Sales Prospectus and Management Regulations SEB European Equity Small Caps October 2007
SEB European Equity Small Caps SEB Asset Management S.A. 6a, Circuit de la Foire Internationale L-1347 Luxembourg Sales Prospectus and Management Regulations October 2007 Custodian Bank Skandinaviska Enskilda Banken S.A. Main Administration SEB Asset Management S.A.
Important information It is not permissible to offer information or statements differing from those in the sales prospectus or in the management regulations. Any acquisition of units made on the basis of information or statements which are not given either in the simplified or the full sales prospectus or in the documents mentioned therein, is solely at the risk of the unit purchaser. SEB Asset Management S.A. is not liable if and to the extent to which information or statements are offered which deviate from this sales prospectus or management regulations. The dissemination of information contained in this sales prospectus and the offering of investment units as described in this sales prospectus are not authorised in many countries unless the management company or a third party instructed by the management company has notified the local supervisory authorities or has obtained permission from the local supervisory authorities. In as far as such notification / permission does not exist, the following will not constitute an offer for the acquisition of investment units. This prospectus does not represent an offer or an invitation for the subscription to units by a person in a legal system in which such an offer or invitation is unlawful, or in which the person expressing such an offer or invitation is not qualified to do so, or if such an offer or invitation is unlawful with regard to the person being faced with the offer or invitation. Potential investors should inform themselves about possible tax consequences, legal requirements and possible currency restrictions or currency control regulations which may be valid in the countries of their nationality, their domicile or their residence, and which could be of importance for the subscription, possession, exchange, redemption or sale of units. Investors should note that not all safeguarding provisions corresponding with the relevant regulatory provisions for their country can be applied and that there is no right of compensation in accordance with these regulatory provisions, in as far as such compensation regulations are in existence. The current full sales prospectus and the current simplified sales prospectus are only valid in connection with the latest annual report of the fund, the qualifying date of which may not be more than sixteen (16) months beforehand. Should the qualifying date of the annual report be more than eight (8) months beforehand, the more recent semi-annual report of the fund will also be given to the purchaser. Both reports are a component of this sales prospectus. These documents, as well as the articles of association of the management company, are available without charge at the headquarters of the management company, the custodian bank and at all paying and information agents. Any other important information is related by the management company to the unitholders using the appropriate means.
A. Sales prospectus I. Structure of the document II. Participating parties III. The fund General regulations Investor profile Investment objective and investment policy of the fund General risk information Risks specifically related to companies Calculation of the unit net asset value Units Costs Liquidation of the fund / Amendments to the management regulations Taxation Annual accounts B. Management regulations - general part Article 1 - Article 2 - Article 3 - Article 4 - Article 5 - Article 6 - Article 7 - Article 8 - Article 9 - Article 10 - Article 11 - Article 12 - Article 13 - Article 14 - Article 15 - Article 16 - Article 17 - Article 18 - Article 19 - Article 20 - The funds The management company The custodian bank General guidelines for investment policy Units of a fund - unit classes Issue of units Redemption of units Exchange of units Unit value calculation Discontinuation of the calculation of the unit value Audit of the annual accounts Dividend payouts Mergers Duration and liquidation of the fund Costs Statute of limitations and presentation period Amendments Publications Applicable law, place of jurisdiction and contract language Coming into force C. Management regulations - special part Article 1 - Article 2 - Article 3 - Article 4 - Article 5 - Article 6 - Article 7 - The fund Investment policy Units Fund currency, valuation day, issue and redemption of units Dividend payout policy Costs Accounting year D. Additional information for investors in Germany
A - Sales prospectus I. Structure of the document The management regulations of the SEB European Equity Small Caps fund are enclosed with this sales prospectus. The sales prospectus and the management regulations form a corresponding whole and thus complement each other. The following management regulations have been divided into a general part and a special part. The general part contains the general legal foundation and is applicable to all funds which fall within the coverage of part I of the Luxembourgian Law of 20 December 2002 concerning Undertakings for Collective Investment (hereafter Law of 2002 ) and are managed by SEB Asset Management S.A. Details specifically concerning the fund are defined in the special part. Funds managed by the SEB Asset Management S.A.: SEB Absolute, SEB Alternative Investment, SEB BestChoice, SEB Concept Biotechnology, SEB deluxe, SEB EuroCash Spezial, SEB EuropaFlex, SEB EuropaRent Spezial, SEB European Equity Small Caps, SEB Fund 1, SEB Fund 2, SEB Fund 3, SEB Fund 4, SEB Fund 5, SEB Global Hedge, SEB GlobalPlayers, SEB HighYield, SEB Institutional, SEB Invest Garant, SEB Optimix, SEB Lux Fund Extra, SEB ÖkoLux, SEB ÖkoRent, SEB Private Equity Fund and SEB TrendSystem Renten. Furthermore, SEB Asset Management S.A. manages the following investment companies: SEB Sicav 1, SEB Sicav 2 and SEB Optimus.
