Investment company under Luxembourg law with variable capital and multiple Sub-Funds EXTRACT OF THE PROSPECTUS relating to the issue of Shares March 2010 SYDBANK PEERLESS, SICAV (the "Company") is an umbrella fund composed of multiple subfunds ("Sub-Funds"). This Prospectus is solely designed for the offer and the distribution of shares of the Company in or from Switzerland. This Prospectus refers only to the Sub-Funds authorised in Switzerland. A further Sub-Fund which has been approved by the Commission de Surveillance du Secteur Financier exists but is not designed for offering and distributing in Switzerland. With regard to the legal relationship between the Company and the investor in Switzerland, only the German version of the prospectus on hand, which has been signed and handed over to the Swiss supervisory authority, is valid. Subscription to the Company s Shares (the "Shares") can only be validly made on the basis of the information contained in the current Prospectus accompanied by a copy of the latest annual report as well as the latest semi-annual report if published after the last annual report. No person is authorised to give to third parties any information other than that contained in this Prospectus or the documents mentioned herein.
INTRODUCTION SYDBANK PEERLESS, SICAV is a limited company (société anonyme) incorporated in the form of an Investment Company with Variable Capital (société d investissement à capital variable, SICAV) with multiple sub-funds, under the laws of the Grand Duchy of Luxembourg. SYDBANK PEERLESS, SICAV is registered on the official list of undertakings for collective investment (organismes de placement collectif) in accordance with Part II of the law of 20 th December 2002 on undertakings for collective investment (the 2002 Law ). This registration cannot be construed as an approval by the regulatory authority of the contents of this Prospectus or the quality of the Shares offered by SYDBANK PEERLESS, SICAV. Any representation to the contrary is unauthorised and unlawful. This prospectus ( Prospectus ) may not be used for the purpose of offering and promoting sales in any country or any circumstances where such offers or promotions are not authorised. Potential subscribers to Shares issued by the Company on behalf of the Sub-Funds are advised to obtain information themselves and seek professional advice from their banker, foreign exchange agent, accountant or legal or tax adviser so that they are fully informed of the possible legal, administrative or tax consequences and the possible effects of foreign exchange restrictions, controls or operations which might be required in connection with the subscription, purchase, holding, redemption, conversion and sale of shares under the laws in force in their countries of residence, domicile or establishment. No person is authorised to give to third parties any information other than that contained in this Prospectus or the documents mentioned herein which can be consulted by the general public. The board of directors of SYDBANK PEERLESS, SICAV (the Directors ) is responsible for the accuracy of the information contained in this Prospectus at the time of its publication. This Prospectus may be updated with important amendments. Consequently, subscribers are advised to ask the Company for the most recent issue of the Prospectus. This Prospectus is valid only if it is accompanied by the latest available annual report and by the latest semi-annual report if the latter is published after the last annual report. These reports are an integral part of the Prospectus. SYDBANK PEERLESS, SICAV March 2010 Page 2
ADMINISTRATION OF THE COMPANY HEAD OFFICE PROMOTER BOARD OF DIRECTORS SYDBANK PEERLESS, SICAV 69 route d'esch L-1470 Luxembourg Sydbank (Schweiz) AG Poststrasse 17 CH-9001 St. Gallen Dr. Thomas König Chief Executive Officer Sydbank (Schweiz) AG, St. Gallen Jürg Willi Compliance Officer Sydbank (Schweiz) AG, St. Gallen Jørgen Dahl Chief Investment Officer Sydbank (Schweiz) AG, St. Gallen Mads Schierup Petersen Senior Vice President Sydbank (Schweiz) AG, St. Gallen INVESTMENT MANAGER REPRESENTATIVE AND PAYING AGENT IN SWITZERLAND INDEPENDENT AUDITOR CUSTODIAN BANK, DOMICILIARY, ADMINISTRATIVE, CORPORATE, PAYING AND LISTING AGENT REGISTRAR AND TRANSFER AGENT LEGAL ADVISER Sydbank (Schweiz) AG Poststrasse 17 CH-9001 St. Gallen Sydbank (Schweiz) AG Poststrasse 17 CH-9001 St. Gallen KPMG Audit S. à r.l. 31, allée Scheffer L-2520 Luxembourg RBC Dexia Investor Services Bank S.A. 14, Porte de France L-4360 Esch-sur-Alzette RBC Dexia Investor Services Bank S.A. 14, Porte de France L-4360 Esch-sur-Alzette Arendt & Medernach 14, Rue Erasme P.O. Box 39 L 2010 Luxembourg SYDBANK PEERLESS, SICAV March 2010 Page 3
TABLE OF CONTENTS INTRODUCTION 2 TABLE OF CONTENTS 4 1. THE COMPANY 5 2. INVESTMENT OBJECTIVES, POLICIES, TECHNIQUES AND RESTRICTIONS 8 3. MANAGEMENT OF THE COMPANY 21 4. CUSTODIAN BANK, PAYING AGENT, DOMICILIARY AND CORPORATE AGENT, ADMINISTRATIVE AGENT AND REGISTRAR AND TRANSFER AGENT 21 5. SHARES 22 6. NET ASSET VALUE 23 7. ISSUE AND DELIVERY OF SHARES 28 8. REDEMPTION OF SHARES 31 9. CONVERSION OF SHARES 32 10. CHARGES AND EXPENSES BORNE BY THE COMPANY 33 11. FISCAL YEAR 35 12. PERIODIC REPORTS 35 13. GENERAL MEETING OF SHAREHOLDERS 35 14. DISTRIBUTION OF DIVIDENDS 36 15. OFFICIAL LANGUAGE 36 16. TAXATION 36 17. SHAREHOLDER INFORMATION 37 18. DOCUMENTS AVAILABLE TO THE PUBLIC 38 19. SPECIAL INFORMATION FOR INVESTORS IN SWITZERLAND 39 APPENDIX I: SPECIAL CONSIDERATIONS ON RISKS FOR INVESTMENTS IN OTHER UCIS 40 APPENDIX II: INVESTMENT AND RISK MANAGEMENT PROCESS 43 APPENDIX III: PREVIOUS PERFORMANCE AND INFORMATION ON TER AND PTR 44 DATA SHEET 45 SYDBANK PEERLESS, SICAV Conservative 45 SYDBANK PEERLESS, SICAV Stable 48 SYDBANK PEERLESS, SICAV Dynamic 51 SYDBANK PEERLESS, SICAV March 2010 Page 4
