EDMOND DE ROTHSCHILD FUND
Société d’Investissement à Capital Variable (SICAV)
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1. INTRODUCTION
EDMOND DE ROTHSCHILD FUND(hereinafter the “Company”) 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. The aim of the Company is to enable investors to invest in portfolios made up of diversified transferable securities according to the specific approach of the Sub-Funds offered, to best achieve the performances expected by the investors.
EDMOND DE ROTHSCHILD FUNDis registered on the official list of Undertakings for Collective Investment in accordance with the Law of 20 December 2002 on Undertakings for Collective Investment (hereinafter the "Law of 2002") and is governed by Part I of the Law of 2002 and qualifies as a self-managed SICAV in accordance with article 27 of the Law of 2002.
This registration cannot be construed as an approval by the controlling authority regarding the contents of this Prospectus or the quality of the securities offered by EDMOND DE ROTHSCHILD FUND. Any representation to the contrary is unauthorised and unlawful.
This Prospectus may not be used for the purpose of offering and promoting sales in any country or any circumstance where such offers or promotions are not authorised.
None of the Shares has been or will be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or under the securities laws of any state or political subdivision of the United States of America or any of its territories, commonwealths, possessions or other areas subject to its jurisdiction including the Commonwealth of Puerto Rico (the "United States"), and such Shares may be offered, sold or otherwise transferred only in compliance with the 1933 Act and such state or other securities laws. The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "1940 Act"), nor under any other U.S. Federal laws. Accordingly, no shares are being offered to U.S. Persons (as defined under U.S. Federal securities and commodities laws) or persons who are in the United States at the time the shares are offered or sold (except as may be otherwise provided under the section titled ‘The hares - Redemption of Shares’ in this Prospectus). The attention of investors is drawn to certain compulsory redemption terms applicable to U.S. Persons described under "Redemptions" in this Prospectus.
The shares have not been approved or disapproved by the U.S. Securities and Exchange Commission (the "SEC") or any other regulatory agency in the United States, nor has the SEC or any other regulatory agency in the United States passed upon the accuracy or adequacy of this Prospectus or the merits of the shares. Any representation to the contrary is a criminal offence. The U.S. Commodity Futures Trading Commission has not reviewed or approved this offering or any offering memorandum for the Company.
No person is authorised to give any information other than that contained in this Prospectus or the documents mentioned herein and which are available for inspection by the general public.
The Board of Directors of EDMOND DE ROTHSCHILD FUND is responsible for the accuracy of the information contained in this Prospectus at the time of its publication.
This Prospectus may be updated from time to time with significant amendments. Consequently, subscribers are advised to ask EDMOND DE ROTHSCHILD FUND for the most recent issue of the Prospectus.
Potential subscribers are also advised to seek professional advice on the laws and regulations (such as those on taxation and exchange control) applicable to the subscription, purchase, holding, redemption and sale of shares in their countries of citizenship, residence or domicile.
This Prospectus is valid only if it is accompanied by the latest available annual report and by the latest semi-annual report if published after such annual report. These documents are an integral part of this Prospectus.
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2. NOTE TO INVESTORS
The Board of Directors will apply national and international regulations for the prevention of money laundering. Measures aimed towards the prevention of money laundering require a detailed verification of an investor’s identity in accordance with the applicable laws and regulations in Luxembourg in relation to money laundering obligations, as amended from time to time. EDMOND DE ROTHSCHILD FUND (and the Central Administration Agent acting on behalf of the Company) reserves the right to request such information as is necessary to verify the identity of an investor in conformity with the before mentioned laws and regulations. In the event of delay or failure by the subscriber to produce any information required for verification purposes, the Company (and the Central Administration Agent acting on behalf of the Company) may refuse to accept the application and all subscription monies.
4 3. CONTENTS 1.INTRODUCTION 2 2.NOTE TO INVESTORS 3 3.CONTENTS 4 4.GLOSSARY 5
5.ADMINISTRATION OF THE COMPANY 7
6.GENERAL CHARACTERISTICS OF THECOMPANY 9
7.INVESTMENT POLICY AND OBJECTIVES 10
8.SPECIAL CONSIDERATIONS ON RISKS 11
9 .CO-MANAGEMENT AND POOLING 12
10.INVESTMENT RESTRICTIONS 13
11. MANAGEMENT OF THE COMPANY 21
12. INVESTMENT MANAGERS 22
13. CUSTODIAN BANK 23
14. CENTRAL ADMINISTRATION 24
15. DISTRIBUTORS AND NOMINEES ERROR! BOOKMARK NOT DEFINED.
16. SHARES 26
17. NET ASSET VALUE 26
18. SUSPENSION OF THE CALCULATION OF NET ASSET VALUE AND OF THE ISSUE, REDEMPTION
AND CONVERSION OF SHARES 30
19. ISSUE OF SHARES, SUBSCRIPTION AND PAYMENT PROCEDURE 31
20. CONVERSION OF SHARES 32
21. REDEMPTION OF SHARES 33
22. DISTRIBUTION POLICY 34
23. TAX CONSIDERATIONS 35
24. CHARGES AND EXPENSES 36
25. GENERAL MEETING OF SHAREHOLDERS ERROR! BOOKMARK NOT DEFINED.
26. DISSOLUTION - MERGER 38
27. SHAREHOLDERS’ INFORMATION 39
28. INFORMATION TO THE ATTENTION OF SWISS INVESTORS 40
29. ANNEX I – SUB-FUNDS DETAILS 42
4. GLOSSARY
Definition of indexes
DJ Stoxx Small 200 : this Dow Jones index is a capitalization-weighted index of the small capitalization stocks within the STOXX family. The index was developed with a base value of 100 as of December 31, 1991.
EONIA Capitalised: (Euro OverNight Index Average) is an index representative of domestic rate in the Euro zone. The day’s rate is based on the weighted average of all unsecured loan operations on the interbank market. It is calculated by the European Central Bank and is fixed once a day between 18h45 and 19h00. It is representative of a short-term capitalised money market investment (reinvested every day).
Euro-Aggregate Treasury – 3-5 Years: The Euro-Aggregate Treasury – 3-5 years, drawn up by Lehman Brothers, is an index which contains the local currency government debt of the European Monetary Union Member States, with final maturities of between 3 and 5 years.
Euro-Aggregate Treasury – 7-10 Years: The Euro-Aggregate Treasury – 7-10 years, drawn up by Lehman Brothers, is an index which
contains the local currency government debt of the European Monetary Union Member States, with final maturities of between 7 and 10 years.
