BNY Mellon Butterfield Funds plc

Transcription

1 BNY Mellon Butterfield Funds plc SIMPLIFIED PROSPECTUS Dated 30 June 2011 Shares may not be offered or sold, directly or indirectly, to any U.S. Person.

2 SIMPLIFIED PROSPECTUS BNY MELLON BUTTERFIELD FUNDS PLC DATED 30 JUNE 2011 This Simplified Prospectus contains key information in relation to BNY Mellon Butterfield Funds plc (the Company ), which is an open-ended umbrella type investment company with variable capital and having segregated liability between its sub-funds incorporated on 20 June 2011 with limited liability under the laws of Ireland and authorised on 30 June 2011 by the Central Bank of Ireland (the Central Bank ) pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (S.I. No. 211 of 2003) as amended by the European Communities (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations, 2003 (S.I. No. 212 of 2003), as amended by the European Communities (Undertakings for Collective Investment in Transferable Securities) (Amendment No.2) Regulations, 2003 (S.I. No. 497 of 2003) as amended by European Communities (Undertaking for Collective Investment in Transferable Securities) (Amendment) Regulations 2007 (S.I. No. 832 of 2007), as may be amended, substituted or supplemented from time to time. The Company has one sub-fund, the BNY Mellon Butterfield Income Advantage Fund (the Sub- Fund ). This Simplified Prospectus contains information relating to the Sub-Fund and the Institutional Accumulating Class of Shares and Retail Accumulating Class of Shares of the Sub- Fund. Potential investors are advised to consult the Company s full Prospectus dated 30 June 2011 (the Prospectus ) together with all supplements and addenda thereto (the Full Prospectus ) before making an investment decision. The rights and duties of the investor as well as the legal relationship with the Company are laid down in the Full Prospectus. Investment Objective/ Policies Investment Objective The investment objective of the Sub-Fund is to obtain competitive interest income to the extent consistent with the maintenance of liquidity. Investment Policies To achieve its investment objective, the Sub-Fund will invest in securities issued or guaranteed, as to principal and interest, by the U.S. Government or its agencies or instrumentalities such as U.S. Treasury securities, agency bonds and municipal bonds; U.S. Dollar-denominated investment grade bills, notes and bonds issued or guaranteed by: (i) any EU Member State or its local authorities; (ii) any OECD Member State; (iii) Brazil; (iv) India; (v) Singapore; and (vi) any public international body listed in Appendix II to the Prospectus; supranationals; certificates of deposit; bankers acceptances, time deposits and other short-term obligations issued by domestic (i.e. U.S.) banks, foreign subsidiaries or foreign branches of domestic banks, and domestic and foreign branches of foreign banks and thrift institutions; asset-backed securities which do not create leverage; high quality domestic and foreign commercial paper and other short-term corporate obligations, such as corporate debt securities, corporate bonds, debentures and notes, including medium term notes, fixed rate notes and those with floating or variable rates of interest. The Sub-Fund reserves the right to invest in other money market instruments similar to those listed above and which are transferable securities. The Sub-Fund may hold ancillary liquid assets including, but not limited to, time deposits and demand deposits, within the conditions and limits laid down by the Central Bank. In pursuit of its investment objective, the Sub-Fund will invest in securities, instruments and obligations (as described above) with remaining maturities until the legal redemption date (date of final maturity) of 2 years or less except asset-backed