1. THE COMPANY A. GENERAL INFORMATION SYDBANK PEERLESS, SICAV is an Investment Company with Variable Capital (SICAV) incorporated under Luxembourg law in the form of a limited company in accordance with the provisions of the amended Luxembourg law of 10 August 1915 on commercial companies and organised in accordance with the provisions of 2002 Law. The Company was set up for an unlimited duration on April 10, 2006. The head office of the Company is located in the Grand Duchy of Luxembourg at 69, route d'esch, L-1470 Luxembourg. The capital of the Company is made up of various categories of Shares each corresponding to a distinct portfolio (a Sub-Fund ) consisting of securities, units or shares of undertakings for collective investment or other investments, including liquid assets, managed according to the standards described in Chapter 2 Investment objectives, policies, techniques and restrictions and in the Data Sheets specific to each Sub-Fund. The Data Sheets can be found at the end of the Prospectus. Currently, the following Sub-Funds are available to investors: - SYDBANK PEERLESS, SICAV Conservative; - SYDBANK PEERLESS, SICAV Stable; - SYDBANK PEERLESS, SICAV Dynamic. The Directors reserve the right to launch other new Sub-Funds in the future, the offering terms and conditions of which will be communicated in due course via an update of or an addendum to this Prospectus. The Company shall be considered as one single legal entity. With regard to third parties, in particular towards the Company s creditors, each Sub-Fund shall be exclusively responsible for all liabilities attributable to it. The Company s articles of incorporation were published in the Mémorial C, Recueil des Sociétés et Associations (the Mémorial ) on May 5, 2006 after being deposited on April 24, 2006 with the Registrar of the Luxembourg District Court. Its articles of incorporation were last amended on March 5, 2007 and published in the Mémorial on March 29, 2007. These documents are available for inspection and copies can be obtained on paying a fee to the Registrar. The Company is registered in the Luxembourg Trade Register under number R.C.S. B 115 626. The Directors are authorised to issue Shares of different classes within each Sub-Fund (a Class ). Each class of Shares may be characterised, amongst other things, by the charges and expenses, distribution policy or minimum subscription amount applicable to it. The types of classes available for each Sub-Fund are listed in the relevant Data Sheets. SYDBANK PEERLESS, SICAV March 2010 Page 5
Use of EUR or Euro signs refers to the legal currency of the European Monetary Union. A business day ( Business Day ) shall be understood to be any day on which banks are open for business in Luxembourg City. B. SHARE CAPITAL The Company s Share capital is at all times equal to the net assets of the Company and to the total net assets of all the Sub-Funds. It is represented by fully paid-up registered shares with no par value. The minimum capital required by law is EUR 1 250 000 and shall be achieved within 6 months after the date on which the Company has been authorised. The Company has been incorporated with an initial capital of EUR 32 000. Variations in the Share capital can take place without further consideration or enquiry and without the need for publication or registration in the Trade Register foreseen in respect of increases and reductions in the capital of limited companies. The Company may issue additional Shares at any time, at a price determined in compliance with the terms of Chapter 7 Issue and delivery of Shares, without preferential rights to existing shareholders of the Company (the "Shareholders"). C. LIQUIDATION OF THE COMPANY The Company is incorporated for an unlimited period and liquidation shall normally be decided upon by a general meeting of Shareholders of the Company ("General Meeting" or "General Meeting of Shareholders"). This meeting will be convened in compliance with Luxembourg law. If the Share capital of the Company falls below two thirds of the minimum level required by law, the Directors must convene a General Meeting of Shareholders and submit the question of the liquidation of the Company. No quorum shall be required and decisions will be taken by simple majority of the Shares represented at the meeting. If the capital of the Company falls below a quarter of the legal minimum, the Directors must submit the question of the liquidation of the Company to the General Meeting for which no quorum shall be prescribed. The liquidation can be resolved by the Shareholders holding a quarter of the Shares represented at the meeting. The General Meeting must be convened so that it is held within a period of forty days as from ascertainment that the net assets have fallen below two thirds or one fourth of the legal minimum, as the case may be. Should the Company be liquidated, such liquidation shall be carried out in accordance with the provisions of the 2002 Law which specifies the steps to be taken to enable Shareholders to participate in the liquidation distributions and in this connection provides for deposit in escrow at the Caisse de Consignations in Luxembourg of any such amounts which it has not been possible to distribute to the Shareholders at the close of liquidation. Amounts not claimed within the prescribed period are liable to be forfeited in accordance with the provisions of Luxembourg law. The net liquidation proceeds of each Sub-Fund shall be distributed to the Shareholders of each Class of the relevant Sub-Fund in proportion to their respective holdings of such Class. SYDBANK PEERLESS, SICAV March 2010 Page 6
D. LIQUIDATION / MERGER OF SUB-FUNDS In the event that for any reason the value of the assets in any Sub-Fund has decreased to, or has not reached, EUR 500 000 being the amount determined by the Directors to be the minimum level for such Sub-Fund to be operated in an economically efficient manner or in case of a substantial modification in the political, economic or monetary situation or as a matter of economic rationalization, the Directors may decide on a forced redemption of the remaining Shares in the Sub- Fund concerned without the Shareholders approval being necessary. The said redemption will be effected on the basis of the Net Asset Value per Share calculated after all the assets attributable to this Sub-Fund have been sold. The Company shall serve a written notice to the holders of the relevant Shares prior to the effective date of the compulsory redemption, which will indicate the reasons for, and the procedure of the redemption operations. Holders of registered Shares shall be notified in writing. The Company shall inform holders of bearer