Euro-Aggregate Corporates – 3-5 Years: The Euro-Aggregate Corporates – 3-5 Years, drawn up by Lehman Brothers, is an index
contains only euro denominated securities from industrial, utility and financial issuers. Inclusion is based on the currency of the issue and not the domicile of the issuer. All issues must be rated investment grade or above, with final maturities between 3 and 5 years.
Merril Lynch Euro High Yield Constrained: is an index of high-yield debts issued in Euro. The Index tracks the performance of below investment grade euro and euro legacy currency denominated bonds of corporate issuers domiciled in countries having an investment grade foreign currency long term debt rating (based on a composite of Moody’s and S&P). Each issuer can not weight more than 3% of the total index and each issuance has a minimum amount outstanding of 50 million Euro.
MSCI AC Far East Ex-Japan Free: is an index made up of several local MSCI indexes in Southeast Asia (Malaysia Free, Singapore Free, etc.) excluding Japan (Ex-Japan) and all shares not available to a European investor, hence Free. All local MSCI indexes making up the MSCI Far East Ex-Japan Free are calculated on the basis of the weighted capitalisation of each share.
MSCI Emerging Markets Free: is an index made up of several (26) local emerging market MSCI indexes world-wide (Argentina Free, China Free, Mexico Free, etc.) excluding shares not available to a European investor, hence Free. All local MSCI indexes constituting the MSCI Emerging Markets Free are calculated on the basis of the weighted capitalisation of each share.
MSCI Europe: is an index made up of the main local MSCI indexes in Europe (UK, France, Germany, Belgium, etc.) excluding the least industrialised countries. All local MSCI indexes making up the MSCI Europe are calculated on the basis of the weighted capitalisation of each share.
S&P 500: is an index made up of the 500 largest American companies (in terms of market capitalisation). It represents the US domestic
economy through the variations of all component stocks.
Topix: (Tokyo Price Index): is an index made up of the largest Japanese companies (in terms of market capitalisation) listed on the Tokyo
stock exchange.
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Other terms
A1 short-term rating: is a rating given to an issuer of certificates of deposit and commercial paper. It is the best rating granted by
Standard and Poor’s ADEF.
ADR: American Depository Receipts. Certificates issued on the US market representing a position in transferable securities issued on
another market.
Category: type of share in a Sub-Fund of the Company offered to a certain type of investor or via a specific marketing network. There are
two categories of shares, A and D as defined in the chapter entitled "Shares" below.
CSSF: the Commission de Surveillance du Secteur Financier.
Eligible State: any EU Member State, any member state of the Organisation for Economic Co-operation and Development (“OECD”), and any other state which the Board of Directors deems appropriate with regard to the investment objectives of each Sub-Fund. Eligible States include in this category countries in Africa, the Americas, Asia, Australasia and Europe.
GDR: Global Depository Receipts. Certificates issued on a domestic market and representing a position in transferable securities issued on another market.
Monetary papers: Generally defined as securities with a short maturity.
OTC: Market for trading securities that are not listed on a Regulated Market.
Participating, non-voting securities: bonds issued by nationalised French companies whose coupon is indexed to turnover, earnings or cash flow. No voting right is attached to these securities.
Price Earnings Ratio or EV/EBITDA: is a statistic (a ratio) obtained by dividing the market price of a quoted stock by the company's earnings per share figure over the last 12 months. The result gives an idea of the relative price of the share. The higher the PER, the higher earnings growth is to be expected to justify this high relative market price. The lower the PER, the lower the relative market price of the share will be, but not necessarily without risk for the investor.
PERs depend on markets and sectors (e.g. a technological stock with a PER of 40 can be considered as a good deal; a banking share with a PER of 40 would be considered as very expensive). EV/EBITDA: (Enterprise Valuation/Earnings Before Interest, Taxes, Depreciation and Amortisation) is similar to PER. This ratio also lets the investor assess if a share is under or over-valued in its market or sector in relation to other companies in a similar market or sector.
Regulated Market: is the market defined in item 13 of Article 1 of Council Directive 93/22/EECof 10th May 1993 on investment services
in the transferable securities field, as amended, as well as any other market in an Eligible State which is regulated, operates regularly and is recognised and open to the public.
Euro Zone: zone including all European Union States participating in the Economic and Monetary Union.
5. ADMINISTRATION OF THE COMPANY
PROMOTER LA COMPAGNIE FINANCIERE EDMOND DE ROTHSCHILD BANQUE 47, rue du Faubourg Saint Honoré
F-75008 Paris
BOARD OF DIRECTORS LA COMPAGNIE FINANCIERE EDMOND DE ROTHSCHILD BANQUE, Chairman of the Board
represented by Mr. Samuel Pinto, Deputy General Manager 47, rue du Faubourg Saint Honoré
F-75008 Paris
EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S, Director represented by Mr Philippe Couvrecelle, Chairman of the Executive Board 47, rue du Faubourg Saint Honoré
F-75008 Paris
Mr. Christophe Boulanger, Director
Chief Financial Officer, Edmond De Rothschild Asset Management S.A.S 47, rue du Faubourg Saint Honoré
F-75008 Paris
Mr. Frederic Otto, Director
Chief Executive Officer, Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais
L - 2535 Luxembourg
Mr. Geoffroy Linard de Guertechin, Director
Vice-Chairman of the Management Committee Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais
L - 2535 Luxembourg
Mr. Pierre–Marie Valenne, Director
Vice-Chairman of the Management Committee Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais
L - 2535 Luxembourg
CONDUCTING PERSONS Mr. Benoît Durand
Head of Client Services, Edmond De Rothschild Asset Management S.A.S 47, rue du Faubourg Saint Honoré
F-75008 Paris Mr. Joseph Stevens
Vice-President,Pri Investment 20, boulevard Emmanuel Servais L - 2535 Luxembourg
HEAD OFFICE 20, boulevard Emmanuel Servais L - 2535 Luxembourg
CUSTODIAN BANK,
REGISTRAR AND TRANSFER AGENT, DOMICILIARY AGENT, CENTRAL
ADMINISTRATION, PAYING AGENT
Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais
L - 2535 Luxembourg
INDEPENDENT AUDITORS PRICEWATERHOUSECOOPERS Espace Ariane,
400, Route d’Esch L - 1471 Luxembourg
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INVESTMENT MANAGERS EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. 47, rue du Faubourg Saint Honoré
F-75008 Paris RFS GESTION
47, rue du Faubourg Saint Honoré F-75008 Paris
LEGAL ADVISER ELVINGER, HOSS & PRUSSEN 2 Place Winston Churchill B.P. 425
L-2014 Luxembourg
DISTRIBUTORS - GROUP LA COMPAGNIE FINANCIÈRE EDMOND DE ROTHSCHILD BANQUE 47, rue du Faubourg Saint Honoré
F-75008 Paris
BANQUE PRIVÉE EDMOND DE ROTHSCHILD S.A. 18 rue de Hesse
CH-1204 Geneva
And all banks or financial professionals related to or affiliated with those companies.
