Old Mutual Dublin Funds plc

Transcription

1 If you are in doubt about the contents of this Prospectus, you should consult your stockbroker, accountant, solicitor or other independent financial adviser. Old Mutual Dublin Funds plc UK Select Smaller Companies Fund UK Dynamic Equity Fund Global Equity Absolute Return Fund Old Mutual Global Bond Fund Investment Manager Old Mutual Asset Managers (UK) Limited The Company is an umbrella type open-ended investment company with variable capital and segregated liability between its sub-funds, incorporated with limited liability under the laws of Ireland with registered number The Company is authorised in Ireland as an investment company pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003 (S.I. No. 211 of 2003), as amended, and any regulations made thereunder. Dated 9 November 2009 Q:\Commer\Prospectus2\O\Old Mutual Dublin Funds November 2009 DF1.doc

2 PRELIMINARY The Company is an open-ended umbrella investment company with variable capital and segregated liability between its sub-funds, incorporated in Ireland with limited liability and authorised by the Irish Financial Services Regulatory Authority (the Financial Regulator ) pursuant to the provisions of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003 (S.I. No. 211 of 2003), as amended, and any regulations made thereunder. Accordingly, the Company is supervised by the Financial Regulator. The directors of Old Mutual Dublin Funds Plc (the "Company"), whose names appear on pages 32 and 33 (the "Directors"), accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of the information. Distribution of this Prospectus is not authorised after the publication of the latest half-yearly report of the Company unless it is accompanied by a copy of that report, and is not authorised after the publication of the first annual report of the Company unless it is accompanied by a copy of the latest annual report and any subsequent half-yearly report. Such reports will form part of this Prospectus. All liabilities, irrespective of whatever Sub-Fund they are attributed to, shall (in the event of a winding up of the Company or a repurchase of all of the Shares of the Sub-Fund), unless otherwise agreed upon with the creditors, be binding on the Company as a whole and, accordingly, liabilities of one Sub-Fund may impact on and be paid out of one or more other Sub-Funds. No person is authorised to issue any advertisement or to give any information or to make any representations in connection with the offering, issue or sale of Shares, other than those contained in this Prospectus and, if issued, given or made, such advertisement, information or representations must not be relied upon as having been authorised by the Company. Neither the delivery of this Prospectus nor the offer, issue or sale of any of the Shares shall under any circumstances create any implication or constitute a representation that the information given in this Prospectus is correct as of any time subsequent to the date hereof. This Prospectus does not constitute, and may not be used for the purposes of, 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. The distribution of this Prospectus and the offer, issue or sale of Shares in certain jurisdictions may be restricted and, accordingly, persons into whose possession this Prospectus comes are required to inform themselves about, and to observe, such restrictions. Prospective investors should inform themselves as to (a) the legal requirements within their own jurisdictions for the purchase or holding of Shares, (b) any foreign exchange restrictions which may affect them, and (c) the income and other tax consequences which may apply in their own jurisdictions relevant to the purchase, holding or disposal of Shares. 2

3 Authorisation of the Company and approval of its Sub-Funds by the Financial Regulator is not an endorsement or guarantee of the Company or of its Sub-Funds by the Financial Regulator nor is the Financial Regulator responsible for the contents of this Prospectus. The authorisation of the Company and of its Sub-Funds by the Financial Regulator shall not constitute a warranty as to the performance of the Company or of its Sub-Funds and the Financial Regulator shall not be liable for the performance or default of the Company or of its Sub-Funds. The Company qualifies as an undertaking for collective investment in transferable securities (a UCITS). The Directors may apply for authorisation for distribution of the Sub-Funds in such countries within the European Union as they deem appropriate. The Company is a collective investment scheme pursuant to the provisions of section 235 of the Financial Services and Markets Act 2000 (the 2000 Act ). With effect from 25 June, 2004 the Company became a recognised scheme under the 2000 Act, and the Prospectus will therefore be distributed in the United Kingdom by or on behalf of the Company and may be considered approved by Old Mutual Asset Managers (UK) Limited, acting as UK Representative for the Company in the United Kingdom, which is authorised and regulated by the FSA, for the purposes of Sections 21 and 264 of the 2000 Act. As a recognised scheme, a United Kingdom investor who enters into an investment agreement to acquire Shares in the Company in response to the Prospectus will not have the right to cancel the agreement under any cancellation rules made by the FSA. The agreement will be binding upon acceptance of the application by the Company. In addition most, if not all, of the protections provided by the United Kingdom regulatory system will not apply. The rights of Shareholders in the Company will not be protected by the investors compensation scheme established in the United Kingdom. An investor may obtain prices from the Company's UK Representative, Old Mutual Asset Managers (UK) Limited. Any investor wishing to make a complaint or serve notice on the Company may do so directly to the Company c/o its UK Representative, Old Mutual Asset Managers (UK) Limited, at 2 Lambeth Hill, London EC4P 4WR. All documents related to the Company including the Prospectus, Memorandum and Articles of Association, Material Contracts and latest annual and half year reports may be inspected free of charge during normal business hours at the offices of Old Mutual Asset Managers (UK) Limited. None of the Shares have been or will be registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and (except in a transaction which is exempt from registration under the 1933 Act) none of the Shares may be offered or sold, directly or indirectly, in the United States or to any U.S. person. In addition, the Company has not been and will not be registered under the Investment Company Act of 1940, as amended, (the "1940 Act"). Based on interpretations of the 1940 Act by the staff of the United States Securities and Exchange Commission relating to foreign investment companies, if the Company has more than 100 beneficial owners who are U.S. Persons (as defined herein), it may become subject to the 1940 Act. The Directors will not knowingly permit the number of Shareholders who are U.S. Persons to exceed 50. All holders of Shares are entitled to the benefit of, are bound by and are deemed to have notice of the Memorandum and Articles of Association of the Company, copies of which are available as mentioned herein. 3