Shares (if any) by publication of a notice in newspapers to be determined by the Directors. Unless it is otherwise decided in the interests of, or to keep equal treatment between the Shareholders, the Shareholders of the Sub-Fund concerned may continue to request redemption or conversion of their Shares free of charge (but taking into account actual realisation prices of investments and realisation expenses) prior to the effective date of the compulsory redemption. Notwithstanding the powers conferred to the Directors by the preceding paragraph, a General Meeting of Shareholders of any Sub-Fund may, upon proposal from the Directors, redeem all the Shares of such Sub-Fund and refund to the Shareholders the net asset value of their Shares (taking into account actual realisation prices of investments and realisation expenses) calculated on the Valuation Day at which such decision shall take effect. There shall be no quorum requirements for such General Meeting of Shareholders at which resolutions shall be adopted by simple majority of those present or represented, if such decision does not result in the liquidation of the Company. Assets which may not be distributed to their beneficiaries upon the close of the liquidation period will be deposited in escrow with the Luxembourg Caisse de Consignations on behalf of the persons entitled thereto. Under the circumstances provided in the first paragraph of this section, the Directors may decide to allocate the assets of any Sub-Fund to those of another existing Sub-Fund within the Company or to another undertaking for collective investment organised under the provisions of part II of the 2002 Law or to another sub-fund within such other undertaking for collective investment (the "new Sub- Fund") and to redesignate the Shares of the Sub-Fund concerned as shares of the new Sub-Fund (following a split or consolidation, if necessary, and the payment of the amount corresponding to any fractional entitlement to Shareholders). Such decision will be published in the same manner as described in the second paragraph of this section (and, in addition, the publication will contain information in relation to the new Sub-Fund), one month before the date on which the amalgamation becomes effective in order to enable Shareholders to request redemption or conversion of their Shares, free of charge, during such period. SYDBANK PEERLESS, SICAV March 2010 Page 7
Notwithstanding the powers conferred to the Directors by the preceding paragraph, a contribution of the assets and liabilities attributable to any Sub-Fund to another Sub-Fund of the Company may be decided upon by a General Meeting of Shareholders of the contributing Sub-Fund for which there shall be no quorum requirements and which will decide upon such an amalgamation by resolution taken by simple majority of those present or represented, if the amalgamation does not result in the liquidation of the Company. Shareholders of the contributing Sub-Fund must be granted a period of one month before the date on which the amalgamation becomes effective to request redemption or conversion of their Shares, free of charge. A contribution of the assets and liabilities attributable to any Sub-Fund to another undertaking for collective investment or to another Class/Serie within such other undertaking for collective investment to be decided by a General Meeting of Shareholders shall require a resolution of the Shareholders of the contributing Sub-Fund where no quorum is required and adopted at a simple majority of the Shares present or represented at such meeting, except when such amalgamation is to be implemented with a Luxembourg undertaking for collective investment of the contractual type ( fonds commun de placement ) or a foreign based undertaking for collective investment, in which case resolutions shall be binding only on the Shareholders of the contributing Sub-Fund who have voted in favour of such merger. 2. INVESTMENT OBJECTIVES, POLICIES, TECHNIQUES AND RESTRICTIONS The main objective of the Company is the active management of different portfolios in order to realise acceptable profits in Euro according to the market conditions and the respective investment strategy of each Sub-Fund. The Company intends to achieve this objective by the active management of the Sub-Funds. The Directors define the investment objectives and policy for each category of Sub-Fund as described below (the particular characteristics of each Sub-Fund are specified in the Data Sheets) and are responsible for the application of these policies. No guarantee can be given that this objective will be achieved. ADVANTAGES AND DISADVANTAGES OF A FUND OF FUNDS STRUCTURE The main advantages of a fund of funds structure such as the Company, in comparison to direct investment, are the following: the selection of a diversified portfolio of underlying funds, whose managers use different strategies, limits the specific risk related to any individual strategy; the selection of a diversified portfolio of underlying funds, whose managers use the same strategy, limits the specific risk related to an individual manager; and collective investment vehicles like the Company allow investors to participate in underlying funds that would normally be closed because of their high minimum investment requirement. The main disadvantages are: each underlying fund has its own cost structure to which the Company's own costs must be added; and SYDBANK PEERLESS, SICAV March 2010 Page 8