6. GENERAL CHARACTERISTICS OF THE COMPANY
EDMOND DE ROTHSCHILD FUND, hereinafter referred to as the "Company", is an Investment Company with Variable Capital
(SICAV) with multiple Sub-Funds incorporated under the laws of Luxembourg, which has been set up for an unlimited duration in
Luxembourg on 15 June 2000 under the name of R FUND and which has been renamed LCF ROTHSCHILD FUND on 4 October 2000, and EDMOND DE ROTHSCHILD FUND on 31 December 2003, in accordance with the provisions of Part I of the Law of 2002 and the Law of 10 August 1915 on Commercial Companies as amended (hereinafter the "Law of 1915").
EDMOND DE ROTHSCHILD FUND is organised as an umbrella fund, which means it is comprised of several Sub-Funds each of which represents a separate pool of assets and liabilities and each with a distinct investment policy.
This structure offers investors the advantage of being able to choose between the various Sub-Funds and then switch from one Sub-Fund to another at will, as explained in the chapter "Conversion of shares".
The Company includes the following Sub-Funds:
Short-term Sub-Funds EDMOND DE ROTHSCHILD FUND - EURO SHORT TERM * Bond Sub-Funds
Government bond Sub-Funds
Corporate bond Sub-Funds
Convertible bond Sub-Fund
EDMOND DE ROTHSCHILD FUND - EURO GOVERNMENT BONDS MID TERM * EDMOND DE ROTHSCHILD FUND - EURO GOVERNMENT BONDS LONG TERM *
EDMOND DE ROTHSCHILD FUND - EURO CORPORATE BONDS SHORT TERM * EDMOND DE ROTHSCHILD FUND - EURO CORPORATE BONDS MID TERM * EDMOND DE ROTHSCHILD FUND - EURO CORPORATE BONDS HIGH YIELD EDMOND DE ROTHSCHILD FUND - EUROPEAN CONVERTIBLE BONDS * Share Sub-Funds EDMOND DE ROTHSCHILD FUND - EUROPE MID CAPS *
EDMOND DE ROTHSCHILD FUND - EUROPE VALUE * EDMOND DE ROTHSCHILD FUND - ASIA EX-JAPAN VALUE* EDMOND DE ROTHSCHILD FUND - WORLD FOOD & HEALTH * EDMOND DE ROTHSCHILD FUND - NORTH AMERICA VALUE * EDMOND DE ROTHSCHILD FUND - EMERGING MARKETS EQUITIES
Currently, only the Sub-Funds mentioned above marked with * are available to investors. The Board of Directors, however, reserves the right to launch new Sub-Funds in the future, the investment policy and selling methods of which will be announced in due course through an addendum to this Prospectus. Investors may be informed through a newspaper announcement if deemed appropriate by the Board of Directors. Similarly, the Board of Directors may propose to shareholders the closing of a Sub-Fund.
The articles of incorporation of the Company, dated 15 June 2000, were published in the Mémorial C, Recueil des Sociétés et Associations
(the "Mémorial”) on 3 August 2000 and amended by an extraordinary general meeting held on 4 October 2000, and subsequently by an
extraordinary general meeting held on 31 December 2003. The consolidated articles of incorporation were published in the Mémorial on
28 January 2004. The articles of incorporation have been amended for the last time by an extraordinary general meeting held on 30 December 2005 and have been published in the Mémorial on 25 January 2006. The articles of incorporation have been deposited with the Register of Commerce and Companies in Luxembourg. These documents are available for inspection and copies can be obtained on payment of the administrative costs as determined by grand-ducal regulation.
The Company is registered with the Register of Commerce and Companies in Luxembourg under the number B – 76.441, and its
registered office is established in Luxembourg.
The capital of the Company is at all times equal the total net assets of the various Sub-Funds and is represented by shares issued with no par value and fully paid up. Variations in the capital can take place without further consideration or inquiry and without the need for publication or registration with the Register of Commerce and Companies in Luxembourg. The minimum capital required for the Company is EUR 1,250,000 (one million two hundred and fifty thousand Euro). This minimum has to be reached within six months after registration of the Company on the official list of Undertakings for Collective Investment.
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7. INVESTMENT POLICY AND OBJECTIVES
The main objective of the Company is to preserve the capital in real terms and ensure the growth of its assets. Obviously, no guarantee is given that this objective will be achieved.
The Company intends to achieve this objective by the active management of the Sub-Funds which can be broken down into five categories. The first category deals primarily with short-term transferable securities and money market instruments. The second category concentrates exclusively on bonds. The third category concerns exclusively stocks and shares. The fourth category invests both in international bonds and equities. Lastly, the fifth category offers specifically profiled investments in terms of risk/return or a combination of both in the makeup of its portfolio. Generally speaking, the Sub-Funds' portfolios will consist of transferable securities, without restriction or limitation as to industrial, economic or geographical diversification, unless otherwise specifically defined in the investment policy of each Sub-Fund offered.
The investment policy and objectives of each Sub-Fund are detailed in the Annex to the present Prospectus, which is an integral part of the present Prospectus.
Information on the historical performance of each Sub-Fund may be found in the relevant Sub-Fund’s Simplified Prospectus.
8. SPECIAL CONSIDERATIONS ON RISKS
With regard to each Sub-Fund, future investors are recommended to consult their professional advisers to evaluate the suitability of an investment in a specific Sub-Fund, in view of their personal financial situation.
The number and allocation of portfolio assets in each Sub-Fund should reduce the Sub-Fund's sensitivity to risks associated with a particular investment. Nevertheless, potential investors should be aware of the fact that there can be no assurance that their initial investment will be preserved.
In addition, future investors should give careful consideration to the following risks linked to an investment in certain Sub-Funds: Acceptable markets
Some markets, in particular Russia, on which securities that may be acquired are listed may not qualify as acceptable markets under Article 41 (1) of the Luxembourg Law of 2002. Investments in securities on these markets will be considered as investments in unlisted transferable securities. Accordingly, the total amount of net assets in a Sub-Fund invested in these unlisted shares and securities will be limited to 10%.
Investments may be by means of ADRs or GDRs to limit emerging market risks. Investments in Russia will be by means of ADRs and GDRs only.