4 Statements made in this Prospectus are based on the law and practice currently in force in Ireland and are subject to changes in that law. The difference at any one time between the sale and repurchase price of Shares means that investment should be viewed as medium to long term. Attention is drawn to the section headed "Risk Warnings". 4

5 Old Mutual Dublin Funds plc CONTENTS Page DIRECTORS AND ADVISERS... 7 INTERPRETATION... 8 PART I PRINCIPAL FEATURES INVESTMENT OBJECTIVE AND POLICIES INVESTMENT RESTRICTIONS BORROWING AND LENDING POWERS RISK WARNINGS MANAGEMENT AND ADMINISTRATION PORTFOLIO TRANSACTIONS AND SHARE DEALING CONFLICTS OF INTEREST CHARGES AND EXPENSES DIVIDENDS REINVESTMENT OF DIVIDENDS TAXATION SHARES VALUATION OF ASSETS MEETINGS AND REPORTS TO SHAREHOLDERS TERMINATION OF SUB-FUNDS GENERAL INFORMATION PART II 5

6 SUPPLEMENT I UK SELECT SMALLER COMPANIES FUND SUPPLEMENT II UK DYNAMIC EQUITY FUND SUPPLEMENT III GLOBAL EQUITY ABSOLUTE RETURN FUND SUPPLEMENT IV OLD MUTUAL GLOBAL BOND FUND APPENDIX I RECOGNISED EXCHANGES

7 Old Mutual Dublin Funds plc Directors and Advisers Registered Office of the Company 1 North Wall Quay Dublin 1 Ireland Directors of the Company Geoffrey McEnery Gerald Moloney Matthew Nagele Paul Nathan Mark Thorne Investment Manager and UK Representative Old Mutual Asset Managers (UK) Limited 2 Lambeth Hill London EC4P 4WR United Kingdom Company Secretary Tudor Trust Limited 332 Sir John Rogerson s Quay Dublin 2 Ireland Custodian Citibank International Plc, Ireland Branch 1 North Wall Quay Dublin 1 Ireland Administrator, Registrar and Transfer Agent Citi Fund Services (Ireland) Limited 1 North Wall Quay Dublin 1 Ireland Legal Advisers Dillon Eustace 33 Sir John Rogerson s Quay Dublin 2 Ireland Registered Auditors KPMG Chartered Accountants and Registered Auditors Stokes Place St Stephen's Green Dublin 2 Ireland 7

8 INTERPRETATION In this Prospectus:- "the Company" means Old Mutual Dublin Funds plc; all references to a specific time of day are to Irish time; all references to "dollars" or "US$" are to the United States dollar, the currency of the United States of America; all references to "Euro" or " " are to the lawful unit of single currency in certain states of the European Union; all references to "GBP" or "STG " are to Pounds Sterling, the currency of the United Kingdom; all references to CHF are to Swiss Franc, the currency of Switzerland; all references to SEK are to Swedish Kronor, the currency of Sweden; all references to ZAR are to South African Rand, the currency of South Africa; "Acts" means the Irish Companies Acts ; "Administrator" means Citi Fund Services (Ireland) Limited; AIMA means the Alternative Investment Management Association; "Articles" means the Articles of Association of the Company; "Associate" means in relation to a corporation a holding company or a subsidiary of such corporation or a subsidiary of the holding company of such corporation and in relation to an individual or firm or other unincorporated body, means any corporation directly or indirectly controlled by such person; "Business Day" in relation to each Sub-Fund, has the meaning assigned to it in the relevant Supplement in Part II, or such other Business Day(s) as the Directors may from time to time determine and notify to Shareholders; "Class" means a class of Share within a Sub-Fund; "Custodian" means Citibank International Plc, Ireland Branch; "Dealing Day", in relation to each Sub-Fund, has the meaning assigned to it in the relevant Supplement in Part II, or such other Business Day(s) as the Directors may from time to time determine and notify to Shareholders; 8

