Prospectus. Syd UCITS Funds plc

Transcription

1 The Directors of the Company whose names appear in the Directory on page 5 of this Prospectus accept responsibility for the information contained in this Prospectus. 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 Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Prospectus Syd UCITS Funds plc An open-ended umbrella investment company with variable capital and segregated liability between Funds incorporated with limited liability in Ireland under the Companies Acts 1963 to 2013 with registration number February 2014

2 1 IMPORTANT INFORMATION 1.1 General If you are in any doubt about the contents of this Prospectus, the risks involved in investing in the Company or the suitability for you of investing in the Company, you should consult your stock broker, bank manager, solicitor, accountant or other independent financial adviser. Prices of Shares in each Fund of the Company may fall as well as rise. 1.2 Typical Investor Profile A typical investor will be seeking to achieve a return on his investment in the medium to long term and is willing to accept a medium degree of volatility. 1.3 The Prospectus and Supplements This Prospectus describes the Company. The Company issues Supplements to this Prospectus relating to each Fund. A separate Supplement will be issued at the time of establishment of each Fund. Each Supplement forms part of and should be read in the context of and in conjunction with this Prospectus. This Prospectus may only be issued with one or more Supplements, each containing information in relation to a separate Fund. Details relating to Classes may be dealt with in the relevant Supplement. 1.4 Authorisation by the Central Bank The Company is both authorised and supervised by the Central Bank of Ireland (the Central Bank ). Authorisation of the Company by the Central Bank shall not constitute a warranty as to the performance of the Company and the Central Bank shall not be liable for the performance or default of any Fund of the Company. The authorisation of the Company is not an endorsement or guarantee of the Company by the Central Bank and the Central Bank is not responsible for the contents of this Prospectus. 1.5 Anti-Dilution Levy Upon the recommendation of the Investment Manager, an Anti- Dilution Levy may be imposed by the Directors on a transaction basis as a percentage adjustment (to be communicated to the Administrator) on the value of the relevant subscription/redemption calculated for the purposes of determining a subscription price or redemption price to reflect the impact of market spreads, duties and charges and other dealing costs relating to the acquisition or disposal of assets and to preserve the Net Asset Value of the relevant Fund where they consider such a provision to be in the best interests of a Fund. The possible imposition of an Anti-Dilution Levy means that there may be a difference at any one time between the subscription price (to which may be added a sales commission) and the 2

3 redemption price of Shares and therefore an investment in a Fund should be viewed as medium to long term. 1.6 Restrictions on Distribution and Sale of Shares The distribution of this Prospectus and the offering of Shares may be restricted in certain jurisdictions. This Prospectus does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorised or the person receiving the offer or solicitation may not lawfully do so. It is the responsibility of any person in possession of this Prospectus and of any person wishing to apply for Shares to inform himself of and to observe all applicable laws and regulations of the countries of his nationality, residence, ordinary residence or domicile. The Company or the Administrator on behalf of the Company may reject any application in whole or in part without giving any reason for such rejection in which event the subscription monies or any balance thereof will be returned without interest, expenses or compensation to the applicant by transfer to the applicant s designated account or by post at the applicant s risk. For further details refer to the section of this Prospectus entitled Share Dealings; Ownership Restrictions. United States of America None of the Shares have been, nor will be, registered under the United States Securities Act of 1933 (the 1933 Act ) and, except in a transaction which does not violate the 1933 Act or any other applicable United States securities laws (including without limitation any applicable law of any of the States of the United States), none of the Shares may be directly or indirectly offered or sold in the United States of America, or any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a US Person. Neither the Company nor any Fund will be registered under the United States Investment Company Act of Notwithstanding the foregoing prohibition on offers and sales in the United States or to or for the benefit of US Persons, the Company may make a private placement of its Shares to a limited number or category of US Persons. No Shares will be issued to any person, whether or not a US Person, if immediately thereafter, the interests of "Benefit Plan Investors" as defined in Section 3(42) of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA") (i.e. employee benefit plans as defined in Section 3(3) ERISA that are subject to the fiduciary responsibility provisions of ERISA, plans described in and subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the "IRC"), church plans that have elected to be subject to ERISA, insurance company general and separate accounts and entities (each a Plan Assets Entity ) the underlying assets of which include plan assets), would equal or exceed 25 per cent of the total value of any class of equity interests of any Fund (disregarding certain interests held by persons with discretion over (or who provide investment advice with respect to) the assets of the Fund and the affiliates of such persons), so that equity participation by Benefit Plan Investors will not be considered "significant" under U.S. Department of Labor regulations and, as a result, the underlying assets of the Fund will not be deemed "plan assets" for purposes of ERISA or Section 4975 of the IRC. The Company may require the compulsory redemption of Shares to 3