Emerging markets
Investors should be aware that some markets in which Sub-Funds may invest are emerging markets subject to periods of growth, instability and change. The activity of custodian banks is not as developed in emerging countries and this may lead to difficulties in the liquidation and registration of transactions. The stock exchanges concerned are smaller and more volatile than the stock markets of more developed countries - a small number of issuers account for a large share of market capitalisation and quotation value of these exchanges. In the past, some of these exchanges have experienced substantial volatility of prices or were closed unexpectedly and for long periods of time. There is no guarantee that such events will not be repeated.
In emerging markets there is the risk of political or economic changes which could unfavourably influence the value of a Sub-Fund’s investments.
Moreover, investments in Eastern Europe, the former Soviet Union and in Russia will be subject to the following risks: there may not be sufficient government control, issuers may sometimes not be independent, management may be unsatisfactory and conflicts of interests may arise, the registration of securities may be a problem and there may be lack of experience in modern market practices, e.g. risk of error, negligence, bad management.
In these regions, the risk that the main investment objective, i.e. appreciation of capital, will not be achieved is even more substantial. Foreign exchange risks
Certain Sub-Funds investing in securities denominated in currencies other than their reference currency, may be subject to fluctuations in exchange rates resulting in a reduction in the Sub-Fund's net asset value.
Risk of limited trading volume
Trading volumes of emerging country stock exchanges can be considerably lower than in leading world exchanges. The resulting lack of liquidity may adversely affect the price at which the securities held by a Sub-Fund can be sold.
Accounting and statutory standards
It may occur in some countries, where a Sub-Fund may potentially invest, that standards of accountancy, auditing and reporting are less strict than the standards applicable in more developed countries and that investment decisions have to be taken based on information less complete and accurate than that available in more developed countries.
Investment in small and medium-size companies
Investment in small and medium-size companies can involve more risks than those normally associated with investment in larger and better established companies. Smaller companies, in particular, often have limits as regards product range, markets or financial resources, and there may be only one or two key managers.
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9. CO-MANAGEMENT AND POOLING
To ensure effective management, the Board of Directors may decide to manage all or part of the assets of one or more Sub-Funds with other Sub-Funds in the Company (technique of pooling) or to co-manage all or part of the assets, except for a cash reserve, if necessary, of one or more Sub-Funds in EDMOND DE ROTHSCHILD FUND with assets of other Luxembourg investment funds or of one or more sub-funds of other Luxembourg investment funds (hereinafter called "Party(ies) to co-managed assets") for which the Company’s Custodian is appointed as the custodian bank. These assets will be managed in accordance with the respective investment policy of the Parties to co-managed assets, each of which pursuing identical or comparable objectives. Parties to co-managed assets will only participate in co-managed assets as stipulated in their respective Prospectus and in accordance with their respective investment restrictions.
Each Party to co-managed assets will participate in co-managed assets in proportion to the assets contributed thereto by it. Assets will be allocated to each Party to managed assets in proportion to its contribution to managed assets. The entitlements of each Party to co-managed assets apply to each line of investment in the aforesaid co-co-managed assets.
The aforementioned co-managed assets will be formed by the transfer of cash or, if necessary, other assets from each Party participating in the co-managed assets. Thereafter, the Board of Directors may regularly make subsequent transfers to co-managed assets. The assets can also be transferred back to a Party to co-managed assets for an amount not exceeding the participation of the said Party to co-managed assets.
Dividends, interest and other distributions deriving from income generated by co-managed assets will accrue to the Parties to co-managed assets in proportion to their respective investments. Such income may be kept by the Party to managed assets or reinvested in the co-managed assets.
All charges and expenses incurred in respect of co-managed assets will be applied to these assets. Such charges and expenses will be allocated to each Party to co-managed assets in proportion to its respective entitlement in the co-managed assets.
In the case of infringement of investment restrictions affecting a Sub-Fund of the Company, when such a Sub-Fund takes part in co-management and even though the manager has complied with the investment restrictions applicable to the co-managed assets in question, the Board of Directors of the Company shall ask the manager to reduce the investment in question proportionally to the participation of the Sub-Fund concerned in the co-managed assets or, if necessary, reduce its participation in the co-managed assets so that investment restrictions for the Sub-Fund are observed.
When the Company is liquidated or when the Board of Directors of the Company decides - without prior notice - to withdraw the participation of the Company or a Sub-Fund of the Company from co-managed assets, the co-managed assets will be allocated to Parties to co-managed assets proportionally to their respective participation in the co-managed assets.
The investor must be aware of the fact that such co-managed assets are employed solely to ensure effective management, and provided that all Parties to co-managed assets have the same custodian bank. Co-managed assets are not distinct legal entities and are not directly accessible to investors. However, the assets and liabilities of each Sub-Fund of the Company will be constantly separated and identifiable.
10. INVESTMENT RESTRICTIONS
The Board has adopted the following restrictions relating to the investment of the Company’s assets and its activities. These restrictions and policies may be amended from time to time by the Board if and as it shall deem it to be in the best interests of the Company in which case this Prospectus will be updated.
The investment restrictions imposed by Luxembourg law must be complied with by each Sub-Fund. The restrictions mentioned in paragraph 1. (D) below are applicable to the Company as a whole.
I. Investment in eligible assets
(A) (1)The Company will exclusively invest in:
a) transferable securities and money market instruments admitted to or dealt in on a Regulated Market; and/or
b) transferable securities and money market instruments dealt in on another regulated market in an Eligible State; and/or c) recently issued transferable securities and money market instruments, provided that the terms of issue include an undertaking that application will be made for admission to official listing on an official stock exchange or another Regulated Market and such admission is achieved within one year of the issue; and/or
d) units of an undertaking for collective investment in transferable securities authorised according to Council Directive 85/611/EEC of 20th December 1985, as amended ("UCITS") and/or of an undertaking for collective investment or
investment fund within the meaning of the first and second indent of Article 1(2) of Council Directive 85/611/EEC of 20th December 1985, as amended ("other UCIs"), whether situated in an EU member state or not, provided that:
- such other UCIs have been authorised under the laws of any member country of the European Union or under the laws of Canada, Hong Kong, Japan, Norway, Switzerland or the United States of America,
- the level of protection for unitholders in such other UCIs is equivalent to that provided for unitholders 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 directive 85/661/EEC,
- the business of such 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,
- 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; and/or
e) 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 country which is an OECD member state and a FATF country; and/or
f) financial derivative instruments, including equivalent cash-settled instruments, dealt in on a regulated market referred to in subparagraphs (a) and (b) above, and/or financial derivative instruments dealt in over-the-counter ("OTC derivatives"), provided that:
- the underlying consists of instruments covered by this section (A) (1), financial indices, interest rates, foreign exchange rates or currencies, in which the Portfolios may invest according to their investment objective; - the counterparties to OTC derivative transactions are institutions subject to prudential supervision, and
belonging to the categories approved by the Luxembourg supervisory authority;
- 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.
