PATRIMONIUM SWISS REAL ESTATE FUND

Transcription

1 This English translation is faithful to the original German text. However, the German-language version of this Fund Agreement shall prevail. PATRIMONIUM SWISS REAL ESTATE FUND A contractual real estate fund established under Swiss law Prospectus with integrated Fund Agreement of 5 October 2015 Fund Management Company GAM INVESTMENT MANAGEMENT (SWITZERLAND) AG Hardstrasse Zurich Custodian Bank Banque Cantonale Vaudoise Place Saint-François Lausanne Investment Manager Patrimonium Asset Management AG Zugerstrasse Baar 1

2 2

3 Part I Prospectus This Prospectus with integrated Fund Agreement, the Simplified Prospectus and the most recent annual or semi-annual report (if published since the previous annual report), form the basis for all unit subscriptions in the Fund. Only information contained in the Prospectus, in the Simplified Prospectus, the Fund Agreement, or in documents listed in the Prospectus shall be regarded as valid. The Fund has been authorised in Switzerland by the supervisory authority, the Swiss Financial Market Supervisory Authority FINMA, and may be distributed in Switzerland without restrictions in line with the statutory provisions. The Fund is not currently authorised for distribution in other countries and there are no plans to obtain authorisation. In certain jurisdictions the distribution of this Prospectus and the offer and sale of units may be subject to certain restrictions. Any person who obtains this Prospectus with integrated Fund Agreement, the Simplified Prospectus, and/or the Fund s subscription form must make enquiries about the legal provisions (including tax legislation) applicable in the relevant jurisdictions, in particular the provisions applying in that person s home country or country of domicile. The Fund Management Company, the Custodian Bank and distributors appointed by them shall be entitled to reject subscriptions, particularly if they believe that subscriptions originate from persons whose subscriptions are made in breach of the laws of a jurisdiction applicable to such persons. 1. Information about the Fund General information on the Fund The PATRIMONIUM SWISS REAL ESTATE FUND is a contractual real estate fund under Swiss law in accordance with the Swiss Federal Collective Investment Schemes Act (CISA) of 23 June The Fund Agreement was issued by GAM INVESTMENT MANAGEMENT (SWITZERLAND) AG (formerly Swiss & Global Asset Management AG, formerly Julius Baer Investmentfonds-Dienstleistung AG) as Fund Management Company and offered with the endorsement of the bank Julius Baer & Co. AG, as Custodian Bank of the Swiss Banking Commission (now Swiss Financial Market Supervisory Authority, FINMA) and initially approved by this authority on 31 October The PATRIMONIUM SWISS REAL ESTATE FUND was originally issued as an investment fund for qualified investors. It was opened to the general investing public on 1 October 2010 with a change to the Fund Agreement. The Fund is based on a collective investment agreement (Fund Agreement), under which the Fund Management Company undertakes to provide the investor with a stake in the Fund in proportion to the number of units held, and to manage the Fund independently and in its own name in accordance with the provisions of the law and the Fund Agreement. The Custodian Bank is party to the Fund Agreement in accordance with the tasks conferred upon it by the law and the Fund Agreement. The PATRIMONIUM SWISS REAL ESTATE FUND is not currently divided into unit classes. In accordance with the Fund Agreement, however, the Fund Management Company is entitled to establish, liquidate or merge different unit classes at any time, subject to the consent of the Custodian Bank and the approval of the supervisory authority. 3

4 1.2 Investment objective and policy of the Fund Investment objective The investment objective of the PATRIMONIUM SWISS REAL ESTATE FUND primarily consists of preserving and increasing value in the long-term by enhancing the portfolio and achieving a reasonable income from investments in a Swiss property portfolio, with the focus on residential and mixed-use buildings. The Fund Management Company does not warrant achievement of the investment objective Investment policy The Fund invests in: (a) properties in Switzerland; (b) property liens on Swiss properties, denominated in Swiss francs, up to a maximum of 10% of the assets; (c) real estate companies that own properties in Switzerland; (d) domestic real estate funds and domestic property investment companies, up to a maximum of 10% of Fund assets. At least half of the direct investments must be in residential and mixed-use buildings. Direct investments may also be made in commercial buildings. The debt securities, debt rights and money market instruments held by the Fund to cover its obligations must be denominated in Swiss francs, although they may be issued by issuers worldwide. Short-term liquid assets must be denominated in Swiss francs. They may be deposited in banks in Switzerland and in other European countries Principal risks The principal risks of the Fund are the dependence of the property market on general economic developments, general or regional drops in demand in the real estate sector, the limited liquidity of the Swiss property market, especially for larger properties or secondary regions, changes in the credit and mortgage markets, changes in legal conditions, especially as regards rental and construction conditions, the less than fully objective valuation of properties, the risks involved in the construction of buildings and environmental risks, especially those from contaminated sites. No conclusion can be drawn regarding future developments on the basis of rising unit prices, and unit prices, net asset values and unit income may fall as well as rise. Additional information on the risks of trading units on the stock exchange is contained in Para. 5.2 below Use of derivatives Derivatives are used exclusively to hedge investment positions. Since no suitable derivatives currently exist to hedge the risks of investments in properties, real estate companies and property liens, their use is limited to hedging investments in securities and account balances. Derivatives do not play a significant role in the Fund s investment policy. Only basic forms of derivatives may be used, i.e. call or put options, swaps and futures and forwards, as described in detail in the Fund Agreement (see Section 13), provided the investment policy allows their underlying assets are investments. The derivatives may be traded on a stock exchange, on a different regulated market open to the public, or purchased OTC (over the counter). In addition to market risk, derivatives are subject to counterparty risk, 4