4 ensure that the interest of Benefit Plan Investors does not equal or exceed 25 per cent of the total value of a Fund. 1.7 Reliance on this Prospectus Any information or representation not contained in this Prospectus or given or made by any broker, salesperson or other person should be regarded as unauthorised by the Company and should accordingly not be relied upon. Investors should not treat the contents of this Prospectus as advice relating to legal, taxation, investment or other matters. You should consult your stockbroker, accountant, solicitor, independent financial adviser or other professional adviser. Statements made in this Prospectus and any Supplement are based on the law and practice in force in the Republic of Ireland at the date of this Prospectus or Supplement as the case may be, which may be subject to change. Neither the delivery of this Prospectus nor the offer, issue or sale of Shares in any Fund of the Company shall under any circumstances constitute a representation that the affairs of the Company or any Fund have not changed since the date hereof. This Prospectus will be updated to take into account any material changes from time to time and any such amendments will be notified in advance to and cleared by the Central Bank. 1.8 Risk Factors Investors should read and consider the section of this Prospectus entitled RISK FACTORS before investing in the Company. 1.9 Governing Law This Prospectus and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with Irish law. With respect to any suit, action or proceedings relating to any dispute arising out of or in connection with this Prospectus (including any non-contractual obligations arising out of or in connection with it), each party irrevocably submits to the jurisdiction of the Irish courts Translations This Prospectus may be translated into other languages. Any such translation shall only contain the same information and have the same meaning as the English language Prospectus. To the extent that there is any inconsistency between the English language Prospectus and this Prospectus in another language, the English language Prospectus will prevail, except to the extent (but only to the extent) otherwise required by the law of any jurisdiction where the Shares are sold. 4

5 2 DIRECTORY Syd UCITS Funds plc Directors Michael Andersen Cormac Byrne Barry Harrington Roy Finucane Registered office 2 nd Floor, Beaux Lane House Mercer Street Lower Dublin 2 Ireland Investment Advisor EM Quest Capital LLP 42 Brook Street London W1K 5DB United Kingdom Company Secretary MFD Secretaries Limited 2 nd Floor, Beaux Lane House Mercer Street Lower Dublin 2 Ireland Auditors Grant Thornton City Quay Dublin 2 Ireland Investment Manager, Distributor and Promoter Sydbank A/S Peberlyk 4 DK-6200 Aabenraa Denmark Administrator HSBC Securities Services (Ireland) Limited 1 Grand Canal Square Grand Canal Harbour Dublin Ireland Custodian HSBC Institutional Trust Services (Ireland) Limited 1 Grand Canal Square Grand Canal Harbour Dublin Ireland Irish legal advisers Maples and Calder 75 St. Stephen's Green Dublin 2 Ireland Irish tax advisers Maples and Calder 75 St. Stephen's Green Dublin 2 Ireland 5

6 TABLE OF CONTENTS NOTE: TO BE UPDATED ONCE FINALISED 1 IMPORTANT INFORMATION DIRECTORY DEFINITIONS PRINCIPAL FEATURES GENERAL MANAGEMENT, ADMINISTRATION AND CUSTODY FEES AND EXPENSES RISK FACTORS CONFLICTS OF INTEREST SHARE DEALINGS NET ASSET VALUE AND VALUATION OF ASSETS TAXATION GENERAL INFORMATION...76 APPENDIX I APPENDIX II SUPPLEMENT 1 6

7 3 DEFINITIONS In this Prospectus the following words and phrases have the meanings set forth below: Accounting Date Accounting Period Act Administration Agreement Administrator 31 December in each year or such other date as the Directors may from time to time decide. a period ending on the Accounting Date and commencing, in the case of the first such period on the date of incorporation of the Company and, in subsequent such periods, on the day following expiry of the last Accounting Period. the Companies Acts 1963 to 2013 and every amendment or re-enactment of the same. the agreement made between the Company and the Administrator dated 15 April, 2011 pursuant to which the latter was appointed administrator of the Company, as may be amended from time to time in accordance with the requirements of the Central Bank. HSBC Securities Services (Ireland) Limited or any successor company approved by the Central Bank as administrator of the Company s and of each Fund s affairs. AIMA the Alternative Investment Management Association. Anti-Dilution Levy Application Form Articles of Association Auditors Base Currency an adjustment made on a transaction basis as a percentage adjustment (to be communicated to the Administrator) on the value of the relevant subscription/redemption calculated for the purposes of determining a subscription price or redemption price to reflect the impact of market spreads, duties and charges and other dealing costs relating to the acquisition or disposal of assets and to preserve the Net Asset Value of the relevant Fund, the details of which are outlined under the heading Fees and Expenses; Anti- Dilution Levy. any application form to be completed by subscribers for Shares as prescribed by the Company from time to time. the Memorandum and Articles of Association of the Company. Grant Thornton, Ireland, chartered accountants. the currency of account of a Fund as specified in 7

