DWS Investment GmbH. DWS Aktien Strategie Deutschland Sales Prospectus including Terms of Contract
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1 DWS Ivestmet GmbH DWS Aktie Strategie Deutschlad Sales Prospectus icludig Terms of Cotract Jauary 1, 2012
2 Sales Prospectus ad Terms of Cotract Sales Prospectus Geeral sectio Geeral priciples 1 Maagemet Compay 1 Custodia 1 Ivestmet policy ad ivestmet priciples 2 Assets i detail 2 Ledig trasactios 4 Repurchase agreemets 5 Borrowig 5 Valuatio 5 Risk warigs 5 Issue ad redemptio of uits 7 Issue ad redemptio prices ad costs 8 Costs 8 Icome adjustmet procedure 9 Liquidatio ad trasfer of the ivestmet fud 9 Trasfer of all assets of the ivestmet fud 10 Potetial coflicts of iterest 10 Outsourcig 11 Aual ad semiaual reports, auditor 11 Distributio of reports ad other iformatio 11 Sellig restrictios 11 Summary of tax regulatios of importace to the ivestor 12 Ivestmet fuds maaged by DWS 17 Special sectio 18 Terms of Cotract Geeral Terms of Cotract 20 Special Terms of Cotract DWS Aktie Strategie Deutschlad 25
3 Sales prospectus Geeral sectio The purchase ad sale of uits shall be o the basis of the curretly available sales prospectus ad the Geeral Terms of Cotract i cojuctio with the Special Terms of Cotract. It is prohibited to provide ay iformatio or to make ay represetatios other tha those cotaied i this prospectus. Each purchase ad sale of uits o the basis of iformatio or statemets ot cotaied i this prospectus shall be at the exclusive risk of the buyer. This sales prospectus is supplemeted by the most recet aual report. If the referece date of the aual report is more tha eight moths i the past, the semiaual report must also be provided to the purchaser prior to eterig ito ay agreemet. Geeral sectio This sales prospectus cosists of a geeral ad a special sectio. The geeral sectio cotais geeral regulatios o the ivestmet fud(s) i this sales prospectus. Regulatios that go beyod or differ from those i the geeral sectio as well as specific regulatios are listed i the special sectio. Geeral priciples The ivestmet fud is a Directive-compliat ivestmet fud as defied by the Germa Ivestmet Act (Ivestmetgesetz; hereiafter referred to as IvG ). It is maaged by DWS Ivestmet GmbH (hereiafter referred to as the Compay ). Maagig a ivestmet fud meas, above all, that ivestor moey deposited with the Compay will be ivested i various assets separately from the assets of the Compay ad i accordace with the priciple of riskspreadig. The ivestmet fud is ot part of the Compay s isolvecy assets. The assets i which the Compay may ivest ad the regulatios to be observed whe so doig are stated i the IvG ad the Terms of Cotract, which gover the legal relatioship betwee the ivestors ad the Compay. The Terms of Cotract cotai a geeral sectio ad a special sectio (hereiafter referred to as Geeral Terms of Cotract ad Special Terms of Cotract ). The applicatio of the Terms of Cotract to a ivestmet fud is subject to the approval of the Federal Fiacial Supervisory Authority (Budesastalt für Fiazdiestleistugsaufsicht, hereiafter referred to as BaFi ). The sales prospectus ad the key ivestor documets, the Terms of Cotract, as well as the most recet aual ad semiaual reports, are available free of charge from the Compay. The text of the Terms of Cotract is aexed to this prospectus. They ca also be viewed o the Iteret at Iformatio o risk maagemet ivestmet limitatio for this ivestmet fud, risk maagemet methods ad the latest developmets cocerig risks ad returs of the most importat categories of assets i this ivestmet fud are available from the Compay i electroic or writte form o request by the ivestor iterested i acquirig uits. The Terms of Cotract may be ameded by the Compay. Such amedmets may also ivolve sigificat chages to the ivestmet policy of the ivestmet fud. Amedmets to the Terms of Cotract are subject to approval by BaFi. Amedmets to the ivestmet fud s ivestmet priciples additioally require the coset of the Compay s supervisory board. Ay proposed amedmets shall be aouced i the electroic versio of the Budesazeiger (Federal Gazette) ad, i additio, i a busiess publicatio or daily ewspaper with sufficiet circulatio, or o the Iteret at If the amedmets relate to fees ad expese reimbursemets which may be charged to the ivestmet fud or key ivestor rights, or if the amedmets are ot compatible with the ivestmet fud s previous ivestmet priciples, ivestors will be iformed of this by meas of a durable medium, immediately after aoucemet by the Compay or, if the uits are ot held by the Compay or it is uable to trasmit the iformatio, by the istitutio maitaiig the custody accout without delay after the Compay publishes the iformatio. This icludes iformatio i paper form or o aother durable medium (e.g. i electroic form), providig the latter is appropriate i terms of the coditios uder which busiess is executed ad the ivestor has opted specifically for this other form of trasmissio of iformatio (hereiafter durable medium ). This iformatio icludes the key aspects of the proposed amedmets, their backgroud, the rights of the ivestors i relatio to the amedmet ad a ote o where ad how additioal iformatio ca be obtaied. The obligatio to iform ivestors i paper or electroic form does ot apply, however, to amedmets to the Terms of Cotract udertake solely to implemet adjustmets required to comply with the versio of the Ivestmet Act applicable sice July 1, The earliest date o which amedmets shall come ito force is o the date after their aoucemet. Amedmets to the provisios cocerig fees ad reimbursemet of expeses shall come ito force o earlier tha three moths after their publicatio i the electroic versio of the Budesazeiger (Federal Gazette) ad additioally i a busiess publicatio or daily ewspaper with sufficiet circulatio, or o the Iteret at uless a earlier date has bee specified with the coset of BaFi. Chages to the ivestmet fud s previous ivestmet priciples also come ito force o earlier tha three moths after their publicatio i the electroic versio of the Budesazeiger (Federal Gazette) ad additioally i a busiess publicatio or daily ewspaper with sufficiet circulatio, or o the Iteret at ad are oly permissible providig the Compay offers to exchage ivestors' uits free of charge for uits of aother ivestmet fud or EU ivestmet fud whose ivestmet policy is compatible with the ivestmet fud s previous ivestmet priciples ad which is also maaged by the Compay or aother Deutsche Bak Group compay, or the Compay offers to redeem their uits free of charge before the chages come ito force. Maagemet Compay The Maagemet Compay of the ivestmet fud described i this prospectus is DWS Ivestmet GmbH, which was fouded o May 22, 1956, ad has its registered office i Frakfurt/ Mai, Germay. The Compay is a ivestmet compay as defied by the IvG. Sice 1994, the Compay has bee authorized to maage moey market fuds ad equity ivestmet fuds i additio to securities ivestmet fuds, ad sice 1998, it has bee authorized to maage fuds of fuds, mixed securities ad real estate ivestmet fuds, as well as retiremet ivestmet fuds. Sice 2004, followig adaptatio to the IvG, the Compay has bee authorized to maage Directive-compliat ivestmet fuds, mixed ivestmet fuds ad retiremet ivestmet fuds, as well as ivestmet fuds with additioal risks (hereiafter referred to as hedge fuds ) ad fuds of fuds with additioal risks (hereiafter referred to as fuds of hedge fuds ). Sice 2008, the Compay has additioally bee authorized to maage Other ivestmet fuds. For further iformatio o the maagemet of the Compay, the compositio of its supervisory board ad uitholders, as well as its subscribed ad paid-i capital, please cosult the fial sectio of this sales prospectus. Custodia The IvG provides for a separatio of the duties of maagemet ad custody for ivestmet fuds. The Compay has appoited a credit istitutio as Custodia to assume custody of the assets cotaied i the idividual ivestmet fuds. The Custodia keeps the fud s assets i blocked securities ad cash accouts, uless bak balaces are held i blocked cash accouts at other credit istitutios. The Custodia shall esure i particular that the issue ad redemptio of uits ad the calculatio of the ivestmet fud s et asset value is i compliace with the IvG ad the Terms of Cotract, that the equivalet value of all trasactios made for the collective accout of the ivestors will be received withi the customary time limits, ad that the icome from the ivestmet fud will be used i accordace with the regulatios of the IvG ad the Terms of Cotract. The Custodia must also review whether the use of blocked cash accouts ad blocked securities at aother credit istitutio, securities compay or other 1
4 custodia is i compliace with the IvG ad the Terms of Cotract. If this is the case, it must grat its coset to such ivestmet. The Custodia shall determie the value of the ivestmet fud, with the participatio of the Compay. State Street Bak GmbH, whose registered office is located at Brieer Straße 59, Müche, Germay has assumed the fuctio of Custodia for the ivestmet fud. State Street Bak GmbH is a credit istitutio uder Germa law. Its pricipal activities cosist of depository ad custodial services. The appoitmet of the Custodia esures that ivestors will receive divided distributios ad that share certificates will be redeemed. For more details regardig the Custodia, please cosult the fial sectio of this sales prospectus. Ivestmet policy ad ivestmet priciples For iformatio o the ivestmet policy ad the ivestmet priciples of the ivestmet fud, please see the special sectio of this sales prospectus. Assets i detail The followig specifies the assets that may geerally be acquired for the ivestmet fud ad the geerally applicable ivestmet limits. Regulatios that go beyod these ad/or specific regulatios for the ivestmet fud are described i the special sectio of the sales prospectus. Securities accordig to article 47 IvG The Compay may acquire the securities of domestic ad foreig issuers for the accout of the ivestmet fud if 1. they are admitted for tradig o a exchage i a member state of the Europea Uio or i aother state that is a party to the Agreemet o the Europea Ecoomic Area or are admitted for tradig or icluded i aother orgaized market i such a member state; 2. they are admitted for tradig o oe of the exchages approved by BaFi or admitted to or icluded i oe of the orgaized markets approved by BaFi. Securities from ew issues may be acquired if the terms of issue cotai the requiremet that a applicatio be filed for admissio for official listig or iclusio o oe of the exchages or i oe of the orgaized markets metioed uder (1) or (2) above, ad if such admissio or iclusio takes place o later tha oe year after the issue. The prerequisites of article 47 (1), setece 2, IvG, must also be fulfilled. I additio, ulisted securities may be acquired (see sectio Geeral ivestmet limits for securities ad moey market istrumets ). Also permissible for acquisitio are securities i the form of equities to which the ivestmet fud is etitled i the evet of a capital icrease from the issuig compay s ow fuds, i the form of uits of closed-ed fuds that fulfill the criteria specified i article 47 (1), o. 7, IvG or i the form of fiacial istrumets that fulfill the criteria specified i article 47 (1), o. 8, IvG, or securities arisig from the exercise of subscriptio rights that belog to the ivestmet fud. Partly paid-i equities ad subscriptio rights o such equities may also be acquired. Subscriptio rights are also cosidered as securities, isofar as the securities uderlyig the subscriptio rights may be icluded i the ivestmet fud. 1 The list of exchages is published o the BaFi web site at Moey market istrumets accordig to article 48 IvG Moey market istrumets are istrumets that are usually traded o the moey market, as well as iterest-bearig securities that have a term or residual term to maturity ot exceedig 397 days at the time of acquisitio for the ivestmet fud. If terms exceed 397 days, iterest paymets must be adjusted to market rates regularly, at least oce every 397 days. Uless the Special Terms of Cotract provide otherwise, the moey market istrumets may also be deomiated i foreig currecies. Istrumets whose risk profile correspods to the risk profile of such iterest-bearig securities are also classified as moey market istrumets. Moey market istrumets may be acquired for the ivestmet fud if 1. they are admitted for tradig o a exchage i a member state of the Europea Uio or i aother state that is a party to the Agreemet o the Europea Ecoomic Area or are admitted for tradig or icluded i aother orgaized market i such a member state; 2. they are admitted for tradig o oe of the exchages approved by BaFi or admitted to or icluded i oe of the orgaized markets approved by BaFi 1, 3. they are issued or guarateed by the Europea Commuities, the Germa federal govermet, a special-purpose vehicle of the Germa federal govermet, a federal state, aother member state or aother cetral, regioal or local authority or the cetral bak of a member state of the Europea Uio, the Europea Cetral Bak or the Europea Ivestmet Bak, a state that is ot a member state of the Europea Uio or, i the case of a federal state, by oe of the members makig up the federatio, or by a public iteratioal body of which oe or