D A N S K E I N V E S T S I C A V
S o c i é t é d ' I n v e s t i s s e m e n t à C a p i t a l V a r i a b l e incorporated under the laws of the Grand Duchy of Luxembourg
P r o s p e c t u s M a y 2 0 1 6
VISA 2016/103377-7089-0-PC
L'apposition du visa ne peut en aucun cas servir d'argument de publicité
Luxembourg, le 2016-05-23
Notice 2
Danske Invest SICAV
This Prospectus and the relevant KIID should be read in their entirety before making any investments in the Shares. Subscriptions can only be placed after the relevant KIID has been made available and on the basis of the Prospectus accompanied by the most recent annual and semi-annual reports of the Fund, if any. Such reports are deemed to be an integral part of the Prospectus.
Danske Invest SICAV is offering Shares of several separate Sub-Funds on the basis of the information contained in the relevant KIID and the Prospectus. No person is authorised to give any information or to make any representations concerning the Fund other than as contained in the relevant KIID and in the Prospectus, and any purchase made by any person on the basis of statements or representations not contained in or inconsistent with the information and representations contained in this Prospectus or in the relevant KIID shall be solely at the risk of the purchaser.
The distribution of this Prospectus is not authorised unless it is accompanied by the most recent annual and semi-annual reports of the Fund, if any.
The Shares to be issued hereunder shall be of several different classes which relate to several separate Sub-Funds of the Fund. Shares of the different Sub-Funds may be issued and redeemed at prices computed on the basis of the Net Asset Value per Share of the relevant Sub-Fund, as defined in the Articles.
The distribution of this Prospectus and the offering of the Shares may be restricted in certain jurisdictions. This Prospectus does not constitute an offer or solicitation in a jurisdiction where to do so is unlawful or where the person making the offer or solicitation is not qualified to do so or where a person receiving the offer or solicitation may not lawfully do so. It is the responsibility of any person in possession of this Prospectus and of any person wishing to apply for Shares to inform themselves of and to observe all applicable laws and regulations of relevant jurisdictions.
The Fund is an investment company governed by the laws of the Grand-Duchy of Luxembourg and is subject to Part I of the 2010 Law which has implemented Directive 2009/65/EC into Luxembourg law. The above registration does however not require any Luxembourg authority to approve or disapprove either the adequacy or accuracy of this Prospectus or the assets held in the various Sub-Funds. Any representations to the contrary are unauthorised and unlawful.
The Shares have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States persons, except in a transaction which does not violate the securities laws of the United States of America.
The term "United States Person" or "US Person" shall mean a citizen or resident of the United States of America, a partnership organised or existing under the laws of any state, territory or possession of the United States of America, or a corporation organised under the laws of the United States of America or of any state, territory or possession thereof, or any estate or trust, other than an estate or trust the income of which from sources outside the United States of America is not includable in gross income for purpose of computing United States income tax payable by it. If a Shareholder subsequently becomes a "United States Person" and such fact comes to the attention of the Fund, Shares owned by that person may be compulsory repurchased by the Fund.
The Articles give powers to the Board of Directors to impose such restrictions as they may think necessary for the purpose of ensuring that no Shares in the Fund are acquired or held by any person in breach of the law or the requirements of any country or governmental authority or by any person in circumstances which in the opinion of the Board of Directors might result in the Fund incurring any liability or taxation or suffering any other disadvantage which the Fund may not otherwise have incurred or suffered (such persons being referred to as the "Prohibited Persons"). In particular, the Board of Directors has decided that United States Person or U.S. Persons would be one class of Prohibited Persons. Applicants may be required to declare that they are not Prohibited Persons and are not applying for Shares on behalf of any Prohibited Person nor reselling Shares for the benefit of Prohibited Persons. The Fund may compulsorily redeem all Shares held by any such persons.
Notwithstanding the above mentioned the Shares may be offered for sale or sold to United States Persons or U.S. Persons with the prior consent of the Management Company in a way which does not violate the securities laws in the United States of America.
The value of the Shares may fall as well as rise and the Shareholder on transfer or redemption of Shares may not get back the amount initially invested. Income from the Shares may fluctuate in money terms and changes in rates of exchange may cause the value of Shares to go up or down. The levels and bases of, and reliefs from, taxation may change.
Investors should inform themselves and should take appropriate advice on the legal requirements as to possible tax consequences, foreign exchange restrictions or exchange control requirements which they might encounter
Notice 3
under the laws of the countries of their citizenship, residence, or domicile and which might be relevant to the subscription, purchase, holding, conversion, redemption or disposal of the Shares of the Fund.
The Board of Directors has taken all reasonable care to ensure that the facts stated herein are correctly and fairly presented with respect to all questions of importance and that no important fact, the omission of which would make misleading any of the statements herein, be omitted. The Board of Directors accepts responsibility accordingly.
The Prospectus and the KIID may be translated into different languages for distribution purposes in certain jurisdictions. Unless contrary to local laws in the jurisdiction concerned, in the event of any inconsistency in any translation, the English version shall always prevail. In addition another language version may contain specific information intended for investors subscribing Shares in a certain country. Such country specific information is not part of this Prospectus.