5 i.e. the risk that the contracting party will be unable to meet its obligations and that financial loss will result. The use of credit default swaps (CDS) is not allowed. Even under extraordinary market conditions, these instruments may not be used to leverage Fund assets or to carry out a short sale. 1.3 Profile of the typical investor The Fund is suitable for investors with a medium to long-term investment horizon who are primarily seeking capital preservation, growth in value and a reasonable ongoing income. Investors can accept temporary fluctuations in market prices and the fund units and are not tied to a specific date on which they will be realising their investment. 1.4 Tax regulations relevant to the Fund Fund taxation Contractual investment funds have no legal personality in Switzerland. Returns earned by the Fund from direct property ownership are subject to both Swiss federal, cantonal, and municipal taxation. Additionally, proportional assets from direct property ownership by the Fund are subject to cantonal and municipal tax on capital. Investors who are domiciled in Switzerland are not taxed on returns and assets on which the Fund pays taxes. The PATRIMONIUM SWISS REAL ESTATE FUND is currently invested almost exclusively in property assets. Swiss withholding tax Other income and capital gains are not taxed at Fund level. Income distributions from the Fund which do not stem from direct property ownership are subject to Swiss federal withholding tax (withholding tax of 35% on the amount of moveable capital assets). Capital gains from the sale of participation units, debt securities and debt rights are free of withholding tax provided they are paid out with a separate coupon. Swiss federal withholding tax deducted from the Fund s domestic income can be reclaimed in full for the Fund by the Fund Management Company. Income and capital gains realised outside Switzerland may be subject to the relevant withholding tax deductions imposed by the country of investment. Whenever possible, the Fund Management Company will reclaim these taxes for investors domiciled in Switzerland pursuant to double-taxation or equivalent agreements with the countries in question. Investors domiciled in Switzerland are entitled to reclaim any withholding tax deducted from the distributions of the Fund by making the relevant submission in their tax return or by making a separate application for refund. Investors domiciled abroad (hereinafter foreign investors ) may reclaim any Swiss withholding tax deducted from distributions of the Fund under the terms of a double taxation agreement (if any) existing between Switzerland and their country of business or domicile. In the absence of such an agreement, the withholding tax may not be reclaimed. The Fund is not expected to satisfy the conditions under which foreign investors who submit a bank affidavit may be exempted from the withholding tax. 5

6 EU interest tax Pursuant to Directive 2003/48/EC of the Council of the European Union of 3 June 2003 on taxation of savings income (hereinafter the Directive ), income and capital gains from investments which generate interest as defined by the Directive and are paid to natural persons resident in another EU member state ( EU investors ) by a paying agent established in an EU member state are subject to the EU Taxation of Savings Income. A reporting or withholding procedure applies, depending on the EU member state. If a withholding procedure applies, investors are permitted to request notification of the tax authorities of their country of residence rather than to have withholding tax deducted from the interest income. If a paying agent in the EU issues a certificate recording the withholding tax deduction, EU investors can request an income tax rebate in their EU country of residence. Non-EU countries that have treaties with the EU apply regulations with the same effect as the EU taxation savings. According to the treaty between the Swiss Confederation and the EU, dated 26 October 2004 on regulations equivalent to those in Directive 2003/48/EC of the EU Council on the taxation of savings income (the Treaty ), Swiss investment funds which do not satisfy the criteria for withholding tax exemption in exchange for a bank affidavit and are thus subject to Swiss federal withholding tax are not covered by the Treaty, which is why Swiss paying agents do not withhold tax. This is likely to apply to the Fund. The taxation and other tax implications for investors when buying, holding and selling units of the Fund depend on the tax regulations of the country in which the investor is domiciled or resident. The levying of withholding tax on interest payments by a paying agent domiciled in the EU is excepted from this and is regulated by the terms of the Directive or on the national regulations based on the Directive. The same applies to tax retention by paying agents which are domiciled in a country with which the EU has concluded a treaty on equivalent measures regarding tax on interest payments. Prospective investors should obtain information and advice on the tax standards that apply to the subscription, purchase, ownership, and sale of units in their countries of residence or domicile or in the country in which their paying agents are based. Specifically, investors should review the taxation or double taxation treatment of income and capital gains on direct property investments which are taxed in Switzerland at Fund level as explained in the above notes. Final withholding tax Due to stipulations in bilateral treaties concluded by Switzerland with the United Kingdom of Great Britain and Northern Ireland and the Republic of Austria on tax-related cooperation, paying agents in Switzerland are obliged to levy a final withholding tax on portions of the Sub-fund that are paid directly or indirectly to affected persons with residence in the United Kingdom or Austria, irrespective of whether they are dividends and/or accumulated profits and whether upon the sale or return of fund units. The satisfying withholding tax consists of: Treaty country Interest Dividend Other income Capital gains income income United Kingdom regular 48% 40% 48% 27% "non-uk domiciled individual", unless certified Austria 25% Tax rates: As at December % 42.5% 50% 28% 6