8 the relevant Supplement relating to that Fund. Business Day Central Bank Class Company Company Secretary Country Supplement Custodian Custodian Agreement Directors Distribution Agreement Distributor EEA Euro or Exempt Irish Investors in relation to a Fund, such day or days as shall be so specified in the relevant Supplement for that Fund. the Central Bank of Ireland or any successor regulatory authority with responsibility for the authorisation and supervision of the Company. a particular division of Shares in a Fund. Syd UCITS Funds plc. MFD Secretaries Limited. a supplement to this Prospectus, issued from time to time, specifying certain information pertaining to the offer of Shares of the Company or a Fund or Class in a particular jurisdiction or jurisdictions. HSBC Institutional Trust Services (Ireland) Limited or any successor company approved by the Central Bank as custodian of the assets of the Company and of each Fund. the agreement made between the Company and the Custodian dated 15 April, 2011 pursuant to which the latter was appointed custodian of the Company, as may be amended from time to time in accordance with the requirements of the Central Bank. the directors of the Company or any duly authorised committee or delegate thereof. the agreement made between the Company and the Distributor dated 15 April, 2011 pursuant to which the latter was appointed distributor of the Company, as may be amended from time to time in accordance with the requirements of the Central Bank. Sydbank A/S. the countries for the time being comprising the European Economic Area (being at the date of this Prospectus, European Union Member States, Norway, Iceland and Liechtenstein). the lawful currency of the participating member states of the European Union which have adopted the single currency in accordance with the EC Treaty of Rome dated 25th March 1957 as amended. A Shareholder who comes within any of the 8

9 categories listed below and who (directly or through an Intermediary has provided the Relevant Declaration to the Company and the Company is not in possession of any information which would reasonably suggest that the information contained in the Relevant Declaration is not, or is no longer, materially correct: (a) a pension scheme which is an exempt scheme within the meaning of Section 774 of the TCA. (b) a company carrying on life business within the meaning of Section 706 of the TCA; (c) an investment limited partnership within the meaning of 739J of the TCA; (d) a specified company within the meaning of Section 734(1) of the TCA; (e) an investment undertaking within the meaning of Section 739(B)(1) of the TCA; (f) a special investment scheme within the meaning of Section 737 of the TCA; (g) a charity being a person referred to in Section 739D(6)(f)(i) of the TCA; (h) a qualifying management company within the meaning of Section 734(1) of the TCA; (i) a unit trust to which Section 731(5)(a) of the TCA applies; (j) a person who is entitled to exemption from income tax and capital gains tax under Section 784A(2) of the TCA where the Shares held are assets of an approved retirement fund or an approved minimum retirement fund; (k) a qualifying fund manager within the meaning of Section 784A TCA or a qualifying savings manager within the meaning of Section 848B TCA, in respect of Shares which are assets of a special savings incentive account within the meaning of Section 848C (l) TCA; 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 TCA, and the Shares are assets of a PRSA; (m) a credit union within the meaning of Section 2 of the Credit Union Act, 1997; (n) the National Pensions Reserve Fund Commission; (o) (p) (q) the National Asset Management Agency; a company within the charge to corporation tax in accordance with Section 110(2) of the TCA (securitisation companies); an Irish resident company, within the charge to corporation tax under Section 739G(2) TCA, but only where the fund is a money 9

10 (r) market fund; in certain circumstances, a company within the charge to tax under Case I of the Schedule D in respect of payments made to it by the Company; or any other person who is Irish Resident or Irish Ordinarily Resident 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 the tax exemptions associated with the Company giving rise to a charge to tax in the Company. "FATCA" means: (a) Sections 1471 to 1474 of the US Internal Revenue Code of 1986 or any associated regulations or other official guidance; (b) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or (c) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any government authority or taxation authority in any other jurisdiction. Fund Initial Price Intermediary a sub-fund of the Company the proceeds of issue of which are pooled separately and invested in accordance with the investment objective and policies applicable to such sub-fund and which is established by the Company from time to time with the prior approval of the Central Bank. the initial price payable for a Share as specified in the relevant Supplement for each Fund. is a person who:- (a) carries on a business which consists of, or includes, the receipt of payments from an Irish Resident investment undertaking on behalf of other persons; or (b) holds units in an investment undertaking on behalf of other persons Investment Management Agreement the agreement made between the Company and the Investment Manager dated 15 April,

