S.A The Guarantor providing the guarantee for the DBS Swing Fund 6.0/3 (S$) and the DBS Swing Fund 5.0/3 (US$) is Societe Generale S.A. which was incorporated in France in It was nationalised in 1945, but returned to the private sector in July 1987 as a Societe Anonyme under the laws of the Republic of France. Its existence has been extended to 31 st December, Societe Generale S.A. has a proven track record and a leading market reputation in derivatives trading. It has established itself as a specialist in all kinds of equity derivatives and was recognised by the industry as such when it was awarded the title Equity Derivatives House of the Year 2001 by Risk Magazine. Societe Generale S.A. s senior long-term unsecured debt is rated Aa3 by Moody s. 23

25 43.2 Prospective investors should note that the Guarantee does not provide any assurance as to the future solvency of the Guarantor and its ability to honour the Guarantee on the Maturity Dates. There may be a dilution of the performance of the Funds due to the Guarantee being put in place Holders will only benefit from the Guarantee if they hold on to their Units until the relevant Maturity Date. Holders who realise their Units before the relevant Maturity Date will be paid the Net Asset Value for the Units at the applicable Redemption Date which might be lower than the guaranteed amount The Guarantee is entered into by the Guarantor and the Trustee on behalf of the Holders of the Funds by way of a deed of guarantee dated 31 October The Guarantee is an unconditional, first-demand guarantee enforceable in Singapore against the Guarantor by the Trustee on behalf of the Holders of the Fund. However, the Guarantee may be terminated in the following circumstances:- (i) (ii) (iii) (iv) (v) by the Trustee, if the Guarantor goes into liquidation (excluding a voluntary liquidation for the purpose of reconstruction or amalgamation) or if a receiver is appointed over any of the assets or if a judicial manager is appointed in respect of the other party or if any encumbrancer shall take possession of any of its assets or if the Guarantor shall cease business; by the Guarantor, the Managers or Trustee, if any law is passed or any change in circumstances occurs which renders it illegal to or in the opinion of the Trustee, impracticable or inadvisable to continue the Guarantee; by the Guarantor, the Managers or Trustee, if either Fund is voluntarily terminated by the Holders; by the Guarantor if the Trustee goes into liquidation (excluding a voluntary liquidation for the purpose of reconstruction or amalgamation) or if a receiver is appointed over any of the assets or if a judicial manager is appointed in respect of the other party or if any encumbrancer shall take possession of any of its assets or if the Trustee shall cease business; by the Trustee or the Guarantor if in its opinion, the retirement, removal or replacement of the Managers affects the Guarantee in a material way, Provided 24

26 That the Trustee shall either enter into a new guarantee which provides the same level of guarantee to the Holders as the terminated Guarantee or convene an Extraordinary General Meeting of the Holders of the Fund concerned for the purposes mentioned in paragraph 43.5 below; or (vi) by the Trustee with the sanction of an Extraordinary Resolution of the Holders of the relevant Fund in accordance with paragraph 43.5 below If the Guarantor fails to continuously fulfil the rating criteria set out in paragraph 43.6 below, or if, in the Trustee s opinion, the retirement, removal or replacement of the Managers pursuant to this Deed affects the Guarantee in a material way, then where the Trustee is of the opinion that the cost of obtaining a new guarantee (which provides at least the same level of guarantee as the previous Guarantee) significantly outweighs the benefit of such guarantee to the existing Holders, the Trustee may convene an Extraordinary General Meeting of the Holders in accordance with the schedule of the Deed for the purposes of obtaining an Extraordinary Resolution of the Holders to sanction:- (i) (ii) the termination of the Fund, whereupon the existing Guarantee will be terminated; or the continuation of the Fund without a Guarantee, in which case the Fund must not:- (a) (b) use the word guarantee as part of its name, or a name that suggests that it is a guaranteed fund or the equivalent of a guaranteed fund; and hold itself out as a guaranteed fund in any communication (whether in the form of marketing material or otherwise) relating to the Fund The Deed requires that the Guarantor fulfils one of the following criteria:- (i) in the case of a Guarantor being a financial institution (other than a Singapore-incorporated bank that is approved under the CPF Investment Scheme to accept fixed deposits), the Guarantor must have an individual rating of at least B by Fitch Inc, an issuer 25