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and/or
g) money market instruments other than those dealt in on a Regulated Market, if the issue or the issuer of such instruments are themselves regulated for the purpose of protecting investors and savings, and provided that such instruments are:
- issued or guaranteed by a central, regional or local authority or by a central bank of an EU member state, the European Central Bank, the European Union or the European Investment Bank, a non-EU member 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 EU member states belong, or
- issued by an undertaking any securities of which are dealt in on Regulated Markets, or
- issued or guaranteed by a credit institution which has its registered office in a country which is an OECD member state and a FATF country, or
- issued by other bodies belonging to the categories approved by the CSSF provided that investments in such instruments are subject to investor protection equivalent to that laid down in the previous three indents 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 the fourth Directive 78/660/EEC, is an entity which, within a group of 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. (2) In addition, the Company may invest a maximum of 10% of the net asset value of any Sub-Fund in transferable securities and
money market instruments other than those referred to under (1) above. (B) (i) The Company may hold ancillary liquid assets.
(ii) The Company will ensure that the global exposure relating to derivative instruments does not exceed the total net value of the Sub-Fund to which they apply.
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. This shall also apply to the following subparagraphs.
The Company may invest, as part of the investment policy of its Sub-Funds and within the limits laid down in paragraph C)(v), in financial derivative instruments provided that the exposure to the underlying assets does not exceed in aggregate the investment limit laid down in paragraph C). When the Company, on behalf of any of its Sub-Funds, invests in index-based financial derivative instruments, these investments do not have to be combined to the limits laid down in paragraph C).
When a transferable security or money market instrument embeds a derivative, the latter must be taken into account when complying with the requirements of this item B).
(C) (i) The Company may invest no more than 10% of the assets of any Sub-Fund in transferable securities or money market instruments issued by the same body.
The Company may not invest more than 20% of the assets of such Sub-Fund in deposits made with the same body. The risk exposure to a counterparty of a Sub-Fund in an OTC derivative transaction may not exceed 10% of its assets when the counterparty is a credit institution referred to in (A) (1) (e) above or 5% of its assets in other cases.
(ii) Furthermore, the total value of the transferable securities and money market instruments held by the Company on behalf of a Sub-Fund in the issuing bodies in each of which it invests more than 5% of its assets must not exceed 40% of the value of its assets.
This limitation does not apply to deposits and OTC derivative transactions made with financial institutions subject to prudential supervision.
Notwithstanding the individual limits laid down in paragraph (C) (i), the Company may not combine for each Sub-Fund:
- investments in transferable securities or money market instruments issued by a single body, - deposits made with a single body, and/or
- exposures arising from OTC derivative transactions undertaken with a single body in excess of 20% of its assets.
(iii) The limit of 10% laid down in paragraph (C)(i) above may be of a maximum of 35% in respect of transferable securities or money market instruments which are issued or guaranteed by an EU member state, its local authorities or by an Eligible State or by public international bodies of which one or more EU member states are members.
(iv) The limit of 10% laid down in paragraph (C) (i) above may be of a maximum of 25% certain debt securities when they are issued by a credit institution which has its registered office in an EU member state and is subject by law, to special public supervision for the purpose of protecting the holders of such debt securities. In particular, sums deriving from the issue of such debt securities must be invested in accordance with the law, in assets which, during the whole period of validity of the debt instruments, are capable of covering claims attaching to the bonds and which, in case of bankruptcy of the issuer, would be used on a priority basis for the repayment of principal and payment of accrued interest.
If a Sub-Fund invests more than 5% of its assets in the debt securities referred to in the sub-paragraph above and issued by one issuer, the total value of such investments may not exceed 80% of the value of the assets of such Sub-Fund.
(v) The transferable securities and money market instruments referred to in paragraphs (C)(iii) and (C)(iv) are not included in the calculation of the limit of 40% referred to in paragraph (C)(ii).
The limits set out in paragraphs (C)(i), (C)(ii), (C)(iii) and (C)(iv) above may not be aggregated and, accordingly, 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 paragraphs (C)(i), (C)(ii), (C)(iii) and (C) (iv) may not, in any event, exceed a total of 35% of any Sub-Fund’s assets.
Companies which are included in the same group for the purposes of consolidated accounts, as defined in accordance with directive 83/349/EEC or in accordance with recognised international accounting rules, are regarded as a single body for the purpose of calculating the limits contained in this paragraph (C).
A Sub-Fund may cumulatively invest up to 20% of its assets in transferable securities and money market instruments within the same group.
(vi) Without prejudice to the limits laid down in paragraph (D), the limits laid down in this paragraph (C) are raised to a maximum of 20% for investments in shares and/or bonds issued by the same body when, according to the Prospectus, the aim of a Sub-Fund’s investment policy is to replicate the composition of a certain stock or bond index which is recognised by the CSSF, on the following basis
- the composition of the index is sufficiently diversified,
- the index represents an adequate benchmark for the market to which it refers, - it is published in a appropriate manner.
The limit laid down in the subparagraph above is raised to 35% where it 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 35% is only permitted for a single issuer.
(vii) Notwithstanding the provisions of paragraph (C), the Company id authorised to invest up to 100% of the assets of any Sub-Fund, in accordance with the principle of risk spreading, in transferable securities and money market instruments issued or guaranteed by an EU member state, by its local authorities or by an Eligible State which is an OECD member state, or by public international bodies of which one or more EU member states are members, provided that such Sub-Fund must hold securities from at least six different issues and securities from any one issue may not account for more than 30% of the total amount.
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(D) (i) The Company may not acquire shares carrying voting rights which would enable the Company to exercise significant influence over the management of the issuing body.
(ii) The Company may acquire no more than
(a) 10% of the non-voting shares of the same issuer, (b) 10% of the debt securities of the same issuer,
(c) 25% of the units of the same UCITS and/or other UCI; and/or (d) 10% of the money market instruments of the same issuer.
However, the limits laid down in (b) to (d) above may be disregarded at the time of acquisition, if at that time the gross amount of the debt securities, or of the money market instruments or units or the net amount of instruments in issue cannot be calculated.