3 securities which shall have an average life at time of purchase of 2 years or less. To help maintain a high degree of share price stability and preserve shareholders' capital, the Sub-Fund will maintain a weighted average maturity of no more than 180 days or such shorter period as may be determined by the Investment Adviser. The Sub-Fund invests only in U.S. Dollar-denominated investment grade securities traded on a Regulated Market in: (i) any EU Member State; (ii) any OECD Member State; (iii) Brazil; (iv) India; and (v) Singapore; and determined, in accordance with procedures established by the Company s Board, to present minimal credit risks and that are rated in one of the three highest rating categories for debt obligations established by at least two statistical rating organisations (or one such established rating organisation if the instrument was rated only by one such organisation) or, if unrated, are of comparable quality as determined in accordance with procedures established by the Investment Adviser. The established statistical rating organisations currently rating instruments of the type the Sub-Fund may purchase are Moody s Investor Service, Inc., Standard & Poor s Ratings Group, and Fitch Investor Service L.P. Bankers acceptances are credit instruments evidencing the obligation of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and the drawer to pay the face amount of the instrument upon maturity. The other short-term obligations may include uninsured, direct obligations bearing fixed, floating or variable interest rates. Certificates of deposit are negotiable certificates evidencing the obligation of a bank to repay funds deposited with it for a specified period of time. Commercial paper consists of short-term, unsecured promissory notes issued to finance short-term credit needs. The commercial paper purchased by the Sub-Fund will consist of only direct obligations. The other corporate obligations in which the Sub-Fund may invest consist of high quality, U.S. Dollar-denominated short-term bonds and notes. The Sub-Fund may lend, for purposes of efficient portfolio management, securities from its portfolio to brokers, dealers and other financial institutions needing to borrow securities to complete certain transactions. The Sub-Fund will continue, however, to be entitled to payments in amounts equal to the interest or other distributions payable on the loaned securities. This entitlement affords the Sub-Fund an opportunity to earn interest on the amount of the loan and on the loaned securities collateral. Loans of portfolio securities may not exceed 331/3% of the value of the Sub-Fund s total assets, and the Sub-Fund will receive collateral consisting of cash or cash equivalents, U.S. Government securities, U.S. Treasury securities, or other high quality instruments that comply with the requirements set out in Appendix III, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. Such loans are terminable by the Sub-Fund at any time upon specified notice. The Sub-Fund might experience risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its agreement. The Sub-Fund may enter into repurchase agreements with certain banks or non-bank dealers, for purposes of efficient portfolio management. In a repurchase agreement, a fund buys, and the seller agrees to repurchase, a security at a mutually agreed upon time and price (usually within seven days). The repurchase agreement thereby determines the yield during the purchaser s holding period, while the seller s obligation to repurchase is secured by the value of the underlying security. Repurchase agreements could involve risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon the Sub-Fund s ability to dispose of the underlying securities. The Sub-Fund may, for purposes of efficient portfolio management, enter into reverse repurchase agreements with banks, brokers or dealers. Reverse repurchase agreements involve the transfer by a fund of an underlying debt instrument in return for cash proceeds based on a percentage of the value of the security. The Sub-Fund retains the right to receive interest and principal payments on the security. The Sub- Fund will use the proceeds of reverse repurchase agreements only to make investments which generally either mature or have a demand feature to resell to the 2

4 issuer at a date simultaneous with or prior to the expiration of the reverse repurchase agreement. At an agreed upon future date, the Sub-Fund repurchases the security, at principal, plus accrued interest. As a result of these transactions, the Sub-Fund will be exposed to greater potential fluctuations in the value of its assets and its Net Asset Value per Share. These borrowings will be subject to interest costs which may or may not be recovered by appreciation of the securities purchased. In certain cases, interest costs may exceed the return received on the securities purchased. For purposes of efficient portfolio management, the Sub-Fund may purchase its portfolio securities on a forward commitment or when-issued basis, which means that delivery and payment take place a number of days after the date of the commitment to purchase. The payment obligation and the interest rate receivable on a forward commitment or when-used security are fixed when the Sub-Fund enters into the commitment, but the Sub-Fund does not make payment until it receives delivery from the counterparty. The Sub-Fund will commit to purchase such securities only with the intention of actually acquiring the securities, but the Sub-Fund may sell these securities before the settlement date if it is deemed advisable. The Company has been authorised by the Central Bank to invest up to 100% of the Sub-Fund s net assets in securities issued and guaranteed as to principal and interest by the U.S. Government. This authorisation is subject to the condition that such securities will be comprised of at least six different issues and any one issue shall not account for more than 30% of the total assets of the Sub-Fund. Securities issued and guaranteed by the U.S. Government include U.S. Treasury securities, which differ only in their interest rates, maturities and times of issuance. Some obligations issued or guaranteed by U.S. Government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury; others by the right of the issuer to borrow from the Treasury; others by discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and others only by the credit of the agency or instrumentality. These securities bear fixed, floating or variable rates of interest. While the U.S. Government currently provides financial support to such U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it will always do so, since it is not so obligated by law. The Sub-Fund will attempt to increase yields by investing to take advantage of shortterm market variations. The value of the portfolio securities held by the Sub-Fund will vary inversely to changes in prevailing interest rates. Thus, if interest rates have increased from the time a security was purchased, such security, if sold, might be sold at a price less than its cost. Similarly, if interest rates have declined from the time a security was purchased, such security, if sold, might be sold at a price greater than its purchase cost. In either instance, if the security was purchased at face value and held to maturity, no gain or loss would be realised. The Sub-Fund may purchase floating and variable rate demand notes and bonds. Variable rate demand notes include master demand notes which are obligations that permit the Sub-Fund to invest fluctuating amounts, at varying rates of interest, pursuant to direct arrangements between the Sub-Fund, as lender, and the borrower. These obligations permit daily changes in the amounts borrowed. Because these obligations are direct lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded, and there generally is no established secondary market for these obligations, although they are redeemable at face value, plus accrued interest. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, the Sub-Fund s right to redeem is dependent on the ability of the borrower to pay principal and interest on demand. The Sub-Fund may invest up to 10% of the value of its net assets in securities that are considered to be transferable within the meaning set forth in UCITS Regulations, but that are not traded on a Regulated Market, provided such investments are consistent with the investment objectives of the Sub-Fund. Such securities may include securities that are not readily marketable, such as certain securities that are subject to legal or contractual restrictions on resale, and repurchase agreements providing for settlement in more than seven days after notice. As to these securities, the Sub-Fund is subject to a risk that should it desire to sell them when a ready buyer is not available at a price the Sub-Fund deems representative of their value, the value 3