more member states of the Europea Uio are members; 4. they are issued by a compay whose securities are traded o the markets referred to i (1) ad (2) above; 5. they are issued or guarateed by a credit istitutio that is subject to supervisio accordig to the criteria stipulated i Europea Commuity legislatio, or by a credit istitutio that is subject to ad complies with supervisory provisios cosidered by BaFi to be equivalet to those of Europea Commuity legislatio; 6. they are issued by other issuers ad the respective issuer is a) a compay with capital ad reserves of at least EUR 10 millio that prepares ad publishes its aual fiacial statemets i accordace with the Fourth Coucil Directive 78/660/EEC of July 25, 1978, goverig the aual fiacial statemets of compaies with certai legal forms, as last ameded by article 49 of Directive 2006/43/EC of the Europea Parliamet ad of the Coucil of May 17, 2006; or b) a etity that, withi a group of compaies that icludes oe or more exchage-listed compaies, is dedicated to the fiacig of the group; or c) a etity that is dedicated to the fiac- ig of securitizatio vehicles that beefit from credit lies to assure liquidity. Securitizatio vehicles that beefit from credit lies to assure liquidity are subject to article 7 of Commissio Directive 2007/16/EC. All of the aforemetioed moey market istrumets may be acquired oly if they fulfill the prerequisites of article 4 (1) ad (2) of Directive 2007/16/EC. For moey market istrumets as defied i article 48 (1), os. 1 ad 2, IvG, article 4 (3) of Directive 2007/16/EC additioally applies. For moey market istrumets as defied i article 48 (1), os. 3 through 6 IvG, sufficiet protectio for ivestors ad savigs must be assured ad, i additio, the criteria of article 5 of Directive 2007/16/EC must be fulfilled. Article 5 (2) of Directive 2007/16/EC applies with regard to the acquisitio of moey market istrumets issued by a regioal or local authority of a member state of the Europea Uio or by a public iteratioal body as defied by article 48 (1) o. 3, IvG, but ot guarateed by that member state or, if that member state is a federal state, ot guarateed by a member of the federatio, as well as with regard to the acquisitio of moey market istrumets pursuat to article 48 (1), os.4 ad 6 IvG; article 5 (4) of Directive 2007/16/EC applies with regard to the acquisitio of all other moey market istrumets pursuat to article 48 (1), o. 3 IvG, with the exceptio of moey market istrumets issued or guarateed by the Europea Cetral Bak or the cetral bak of a member state of the Europea Uio. Article 5 (3) ad, i the case of moey market istrumets issued or guarateed by a credit istitutio that is subject to ad i compliace with supervisory provisios cosidered by BaFi to be equivalet to those of Europea Commuity legislatio, article 6 of Directive 2007/16/EC apply with regard to the acquisitio of moey market istrumets pursuat to article 48 (1), o. 5, IvG. 2
5 Geeral ivestmet limits for securities ad moey market istrumets The Compay may ivest o more tha 10% of the ivestmet fud s assets i securities ad moey market istrumets of the same issuer (borrower). I so doig, the total value of securities ad moey market istrumets from such issuers (borrowers) whose proportio is i excess of 5% of the ivestmet fud s assets may ot exceed 40% of the ivestmet fud s assets. The Compay may ivest i each case up to 35% of the ivestmet fud s assets i bods, promissory ote loas ad moey market istrumets issued or guarateed by the Germa federal govermet, a Germa federal state, the Europea Commuities, a member state of the Europea Uio or its local authorities, aother state that is a party to the Agreemet o the Europea Ecoomic Area, a state that is ot a member of the Europea Uio or by a iteratioal orgaizatio of which oe or more member states of the Europea Uio are members (hereiafter referred to as special public issuers as defied i article 60 (2), setece 1, IvG ). This limit ca be exceeded for securities ad moey market istrumets, if this is provided for i the Special Terms of Cotract ad the issuers are specified there. If this optio is availed of, the securities/moey market istrumets must cosist of at least six differet issues; o more tha 30% of the ivestmet fud s assets may be ivested i oe issue. The Compay may ivest up to 25% of the ivestmet fud s assets i covered bods. Whe more tha 5% of the ivestmet fud s assets are ivested i covered bods issued by oe issuer, the total value of these bods may ot exceed 80% of the value of the assets of the ivestmet fud. Moey market istrumets ad securities purchased uder repurchase trasactios shall be attributed to the aforemetioed ivestmet limits. The Compay shall esure that a combiatio of a) securities or moey market istrumets issued by oe ad the same istitutio, b) deposits at this istitutio, c) attributable amouts for the couterparty risk of trasactios coducted with this istitutio do ot exceed 20% of the respective ivestmet fud s assets. This applies i particular to public issuers as defied i article 60 (2), setece 1, IvG, with the proviso that the Compay must esure that a combiatio of the aforemetioed assets ad attributable amouts shall ot exceed 35% of the value of the respective ivestmet fud. The respective idividual upper limits shall remai uaffected i both cases. The attributable amouts of securities ad moey market istrumets from a issuer to the limits metioed above may be reduced by usig offsettig derivatives which have securities or moey market istrumets of the same issuers as their uderlyig. This meas that securities ad moey market istrumets from the same issuer may be acquired or ivested at the same istitutio o accout of the ivestmet fud, eve exceedig the limits metioed above, providig the related icrease i issuer risk is reduced agai by hedgig trasactios. The Compay may ivest a total of o more tha 10% of the ivestmet fud s assets i securities that are ot admitted for tradig o a exchage or icluded i aother orgaized market, but which fulfill the criteria of article 52 (1), o. 1, IvG; moey market istrumets of issuers that do ot fulfill the criteria of article 48 IvG, isofar as the moey market istrumets do fulfill the prerequisites of article 52 (1), o. 2, IvG; ew issues of equities whose plaed admissio has ot yet take place; promissory ote loas (Schuldscheidarlehe) that ca be assiged at least twice followig acquisitio for the ivestmet fud ad were grated to: a) the Germa federal govermet, a special- purpose fud of the Germa federal govermet, a Germa state govermet, the Europea Commuities or a member coutry of the Orgaisatio for Ecoomic Co-operatio ad Developmet; b) aother domestic authority, regioal govermet or local authority of aother member state of the Europea Uio or aother state that is a party to the Agreemet o the Europea Ecoomic Area for which a zero weightig was publicly aouced uder article 44 of Directive 2000/12/EC of the Europea Parliamet ad of the Coucil of March 20, 2000, relatig to the takig up ad pursuit of the busiess of credit istitutios; c) other corporate bodies or istitutios uder public law with registered offices i Germay or i aother member state of the Europea Uio, or i aother state that is a party to the Agreemet o the Europea Ecoomic Area; d) compaies that have issued securities that have bee admitted for tradig i a orgaized market as defied i article 2 (5) of the Germa Securities Tradig Act (Wertpapierhadelsgesetz) or are admitted to or icluded i aother orgaized market that fulfills the material requiremets cocerig regulated markets as defied by the guidelies specified i article 52 (1), o. 4 (d), IvG; or e) other borrowers, provided that oe of the bodies described i (a) through (c) above has guarateed the paymet of iterest ad repaymet of pricipal. Bak balaces accordig to article 49 IvG The Compay may, for the accout of the ivestmet fud, hold bak balaces havig a term ot exceedig twelve moths. Such balaces shall be kept i blocked accouts at credit istitutios havig their registered offices i a member state of the Europea Uio or i aother state that is a party to the Agreemet o the Europea Ecoomic Area. Subject to the Special Terms of Cotract, they may also be kept at a credit istitutio havig its registered office i a third coutry. Bak balaces may also be deomiated i foreig currecies. The Compay may ivest o more tha 20% of the ivestmet fud s assets i bak balaces at ay oe credit istitutio. Uits of ivestmet assets accordig to article 50 IvG The Compay may acquire uits of ivestmet fuds as defied i article 50 IvG (hereiafter referred to as ivestmet fud uits ) for the accout of the ivestmet fud. Uits i other domestic ad foreig Directive-compliat ivestmet fuds ad ivestmet corporatios as well as uits i o-directive-compliat domestic ad foreig ivestmet fuds ad ivestmet corporatios may be acquired if they fulfill the requiremets of article 50 (1), setece 2, IvG. These ivestmet fuds may i tur ivest o more tha 10% of the et assets i uits of ivestmet fuds, i accordace with their terms of cotract or articles of icorporatio ad by-laws. The ivestmet fud uits must be uits of public ivestmet fuds, i.e., the uits must be offered to the public without limitatio o the umber of uits ad the ivestors must have the optio to redeem the uits at ay time. The Compay may acquire for the accout of the ivestmet fud o more tha 25% of the issued uits of aother ivestmet fud. Ivestmets i a sigle ivestmet fud may ot exceed 20% of the ivestmet fud s assets, ad total ivestmets i o-directive-compliat ivestmet fuds may ot exceed 30% of the ivestmet fud s assets. Derivatives The Compay may for the accout of the ivestmet fud provided a appropriate risk maagemet system is i place ivest i ay ad all derivatives or fiacial istrumets with derivative compoets as defied by article 10 (1) of Directive 2007/16/EC that are based o assets that may be acquired for the ivestmet fud, or from fiacial idices as defied by article 9 (1) of Directive 2007/16/EC, iterest rates, exchage rates or currecies. I particular, this icludes optios, fiacial futures cotracts ad swaps, as well as combiatios thereof. The Compay may use derivatives for hedgig purposes, for efficiet portfolio maagemet, for achievig additioal icome, i.e. for speculative purposes, ad as part of the ivestmet strategy for the ivestmet fud. If derivatives are used, the potetial market risk of the ivestmet fud may be icreased. I these cases, the value-at-risk amout attributable to the ivestmet fud for the market risk exposure ( value-at-risk amout ) may at o time exceed twice the value-at-risk amout for the market risk exposure of the 3
6 respective referece portfolio that does ot cotai derivatives i accordace with article 9 DerivateV. Alteratively, the value-at-risk amout may ot exceed 20% of the assets of the ivestmet fud at ay time. The potetial market risk of the ivestmet fud may ot be more tha doubled through the use of derivatives; i additio the ivestmet fud may borrow a amout equal to 10% of the ivestmet fud s assets. A overall commitmet of 200% i potetial market risk ad 10% i borrowigs ca sigificatly icrease both the opportuities ad the risks associated with a ivestmet. Market risk is the risk of loss for the ivestmet fud resultig from fluctuatios of the market value of positios i the ivestmet fud caused by chages i market variables, such as iterest rates, exchage rates, prices of equities ad commodities, or the credit stadig of the issuer. The Compay determies the market risk exposure by meas of the qualified approach as defied i the Derivatives Regulatio. The risks associated with the use of derivatives are maaged by a risk maagemet process that allows the risk of the positio ad its cotributio to the overall risk profile of the portfolio to be moitored ad measured at ay time. The Compay geerally strives to esure that the leverage effect of the ivestmet fud by the use of derivatives is less tha two, uless otherwise specified i the special sectio of the sales prospectus. The leverage effect depeds o the market coditios ad/or chages to positios (e.g. to hedge the fud agaist ufavorable market movemets), so that the target mark may be exceeded, despite costat moitorig by the Compay. Optios The Compay may take part i optios trasactios for the accout of the ivestmet fud withi the scope of the ivestmet priciples. I optios trasactios, a third party is grated, agaist paymet of a premium, the right to demad delivery or acceptace of assets durig a specific period of time or at the ed of a specific period at a predetermied price (strike price), or to demad paymet of a cash settlemet, or to acquire the respective optios. Futures cotracts The Compay may eter ito futures cotracts for the accout of the ivestmet fud, withi the scope of the ivestmet priciples, o all assets acquirable for the respective ivestmet fud that ca also serve as uderlyig assets for derivatives accordig to the IvG ad the Terms of Cotract ad the respective ivestmet requiremets, as well as o fiacial idices as defied i article 9 (1) of the Directive 2007/16/EC, iterest rates, exchage rates ad currecies. Futures cotracts are agreemets that ucoditioally bid both parties to buy or sell a particular amout of a certai uderlyig at a predetermied price at a certai poit i time, at maturity or withi a certai period. Swaps