II. Participating parties Promoter SEB Asset Management S.A. 6a, Circuit de la Foire Internationale L-1347 Luxembourg Management Company and Main Administration SEB Asset Management S.A. 6a, Circuit de la Foire Internationale L-1347 Luxembourg Board Chairperson Gunilla Carlsson Global Head of Operations at SEB Wealth Management Stockholm, Sweden Members Barbro Lilieholm Head of Legal at SEB Wealth Management Stockholm Rudolf Kömen Head of SEB Asset Management S.A. Luxembourg Management Rudolf Kömen Renzo Sechi Custodian Bank Skandinaviska Enskilda Banken S.A. 6a, Circuit de la Foire Internationale L-1347 Luxembourg Register and Transfer Agent SEB Fund Services S.A. 6a, Circuit de la Foire Internationale L-1347 Luxembourg Fund Management Skandinaviska Enskilda Banken A/S Landemaerket 10 DK-1119 Copenhagen Auditor of the Fund and of the Management Company PricewaterhouseCoopers S.à.r.l. 400, route d Esch L-1471 Luxembourg Paying Agents, Information Agents and Sales Offices Paying Agent and Sales Office in Luxembourg Skandinaviska Enskilda Banken S.A.
6a, Circuit de la Foire Internationale L-1347 Luxembourg Paying and Information Agent in Germany SEB AG Ulmenstraße 30 D-60325 Frankfurt am Main and its branches in Germany Sales Office in Germany SEB Invest GmbH Rotfeder-Ring 7 D-60327 Frankfurt am Main Sales Office and Paying Agent in Sweden Skandinaviska Enskilda Banken AB (publ) Kungsträdgårdsgatan 8 S-106 40 Stockholm
III. The Fund General regulations The legally dependent investment fund, SEB European Equity Small Caps (hereafter the fund ), as described in this full sales prospectus, is a Luxembourgian investment fund ( fonds commun de placement ) which falls within the coverage of part I of the Law of 2002. SEB European Equity Small Caps, which was launched on 30 April 1999 for an indefinite period, is managed by SEB Asset Management S.A. (the management company). The conditions of contract which are currently valid were lodged with the Register of Companies in Luxembourg and statements of lodging concerning the general and special parts were published in Mémorial C Recueil des Sociétés et Associations (hereafter Mémorial C ) on 28 February 2006 and 7 September 2006 respectively. The management company was founded on 15 July 1988 with subsequent publication in Mémorial C on 16 August 1988. A final amendment to the Articles of Association was made on 2 December 2005 and was published on 13 December 2005. The subscribed and paid in capital amounts to 2,000,000 euro. The liable capital amounted to 3.36 million euro on 31 March 2007. The management company, which is subject to the requirements of Chapter 13 of the Law of 2002, takes on the administrative responsibilities which are necessary in the scope of the fund management and which are stipulated by Luxembourgian law. In addition, the management company takes on the tasks and duties of the main administration. The management company, under its own responsibility, control and coordination, may assign individual tasks to third parties for the purpose of efficient management. The management company has transferred the duties of register and transfer agent - under its own responsibility and control - to SEB Fund Services S.A., based at 6a, Circuit de la Foire Internationale, L-1347 Luxembourg. In its capacity as management company, SEB Fund Services S.A. fulfils the conditions stipulated in Chapter 13 of the Law of 2002. The custodian bank is Skandinaviska Enskilda Banken S.A. It keeps the fund s assets in safe custody and fulfils the further duties of a custodian as stipulated by Luxembourgian law. Fund Manager The management company has entrusted the daily management of the fund to Skandinaviska Enskilda Banken A/S, Landemaerket 10, DK-1119 Copenhagen, at its own expense and under its own control and responsibility. The fund manager, for its part, may entrust a sub-manager with the complete or partial administration of this fund, at its own expense and responsibility and in agreement with the management company and with the prior approval of the supervisory authorities. The fund manager executes the investment policy, makes investment decisions and brings these properly in line with market developments, continually taking the interests of the fund into account. Legal position of the investors The management company invests the money in the fund in securities, money market instruments and other authorised assets under its own name for the joint account of the
investors ( unitholders ), taking the principle of risk spreading into account. The invested money and the assets connected with it make up the fund s assets, which are held separately from the management company s own assets. The unitholders hold an interest in the fund s assets as joint owners according to the number of their units. Their rights are represented by units which are made out to the bearer and are certified in the form of global certificates. All fund units have the same rights. Investor profile This fund is suitable for investors who knowingly take higher risks in order to be able to achieve higher profits. Prospective investors should be aware that shares in Small Cap companies can be subject to higher fluctuations in value. Because of the relatively small market capitalisation of these companies, their prices can show greater fluctuations and their shares may be less liquid. Finally, it should be pointed out that the fund invests in domestic and foreign companies and currency fluctuations can therefore not be ruled out. The fund has an investment horizon of at least five years. This investment strategy is recommended for investors who knowingly take higher risks in order to be able to achieve higher profits. Investment objective and investment policy of the fund The main objective of the investment policy of the SEB European Equity Small Caps is the generation of long-term high appreciation. In accordance with the principles of risk spreading, the fund s assets will predominantly be invested in securities, whereby the emphasis will be on investment in shares, share certificates, convertible bonds and other securities similar to shares. Investment in companies participation certificates is also permitted, in as far as these count as securities in accordance with Article 41 of the Law of 20 December 2002 concerning Undertakings for Investment. The issuers of these