5 of the Sub-Fund s net assets could be adversely affected. The asset-backed securities in which the Sub-Fund may invest are investment grade obligations issued by special purpose entities whose primary assets consist of a pool of mortgages, loans, receivables, or other assets, and are traded on the over-thecounter market in the United States among market makers regulated by the SEC and the NASD and have a two year average weighted life and rated AAA only and for money market tranches at least A-1+/P-1. Payment of principal and interest may depend largely on the cash flows generated by the asset backing the securities and, in certain cases, supported by letters of credit, surety bonds and other forms of credit or liquidity enhancements. The value of these asset-backed securities also may be affected by the creditworthiness of the servicing agent for the pool of assets, the originator of the loans or receivables or the financial institutions providing the credit support. Efficient Portfolio Management The Sub-Fund may invest in techniques and instruments for the purposes of efficient portfolio management as set out in the Appendix III Financial Derivative Instruments/Efficient Portfolio Management of the Prospectus. The Company, on behalf of the Sub-Fund, within the conditions and limits established by the Central Bank and as set forth in the Prospectus, may enter into reverse repurchase agreements. Reverse repurchase agreements involve the transfer by the Sub-Fund of an underlying debt instrument in return for cash proceeds based on a percentage of the value of the security. The Sub-Fund will use the proceeds of reverse repurchase agreements only to make investments which generally either mature or have a demand feature to resell to the issuer at a date simultaneous with or prior to the expiration of the reverse repurchase agreement. At an agreed upon future date, the Sub-Fund repurchases the security, at principal, plus accrued interest. As a result of these transactions, the Sub-Fund is exposed to greater potential fluctuations in the value of its assets and its Net Asset Value per Share. These borrowings will be subject to interest costs which may or may not be recovered by appreciation of the securities purchased; in certain cases, interest costs may exceed the return received on the securities purchased. The Sub-Fund may enter into repurchase agreements with certain banks or non-bank dealers. In a repurchase agreement, the Sub-Fund buys, and the seller agrees to repurchase, a security at a mutually agreed upon time and price (usually within seven days). The repurchase agreement thereby determines the yield during the purchaser s holding period, while the seller s obligation to repurchase is secured by the value of the underlying security. Repurchase agreements could involve risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon the Sub-Fund s ability to dispose of the underlying securities. Repurchase agreements may only be entered into in accordance with normal market practice and the Company must, at all times, be in a position to meet repurchase obligations. Securities that are the subject of a purchase contract cannot be sold before the repurchase term has expired. The Investment Adviser will monitor on an ongoing basis the value of the collateral to ensure that it always exceeds the repurchase price. Certain costs may be incurred by the Sub-Fund in connection with the sale of the securities if the seller does not repurchase them in accordance with the repurchase agreement. In addition, if bankruptcy proceedings or similar proceedings are commenced in respect of the seller of the securities, realisation of the securities by the Sub-Fund may be delayed or limited. The Manager will consider on an ongoing basis the creditworthiness of the institutions with which it enters into repurchase agreements. The Sub-Fund may purchase securities on a when-issued or delayed delivery basis. These transactions are arrangements by which securities are purchased with payment and delivery scheduled for a future time. The Company does not engage in when-issued and delayed delivery transactions for investment leverage or for borrowing purposes on behalf of the Sub-Fund. 4