27 rating of at least B by Thomson BankWatch, a financial strength rating of at least B by Moody s or a long-term issuer credit rating of at least AA- by Standard and Poor s; (ii) in the case of a Guarantor being a Singaporeincorporated bank which is approved under the CPF Investment Scheme to accept fixed deposits, no rating is required for the Guarantor; or (iii) in the case of a Guarantor not being a financial institution, the Guarantor must have received a longterm credit rating of AAA by Fitch Inc, AAA by Thomson BankWatch, AAA by Standard and Poor s or Aaa by Moody s The Trustee shall within 6 months, or sooner if the Trustee considers it is in the best interest of Holders, enter into a new deed of guarantee with a new guarantor that meets the rating criteria in paragraph 43.6 above in the event that:- (i) (ii) in the case of a Guarantor being a financial institution (other than a Singapore-incorporated bank that is approved under the CPF Investment Scheme to accept fixed deposits), the Guarantor s rating is withdrawn or if the Guarantor is downgraded to a rating of C or below by Fitch IBCA, Thomson BankWatch or Moody s or BBB- or below by Standard and Poor s; in the case of a Guarantor being a Singaporeincorporated bank which is approved under the CPF Investment Scheme to accept fixed deposits), such approval for the Guarantor is withdrawn; or (iii) in the case of a Guarantor not being a financial institution, the Guarantor s rating is withdrawn or if the guarantor is downgraded to a rating of BBB- or below by Fitch IBCA, Thomson BankWatch, Standard and Poor s, or Baa3 or below by Moody s; Provided That the new guarantee must, in the opinion of the Trustee, provide the same level of guarantee to the Holders as the original Guarantee and Provided Further That if the Trustee is of the opinion that the cost of obtaining a new guarantee (which provides at least the same level of guarantee as the original Guarantee) significantly outweighs the benefit of such guarantee to existing Holders, the Trustee may invoke the provisions of paragraph

28 For the avoidance of doubt, no action is required to be taken by the Trustee or the Managers in the following events:- (a) (b) in the case of a Guarantor being a financial institution (other than a Singapore-incorporated bank that is approved under the CPF Investment Scheme to accept fixed deposits), the rating of the Guarantor is downgraded but is still above C by Fitch IBCA, above C by Thomson BankWatch, above C by Moody s or above BBB- by Standard and Poor s; and in the case of a Guarantor not being a financial institution, the rating of the Guarantor is downgraded but is still above BBB- by Fitch IBCA, Thomson BankWatch, Standard and Poor s or Duff and Phelps, or above Baa3 by Moody s The Managers shall inform the Holders in writing at least 30 days before the relevant Maturity Date, of the indicative guaranteed redemption value of their Units and the termination of the Fund The Trustee and the Guarantor shall be entitled by a supplemental deed of guarantee to modify, alter or add to the provisions of the Guarantee in such manner and to such extent as they may consider expedient for any purpose Provided That unless the Trustee shall certify in writing that in its opinion such modification, alteration or addition is not material, no such modification, alteration or addition shall be made without the sanction of an ordinary resolution of a meeting of Holders of the Fund and Provided Also That no such modification, alteration or addition shall be permitted if, in the opinion of the Trustee, such variation is detrimental to the interests of existing Holders. XVIII TERMINATION OF THE FUND 44. The Funds will be terminated by the Managers and the Trustee in accordance with the terms and provisions of the Deed on their respective Maturity Dates. Thereafter, all Units will be compulsorily redeemed and Holders will be paid the Net Asset Value for each Unit as at the Maturity Date, or the amount guaranteed by the Guarantor, whichever is higher. 27