investment instruments are mainly Small Cap companies based in countries which are included in the MSCI Europe Small Cap Performance Index. These are EU countries as well as Switzerland and Norway. An admixture of Small Cap companies with headquarters in Eastern European countries is possible up to a maximum of 10 % of the net fund s assets. The companies in which the fund invests have, as a rule, a market capitalisation of less than two thousand million euro and widely spread shareholdings of more than 50 million euro at the time of investment. Besides this, the fund can invest up to 49 % in regularly traded money market instruments and bonds, including liquid funds, as noted in the management regulations. In special exceptional cases, liquid funds can take up a higher proportion of the net fund s assets, if and in as far as this is deemed to be in the interests of the unitholders. Furthermore, the management company is permitted to employ financial derivative instruments (derivatives) as stated in Article 4 A h) of the following management regulations, as long as these derivatives are used with regard to efficient portfolio management (including hedging purposes) and within the framework of pursuing the investment objective. Under no circumstances is a fund permitted to deviate from the stated investment objectives when employing derivatives.
The management company will ensure that the total risk connected with derivatives does not exceed the respective net fund s assets. When calculating the risk, the market value of the underlying instruments, the risk of default of the counterparty, future market developments and the maturity dates of the positions are all taken into consideration. The management company may employ derivatives within the framework of pursuing its investment objective, as long as the total risk of the underlying instruments does not exceed the investment limits of Article 4, paragraph B, points 1, 2, 3, 5, 8, 9 and 10 of the following management regulations. If the fund invests in index-based derivatives, these investments will not be taken into consideration in the above-mentioned investment restrictions. If a derivative is embedded in a security or in a money market instrument, it must be considered with regard to maintaining the investment restrictions. The acquisition of units from other undertakings for collective investment in transferable securities (UCITs) or other undertakings for collective investment (UCIs) is restricted to 10 % of the net fund s assets. Net Asset Value The net asset value of the fund is expressed in euro. General risk information An investment in the fund s units is connected with risks. The risks can include or be connected to market risks, interest rate risks, credit risks, exchange rate risks and volatility risks as well as political risks. Each of these risks can also occur in combination with other risks. Some of these risk factors are briefly described below. Potential investors should have experience in investment in instruments which are employed within the scope of the intended investment policy. In addition, investors should be aware of the risks connected with an investment in the fund s units and only make a decision to invest when they have been advised extensively by their financial advisers, tax advisers, legal advisers, accountants or other advisers about (a) the suitability of an investment in the units with regard to their personal financial and tax situation and other circumstances, (b) the information presented in this sales prospectus and (c) the investment policy of the fund. It must be noted that investments in a fund involve risks as well as the prospects of price increases. The units of the fund are securities, the value of which is determined by price fluctuations in the assets contained in the fund. The unit value can rise or fall accordingly in comparison with the acquisition price. Therefore, no guarantee can be given that the objectives of the investment policy can be achieved. Under the circumstances, investors risk having a lower amount returned than the original amount they have invested. Market risk This risk is of a general nature and can be found in all kinds of investment. The price development of securities is particularly dependent on the performance of the capital markets as well as the economic performance of the issuers, who are in turn influenced by the
general state of the world economy as well as the general economic and political conditions in the respective countries. Interest rates Investors should be aware that an investment in units can be accompanied by interest rate risks which can arise in the case of fluctuations in interest rates in the currency applicable to the securities or the fund. Should the market interest rate level rise, the market value of the interest-bearing securities belonging to the fund could fall considerably. This applies to a high degree, in as far as the fund also holds interest-bearing securities with longer residual maturities and lower nominal interest return. Credit risk Investors should be aware that an investment can involve credit risks. Bonds or debt securities bear a credit risk regarding the issuers, for which the credit rating of the issuer can serve as an indicator. Bonds or debt securities launched by issuers with a bad rating are, as a rule, regarded as securities with a higher credit risk and probability of loss on the side of the issuer than those securities launched by issuers with a better rating. Should an issuer of bonds or debt securities run into financial or economic difficulties, this could have an impact on the value of the bonds or debt securities (this can sink to zero) and on the payments made on these bonds or debt securities. Loss exposure Besides the general tendencies on the capital markets, the particular performance of the respective issuers has an effect on the price of an investment. For example, even with the most careful selection of securities, losses caused by a disintegration of the issuer s assets cannot be ruled out. Counterparty credit risk When closing over-the-counter trades (OTC trades), the fund can be exposed to risks with regard to the credit standing of its counterparties and their ability to fulfil the conditions of these contracts. For example, the fund can conclude forward transactions, option contracts and swaps or employ other derivatives, where the fund is subject to the risk that the counterparty does not fulfil the obligations arising from the respective contract. Derivatives The fund may use derivatives, as described in the section Investment objective and investment policy. In this connection, we point out that the following risks can be connected with derivatives: a) The acquired limited rights can become invalid or suffer a loss of value; b) The risk of loss cannot be determined and may go beyond any security; c) Trades where the risks should be excluded or limited may not be concluded or may only be concluded at a loss-making market price if necessary;