9 Dealing Deadline, in relation to each Sub-Fund, such time on any Dealing Day as shall be specified in the relevant Supplement in Part II; "Dilution Levy" means such levy as may, at the discretion of the Directors, be imposed on subscriptions for Shares or redemptions of Shares in the Company for the cost of acquiring additional investments or disposing of investments as a result of subscriptions for Shares or redemptions of Shares in the Company; "Directors" means the board of directors of the Company; "EEA" means the countries for the time being comprising the European Economic Area (being at the date of this Prospectus, European Union Member States, Norway, Iceland, Liechtenstein) and EEA Member States mean the Member States of the EEA; "EU" means the European Union; "Exempt Irish Investor" means any of the following persons: - a pension scheme which is an exempt approved scheme within the meaning of Section 774 of the Taxes Act or a retirement annuity contract or a trust scheme to which Section 784 or 785 of the Taxes Act applies; - a company carrying on life business within the meaning of Section 706 of the Taxes Act; - an investment undertaking within the meaning of Section 739B(1) of the Taxes Act; - a special investment scheme within the meaning of Section 737 of the Taxes Act; - a charity being a person referred to in Section 739D(6)(f)(i) of the Taxes Act; - a unit trust to which Section 731(5)(a) of the Taxes Act applies; - a specified company within the meaning of Section 734(1) of the Taxes Act; - a qualifying fund manager within the meaning of Section 784A(1)(a) of the Taxes Act where the Shares held are assets of an approved retirement fund or an approved minimum retirement fund; - a qualifying savings manager within the meaning of Section 848B of the Taxes Act in respect of Shares which are assets of a special savings incentive account within the meaning of Section 848C of the Taxes Act; - a personal retirement savings account ( PRSA ) administrator acting on behalf of a person who is entitled to exemption from income tax and capital gains tax by virtue of Section 787I of the Taxes Act and the Shares are assets of a PRSA; - a credit union within the meaning of Section 2 of the Credit Union Act, 1997; - the National Pensions Reserve Fund Commission; - a company which is within the charge to corporation tax in accordance with Section 110(2) of the Taxes Act in respect of payments made to it by the Company; or - any other Irish Resident or persons who are Ordinarily Resident in Ireland who may be permitted to own Shares under taxation legislation or by written practice or concession of the Revenue Commissioners without giving rise to a charge to tax in the Company or jeopardising tax exemptions associated with the Company giving rise to a charge to tax in the Company; provided that they have correctly completed the Relevant Declaration. "Financial Regulator" means the Irish Financial Services Regulatory Authority; 9

10 "Investment Manager" means Old Mutual Asset Managers (UK) Limited or any of its Associates who may be appointed to act as investment manager or sub-investment manager in accordance with the requirements of the Financial Regulator; "Intermediary" means a person who:- carries on a business which consists of, or includes, the receipt of payments from an investment undertaking on behalf of other persons; or holds Shares in an investment undertaking on behalf of other persons. "Ireland" means the Republic of Ireland; "IOSCO" means the International Organisation of Securities Commissions; Irish Resident - in the case of an individual, means an individual who is resident in Ireland for tax purposes. - in the case of a trust, means a trust that is resident in Ireland for tax purposes. - in the case of a company, means a company that is resident in Ireland for tax purposes. An individual will be regarded as being resident in Ireland for a twelve month tax year if he/she is present in Ireland: (1) for a period of at least 183 days in that twelve month tax year; or (2) for a period of at least 280 days in any two consecutive tax years, provided that the individual is resident in Ireland for at least 31 days in each twelve month period. In determining days present in Ireland, an individual is deemed to be present if he/she is in Ireland at any time during the day. This new test became effective from 1 January 2009 (previously in determining days present in Ireland an individual was deemed to be present if he/she was in Ireland at the end of the day (midnight). A trust will generally be Irish resident where the trustee is resident in Ireland or a majority of the trustees (if more than one) are resident in Ireland. A company which has its central management and control in Ireland is resident in Ireland irrespective of where it is incorporated. A company which does not have its central management and control in Ireland but which is incorporated in Ireland is resident in Ireland except where:- - the company or a related company carries on a trade in Ireland, and either the company is ultimately controlled by persons resident in EU Member States or in countries with which Ireland has a double taxation treaty, or the company or a related company are quoted companies on a recognised Stock Exchange in the EU or in a treaty country under a double taxation treaty between Ireland and that country; or - the company is regarded as not resident in Ireland under a double taxation treaty between Ireland and another country. 10