7 This investment fund is not transparent for the satisfying withholding tax in the treaty states, i.e. levying of the satisfying withholding tax is not based on specific tax factors of the investment fund (fund reporting), but will instead be based on an alternative assessment. With explicit instruction from the affected persons to the paying agent, the satisfying withholding tax can be replaced by a voluntary announcement to the tax authorities of the fiscal domicile. FATCA The real estate fund is registered deemed compliant FFI with respect to sections of the U.S. Internal Revenue Code (Foreign Account Tax Compliance Act, including associated directives, FATCA ). The tax information provided above is based on the currently known legal situation and, to the extent publicised, common practice in Switzerland. It is subject to changes in legislation, court decisions and the ordinances and practices of the tax authorities. 2. Information on the Fund Management Company 2.1 General information on the Fund Management Company GAM INVESTMENT MANAGEMENT (SWITZERLAND) AG, Zurich, is responsible for management of the fund. Since its establishment as an Aktiengesellschaft (public limited company) in 1990, the Fund Management Company has been active in international fund management; since 15 June 1995 it has been the Fund Management Company for Julius Baer Funds. The fully paid-up share capital of the Fund Management Company amounted to CHF 1.20 million on 31 December 2014, divided into 120,000 registered units with a par value of CHF The Fund Management Company is a wholly owned subsidiary of GAM (SWIT- ZERLAND) HOLDING AG, Zurich, which itself is a wholly owned subsidiary of GAM HOLDING AG, Zurich. The Board of Directors currently consists of Roman Aschwanden, President of the Board of Directors, Head of Portfolio Management & Product Management, GAM (SWITZERLAND) AG; Martin Jufer, Member of the Group Management Board GAM Group; Andrew Hanges, Member of the Group Management Board GAM Group; Rolf Aeberhard is the Managing Director of the Fund Management Company. The other members of management are Daniel Koller, Christoph Widmer, Dirk Spiegel, and Thomas van Ditzhuyzen. As of 31 December 2014 the Fund Management Company managed a total of 128 investment funds with total assets under management of CHF 42.6 billion. 2.2 Delegation of investment and property management The Fund Management Company has delegated the following responsibilities to PATRIMONI- UM ASSET MANAGEMENT AG, Zugerstrasse 74, 6340 Baar (hereinafter Investment Manager ): (a) Decision-making regarding the sale or purchase of property assets within the framework of the investment strategy set out by the Fund Management Company. 7

8 (b) (c) Financial and liquidity planning of all property investments. Property management, comprising technical maintenance, rental and administration of properties and lease relationships, and operational management of property assets. (d) Ongoing supervision of the planning and execution of construction projects. (e) (f) Assurance that tax-relevant aspects of individual property assets are recorded. Ongoing decisions regarding the Fund s financial investments (account balances, debt securities and debt rights) The Investment Manager was established on 1 October 2007 as a public limited company. The Investment Manager is an investment management company and therefore subject to supervision in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA). The Investment Manager specialises in property investments. An agreement concluded between the Fund Management Company and the Investment Manager regulates execution of the contract. On the Investment Manager s recommendation, the Fund Management Company may assign property management responsibilities pursuant to letter (c) above for individual property assets to other qualified agents operating in the relevant property s canton. These agents are disclosed in the relevant annual report. 2.3 Delegation of other specific tasks Up to 30 September 2015: The Fund Management Company delegated portions of the fund accounting tasks to a specialised fund administration unit at RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich branch (hereinafter the Accounting Agent ). An agreement concluded between the Fund Management Company and the Accounting Agent regulates execution of the contract. From 1 October 2015: The Fund Management Company has delegated parts of the fund accounting to State Street Bank GmbH, Munich, Zurich branch. State Street Bank GmbH, Munich, Zurich branch, Zurich possesses many years experience in the administration of investment funds. The exact execution of the mandate is governed by an agreement between the Fund Management Company and State Street Bank GmbH, Munich, Zurich branch. State Street Bank GmbH, Munich, Zurich branch, Zurich (the "Bank") is part of an international company. In connection with the processing of subscriptions and redemptions and the handling of business relations, data and information on clients, their business relations with the Bank (including information on beneficial owners) and on business transactions may be passed on to affiliates of the Bank abroad, to its agents abroad or to the Fund Management Company of the Fund to the extent permitted by law. These service providers and the Fund Management Company are required to treat this information as confidential and to use it only for the purposes for which it is made available to them. Foreign data protection legislation may differ from data protection provisions in Switzerland and provide a lower standard of protection. 2.4 Exercise of membership and creditors rights The Fund Management Company exercises the membership and creditors rights associated 8