d) The loss exposure may rise if the obligations arising from these transactions or the service rendered in return which can be claimed from these is denominated in a foreign currency. Currency risk For investments which are denominated in a different currency from the fund currency, an additional loss can arise caused by the currency risk. The currency risk is based upon changes in exchange rates which can sometimes be considerable. Risks specifically related to companies The price development of the securities and money market instruments held by the fund is also dependent on factors specifically related to companies, for example, the administrative situation of the issuer. Sector risk With regard to sector funds, the specification of the investment objective means that no distribution of risk among different sectors can be made from the outset. Sector funds are particularly dependent on the development of company profits in an individual sector or in related sectors. Liquidity risk In the case of non-liquid securities (tight market conditions), even a smaller order can lead to considerable price fluctuations for both purchases and sales. For non-liquid assets there is a danger that in the case of their disposal, this will not be possible or will be possible only if a considerable decrease in price is accepted. In the case of a purchase, the non-liquidity of an asset can lead to the purchase price being considerably higher. Calculation of the unit net asset value In order to calculate the unit value, the value of the assets belonging to the fund minus the fund s liabilities is ascertained on each day the banks are open for business in both Luxembourg and Frankfurt am Main ( valuation day ). This is divided by the number of the units which are in circulation. Details concerning the calculation of the unit value as well as the evaluation of assets are stated in the general part of the management regulations. Units Issuing of units Units are issued on each valuation day. The issue price is the unit value plus an issue fee of up to 5 % of the unit value. It is payable in the reference currency of the fund immediately after the corresponding valuation day. The issue fee is charged in favour of the fund s sales offices. The issue price can be increased by charges or other encumbrances which arise in the respective countries of sale. The management company may issue units at the request of the unitholder, at its own discretion, against the investment in kind of securities and other assets. This is done on the condition that these securities and other assets are in accordance with the investment objectives and investment policy as well as the provisions of the management regulations. The fund s auditor will prepare a valuation report which is available to every investor at the
headquarters of the management company. The costs for such an investment in kind are carried by the relevant investor. Units are issued at an issue price corresponding to the assessed amount of the investment in kind as determined by the auditor. Units of the SEB European Equity Small Caps can be acquired at the paying agents listed in the sales prospectus. The management company issues global certificates for the issued units. The issue of physical securities is not intended; only confirmation of units will be issued. The management company may schedule the issue of fractional units which can be issued up to the third decimal point. The management company is authorised to issue new units continuously. However, the management company reserves the right to discontinue the issuing of units temporarily or permanently. Payments which have already been made will be reimbursed without delay in this case. The unitholders will be informed about the discontinuation as well as the resumption of the issuing of units immediately. The units of the SEB European Equity Small Caps are not registered in accordance with the United States Securities Act of 1933 (Act of 1933) or with the Investment Company Act of 1940 (Act of 1940) or any other legal provisions of the United States of America. Therefore, unit certificates of the SEB European Equity Small Caps may not, either directly or indirectly, be offered, sold, redeemed, transferred or supplied in the broadest sense in the USA, its territories or sovereign territories, or be offered, sold, redeemed, transferred or supplied in the broadest sense in favour of a person of United States nationality as defined in the Act of 1933 or any other appropriately applicable regulation (an exception applies to certain buyers who qualify in accordance with the Act of 1940). Applicants for the purchase of unit certificates of the SEB European Equity Small Caps should, therefore, confirm that they are not of United States nationality. Holders of units are, therefore, obliged to notify the management company of any changes of their status. The management company is authorised to refuse to issue units to these persons or to have units transferred to persons not of United States nationality Furthermore, the management company may redeem units held by unauthorised persons at any time. Measures to combat money laundering The sales office is obliged by the management company to adhere to all current or future valid applicable regulations and legal obligations to combat money laundering. As a result of these regulations, the sales offices are obliged to identify the subscriber before the conveyance of the application form to the main administration, in as far as the application form has not been accepted by another acknowledged professionally active member of the financial sector which, due to the legal system valid in this case, is subject to the obligation of identification in accordance with Luxembourgian law. Within the scope of the measures for combating money laundering valid in the Grand Duchy of Luxembourg, it is demanded of the unit subscribers that they disclose to the main administration, in its function as transfer agent, their identity and the identity of possible intended authorised beneficial unitholders. The management company and the sales offices are obliged to set up supervisory measures in order to determine the identity of subscribers (and of persons on behalf of whom they act). Therefore, applications for subscription will only be accepted if the subscribers can prove that they are exempted from this requirement or if they enclose copies of the documents required by the main administration with their application for subscription, whereby it is at the main