Contents 4
Contents
Contents 4
Definitions 7
Interpretation Rules 12
Management and Administration 13
Prospectus 15
1. Principal Features 15
1.1. Structure...15
1.2. Sub-Funds and Share Classes ...15
2. Investment Objective of the Sub-Funds 18 2.1. Pooling and Co Management...18
3. Investment Policy and Restrictions - Risk Factors - Risk Management 19 4. Derivative instruments 24 5. Efficient portfolio management techniques 26 6. Management of collateral for OTC financial derivative transactions and efficient portfolio management techniques 27 7. Risk Factors 29 7.1. Market risk...29
7.2. Emerging and Frontier Markets Risk ...29
7.3. Interest rate risk ...30
7.4. Defaulted Debt Securities risk ...30
7.5. Credit risk ...30
7.6. Foreign exchange risk ...30
7.7. Counterparty risk ...30
7.8. Sovereign risk ...31
7.9. Liquidity risk ...31
7.10. Volatility...31
7.11. Investing in Equity Securities ...31
7.12. Risk relating to investing in certain geographical area or with particular style or theme...32
7.13. Operational risks ...32
7.14. Risks associated with investment in Rule 144A Securities...32
7.15. Force majeure risk...32
7.16. Risk relating to active management ...32
7.17. Securities lending and repurchase transactions ...32
7.18. Financial derivative instruments ...33
7.19. Risks relating to investments on other UCI ...34
7.20. Risks relating to investments in CoCos ...35
7.21. Risks relating to investing in China A-shares ...35
7.22. Risks in relation to index tracking and anticipated Tracking Error ...38
7.23. Index disruption risk ...39
7.24. Risks in relation to Covered Bonds ...39
8. Risk Management 39 9. Management Company 40 10. Investment Manager, Sub-Investment Managers and Sub-Investment Advisors 41 10.1. The Investment Managers...41
Contents 5
10.2. The Sub-Investment Managers ...42
10.3. The Sub-Investment Advisors ...42
11. Custodian and Principal Paying Agent 43 12. Central Administration 44 13. Domiciliary Agent 44 14. Registrar Agent 44 15. Distribution of the Shares 44 16. The Shares 45 17. Issue and Sale of Shares 45 17.1. Continuous Offering ...45
17.2. Fight against the Money Laundering ...46
18. Redemption of Shares 47 19. Conversion of Shares 48 20. Restrictions on Subscription and Conversion of Shares of certain Sub-Funds 49 21. Prevention of market timing and late trading practices 49 21.1. Market Timing ...49
21.2. Late Trading ...49
22. Determination of the Net Asset Value 49 23. Temporary Suspension of the Calculation 51 24. Distribution Policy 52 25. Charges and Expenses 52 25.1. Charges and Expenses payable by the Fund...52
25.2. Other Information relating to Fees...54
25.3. Fees and Expenses Payable by Investors ...54
26. Taxation 54 26.1. The Fund...54
26.2. The Shareholders...55
26.3. Savings Directive...55
26.4. FATCA Foreign Account Tax Compliance Act ...56
26.5. China...58
27. General Information and Documents for Inspection 60 27.1. Meetings of, and Reports to Shareholders ...60
27.2. Information notices ...60
27.3. Conflict of interest...60
27.4. Exercise of voting rights ...61
27.5. Documents and other information Available...61
27.6. Data Protection and telephone recording ...62
28. Dissolution and Liquidation of the Fund 62 29. Termination of Sub-Funds 63 30. Merger of the Fund and of Sub-Funds 63 30.1. Mergers of the Fund decided by the Board of Directors ...63
30.2. Mergers of Sub-Fund decided by the Board of Directors ...64
Appendices to the Prospectus 65 Aktiv Förmögenhetsförvaltning ...66
Eastern Europe...69
Emerging and Frontier Markets ...72
Contents 6
Euro High Yield Bond ...79
Europa (SEK) ...83
Europe...86
Europe Absolute ...89
Europe Long-Short Dynamic ...93
Europe Long-Short Dynamic Plus ...97
European Corporate Sustainable Bond ...101
Germany...106
Global Emerging Markets Leaders ...109
Global High Dividend...112
Global Inflation Linked Bond...115
Global Inflation Linked Bond Short Duration...118
Nordic Corporate Bond...121
Sverige ...124
Sverige Europa...127
Sverige Fokus...130
Sverige Kort Ränta ...133
Sverige Ränta...136
Sverige Real Ränta ...139
US High Yield Bond...142
Global Index ...145
SRI Global ...148
Definitions 7
Definitions
Articles The articles of incorporation of the Fund, as may be supplemented or amended fromtime to time.
ADR
An American Depositary Receipt (“ADR”) is a negotiable certificate issued by a U.S. depositary bank which is holding shares of a foreign company in its accounts and which confers the owner of the ADR an entitlement to a specified number of shares in that foreign company. ADRs are usually denominated in U.S. dollars, with the
underlying security held by a U.S. financial institution overseas.
Base Currency The currency of the Sub-Fund as defined for each Sub-Fund in the relevant Appendixto the Prospectus.
Benchmark Index In relation to a Sub-Fund, the index against which the return of the Sub-Fund will be compared.
Board of Directors The members of the board of the Fund.
Business Day If not otherwise defined in the relevant Appendices to the Prospectus, any full day onwhich banks are open for business in Luxembourg City except the 31 December.
CAD Canadian Dollar.
CDS
Credit Default Swaps. A Credit Default Swap is a credit derivative contract tied to a reference asset, where the purchaser of the swap makes periodic payments to the seller of the contract up until the maturity date of a contract or until a credit event occurs. In return, the seller agrees, upon the occurrence of a credit event, either to reimburse the reference asset in full, or to acquire the reference asset from the buyer at face value.
CHF Swiss Franc.
Consolidation
Currency The consolidation currency of the Fund being the Euro.
Contingent Convertible Bond (“CoCos”)
Security similar to a Convertible Bond in which the price of the underlying stock must reach a certain level before conversion is allowed (e.g. the share price of the issuer falling to predetermined level for a certain period of time or the issuer’s core Tier 1 capital falling to a predetermined level). All Convertible Bonds have a conversion price, that is, the price one pays in order to exchange the bonds for stocks. However, CoCos have a second, higher price that the underlying stock must meet before a bondholder is allowed to convert.
Convertible Bond Bond that can be converted into a predetermined amount of the company’s equity atcertain times during its life, usually at the discretion of the bondholder.
Covered Bond Debt security backed by cash flows from mortgages or public sector loans. Thecovered bond assets remain on the issuer’s consolidated balance sheet and continue as obligations of the issuer (often a bank or mortgage institute).
CSRC The China Securities Regulatory Commission.
CSSF The Commission de Surveillance du Secteur Financier, the Luxembourg supervisoryauthority of financial sector.
Credit Rating Agency
Any rating agency which will provide independent credit ratings, used by the Investment Manager of any particular Sub-Fund. Credit Rating Agencies must be approved by either the Securities and Exchange Commission (“Nationally Recognized Statistical Rating Organization”) or by the ESMA (“Credit Rating Agency”).
Cross-investing Sub-Fund
Has the meaning of ascribed to this term in paragraph B. “Cross Investments between Sub-Funds of the Fund” of section 3. “Investment Policy and Restrictions - Risk
Definitions 8
Custodian and
Principal Paying Agent Agreement
The agreement between the Fund and the Custodian and Principal Paying Agent as amended, supplemented or otherwise modified from time to time.
Debt Securities
Any security representing borrowed funds that must be repaid. Examples of debt securities include bonds, certificates of deposit, commercial paper, and debentures. Such Debt Securities can appear in the form of fixed rate, floating rate, interest-bearing securities, zero coupon, inflation-linked, perpetual and/or dual currency bonds. Debt Securities can be issued by public authorities, supranational institutions, companies and/or credit institutions.
Denomination
Currency The currency of denomination of the different Share Classes.
DKK Danish Kroner.
ESG
Environmental, social and governance issues that investors are considering in the context of corporate behaviour and performance. While a definitive list of ESG issues does not exist, material ESG issues are generally understood to be those that may be considered important for reflecting a company’s economic, environmental and social impacts, or influencing the decisions of stakeholders. ESG issues may be difficult to measure in monetary terms, but can affect the risk and return of investments. ESMA The European Securities and Markets Authority.
EUR Euro.
Fund Danske Invest SICAV.
GBP Pound Sterling.