9 with investments of the managed Fund impartially and exclusively in the interests of the investors. Investors can receive information from the Fund Management Company about the exercising of membership and creditors rights upon request. For scheduled routine transactions, the Fund Management Company may exercise the membership and creditors rights itself or delegate this to the Custodian Bank or a third party. In the case of all other events that might have a lasting impact on the interests of the investors, such as, in particular, the exercise of membership and creditors rights that the Fund Management Company holds as a shareholder or creditor of the Custodian Bank or another related legal entity, the Fund Management Company will exercise the voting rights itself or issue explicit instructions. In such cases, it may base its actions on information it receives from the Custodian Bank, the Investment Manager, consultants on share voting rights, third parties or from the press. The Fund Management Company is free to waive the exercise of membership and creditors rights. 3. Information on the Custodian Bank The Custodian Bank is BANQUE CANTONALE VAUDOISE (hereinafter BCV ). BCV was established by decree by the Vaud Grand Council on 19 December 1845 for an indefinite period of time. It is a public limited company. Headquarters and management are located at Place St-François 14 in 1003 Lausanne, Switzerland. It can establish agencies, branch offices, and representatives. BCV is a customer-oriented universal bank with 150 years business experience, approximately 2,000 employees, and more than 70 sales locations in the canton of Vaud. Its areas of responsibility include promotion of all sectors of the private economy throughout the canton, to support public institutions through financing of their activities and to cover the demand for mortgage credit. For this purpose, it performs all common bank transactions for its own account and for the accounts of third parties (Art. 4 of LBCV and Art. 4 of the banking statutes). BCV pursues its business primarily in the canton of Vaud; it may be active in other areas of Switzerland and in foreign countries if this serves the interest of the Vaud economy. In particular, as a cantonal bank, it is committed to promoting the economy of the canton according to the principles of sustainable growth while respecting economic, ecological, and social criteria. The Custodian Bank may charge third-party and collective custodians in Switzerland and abroad with the safekeeping of the Fund assets where this is in the interest of efficient management. Financial instruments may only be transferred to third-party or collective custodians that are subject to supervision. Exempted from this is the mandatory safekeeping at a location where transfers to third-party or collective custodians is not possible, such as due to mandatory legal provisions or the terms of the investment products. Third-party and collective safe custody means that the Fund Management Company no longer has sole possession but joint possession of the securities deposited. Where the third-party and collective custodians are not subject to supervision, they are unlikely to meet the organisational requirements placed on Swiss banks. The Custodian Bank is liable for any damage caused by its agents, unless it can demonstrate that it exercised due diligence in selecting, instructing and monitoring these agents. The Custodian Bank is a Participating Foreign Financial Institution (PFFI) with respect to sections of the U.S. Internal Revenue Code (Foreign Account Tax Compliance Act, including associated directives, FATCA ). 9

10 4. Information on third parties 4.1 Paying agent Paying agent is the Custodian Bank, BANQUE CANTONALE VAUDOISE, Lausanne. 4.2 Distribution agents Patrimonium Asset Management AG, Baar, acts as the principal distribution agent. Details on the company can be found in Para. 2.2 above. The principal distribution agent is permitted to employ additional distribution agents. 4.3 Auditor The auditor is KPMG AG, Badenerstrasse 172, CH-8026 Zurich. 4.4 Valuation experts With the approval of FINMA, the Fund Management Company has appointed Andreas Ammann, Ivan Anton and Nabil Aziz as permanent independent valuation experts. All of the above valuation experts are employees of Wüest & Partner AG, Gotthardstrasse 6, CH-8002 Zurich and are distinguished by many years of experience in the Swiss property sector. An agreement concluded between the Fund Management Company and the valuation experts regulates execution of the contract. 5. Further information 5.1 Useful information Unit classes: The Fund is not currently divided into unit classes. Swiss securities number: ISIN: Listing: Financial year: Term: Accounting unit: Units: Minimum investment: Appropriation of income: CH Fund units are listed on the SIX Swiss Exchange. For more details, see Para. 5.3 below. 1 April to 31 March unlimited Swiss francs (CHF) The units are registered. Instead of certificates, unit ownership is recorded as book entries. Fractional units are emitted to three decimal places. 1 unit Income is distributed within four months of the financial year-end Media of publication: Publication of prices: and 10