administration s discretion to decide whether further evidence will be required or whether to reject applications for subscription even after receiving all evidence. Late Trading and Market Timing The management company does not allow any procedures connected with market timing and late trading and reserves the right to refuse applications for subscription from an investor, should it have reason to suspect such business procedures. The management company will take any necessary measures to protect the other investors of the fund. Redemption of units The redemption of fund units takes place on each valuation day at the unit value. In as far as the units are redeemed in a country where stamp charges or other encumbrances arise, the redemption price is decreased accordingly. The payment of the redemption price is made in the reference currency immediately after the corresponding valuation day in return for the receipt of the units, in as far as they have been issued. In the case of a very high demand for redemption, the management company reserves the right, with prior approval of the custodian bank, to effect the redemptions at the valid redemption price, only after it has sold corresponding assets without delay but while observing the interests of the unitholders. The units can be redeemed at the management company, the custodian bank and at the paying agents. Any other payments to the unitholders are also made via the abovementioned locations. Should the management company suspect market timing procedures, it is authorised to charge a redemption fee of up to 2 % of the net assets of the units, in as far as these units were issued a maximum of 6 months previously. This redemption fee flows into the fund and the unit class concerned respectively. The same redemption fee is imposed on all redemptions based upon market timing which are carried out on one valuation day. Redemption of units held by US persons Furthermore, the management company is authorised to redeem units held by US persons (as defined above) at any time. Regulations for the acceptance of orders All applications for subscription and redemption take place on the basis of an unknown unit value. Applications which reach the management company by 5 pm at the latest (Central European Time) on a valuation day will be settled on the basis of the unit value of the next valuation day. Applications which reach the management company after 5 pm (Central European Time) will be settled on the basis of the unit value of the next but one valuation day. It is categorically ensured that requests for subscription and redemption can only be submitted at a unit value which is not yet known, plus an issue fee or minus a redemption fee, if applicable. Publications
The respectively valid issue and redemption prices as well as all other information for unitholders can be requested at the headquarters of the management company, at the custodian bank and at the paying and information agents, at any time. Moreover, the issue and redemption prices are published in the appropriate media in each country of sale. Stock exchange quotation There is no intention to have the units of the fund quoted on a stock exchange. Ascertainment and application of the proceeds The management company makes the decision annually whether and to which amount a dividend payout takes place. Costs 1. The management company receives a fee of 1.5 % p.a. from the fund s assets, calculated on the basis of the net fund s assets which are determined on a daily basis. The fee is paid at the end of each month. In addition to this fixed management fee, the management company can receive an annual performance fee of 10 % of the value by which the annual unit performance exceeds the performance of the MSCI Europe Small Cap Price Index (EUR). The period of calculation for the performance fee is the calendar year. All costs arising for the fund and the fixed management fee of 1.5 % p.a. are included in the unit performance. The charge of the performance fee will therefore only take place if the unit performance exceeds the MSCI Europe Small Cap Price Index (EUR) after deducting all costs at the end of the calendar year and the performance fee has been retained by the management company. In this case, the performance fee can be calculated and taken from the fund. In the case that the absolute performance of the fund during the calendar year is negative, no performance fee will be calculated, even if the benchmark is outperformed. In as far as the unit performance is under the MSCI Europe Small Cap Price Index (EUR) after deducting all costs at the end of the calendar year, this decrease in value will not be taken into account with regard to the calculation of the performance fee for the following calendar year. The development of the unit value in comparison to the calculated development of the index is compared in the course of each price calculation and is taken into consideration by accrual pro rata. 2. The custodian bank receives the following from the fund s assets: a) a fee of up to 0.10 % p.a., calculated daily on the basis of the assets taken into safe custody; b) a handling fee in line with bank practice for transactions made for the account of the fund; c) costs and expenses arising for the custodian bank due to authorised and customary instructions given to a third party financial institution and/or to securities clearing and deposit banks to hold the fund s assets in safe custody. The fee is always paid to the custodian bank at the end of each month.