GDR
A Global Depositary Receipt (“GDR”) is a negotiable certificate issued by a depositary bank which is holding shares of foreign company in its accounts and which confers the owner of the GDR an entitlement to a specified number of shares in that foreign company. The shares are usually held by a foreign branch of an international bank. 2010 Law The Luxembourg law of 17 December 2010 on undertakings for collective investment,as amended.
Swedish Half Day A Business Day on which the Stock market in Sweden is open until 13.00 and thebond market is open until 12.00 as disclosed on www.nasdaqomxnordic.com.
Institutional Investor
Investors within the meaning of article 174 of the 2010 Law such as credit institutions and other professionals of the financial sector (“PSF”) acting on their own behalf, on behalf of institutional investors or of non institutional clients on the basis of a discretionary management mandate, insurance and re-insurance companies, social security institutions, pension funds, major industrial or financial groups, UCIs,
territorial government organizations, official teaching bodies, family offices as long as they qualify as PSF, non –profit organizations, housing companies, organizations with well-defined purpose (such as professional federations, foundations, community art centres, sports associations), philosophical organizations (such as communities, religious orders, bishoprics, dioceses), health or social organizations (such as mutual insurance companies, insurance companies, pension companies, hospitals, social housing companies), association of territorial organizations, organizations (such as self-governing harbours, chambers of commerce, guild chambers, farmers’
associations) and/or managers of public services (such as rail transport companies). Investment Fund
Service Agreement
The agreement between the Fund, the Management Company and the Central Administration and the Registrar Agent as amended, supplemented or otherwise modified from time to time.
Investment Management Agreement
The agreement between the Management Company, and the Investment Manager as amended, supplemented or otherwise modified from time to time.
Definitions 9
JPY Japanese Yen.
KIID
The Key Investor Information Document(s). In addition to this Prospectus a Key Investor Information Document of each Share Class within a Sub-Fund is made available in the registered office of the Fund and in the website
(www.danskeinvest.com). The Key Investors Information Documents provide information for example on the synthetic risk, reward indicator, charges and on historical performance. Before subscribing any Shares investors should read the relevant Key Investor Information Document.
Management
Company Agreement The agreement between the Fund and the Management Company as amended,supplemented or otherwise modified from time to time. Net Asset Value or
NAV Net asset value as described in section 22. “Determination of the Net Asset Value”.
NOK Norwegian Kroner.
OECD Organisation for the Economic Cooperation and Development. P-Notes/
Participatory Notes
Financial instruments that are used to generate exposure to an equity investment (including common stocks and warrants) located in markets where direct ownership may not be possible for the Fund.
Preferred Stock/ Convertible Preferred Stock
Equity security that may have features not possessed by common stock such as a specified dividend that must be paid before any dividends can be paid to common stockholders, and which takes precedence over common stock in the event of the company’s liquidation. Convertible preferred stock includes an embedded option for the holder to convert the preferred shares into a fixed number of common shares, generally anytime after a predetermined date.
PBOC The People’s Bank of China, the central bank of the PRC.
PRC or China The People's Republic of China, excluding for the purpose of this Prospectus the HongKong and Macao Special Administrative Regions and Taiwan.
Prospectus This prospectus, as it may be supplemented or amended from time to time.
QFII A person that has been approved as a qualified foreign institutional investor by theCSRC to invest in the PRC securities market under the QFII Regulations and has obtained an investment quota from SAFE.
QFII Regulations
Collectively, the Measures for the Administration of the Securities Investments of Qualified Foreign Institutional Investors in the PRC (promulgated jointly by the CSRC, PBOC and SAFE on 24 August 2006 and effective 1 September 2006) and any
measures or guidance issued thereunder, and all regulations, rules, orders, measures, notices, directives, directions or guidance, as amended from time to time, formulated specifically to deal with or which are relevant to any of the QFII-related activities (as amended, supplemented or revised from time to time).
Definitions 10
Regulated Market
Regulated market:
- a) within the meaning of Directive 2004/39/EC of the European Parliament of 21 April 2004 on markets in financial instruments as amended namely a multilateral system operated and/or managed by a market operator, which brings together or facilities the bringing together of multiple third-party buying and selling interests in financial instruments - in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title III of the Directive 2004/39/EC - b) any other market which the board of directors of the Management
Company considers that it is regulated, operates regularly and is recognised and open to the public in Member States of the Organisation for the Economic Cooperation and Development (“OECD”) and any other country of Europe, North, Central & South America, Asia, Africa and Oceania. These other Regulated Markets are subject to approval from the Board of Directors of the Fund and the Management Company is only authorizing investments in markets foreseen in the "eligible market policy" approved and updated from time to time by the Board of Directors of the Fund.
RI Responsible Investments as defined in the Responsible Investment policy adopted bythe Board of Directors.
RQFII A person that has been approved as a Renminbi qualified foreign institutional investorby the CSRC to invest in the PRC securities market under the RQFII Regulations and has obtained an investment quota approval from SAFE.
RQFII Regulations
Collectively, the Pilot Measures for Onshore Securities Investment by RMB Qualified Foreign Institutional Investors (jointly issued by the CSRC, PBOC and SAFE on and made effective 1 March 2013) and any measures or guidance issued thereunder, and all regulations, rules, orders, measures, notices, directives, directions or guidance, as amended from time to time, formulated specifically to deal with or which are relevant to any of the RQFII-related activities (as amended, supplemented or revised from time to time).
Rule 144A Securities
Rule 144A Securities are US securities transferable via a private placement regime (i.e. without registration with the Securities and Exchange Commission), to which a “registration right” registered under the Securities Act may be attached, such registration rights providing for an exchange right into equivalent Debt Securities or into equity shares. The selling of such Rule 144A Securities is restricted to qualified institutional buyers (as defined by Securities Act).
SAFE The State Administration of Foreign Exchange of the PRC.
Securities Act US Securities Act of 1933, as may be amended from time to time.
SEK Swedish Kroner.
Service Providers
Means the Management Company, the Investment Manager, the Custodian and Principal Paying Agent, the Central Administration Agent, the Registrar and Transfer Agent, the Domiciliary Agent and any other entity which provides services to the Fund from time to time.
Share Each share within any Sub-Fund. Share Class(es) Each share class within any Sub-Fund. Shareholder The holder of Shares in any Sub-Fund.
Sub-Fund
Each sub-fund within the Fund.
By derogation to the provisions of Article 2093 of the Luxembourg Civil Code, the assets of one given Sub-Fund are only liable for the debts, obligations and liabilities which are attributable to this Sub-Fund. In the relations between the Fund’s
Definitions 11
Target Sub-Fund Has the meaning of ascribed to this term in paragraph B. “Cross Investments betweenSub-Funds of the Fund” of section 3. “Investment Policy and Restrictions - Risk Factors - Risk Management”.