11 It should be noted that the determination of a company s residence for tax purposes can be complex in certain cases and potential investors are referred to the specific legislative provisions that are contained in Section 23A of the Taxes Act. "Management Shares" means Management Shares in the capital of the Company issued in accordance with the Articles and with the rights provided for under the Articles; "Member State" means a member state of the EU; "Money Market Investments" means investments normally dealt in the money market which: are liquid i.e. money market instruments / transferable securities are regarded as liquid where they can be repurchased, redeemed or sold at limited cost and at any given time, in terms of low fees and narrow bid / offer spread with very little settlement delay; and have a value which can be accurately determined at any time. "Net Asset Value" means the net asset value of a Sub-Fund or the net asset value of a Class calculated as referred to herein; Net Asset Value per Share means the Net Asset Value of a Sub-Fund divided by the number of Shares in issue in that Sub-Fund or the Net Asset Value attributable to a Class rounded to such number of decimal places as the Directors may determine. "OECD" means the Organisation for Economic Co-operation and Development whose members are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States; "Ordinarily Resident in the Republic of Ireland" - in the case of an individual, means an individual who is ordinarily resident in Ireland for tax purposes; or - in the case of a trust, means a trust that is ordinarily resident in Ireland for tax purposes. An individual will be regarded as ordinarily resident for a particular tax year if he/she has been Irish Resident for the three previous consecutive tax years (i.e. he/she becomes ordinarily resident with effect from the commencement of the fourth tax year). An individual will remain ordinarily resident in Ireland until he/she has been non-irish Resident for three consecutive tax years. Thus, an individual who is resident and ordinarily resident in Ireland in the tax year 1 January 2009 to 31 December 2009 and departs from Ireland in that tax year will remain ordinarily resident up to the end of the tax year 1 January 2012 to 31 December "Recognised Clearing System" means Bank One NA, Depositary and Clearing Centre, Clearstream Banking AG, Clearstream Banking SA, CREST, Depositary Trust Company of New York, Euroclear, National Securities Clearing System, Sicovam SA, SIS Sega Intersettle AG or any other system for clearing units which is designated for the purposes of Chapter 1A in Part 27 of the Taxes Act, by the Irish Revenue Commissioners as a recognised clearing system; 11

12 "Recognised Exchange" means in relation to any investment, any stock exchange, over-the-counter market or other securities market as referred to in the Regulations and contained in Appendix I; "Relevant Period" means a period of 8 years beginning with the acquisition of a Share by a Shareholder and each subsequent period of 8 years beginning immediately after the preceding relevant period; "Repurchase Charge" means a charge of up to 3 per cent. of the Net Asset Value of the Shares which, in the case of repurchases of Shares, may at the discretion of the Directors be levied against each repurchased Share as set out in the relevant Supplement for each Sub-Fund. The Repurchase Charge shall be for the account of the Investment Manager who may waive such charge or differentiate between applicants as to the amount of such charge subject to the maximum charge of 3 per cent. of the Net Asset Value per Unit; "Regulations" the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (Statutory Instrument No. 211 of 2003) as amended and any notices or regulations that may be issued by the Financial Regulator pursuant thereto for the time being in force; "Relevant Declaration" means the declaration relevant to the shareholder as set out in Schedule 2B of the Taxes Act; "Sales Charge" such fee as may, at the discretion of the Directors be added to the issue price or Net Asset Value per Share as appropriate as set out in the relevant Supplement for each Sub-Fund. The Sales Charge shall be for the account of the Investment Manager who may waive such charge or differentiate between applicants as to the amount of such charge subject to the maximum charge of 7 per cent. of the Net Asset Value per Share; "Shares" means participating Shares of no par value in the capital of the Company, which may be designated as participating shares in one or more Sub-Funds and which may also be divided into different Classes within each Sub-Fund; "Shareholder" means any person registered in the Company s register of shareholders as a holder of Shares; "Supplement" means any supplement to this Prospectus for the time being in issue and contained in Part II hereof; "Sub-Fund" means a fund of assets which is invested in accordance with the investment objectives applicable to such Sub-Fund, established by the Directors from time to time with the prior approval of the Financial Regulator. Taxes Act means the Taxes Consolidation Act, 1997 (of Ireland) as amended; "Transferable Securities" means shares in companies or other securities equivalent to shares in companies, bonds and other forms of securitised debt, any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange, excluding the techniques or instruments referred to in Section 48A of the Regulations; 12

13 "United States" means United States of America (including the States and the District of Columbia) its territories, possessions and all other areas subject to its jurisdiction; "US Person" has, except where otherwise stated, the meaning assigned to it in Regulation S under the 1933 Act and includes: (a) any natural person resident in the United States; (b) any partnership or corporation organised or incorporated under the laws of the United States; (c) any estate of which any executor or administrator is a US Person; (d) any trust of which any trustee is a US Person; (e) any agency or branch of a non-us entity located in the United States; (f) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a US Person; (g) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organised, incorporated, or, if an individual, resident in the United States; or (h) any partnership or corporation if: (i) organised or incorporated under the laws of any non-us jurisdiction: and (ii) formed by a US Person principally for the purpose of investing in securities not registered under the 1933 Act, unless it is organised or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the 1933 Act) who are not natural persons, estates or trusts. Notwithstanding the foregoing "US Person" does not include: (a) any discretionary account or similar account (other than estate or trust) held for the benefit or account of a non-us Person by a dealer or other professional fiduciary organised, incorporated, or, if an individual, resident in the United States; (b) any estate of which any professional fiduciary acting as executor or administrator is a US Person if (i) an executor or administrator of the estate who is not a US Person has sole or shared investment discretion with respect to the assets of the estate and (ii) the estate is governed by non-us law; (c) any trust of which any professional fiduciary acting as trustee is a US Person if a trustee who is not a US Person has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a US Person; (d) an employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country; (e) any agency or branch of a US Person located outside the United States if (i) the agency of branch operates for valid business reasons and (ii) the agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located; or (f) the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter- American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organisations, their agencies, affiliates and pension plans. "Valuation Point" means the point in time by reference to which the value of the net assets of a Sub-Fund is taken, as shall be set out in the relevant Supplement for each Sub-Fund. VaR means Value at Risk, an advanced risk measurement methodology used to measure leverage and risk associated with the use of derivatives. "VAT" means value added tax. 13