11 pursuant to which the latter was appointed investment manager of the Company, as may be amended from time to time in accordance with the requirements of the Central Bank. Investment Manager Investment Advisor IOSCO Ireland Sydbank A/S. EM Quest Capital LLP. the International Organisation of Securities Commissions. the Republic of Ireland. 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. NOTE: 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. 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 11

12 country under a double taxation treaty between Ireland and that country, provided that, in each case, the company is not centrally managed and controlled in a jurisdiction which does not apply a residency test based on central management and control; or the company is regarded as not resident in Ireland under a double taxation treaty between Ireland and another country. 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 TCA. Irish Ordinarily Resident in the case of an individual, means an individual who is ordinarily resident in Ireland for tax purposes in the case of a trust, means a trust that is ordinarily resident in Ireland for tax purposes. NOTE: 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 2011 to 31 December 2011 and departs from Ireland in that tax year will remain ordinarily resident up to the end of the tax year 1 January 2014 to 31 December The concept of a trust s ordinary residence is somewhat obscure and linked to its tax residence. Member State Member Minimum Holding a member state of the European Union. a Shareholder or a person who is registered as the holder of one or more non-participating shares in the Company. the minimum number or value of Shares which must be held by Shareholders as specified in the relevant Supplement. 12

13 Minimum Initial Subscription Minimum Transaction Size Net Asset Value Net Asset Value per Share OECD OTC Prospectus Recognised Exchange Redemption Day Redemption Deadline Relevant Declaration Share Shareholder the minimum value of an initial subscription for Shares in any Fund or Class as specified in the relevant Supplement. the minimum value of subsequent subscriptions, redemptions, conversions or transfers of Shares in any Fund or Class as specified in the relevant Supplement. the Net Asset Value of a Fund or attributable to a Class (as appropriate) calculated as referred to in this Prospectus. the Net Asset Value of a Fund divided by the number of Shares in issue in that Fund or the Net Asset Value attributable to a Class divided by the number of Shares issued in that Class rounded to such number of decimal places as the Directors may determine as set out in this Prospectus. the Organisation for Economic Co-Operation and Development. Over-the-Counter, a commonly used term for customised trades in securities, including derivative trades, that are not available for trading on an exchange and for which no secondary market may exist. the prospectus of the Company and any Supplements and addenda thereto issued in accordance with the requirements of the UCITS Regulations. the stock exchanges or markets set out in Appendix II to this Prospectus. in relation to a Fund such Business Day or Business Days as shall be specified in the relevant Supplement for that Fund and determined by the Directors from time to time provided that there shall be at least one Redemption Day per fortnight. in relation to a Fund, such time on or with respect to any Redemption Day as shall be specified in the relevant Supplement for the Fund. means a declaration relevant to the Shareholder as set out in Schedule 2B of the TCA. a participating share or, save as otherwise provided in this Prospectus, a fraction of a participating share in the capital of the Company. a person who is registered as the holder of Shares in the register of Shareholders for the time being kept by or on behalf of the Company. 13

14 Supplement Subscription Day Subscription Deadline TCA UCITS UCITS Directive UCITS Notices UCITS Regulations United States US Dollar, USD or US$ US Person Valuation Point a supplement to this Prospectus specifying certain information in respect of a Fund and/or one or more Classes. in relation to a Fund such Business Day or Business Days as shall be specified in the relevant Supplement for that Fund and determined by the Directors from time to time. in relation to a Fund, such time on or with respect to any Subscription Day as shall be specified in the relevant Supplement for the Fund. means the Taxes Consolidation Act 1997 as amended. an Undertaking for Collective Investment in Transferable Securities established pursuant to the UCITS Regulations. EC Council Directive 85/611/EEC of 20 December 1985 (as amended, consolidated or substituted from time to time). a notice or notices with respect to UCITS issued from time to time by the Central Bank as the competent authority with responsibility for the authorisation and supervision of UCITS, as may be amended, supplemented, consolidated, substituted in any form or otherwise modified from time to time. the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, (S.I. No. 352 of 2011), as may be amended, consolidated or substituted from time to time. the United States of America (including the States and the District of Colombia) its territories, possessions and all other areas subject to its jurisdiction. United States Dollars, the lawful currency for the time being of the United States of America. a US Person as defined in Regulation S under the United States Securities Act of 1933 and CFTC Rule 4.7. such time as shall be specified in the relevant Supplement for each Fund. 14