Tracking Error
The annualised standard deviation of the difference in returns between a Sub-Fund and its benchmark. While the tracking difference measures the actual difference between the returns of a Sub-Fund and the returns of the benchmark, the Tracking Error measures the increase and decrease in tracking difference (i.e. volatility of tracking difference).
UCI An undertaking for collective investment.
UCITS
An undertaking for collective investment of the open-ended type, which is recognised as an Undertaking for Collective Investments in Transferable Securities within the meaning of the first and second indent of Article 1.2 (a) and (b) of the Directive 2009/65/EC of 13 July 2009, as amended.
USD United States Dollar.
Valuation Day
If not otherwise defined in the relevant Appendix to the Prospectus, day on which the Net Asset Value per Share of any Sub-Fund and Class is determined or calculated, determined as being any full day on which banks are open for business in
Luxembourg City except the 31 December. Warrant
A derivative security usually issued directly by a company that gives the holder the right to purchase securities from that company at a specific price within a certain time frame. Values of warrants are likely to fluctuate more than the prices of the
Interpretation Rules 12
Interpretation Rules
The following rules apply unless the context requires otherwise:
headings are for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Prospectus or any provision hereunder;
words denoting the singular shall include the plural and vice versa; words denoting one gender shall include the other gender;
if a word or phrase is defined, its other grammatical forms have a corresponding meaning;
references to a “Section” and “Appendix” are respectively to a section and appendix of this Prospectus; where there is a conflicting meaning between a defined term in the Prospectus and an Appendix, the
definition or meaning stated in the relevant Appendix shall prevail for that Sub-Fund;
the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation";
the terms "herein", "hereof” and "hereunder" shall refer to this Prospectus in its entirety;
a reference to an agreement or document (including, without limitation, a reference to this Prospectus) is to the agreement or document as amended, varied, supplemented, novated or replaced, except to the extent prohibited by this Prospectus or that other agreement or document;
a reference to a party to an agreement or document includes the party's successors, permitted substitutes and permitted assigns;
a reference to an agreement includes any undertaking, deed, agreement and legally enforceable arrangement, whether or not in writing, and a reference to a document includes an agreement (as so defined) in writing and any certificate, notice, instrument and document of any kind;
a reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it.
Management and Administration 13
Management and Administration
Registered Office of the Fund
13, rue Edward Steichen L-2540 Luxembourg
Grand Duchy of Luxembourg Board of
Directors Chairman
Robert Mikkelstrup
Head of Product Management of Danske Capital,
2800-Kgs. Lyngby, Denmark
Members
Henrik Rye Petersen
Head of Global Financial Institutions at Danske Invest
2800-Kgs. Lyngby, Denmark
Morten Rasten Managing Director
Danske Invest Management A/S, 2800-Kgs. Lyngby,
Denmark Management
Company Danske Invest ManagementCompany 13, rue Edward Steichen L-2540 Luxembourg
Grand Duchy of Luxembourg Board of Directors of the Management Company: Chairman Morten Rasten Managing Director
Danske Invest Management A/S 2800-Kgs. Lyngby
Denmark Members Johnny Bisgaard
Head of Private Banking Luxembourg
Danske Bank International S.A. Luxembourg
Grand-Duchy of Luxembourg Lone Mortensen
Member of Executive Board Danske Invest Management A/S 2800-Kgs. Lyngby
Denmark
Investment
Managers Danske Bank A/S (acting through itsdivision Danske Capital) 17, Parallelvej 2800-Kgs. Lyngby Denmark Danske Capital AB 16, Kungsträdgårdsgatan SE-111 47 Stockholm Sweden Sub-Investment Managers DDJ Capital Management LLC Stony Brook Office Park 130 Turner Street Building 3, Suite 600 Waltham, MA 02453 U.S.A.
William Blair & Company LLC 222 West Adams Street Chicago, Illinois 60606 U.S.A.
Sub-Investment Advisors
Aventicum Capital Management (Qatar) LLC
Tornado Tower – 32 Floor West Bay, P.O. Box 23146 Doha
Qatar
Blackhorse Asset Management Pte. Ltd
156 Cecil Street
#06-01 Far Eastern Bank Building Singapore 069544
Claritas Administração de Recursos Ltda.
Avenida Brigadeiro Faria Lima, 4221, 4thfloor 04538-133, São Paulo Brazil Compass Group LLC 35 East 57thStreet, New York, NY 10022 U.S.A.
Fullerton Fund Management Company Ltd
60B Orchard Road,
5th Floor Tower 2, The Atrium, Singapore 238891
Imara Asset Management Ltd Level 12, Nexteracom Tower 1 Cybercity, Ebene
Management and Administration 14
JK Capital Management Limited Suite 1101, 11thFloor, 34-37 Connaught Road Central, Hong Kong
China
Karma Capital Advisors Private Limited
408, Oberoi Chambers 1, Off Link Road, Andheri West,
Mumbai 400053 India
Domiciliary
Agent Danske Invest ManagementCompany 13, rue Edward Steichen, L-2540 Luxembourg
Grand Duchy of Luxembourg Custodian
and Central Administrati on
RBC Investor Services Bank S.A. 14, Porte de France
L-4360 Esch-sur-Alzette Grand Duchy of Luxembourg
Auditor of
the Fund Deloitte Audit S.à r.l.560, Rue de Neudorf L-2220 Luxembourg
Grand Duchy of Luxembourg Registrar
Agent RBC Investor Services Bank S.A.14, Porte de France L-4360 Esch-sur-Alzette
Grand Duchy of Luxembourg Principal
Paying Agent
RBC Investor Services Bank S.A. 14, Porte de France
L-4360 Esch-sur-Alzette Grand Duchy of Luxembourg
Prospectus 15
Prospectus
1.
Principal Features
1.1.
Structure
The Fund was incorporated on 30 June 2011 for an unlimited period of time and is governed by the law of 10 August 1915 on commercial companies, as amended, and by the 2010 Law, as amended.
The Fund’s Articles were published on 8 July 2011 in the Luxembourg Official Gazette, the Mémorial C, Recueil des
Sociétés et Associations (the “Mémorial“) and registered with the Luxembourg Registre de Commerce et des Sociétés, where they may be consulted and where copies may be obtained upon payment of the applicable
charges. Copies are available on request at the registered office of the Fund. They were amended on 11 September 2012 and on 21 August 2013. The latest amendment has been published in the Mémorial on 11 September 2013.
The registered office of the Fund is established at L-2540 Luxembourg, 13, rue Edward Steichen. The Fund is recorded at the Luxembourg "Registre de Commerce et des Sociétés" under the number B 161867.
The Fund is an investment company incorporated under the laws of the Grand Duchy of Luxembourg as a Société d'Investissement à Capital Variable (the "SICAV"). The Fund purpose is to invest in all kinds of transferable securities, units or shares of UCITS or other UCIs, as well as derivatives on transferable securities and other financial instruments authorised by the 2010 Law; it is consequently subject to Part I of the 2010 Law.