3. The fund may be charged with further costs in line with Article 15 of the management regulations. Liquidation of the fund / Amendments to the management regulations The management company may liquidate the fund or amend the management regulations at any time. Details can be found in the management regulations. Taxation The fund s assets are subject to a subscription tax ( taxe d abonnement ) of 0.05 % p.a. in the Grand Duchy of Luxembourg, which is payable quarterly on the respective net fund s assets reported at the end of the quarter. There is no taxe d abonnement due on the amount allocated to investment in other undertakings for collective investment which are already subject to taxe d abonnement in accordance with the appropriate regulations of the Luxembourgian law. The income from the investment in the fund s assets is not taxed in Luxembourg. This income can, however, be subject to withholding tax in countries in which the fund s assets are invested. In such cases, neither the custodian bank nor the management company is obliged to obtain tax certificates. In accordance with Luxembourgian law and common practice, investors in Luxembourg are not currently subject to income tax, gift tax or inheritance tax (excepting investors who are taxed in Luxembourg, are resident there or have their business premises there, as well as certain former residents of Luxembourg who hold more than 10 % of the units). Income and investment income drawn from the fund may be taxable for the unitholder. Potential investors should find out about the laws and directives which are applicable to the purchase, the possession and the redemption of units and seek advice if necessary. European Union tax law considerations On 3 June 2003, the Council of the European Union passed the Council directive 2003/48/EU in the field of the taxation of interest income. According to the principles of this directive, member states of the European Union ( member states ) must give details to the tax authorities of another member state about interest payments or similar earnings made by a paying agent within their jurisdiction to a natural person in another member state, while retaining the rights of certain member states (Austria, Belgium and Luxembourg) to opt for a withholding tax system with regard to such payments during a period of transition. From July 2005 until June 2008 the corresponding withholding tax rate would be 15 %, and from July 2008 until June 2011 it would be 20 %; from 1 July 2011 the rate would be increased to 35 %. Annual accounts The accounting year begins on 1 November each year and ends on 31 October the following year.
B - Management regulations - General Part The general part of these management regulations is applicable to all funds which fall under the area of application of part I of the Luxembourgian Law of 20 December 2002 concerning Undertakings for Collective Investment (hereafter the Law of 2002 ) and which are managed by SEB Asset Management S.A. The general part of the management regulations determines general principles for different funds, the specific characteristics of which are described in the special part of the management regulations of the respective fund, wherein supplementary and/or differing regulations can be found for the individual provisions of the management regulations. The general part and the special part of the management regulations, as connected components, together make up the valid terms of contract for the corresponding fund. Article 1 - The funds 1. The funds are legally dependent separate funds ( fonds commun de placement ), consisting of securities and/or other assets (fund s assets) and are managed for the joint account of the holders of units (unitholders), taking the principle of risk spreading into consideration. The unitholders participate in the fund s assets according to the units they hold. The assets in each of the funds are held on principle in safe custody by the custodian bank. 2. The mutual contractual rights and obligations of the unitholders and the management company, as well as of the custodian bank, are stated in these management regulations, which are drawn up by the management company with the approval of the custodian bank. Upon the purchase of a unit, the unitholder acknowledges the management regulations as well as all authorised amendments to them. Article 2 - The management company 1. The management company is SEB Asset Management S.A. 2. The management company manages the fund under its own name, but exclusively in the interests and for the joint account of the unitholders. The authority of administration applies to the exertion of all rights which are directly or indirectly connected to the fund s assets. 3. The management company determines the investment policy for each individual fund, taking the legal and contractual investment restrictions into consideration. The board of directors is entitled to entrust one or more of its members, as well as other natural or legal persons, with the execution of the daily investment policy. 4. The management company can consult investment advisers and fund managers at its own responsibility, risk and supervision and at its own expense. If necessary, it can fall back upon advice from an investment policy committee. This point is mentioned in the sales prospectus, if applicable. 5. The management company also functions as the main administration, in as far as this is not otherwise designated in the special part of the management regulations. Article 3 - The custodian bank 1. The custodian bank for each fund is specified in the special part of the management regulations.