15 4 PRINCIPAL FEATURES The following is a summary of the principal features of the Company, each of its Funds and the offering of Shares of each Fund. It is derived from and should be read in conjunction with the full text of this Prospectus and the Supplement for the relevant Fund. 4.1 Structure The Company is an open-ended investment company with variable capital and segregated liability between Funds incorporated in Ireland on 20 December, 2010 under the Act with registration number The Company has been authorised by the Central Bank as a UCITS pursuant to the UCITS Regulations. 4.2 The Funds At the date of this Prospectus, the Company has established the Funds listed below. Sydbank Emerging Markets Value Fund Additional Funds in respect of which a Supplement or Supplements will be issued may be established by the Directors with the prior approval of the Central Bank. 4.3 Share Classes Shares may be issued in Classes within each Fund. The Classes of Shares available for subscription shall be set out in the relevant Supplement. Additional Classes in respect of which a Supplement or Supplements will be issued may be established by the Directors and notified to and cleared in advance with the Central Bank or otherwise must be created in accordance with the requirements of the Central Bank. 4.4 Investment Objective and Policies The specific investment objective and policies of each Fund will be set out in the relevant Supplement and will be formulated by the Directors at the time of creation of the relevant Fund. 4.5 Dividend Policy The dividend policy and information on the declaration and payment of dividends for each Fund will be specified in the relevant Supplement. 4.6 Fees and Expenses Details of the fees and expenses payable to the Investment Manager, Administrator, Custodian, Directors and other parties will be set out in the section of this Prospectus entitled Fees and Expenses and, where specific to a Fund, the relevant Supplement. Shareholders may also be charged sales commissions and conversion fees. Details of such commissions and fees, if applicable, will be set out in the Supplement for the relevant Fund. 15

16 The Directors reserve the right to impose an Anti-Dilution Levy as outlined in more detail in the section of the Prospectus entitled Fees and Expenses; Anti-Dilution Levy. 4.7 Risk Factors Prospective investors should note the risks associated with investing in the Company. Investors should read and consider the section of this Prospectus entitled Risk Factors before investing in the Company. 4.8 Conflicts of Interest Prospective investors should note certain potential conflicts of interest associated with investing in the Company. Investors should read and consider the section of this Prospectus entitled Conflicts of Interest before investing in the Company. 4.9 Subscription, Redemption and Conversion of Shares Shares will first be issued on the first Subscription Day after expiry of the initial offer period specified in the relevant Supplement at the Initial Price as specified in the relevant Supplement. Thereafter Shares shall be issued at the Net Asset Value per Share (plus sales commission, if any) on any Subscription Day. Confirmation of each purchase of Shares will normally be sent to Shareholders within 72 hours of the relevant Subscription Day. Shares shall be issued in registered form only and title to Shares will be evidenced by the entering of the investor s name on the Company s register of Shareholders and no certificates will be issued. Shareholders may redeem their Shares on a Redemption Day at the Net Asset Value per Share save during any period when the calculation of the Net Asset Value is suspended. Shareholders may request conversion of some or all of their Shares in one Fund or Class to Shares in another Fund or Class or another Class in the same Fund in accordance with the formula and procedures specified in the section of this Prospectus entitled Conversion of Shares Reports and Accounts The Company will prepare an annual report and audited accounts as of 31 December in each calendar year and a half-yearly report and unaudited accounts as of 30 June in each year Taxation The Directors have been advised that the Company qualifies as an investment undertaking as defined in Section 739B of the TCA and therefore, under current Irish law and practice, it is not generally chargeable to Irish tax on its income and gains. For further details on tax matters, please refer to the section of this Prospectus entitled Taxation. Prospective investors should consult their own professional advisers regarding the tax implications of an investment in the Company. 16

17 5 GENERAL 5.8 Structure The Company is an open-ended investment company with variable capital and segregated liability between Funds incorporated in Ireland on 20 December, 2010 under the Act with registration number The Company has been authorised by the Central Bank as a UCITS pursuant to the UCITS Regulations. The Company is structured as an umbrella fund consisting of different Funds each comprising one or more Classes. The assets of each Fund will be invested separately on behalf of each Fund in accordance with the investment objective and policies of each Fund. The investment objective and policies and other details in relation to each Fund are set out in the relevant Supplement. At the date of this Prospectus, the Company has established the Fund(s) listed below. Sydbank Emerging Markets Value Fund Additional Funds in respect of which a Supplement or Supplements will be issued may be established by the Directors from time to time with the prior approval of the Central Bank. Shares may be issued in Classes within each Fund. Classes of Shares in each Fund may differ as to certain matters including currency of denomination, hedging strategies if any applied to the designated currency of a particular Class, dividend policy, return of capital, fees and expenses charged or the Minimum Initial Subscription or Minimum Holding applicable. The Classes of Shares available for subscription shall be set out in the relevant Supplement. A separate pool of assets shall not be maintained in respect of each Class. Additional Classes in respect of which a Supplement or Supplements will be issued may be established by the Directors and notified to and cleared in advance with the Central Bank or otherwise must be created in accordance with the requirements of the Central Bank. 5.9 Investment Objective and Policies The assets of each Fund will be invested separately in accordance with the investment objectives and policies of the Fund. The specific investment objective and policies of each Fund will be set out in the relevant Supplement and will be formulated by the Directors at the time of creation of the relevant Fund. The investment objective of a Fund may not be altered and material changes in the investment policy of a Fund may not be made without prior approval of Shareholders on the basis of a majority of votes cast at a meeting of the Shareholders of the particular Fund duly convened and held or with the prior written approval of all Shareholders of the relevant Fund. In the event of a change of the investment objective and/or material change in the investment policy of a Fund on the basis of prior approval by way of a majority of votes cast at a meeting of the Shareholders of the particular Fund duly convened and held, Shareholders in the relevant Fund 17