14 PART I PRINCIPAL FEATURES The Company is an investment company with variable capital and segregated liability between its subfunds, incorporated on 12 th December, 2001 and authorised in Ireland by the Financial Regulator pursuant to the Regulations. This authorisation does not, however, constitute a warranty as to the performance of the Company and the Financial Regulator shall not be liable for the performance or default of the Company. The minimum investment amount and subsequent investment amount in each Sub-Fund or Class, as the case may be shall be set out in the relevant Supplement for each Sub-Fund. The minimum investment amount for initial and subsequent subscriptions may be waived at the discretion of the Directors. Dealing Shares can normally be purchased, repurchased or switched on application to the Company. Investors should be aware that Shares can only be repurchased once settlement proceeds and registration details as specified under the section "Applications for Shares" below have been received as accepted by the Company. Sub-Funds The Company is an umbrella type structure in which different Sub-Funds may be issued from time to time with the prior approval of the Financial Regulator and, once additional Sub-Funds are established, Shareholders will be entitled to switch Shares of one Sub-Fund for Shares of another Sub-Fund. Prior to the issue of any Shares, the Directors will designate the Sub-Fund in relation to which such Shares shall be designated. A separate fund is maintained for each Sub-Fund and is invested in accordance with the investment objectives applicable to such Sub-Fund. Initially, Shares are being made available in respect of the following Sub-Funds with the following base currencies: UK Select Smaller Companies Fund UK Dynamic Equity Fund Global Equity Absolute Return Fund Old Mutual Global Bond Fund Sterling Sterling US Dollars US Dollars Other Sub-Funds may be introduced by the Company from time to time, with the prior approval of the Financial Regulator. The Directors shall have the power to change the name of any Sub-Fund from time to time in accordance with the requirements of the Financial Regulator. A separate Supplement relating to any new Sub-Fund will be issued by the Directors at the time of creation of any other Sub-Funds. Separate Classes of Shares may be issued from time to time in a Sub-Fund and the creation of further Share Classes must be in accordance with the requirements of the Financial Regulator. 14

15 INVESTMENT OBJECTIVE AND POLICIES The investment objective and policies for each Sub-Fund will be formulated by the Directors at the time of the creation of the Sub-Fund. The assets of each Sub-Fund will be invested separately in accordance with the investment objective, policies and guidelines of that Sub-Fund which are set out in a Supplement to this Prospectus. Supplements may be added to or removed from this Prospectus from time to time as Sub-Funds are approved or as approval is revoked, as the case may be. Any changes in the investment objective and any material changes in the investment policy of a Sub-Fund will be subject to approval of the Shareholders by way of an ordinary resolution. Shareholders will be given reasonable notice prior to the implementation of any change to the investment objective and/or policy to enable them to redeem their Shares prior to the implementation of such a change. Investors should be aware that the performance of certain Sub-Funds may be measured against a specified index or benchmark and in this regard, investors are directed towards the relevant Supplement which will refer to any relevant performance measurement criteria. The Company may at any time change that reference index where, for reasons outside its control, that index has been replaced, or another index or benchmark may reasonably be considered by the Company to have become the appropriate standard for the relevant exposure. Such a change would represent a change in policy of the relevant Sub-Fund and Shareholders will be advised of any change in a reference index or benchmark if (i) made by the Directors, in advance of such a change and (ii) if made by the index concerned, in the annual or half-yearly report of the Sub-Fund issued subsequent to such change. Shareholders are advised that any change in the index as outlined will be disclosed in the periodic reports of the Sub-Fund(s) as appropriate. Pending investment of the proceeds of a placing or offer of Shares or where market or other factors so warrant, a Sub-Fund's assets may be invested in cash deposits, treasury bills, or short-term money market instruments as understood by reference to the UCITS Regulations and in money market funds (subject to an aggregate limit per Sub-Fund of 10% investment in other collective investment schemes) ( Liquid Assets ). The Investment Manager is also generally permitted to use financial derivative instruments to more effectively manage the level of investment risk and to facilitate efficient investment and management of cash and liquidity in each Sub-Fund, as set out in more detail under Investment in Derivatives below. The Investment Manager may also use financial derivative instruments for investment purposes as will be indicated in the relevant Supplement for a Sub-Fund. Using derivatives in this way may increase the degree of leverage in a Sub-Fund relative to the market, or by taking short positions, reduce a Sub-Fund s overall exposure to particular markets, individual securities or specific market factors, such as currency and interest rates. Where permitted by the investment objective and policy for a particular Sub-Fund, and by the investment strategy as set out in the relevant Supplements, the Investment Manager may also use short positions in derivatives to create negative exposures to certain securities or market factors, so as to benefit from falling prices, without the Sub-Fund having any corresponding or related long position. In using derivatives, the Investment Manager s intention will be to improve the level of return generated from the level of investment risk incurred, while maintaining consistency with each Sub-Fund s investment objective. The Investment Manager s use of derivatives will however be restricted by the need to provide 15