The Fund is an umbrella Fund and as such provides investors with the choice of investment in a range of several separate Sub-Funds each of which relates to a separate portfolio of liquid assets and other securities and assets permitted by the 2010 Law with specific investment objectives, as described in the relevant Appendix to this Prospectus. Each such Appendix forms an integral part of this Prospectus.
The minimum capital of the Fund, as provided by the 2010 Law, which must be achieved within 6 months after the date on which the Fund has been authorized as a collective investment undertaking under Luxembourg law, shall be an amount of EUR 1,250,000.- being provided that Shares of Target Fund held by a Cross-investing Sub-Fund shall not be taken into account for the purpose of the calculation of the EUR 1,250,000 minimum capital requirement. The capital of the Fund is represented by fully paid-up Shares of no par value. The initial capital of the Fund has been set at EUR 31,000.-.
The share capital of the Fund will be equal, at any time, to the total value of the net assets of all the Sub-Funds and represented by Shares of no par value.
1.2.
Sub-Funds and Share Classes
1.2.1.Sub-Funds
The Board of Directors may from time to time decide to create further Sub-Funds; in that event, the Appendices to the Prospectus will be updated and amended so as to include detailed information on the new Sub-Funds.
The specific characteristics and the investment objectives of each Sub-Fund as well as the different classes offered in relation to each Sub-Fund are defined in the relevant Appendix to this Prospectus.
1.2.2.
Share Classes
The Fund may create additional classes within each Sub-Fund. Such classes may differ inter alia in their fee structure, distribution policy, qualification of the investors, subscription amounts and in their currency denomination, which may differ from the Base Currency of the relevant Sub-Fund.
Principal Features 16
The following types of classes may exist in the Sub-Funds:
Class Description Currency Minimum Initial
Investment and Subsequent Holding Class A A Shares are available for all investors Any currency NIL
Class I I Shares are available for investors who qualify as
Institutional Investors. EURUSD
SEK DKK NOK 1,000,000.- 10,000,000,- 10,000,000.-Class W W Shares are available to investors having entered
into a discretionary management agreement with Danske Bank Group entity.
Any currency NIL
Class X X Shares are available for all investors and intended
for high net worth retail investors. EUR
300,000.-Class Y Y Shares are available for all investors in certain
jurisdictions. Any currency NIL
Class YI YI Shares are available for investors who qualify as Institutional Investors. The Shares are available in certain jurisdictions.
SEK
5,000,000,-The Base Currency of each Fund is defined in the relevant Appendix to this Prospectus. Generally the Sub-Funds are not currency hedged except otherwise provided in the relevant Appendix to the Prospectus. Therefore different Sub-Funds and Share Classes remain exposed to the currencies of the underlying holdings of the portfolio unless otherwise stated in the relevant Appendix to the Prospectus.
The Minimum Initial Investment and Subsequent Holding may be waived or reduced at the discretion of the Management Company.
a) Share Classes’ Characteristics
The following types of Shares may be offered in each of the above mentioned Share Classes (see more detailed description of the type of the Shares in the below table):
Suffix used to describe the type of Shares Type of Shares
d Distribution Shares
currency acronym with small letters Denomination Currency of the Shares other than the Base Currency of the Sub-Fund
h Currency Hedged Shares
p Shares with a performance fee
b) Distribution Share Classes
Distribution Shares are identifiable by adding the letter “d” as a suffix to the Share Class name (e.g. Class A d or Class I d). Unless the letter “d” is added as a suffix to the name of the Share Class the question is about accumulation Shares.
c) Denomination Currency of the Share Classes
The Denomination Currency of a Share Class is the Base Currency of the Sub-Fund unless currency acronym (such as EUR, SEK, DKK, NOK, GBP, USD and CHF) with small letters has been added as a suffix to the name of the relevant Share Class (e.g. Class A-sek for an accumulation Share Class A which is denominated in SEK when the Sub-Fund has a Base Currency different than SEK). With Share Classes described in this section the currency acronym denotes the currency in which the Net Asset Value per Share will be calculated.
Principal Features 17
No hedging against the Base Currency of a Sub-Fund is undertaken for the Share Classes described in this section. Unless otherwise stated in the relevant Appendix to this Prospectus, the Share Classes described in this section remain exposed to the currencies of the underlying holdings of the portfolio and to the Base Currency of the relevant Sub-Fund.
Subscriptions and redemptions are accepted in the Denomination Currency of the Share Class as well as in SEK and in NOK unless the Fund has decided to accept subscriptions or redemptions in other currencies.
d) Currency Hedged Share Classes
Where Share Classes are issued in a Denomination Currency other than the Base Currency of the relevant Fund and at least 90% of the Net Asset Value of the Share Class is hedged against the Base Currency of the Sub-Fund the letter “h” is added as a suffix to the name of the relevant Share Class (e.g. Class A-sek h for an accumulation Share Class which is denominated in SEK when the Sub-Fund has a Base Currency different than SEK and the Share Class is hedged against the Base Currency of the Sub-Fund).
With Share Classes described in this section the currency acronym denotes the currency in which the Net Asset Value per Share will be calculated.
Unless otherwise stated in the relevant Appendix to this Prospectus, the Share Classes described in this section remain exposed to the currencies of the underlying holdings of the portfolio.
Subscriptions and redemptions are accepted in the Denomination Currency of the Share Class as well as SEK and NOK unless the Fund has decided to accept subscriptions or redemptions in other currencies.
e) Share Classes with Performance Fee
Share Classes with a performance fee are identifiable by adding the letter “p” as a suffix to the Share Class name (e.g. Class A p or Class I p). The performance fee is described in the relevant Appendix to the Prospectus.
1.2.3.
Dealing
Shares may normally be purchased or redeemed at prices based on the Net Asset Value per Share of the relevant Sub-Fund on the relevant Valuation Day of each Sub-Fund (specified for each Sub-Fund in the relevant Appendices of the Prospectus).
1.2.4.
Offer Price
After the Initial Offer Period (specified for each Sub-Fund in the relevant Appendices of the Prospectus), the Offer Price of the Shares will be equal to the Net Asset Value per Share of the relevant Sub-Fund plus the subscription charge mentioned for each Sub-Fund individually in the Appendices of the Prospectus.
1.2.5.
Minimum Investment and Subsequent Holding
The minimum initial investment and the subsequent holding requirement are specified under “1.2.2 Share Classes”. A redemption or conversion request which would reduce the value at such time of any holding to below such amount may be treated as a request to redeem or to convert the whole of such shareholding.
Investment Objective of the Sub-Funds 18
2.