6 It is not anticipated that the Company will employ other techniques and instruments for the purposes of efficient portfolio management in the Sub-Fund. Risk Profile The following risks apply to the Sub-Fund: Potential investors should be aware that the price of Shares and income therefrom may fall as well as rise and investors may not get back the full amount originally invested. The investments of the Sub-Fund will be subject to market fluctuations. The Sub-Fund may be exposed to foreign exchange/currency risk. The Sub-Fund may be exposed to changes in interest rates. The Sub-Fund may be exposed to a credit risk from the parties with whom it trades and may also bear the risk of settlement default. Potential investors should note that a holding in the Sub-Fund is subject to the risks associated with investing in a collective investment undertaking, in particular, the fact that the principal sum invested is capable of fluctuation as the Net Asset Value of the Sub-Fund fluctuates. A complete description of risk factors is set out in the Full Prospectus. Performance Data Profile of the Typical Investor Distribution Policy Fees and Expenses The Sub-Fund is newly established and, as such, no performance data is currently available. The Retail Accumulating Class of Shares may be offered to the retail sector and may be purchased by any individual or institutional investor or distributor, paying agent, broker or other financial intermediary. The Institutional Accumulating Class of Shares may be offered to institutional investors only who are acting for themselves or in a fiduciary, custodial or other similar capacity. In respect of the Accumulating Shares of the Sub-Fund, it is not intended to distribute dividends to the Shareholders. The income and other profits will be accumulated and reinvested on behalf of Shareholders. Dividends, if paid on the Shares, may be paid out of the net revenue of the Sub-Fund including interest and dividends earned by the Sub-Fund, realised and unrealised profits on the disposal/valuation of the investments and other assets less realised and unrealised losses of the Sub-Fund. Shareholder Expenses - The Company does not intend to charge a subscription fee in respect of the Sub- Fund. - The Company does not intend to charge a redemption fee in respect of the Sub- Fund. - The Company does not intend to charge a switching fee in respect of the Sub- Fund. Annual Operating Expenses (per annum) - Annual Management Fees: Institutional Accumulating Class 0.50% Retail Accumulating Class 0.70% - The Manager may waive receipt of all or a portion of its fees, voluntarily assume certain expenses of, or make other arrangements to reduce expenses of a Sub- Fund, to the extent that such expenses exceed such expense limitation as the Manager, by written notice to the Company, may voluntarily declare effective from time to time. Any such waiver, assumption of expenses or other arrangements, while in effect, would have the effect of lowering a Sub-Fund's overall expense ratio and increasing the yield or investment return to the Shareholders. In such case, the Sub-Fund will not pay the Manager at a later time for any fees the Manager may waive, and the Sub-Fund will not reimburse the Manager for any expenses voluntarily assumed by the Manager. The operating costs subject to the voluntary limitation include the management, 5