11 5.2 Conditions for the issuing and redemption of fund units Issue and redemption Units may be issued at any time, but only in tranches. The Fund Management Company determines the number of new units to be issued, the subscription ratio for existing investors, the issue method for the subscription rights and the other conditions in a separate issue prospectus. Investors can liquidate their units at the end of an accounting year, after having given twelve months notice. Under certain conditions the Fund Management Company may offer early redemption of units terminated during a financial year pursuant to Section 17(1) of the Fund Agreement. Investors seeking early redemption must request this in writing when submitting the request for liquidation. Standard and early redemption takes place within two months after the end of the accounting year (see Section 5(5) of the Fund Agreement). Net asset value The net asset value of the Fund is calculated at market value at financial year-end and whenever units are issued. The net asset value of a unit is based on the market value of Fund assets, less any Fund liabilities and, where the Fund is liquidated, any likely taxes divided by the number of units in circulation. It is rounded to the nearest rappen (one hundredth of a Swiss franc). Issue price and redemption price The issue price is determined by adding the net asset value at the time of issue plus the issuing commission. The amount of the issuing commission is set forth in Para. 5.3 below. The redemption price is determined from the net asset value at the time of redemption minus the redemption commission. The amount of the redemption commission is set forth in Para. 5.3 below. Incidental costs for the purchase and sale of investments (transfer taxes, notary costs, other fees, standard market brokerage commissions, duties, etc.) which are incurred by the Fund when investing the amounts paid in or from the sale of a portion of the investments corresponding to the terminated holdings are charged to Fund assets. Further information Fractional units are emitted to three decimal places. Instead of certificates, unit ownership is recorded as book entries. The Fund Management Company may suspend the issue of units at any time and deny requests for subscription to exchange of units. The Custodian Bank systematically informs the Fund Management Company of all subscription and redemption orders, maintains a contact office for investors and keeps a list of orders transmitted to it. In cooperation with the Fund Management Company, any market maker and the market intermediaries, the Custodian Bank uses its best efforts to ensure technical settlement and proper execution of the various orders received in line with the applicable standards. Contact person for the Custodian Bank Immo Desk, Telephone: The Fund Management Company publishes the market value of Fund assets and the resulting net asset value per unit in the media of publication at the same time it makes these disclosures to the bank or securities dealers tasked with the regular trading of units. 11

12 5.3 Listing of the units on the SIX Swiss Exchange/Trading The units of the PATRIMONIUM SWISS REAL ESTATE FUND are listed in the ETF & Funds segment of the SIX Swiss Exchange. The Regulatory Board of the SIX Swiss Exchange approved the listing request of the PATRI- MONIUM SWISS REAL ESTATE FUND on 21 October Trading of the units of the Fund on the SIX Swiss Exchange began on 1 November 2010; the accounting currency is Swiss francs. The objective of listing the units on the SIX Swiss Exchange is to give investors the additional option of buying and selling units on a liquid and regulated secondary market, i.e. on the exchange, in addition to subscribing to or redeeming units pursuant to the provisions of Para. 5.2 above via the Fund Management Company or its distributors. SIX SIS AG, Zurich, is responsible for clearing. In compliance with the applicable provisions (particularly the provisions of CISA and the stock exchange regulations) the Fund Management Company ensures that units are regularly traded on an exchange or over the counter by a bank or securities dealer. The Fund Management Company publishes the market value of Fund assets and the resulting net asset value per unit in the media of publication at the same time it discloses these values to the bank or securities dealers tasked with the regular trading of units on an exchange or over the counter. It should be noted that the market prices may differ from the net asset values of the units. Moreover, the trend in the market prices of the units often reflects the general situation on the capital and property markets and not the specific performance by the property portfolio of the Fund. 5.4 Fees and incidental costs Fees and incidental costs charged to investors (extract from Section 18 of the Fund Agreement) Issuing commission paid to Fund Management Company, Custodian Bank and/or distributors, in Switzerland and abroad no more than 5% Redemption commission paid to Fund Management Company, Custodian Bank and/or distributors, in Switzerland and abroad currently no more than 2% Fees and incidental costs charged to Fund assets (extract from Section 19 of the Fund Agreement) The Fund Management Company s management fee no more than 1.05% p.a. This fee is used for the administration, asset management and any distribution of the Fund and to compensate the Custodian Bank its services, such as safekeeping the Fund assets, handling the Fund payment transactions and the other tasks set out in Section 4 of the Fund Agreement. It is also used to pay for the following third-party services: specific administrative and operational support pursuant to Para. 2.3 and market making. 12

13 In addition, the fees and incidental costs set out in Section 19 of the Fund Agreement may be charged to the Fund. The management fee including the Custodian Bank fee effectively is shown in the annual and semi-annual report Payment of retrocessions and discounts The Fund Management Company and its agents pay no retrocessions to third parties as remuneration for the distribution of Fund units in or from Switzerland. The Fund Management Company and its agents pay no discounts for the distribution activities of Fund units in or from Switzerland to reduce the amounts of the fees and expenses attributable to the investors and charged to the Fund Investments in affiliated target funds In the case of units in collective capital investments which the Fund Management Company manages directly or indirectly, or which are managed by a company with which the Fund Management Company is affiliated by common management, control or by a direct or indirect holding of more than 10% of the capital or votes, no issuing or redemption commissions will be charged Total Expense Ratio The coefficient of the total expenses charged to Fund assets on an ongoing basis (total expense ratio or TER) was: : 0.99% : 1.29% : 0.99% : 0.99% : 0.90% : 0.90% : 0.90% : 0.90% Commission sharing agreements and soft commissions The Fund Management Company has not entered into any commission-sharing agreements. The Fund Management Company has not entered into any soft commission agreements. 5.5 Publications of the Fund Further information on the Fund is available in the latest annual or semi-annual report. In addition, the most current information is available at With regard to the listing requirements, the most recent annual and semi-annual reports are considered to be part of this Prospectus. The Prospectus with integrated Fund Agreement, the Simplified Prospectus, and the most recent annual/semi-annual report may be obtained free of charge from the Fund Management Company, Custodian Bank or from any distributor. 13