(iii) The limits set out in paragraph (D)(i) and (ii) above shall not apply to:
(a) transferable securities and money market instruments issued or guaranteed by an EU member state or its local authorities;
(b) transferable securities and money market instruments issued or guaranteed by a non-member state of the EU; (c) transferable securities and money market instruments issued by public international bodies of which one or more EU member states are members;
(d) shares held by a Sub-Fund in the capital of a company incorporated in a non- member state of the EU which invests its assets mainly in the securities of issuing bodies having their registered office in that state where, under the legislation of that state, such a holding represents the only way in which the Sub-Fund can invest in the securities of the issuing bodies of that state, provided, however, that such company in its investment policy complies with the limits laid down in Articles 43, 46 and 48 (1) and (2) of the Law of 2002;
(e) shares held by one or more investment companies 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.
(E) (i) No Sub-Fund may invest in aggregate more than 10% of its assets in the units or shares of other UCITS or UCI. For the purpose of the application of this investment limit, each compartment of a UCI with multiple compartments within the meaning of article 133 of the Law of 2002 is to be considered as a separate issuer provided that the principle of segregation of the obligations of the various compartments vis-à-vis third parties is ensured.
(ii) When the Company invests in the units of other UCITS and/or other UCIs that are managed directly or by delegation, by the same management company or by any other company with which the management company is linked by common management or control, or by way of a direct or indirect stake of more than 10% of the capital or votes, that management company or other company may not charge subscription, redemption or management fees on account of the Company investment in the units of such other UCITS and/or UCIs.
When the Company invests an important part of its assets in units of other UCITS and/or other UCIs other than those described in the preceding paragraph, the maximum level of the management fees that may be charged both to the Company itself and to the other UCITS and/or other UCIs in which it intends to invest is fixed at 2.5% per annum. The Company will indicate in its annual report the total management fee charged both to the relevant Sub-Fund and other UCTS and/or UCIs in which such Sub-Fund has invested during the relevant period.
(iii) The underlying investments held by the UCITS or other UCIs in which the Company invests do not have to be considered for the purpose of the investment restrictions set forth under paragraph I. (C) above.
II. Investment in other assets
(A) The Company will not make investments in precious metals or certificates representing these.
(B) The Company may not enter into transactions involving commodities or commodity contracts, except that the Company may employ techniques and instruments relating to transferable securities within the limits set out in paragraph III. below.
(C) The Company will not purchase or sell real estate or any option, right or interest therein, provided the Company may invest in transferable securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein.
(D) The Company may not carry out uncovered sales of transferable securities, money market instruments or other financial instruments referred to in paragraph I.(A) (1) d), f) and g).
(E) The Company may not make loans to – or act as guarantor for – third parties, provided that this restriction shall not prevent the Company from acquiring transferable securities or money market instruments or other financial instruments referred to in paragraph I. (A)(1) d), f) and g).
(F) The Company may not borrow for the account of any Sub-Fund, other than amounts which do not in aggregate exceed 10% of the net assets of the Sub-Fund, and then only on a temporary basis. However, the Company may acquire foreign currency by means of back-to-back loans.
(G) The Company will not mortgage, pledge, hypothecate or otherwise encumber as security for indebtedness any securities held for the account of any Sub-Fund, except as may be necessary in connection with the borrowings mentioned in (F) above, and then such mortgaging, pledging, or hypothecating may not exceed 10% of the asset value of each Sub-Fund. In connection with OTC transactions including amongst others, swap transactions, option and forward exchange or futures transactions, the deposit of securities or other assets in a separate account shall not be considered a mortgage, pledge or hypothecation for this purpose.
(H) The Company will not underwrite or sub-underwrite securities of other issuers.
III. Financial Techniques and instruments
Pursuant to Article 42(2) and 47 of the Law of 2002 the Company, for each of its Sub-Funds, is authorised to employ techniques and instruments to protect its assets against exchange risks and may employ techniques and instruments relating to transferable securities for the purpose of efficient portfolio management, provided that the global exposure relating to derivative instruments does not exceed the total net assets of the relevant Sub-Fund.
The techniques and instruments which the Company is authorised to use under this provision are more fully described hereafter.
A. Techniques and instruments relating to transferable securities.
For the purpose of efficient portfolio management, the Company may, on behalf of each Sub-Fund, participate in transactions relating to - options;
- financial futures and related options; - securities lending;
- repurchase agreements.
1 Transactions relating to options on transferable securities.
The purchase and writing of call and put options by the Company is permitted provided such options are traded on a regulated market which is operating regularly, recognised and open to the public.
When entering into these transactions, the Company must comply with the following rules:
1.1 Rules applicable to the purchase of options.
The total premiums paid for the acquisition of call and put options outstanding and referred to herein may not together with the total of the premiums paid for the purchase of call and put options outstanding and referred to in heading 2.3. below, exceed 15 per cent. of the net assets of a Sub-Fund.
1.2 Rules to ensure the coverage of the commitments resulting from options transactions.
Upon the conclusion of contracts whereby call options are written, the relevant Sub-Fund must hold either the underlying securities, or equivalent call options or other instruments capable of ensuring adequate coverage of the commitments resulting from such contracts, such as warrants. The underlying securities related to call options written may not be disposed of as long as these options are in existence unless such options are covered by matching options or by other instruments that can be used for that purpose. The same applies to equivalent call options or other instruments which the relevant Sub-Fund must hold where it does not have the underlying securities at the time of the writing of such options.
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As an exception to this rule, a Sub-Fund may write call options on securities it does not hold at the entering into the option contract provided the following conditions are met:
- the aggregate exercise (striking) price of such uncovered call options written shall not exceed 25 per cent. of the net assets of the relevant Sub-Fund;
- the Company must at any time be in the position to ensure the coverage of the position taken as a result of the writing of such options.
Where it writes put options, a Sub-Fund must be covered during the entire duration of the option contract by adequate liquid assets that may be used to pay for the securities which could be delivered to it in case of the exercise of the option by the counterpart.
1.3 Conditions and limits for the writing of call and put options.
The aggregate of the commitments arising from the writing of put and call options (excluding call options written in respect of which the relevant Sub-Fund has adequate coverage) and the aggregate of the commitments from the transactions referred to in heading 2.3. hereafter may not, at any time, exceed the value of the net assets of the Sub-Fund concerned. In this context, the commitment on call and put options written is deemed to be equal to the aggregate of the exercise (striking) prices of those options.