18 will be given reasonable notice of such change to enable them redeem their Shares prior to implementation of such a change. Investors should be aware that the performance of certain Funds may be measured against a specified index or benchmark and in this regard, Shareholders 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 investment policy of the relevant 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) made by the index concerned, in the annual or half-yearly report of the 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 Fund(s) as appropriate Cross Investment Investors should note that, subject to the requirements of the Central Bank, each of the Funds may invest in the other Funds of the Company. The Investment Manager may not charge investment management fees in respect of that proportion of the assets of a Fund which are invested in other Funds of the Company. In addition, no sales commission, redemption charge or conversion fee may be charged on the crossinvesting Fund s investment. Investment will not be made by a Fund in a Fund which itself cross-invests in another Fund within the Company Investment Restrictions Investment of the assets of each Fund must comply with the UCITS Regulations. The Directors may impose further restrictions in respect of any Fund. The investment and borrowing restrictions applying to the Company and each Fund are set out in Appendix I to this Prospectus. Each Fund may also hold ancillary liquid assets. With the exception of permitted investment in unlisted securities and OTC derivative instruments, investments by a Fund will be restricted to securities and financial derivative instruments listed or traded on Recognised Exchanges Borrowing Powers The Company may only borrow on a temporary basis for the account of a Fund and the aggregate amount of such borrowings may not exceed 10% of the Net Asset Value of such Fund. In accordance with the provisions of the UCITS Regulations, the Company may charge the assets of a Fund as security for borrowings of that Fund Changes to Investment and Borrowing Restrictions It is intended that the Company shall have the power (subject to the prior approval of the Central Bank) to avail itself of any change in the investment and borrowing restrictions specified in the UCITS Regulations 18

19 which would permit investment by a Fund in securities, derivative instruments or in any other forms of investment in which investment is at the date of this Prospectus restricted or prohibited under the UCITS Regulations. Any changes to the investment or borrowing restrictions will be disclosed in an updated Prospectus Use of Financial Derivative Instruments The Company may, on behalf of each Fund, use derivatives, including both exchange traded and OTC derivative instruments, as disclosed in the relevant Supplement. 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 Company will employ a risk management process which will enable it to accurately measure, monitor and manage the risks attached to financial derivative positions and details of this process have been provided to the Central Bank. The Company will not utilise financial derivatives which have not been included in the risk management process until such time as a revised risk management process has been submitted to and cleared in advance by the Central Bank. The Company will provide on request to Shareholders supplementary information relating to the risk management methods employed by the Company including the quantitative limits that are applied and any recent developments in the risk and yield characteristics of the main categories of investments. Information on financial derivatives used for each Fund will be included in the Company s semi-annual and annual reports and accounts. Financial derivative instruments may be used by the Company on behalf of each Fund either for investment or hedging purposes. The financial derivative instruments which the Company may invest in on behalf of each Fund, and the expected effect of investment in such financial derivative instruments on the risk profile of a Fund are set out below and, if applicable to one or more particular Funds, in the relevant Supplement. The Company may, on behalf of each Fund, use futures, forwards (including forward rate agreements), options (both writing and purchasing), swaps (including credit default swaps and total return swaps) and contracts for difference, including both exchange traded and OTC derivative instruments as described below. Futures The Investment Manager may enter into single security and index futures contracts to hedge against changes in the values of securities held by the Fund or markets to which the Fund is exposed or to take out hedges against changes in interest or currency rates which may have an impact on the Fund. Alternatively, interest rate futures may be used to manage overall portfolio duration. The Investment Manager may use futures contracts as a means of gaining exposure to particular securities or markets on a short to medium term basis in advance of making a decision to purchase a particular security or to reallocate assets on a longer term basis. In addition, the Investment 19