14 Modifications to the Fund Agreement, a change of the Fund Management Company or Custodian Bank, or any dissolution of the Fund will be announced by the Fund Management Company via the electronic platform The issue and redemption prices and the net asset value with the note excluding fees are published whenever units are issued or redeemed. The net asset value of all units is also published at the end of the year. Prices are published whenever units are issued or redeemed; the latest issue and redemption prices and the current trading prices pursuant to Para. 5.3 are published on the electronic platform and the website on the first bank business day of any week in Zurich. 5.6 Information on net asset values Issue price (net asset value at launch) as of 20/11/2007: CHF Net asset value as at 31/03/2008: CHF Net asset value as at 31/03/2009: CHF Net asset value as at 31/03/2010: CHF Net asset value as at 31/03/2011: CHF Net asset value as at 31/03/2012: CHF Net asset value as at 31/03/2013: CHF Net asset value as at 31/03/2014: CHF Net asset value as at 31/03/2015: CHF Property Insurance The property owned by this Fund is insured against fire and water damage and against liability claims from third parties. Loss of rental income as a result of fire and water damage is included in this insurance coverage. However, damage from earthquakes and their effects is not insured in most cantons. 5.8 Sales restrictions The legal provisions of the relevant country shall apply if fund units are sold abroad. The Fund currently has no authorised distributors in other countries, nor does it intend to seek them. In particular Fund units have not been registered under the United States Securities Act of 1933 and may not be offered, sold, resold or delivered directly or indirectly within the United States of America or to nationals or persons resident in the United States, to corporations or other legal entities established or administered under American law, except in connection with a transaction which is not in breach of the applicable American law. Fund units may not be offered or sold to persons who wish to execute the transactions within the framework of a US defined benefit pension plan. In this context, defined benefit pension plan refers to (i) all defined benefit pension plans for employees pursuant to Section 3(3) of US Employee Retirement Income Security Act (ERISA) of 1974 in the most current version, which fall under the provisions of Part 4 Chapter I of ERISA, (ii) all retirement savings accounts, all Keogh plans and all other plans set forth in Section 4975(e)(1) of the US Internal Revenue Code of 1986 in its most recent version, (iii) all institutions whose underlying investments contain plan assets, because the plans specified under (i) or (ii) hold at least 25% of each class of capital participations in this entity, or (iv) any other institutions (whether separate 14

15 or collective accounts of an insurance company, a group company, or a common trust) whose underlying investments contain plan assets because the plans specified under (i) or (ii) have invested in this entity. 5.9 Detailed regulations Further detailed information on the Fund, such as the valuation of Fund assets, details of all fees and incidental costs charged to the investor and the Fund, as well as the appropriation of income is detailed in the Fund Agreement. 15

16 Part II - Fund Agreement I. Basic principles Section 1 Designation; company and place of business of Fund Management Company, Custodian Bank and Investment Manager; market maker 1. The name PATRIMONIUM SWISS REAL ESTATE FUND refers to a contractual property fund established under Swiss law (the Fund ) within the meaning of Article 25 et seq. in conjunction with Article 58 et seq. of the Federal Act on Collective Investment Schemes of 23 June 2006 ( CISA ). 2. The Fund Management Company is GAM INVESTMENT MANAGEMENT (SWITZERLAND) AG, Zurich. 3. BANQUE CANTONALE VAUDOISE, with registered office in Lausanne, is the Custodian Bank. 4. The asset manager is PATRIMONIUM ASSET MANAGEMENT AG, Baar. 5. Fund units must be regularly traded either on an exchange or over the counter. A bank or a securities dealer with its registered office or a branch in Switzerland acts as a market maker for the Fund. Several market makers may also be appointed. The details are outlined in the Prospectus. II. Rights and obligations of the parties to the contract Section 2 The Fund Agreement The legal relationships between investors on the one hand and the Fund Management Company and Custodian Bank on the other hand are governed by this Fund Agreement and the relevant provisions of the laws governing collective investments. Section 3 The Fund Management Company 1. The Fund Management Company manages the Fund for the account of the investors independently and in its own name. In particular, it decides on the issue of units, the investments and their valuation. It calculates the net asset value and determines the issue and redemption prices as well as distribution of income. It shall exercise all rights associated with the Fund. 2. The Fund Management Company and its agents are obliged to act in good faith, exercise all due care and to respect the confidentiality of information. They act independently and exclusively in the interests of investors. They shall take any organisational measures required for smooth business operations. They ensure transparent accounting procedures and provide appropriate information about this Fund. They shall disclose all fees and costs charged to investors and their use; they shall provide complete, truthful and intelligible information to investors on fees for the operation of collective investment undertakings in the form of provisions, brokerage commissions and other non-cash benefits. 3. The Fund Management Company may delegate investment decisions, administration, and technical support of the property assets as well as other specialised tasks to the extent this is in the interest of proper administration. For this purpose it shall employ only persons who are qualified to carry out the tasks properly, and shall ensure that they receive instructions on the performance of these tasks and that suitable supervision and control is arranged. 16