2. The custodian bank is entrusted with the safe custody of the assets of the respective fund. The rights and obligations of the custodian bank comply with the law, these management regulations and the respective custodian bank contract. In particular, it is entrusted with the safe custody of the assets of the respective fund. The custodian bank acts in the interests of the unitholders. 3. The custodian bank holds all securities and other assets of the relevant fund in safe custody in blocked accounts and custody accounts which can only be drawn upon in agreement with the provisions of these management regulations. The custodian bank can entrust other banks and securities clearing and deposit banks with the safekeeping of securities and assets, at its own risk and with the prior approval of the management company. 4. As far as is legally permitted, the custodian bank is authorised and obliged, under its own name, to a) assert unitholder claims against the management company or a former custodian bank; b) protest against enforcement measures by a third party and to take action in case of enforcement of a claim for which the fund s assets are not liable; 5. The custodian bank is bound by the instructions of the management company, in as far as such instructions do not contradict the law, the management regulations or the sales prospectus. 6. The custodian bank and the management company are entitled to terminate the appointment of the custodian bank in writing at any time, in line with the conditions in the contract. Such a termination takes effect when the management company has appointed another custodian bank, with the approval of the supervisory authorities concerned, and this custodian bank has taken on the duties and function of custodian bank. Up until then, the former custodian bank shall fulfil its obligations as custodian bank in their entirety, in order to protect the interests of the unitholders. Article 4 - General guidelines for investment policy The following general guidelines for investment policy are valid for all funds managed by SEB Asset Management S.A. and subject to the provisions of part I of the Luxembourgian Law of 20 December 2002 concerning Undertakings for Collective Investment, unless otherwise stated in the special part of the management regulations or the sales prospectuses. A. Admissible assets Each fund may invest exclusively in the following assets: Transferable securities and money market instruments as defined in the Law of 2002. These comprise: a) securities and money market instruments which are quoted or traded on a regulated market in accordance with Article 1, Point 13 of the directive 93/22/EEC;
b) securities and money market instruments which are traded on another market in a member state of the European Union which is acknowledged, open for the investing public and the functional principle of which is in accordance with the regulations; c) securities and money market instruments which are authorised for trading on a stock exchange of a state which is not a member of the European Union, or on another regulated market there which is acknowledged, open for the investing public and the functional principle of which is in accordance with the regulations; d) securities and money market instruments from new issues, in as far as - the terms of the issue include the obligation to apply for the admission to official quotation on a stock exchange or on another regulated market which is acknowledged, open for the investing public and the functional principle of which is in accordance with the regulations, and - the admission has been obtained before the lapse of one year after the issue; The securities and money market instruments mentioned under c) and d) are officially quoted or traded within North America, South America, Australia (including Oceania), Africa, Asia and/or Europe. e) money market instruments which are not traded on a regulated market, are liquid and the value of which can be determined at any time, in as far as the issue or the issuer of these instruments itself is subject to conditions concerning deposit protection and investor protection and provided that these instruments are - launched or guaranteed by a central state, regional or local corporation or by the central bank of a member state of the European Union, the European Central Bank, the European Union or the European Investment Bank, a non-member state of the European Union, or, in as far as it is a federal state, a constituent state of the federation, or by an international institution under public law, to which at least one member state of the European Union belongs; or - launched by a company, the securities of which are traded on the regulated markets mentioned above under letters a), b) or c); or - launched or guaranteed by an institution which is subject to supervision in accordance with the officially determined criteria in community law or by an institution which is subject to and adheres to conditions of supervision which are in the opinion of the Commission de Surveillance du Secteur Financier, at least as strict as those set by community law; or - launched by other issuers belonging to a category authorised by the Commission de Surveillance du Secteur Financier, in as far as there are valid conditions for the protection of investors concerning investment in these instruments, conditions which are equivalent to the above-mentioned first, second or third indents and in as far as the issuer is either a company with a share capital of at least ten million euro and which prepares and publishes its annual accounts according to the conditions stipulated in the fourth directive 78/660/EEC, or the issuer is a legal representative responsible for the financing of a group of concerns embracing one or more publicly quoted companies, or the issuer is a legal representative, which is to finance securitisation vehicles which benefit from a banking liquidity line. The fund may invest a maximum of 10 % of its net assets in securities and money market instruments which are not mentioned under letters a) to e). Units of undertakings for collective investment