The Compay may coduct the followig swap trasactios for the accout of the ivestmet fud withi the scope of the ivestmet priciples: iterest rate swaps, currecy swaps, equity swaps ad credit default swaps. Swap trasactios are exchage cotracts i which the parties swap the cash flows or risks uderlyig the respective trasactio. Swaptios Swaptios are optios o swaps. A swaptio is the right, but ot the obligatio, to coduct a swap trasactio, the terms of which are precisely specified, at a certai poit i time or withi a certai period. I all other aspects, the priciples related to optio trasactios apply as described. Credit default swaps Credit default swaps are credit derivatives that eable the trasfer of a volume of potetial credit defaults to other parties. As compesatio for acceptig the credit default risk, the seller of the risk (the protectio buyer) pays a premium to its couterparty. I all other aspects, the iformatio for swaps applies accordigly. Fiacial istrumets with derivative compoets The Compay may for the accout of the ivestmet fud acquire fiacial istrumets, as defied i article 10 of Directive 2007/16/EC, i which a derivative is embedded. These fiacial istrumets must fulfill the criteria of article 2 (1) or article 4 (1) ad (2) of Directive 2007/16/EC ad cotai a compoet that fulfills the followig requiremets: The stregth of the compoet is that some or all cash flows that would otherwise be ecessary with the fiacial istrumet fuctioig as the host cotract ca be chaged accordig to a specific iterest rate, fiacial istrumet price, exchage rate, price or market price idex, credit rakig or credit idex or ito other variables. These cash flows therefore vary i a way similar to a stad-aloe derivative. The ecoomic characteristics ad risks of the compoet are ot closely related to the ecoomic characteristics ad risks of the host cotract. The compoet has a sigificat ifluece o the risk profile ad the pricig of the fiacial istrumet. The statemets o opportuities ad risks apply accordigly to such fiacial istrumets with derivative compoets, but with the coditio that the risk of loss i the case of fiacial istrumets is limited to the value of the security. OTC derivative trasactios The Compay may coduct both those derivative trasactios admitted for tradig o a exchage or icluded i aother orgaized market ad over-the-couter (OTC) trasactios. The Compay may coduct derivative trasactios ot admitted for tradig o a exchage or icluded i aother orgaized market oly with suitable credit istitutios or fiacial services istitutios o the basis of stadardized master agreemets. For derivatives traded other tha o a exchage, the couterparty risk of a cotractig party is limited to 5% of the ivestmet fud s assets. If the couterparty is a credit istitutio havig its registered office i the Europea Uio, the Europea Ecoomic Area or a third coutry with a comparable level of supervisio, the couterparty risk may amout to 10% of the ivestmet fud s assets. Derivative trasactios traded other tha o a exchage where the couterparty is the cetral clearighouse of a exchage or aother orgaized market are ot icluded whe determiig couterparty limits if the derivatives are marked to market daily, with a daily margi settlemet. Claims of the ivestmet fud agaist a itermediary are, however, to be allocated to the limits, eve if the derivative is traded o aother exchage or regulated market. Ledig trasactios The assets held by the ivestmet fud may be trasferred as a loa to a third party i exchage for appropriate market compesatio (hereiafter referred to as a securities loa ). If the assets are let for a idefiite period, the Compay shall be etitled to termiate such loas at ay time. It must be cotractually agreed that assets of the same kid, quality ad quatity are to be retured followig the ed of the term of the loa. A requiremet for the trasfer of assets by way of a loa is that the ivestmet fud must be provided with sufficiet collateral. For this purpose, balaces may be assiged or pledged, or securities or moey market istrumets may be trasferred or pledged. The ivestmet fud is etitled to the icome from ivestig the collateral. The borrower must additioally pay to the Custodia, for the accout of the ivestmet fud, ay iterest received from let ivestmet assets at maturity. If ivestmet assets are let for a fixed term, the value of such ledig may ot exceed 15% of the ivestmet fud s assets. The value of all assets trasferred to ay oe borrower may ot exceed 10% of the ivestmet fud s assets. Pursuat to article 58 (2) IvG, such ledig must additioally fulfill the criteria of article 11 (1) of Directive 2007/16/EC. 4
7 The Compay may ot grat moey loas to third parties for the accout of the ivestmet fud. Repurchase agreemets The Compay may eter repurchase agreemets havig a maximum maturity of twelve moths o behalf of the ivestmet fud with credit istitutios ad fiacial services istitutios. Repurchase trasactios are oly permitted i the form of so-called geuie repurchase agreemets. I these trasactios, the pledgee assumes the obligatio to retrasfer the assets o a fixed date or o a date to be determied by the pledgor. Pursuat to article 58 (2) IvG, repurchase trasactios must additioally fulfill the criteria of article 11 (1) of Directive 2007/16/EC. Borrowig Short-term borrowig of up to 10% of the ivestmet fud s assets for the collective accout of the ivestors is permissible if the borrowig coditios are customary i the market, ad if the Custodia grats its coset. Valuatio Geeral asset valuatio rules Assets admitted for tradig o a exchage/ traded i a orgaized market Assets that are admitted for tradig o exchages or admitted to, or icluded i, aother orgaized market, as well as subscriptio rights for the ivestmet fud, are geerally valued at their last available tradable market price which provides a reliable valuatio, uless otherwise provided for i the Special valuatio rules below. Assets ot listed o exchages or traded i orgaized markets, or assets havig o tradig price Assets that are ot admitted for tradig o exchages or admitted to, or icluded i, aother orgaized market, or for which there is o tradig price, are valued at the curret market value deemed appropriate o the basis of a careful assessmet usig suitable valuatio models ad takig ito cosideratio curret market coditios, uless otherwise provided for i the Special valuatio rules below. Special valuatio rules for idividual assets Ulisted bods ad promissory ote loas For the purposes of valuig bods that are ot admitted for tradig o a exchage or admitted to, or icluded i, aother orgaized market (e.g., ulisted debt istrumets, commercial papers ad certificates of deposit) ad for the valuatio of promissory ote loas, the market prices agreed for comparable bods ad promissory ote loas ad, if applicable, the market prices of bods of comparable issuers ad with equivalet maturities ad iterest rates are used, less a discout to compesate for limited marketability, if ecessary. Moey market istrumets Moey market istrumets are valued at the prevailig market rates. Derivatives Optios owed by the ivestmet fud ad liabilities from optios grated to third parties that are admitted for tradig o a exchage or icluded i aother orgaized market are valued at the last available tradable price which provides a reliable valuatio. The same applies with respect to amouts receivable ad payable uder futures cotracts cocluded for the accout of the ivestmet fud. The iitial margis charged to the ivestmet fud are icluded i the value of the ivestmet fud, takig ito accout the gais ad losses i valuatio established o the day of tradig. Swaps are valued at the market value deemed appropriate o the basis of a careful assessmet usig suitable valuatio models ad takig ito cosideratio overall circumstaces. Bak balaces, other assets, liabilities, time deposits ad uits of ivestmet fuds Bak balaces ad certai other assets (e.g., iterest receivable), receivables (e.g., accrued iterest receivable) ad liabilities are geerally measured at their omial value plus accrued iterest. Time deposits are valued at their market value, provided that the time deposit may be cacelled at ay time ad repaymet upo cacellatio does ot take place at the omial value plus iterest. Ivestmet uits are geerally valued at their last determied redemptio price or the last available tradable price, which provides a reliable valuatio. If these figures are ot available, ivestmet uits are valued at their curret market value deemed appropriate o the basis of a careful assessmet usig suitable valuatio models ad takig ito cosideratio the curret market situatio. Ledig trasactios Repaymet claims arisig from ledig trasactios are govered by the applicable price of the assets trasferred as loas. Repurchase agreemets Assets sold uder repurchase agreemets for the accout of the ivestmet fud shall cotiue to be take ito accout i the valuatio. I additio, the amouts received for the accout of the ivestmet fud uder repurchase agreemets shall be reported as bak balaces. Assets purchased uder repurchase agreemets for the accout of the ivestmet fud shall ot be icluded i the valuatio. Because of the paymets made by the ivestmet fud, a claim agaist the pledgor i the amout of the discouted repaymet claims must be take ito accout i the valuatio. Assets deomiated i foreig currecy Assets deomiated i foreig currecy shall be coverted ito euro usig the currecy s exchage rate calculated each day of tradig, as determied by the last kow official fixig of Reuters AG. Risk warigs Geeral poits The assets i which the Compay ivests for the accout of the ivestmet fud cotai both capital appreciatio opportuities ad risks. Losses may be icurred if the market value of the assets decreases i relatio to the purchase price. If the ivestor sells uits of the ivestmet fud o a date o which the prices of the assets i the ivestmet fud have falle i relatio to the date o which he bought the uits, this will result i the ivestor gettig back oe or less tha the full amout of the moey ivested i the ivestmet fud. Although each ivestmet fud seeks steady appreciatio of capital, such appreciatio caot be guarateed. The ivestor s risk, however, is limited to the sum ivested. There is o obligatio to make subsequet paymets i additio to the moey ivested by the ivestor. Potetial ivestmet spectrum I observace of the ivestmet priciples ad limits stipulated i the IvG ad the Terms of Cotract, which provide the ivestmet fud with a wide framework, the ivestmet policy ca be directed at primarily acquirig assets of oly a few idustries, markets or regios/ coutries, for example. Such cocetratio o a few specific ivestmet sectors etails specific opportuities, which will, however, be coutered by correspodig risks (e.g., arrow markets, broad rage of fluctuatio withi certai ecoomic cycles). The aual report provides retrospective iformatio regardig the cotet of the ivestmet policy for the reportig year eded. Chage i the ivestmet policy The risk associated with the ivestmet fud may chage i terms of cotet due to a chage i the ivestmet policy withi the rage of ivestmets permitted legally ad cotractually for the Directive-compliat ivestmet fud. The Compay ca materially modify the ivestmet policy of the ivestmet fud at ay time, withi the cofies of the valid Terms of Cotract, by modifyig the sales prospectus. 5