Investment Objective of the Sub-Funds
The investment objectives of each Sub-Fund are defined in the relevant Appendix to this Prospectus. Each such Appendix forms an integral part of the Prospectus. Each Sub-Fund will have a separate investment objective, which it pursues through separate investment policies as described in the relevant Appendix of the Prospectus. The Board of Directors has adopted an RI (Responsible Investments) policy which implies that the Fund's investments, where made directly, and subsequently direct investments of its Sub-Funds and Share Classes, are screened in accordance with acknowledged principles for corporate social responsibility, including UN Global Compact, UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. Unless otherwise specified in the relevant Appendix to this Prospectus, the Sub-Funds will be actively managed. Those Sub-Funds that are not actively managed will be managed by tracking an index.
Each index tracking Sub-Fund uses a physical replicating strategy in order to track its Benchmark Index. The replicating index Sub-Funds will replicate the relevant Benchmark Index by a dynamic sample based physical replication model. The sample based model is used in order to minimize costs for the Sub-Fund and is optimized to track the performance on the Benchmark Index. Tracking error restriction is applied for all our index tracking Sub-Funds. In addition to this it may not always be possible or practicable to purchase individual constituents of the benchmark (e.g. where some constituents are excluded from the investment universe of the Sub-Fund due to RI restrictions, where a security in the Benchmark Index becomes unavailable, temporarily illiquid or there are considerable costs or practical difficulties involved in compiling a portfolio of securities in order to replicate the Benchmark Index). Any change in a Benchmark Index will not require Shareholders’ approval.
The investment objectives of the Fund and each Sub-Fund are to achieve a high total return as compatible with a sound diversification of risks.
More information about the Danske Bank Group responsibility policy and the Group’s work with responsible investments can be found on the website www.danskeinvest.lu.
There can however be no assurance that the investment objectives of the Fund and each Sub-Fund will be achieved.
2.1.
Pooling and Co Management
For the purposes of efficient portfolio management, the Management Company and the Fund may invest and manage all or any part of the portfolio assets established for two or more Sub-Funds of the Fund and/or with one or more sub-funds of any other Luxembourg investment fund having the same Custodian than the Fund (for the purposes hereof “Participating Sub-Funds”) on a pooled basis (pooling) in accordance with their respective investment policies. Such asset pools may not be considered as separate legal entities and any notional accounting shares of such pool shall not be considered as Shares of the Fund.
Any such asset pool shall be formed by transferring to it cash or other assets (subject to such assets being appropriate in respect to the investment policy of the pool concerned) from each of the Participating Sub-Funds. Thereafter, the Management Company and the Fund may from time to time make further transfers to each asset pool. Assets may also be transferred back to a Participating Sub-Fund up to the amount of the participation of the Sub-Fund concerned. The portion of a Participating Sub-Fund in an asset pool shall be measured by reference to its percentage of ownership corresponding to notional accounting shares in the asset pool, which is calculated at each Valuation Day. This percentage of ownership shall be applicable to each and every line of investment held in the asset pool. This line-by-line detail of the Funds portion of the pool is reflected in the accounts of the Sub-Fund.
Such notional accounting shares shall be denominated in Euro or in such currency as the Management Company and the Fund shall consider appropriate and shall be allocated to each Participating Sub-Fund in an aggregate value equal to the cash, securities and other assets contributed.
When additional cash or assets are contributed to or withdrawn from an asset pool, the percentage of ownership of all of the Participating Sub-Funds will be increased or reduced, as the case may be, to reflect the percentage of ownership change. Where a contribution is made in cash, it may be treated for the purpose of this calculation as reduced by an amount which the Management Company and the Fund consider appropriate to reflect fiscal charges and dealing and purchase costs which may be incurred in investing the cash concerned; in the case of cash withdrawal, a corresponding deduction may be made to reflect costs which may be incurred in realising securities or other assets of the asset pool. The Custodian shall at all times keep the Fund's assets segregated on its books and records from the assets of other co-managed entities and shall therefore be able at all times to identify the assets of the Fund and of each Sub-Fund.
Investment Policy and Restrictions - Risk Factors - Risk Management 19
Dividends, interest and other distributions of an income nature earned in respect of the assets in an asset pool will be applied to such asset pool and cause the respective net assets to increase. Upon the dissolution of the Fund, the assets in an asset pool will be allocated to the Participating Sub-Funds in proportion to their respective participation in the asset pool.
3.
Investment Policy and Restrictions - Risk Factors - Risk Management
A. Investment Policy
Each Sub-Fund of the Fund shall be regarded as a separate UCITS for the purpose of this paragraph: The Fund may only invest in:
3.1.
3.1.1. Transferable securities and money market instruments admitted to or dealt in on a Regulated Market; 3.1.2. 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 a Regulated Market;
Such admission is secured within one year of issue;
3.1.3. Rule 144A Securities, which can be invested into by some Sub-Funds under the conditions that such securities are admitted to or dealt in on a Regulated Market and such securities respect Point 17 of “CESR’s Guidelines concerning eligible assets for investment by UCITS”, dated March 2007.
Investment in Rule 144A Securities, which would not comply with any of the above conditions, shall together with the transferable securities eligible under section 3.6..1 below, not exceed 10% of the Sub-Fund’s Net Asset Value.
3.1.4. Debt Securities, which are rated by approved Credit Rating Agency, can be invested into in accordance with directive 2013/14/EU (reduced reliance on external ratings). Investments made in debt security must in accordance with directive 2013/14/EU be subject to an independent credit risk assessment, as management and investment companies may not rely solely and mechanistically on external credit ratings. In case of an impairment of credit quality, identified through an internal credit risk assessment process or indicated by a change of a rating issued by an approved Rating Agency, corrective action must be taken when required by the Investment Policy.
3.2.
Units of UCITS authorised according to Directive 2009/65/EC and/or other UCI within the meaning of the first and second indent of Article 1, paragraph (2), point a) and b) of Directive 2009/65/EC, should they be situated in a Member State of the European Union or not, provided that:
3.2.1. such other UCI are authorised under laws which provide that they are subject to supervision considered by the CSSF to be equivalent to that laid down in Community law, and that cooperation between authorities is sufficiently ensured;
3.2.2. the level of protection for unit-holders in such other UCI is equivalent to that provided for unit-holders in a UCITS, and in particular that the rules on assets segregation, borrowing, lending, uncovered sales of transferable securities and money market instruments are equivalent to the requirements of Directive 2009/65/EC;
3.2.3. the business of the other UCI is reported in half-yearly and annual reports to enable an assessment to be made of the assets and liabilities, income and operations over the reporting period;
3.2.4. no more than 10% of the UCITS or the other UCI assets, whose acquisition is contemplated, can be, according to its constitutional documents, invested in aggregate in units of other UCITS or other UCIs; 3.3.
Deposits with credit institutions which are repayable on demand or have the right to be withdrawn, and maturing in no more than twelve months, provided that the credit institution has its registered office in a Member State of the European Union or, if the registered office of the credit institution is situated in a non-Member State, provided that it is subject to prudential rules considered by the CSSF as equivalent to those laid down in Community law; 3.4.