17 The Fund Management Company is liable for the actions of its agents as if they were its own actions. Investment decisions may only be delegated to asset managers subject to a recognised supervisory authority. Where foreign law requires an agreement on cooperation and information exchange with foreign supervisory authorities, the Fund Management Company may only delegate investment decisions to an asset manager abroad if there is such an agreement between FINMA and the relevant supervisory authority concerned by the investment decisions. 4. With the approval of the Custodian Bank, the Fund Management Company may apply to the supervisory authority for approval of an amendment to this Fund Agreement (see Section 26). 5. The Fund Management Company may merge the Fund with other real estate funds in accordance with the provisions of Section 24 or liquidate it in accordance with the provisions of Section The Fund Management Company is entitled to the fees described in Section 18 and 19, to be released from the liabilities which it assumed in the proper execution of its duties, and to a reimbursement of the expenses it incurred in meeting these liabilities. 7. The Fund Management Company is liable to the investors for ensuring that the real estate companies belonging to the Fund adhere to the provisions of the laws governing collective investments and of the Fund Agreement. 8. The Fund Management Company and its agents, as well as natural and legal persons affiliated to them, are not authorised to acquire property assets from the Fund or to transfer such assets to them. In individual justified cases, the supervisory authority may approve exceptions to the ban on transactions with affiliated parties if the exception is in the interests of the investors and in addition to the valuation by the Fund s permanent valuation experts, a valuation expert who is independent of such experts or their employer and/or the Fund Management Company and/or the Custodian Bank of the Fund confirms that the purchase and sale price for the property and the transaction costs are in line with the market. After the transaction is concluded the Fund Management Company draws up a report detailing the individual property assets acquired or transferred and the value thereof on the transfer or assignment date, with the valuation report of the permanent valuation experts and the independent expert s report on the market conformity of the purchase or sale price pursuant to Art. 32a(1)(c) CISO. As part of their audit, the auditors confirm that the Fund Management Company is in compliance with its special fiduciary duty for property investments. In the annual report for the Fund, the Fund Management Company mentions transactions with related parties. Section 4 The Custodian Bank 1. The Custodian Bank holds the Fund assets in safekeeping, especially clear mortgage certificates and the shares of real estate companies. It shall be responsible for the issue and redemption of Fund units as well as for payment transactions performed on behalf of the Fund. For the routine administration of property assets, it may delegate account management to third parties. 17

18 2. The Custodian Bank shall ensure that in the case of transactions relating to the assets of the Fund the equivalent value is remitted within the usual timeframes. It shall notify the Fund Management Company if the equivalent value is not reimbursed within the usual timeframes and shall where possible claim compensation from the counterparty for the relevant asset. 3. The Custodian Bank shall maintain the requisite records and accounts in such a manner that the assets of individual investment funds held in safe custody can at all times be differentiated from each other. In the case of assets that cannot be taken into safe custody, the Custodian Bank shall check that they are owned by the Fund Management Company and shall keep a record thereof. 4. The Custodian Bank and its agents are bound by a duty to act in good faith, to exercise all due care and respect the information obligation. They act independently and exclusively in the interests of investors. They shall take any organisational measures required for smooth business operations. They ensure transparent accounting procedures and provide appropriate information about this Fund. They shall disclose all fees and costs charged to investors and their use; they shall provide complete, truthful and intelligible information to investors on fees for the operation of collective investment undertakings in the form of provisions, brokerage commissions and other non-cash benefits. 5. The Custodian Bank may charge third-party and collective custodians in Switzerland or abroad with the safekeeping of the Fund assets where this is in the interest of efficient management. It shall check and monitor whether the third-party or collective custodian appointed by it a) has adequate business organisation, financial guarantees and specialist qualifications required for the type and complexity of the assets entrusted to them; b) is subject to regular external auditing to ensure that the financial instruments are in their possession; c) manages the assets held by the Custodian Bank in such a manner that they can be unequivocally identified by the Custodian Bank at all times by regularly reconciling holdings as belonging to the Fund assets; d) complies with the provisions applicable to the Custodian Bank for performing the tasks delegated to it and for avoiding conflicts of interest. The Custodian Bank is liable for any damage caused by its agents, unless it can demonstrate that it exercised due diligence in selecting, instructing and monitoring these agents. The Prospectus contains details on the risks associated with transferring safekeeping to third-party and collective custodians. Financial instruments may only be transferred as defined in the preceding paragraph to thirdparty or collective custodians that are subject to supervision. Exempted from this is the mandatory safekeeping at a location where transfers to third-party or collective custodians is not possible, such as due to mandatory legal provisions or the terms of the investment products. Investors can find information on safe custody by third-party or collective custodians in the Prospectus. 6. The Custodian Bank shall ensure that the Fund Management Company adheres to the law and the Fund Agreement. It ensures that the net asset value and the issue and redemption prices as well as the investment decisions are in compliance with the law and the Fund Agreement, and that income is appropriated in keeping with the Fund Agreement. The Custodian Bank is not responsible for the choice of the individual investments made by the Fund Management Company within the scope of the investment guidelines. 18