16 cover for each position taken in derivatives, and by the limits on leverage and exposure set out in the relevant Supplement for a Sub-Fund, and will be monitored by the Investment Manager. Where derivatives are used in respect of a Sub-Fund, the Directors will endeavor to ensure that the liabilities of each Sub-Fund are limited to the respective Sub-Fund. Efficient Portfolio Management The Company may employ techniques and instruments relating to transferable securities such as securities lending, reverse repurchase transactions and derivatives for the purposes of the efficient portfolio management and for protection against exchange rate risks under the conditions and within the limits laid down by the Financial Regulator. Any reference in this Prospectus or in the Supplements to efficient portfolio management shall mean a reference to techniques and instruments, including the use of derivatives, for one or more of the specific aims: (1) for the reduction of risk; (2) for the reduction of costs with no increase or a minimal increase in risk; and (3) use of instruments for the generation of additional capital or income with no increase, or a minimal increase in risk. Investment in Derivatives The Investment Manager may use futures, forwards (including forward rate agreements), options (both writing and purchasing), swaps (including credit default swaps) and contracts for difference, including both exchange traded and over the counter derivative instruments for any Sub-Fund. The assets or indices underlying such instruments may consist of any one or more of the following: transferable securities, money market instruments, other collective investment schemes, financial indices, interest and foreign exchange rates and currencies. The Investment Manager operates a risk management process on behalf of the Company in relation to its use of derivatives which allows it to accurately measure, monitor and manage the various risks associated with derivatives and which is intended to ensure that each Sub-Fund s derivatives exposure remains within the limits described below. This risk management process will also take into account any exposure created through derivatives embedded in transferable securities which the Investment Manager may acquire for a Sub-Fund in accordance with its investment objective and policies. The risk management process is described in a statement, a copy of which has been filed with the Financial Regulator, and which will be updated from time to time to include any additional financial derivative instruments which the Investment Manager proposes to employ on behalf of the Sub-Funds. Until such time as the risk management statement has been updated, however, the Investment Manager will not use any financial derivative instrument which is not for the time being included in the risk management statement. Information on financial derivatives used for each Sub-Fund will be included in the Company s semi-annual and annual reports and accounts. The Company will also provide supplementary information to Shareholders on request on the risk management process employed by the Investment Manager on the Company s behalf, including details of the quantitative limits applied and information on the risk and yield 16

17 characteristics of the main categories of investments held on behalf of each Sub-Fund. Financial derivative instruments may be used by the Investment Manager either for investment or hedging purposes. Examples of the way in which they may be used, which should not be taken as being exhaustive, or mutually exclusive, include: Hedging Futures, forwards, swaps (including credit default swaps), options and contracts for difference may be used to hedge against downward movements in the value of a Sub-Fund s portfolio, either by reference to specific securities or markets to which the Sub-Fund may be exposed. The Investment Manager may also take out hedges against changes in interest or currency rates or credit spreads which would have an impact on a Sub-Fund. Forward foreign exchange contracts may also be used more specifically to hedge the value of certain classes of Shares in the Company s Sub-Funds against changes in the exchange rate between the currency of denomination of the class of Shares and the base currency of the Sub-Fund. Hedged classes will be identified in the relevant Supplement for each Sub-Fund. Tactical asset allocation Futures, forwards, options, swaps (including credit default swaps) and contracts for difference may be used to gain or reduce a Sub-Fund s exposure to credit spreads or a particular security or market on a short or medium term basis, either in advance of a longer term allocation or reappraisal of the Sub-Fund s commitment to the asset or market in question, or purely on a temporary basis where it is more efficient to use derivatives for this purpose. Taking views on the pricing or likely direction of markets Each Sub-Fund benefits from unhedged positive movements in market prices and upwards revaluations of assets through the securities positions and long exposures in its portfolio. The Investment Manager may also use futures, forwards, options, swaps (including credit default swaps) and contracts for difference to increase a Sub-Fund s ability to benefit from long positions by employing leverage or to position a Sub- Fund to benefit from anticipated corrections in the overpricing of securities or of market risks or downwards movements in market prices by taking short or negative positions in relation to particular securities, markets or market factors. Revenue generation The Investment Manager may generate additional revenue or subsidise the cost of options purchased for a Sub-Fund by writing put options and call options on securities held in the Sub-Fund. Currency management Currency forwards, futures, options and swaps may be used to actively implement the Investment Manager s views on likely currency movements. 17