8 Performace risk Positive performace caot be assured i the absece of a guaratee. I additio, assets acquired for a ivestmet fud may post a performace that is differet from that expected o acquisitio. Market risk The price or market performace of fiacial products depeds, i particular, o the performace of the capital markets, which i tur are affected by the overall ecoomic situatio ad the geeral ecoomic ad political framework i idividual coutries. Irratioal factors such as setimet, opiios ad rumors have a effect o geeral price performace, particularly o a exchage. Currecy risk To the extet the ivestmet fud ivests i assets deomiated i currecies other tha the respective fud currecy, the ivestmet fud will receive icome, repaymets ad proceeds from such ivestmets i these other currecies. If the value of these currecies falls i relatio to the fud currecy, the value of the ivestmet fud is reduced. Liquidity risk It is also permitted to acquire for the ivestmet fud assets that are ot admitted for tradig o a exchage or are icluded i aother regulated market. The acquisitio of such assets etails the particular risk of problems arisig whe attemptig to resell the assets to third parties. Although geerally oly assets which may be liquidated at ay time may be acquired for the ivestmet fud, it caot be ruled out that this may ot be possible without icurrig a loss, or that redemptio of uits i ivestmet fud assets may temporarily be suspeded. This meas that it may ot always be possible to liquidate the uits at the most favorable time due to limited redemptio opportuities. Risk of chages i iterest rates Ivestig i fixed-rate securities is associated with the possibility that the level of market iterest rates existig at the time a fixed-rate security is issued ca chage. If market iterest rates rise i compariso with the iterest rates at the time of the issue, the prices for fixed-iterest securities will fall as a rule. If, o the other had, the market iterest rate falls, the price of fixed-rate securities will rise. This price tred meas that the curret retur o a fixed-rate security is roughly equivalet to the curret market iterest rate. However, these price fluctuatios vary accordig to the maturity of the fixed-rate securities. Fixed-rate securities with shorter maturities are geerally associated with lower price risks tha fixed-rate securities with loger maturities. Coversely, fixed-rate securities with shorter maturities geerally have lower returs tha loger-term fixed-rate securities. Due to their short terms ot exceedig 397 days, moey market istrumets ted to be associated with lower price risks. Risks coected to derivative trasactios Buyig ad sellig optios, as well as the coclusio of futures cotracts or swaps, ivolves the followig risks: Price chages i the uderlyig ca cause a decrease i the value of the optio or future, ad eve result i a total loss. Chages i the value of the asset uderlyig a swap ca also result i losses for the ivestmet fud. Ay ecessary back-to-back trasactios (closig of positio) icur costs. The leverage effect of optios may alter the value of the fud s assets more strogly tha the direct purchase of uderlyigs would. The purchase of optios etails the risk that the call optios are ot exercised because the prices of the uderlyigs do ot chage as expected, meaig that the ivestmet fud loses the optio premium it paid. If optios are sold, there is the risk that the ivestmet fud may be obliged to buy assets at a price that is higher tha the curret market price, or obliged to deliver assets at a price which is lower tha the curret market price. I that case, the ivestmet fud suffers a loss amoutig to the price differece mius the optio premium which had bee received. Futures cotracts also etail the risk that the ivestmet fud may make losses due to market prices ot havig developed as expected at maturity. Risks associated with ivestmet fud uits The risks etailed i ivestmet fud uits acquired for the ivestmet fud are closely liked to the risks iheret i the idividual assets cotaied i these ivestmet fuds, ad i the ivestmet strategies pursued by them. The stated risks may be reduced, however, by the diversificatio of ivestmets withi the ivestmet fuds whose uits are acquired, ad by diversificatio withi that ivestmet fud. However, sice the maagers of the idividual target fuds operate idepedetly of oe aother, it is also possible that several target fuds will be egaged i similar or mutually opposig ivestmet strategies. This ca result i a cumulative effect of existig risks, ad ay opportuities might be offset. It is geerally ot possible for the Compay to cotrol the maagemet of the target fuds. Their ivestmet decisios do ot ecessarily have to cocur with the Compay s assumptios or expectatios. The Compay ofte will ot have timely kowledge of the curret compositio of target fuds. If the compositio does ot match the Compay s assumptios or expectatios, it may ot be able to react without a cosiderable delay, by returig uits i target fuds. The risk of the ivestmet fud as ivestor i a target fud, however, is limited to the sum ivested. There is o obligatio to make subsequet paymets i additio to the moey ivested. It is possible that ivestmet fuds i which the ivestmet fud acquires uits may temporarily susped redemptio. The Compay is the preveted from sellig the uits to the other ivestmet fud by returig them to the Maagemet Compay or Custodia of the other fud i retur for paymet of the redemptio price. It is reported i the fud overview of the ivestmet fud o the Compay s homepage if the ivestmet fud has ivested more tha 5% of the value of its assets i uits of other ivestmet fuds which have curretly suspeded redemptio. Risks associated with borrowig The Compay may egage i short-term borrowig to a limited extet for the accout of the ivestmet fud. Because borrowig may oly be o a temporary basis, a icrease i the level of ivestmet of the ivestmet fud (leverage) ad the related risks are geerally excluded. Cocetratio risk Additioal risks may arise from a cocetratio of ivestmets i particular assets or markets. The ivestmet fud the becomes particularly heavily depedet o the performace of these assets. Coutry or trasfer risk A coutry risk exists whe a foreig borrower, despite ability to pay, caot make paymets at all, or ot o time, because of the iability or uwilligess of its coutry of domicile to execute trasfers. This meas that, for example, paymets to which the ivestmet fud is etitled may ot occur, or be i a currecy that is o loger covertible due to restrictios o currecy exchage. Settlemet risk Especially whe ivestig i ulisted securities, there is a risk that settlemet via a trasfer system is ot executed as expected because a paymet or delivery did ot take place i time or as agreed. Risk of default The default of a issuer or of a couterparty may result i losses for the ivestmet fud. Issuer risk describes the effects of particular developmets at the idividual issuer that will affect the price of a security i additio to geeral treds i the capital markets. The risk of a declie i the assets of issuers caot be etirely elimiated eve through careful selectio of securities. The couterparty risk is the risk of the other party to a reciprocal cotract failig, i whole or i part, to fulfill its obligatio with respect to a 6
9 receivable. This applies to all cotracts that are etered ito for the accout of a ivestmet fud. Political risk/regulatory risk The ivestmet fud may ivest abroad. This ivolves the risk of detrimetal iteratioal political developmets, chages i govermet policy, chages i the regulatory framework coditios, chages i taxatio ad other chages i the legal status. This ca result particularly i restrictios i respect of the assets acquirable for the ivestmet fud, which i tur ca adversely affect the performace of the ivestmet fud. Iflatio risk All assets are subject to a risk of devaluatio through iflatio. Custody risk The custody of assets, especially i foreig coutries, ivolves a risk of loss that may result from isolvecy, violatio of due diligece, or improper coduct o the part of the Custodia or ay sub-custodia. Risk associated with domestic ad foreig public holidays The ivestmet fud may be focused o ivestmet i assets of a limited umber of regios or coutries. Local public holidays i these regios or coutries may result i differeces betwee exchage tradig days of these regios or coutries ad the valuatio dates of the ivestmet fud. The ivestmet fud may cosequetly be uable to react to market developmets i these regios or coutries o the same day if that day is ot a valuatio date, or it may be uable to act o a valuatio date that is ot a tradig day i the markets of these regios or coutries. This may also give rise to liquidity problems i the sale of uits. Key idividual risk The exceptioally positive performace of certai ivestmet fuds durig a particular period is also attributable to the abilities of the idividuals actig o behalf of such fuds, ad therefore to the correct decisios made by their respective fud maagemet. Fud maagemet persoel ca chage, however. New decisio-makers might ot be as successful. Legal ad tax risk The legal ad tax treatmet of fuds may chage i ways that caot be predicted or iflueced. I the case of a correctio with tax cosequeces that are essetially ufavorable for the ivestor, chages to the fud s taxatio bases for precedig fiscal years made because these bases are foud to be icorrect (e.g., based o exteral tax audits) ca result i the ivestor havig to bear the tax burde resultig from the correctio for precedig fiscal years, eve though he may ot have held a ivestmet i the ivestmet fud at the time. Coversely, the ivestor may fail to beefit from a essetially favorable correctio for the curret or precedig fiscal years durig which he held a ivestmet i the ivestmet fud if the uits are redeemed or sold before the correctio takes place. I additio, a correctio of tax data ca result i a situatio where taxable icome or tax beefits are actually assessed for tax i a differet assessmet period to the applicable oe ad that this has a egative effect for the idividual ivestor. Chages to Terms of Cotract/ Liquidatio or merger I the Terms of Cotract for the ivestmet fud, the Compay reserves the right to chage those Terms of Cotract (see the sectio etitled Geeral priciples ). I additio, the Compay may, i accordace with the Terms of Cotract, completely liquidate the ivestmet fud or merge it with aother ivestmet fud. For the ivestor, this etails the risk that the holdig period plaed by the ivestor will ot be realized. Risk of suspesio of redemptio Ivestors ca geerally request the redemptio of their uits by the Compay o ay valuatio date. The Compay may, however, susped redemptio of uits for a limited time i exceptioal circumstaces ad the redeem the uits oly at a later date at the applicable price at that time (for additioal details, see the sectio etitled Suspesio of the redemptio of uits ). This price may be lower tha the price before suspesio of redemptio. Risk of icreased turover as a uderlyig for structured products The ivestmet fud may be a uderlyig for structured ivestmet fuds ad certificates. This may result i a icrease i the volume of issues ad redemptios of uits whe the issuers or sposors of these ivestmet fuds or certificates seek to hedge their exposure to market movemets or turover by acquirig or returig uits. The Compay takes appropriate measures to protect the ivestmet fud or the ivestor from such actios. NO ASSURANCE CAN BE GIVEN THAT THE INVESTMENT OBJECTIVES WILL ACTUALLY BE ACHIEVED. Issue ad redemptio of uits The Compay prohibits all activities coected with market timig ad similar practices, ad it reserves the right to refuse buy, sell ad exchage orders if it suspects that such practices are beig applied. I such cases, the Compay will take all measures ecessary to protect the other ivestors i the fud. Issue of uits The umber of uits issued is geerally ulimited. They are issued by the Custodia at the issue price, which is equal to the et asset value per uit plus a iitial sales charge. The Compay reserves the right to susped or permaetly discotiue the issue of uits. Cocerig the issue of uits, the Compay defies a daily order acceptace deadlie. The order acceptace deadlie for the ivestmet fud is specified i the special sectio of this sales prospectus ad is published by the Compay o the Iteret at The order acceptace deadlie may be chaged by the Compay at ay time. If a buy order has bee received by the agets listed i the special sectio by the order acceptace deadlie, such order will be processed usig the issue price correspodig to that order acceptace deadlie. If a buy order is received oly after the order acceptace deadlie, the issue of uits ad settlemet will shift to the ext price per uit. Settlemet whe issuig uits Uless otherwise specified i the special sectio of this sales prospectus, the equivalet value is charged two bak busiess days after issue of the uits. Redemptio of uits The Compay is obliged to redeem uits at the applicable redemptio price for the accout of the ivestmet fud. The redemptio price correspods to the et asset value per uit less a redemptio fee, where applicable. Ivestors may geerally request the redemptio of uits by the Compay o ay valuatio date. Uits are redeemed by the Custodia. Cocerig the redemptio of uits, the Compay defies a daily order acceptace deadlie. The order acceptace deadlie for the ivestmet fud is specified i the special sectio of this sales prospectus ad is published by the Compay o the Iteret at The order acceptace deadlie may be chaged by the Compay at ay time. If a sell order has bee received by the agets listed i the special sectio by the order acceptace deadlie, such order will be processed usig the redemptio price correspodig to that order acceptace deadlie. If a sell order is received oly after the order acceptace deadlie, the redemptio of uits ad settlemet will shift to the ext price per uit. Settlemet whe redeemig uits Settlemet takes place two bak busiess days after redemptio of the uits. This period refers to the processig activity betwee the istitutio maitaiig the securities accout ad the Custodia. Postig or trasfer from the istitutio maitaiig the securities accout to the desired recipiet accout must follow after- 7