19 7. The Custodian Bank is entitled to the fees set out in Section 18 and 19, to be released from the liabilities which it assumed in the proper execution of its duties, and to reimbursement of the expenses it incurred in meeting these liabilities. 8. The Custodian Bank and its agents, as well as natural and legal persons associated with them, are not authorised to acquire property assets from the Fund or to transfer such assets to them. In individual justified cases, the supervisory authority may approve exceptions to the ban on transactions with related parties if the exception is in the interests of the investors and in addition to the valuation by the Fund s permanent valuation experts, a valuation expert who is independent of such experts or their employer and/or the Fund Management Company and/or the Custodian Bank of the Fund confirms that the purchase and sale price for the property and the transaction costs are in line with the market. As part of their audit, the auditors confirm that the Fund Management Company is in compliance with its special fiduciary duty for property investments. Section 5 The investors 1. The group of investors is not limited. 2. Upon signing the agreement and making payment in cash, investors acquire a claim against the Fund Management Company to participation in the assets and income of the Fund. The claims of investors are established in the form of units. 3. Investors are only obliged to pay for the stake in the Fund to which they have subscribed. Any personal liability on the part of the investor for liabilities of the Fund is excluded. 4. Investors may at any time request that the Fund Management Company supply them with the necessary information regarding the basis on which the net asset value per unit is calculated. The Fund Management Company shall also provide details of individual transactions performed by the Fund Management Company, such as the exercise of membership or creditor rights or of risk management to any investors demonstrating a legitimate interest in such information at any time. At the court at the location of the Fund Management Company s registered office, investors may request that an auditor or other expert examine any matters requiring investigation and provide them with a report on such matters. 5. Investors may terminate the Fund Agreement with 12 months notice at the end of a financial year by requesting redemption of their holding in the Fund in cash. Under certain conditions, the Fund Management Company may effect early redemption of units terminated during a financial year after the end of that financial year pursuant to Section 17(1) of the Fund Agreement. Standard and early redemption takes place no later than two months after the end of the financial year. 6. Investors shall be obliged to demonstrate to the Fund Management Company, the Custodian Bank and its agents upon request that they satisfy or continue to satisfy the legal or contractual fund requirements for holding an interest in the Fund or a unit class. They are also obliged to notify the Fund Management Company, Custodian Bank and their agents immediately if they no longer fulfil these requirements. 7. Units owned by investors must be compulsorily redeemed by the Fund Management Company in conjunction with the Custodian Bank at the respective redemption price if: 19

20 (a) (b) this is required in order to safeguard the reputation of the financial centre by combating money laundering; an investor no longer satisfies the statutory or contractual conditions for investment in this Fund. 8. In addition, the Fund Management Company, in conjunction with the Custodian Bank, may carry out the compulsory redemption of an investor s units at the current redemption price if: a) the investor's stake in the Fund may adversely affect the economic interests of other investors, in particular if the holding could cause negative tax consequences for the Fund in Switzerland or abroad; (b) (c) investors have acquired or hold their units in breach of applicable domestic or foreign law, this Fund Agreement or the Prospectus; the economic interests of investors as a whole have been or may be adversely affected. 9. Instead of compulsory redemption, the investor concerned may, with the agreement of the Fund Management Company and the bank appointed by the Fund Management Company, sell his units on an exchange (if the units are listed) or over the counter. Section 6 Units and unit classes 1. The Fund Management Company may, with the approval of the Custodian Bank and the supervisory authority, create different unit classes, terminate such classes or merge them. All unit classes entitle investors to a share in the undivided Fund assets, which is not itself segmented. This proportion may vary owing to costs, distributions or income relating to particular unit classes; therefore the net asset value per unit may vary from one class to another. The assets of the Fund as a whole shall be liable for class-specific charges. 2. The creation, liquidation or merger of unit classes is announced in the official publications. Only a merger is deemed to be a change to the Fund Agreement pursuant to Section The various unit classes may differ in terms of cost structure, reference currency, currency hedging, distribution or reinvestment of income, the minimum investment amount, and the group of investors, including their tax status. Fees and costs will only be charged to those unit classes that benefit from a particular service. Remuneration and costs which cannot be clearly attributed to a unit class will be charged to the individual unit classes on a pro rata basis in proportion to their weighting within the Fund assets. 4. The Fund is not currently divided into unit classes. 5. The units are not certificated, and are only book entries. Investors are not entitled to demand delivery of a unit certificate. Fractional units are emitted to three decimal places. 6. The Fund Management Company undertakes to ask investors who no longer fulfil the requirements to hold a unit class to return their units within 30 calendar days, pursuant to Section 17, to transfer them to a person who does fulfil the requirements stipulated or to exchange them for units of another class whose conditions they do fulfil. If the investor does not comply with this request, the Fund Management Company in conjunction with the Custodian Bank may either undertake a compulsory exchange to another unit class of this Fund or, if this is not possible, a compulsory redemption of the units in question pursuant to Section 5(7). This is subject to the requirements of Section 5(9) above. 20