the dilution of specific risk by means of diversification implies a dilution of the performance of the Company's most successful investments. I. INVESTMENT OBJECTIVE The objective of the Traditional Management Sub-Funds is to achieve optimal growth of the invested capital over the long-term. II. INVESTMENT POLICY In order to achieve its investment objective, the Company invests at all times at least 50% of the net assets of each of the Sub-Funds in units or shares of other UCITS or UCI, whose investment policy is to invest in bonds, equities, money market instruments and financial derivative instruments. These UCITS or UCIs are generally Luxembourg investment funds with any type of legal structure, e.g. contractual investment funds or companies. In addition, each Sub-Fund may invest directly in the securities mentioned in the preceding paragraph. The Sub-Funds allocate their assets by investing both: - directly in the said assets and/or - in units or shares issued by undertakings for collective investment ( UCIs ) whose investment policy is to invest in such assets. The Sub-Funds may also invest in stock warrants; the life of these warrants may be greater than one year. Warrants involve increased risks due to their volatility which may have an impact on the net asset value per Share of the Sub-Funds concerned. The Sub-Funds shall only invest in warrants on an ancillary basis. All Sub-Funds may also hold liquid assets on an ancillary and temporary basis and may use financial techniques and instruments for the purpose of hedging or the efficient management of the portfolio within the limits defined below. SYDBANK PEERLESS, SICAV March 2010 Page 9
III. INVESTMENT RESTRICTIONS The management of the assets of each Sub-Fund will be undertaken by the Investment Manager within the limits of the following investment restrictions. A Sub-Fund may be subject to different or additional investment restrictions that will be set forth in the relevant Data Sheet. Except to the extent that more restrictive rules are provided for in connection with a specific Sub- Fund as described in the relevant Data Sheets, the investment policy shall comply with the rules and restrictions laid down hereafter. For best understanding of this section A. III, the following concepts are defined hereafter: Group of Companies companies belonging to the same body of undertakings and which must draw up consolidated accounts in accordance with Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts and according to recognized international accounting rules as amended Member State Money Market Instruments Other Regulated Market Other State a member state of the European Union instruments normally dealt in on the money market which are liquid, and have a value which can be accurately determined at any time a market which is regulated, operates regulatory and is recognized and open to the public, namely a market (i) that meets the following cumulative criteria: liquidity; multilateral order matching (general matching of bid and ask prices in order to establish a single price); transparency (the circulation of complete information in order to give clients the possibility of tracking trades, thereby ensuring that their orders are executed on current conditions); (ii) on which the securities are dealt in at a certain fixed frequency, (iii) which is recognized by a state or by a public authority which has been delegated by that state or by another entity which is recognized by that state or by that public authority such as a professional association and (iv) on which the securities dealt are accessible to the public Any State of Europe which is not a Member State, and any State of the Americas, Africa, Asia, Australia and Oceania SYDBANK PEERLESS, SICAV March 2010 Page 10
Regulated Market a regulated market as defined in the Directive 2004/39/EC of the European Parliament and the Council on markets in financial instruments as amended, namely a multilateral system operated and/or managed by a market operator, which brings together or facilitates a multiple third party buying and selling interests in financial instruments in the system and in accordance with its non-discretionary rules in a way which results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorized and functions regularly and in accordance with the provisions of title III of such Directive 2004/39/EC Transferable Securities - shares and other securities equivalent to shares; - bonds and other debt instruments; - any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchanges, with the exclusion of techniques and instruments A. Investments in the Company shall consist solely of: (1) Transferable Securities and Money Market Instruments listed or dealt in on a Regulated Market; (2) Transferable Securities and Money Market Instruments dealt in on an Other Regulated Market in a Member State; (3) Transferable Securities and Money Market Instruments admitted to official listing on a stock exchange in an Other State or dealt in on an Other Regulated Market in an Other State; (4) recently issued Transferable Securities and Money Market Instruments, provided that: i) the terms of issue include an undertaking that application will be made for admission to official listing on a Regulated Market, a stock exchange in an Other State or on an Other Regulated Market as described under (1)-(3) above; ii) such admission is secured within one year of the issue; (5) units of UCITS and/or other UCIs within the meaning of the first and second indent of article 1 (2) of the UCITS Directive, whether situated in a Member State or in an Other State, provided that: i) such other UCIs are authorized under laws which provide that they are subject to supervision considered by the regulatory authority to be equivalent to that laid down in Community law, and that cooperation between authorities is sufficiently ensured (currently the United States of America, Canada, Switzerland, Hong Kong and Japan); SYDBANK PEERLESS, SICAV March 2010 Page 11
ii) the level of protection for unit holders in such other UCIs is equivalent to that provided for unit holders in a UCITS, and in particular that the rules on assets segregation, borrowing, lending, and uncovered sales of Transferable Securities and Money Market Instruments are equivalent to the requirements of the UCITS Directive; iii) the business of the other UCIs is reported in half-yearly and annual reports to enable an assessment of the assets and liabilities, income and operations over the reporting period; iv) no more than 10 % of the assets of the UCITS or of the other UCIs, whose acquisition is contemplated, can, according to their constitutional documents, in aggregate be invested in units of other UCITS or other UCIs; (6) deposits with credit institutions which are repayable on demand or have the right to be withdrawn, and maturing in no more than 12 months, provided that the credit institution has its registered office in a Member State or, if the registered office of the credit institution is situated in an Other State, provided that