10 ward, ad may lead to additioal delays. Ivestors should therefore allow sufficiet time whe plaig for specific paymet dates. Suspesio of the redemptio of uits The Compay may susped the redemptio of uits uder exceptioal circumstaces that make a suspesio appear ecessary whe takig ito cosideratio the iterests of ivestors. Exceptioal circumstaces iclude, for example, the uscheduled closig of a exchage o which a sigificat portio of the securities of the ivestmet fud is traded or that the assets of the ivestmet fud caot be valued. A temporary suspesio of redemptio is admissible particularly if the paymet obligatios resultig from the redemptio caot be met out of the liquid assets of the ivestmet fud. I this case, the Compay is ot obligated to redeem the uits util it has sold correspodig assets while servig the iterests of all ivestors. As log as redemptio is suspeded, o ew uits may be issued, the Compay shall otify without delay BaFi ad the resposible istitutios of other member states of the Europea Uio or the other states that are parties to the Agreemet o the Europea Ecoomic Area i which uits are sold, of its decisio to susped redemptio. The Compay shall otify the ivestors by meas of a aoucemet i the electroic versio of the Budesazeiger ad, i additio, i a busiess publicatio ad i daily ewspapers with sufficiet circulatio, or o the Iteret at about the suspesio of the redemptio of uits ad its resumptio. I additio, the ivestors will be iformed by meas of a durable medium, immediately after aoucemet by the Compay or, if the uits are ot held by the Compay or it is uable to trasmit the iformatio, by the istitutio maitaiig the custody accout without delay after the Compay publishes the iformatio. If it is ot possible to fulfill all claims of the ivestors to redemptio of their uits, the claims shall be fulfilled i the chroological order of their assertio. Claims made o the same day must be fulfilled pro rata. Issue ad redemptio prices ad costs Issue ad redemptio prices I calculatig the issue price ad the redemptio price for the uits, the Custodia shall determie o each valuatio date, with the participatio of the Compay, the value of the total assets owed by each ivestmet fud, less ay liabilities of the fud (hereiafter referred to as et asset value ). The value of the ivestmet fud s assets calculated i this maer, divided by the umber of uits issued is the et asset value per uit (hereiafter referred to as the et asset value per uit ). All exchage tradig days that are bak busiess days i Frakfurt/Mai, Germay, are valuatio dates for the uits of the ivestmet fud. O public holidays i Germay that are tradig days, as well as o December 24 ad December 31 of each year, the maagemet may refrai from calculatig the et asset value per uit. No calculatio of uit price curretly takes place o Jauary 1, Good Friday, Easter Moday, May 1, Ascesio Day, Whit Moday, Corpus Christi, October 3,December 24 to 26, ad December 31. There are some additioal days such as foreig holidays which ca also be excluded as valuatio days i the Special Terms of Cotract ad the special sectio of the sales prospectus. Suspesio of the calculatio of the issue ad redemptio prices The Compay may susped the calculatio of the issue ad redemptio prices uder the same coditios as the redemptio of uits. These circumstaces are explaied i more detail i the sectio etitled Suspesio of the redemptio of uits. Iitial sales charge A iitial sales charge is added to the et asset value per uit whe the issue price is set. The iitial sales charge of the ivestmet fud is specified i the special sectio of the sales prospectus. The Compay is free to charge a lower iitial sales charge. This iitial sales charge may reduce or eve completely cosume performace, particularly i the case of a short ivestmet period. For this reaso, a loger ivestmet period is recommeded whe cosiderig the purchase of uits with a iitial sales charge. The iitial sales charge is basically a fee for the distributio of the uits of the ivestmet fud. The Compay may pass o the iitial sales charge to itermediaries as remueratio for sales services. Redemptio fee Whe determiig the redemptio price, a redemptio fee may be deducted from the et asset value per uit. If a redemptio fee is applied, it is metioed i the special sectio of the sales prospectus. Otherwise, the redemptio price is equal to the et asset value per uit. A redemptio fee may reduce or eve completely cosume performace, particularly i the case of short ivestmet periods. For this reaso, a loger ivestmet period is recommeded whe cosiderig the purchase of uits with a redemptio fee. Publicatio of the issue ad redemptio prices For each issue ad redemptio of uits, the issue ad redemptio prices shall be published i a busiess publicatio ad a daily ewspaper with sufficiet circulatio ad/or o the Iteret at Costs related to the issue ad redemptio of uits No additioal costs are charged by the Compay or the Custodia for the issue ad redemptio of uits at the issue price (et asset value per uit plus a iitial sales charge) or redemptio price (et asset value per uit less a redemptio fee, where applicable). If uits are redeemed through third parties, costs could be icurred for the redemptio of the uits. Costs higher tha the issue price may be charged if the uits are sold through third parties. Costs Fees ad reimbursemets of expeses from the ivestmet fud to the Compay, the Custodia or third parties are ot subject to the approval of BaFi. Details of the fees ad reimbursemets that ca be charged to the ivestmet fud are listed i the special sectio of the sales prospectus. The Compay does ot receive ay reimbursemet of the fees ad expese reimbursemets paid out of the ivestmet fud to the Custodia ad third parties. Valuable beefits provided by brokers ad traders, which the Compay uses i the iterests of ivestors, are ot affected (see sectios Buy ad sell orders for securities ad fiacial istrumets ad Commissio sharig ). Aside from the fees ad expese reimbursemets metioed i the special sectio of the sales prospectus, the Compay may receive up to oe half of the icome from the coclusio of securities ledig trasactios for the accout of the ivestmet fud as a flat fee. The Compay idicates a total expese ratio i the aual report. The total expese ratio comprises all the maagemet costs icurred by the ivestmet fud i the fiscal year excludig trasactio costs ad the sales costs of assets (hereiafter referred to as trasactio costs ). The total expese ratio expresses the ratio of the above-metioed costs to the average et asset value of the ivestmet fud withi the previous fiscal year. The Compay usually passes o some of its maagemet fee to itermediaries. This may costitute a substatial amout. This is paid as remueratio for sales services performed o a agecy basis. The aual report cotais additioal iformatio o this. The Compay may, at its discretio, agree with idividual ivestors the partial repaymet to them of the maagemet fees collected. This ca be a cosideratio especially i the case of istitutioal ivestors who directly ivest large amouts for the log term. The Compay s Istitutioal Sales divisio is resposible for these matters. Circumstaces particular to the acquisitio of ivestmet fud uits I additio to the costs for the maagemet of the ivestmet fud, costs for the ivestmet 8
11 fud uits held i the ivestmet fud (target fud) are charged. The costs of the target fud, especially the maagemet fee/all-i fee, performace-based fees, iitial sales charges, redemptio fees, expese reimbursemets ad other costs, are thus idirectly charged to the ivestmet fud. I total, this ca result i a high cost load for the ivestor. Whe calculatig the total expese ratio, these costs are take ito accout (see the Costs sectio). Whe acquirig uits of ivestmet fuds that are directly or idirectly maaged by the Compay itself or by aother compay with which the Compay is affiliated by virtue of joit maagemet or cotrol, or by material direct or idirect uitholdig amoutig to more tha 10% of capital or votig rights (hereiafter referred to as affiliated ivestmet fuds ), the ivestmet fud may oly be charged a reduced all-i fee of 0.25% i respect of such ivestmets. If the Compay ivests i uits of affiliated ivestmet fuds havig a all-i fee lower tha that of the ivestmet fud, the Compay may, istead of chargig the reduced all-i fee, charge to the ivestmet fud for the uits acquired the differece betwee the alli fee of the ivestmet fud ad the all-i fee of the affiliated ivestmet fud, which may be higher tha the reduced all-i fee. The same shall apply with respect to the maagemet fee if o all-i fee is charged to the ivestmet fud ad/or the affiliated ivestmet fud. The special sectio of the sales prospectus may cotai differet provisios. For acquired ivestmet fud uits, the aual report ad semiaual report shall cotai a disclosure of the amout of the iitial ad redemptio fees that have bee charged to the ivestmet fud for the acquisitio ad redemptio of uits of domestic ad foreig target fuds durig the reportig period. The Compay or the other compay may ot charge iitial or redemptio fees whe purchasig affiliated ivestmet fuds. Furthermore, the aual ad semiaual report will disclose the maagemet fee, which is charged to the ivestmet fud for the ivestmet fud uits held i the ivestmet fud. The same shall apply with respect to the all-i fee, if a all-i fee is charged to the ivestmet fud ad/or the affiliated ivestmet fud. Buy ad sell orders for securities ad fiacial istrumets The Compay submits buy ad sell orders for securities ad fiacial istrumets directly to brokers ad traders for the accout of the ivestmet fud. It cocludes agreemets with these brokers ad traders uder customary market coditios that comply with first-rate executio stadards. Whe selectig the broker or trader, the Compay takes ito accout all relevat factors, such as the credit ratig of the broker or trader ad the quality of the market iformatio, the aalyses, as well as the executio capacities provided. Moreover, the Compay curretly cocludes agreemets uder which it ca take advatage of ad utilize valuable beefits offered by brokers ad traders. These services, which the Compay is etitled to retai (see the provisio i the Special Terms of Cotract dealig with fees ad reimbursemet of expeses), iclude services provided by the brokers ad traders directly ad those provided by third parties. These services may iclude the followig, for example: particular advice regardig the advisability of tradig a asset or its valuatio, aalyses ad cosultatio services, ecoomic ad political aalyses, portfolio aalyses (icludig valuatio ad performace measuremet), market aalyses, market ad price iformatio systems, iformatio services, computer hardware ad software, or ay ad all other meas of gatherig iformatio i the scope i which they are used to support the ivestmet decisio process ad the performace of the services owed by the Compay i respect of the ivestmets of the ivestmet fud. That meas brokerage services may ot be limited to geeral aalysis, but may also iclude special services such as Reuters ad Bloomberg. Agreemets with brokers ad traders may iclude the coditio that traders ad brokers are to trasfer to third parties immediately or later a portio of the commissios paid for the purchase or sale of assets; said commissios shall be provided by the Compay for the services previously specified. The Compay shall comply with all valid regulatory provisios ad idustry stadards whe takig advatage of these beefits (ofte also called soft dollars ). I particular, the Compay shall ot accept ay beefits, or coclude ay agreemets o obtaiig such beefits, if these agreemets do ot support the Compay i its ivestmet decisio process accordig to reasoably prudet discretio. The prerequisite is that the Compay shall always esure that the trasactios are executed while takig ito accout the appropriate market at the appropriate time for trasactios of the appropriate type ad size at the best possible coditios ad that o uecessary busiess trasactios are cocluded to acquire the right to such beefits. The goods ad services received withi the scope of soft-dollar agreemets shall exclude travel, accommodatios, etertaimet, geeral admiistrative goods ad services, geeral office equipmet ad office space, membership fees, employee salaries ad direct cash paymets. Commissio sharig The Compay may coclude agreemets as defied i the Buy ad sell orders for securities ad fiacial istrumets sectio above with select brokers uder which the respective broker trasfers, either immediately or after a time delay, portios of the paymets it receives uder the relevat agreemet from the Compay for the purchase or sale of assets to third parties that will provide research or aalytical services to the Compay or retais such paymets itself for its ow research ad aalytical services o the istructios of the Compay. The services uder these so-called commissio-sharig agreemets are used by the Compay for the purpose of maagig the ivestmet fud. To clarify: the Compay shall use these services as specified i ad oly i accordace with the coditios set out i the Buy ad sell orders for securities ad fiacial istrumets sectio. The Compay offers to disclose more detailed iformatio to its ivestors. Icome adjustmet procedure The Compay uses a procedure for the ivestmet fud, the so-called icome adjustmet procedure. This meas that the prorated icome over the fiscal year that the purchaser of uits must pay as part of the issue price, ad that the seller of uits receives as part of the redemptio price, are cotiually offset. Whe calculatig the icome adjustmet, the expeses icurred are take ito accout. This icome adjustmet procedure serves to eve out fluctuatios i the ratio betwee icome ad other assets caused by the et capital iflows ad outflows associated with the issue ad redemptio of uits. Otherwise, every et capital iflow of liquid assets would decrease the proportio of icome i the et asset value of the ivestmet fud, while every et capital outflow would icrease it. The ultimate effect of the icome adjustmet procedure is that the icome per uit reported i the aual report will ot be iflueced by ay chages i the umber of uits outstadig. I doig so, it is accepted for distributig ivestmet fuds that ivestors acquirig uits shortly before a distributio date, for istace, will receive back the portio of the issue price attributable to icome i the form of a divided, eve though their paid-i capital did ot cotribute to the geeratio of that icome. Liquidatio ad trasfer of the ivestmet fud The ivestors are ot etitled to demad the liquidatio of the ivestmet fud. The Compay may, however, termiate its maagemet of a ivestmet fud by givig six moths otice by way of a aoucemet i the electroic versio of the Budesazeiger ad additioally i the aual report or semiaual report. I additio, the ivestors will be iformed of the termiatio by meas of a durable medium, immediately after aoucemet by the Compay or, if the uits are ot held by the Compay or it is uable to trasmit the iformatio, by the istitutio maitaiig the custody accout without delay after the Compay publishes the iformatio. The right of the Compay to maage the ivestmet fud shall also cease upo the isti- 9