Investment Policy and Restrictions - Risk Factors - Risk Management 20
Financial derivative instruments, including equivalent cash-settled instruments, dealt in on a Regulated Market referred to in sub-paragraph 3.1.1 and/or financial derivative instruments dealt in over-the-counter (“OTC derivatives”), provided that:
3.4.1. the underlying consists of instruments covered by, paragraphs 3.1-3.3., financial indices, interest rates, foreign exchange rates or currencies, in which the UCITS may invest according to its investment objectives as stated in the UCITS’ constitutional documents,
3.4.2. the counter-parties to OTC derivative transactions are institutions subject to prudential supervision, and belonging to the categories approved by the CSSF, and
3.4.3. 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 market value at the Fund’s initiative;
3.5.
Money market instruments other than those dealt in on a Regulated Market and which fall under Article 1 of the 2010 Law, if the issue or issuer of such instruments is itself regulated for the purpose of protecting investors and savings, and provided that they are:
3.5.1. Issued or guaranteed by a central, regional or local authority, a central bank of a Member State, the European Central Bank, the European Union or the European Investment Bank, a non-Member State or, in the 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
3.5.2. Issued by an undertaking any securities of which are dealt in on regulated markets referred to in sub-paragraph 3.1.1., or
3.5.3. 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 CSSF to be at least as stringent as those laid down by Community law, or
3.5.4. 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 sub-paragraph 3.5.1., 3.5.2. and 3.5.3. and provided that the issuer is a company whose capital and reserves amount at least to ten million Euros (EUR 10,000,000.-) and which presents and publishes its annual accounts in accordance with Fourth 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.
3.6.
However the Fund:
3.6.1. Shall not invest more than 10% of its assets in transferable securities or money market instruments other than those referred to in paragraphs 3.1.and 3.5.;
3.6.2. Shall not acquire either precious metals or certificates representing them. 3.7.
The Fund may hold ancillary liquid assets which may be invested in deposits and/or government bonds issued or guaranteed by AAA- rated member states of the OECD or by their local authorities or by their supranational institutions and organization. The remaining time to maturity of individual bond may be a maximum 6 months. 3.8.
The Fund shall ensure that its global exposure relating to derivative instruments does not exceed the total net value of its portfolio.
The risk exposure is calculated taking into account the current value of the underlying assets, the counterparty risk, future market movements and the time available to liquidate the positions. This shall also apply to the following sub-paragraphs.
The Fund may invest, as a part of its investment policy and within the limit laid down in paragraph 3.9.5., in financial derivative instruments provided that the exposure to the underlying assets does not exceed in aggregate the investment limits laid down in paragraph 3.9. When the Fund invests in index-based financial derivative instruments, these investments do not have to be combined to the limits laid down in paragraph 3.9.
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 Article.
Investment Policy and Restrictions - Risk Factors - Risk Management 21
3.9.
3.9.1. The Fund may invest no more than 10% of its assets in transferable securities or money market instruments issued by the same body. The Fund may not invest more than 20% of its assets in deposits made with the same body. The risk exposure to a counterparty of the Fund in an OTC derivative transaction may not exceed 10% of its assets when the counterparty is a credit institution referred to in paragraph 3.3, or 5% of its assets in the other cases.
3.9.2. The total value of the transferable securities and money market instruments held by the 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 3.9.1., the Fund shall not combine where this would lead to investing more than 20% of its assets in a single body, of any of the following:
investments in transferable securities or money market instruments issued by that body, deposits made with that body or
exposures arising from OTC derivatives transactions undertaken with that body
3.9.3. The limit laid down in 3.9.1., first sentence, is raised to a maximum of 35% if the transferable securities or money market instruments are issued or guaranteed by a Member State of the European Union, by its local authorities, by a non-Member State or by public international bodies to which one or more Member States are members.
3.9.4. The limit laid down in 3.9.1., first sentence, is raised to a maximum of 25% for certain Debt Securities if they are issued by a credit institution whose registered office is situated in a Member State of the European Union and which is subject by law to special public supervision designed to protect the holders of Debt Securities. In particular, sums deriving from the issue of such Debt Securities must be invested pursuant to the law in assets which, during the whole period of validity of the Debt Securities, are capable of covering claims attaching to the Debt Securities and which, in the event of bankruptcy of the issuer, would be used on a priority basis for the reimbursement of the principal and payment of the accrued interest.
When the Fund invests more than 5% of its assets in such Debt Securities as referred to in first indent and issued by one issuer, the total value of such investments may not exceed 80% of the value of the Fund's assets.
3.9.5. The transferable securities and money market instruments referred to in paragraphs 3.9.3 and 3.9.4. are not taken into account for the purpose of applying the limit of 40% referred to in 3.9.2. The limits set out in paragraphs 3.9.1., 3.9.2., 3.9.3. and 3.9.4. may not be combined; thus, investments in transferable securities or money market instruments issued by the same body or in deposits or derivative instruments made with this body in accordance with paragraphs 3.9.1., 3.9.2., 3.9.3. and 3.9.4. may not exceed a total of 35% of the assets of the Fund.
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 the present Article. The Fund may invest in aggregate up to 20% of its assets in transferable securities and money market instruments within the same group.
3.10.
3.10.1. Without prejudice to the limits laid down in paragraph 3.13, the limits laid down in paragraph 3.9 are raised to maximum 20% for investment in Shares and/or Debt Securities issued by the same body when the aim of the Fund' investment policy is to replicate the composition of a certain stock or debt securities index which is recognised by the CSSF, on the following basis:
the index’s composition is sufficiently diversified;
the index represents an adequate benchmark for the market to which it refers; it is published in an appropriate manner.
Investment Policy and Restrictions - Risk Factors - Risk Management 22
3.10.2. The limit laid down in 3.10.1. is 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.
3.11.
Notwithstanding paragraph 3.9. above, according to Article 45 (1) of the 2010 Law, the Fund may invest in accordance with the principle of risk-spreading up to 100% of its assets in different transferable securities and money market instruments issued or guaranteed by a Member State of the European Union, its local authorities, a Member State of the OECD or public international bodies of which one or more Member States of the European Union are members, provided that the Fund ensures the required legal protection for its investors. It shall hold securities from at least six different issues, but securities from any one issue may not account for more than 30% of the total amount. 3.12.
3.12.1. The Fund may acquire the units of UCITS and/or other UCIs referred to in paragraph 3.2., provided that no more than 20% of its assets are invested in a single UCITS or other UCI.
For the purpose of the application of this investment limit, each compartment of a UCI with multiple compartments 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.
3.12.2. Investments made in units of UCI other than UCITS may not exceed, in aggregate, 30% of the assets of the Fund.
When the Fund has acquired units of UCITS and/or other UCIs, the assets of the respective UCITS or other UCI do not have to be combined in the view of the limits laid down in paragraph 3.9.