18 Cash management and efficient investing The Investment Manager may also use futures, forwards, options, swaps (including credit default swaps) and contracts for difference as an alternative to acquiring the underlying or the related securities, alone or in conjunction with the securities, in any case where such investment may be accomplished in a more efficient or less costly way through the use of derivatives. Such instruments may also be used to maintain or reduce exposure to the market while managing the cashflows from subscriptions and redemptions into and out of each Sub-Fund more efficiently than by buying and selling transferable securities. INVESTMENT RESTRICTIONS The principal investment restrictions applying to each of the Sub-Funds of the Company are set out below. These are, however, subject to the qualifications and exemptions contained in the Regulations and in the guidelines issued by the Financial Regulator. Any additional investment restrictions for each other Sub- Fund will be formulated by the Directors at the time of the creation of such Sub-Fund. Legal or management control of underlying investments will not be taken. The Directors may from time to time impose such further investment restrictions as shall be compatible with or in the interest of the Shareholders, in order to comply with the laws and regulations of the countries where Shareholders of the Company are placed. References to risk exposure or exposure shall be as set out in UCITS Notice Permitted Investments Investments of a UCITS are confined to: 1.1 Transferable Securities and Money Market Instruments which are either admitted to official listing on a stock exchange in a Member State or non-member State or which are dealt on a market which is regulated, operates regularly, is recognised and open to the public in a Member State or non-member State. 1.2 Recently issued Transferable Securities which will be admitted to official listing on a stock exchange or other market (as described above) within a year. 1.3 Money Market Instruments, as defined in the UCITS Notices, other than those dealt on a regulated market. 1.4 Shares of UCITS. 1.5 Shares of non-ucits as set out in the Financial Regulator s Guidance Note 2/ Deposits with credit institutions as prescribed in the UCITS Notices. 1.7 Financial derivative instruments as prescribed in the UCITS Notices. 18

19 2 Investment Restrictions 2.1 A UCITS may invest no more than 10% of net assets in Transferable Securities and Money Market Instruments other than those referred to in paragraph A UCITS may invest no more than 10% of net assets in recently issued Transferable Securities which will be admitted to official listing on a stock exchange or other market (as described in paragraph 1.1) within a year. This restriction will not apply in relation to investment by the UCITS in certain US securities known as Rule 144A securities provided that: the securities are issued with an undertaking to register with the US Securities and Exchanges Commission within one year of issue; and the securities are not illiquid securities i.e. they may be realised by the UCITS within seven days at the price, or approximately at the price, at which they are valued by the UCITS. 2.3 A UCITS may invest no more than 10% of net assets in Transferable Securities or Money Market Instruments issued by the same body provided that the total value of Transferable Securities and Money Market Instruments held in the issuing bodies in each of which it invests more than 5% does not exceed 40%. 2.4 The limit of 10% (as described in paragraph 2.3) is raised to 35% if the Transferable Securities or Money Market Instruments are issued or guaranteed by a Member State or its local authorities or by a non-member State or public international body of which one or more Member States are members. 2.5 The Transferable Securities and Money Market Instruments referred to in paragraph 2.4 shall not be taken into account for the purpose of applying the limit of 40% referred to in paragraph A UCITS may not invest more than 20% of net assets in deposits made with the same credit institution. Deposits with any one credit institution, other than:- credit institutions authorised in an EEA Member State; or credit institutions authorised within a signatory state (other than an EEA Member State) to the Basle Capital Convergence Agreement of July 1988, (Switzerland, Canada, Japan, United States); or credit institutions authorised within Jersey, Guernsey, the Isle of Man, Australia or New Zealand; held as ancillary liquidity, must not exceed 10% of net assets. This limit may be raised to 20% in the case of deposits made with the Custodian. 19

20 2.7 The risk exposure of a UCITS to a counterparty to an over-the-counter ( OTC ) derivative may not exceed 5% of net assets. This limit is raised to 10% in the case of credit institutions authorised in the EEA or credit institutions authorised within a signatory state (other than an EEA Member State) to the Basle Capital Convergence Agreement of July 1988 or credit institutions authorised within Jersey, Guernsey, the Isle of Man, Australia or New Zealand. 2.8 Notwithstanding paragraphs 2.3, 2.6 and 2.7 above, a combination of two or more of the following issued by, or made or undertaken with, the same body may not exceed 20% of net assets: investments in Transferable Securities or Money Market Instruments; deposits, and/or risk exposures arising from OTC derivatives transactions. 2.9 The limits referred to in paragraphs 2.3, 2.4, 2.6, 2.7 and 2.8 above may not be combined, so that exposure to a single body shall not exceed 35% of net assets Group companies are regarded as a single issuer for the purposes of paragraphs 2.3, 2.4, 2.6, 2.7 and 2.8. However, a limit of 20% of net assets may be applied to investment in Transferable Securities and Money Market Instruments within the same group UCITS may invest up to 100% of net assets in different Transferable Securities and Money Market Instruments issued or guaranteed by any Member State, its local authorities, non-member States or public international bodies of which one or more Member States are members. The individual issuers must be listed in the prospectus and may be drawn from the following list: OECD Governments (provided the relevant issues are investment grade), The European Investment Bank, The European Bank for Reconstruction and Development, The International Finance Corporation, The International Monetary Fund, Euratom, The Asian Development Bank, The European Central Bank, The Council of Europe, Eurofima, The African Development Bank, The International Bank for Reconstruction and Development (The World Bank), The Inter American Development Bank, European Union, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Government National Mortgage Association (Ginnie Mae), Student Loan Marketing Association (Sallie Mae), Federal Home Loan Bank, Federal Farm Credit Bank, Tennessee Valley Authority. The UCITS must hold securities from at least 6 different issues, with securities from any one issue not exceeding 30% of net assets. 20