20 Manager may use futures to reduce exposure to a market in advance of raising cash from asset sales to fund redemptions from the Fund. The Investment Manager may also use futures contracts to take a directional view on particular securities or markets within the Fund s investment universe where, in the Investment Manager s view, those securities or markets are overpriced/underpriced or likely to enter into a downward/upward phase of the investment cycle. Index Futures Index futures may be used to manage a Fund s market exposure in a cost effective and efficient manner as futures are often more liquid and cost effective to trade. For example, entering into an index future contract in place of immediate purchase of underlying securities, in certain circumstances, may be deemed more cost effective and expedient. Funds may also use index futures for tactical asset allocation reasons mainly to manage a Fund s market exposure. Futures can be used in this way to change weightings to a particular market or market segment at the expense of another, without disturbing individual positions. The use of indices shall in each case be within the conditions and limits set out in the UCITS Notices. Where relevant, dependent on the nature of the underlying, indices will be cleared in advance by the Central Bank. Forwards The Fund may enter into forward currency contracts to purchase or sell a specific currency at a future date at a price set at the time of the contract. FX forwards may be used to hedge the currency exposures of securities denominated in a currency other than the Base Currency of the Fund and to hedge against changes in interest and currency rates which may have an impact on the Fund. The Fund may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. Forward Foreign Exchange Contracts (including Non-deliverable Forward Contracts ( NDFs )) The Fund may invest in forward currency exchange contracts, which involve an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract. The Fund may enter into these contracts primarily with the purpose of increasing exposure to a currency or to shift exposure to currency fluctuations from one currency to another. Investors should note that currencies can be volatile and lead to losses within a portfolio if the exchange rate or interest rate differential moves during the life of the agreement (however, a currency forward contract can be neutralised before the specified delivery date by effecting an identical but opposite transaction). There is a degree of credit risk associated with such a contract because it is struck directly between a buyer and seller without the intervention of an exchange. These contracts will be used with the aim of enabling the Fund to manage its currency exposures in the most efficient manner in relation to the Fund s investment objective. In this sense the use of forward foreign exchange contracts is intended to reduce risks and/or generate additional income or capital gain. As with all such transactions the Fund will become subject to 20

21 an exchange rate risk in relation to changes in the exchange rate between the original currency and the selected currency of conversion. Exchange Traded Futures on Currencies and Options on Currency Futures The Fund may enter into futures on currency contracts or options on currency futures contracts. A currency future is an agreement to buy or sell a currency pair on a specific date. Currency futures differ from currency forwards in that they are traded on Recognised Exchanges thereby reducing counterparty risk. In addition, unlike OTC derivatives, the underlying characteristics of such contracts are standardised. The purchase or sale of a futures currency contract differs from the purchase or sale of the currency or option in that no price or premium is paid or received. Instead, an amount of cash or other liquid assets generally must be deposited with the broker. This amount is known as initial margin. Subsequent payments to and from the broker, known as variation margin, are made on a daily basis as the price of the underlying futures currency contract fluctuates making the long and short positions in the futures contract more or less valuable, a process known as marking to market. In most cases futures contracts are closed out before the settlement date without the making or taking of delivery. Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the relevant currency and the same delivery date. If the price of the initial sale of the futures contract exceeds the price of the offsetting purchase, the seller is paid the difference and realises a gain. Conversely, if the price of the offsetting purchase exceeds the price of the initial sale, the seller realises a loss. Similarly, the closing out of a futures contract purchase is effected by the purchaser entering into a futures contract sale. If the offsetting sale price exceeds the purchase price, the purchaser realises a gain, and if the purchase price exceeds the offsetting sale price, a loss will be realised. In addition, the Fund may enter into exchangetraded options on currency futures contracts for the purpose of increasing or reducing exposure to a specific currency pair. Options Call options may be used to gain exposure to specific securities and put options may be used to hedge against downside risk. Options may also be purchased to hedge against currency and interest rate risk and the Investment Manager may write put options and covered call options to generate additional revenues for the Fund. Call options can provide an efficient, liquid and effective mechanism for taking positions in securities. This allows the Fund to benefit from future gains in the value of a security without the need to purchase and hold the security. A Fund may also purchase call options on currencies to protect against exchange rate risks. The Investment Manager will not write uncovered call options. Options on currencies The Fund may enter into OTC currency option contracts or exchange traded options on currencies which are traded on Recognised Exchanges located worldwide for the purpose of taking/hedging currency risk. Such an option involves the right to buy or sell a currency at a specified strike price during a specified time. Put (sell) and Call (buy) options on currencies exist for this purpose. A price is paid for the right (the premium). The Fund receives a premium from writing a call or put option, which increases the return if the option expires unexercised or is closed 21