7 custodian and administration fees. Not included within the voluntary expense limitation, however, are any taxes, (including but not limited to any withholding tax applicable to portfolio securities or distributions to Shareholders and the costs related thereto), brokerage, interest on borrowing, insurance premiums, the costs associated with registering the Company, the Sub-Fund or the Shares with any governmental or regulatory authority, or with any regulated stock exchange or market, and extraordinary expenses. The Manager, at any time in its sole discretion, may modify or terminate any such voluntary fee waiver, assumption of expenses or other arrangements to reduce expenses of the Sub-Fund, upon notice in writing to the Company. The Manager currently has undertaken that if in any fiscal year the aggregate operating expenses allowable to each Class of Shares of a Sub-Fund are in excess of the Annual Management Fee, the Sub- Fund may deduct such excess expenses from payments to be made to the Manager under the Management Agreement, or the Manager will itself bear the excess expenses. - The Manager will be responsible for and will discharge the Administrator's fee out of the fees paid to the Manager and will be entitled to reimbursement out of the assets of each Sub-Fund for any such fee paid. The Administrator is entitled to a fee at an annual rate not exceeding 0.02% of the average monthly Net Asset Value of each Sub-Fund as of the last Valuation Point in each month. This fee shall accrue daily and be payable monthly in arrears and shall be allocated equally across all of the Sub-Funds of the Company. The Administrator shall also be entitled to be reimbursed for certain expenses incurred by it in the performance of its duties under the Administration Agreement. - Under the Custodian Agreement, the Custodian is entitled to a fee that accrues daily and is payable monthly in arrears at an annual rate not exceeding % of the aggregate Net Asset Value of each Sub-Fund as of the last Valuation Point in each month. The Custodian shall also be entitled to be reimbursed for certain transactional and other expenses incurred by it in the performance of its duties under the Custodian Agreement. The fees of any sub-custodian appointed by the Custodian shall be discharged by the Custodian out of its own fee. - Out of pocket expenses of the Manager are paid out of the Company s assets. - The Manager will be responsible for and will discharge the Distributor s fees and reasonably incurred, properly vouched out of pocket expenses out of the Annual Management Fee as described in the relevant Supplement. - The Directors shall be entitled to a fee and remuneration for their services at a rate to be determined from time to time by the Directors which shall not exceed 30,000 (exclusive of any applicable value added tax) for any Director in any one financial year without the approval of the Board. Any Director who holds any executive office or who serves on any committee, or who otherwise performs services which in the opinion of the Directors are outside the ordinary duties of a Director or who devotes special attention to the business, may be paid such extra remuneration as the Directors may determine. The Directors may also be paid, inter alia, for travelling, hotel and other expenses properly incurred by them in attending meetings of the Directors or in connection with the business of the Company. Total Expense Ratio ( TER ) The Sub-Fund is newly established and, as such, no TER data is currently available. 6

8 Portfolio Turnover Rate ( PTR ) Irish Taxation The Sub-Fund is newly established and, as such, no PTR data is currently available. Subject to the provisions contained in the Prospectus in the section Taxation, the Company is not subject to Irish taxation charges on income or capital gains. No Irish stamp duty is payable on the issue, redemption or transfer of Shares in the Company. However, tax can arise in respect of chargeable events in respect of a Shareholder who is Irish Resident or Ordinarily Resident in Ireland. Shareholders and potential investors should consult with their professional advisers in relation to the tax treatment of their holdings in the Company. Publication of Share Price How to buy/sell Shares Except where the determination of the Net Asset Value of a Sub-Fund, the Net Asset Value per Share and/or the issue and redemption of Shares has been suspended in the circumstances described in the Prospectus, the Subscription Price and Redemption Price on each Valuation Day will be made public at the office of the Administrator and published by the Company on each Valuation Day on the following website: It is intended that the Net Asset Value of the Sub-Fund, the Subscription Price and Redemption Price posted on the BNY Mellon Asset Management International Limited website will be up to date. Investors can buy, sell and switch Shares from the Company s Administrator, BNY Mellon Fund Services (Ireland) Limited of Guild House, Guild Street, Dublin 1, Ireland, Tel: ; Fax: The minimum initial subscription amounts, which vary from Class to Class, dealing deadlines, notice periods and other details are set out in the Full Prospectus. Additional Important Information The Full Prospectus and the most recently published annual and half-yearly reports relating to the Company are available free of charge for inspection on any Business Day at the registered office of the Administrator at Guild House, Guild Street, Dublin 1, Ireland. The Manager: Investment Adviser Administrator: Custodian: Auditors: Secretary: Distributor: BNY Mellon Global Management Limited, 33 Sir John Rogerson s Quay, Dublin 2, Ireland. The Dreyfus Corporation 200 Park Avenue, New York, NY 10166, USA. BNY Mellon Fund Services (Ireland) Limited Guild House, Guild Street, Dublin 1, Ireland. BNY Mellon Trust Company (Ireland) Limited Guild House, Guild Street, Dublin 1, Ireland. PricewaterhouseCoopers, Chartered Accountants, Georges Quay, Dublin 2, Ireland. Wilton Secretarial Limited, Fitzwilton House, Wilton Place, Dublin 2, Ireland. Butterfield Asset Management Limited, 65 Front Street, Hamilton, HM 12, Bermuda For further information, please contact BNY Mellon Butterfield Funds plc, c/o BNY Mellon Fund Services (Ireland) Limited, Guild House, Guild Street, Dublin 1, Ireland. (Tel No: ) WF v4 7

9 2011 BNY Mellon Global Management Limited BNYMBTFD-SP-0611