it is subject to prudential rules considered by the regulatory authority as equivalent to those laid down in Community law; (7) financial derivative instruments, including equivalent cash-settled instruments, dealt in on a Regulated Market, stock exchange in an Other State or on an Other Regulated Market referred to in (1), (2) and (3) above, and/or financial derivative instruments dealt in over-the-counter ("OTC derivatives"), provided that: i) the underlying consists of instruments covered by this section A, financial indices, interest rates, foreign exchange rates or currencies, in which the Sub-Fund may invest according to its investment objectives; ii) the counterparties to OTC derivative transactions are institutions subject to prudential supervision, and belonging to the categories approved by the Regulatory Authority; and iii) the OTC derivatives are subject to reliable and verifiable valuation on a daily basis and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the Company's initiative; (8) Money Market Instruments other than those dealt in on a Regulated Market or on an Other Regulated Market, to the extent that the issue or the issuer of such instruments is itself regulated for the purpose of protecting investors and savings, and provided that such instruments are: i) issued or guaranteed by a central, regional or local authority or by a central bank of a Member State, the European Central Bank, the EU or the European Investment Bank, an Other State or, in case of a Federal State, by one of the members making up the federation, or by a public international body to which one or more Member States belong, or ii) issued by an undertaking any securities of which are dealt in on Regulated Markets or on Other Regulated Markets referred to in (1), (2) or (3) above, or iii) issued or guaranteed by an establishment subject to prudential supervision, in accordance with criteria defined by Community law, or by an establishment which is subject to and complies with prudential rules considered by the regulatory authority to be at least as stringent as those laid down by Community law; or SYDBANK PEERLESS, SICAV March 2010 Page 12
iv) issued by other bodies belonging to the categories approved by the regulatory authority provided that investments in such instruments are subject to investor protection equivalent to that laid down in the first, the second or the third indent and provided that the issuer is a company whose capital and reserves amount to at least ten million Euro (EUR 10.000.000) and which presents and publishes its annual accounts in accordance with directive 78/660/EEC, is an entity which, within a Group of Companies which includes one or several listed companies, is dedicated to the financing of the group or is an entity which is dedicated to the financing of securitisation vehicles which benefit from a banking liquidity line. B. Each Sub-Fund may however: (1) Invest up to 10% of its net assets in Transferable Securities and Money Market Instruments other than those referred to above under A (1) through (8), including UCIs pursuing alternative investment strategies, and closed-ended UCIs, the shares or units of which are neither listed on a Regulated Market nor dealt in on an Other Regulated Market or on a stock exchange in an other State or dealt in on an other Regulated Market in an Other State. (2) Hold cash and cash equivalents on an ancillary basis; such restriction may exceptionally and temporarily be exceeded if the Directors consider this to be in the best interest of the Shareholders. (3) Borrow up to 10% of its net assets, provided that such borrowings are made only on a temporary basis. Collateral arrangements with respect to the writing of options or the purchase or sale of forward or futures contracts are not deemed to constitute "borrowings" for the purpose of this restriction. (4) Acquire foreign currency by means of a back-to-back loan. C. In addition, the Company shall comply in respect of the net assets of each Sub-Fund with the following investment restrictions per issuer: (a) Risk Diversification rules For the purpose of calculating the restrictions described in (1) to (5) and (8) hereunder, companies which are included in the same Group of Companies are regarded as a single issuer. To the extent an issuer is a legal entity with multiple sub-funds where the assets of a sub-fund are exclusively reserved to the investors in such sub-fund and to those creditors whose claim has arisen in connection with the creation, operation and liquidation of that sub- fund, each sub-fund is to be considered as a separate issuer for the purpose of the application of the risk spreading rules described under items (1) to (5), (7) to (9) and (12) to (15) hereunder. SYDBANK PEERLESS, SICAV March 2010 Page 13
Transferable Securities and Money Market Instruments (1) No Sub-Fund may purchase additional Transferable Securities and Money Market Instruments of any single issuer if: (i) upon such purchase more than 10% of its net assets would consist of Transferable Securities and Money Market Instruments of one single issuer; or (ii) the total value of all Transferable Securities and Money Market Instruments of issuers in which it invests more than 5% of its net assets would exceed 40% of the value of its net assets. This limitation does not apply to deposits and OTC derivative transactions made with financial institutions subject to prudential supervision. (2) A Sub-Fund may invest on a cumulative basis up to 20% of its net assets in Transferable Securities and Money Market Instruments issued by the same Group of Companies. (3) The limit of 10% set forth above under (1) (i) is increased to 35% in respect of Transferable Securities and Money Market Instruments issued or guaranteed by a Member State, by its local authorities, by any Other State or by a public international body of which one or more Member State(s) are member(s). (4) The limit of 10% set forth above under (1) (i) is increased up to 25% in respect of qualifying debt securities issued by a credit institution which has its registered office in a Member State and which, under applicable law, is submitted to specific public control in order to protect the holders of such qualifying debt securities. For the purposes