22 out at a net profit. If a Fund writes a call option, it gives up the opportunity to profit from any increase in the price of the relevant currency above the exercise price of the option; when it writes a put option, the Fund takes the risk that it will be required to purchase the relevant currency from the option holder at a price above the current market price of the currency. The Fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written. The Fund may also write put-options on currencies to protect against exchange rate risks. Swaps Swap agreements are two-party contracts for periods ranging from a few weeks to more than one year. In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realised on particular agreed investments or instruments. In a swap, the gross returns to be exchanged or swapped between the parties are generally calculated with respect to a notional amount, i.e. the return or increase in value of a particular security or basket of securities or securities index. Total return swap agreements may be used to gain exposure to particular securities or securities markets in instances where it is not possible or not economic to do so through the underlying security or through an exchange traded futures contract. The Fund may utilise total return swap contracts in respect of securities and securities indices whereby the Fund typically exchanges floating interest rate cash flows for fixed cash flows based on the total return of an equity or equity index or could exchange a fixed cash flow based on the total return of a security or a securities index for floating interest rate cash flows. These contracts allow a Fund to manage its exposures to certain securities or securities indices. Swaps may also be used to hedge against currency and interest rate risk or to manage the Fund s interest rate duration and convexity. In respect of currencies the Fund may utilise currency swap contracts where the Fund may exchange currencies at fixed rates of exchange or at floating rates of exchange or currencies at a floating rate of exchange for currencies at a fixed rate of exchange. For these instruments the Fund s return is based on the movement of currency exchange rates and interest rates relative to a fixed currency amount agreed by the parties. In respect of interest rates, the Fund may utilise interest rate swap contracts where the Fund may exchange floating interest rate cash flows for fixed interest rate cash flows or fixed interest rate cash flows for floating interest rate cash flows. These contracts allow the Fund to manage its interest rate exposures. For these instruments the Fund s return is based on the movement of interest rates (and consideration of financing and re-financing costs) relative to a fixed rate agreed by the parties. A credit default swap may be used to transfer the credit exposure of a fixed income product between parties. Where a Fund buys a credit default swap, this is to receive credit protection, whereas the seller of the credit default swap guarantees the credit worthiness of the underlying asset to the Fund. Credit default swaps can either serve as a substitute for purchasing bonds or they can hedge specific bond exposure or reduce 22

23 exposure to credit basis risk. A Fund may enter into credit default swap agreements. The buyer in a credit default swap contract is obligated to pay the seller a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or par value, of the reference obligation in exchange for a deliverable reference obligation. A Fund may be either the buyer or seller in a credit default swap transaction. If a Fund is a buyer and no event of default occurs, the Fund will have paid for the protection without being required to call upon it. However, if an event of default occurs, the Fund (if the buyer) will receive the full notional value of the reference obligation that may have little or no value. As a seller, a Fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and five years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation less the value, if any, of the deliverable reference obligation. A total return swap could be used if it provided exposure to a security or index position in a more cost efficient manner than a direct investment in that security or index position. Total return swaps are agreements whereby a Fund agrees to pay a stream of payments based on an agreed interest rate in exchange for payments representing the total economic performance, over the life of the swap, of the asset or assets underlying the swap. Through the swap, the Fund may take a long or short position in the underlying asset(s), which may constitute a single security or a basket of securities. Exposure through the swap closely replicates the economics of physical shorting (in the case of short positions) or physical ownership (in the case of long positions), but in the latter case without the voting or beneficial ownership rights of direct physical ownership. Index swaps can either serve as a substitute for purchasing a group of bonds, hedge specific index exposure, gain or reduce exposure to an index or be associated to the performance of one or more relevant underlying indices that are linked directly or indirectly to certain securities. The use of indices shall in each case be within the conditions and limits set out in the UCITS Notices. Where relevant, dependent on the nature of the underlying, indices will be cleared in advance by the Central Bank. Contracts for Difference Contracts for difference ( CFDs ) (also known as synthetic swaps) can be used to secure a profit or avoid a loss by reference to fluctuations in the value or price of equities or financial instruments or in an index of such equities or financial instruments. An equity CFD is a derivative instrument designed to replicate the economic performance and the cash flows of a conventional share investment. Contracts for difference may be used either as a substitute for direct investment in the underlying security or as an alternative to and for the same purposes as futures and options, particularly in cases where there is no futures contract available in relation to a specific security, or where an index option or index future represents an inefficient method of gaining exposure because of pricing risk or the risk of delta or beta mismatches. The attention of investors is drawn to the risks described under the headings Derivatives Risk and Currency Risk in the Risk Factors section 23