12 tutio of bakruptcy proceedigs cocerig the assets of the Compay or upo a judicial order by which the applicatio for the istitutio of such proceedigs uder article 26 of the Germa Isolvecy Code (Isolvezordug) is rejected for lack of assets. The right to dispose of the ivestmet fud will the pass to the Custodia, which shall wid up the ivestmet fud or, with the approval of BaFi, trasfer its maagemet to aother ivestmet compay. Procedure for the liquidatio of the ivestmet fud Upo liquidatio of the ivestmet fud after termiatio by the Compay of its right to maage it, the issue ad redemptio of uits shall cease as of the date specified i the aoucemet i the electroic versio of the Budesazeiger. The proceeds from the sale of the ivestmet fud s assets (hereiafter termed liquidatio proceeds ), less ay remaiig costs payable by the ivestmet fud ad the costs associated with the liquidatio of the ivestmet fud, shall be distributed to the ivestors. The ivestors shall be etitled to a share of the liquidatio proceeds that is proportioal to the umber of uits they hold i the respective ivestmet fud. The Custodia has the right to deposit ay uclaimed proceeds after a period of six moths with the Local Court (Amtsgericht) that has jurisdictio over the Compay. The Compay shall draw up a liquidatio report dated to the day o which its right of maagemet ceases; this report must comply with the requiremets of a aual report. No later tha three moths after the date of liquidatio of the ivestmet fud, the liquidatio report is published i the electroic versio of the Budesazeiger. While the Custodia liquidates the ivestmet fud, it must draw up a report aually ad o the day liquidatio is completed; this report must comply with the requiremets of a aual report. These reports must also be published i the electroic versio of the Budesazeiger o later tha three moths after the date of liquidatio. Settlemet whe distributig the liquidatio proceeds Settlemet takes place three bak busiess days after the liquidatio date. This period refers to the processig activity betwee the istitutio maitaiig the securities accout ad the Custodia. Postig or trasfer from the istitutio maitaiig the securities accout to the desired recipiet accout must follow afterward, ad may lead to additioal delays. Ivestors should therefore allow sufficiet time whe plaig for specific paymet dates. Trasfer of all assets of the ivestmet fud All the assets of the ivestmet fud may be trasferred to aother, existig ivestmet fud, or a ew ivestmet fud created by the merger, at the ed of the fiscal year (hereiafter the key date of trasfer ). The ivestmet fud may also be merged with a ivestmet fud which was lauched i aother EU or EEA coutry ad also complies with the provisios of the Directive 2009/65/EC (hereiafter referred to as EU ivestmet fud ). A differet key date of trasfer may be specified with the coset of BaFi. It is also possible for all the assets of aother ivestmet fud or EU ivestmet fud to be trasferred to the ivestmet fud effective at the ed of the fiscal year or at aother key date of trasfer. Fially there is also the optio that oly the assets of a EU ivestmet fud without its liabilities are trasferred to the ivestmet fud. Procedure for the trasfer of the ivestmet fud Either the Compay of the trasferrig ad receivig ivestmet fud or EU ivestmet fud or, if the uits are ot held by the Compay or if it is uable to iform the ivestors, the istitutios maitaiig the securities accout o behalf of the ivestors of the trasferrig ad receivig ivestmet fud or EU ivestmet fud covey to the ivestors without delay by meas of a durable medium, as soo as the Compay publishes the iformatio, o later, however, tha 35 workig days before the proposed key date of trasfer, iformatio o the reasos for the merger, the potetial impact o the ivestors, the rights of the ivestors i relatio to the merger ad key aspects of the procedure. The ivestors also receive the key ivestor documets o the receivig ivestmet fud or EU ivestmet fud. Up to five workig days before the key date of trasfer, ivestors i the trasferrig ad receivig ivestmet fud or EU ivestmet fud have the opportuity to either redeem their uits without additioal costs with the exceptio of the costs retaied to cover liquidatio expeses -, or to exchage their uits free of charge for uits of aother ivestmet fud or EU ivestmet fud whose ivestmet policy is compatible with the ivestmet fud s previous ivestmet priciples ad which is also maaged by the Compay or aother Deutsche Bak Group compay. O the key date of trasfer, the values of the receivig ivestmet fud ad of the trasferrig ivestmet fud or EU ivestmet fud are calculated, the coversio ratio is determied, ad the etire procedure is examied by the auditor. The coversio ratio is calculated o the basis of the ratio of the et asset values of the trasferred ivestmet fud ad of the receivig ivestmet fud at the time of the trasfer. The ivestor receives the umber of uits of the ew ivestmet fud that correspods to the value of the uits held i the trasferred ivestmet fud. There is also the optio that ivestors i the trasferrig ivestmet fud or EU ivestmet fud may receive a disbursemet i cash of up to 10% of the value of their uits. If the merger takes place durig the fiscal year of the trasferrig ivestmet fud, its Maagemet Compay must draw up a report o the key date of trasfer which must comply with the requiremets of a aual report. The Compay shall make a aoucemet i the electroic versio of the Budesazeiger (Federal Gazette) ad, i additio, i a busiess publicatio or a daily ewspaper with sufficiet circulatio, or o the Iteret at oce the ivestmet fud has icorporated aother fud ad the merger has come ito force. If the ivestmet fud is to be termiated by a merger, the Compay which maages the receivig or ewly-fouded fud takes resposibility for this publicatio. The trasfer of all the assets of a ivestmet fud to a differet ivestmet fud or a EU ivestmet fud will take place oly upo approval by BaFi. Potetial coflicts of iterest The Compay, the desigated sales agets ad persos authorized to carry out the distributio, the Custodia, ay ivestmet advisor, the ivestors, as well as all subsidiaries, affiliated compaies, represetatives or agets of the aforemetioed etities ad persos (hereiafter Associated Persos ) may: coduct amog themselves or for the fud ay ad all kids of fiacial ad bakig trasactios or other trasactios or eter ito the correspodig cotracts, icludig those that are directed at the fud s ivestmets i securities or at ivestmets by a Associated Perso i a compay or udertakig, such ivestmet beig a costituet part of the ivestmet fud, or be ivolved i such cotracts or trasactios, ad/ or for their ow accouts or for the accouts of third parties, ivest i uits, securities or assets of the same type as the compoets of the ivestmet fud s assets ad trade i them, ad/or i their ow ames or i the ames of third parties, participate i the purchase or sale of securities or other ivestmets through or joitly with the Compay, the persos appoited to carry out sales activities, the Custodia, the ivestmet advisor where applicable, or a subsidiary, a affiliated compay, represetative or aget of these. Assets of the ivestmet fud i the form of bak balaces or securities may be deposited with a Associated Perso i accordace with the legal provisios goverig the Custodia. Bak balaces of the ivestmet fud may be ivested i certificates of deposit issued by a Associated Perso or i bak deposits offered by a Associated Perso. Bakig or comparable trasactios may also be coducted with or 10
13 through a Associated Perso. The ivestmet fud may ivest i all types of issues (e.g. securities, certificates), which are issued by compaies i the Deutsche Bak Group, their subsidiaries or affiliated compaies, or i the issue of which compaies i the Deutsche Bak Group, their subsidiaries or affiliated compaies are ivolved i some form. Compaies i the Deutsche Bak Group ad/or employees, represetatives, affiliated compaies or subsidiaries of compaies i the Deutsche Bak Group ( DB Group Members ) may be couterparties i the Compay s derivatives trasactios or derivatives cotracts ( Couterparty ). Furthermore, the ivestmet compay ca ivest i fiacial istrumets whose uderlyigs are the compaies of the Deutsche Bak Group, their subsidiaries or affiliated compaies. Fially, i some cases such derivatives trasactios or derivatives cotracts may have to be evaluated o the basis of iformatio provided by the Couterparty. Such iformatio may costitute i these cases the basis for calculatio of the value of particular assets of the ivestmet fud by the Custodia. The Compay is aware that DB Group Members may possibly be ivolved i a coflict of iterest if they act as Couterparty ad/or provide such iformatio. The evaluatio will be adjusted ad carried out i a maer that is verifiable. However, the Compay believes that such coflicts ca be hadled appropriately ad assumes that the Couterparty possesses the aptitude ad competece to perform such evaluatios. I accordace with the respective terms agreed, DB Group Members may also act i particular as sales agets, sub-agets, Custodias, payig agets, fud maagers or ivestmet advisors, ad may offer to provide fiacial ad bakig trasactios to the Compay. The Compay is aware that coflicts of iterest may arise due to the fuctios that DB Group Members perform i relatio to the Compay. I respect of such evetualities, each DB Group Member has udertake to edeavor, to a reasoable extet, to resolve such coflicts of iterest equitably (with regard to the Members respective duties ad resposibilities), ad to esure that the iterests of the Compay ad of the ivestors are ot adversely affected. The Compay is of the view that DB Group Members possess the required aptitude ad competece to perform such duties. The iterests of the Compay may coflict with those of the etities metioed above (except the ivestors). I the evet of coflicts of iterest, the Compay will edeavor to resolve such coflicts i favor of the Compay. Isofar as the iterests of the ivestors are also affected, the Compay will edeavor to avoid ay coflicts of iterest ad, if it is impossible to avoid such coflicts, to esure that ievitable coflicts of iterests are resolved while suitably protectig the iterests of the ivestors. Outsourcig The Compay has trasferred the followig duties to other compaies: Risk & Cotrol Maagemet Busiess Maagemet Support Compliace (icludig ivestmet limit compliace testig) Accoutig for the Compay Huma Resources IT Operatios IT Audit Legal Departmet Office Admiistratio Collateral Maagemet Aual ad semiaual reports, Auditor The aual reports ad semiaual reports may be obtaied from the Compay as well as from Deutsche Bak AG ad Deutsche Bak Privat- ud Geschäftskude AG. KPMG AG Wirtschaftsprüfugsgesellschaft, THE SQUARE, Am Flughafe, Frakfurt/ Mai, Germay, has bee appoited auditor of the ivestmet fud ad the aual report. Distributio of reports ad other iformatio The vehicles for iformatio metioed i this sales prospectus, such as the sales prospectus, the Terms of Cotract, ad the aual reports ad semiaual reports, may be obtaied from the Compay. They are provided by the Compay free of charge to ivestors, o request. These documets may also be obtaied from the Custodia. The iformatio metioed i this sales prospectus may also be obtaied o the Iteret at Sellig restrictios The uits of this ivestmet fud that have bee issued may be offered for sale or sold to the public oly i coutries where such a offer or such a sale is permissible. Uless the Compay, or a third party authorized by it, has obtaied permissio to do so from the local regulatory authorities, this prospectus does ot costitute a solicitatio to purchase ivestmet fud uits, or may the prospectus be used for the purpose of solicitig the purchase of ivestmet fud uits. The iformatio cotaied herei ad the uits of the ivestmet fud are ot iteded for distributio i the Uited States of America or to U.S. persos (idividuals who are U.S. citizes or whose permaet place of residece is i the Uited States of America ad parterships or corporatios established i accordace with the laws of the Uited States of America or of ay state, territory or possessio of the Uited States). Accordigly, uits will ot be offered or sold i the Uited States or to or for the accout of U.S. persos. Subsequet trasfers of uits i or ito