f) Units of undertakings for collective investment in transferable securities in accordance with the EU directive 85/611/EEC and/or other undertakings for collective investment in accordance with Article I, paragraph 2, first and second indents of the directive 85/611/EEC registered in a member state of the European Union or a non-member state, in as far as - these other undertakings for collective investment were authorised in accordance with the legal requirements, which make them subject to supervision which is, in the opinion of the Commission de Surveillance du Secteur Financier, equivalent to community law, and that sufficient guarantee exists for the cooperation between the authorities; - the level of protection of the unitholder of other undertakings for collective investment is equivalent to the level of protection of the unitholder of undertakings for collective investment in transferable securities and in particular, that the conditions for the separated custody of the fund s assets, the raising of a loan, the loan accommodation and uncovered sales of securities and money market instruments are equivalent to the requirements of the directive 85/611/EEC; - the business activities of the other undertakings for collective investment are subject to semi-annual and annual reports which permit a judgement on the assets and liabilities, the yield and the transactions made in the period under review; - the undertaking for collective investment in transferable securities or the other undertaking for collective investment, the units of which are to be acquired, may invest a maximum of 10 % of its assets in units of other undertakings for collective investment in transferable securities or undertakings for collective investment, in accordance with its foundation documents. If a fund acquires units from other undertakings for collective investment in transferable securities and/or other undertakings for collective investment, which are managed directly or indirectly by the same management company, or by another company with which the management company is connected, due to a joint administration or controlling or a significant direct or indirect participation, the management company or other company is not permitted to charge any fees for the subscription or redemption of units from other undertakings for collective investment in transferable securities and/or undertakings for collective investment, through this fund. Deposits with financial institutions g) demand deposits or deposits subject to a withdrawal notice with a maximum term of twelve months at financial institutions, in as far as the financial institution concerned is registered in one of the member states of the European Union, or, in the case that it has its head office in a state which is not a member of the European Union, it is subject to the supervisory regulations which are, in the opinion of the Commission de Surveillance du Secteur Financier, equivalent to community law. Financial derivative instruments h) financial derivative instruments (derivatives) including cash settled instruments of the same value, which are traded on one of the regulated markets mentioned above in a), b) and c), and/or financial derivative instruments which are not traded on the stock exchange ( OTC derivatives ) in as far as - with reference to the underlying instruments, the instruments concerned are in accordance with this paragraph, or are financial indexes, interest rates, exchange rates or currencies which are within the scope of the investment objectives;
- the counterparties for trades with OTC derivatives are subject to supervision by institutions of categories which are authorised by the Commission de Surveillance du Secteur Financier, and - the OTC derivatives are subject to a reliable and verifiable assessment on a daily basis, and can be disposed of, turned into cash or evened up through an offsetting transaction at any time on the initiative of the fund at an appropriate market value. With regard to the hedging of investment positions and the efficient management of the fund s assets, or as part of the investment strategy, the fund is entitled, within the scope of its investment policy and the applicable investment restrictions, to fall back on financial derivative instruments of any kind which have been approved by Luxembourgian law, the circulars published by the authorities and current administrative practice. These include but are not restricted to, (a) the purchase and sale of options on securities, indexes and foreign currency including over-the-counter options; (b) stock exchange and interest rate futures, as well as options on these; (c) structured products; (d) warrants and (e) swaps. B. Investment restrictions applicable to permissible assets The following restrictions are applicable to the permissible assets mentioned under letter A: Transferable securities and money market instruments as defined in the law of 2002. 1. A maximum of 10 % of the net fund s assets may be invested in securities or money market instruments of one and the same issuer. 2. The total value of securities and money market instruments of issuers, in each of which a fund invests more than 5 % of its net fund s assets, may not exceed 40 % of the value of its net fund s assets. This limitation does not apply to deposits and to transactions with OTC derivatives which are made with financial institutions subject to supervision. 3. The limit of 10 % as mentioned in point (1) is raised to a maximum of 35 % if the securities or money market instruments are launched or guaranteed by a member state of the European Union or its central, regional and local authorities, a non-member state or by an international body under public law, to which at least one member state belongs. These securities and money market instruments are not taken into consideration when applying the designated investment restriction of 40 % in paragraph 2. 4. Despite the restrictions which have been set out, a fund may, in accordance with the principle of risk spreading, invest up to 100 % of its net fund s assets in securities and money market instruments of different issues, which are launched by a member state of the European Union or its central, regional and local authorities, or by a member state of the OECD or by an international undertaking under public law, to which at least one member state of the European Union belongs, in as far as these securities and money market instruments are launched in connection with at least six different issues, in which securities from one single issue may not exceed 30 % of the net fund s assets. 5. The limit of 10 % as mentioned in point (1) is raised to a maximum of 25 % for certain bonds, if these - are launched by a financial institution registered in a member state of the European Union which is subject to special public supervision due to legal requirements for the protection of the holders of these bonds, and