21 3 Investment in Collective Investment Schemes ( CIS ) Save where expressly provided otherwise in a Supplement for a Sub-Fund, no more that 10% in aggregate of the net assets of a Sub-Fund may be invested in other open-ended collective investment schemes. 3.1 A UCITS may not invest more than 10% of net assets in any one CIS. 3.2 Investment in non-ucits may not, in aggregate, exceed 30% of net assets. 3.3 When a UCITS invests in the units of other CIS that are managed, directly or by delegation, by the UCITS management company or by any other company with which the UCITS management company is linked by common management or control, or by a substantial direct or indirect holding, that management company or other company may not charge subscription, conversion or redemption fees on account of the UCITS investment in the units of such other CIS. 3.4 Where a commission (including a rebated commission) is received by the UCITS manager or investment manager by virtue of an investment in the units of another CIS, this commission must be paid into the property of the UCITS. 4 Index Tracking UCITS 4.1 A UCITS may invest up to 20% of net assets in shares and/or debt securities issued by the same body where the investment policy of the UCITS is to replicate an index which satisfies the criteria set out in the UCITS Notices and is recognised by the Financial Regulator. 4.2 The limit in paragraph 4.1 may be raised to 35%, and applied to a single issuer, where this is justified by exceptional market conditions. 5 General Provisions 5.1 An investment company, or management company acting in connection with all of the CIS it manages, may not acquire any shares carrying voting rights which would enable it to exercise significant influence over the management of an issuing body. 5.2 A UCITS may acquire no more than: (i) (ii) (iii) (iv) 10% of the non-voting shares of any single issuing body; 10% of the debt securities of any single issuing body; 25% of the units of any single CIS; 10% of the Money Market Instruments of any single issuing body. NOTE: The limits laid down in (ii), (iii) and (iv) above may be disregarded at the time of acquisition if at that time the gross amount of the debt securities or of the Money Market Instruments, or the net amount of the securities in issue cannot be calculated. 5.3 Paragraph 5.1 and 5.2 shall not be applicable to: 21

22 (i) (ii) (iii) (iv) (v) Transferable Securities and Money Market Instruments issued or guaranteed by a Member State or its local authorities; Transferable Securities and Money Market Instruments issued or guaranteed by a non- Member State; Transferable Securities and Money Market Instruments issued by public international bodies of which one or more Member States are members; Shares held by a UCITS in the capital of a company incorporated in a non-member State which invests its assets mainly in the securities of issuing bodies having their registered offices in that State, where under the legislation of that State such a holding represents the only way in which the UCITS can invest in the securities of issuing bodies of that State. This waiver is applicable only if in its investment policies the company from the non-member State complies with the limits laid down in paragraphs 2.3 to 2.10, 3.1, 3.2, 5.1, 5.2, 5.4, 5.5 and 5.6, and provided that where these limits are exceeded, paragraphs 5.5 and 5.6 below are observed; Shares held by an investment company or investment companies in the capital of subsidiary companies carrying on only the business of management, advice or marketing in the country where the subsidiary is located, in regard to the repurchase of units at unitholders request exclusively on their behalf. 5.4 UCITS need not comply with the investment restrictions herein when exercising subscription rights attaching to transferable securities or Money Market Instruments which form part of their assets. 5.5 The Financial Regulator may allow recently authorised UCITS to derogate from the provisions of paragraphs 2.3 to 2.11, 3.1, and 4.2 for six months following the date of their authorisation, provided they observe the principle of risk spreading. 5.6 If the limits laid down herein are exceeded for reasons beyond the control of a UCITS, or as a result of the exercise of subscription rights, the UCITS must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of its Shareholders. 5.7 Neither an investment company, nor a management company or a trustee acting on behalf of a unit trust or a management company of a common contractual fund, may carry out uncovered sales of: Transferable Securities; Money Market Instruments; Units of CIS; or financial derivative instruments. 5.8 A UCITS may hold ancillary liquid assets. 6 Financial Derivative Instruments ("FDIs") 6.1 The UCITS global exposure (as prescribed in the UCITS Notices) relating to FDI must not exceed its total net asset value. 22