the Uited States or to U.S. persos are prohibited. I cases whe the Compay receives kowledge that a uitholder is a U.S. perso or holds uits for the accout of a U.S. perso, the Compay may demad the immediate retur of the uits to the Compay at the last determied et asset value per uit. This prospectus may ot be distributed i the Uited States of America. The distributio of this prospectus ad the offerig of the uits may also be restricted i other jurisdictios. Ivestors that are cosidered restricted persos as defied i Rule 2790 of the Natioal Associatio of Securities Dealers i the Uited States (NASD Rule 2790) must report their holdigs i the ivestmet fud to the Compay without delay. This prospectus may be used for sales purposes oly by persos who have express writte authorizatio from the Compay (grated directly or idirectly via authorized sales agets) to do so. Declaratios or represetatios by third parties that are ot cotaied i this sales prospectus or i the documetatio have ot bee authorized by the Compay. These documets are available to the public at the registered office of the Compay. The cotractual relatioship ad all precotractual relatioships betwee the Compay ad the ivestor are govered by Germa law. I accordace with article 23 (2) of the Geeral Terms of Cotract, the locatio of the registered office of the Compay shall be the place of jurisdictio for ay disputes arisig from this cotractual relatioship if the ivestor does ot have a geeral place of jurisdictio i Germay. I accordace with article 123 (1) IvG, all publicatios ad advertisig brochures are to be drafted i Germa or traslated ito Germa. I additio, the Compay will commuicate with its ivestors etirely i Germa. I the evet of disputes relatig to the provisios of the Ivestmet Act, cosumers ca cotact the ombudsma for ivestmet fuds at BVI Budesverbad Ivestmet ud Asset Maagemet e.v., Uter de Lide 42, Berli. Further cotact details ca be foud o the BVI website This arbitratio optio does ot affect the right of recourse to the courts. I the case of ay disputes arisig from the applicatio of the regulatios uder the Germa Civil Code (Bürgerliches Gesetzbuch; BGB) cocerig distace sellig cotracts ivolvig fiacial services, the parties may also apply to the arbitratio office of the Deutsche Budesbak, P.O. Box , Frakfurt/Mai, Germay; Tel.: +49-(0)69/ or -1906, Fax: +49-(0)69/ or schlichtug@budesbak.de. This arbitratio optio does ot affect the right of recourse to the courts. 11
14 Summary of tax regulatios of importace to the ivestor Ivestmet fuds orgaized uder Germa law Geeral poits The statemets o tax regulatios oly apply to ivestors who are subject, without limitatio, to taxatio i Germay. We recommed that, prior to acquirig uits of the ivestmet fud described i this sales prospectus, the foreig ivestor idividually discuss with his tax advisor ay possible tax cosequeces i his coutry of residece arisig from the acquisitio of uits. As a special-purpose asset, this ivestmet fud is exempt from corporate icome tax ad trade tax. However, the taxable icome of the ivestmet fud is taxable for the idividual ivestor as icome from capital assets, which is subject to icome tax, provided that it exceeds the saver s flat allowace of EUR 801 p.a. (for sigle persos or spouses assessed separately) or EUR 1,602 (for spouses assessed joitly) whe added to ay other capital gais. Icome from capital assets is geerally subject to a 25% withholdig tax (plus solidarity surcharge ad, where applicable, church tax). Icome from capital assets also icludes icome distributed by the ivestmet fud, icome equivalet to distributios, the iterim profits, as well as ay gais from the sale or purchase of fud uits, provided the uits were or are acquired after December 31, I geeral, for the idividual ivestor, the withholdig tax acts as a fial paymet ( fial withholdig tax ), so that, as a rule, icome from capital assets is ot to be declared i the icome tax retur. For the idividual ivestor, the domestic istitutio maitaiig the custody accout usually offsets icome subject to withholdig agaist losses ad deductible foreig withholdig taxes. The withholdig tax does ot act as a fial paymet, however, if the ivestor s persoal tax rate is lower tha the fial withholdig tax of 25%. I this case, icome from capital assets may be declared i the icome tax retur. The tax office the applies the lower persoal tax rate ad offsets the tax withheld agaist the persoal tax liability ( reduced rate test ). Where icome from capital assets was ot subject to ay tax deductio (because capital gais from the sale of fud uits accrue i a foreig custody accout, for example), this is to be specified i the tax retur. Withi the tax assessmet, ay icome from capital assets is the also subject to the fial withholdig tax of 25%, or else to the lower persoal tax rate. Despite tax withholdig ad a higher persoal tax rate, icome from capital assets may still have to be declared if deductios for uusual costs or special expeses (e.g., charitable doatios) are claimed i the icome tax retur. If uits are held as busiess assets, the icome is cosidered taxable as operatig icome. I this case, the withholdig tax does ot act as a fial paymet; the istitutio maitaiig the custody accout does ot offset agaist ay losses. I determiig taxable icome ad icome subject to ivestmet icome tax, tax legislatio requires that certai distictios be made with regard to the icome compoets. I Uits held as persoal assets (Germa tax residets) 1. Iterest, icome equivalet to iterest ad foreig divideds Distributed or reivested iterest, icome equivalet to iterest as well as domestic ad foreig divideds are subject to 25% tax deductio (plus solidarity surcharge ad church tax, where applicable) i the case of domestic custody. I the case of a reivestig ivestmet fud accordig to tax law, tax o reivested icome of the ivestmet fud subject to withholdig is withheld ad directly paid to the tax authorities by the ivestmet compay itself at a rate of 25% (plus solidarity surcharge)if reivestmet takes place before Jauary 1, The issue ad redemptio prices of the fud uits are thus reduced by the amout of tax withheld as of the close of each fiscal year. As the ivestmet compay s ivestors are ot geerally kow, o church tax ca be withheld i this case. Ivestors who are subject to church tax are thus required to provide correspodig details i their icome tax retur. For icome reivested after December 31, 2011, the ivestmet fud provides the istitutios maitaiig the custody accouts with the ivestmet icome tax, i additio to the maximum accrued supplemetary taxes (solidarity surcharge ad church tax). As i the case of distributios, the istitutios maitaiig the custody accouts take the persoal situatio of the ivestors ito accout whe withholdig taxes so that i particular church tax may be deducted, if applicable. Should the ivestmet fud provide the istitutios maitaiig the custody accouts with amouts that do ot have to be withheld, these are refuded. 2. Profits from the sale of Germa ad foreig properties more tha 10 years after purchase Profits geerated at ivestmet fud level from the sale of Germa ad foreig properties after the te-year period are always tax-free for the ivestor. 3. Foreig retal icome ad profits from the sale of foreig properties withi 10 years of purchase Foreig retal icome ad profits from the sale of foreig properties, for which Germay has waived taxatio o the basis of a double taxatio agreemet (exemptio), also remai tax-free (ormal case). The tax-free icome also has o impact o the tax rate to be applied (o exemptio with progressio). If, as a exceptio, the offsettig method is agreed i the respective double taxatio agreemet or o double taxatio agreemet has bee cocluded, the statemets o the treatmet of profits from the sale of Germa properties withi 10 years of purchase apply i the same way. The taxes paid i the coutries of origiatio ca be offset agaist Germa icome tax if applicable, provided the taxes paid have ot already bee take ito accout as icome-related expeses at ivestor fud level. 4. Gais from the sale of securities, gais from forward trasactios ad icome from optio writer premiums Gais from the sale of equities, divided rights similar to equities ad ivestmet fud uits, as well as gais from forward trasactios ad icome from optio writer premiums that are realized at the level of the ivestmet fud do ot affect the ivestor as log as they are ot distributed. Nor shall ay gais from the sale of the debt istrumets listed i article 1 (3), setece 3, o. 1 (a) through (f), of the Ivestmet Tax Act (Ivestmetsteuergesetz; IvStG) affect the ivestor if they are ot distributed. They iclude the followig debt istrumets: a) debt istrumets that have a issuig yield, b) debt istrumets with fixed or variable coupos i which repaymet of the pricipal is agreed or effected i the amout i which it was made available (e.g., ormal bods, floaters, reverse floaters or dow-ratig bods), c) risk certificates represetig a idividual stock or a published idex for multiple equities at a 1:1 ratio, d) reverse covertible bods, exchageable bods ad covertible bods, e) icome bods ad debt divided rights traded flat, i.e., without a separate recordig of the accrued iterest, ad f) cum-warrat bods. If gais from the sale of the securities ad debt istrumets listed above, gais from forward trasactios, as well as icome from optio writer premiums are distributed, they are geerally taxable ad usually subject to the 25% withholdig tax (plus solidarity surcharge ad, where applicable, church tax). However, distributed gais from the sale of securities ad gais from forward trasactios are tax-exempt if the securities are purchased at the level of the ivestmet fud before Jauary 1, 2009, or the forward trasactios are executed before Jauary 1, Ivestors acquirig uits of a ivestmet fud after December 31, 2008, receive a otioal allocatio of these utaxed distributed gais whe capital gais are determied (see I 8 below). Gais from the sale of debt istrumets ot cotaied i the above list shall be treated as iterest for tax purposes (see I 1 above). 5. Germa divideds, retal icome ad profits from the sale of Germa properties withi 10 years of purchase Divideds from Germa corporatios, retal icome ad profits from the sale of Germa 12
15 properties withi 10 years of purchase that are distributed or reivested by the ivestmet fud are geerally taxable for the ivestor. I the case of distributio or reivestmet, a 25% tax (plus solidarity surcharge) is withheld by the istitutio maitaiig the custody accout or the ivestmet compay from domestic divideds. For distributios, the domestic istitutio maitaiig the custody accout shall additioally give cosideratio to ay existig applicatio for church tax withholdig. For distributios ad icome reivested after December 31, 2011, the ivestmet fud provides the istitutios maitaiig the custody accouts with the ivestmet icome tax, i additio to the maximum accrued supplemetary taxes (solidarity surcharge ad church tax). The istitutios maitaiig the custody accouts take the persoal situatio of the ivestors ito accout whe withholdig taxes so that i particular church tax may be deducted, if applicable. Should the ivestmet fud provide the istitutios maitaiig the custody accouts with amouts that do ot have to be withheld, these are refuded. 6. Negative icome for tax purposes If egative icome remais after offsettig with similar positive icome at the level of the ivestmet fud, that egative icome is carried forward for tax purposes at the level of the ivestmet fud. It may be offset at the level of the ivestmet fud agaist future similar positive taxable icome i subsequet years. Direct allocatio of egative taxable icome to the ivestor is ot possible. I this way, these egative amouts oly affect the ivestor for icome tax purposes i the tax year i which the fiscal year of the ivestmet fud eds or i which the distributio for the fiscal year of the ivestmet fud occurred for which the egative taxable icome is offset at the level of the ivestmet fud. Earlier cosideratio i the ivestor s icome tax is ot possible. 7. Distributios of o-icome assets Distributios of o-icome assets are ot subject to tax. However, distributios of o-icome assets received by the ivestor durig his holdig period must be added to the taxable gai from the sale of the fud uits; the total taxable gai is thus icreased. 