hereof, "qualifying debt securities" are securities the proceeds of which are invested in accordance with applicable law in assets providing a return which will cover the debt service through to the maturity date of the securities and which will be applied on a priority basis to the payment of principal and interest in the event of a default by the issuer. To the extent that a relevant Sub-Fund invests more than 5% of its net assets in debt securities issued by such an issuer, the total value of such investments may not exceed 80% of the net assets of such Sub-Fund. (5) The securities specified above under (3) and (4) are not to be included for purposes of computing the ceiling of 40% set forth above under (1) (ii). (6) Notwithstanding the ceilings set forth above and having regard to the specific investment policies of the Sub-Fund in the relevant Data Sheet, each Sub-Fund is authorized to invest, in accordance with the principle of risk spreading, up to 100% of its net assets in Transferable Securities and Money Market Instruments issued or guaranteed by a Member State, by its local authorities, by any other member State of the Organization for Economic Cooperation and Development ("OECD") such as the U.S. or by a public international body of which one or more Member State(s) are member(s), provided that (i) such securities are part of at least six different issues and (ii) the securities from any such issue do not account for more than 30% of the net assets of such Sub-Fund. (7) Without prejudice to the limits set forth hereafter under (b), the limits set forth in (1) are raised to a maximum of 20% for investments in shares and/or bonds issued by the same body when the aim of the Sub-Fund's investment policy is to replicate the composition of a certain stock or bond index which is recognized by the Regulatory Authority, on the following basis: SYDBANK PEERLESS, SICAV March 2010 Page 14
i) the composition of the index is sufficiently diversified, ii) the index represents an adequate benchmark for the market to which it refers, iii) it is published in an appropriate manner. The limit of 20% is raised to 35% where that proves to be justified by exceptional market conditions in particular in Regulated Markets where certain Transferable Securities or Money Market Instruments are highly dominant. The investment up to this limit is only permitted for a single issuer. Bank Deposits (8) A Sub-Fund may not invest more than 20% of its net assets in deposits made with the same body. Derivative Instruments (9) The risk exposure to a counterparty in an OTC derivative transaction may not exceed 10% of the Sub-Fund's net assets when the counterparty is a credit institution referred to in A (6) above or 5% of its net assets in other cases. (10) Investment in financial derivative instruments shall only be made provided that the exposure to the underlying assets does not exceed in aggregate the investment limits set forth in (1) to (5), (8), (9), (14) and (15). When the Sub-Fund invests in index-based financial derivative instruments, these investments do not have to be combined to the limits set forth in (1) to (5), (8), (9), (14) and (15). In addition, the Company is only authorized to make use of financial derivative instruments for the purpose of hedging against foreign exchange risks and risks relating to direct investments, excluding assets held indirectly through underlying UCITS or UCIs. (11) When a Transferable Security or Money Market Instrument embeds a derivative, the latter must be taken into account when complying with the requirements of (A) (7) (ii) and (D) (1) as well as with the risk exposure and information requirements laid down in the present Prospectus. Units of Open-Ended Funds (12) No Sub-Fund may invest more than 20% of its net assets in the units of a single UCITS or other UCI. For the purposes of this limit, each sub-fund of a UCITS or other UCI is to be considered as a separate issuer, provided that the principle of the segregation of the liabilities of each sub-fund towards third parties is complied with. SYDBANK PEERLESS, SICAV March 2010 Page 15
Units of Closed-Ended Funds (13) Investments in closed-ended UCIs underlie the same restrictions as investments in transferable securities. Therefore, no Sub-Fund may invest more than 10% of its net assets in closed-ended UCIs whose shares or units are neither listed on a Regulated Market nor dealt in on an Other Regulated Market or on a stock exchange in an other State or dealt in on another Regulated Market in an Other State. Hence, at least 90% of the UCIs in which the Company invests are open-ended or have their shares listed on a Regulated Market or dealt in on an Other Regulated Market or on a stock exchange in an other State or dealt in on an other Regulated Market in an Other State. Combined limits (14) Notwithstanding the individual limits laid down in (1), (8) and (9) above, a Sub-Fund may not combine: i) investments in Transferable Securities or Money Market Instruments issued by, ii) deposits made with, and/or iii) exposures arising from OTC derivative transactions undertaken with a single body in excess of 20% of its net assets. (15) The limits set out in (1), (3), (4), (8), (9) and (14) above may not be combined, and thus investments in Transferable Securities or Money Market Instruments issued by the same body, in deposits or derivative instruments made with this body carried out in accordance with (1), (3), (4), (8), (9) and (14) above may not exceed a total of 35% of the net assets of the Sub-Fund. (b) Limitations on Control (16) No Sub-Fund may acquire such amount of shares carrying voting rights which would enable the Company to exercise a significant influence over the management of the issuer. (17) Neither any Sub-Fund nor the Company as a whole may acquire (i) more than 10% of the outstanding non-voting shares of any one issuer; (ii) more than 10% of the outstanding debt securities of any one issuer; (iii) more than 10% of the Money Market Instruments of any one issuer; or (iv) more than 25% of the outstanding shares or units of any one UCITS and/or other UCI. The limits set forth in (ii) to (iv) may be disregarded at the time of acquisition if at that time the gross amount of bonds or of the Money Market Instruments or the net amount of the securities in issue cannot be calculated. The ceilings set forth above under (14) and (15) do not apply in respect of: i) Transferable Securities and Money Market Instruments issued or guaranteed by a Member State or by its local authorities; ii) Transferable Securities and Money Market Instruments issued or guaranteed by any Other State; SYDBANK PEERLESS, SICAV March 2010 Page 16