1.4 Swap Agreements
The Company may, on a ancillary basis, enter into swap agreements whereby the income produced by the investment in interest rate instruments, in equities and in money market instruments will be waived to the counterparty of the swap agreement in order to obtain, in exchange, a return based on the return on interest rate, on equities or a basket of equities or an index or a basket of indices. The Company may enter into said transactions for the purpose of achieving a higher rate of return than that produced by the holding of equities over the same period, and/or when it is unable to allocate a portion of the assets of the Company to a selected Manager or to subscribe in existing Undertakings for Collective Investment. These swap agreements will be standardised agreements as set up by the International Swaps and Derivatives Association (ISDA).
The counterparties in the swap agreements must be institutions financially capable of meeting their obligation under the swap contract and must be a first class financial institution specialised in this kind of transactions. However, the counterparty’s risk will remain. During the period pursuant to the terms of the swap agreements, the Company will not directly benefit from the income produced by the underlying investments but from the income stipulated by the terms of the swap agreements.
2 Transactions relating to futures and option contracts relating to financial instruments.
Except for transactions by private contract mentioned under heading 2.2. below, the transactions described herein may only relate to contracts that are dealt in on a regulated market which is operating regularly, recognised and open to the public.
Subject to the conditions specified below, these transactions may be made for hedging or other purposes.
2.1 Transactions with the purpose of hedging risks connected to the evolution of stock markets.
A Sub-Fund may sell stock index futures for the purpose of hedging against a global risk of an unfavourable evolution of stock markets. For the same purpose, it may also write call options on stock indices or purchase put options thereon.
The hedging purpose of these transactions presupposes that there exists a sufficient correlation between the composition of the index used and the corresponding portfolio.
In principle, the aggregate commitments resulting from futures contracts and stock index options may not exceed the aggregate estimated market value of the securities held by the relevant Sub-Fund in the corresponding market.
2.2 Transactions with the purpose of hedging interest rates.
A Sub-Fund may sell interest rate futures contracts for the purpose of achieving a global hedge against interest rate fluctuations. It may also for the same purpose write call options or purchase put options on interest rates or enter into interest rate swaps by private agreement with highly rated financial institutions specialised in this type of operation.
In principle, the aggregate of the commitments relating to futures contracts, options and swap transactions on interest rates may not exceed the aggregate estimated market value of the assets to be hedged and held by the relevant Sub-Fund in the currency corresponding to those contracts.
2.3 Transactions made for a purpose other than hedging.
Besides option contracts on transferable securities and contracts on currencies, a Sub-Fund may, for a purpose other than hedging, purchase and sell futures contracts and options on any kind of financial instruments provided that the aggregate commitments in connection with such purchase and sale transactions together with the amount of the commitments relating to the writing of call and put options on transferable securities does not exceed at any time the value of the net assets of the relevant Sub-Fund.
The writing of call options on transferable securities for which the relevant Sub-Fund has adequate coverage are not considered for the calculation of the aggregate amount of the commitments referred to above.
In this context, the concept of the commitments relating to transactions other than options on transferable securities is defined as follows: - the commitment arising from futures contracts is deemed equal to the value of the underlying net positions payable on those contracts which relate to identical financial instruments (after setting off all sale positions against purchase positions), without taking into account the respective maturity dates and
- the commitment deriving from options purchased and written is equal to the aggregate of the exercise (striking) prices of net uncovered sales positions which relate to single underlying assets without taking into account respective maturity dates.
The aggregate amount of premiums paid for the acquisition of call and put options outstanding which are referred to herein, may not, together with the aggregate of the premiums paid for the acquisition of call and put options on transferable securities mentioned in heading 1.1. above, exceed 15 per cent. of the net assets of the relevant Sub-Fund.
With respect to options referred to in the foregoing restrictions, the Company, on behalf of each Sub-Fund, may enter into OTC option transactions with first class financial institutions that specialise in this type of transaction.
3 Securities lending transactions.
The Company may enter into securities lending transactions provided the following rules are complied with:
3.1 Rules intended to ensure proper completion of lending transactions.
The Company may only participate in securities lending transactions within a standardised lending system organised by a recognised securities clearing institution or by a first class financial institution specialised in that type of transaction.
In relation to its lending transactions, the Company, on behalf of the relevant Sub-Fund, must in principle receive security of a value which, at the conclusion of the lending agreement, must be at least equal to the value of the global valuation of the securities lent. This collateral must be given in the form of cash and/or of securities issued or guaranteed by member States of the OECD or by their local authorities or by supranational institutions and organisations with EEC, regional or worldwide scope and blocked in favour of the Company until termination of the lending contract.
3.2 Conditions and limits of lending transactions.
Lending transactions may not be carried out on more than 50 per cent. of the aggregate market value of the securities in the portfolio. This limit is not applicable where the Company has the right, at any time, to terminate the contract and obtain restitution of the securities lent.
Lending transactions may not extend beyond a period of 30 days.
4 Repurchase agreements.
The Company may, from time to time, enter into repurchase agreements which consist in the purchase and sale of securities whereby the terms of the agreement entitle the seller to repurchase from the purchaser the securities at a price and at a time agreed amongst the two parties at the conclusion of the agreement.
The Company may act either as purchaser or seller in repurchase transactions. However, in entering into such agreements the Company is subject to the following rules:
4.1 Rules intended to ensure the proper completion of repurchase agreements.
The Company, on behalf of its Sub-Funds, may purchase or sell securities in the context of a repurchase agreement only if its counterpart is a highly rated financial institution specialised in this type of transaction.
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4.2 Conditions and limits of repurchase transactions.
During the lifetime of a repurchase agreement, the Company may not sell the securities which are the object of the agreement (i) either before the repurchase of the securities by the counterparty has been carried out or (ii) the repurchase period has expired.
The Company must ensure to maintain the importance of purchased securities subject to a repurchase obligation at a level such that it is able, at all times, to meet its obligations to redeem its own shares.
B. Techniques and instruments intended to hedge currency risks to which the Company and its Sub-Funds are exposed to in the management of their assets and liabilities.
In order to protect each Sub-Fund’s assets against currency fluctuations, the Company may, on behalf of each Sub-Fund, enter into transactions the objects of which are currency forward contracts as well as the writing of call options and the purchase of put options on currencies. The transactions referred to herein may only concern contracts which are traded on a regulated market which is operating regularly, recognised and open to the public.
For the same purpose, the Company may also, on behalf of each Sub-Fund, enter into forward sales of currencies or exchange currencies on the basis of private agreements with highly rated financial institutions specialised in this type of transaction.
The herebefore mentioned transactions’ objective of achieving a hedge presupposes the existence of a direct relationship between them and the assets to be hedged. This implies that transactions made in one currency may in principle not exceed the valuation of the aggregate assets denominated in that currency nor exceed the period during which such assets are held.