3.12.3. When the Fund 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 to which the Management Company is linked by common management or control or by a substantial direct or indirect holding, that Management Company or other company may not charge subscription or redemption fees on account of the Fund's investment in the units of other UCITS and/or other UCI.
3.13.
3.13.1. The Fund may not acquire any shares carrying voting rights which would enable it to exercise significant influence over the management of an issuing body.
3.13.2. Moreover, the Fund 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 or other UCI;
d) 10% of the money market instruments of the same issuer.
The limits laid down in (b), (c) and (d) may be disregarded at the time of acquisition if at that time the gross amount of Debt Securities or money market instruments, or the net amount of the securities in issue, cannot be calculated.
3.13.3. Paragraphs 3.13.1 and 3.13.2. are waived as regards:
Transferable securities and money market instruments issued or guaranteed by a Member State of the European Union or its local authorities;
Transferable securities and money market instruments issued or guaranteed by a non-Member State of the European Union;
Transferable securities and money market instruments issued by public international bodies of which one or more Member States of the European Union are members;
Shares held by the Fund in the capital of a company incorporated in a non-Member State of the European Union 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 Fund can invest in the securities of issuing bodies of that State. This derogation, however, shall apply
Investment Policy and Restrictions - Risk Factors - Risk Management 23
only if in its investment policy the company from the non-Member State of the European Union complies with the limits laid down in paragraph 3.9., 3.12. and 3.13.1. and 3.13.2. Where the limits set in paragraph 3.9. and 3.12. are exceeded, paragraph 3.14. shall apply mutates mutandis;
Shares held by the Fund in the capital of subsidiary companies carrying on the business of management, advice or marketing in the country where the subsidiary is established, in regard to the repurchase of units at unitholders’ request exclusively on its or their behalf.
3.14.
3.14.1. The Fund need not necessarily comply with the limits laid down in the present Section when exercising subscription rights attaching to transferable securities or money market instruments which form part of their assets.
While ensuring observance of the principle of risk-spreading, the Fund may derogate from paragraphs 3.9., 3.10., 3.11. and 3.12. for a period of six months following the date of its authorisation.
3.14.2. If the limits referred to in the above-mentioned paragraph are exceeded for reasons beyond the control of the Fund or as a result of the exercise of subscription rights, it must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of the Shareholders.
3.15.
3.15.1. The Fund may not borrow.
However, the Fund may acquire foreign currency by means of a back-to-back loan.
3.15.2. By way of derogation from paragraph 3.15.1., the Fund may borrow provided that such a borrowing is: (a) on a temporary basis and represents, no more than 10% of its assets;
(b) to enable the acquisition of immovable property essential for the direct pursuit of its business and represents, no more than 10% of its assets;
Where a UCITS is authorised to borrow under points (a) and (b) that borrowing shall not exceed 15% of its assets in total.
3.16.
3.16.1. The Fund may not, without prejudice to the application of paragraph 3.1. to 3.8., grant loans or act as a guarantor on behalf of third parties.
3.16.2. Paragraph 3.16.1. shall not prevent such undertakings from acquiring transferable securities, money market instruments or other financial instruments referred to in paragraph 3.2., 3.4., 3.5. which are not fully paid.
3.17.
3.17.1. The Fund may not carry out uncovered sales of transferable securities, money market instruments or other financial instruments referred to in paragraph 3.2., 3.4. and 3.5.
3.18.
By derogation of the restriction 3.2.4 and under the conditions and within the limits laid down by the 2010 Law and regulations, a Sub-Fund (the “Feeder”) may invest:
a) at least 85% of its assets in units or shares of another UCITS or another sub-fund of a UCITS (the “Master”). b) up to 15% of its assets in one or more of the following:
- ancillary liquid assets,
- financial derivative instruments which may be used only for hedging purposes,
- movable and immovable property which is essential for the direct pursuit of its business.
Within each Sub-Fund, specific investment restrictions may be established as more fully described in the relevant Appendix to the Prospectus.
Derivative instruments 24
B. Cross Investments between Sub-Funds of the Fund
A Sub-Fund (the “Cross-investing Sub-Fund”) may invest in one or more other Sub-Funds. Any acquisition of Shares of another Sub-Fund (the “Target Sub-Fund”) by the Cross-investing Sub-Fund is subject to the following conditions:
(1) the Target Sub-Fund may not invest in the Cross-investing Sub-Fund;
(2) the Target Fund may not invest more than 10% of its net assets in UCITS (including other Sub-Funds) or other UCIs referred to in item 3.2 of paragraph A. “Investment Policy” of section 3. “Investment Policy and Restrictions - Risk Factors - Risk Management”;
(3) the voting rights attached to the Shares of the Target Sub-Fund are suspended during the investment by the Cross-investing Sub-Fund;
(4) the value of the Shares of the Target Sub-Fund held by the Cross-investing Sub-Fund are not taken into account for the purpose of assessing the compliance with the EUR 1,250,000 minimum capital requirement; and
(5) duplication of management, subscription or redemption fees is prohibited.
C. Rules and restrictions with regard to financial derivative instruments
and efficient portfolio management techniques
4.
Derivative instruments
4.1. The Fund can use financial derivative instruments for investment, hedging and efficient portfolio management.
The Management Company must 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 the portfolio and
- a process for accurate and independent assessment of the value of OTC financial derivative instruments.
4.2. As specified in section 8. “Risk Management” and in the appendices to the Prospectus (relating to the specific information on the different Sub-Funds), the global exposure is calculated using commitment approach or the Value-at-Risk (“VaR”) approach (representing the maximum loss not exceeded with a given probability defined as the confidence level, over a given period of time) to monitor the global exposure relating to derivative instruments.
4.3. A Sub-Fund may invest, as part of its investment objective in financial derivative instruments including but not limited to future and forward contracts on financial instruments, option contracts on financial instruments as well as swap contracts and contracts for differences provided that the global exposure to the underlying assets does not exceed in aggregate the investment limits in paragraph 3.9 of Section A. “Investment Policy”.
When a Sub-Fund invests in index-based financial derivative instruments, these investments do not have to be combined to the limits laid down in the paragraph 3.9 of Section A. “Investment Policy”.
4.4. With total return swaps where one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of underlying assets, which includes both the income it generates and any capital gains, the total return swaps may only give exposure to securities which are in line with the investment policy and objective of the Sub Fund.
The counterparty with regards to total return swaps must be a financial institution that is specialising in this type of transaction. The counterparty may not have discretion over the composition or management of a Sub-Fund’s portfolio or over the underlying of the financial derivative instruments used. Counterparty approval is not required in relation to any Sub-Fund’s investment portfolio transaction. For further details on the risks linked to such transactions, please refer to section 7. “Risk Factors” of the Prospectus.