iii) Transferable Securities and Money Market Instruments issued by a public international body of which one or more Member State(s) are member(s); and iv) Shares in the capital of a company which is incorporated under or organized pursuant to the laws of an Other State provided that (i) such company invests its assets principally in securities issued by issuers of that State, (ii) pursuant to the laws of that State a participation by the relevant Sub-Fund in the equity of such company constitutes the only possible way to purchase securities of issuers of that State, and (iii) such company observes in its investments policy the restrictions set forth under C, items (1) to (5), (8), (9) and (12) to (15); v) shares in the capital of subsidiary companies which, exclusively on its or their behalf carry on only the business of management, advice or marketing in the country where the subsidiary is located, in regard to the redemption of shares at the request of Shareholders. D. In addition, the Company shall comply in respect of its net assets with the following investment restrictions per instrument: (1) Each Sub-Fund shall ensure that its global exposure relating to derivative instruments does not exceed the total net value of its portfolio. The exposure is calculated taking into account the current value of the underlying assets, the counterparty risk, foreseeable market movements and the time available to liquidate the positions. (2) Investments made in units of UCIs other than UCITS may not in aggregate exceed 30% of the net assets of a Sub-Fund. E. Finally, the Company shall comply in respect of the assets of each Sub-Fund with the following investment restrictions: (1) No Sub-Fund may acquire commodities or precious metals or certificates representative thereof, provided that transactions in foreign currencies, financial instruments, indices or Transferable Securities as well as futures and forward contracts, options and swaps thereon are not considered to be transactions in commodities for the purposes of this restriction. (2) No Sub-Fund may invest in real estate provided that investments may be made in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein. (3) No Sub-Fund may use its assets to underwrite any securities. (4) No Sub-Fund may issue warrants or other rights to subscribe for shares in such Sub-Fund. (5) A Sub-Fund may not grant loans or guarantees in favour of a third party, provided that such restriction shall not prevent each Sub-Fund from investing in non fully paid-up Transferable Securities, Money Market Instruments or other financial instruments, as mentioned under A, items (5), (7) and (8). (6) A Sub-Fund may not enter into uncovered sales of Transferable Securities, Money Market Instruments or other financial instruments as listed under A, items (5), (7) and (8). SYDBANK PEERLESS, SICAV March 2010 Page 17
(7) A Sub-Fund may not conclude any individual mandates for asset management, with a view to placing its assets directly or indirectly into "managed accounts". F. Notwithstanding anything to the contrary herein contained: (1) While ensuring observance of the principle of risk-spreading, each Sub-Fund may derogate from paragraph C, items (1) to (9) and (12) to (15) for a period of six months following the date of its authorization. (2) The ceilings set forth above may be disregarded by each Sub-Fund when exercising subscription rights attaching to securities in such Sub-Fund's portfolio. (3) If such ceilings are exceeded for reasons beyond the control of a Sub-Fund or as a result of the exercise of subscription rights, such Sub-Fund must adopt as its priority objective in its sale transactions the remedying of such situation, taking due account of the interests of its Shareholders. The Directors have the right to determine additional investment restrictions to the extent that those restrictions are necessary to comply with the laws and regulations of countries where Shares of the Company are offered or sold. SYDBANK PEERLESS, SICAV March 2010 Page 18
IV. SPECIAL INVESTMENT TECHNIQUES AND INSTRUMENTS (A) General The Company may employ techniques and instruments relating to Transferable Securities and Money Market Instruments in order to ensure efficient portfolio management and for hedging purposes as more fully described in the Data Sheets. When these operations concern the use of derivative instruments, the conditions and/or limits shall conform to the provisions laid down in section III "Investment Restrictions". Under no circumstances shall these operations cause a Fund to diverge from its investment objectives as laid down under the sections "Investment Objectives" and "Investment Policy" hereabove. (B) Securities Lending and Borrowing The Company may enter into securities lending and borrowing transactions provided that they comply with the following rules: i) The Company may only lend or borrow securities through a standardised system organised by a recognised clearing institution or through a first class financial institution specializing in this type of transaction. ii) As part of lending transactions, the Company must in principle receive a guarantee, the value of which at the conclusion of the contract must be at least equal to the aggregate value of the securities lent. This guarantee must be given in the form of liquid assets and/or in the form of securities issued or guaranteed by a Member State of the OECD or by their local authorities or by supranational institutions and undertakings of a community, regional or worldwide nature and or by an on demand guarantee furnished by a first class financial institution blocked in the name of the Company until the expiry of the loan contract. Such a guarantee shall not be required if the securities lending is made through recognised clearing institutions or through any other organisation assuring to the lender a reimbursement of the value of the securities lent, by way of a guarantee or otherwise. iii) Securities lending transactions may not exceed 50% of the aggregate value of the securities portfolio of each Fund. Securities lending and borrowing transactions may no extend beyond a period of 30 days. These limitations do not apply where the Company is entitled at any time to cancel the contract and receive back the securities lent. iv) The securities borrowed by the Company may not be disposed of during the time they are held by the Company, unless they are covered by sufficient financial instruments which enable the Company to return the borrowed securities at the close of the transaction. v) Borrowing transactions may not exceed 50% of the aggregate value of the securities portfolio of each Sub-Fund. SYDBANK PEERLESS, SICAV March 2010 Page 19