IV. Risk-management process
The Company will employ a risk-management process which enables it to monitor and measure at any time the risk of the positions and their contribution to the overall risk profile of each Sub-Fund. The Company will employ, if applicable, a process for accurate and independent assessment of the value of any OTC derivative instruments.
V. General
The Company need not comply with the investment limit percentages laid down above when exercising subscription rights attached to securities which form part of its assets. In addition, the Company need not comply with the investment limits set out in paragraph I (C) above during the first 6 month period following its authorisation in Luxembourg. If such percentages are exceeded for reasons beyond the control of the Company or as a result of the exercise of subscription rights, the Company must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of its Shareholders.
11. MANAGEMENT OF THE COMPANY
The Board of Directors of the Company is responsible for the Company's management and the control of its operations as well as determining and implementing its investment policy
The Board of Directors of the Company has appointed the Conducting Persons as listed above in order to supervise and coordinate the activities of the Company, in compliance with the provisions of the CSSF Circular 03/108 which apply to self-managed SICAVs. The Conducting Persons shall supervise and coordinate the functions delegated to the different service providers and shall ensure that an appropriate risk management method is applied to the Company. The Company has entered into an agreement dated as of 1st November 2006 with the above mentioned Conducting Persons. This Agreement has been concluded for an unlimited duration. Each party may terminate this Agreement by way of registered mail with a three months prior notice.
The Board of Directors may, under its control and responsibility, delegate the execution of the day to day management of the assets of the Sub-Funds to one or several persons which need not be members of the Board of Directors. Such persons shall have the powers and duties given to them by the Board of Directors.
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12. INVESTMENT MANAGERS
The Board of Directors has decided to delegate, under its responsibility, the management of the assets of the Company to the following Investment Managers :
a. EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. is a 99.99% subsidiary of La Compagnie Financière Edmond de Rothschild Banque, Paris, which is a French commercial bank, belonging to the Edmond de Rothschild Group. It was created as a bank in 1971. It is active in national and international banking operations and asset management for both private and institutional customers.
EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. is in charge of the management of the assets of the following Sub-Funds :
EDMOND DE ROTHSCHILD FUND – EUROPEAN CONVERTIBLE BONDS * EDMOND DE ROTHSCHILD FUND – EUROPE MID CAPS *
EDMOND DE ROTHSCHILD FUND – EUROPE VALUE *
EDMOND DE ROTHSCHILD FUND – ASIA EX-JAPAN VALUE * EDMOND DE ROTHSCHILD FUND – WORLD FOOD & HEALTH * EDMOND DE ROTHSCHILD FUND – NORTH AMERICA VALUE * EDMOND DE ROTHSCHILD FUND – EMERGING MARKETS EQUITIES b. RFS GESTION
.
RFS GESTION, a subsidiary of Edmond de Rothschild Group, is a portfolios management company authorised by the French regulator, l'Autorité des Marchés Financiers, on 15 April 2004 and incorporated as a société anonyme with Directoire and Conseil de Surveillance, with a share capital of € 1.000.000.
As from the 1st March 2007,EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. will be replaced by RFS GESTION as
Investment Manager of the assets of the following Sub-Funds :
EDMOND DE ROTHSCHILD FUND – EURO SHORT TERM *
EDMOND DE ROTHSCHILD FUND – EURO GOVERNMENT BONDS MID TERM * EDMOND DE ROTHSCHILD FUND – EURO GOVERNMENT BONDS LONG TERM * EDMOND DE ROTHSCHILD FUND – EURO CORPORATE BONDS SHORT TERM * EDMOND DE ROTHSCHILD FUND – EURO CORPORATE BONDS MID TERM * EDMOND DE ROTHSCHILD FUND – EURO CORPORATE BONDS HIGH YIELD
The remuneration of the Investment Managers for their services is described in the chapter "Charges and expenses" below.
13. CUSTODIAN BANK
Banque Privée Edmond de Rothschild Europe has been appointed Custodian of the Company’s assets under the terms of an agreement of unlimited duration. Banque Privée Edmond de Rothschild Europe is a wholly-owned subsidiary of Banque Privée Edmond de Rothschild S.A., Genève.
Either party may terminate the agreement with 90 days prior written notice.
The custody of the Company’s assets has been entrusted to the Custodian Bank or, in accordance with banking practice and under its responsibility, to correspondents. The Custodian shall exercise reasonable care in the selection and supervision of correspondents and will be responsible for the transfer of instructions or Company assets to the correspondents. Unless the Custodian has been negligent, the Custodian shall be responsible for the acts of the correspondents selected only to the extent it is refunded by them for damage caused to the Company. The Custodian will not be liable for losses resulting from the bankruptcy or insolvency of a correspondent if it was not negligent in its selection and supervision.
The Custodian must moreover:
a) ensure that the sale, issue, redemption and cancellation of shares carried out by the Company or on its behalf, are in accordance with the law or the Company’s articles of incorporation;
b)
ensure that in the case of transactions involving the Company’s assets, consideration is remitted to it within the usual time limits;
c) ensure that income of the Company is applied in accordance with the articles of incorporation.
Fees and costs of the Custodian are charged to the Company in conformity with normal practice in Luxembourg. Such fees will be calculated quarterly on the basis of the average net assets of the Company during each quarter.
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14. CENTRAL ADMINISTRATION
The Company's Central Administration will be carried out in Luxembourg, at 20 Boulevard Emmanuel Servais, by Banque Privée Edmond de Rothschild Europe.
In fact,
- accounts will be kept there and accounting records will be available there; - issues and redemptions will be carried out there;
- the Register of Shareholders will be kept there;
- the prospectus, financial reports and all other documents related to investments will be drawn up there;
- correspondence, dispatch of financial reports and all other documents intended for shareholders or bearers of shares will be sent from Luxembourg;
- calculation of net asset values will be carried out there.
15. DISTRIBUTORS AND NOMINEES
In the context of selling shares, the Company may enter into agreement with distributors and/or selling networks also able to act as nominees depending on rules applicable in the countries concerned and investor demands.
In compliance with the Distribution contracts, the Distributor acting as nominee will be registered on the Register of Shareholders but not the clients who have invested in the Company. Terms and conditions of the Distribution contract provide, among other things, that a client who has invested in the Company via a nominee, may at any time request that shares subscribed via the nominee be transferred to his own name, so that the client is registered under his own name in the Register of Shareholders upon reception of such instructions from the nominee.
In case of nominee, investors must be aware that subscriptions to shares may be made both through the nominee or directly to the Company.