vi) vii) The Company may borrow securities under the following circumstances in connection with the settlement of a sale transaction: (a) during a period the securities have been sent out for re-registration; (b) when the securities have been loaned and not returned in time; (c) to avoid a failed settlement when the Custodian fails to make delivery; and (d) as a technique to meet its obligation to deliver the securities being the object of a repurchase agreement when the counterparty to such agreement exercises its right to repurchase these securities, to the extent such securities have been previously sold by the Company. Securities which constitute the underlying of a financial derivative instrument or which have been received in the frame of a repurchase agreement may not be lent. (C) Repurchase Agreement Transactions The Company may on an ancillary basis enter into repurchase agreement transactions which consist of the purchase and sale of securities with a clause reserving the seller the right or the obligation to repurchase from the acquirer the securities sold at a price and term specified by the two parties in their contractual arrangement. The Company can act either as purchaser or seller in repurchase agreement transactions or a series of continuing repurchase transactions. Its involvement in such transactions is, however, subject to the following rules: i) The Fund may not buy or sell securities using a repurchase agreement transaction unless the counterpart in such transactions is a highly-rated financial institution specializing in this type of transaction, including without limitation member bank of the U.S. Federal Reserve System. ii) During the life of a repurchase agreement contract, the Fund cannot sell the securities which are the object of the contract, either before the right to repurchase these securities has been exercised by the counterparty, or the repurchase term has expired, except to the extent it has borrowed similar securities in compliance with the provisions set forth hereabove in respect of securities borrowing transactions. iii) The Company must ensure that the level of its exposure to repurchase agreement transactions is such that it is able, at all times, to meet its redemption obligations. iv) Securities which constitute the underlying of a financial derivative instrument, which have been lent or which have been received in the frame of a repurchase agreement may not be sold in the frame of a repurchase agreement. SYDBANK PEERLESS, SICAV March 2010 Page 20
3. MANAGEMENT OF THE COMPANY The Directors are responsible for the management of the Company and for supervising its operations as well as determining and implementing the Company s investment policy. The Directors have required the assistance of Sydbank (Schweiz) AG (the Investment Manager ) for the management of the Sub-Funds pursuant to an investment management agreement dated April 10, 2006 (the Management Agreement ). Any details regarding the remuneration of the Investment Manager will be specified in the Data Sheets. The Management Agreement provides for the appointment of the Investment Manager to continue for an unlimited period of time from the date of their signature. It may be terminated by the Company or the Investment Manager on giving a six (6) month' prior written notice. The Investment Manager provides the Directors with advice, reports and recommendations in connection with the management of the assets of the relevant Sub-Funds and shall advise the Directors as to the selection of UCIs, liquid assets and other securities and assets constituting the portfolios of the Sub-Funds and, pursuant to the Management Agreement, have discretion, on a day to day basis and subject to the overall control and responsibility of the Directors, to purchase and sell the assets of the Sub-Funds and otherwise to manage the Sub-Funds' portfolios. The Investment Manager may, subject to the approval of the Directors, delegate its powers, in which case the Prospectus will be updated or supplemented accordingly. Sydbank (Schweiz) AG is a subsidiary of the Sydbank Group. Sydbank A/S is a highly-reputed listed Danish bank with roots dating back more than a century. Sydbank (Schweiz) AG was established in 2002 as a Swiss platform for private banking. The bank specialises in developing premier, versatile investment solutions for international investors and is able to draw upon the Sydbank Group s long experience within this area. 4. CUSTODIAN BANK, PAYING AGENT, DOMICILIARY AND CORPORATE AGENT, ADMINISTRATIVE AGENT AND REGISTRAR AND TRANSFER AGENT RBC Dexia Investor Services Bank S.A. ("RBC Dexia") assumes the functions of Custodian, for the Company. The Custodian carries out duties regarding custody of cash, securities and other assets deposits. The Custodian will further, in accordance with the 2002 Law : a) ensure that the sale, issue, redemption and cancellation of Shares effected by the Company or on its behalf are carried out in accordance with the law and the articles of incorporation; b) ensure that in transactions involving the assets of the Company, the consideration is remitted to it within the usual time limits; c) ensure that the income of the Company is applied in accordance with the articles of incorporation. The Custodian shall further be responsible for the payment of the redemption price of the Shares by the Company. SYDBANK PEERLESS, SICAV March 2010 Page 21