8. Capital gais at ivestor level If uits of a ivestmet fud that were purchased after December 31, 2008, are sold by a idividual ivestor, the capital gais are subject to the fial withholdig tax of 25% (plus solidarity surcharge ad, where applicable, church tax). For the sale of the uits purchased before Jauary 1, 2009, the gais are ot taxed for idividual ivestors. Whe determiig the capital gais for fial withholdig tax purposes, the iterim profits at the time of purchase must be subtracted from the cost of purchasig the uits, ad the iterim profits ad sales proceeds at the time of sellig the uits must be subtracted from the sellig price to prevet double icome taxatio of iterim profits (see below). The sales proceeds must further be reduced by the amout of reivested icome the ivestor has already reported for taxes, so that double taxatio is preveted i that respect also. A additio to the sales proceeds takes place i the respective amouts of foreig tax as defied by article 4 (2) IvStG paid, less ay credits claimed, ad ivestmet icome tax as defied by article 7 (3) ad (4) IvStG paid, provided such taxes relate to the reivested icome geerated durig the holdig period, as well as i the amout of the icome equivalet to distributios geerated i the fiscal years before the holdig period ad distributed durig the holdig period. If the ivestor acquired uits of a ivestmet fud after December 31, 2008, utaxed distributios of gais from forward trasactios after Jauary 1, 2009, as well as gais from the sale of securities, must be added to the gai from the sale. The gai from the sale of fud uits acquired after December 31, 2008, is tax-exempt isofar as it is attributable to icome deemed taxexempt uder the DTC that was geerated i the fud durig the holdig period but ot yet recogized at ivestor level (so-called pro-rata real property gai ). A prerequisite for this is that the capital ivestmet compay publishes the real estate profit as a percetage of the value of the ivestmet uit o each valuatio date. If a miimum ivestmet of EUR 100,000 or more is required i order to participate i the fud (or i a uit class, i the case of particular uit classes), or if the participatio of atural persos is depedet o the kowledge of ivestors, the followig applies to the sale or redemptio of uits acquired after November 9, 2007, ad before Jauary 1, 2009: The gai from the sale or redemptio of such uits is geerally subject to the fial withholdig tax of 25%. However, i this case the taxable capital gai from the sale or redemptio of the uits is limited to the amout of the gais reivested at fud level from the sale of securities acquired after December 31, 2008, ad the gais reivested at fud level from forward trasactios executed after December 31, Such limitatio of taxable capital gai requires the documetatio of the correspodig amout. I the opiio of the Germa Federal Miistry of Fiace (miisterial letter of October 22, 2008), it ca be assumed, for ivestors whose ivestmet does i fact amout to at least EUR 100,000, that the EUR 100,000 miimum ivestmet is a prerequisite ad that particular ivestor kowledge is required wheever the major portio of the assets of a ivestmet fud is held by a small umber of up to te ivestors. II Uits held as busiess assets (Germa tax residets) 1. Iterest, icome equivalet to iterest ad Germa retal icome Iterest, icome equivalet to iterest ad Germa retal icome is geerally taxable for the ivestor. This applies irrespective of whether such icome is reivested or distributed. Accordig to article 2 (2a) IvStG, taxable iterest is subject to the iterest deductio ceilig of article 4h EStG. 2. Foreig retal icome I the case of retal icome from foreig properties Germay usually waives taxatio (exemptio o the basis of a double taxatio agreemet). However, i the case of ivestors which are ot ivestmet compaies, exemptio with progressio is to be observed i part. If, as a exceptio, the offsettig method is agreed i the respective double taxatio agreemet or o double taxatio agreemet has bee cocluded, icome taxes paid i the origiatig coutries may, if applicable, be offset agaist Germa icome tax or corporate icome tax, isofar as the taxes paid have ot already bee take ito accout as icome-related expeses at ivestmet fud level. 3. Profits from the sale of Germa ad foreig properties Reivested profits from the sale of Germa or foreig properties are without cosequece for the ivestor i relatio to tax, provided the sale occurs more tha te years after purchase of the property at fud level. Profits are oly subject to taxatio oce they are distributed, whereby Germay usually waives taxatio of foreig profits (exemptio o the basis of a double taxatio agreemet). Profits from the sale of Germa ad foreig properties withi the te-year period are to be take ito accout at ivestor level for tax purposes whe they are reivested or distributed. Profits from the sale of Germa properties are subject to taxatio i full. I the case of profits from the sale of foreig properties Germay usually waives taxatio (exemptio o the basis of a double taxatio agreemet). However, i the case of ivestors which are ot ivestmet compaies, exemptio with progressio is to be observed. If, as a exceptio, the offsettig method is agreed i the respective double taxatio agreemet or o double taxatio agreemet has bee cocluded, icome taxes paid i the origiatig coutries may, if applicable, be offset agaist Germa icome tax or corporate icome tax, isofar as the taxes paid have ot already bee take ito accout as icome-related expeses at ivestmet fud level. 13
16 4. Gais from the sale of securities, gais from forward trasactios ad icome from optio writer premiums Gais from the sale of equities, divided rights similar to equities ad ivestmet fud uits, as well as gais from forward trasactios ad icome from optio writer premiums that are realized at the level of the ivestmet fud do ot affect the ivestor as log as they are ot distributed. Nor shall ay gais from the sale of the debt istrumets listed i article 1 (3), setece 3, o. 1 (a) through (f), of the Ivestmet Tax Act (Ivestmetsteuergesetz; IvStG) affect the ivestor if they are ot distributed. They iclude the followig debt istrumets: a) debt istrumets that have a issuig yield, b) debt istrumets with fixed or variable coupos i which repaymet of the pricipal is agreed or effected i the amout i which it was made available (e.g., ormal bods, floaters, reverse floaters or dow-ratig bods), c) risk certificates represetig a idividual stock or a published idex for multiple equities at a 1:1 ratio, d) reverse covertible bods, exchageable bods ad covertible bods, e) icome bods ad debt divided rights traded flat, i.e., without a separate recordig of the accrued iterest, ad f) cum-warrat bods. If these gais are distributed, they have to be cosidered at ivestor level for tax purposes. For ivestors that are corporate etities, capital gais o equities are geerally tax-exempt, but 5% costitute o-deductible operatig expeses. I the case of other busiess ivestors (e.g., sole proprietorships), 40% of capital gais o equities are tax-exempt (partial-icome procedure). Capital gais from bods ad debt istrumets, as well as gais from forward trasactios ad optio writer premiums, o the other had, are fully taxable. Gais from the sale of debt istrumets ot cotaied i the above list shall be treated as iterest for tax purposes (see II 1 above). 5. Domestic ad foreig divideds Except for those govered by the Germa REIT Act, divideds from domestic ad foreig corporatios that are distributed o or reivested i uits held as busiess assets are geerally tax-exempt for corporate etities (5% of these divideds, however, costitute o-deductible operatig expeses). I the case of other busiess ivestors (e.g., sole proprietorships), 40% of this icome is tax-exempt (partial-icome procedure). Domestic ad foreig divideds are geerally subject to the 25% withholdig tax plus solidarity surcharge. For ivestors subject to trade tax, this divided icome partially exempted from (corporate) icome tax must be added back whe determiig icome for trade-tax purposes, ad ot deducted agai. I the opiio of the tax authorities, divideds from foreig corporatios ca oly be tax exempt as itercorporate divideds to the full extet if the ivestor is a (capital) compay as defied i the relevat double taxatio covetio ad it is established that the ivestor has a sufficietly high (itercorporate) stockholdig. 6. Negative icome for tax purposes If egative icome remais after offsettig with similar positive icome at the level of the ivestmet fud, that egative icome is carried forward for tax purposes at the level of the ivestmet fud. It may be offset at the level of the ivestmet fud agaist future similar positive taxable icome i subsequet years. Direct allocatio of egative taxable icome to the ivestor is ot possible. I this way, these egative amouts oly affect the ivestor for (corporate) icome tax purposes i the tax year i which the fiscal year of the ivestmet fud eds or i which the distributio for the fiscal year of the ivestmet fud occurred for which the egative taxable icome is offset at the level of the ivestmet fud. Earlier cosideratio i the ivestor s (corporate) icome tax is ot possible. 7. Distributios of o-icome assets Distributios of o-icome assets are ot subject to tax. For a ivestor who keeps a tax accout, this meas that the distributios of o-icome assets are to be collected related to icome i the commercial balace sheet; i the tax balace sheet, a adjustmet item o the liabilities side is to be formed related to expeses, ad thus techically the historic acquisitio costs are reduced i a tax-eutral maer. Alteratively, the amortized acquisitio costs ca be reduced by the pro-rata amout of the distributio of oicome assets. 8. Capital gais at ivestor level Gais from the sale of uits held as busiess assets are tax-exempt for busiess ivestors isofar as they are attributable to icome deemed tax-exempt uder the DTC that was geerated i the fud durig the holdig period but ot yet recogized at ivestor level ( pro-rata real property gai ). A prerequisite for this is that the capital ivestmet compay publishes the real estate profit as a percetage of the value of the ivestmet uit o each valuatio date. Gais from the sale of uits held as busiess assets are also tax-exempt for corporate etities, provided the gais emaate from divideds that have ot yet accrued or are deemed to have ot yet accrued ad from realized ad urealized capital gais of the ivestmet fud from domestic ad foreig equities ( equity gai ). However, 5% of the equity gai costitutes o-deductible operatig expeses. I the case of other busiess ivestors (e.g., sole proprietorships), 40% of this icome is tax-exempt (partial-icome procedure). A prerequisite for this is that the capital ivestmet compay publishes the equity gai as a percetage of the value of the ivestmet uit o each valuatio date. III Exemptio from withholdig ad refud of ivestmet icome tax withheld 1. Germa tax residets If a residet idividual ivestor has uits of a ivestmet fud held i domestic custody by the ivestmet compay or by aother credit istitutio (custody arragemet), ad if the idividual ivestor submits a exemptio form coformig to the official sample documet ad coverig a adequate amout, or a o-assessmet certificate, i sufficiet time, the followig applies: I the case of a (partially) distributig ivestmet fud, the credit istitutio maitaiig the custody accout will, as payig aget, refrai from withholdig ad refud ay ivestmet icome tax withheld by the ivestmet compay. I this case, the ivestor will be credited the full amout of the distributio. I the case of a reivestig ivestmet fud, the accout of the ivestor will be credited by the credit istitutio maitaiig his custody accout for ay taxes withheld by the ivestmet compay (or from 2012 the amout provided to the istitutios maitaiig the custody accouts) o reivested icome subject to taxatio. Amouts ot to be withheld, which have bee provided to the istitutios maitaiig the custody accouts for icome reivested after December 31, 2011, are reimbursed to private ivestors eve without submissio of a exemptio form or o-assessmet certificate. The credit istitutio maitaiig the custody accout will refrai from withholdig tax o the iterim profits ad o gais from the sale of the ivestmet fud uits cotaied i the sales proceeds/redemptio price. If a residet ivestor holdig uits of a ivestmet fud as busiess assets has them held i domestic custody by the ivestmet compay or by aother credit istitutio (custody arragemet), the credit istitutio maitaiig the custody accout will refrai, as payig aget, from withholdig ad refud ay ivestmet icome tax withheld by the ivestmet compay if the ivestor submits a appropriate oassessmet certificate i sufficiet time (total or partial exemptio from withholdig/refud of tax withheld will deped o the type of the respective o-assessmet certificate), i the case of amouts ot to be withheld which have bee provided to the istitutios maitaiig the custody accouts for icome reivested after December 31, 2011, eve without submissio of a o-assessmet certificate or for gais from the sale of securities, gais from forward trasactios, icome from optio 14
17 writer premiums, as well as gais from the sale of the ivestmet fud uits, eve without a oassessmet certificate if the ivestor is a corporate etity subject, without limitatio, to taxatio i Germay or if the ivestmet icome costitutes the operatig icome of a domestic busiess ad the creditor iforms the payig aget accordigly, usig the official form. If the exemptio form or o-assessmet certificate is ot submitted, or ot submitted i time, the ivestor will upo request receive from the istitutio maitaiig the custody accout a tax statemet o the tax ad solidarity surcharge withheld ad ot refuded. The ivestor may the offset the tax withheld agaist his persoal/ corporate tax liability i his (corporate) icome tax assessmet. 2. No-residet taxpayers If a o-residet taxpayer has uits of distributig ivestmet fuds held i custody by a domestic credit istitutio (custody arragemet), o tax will be withheld o iterest ad icome equivalet to iterest, o gais from the sale of securities, o gais from forward trasactios ad o foreig divideds, as well as o the iterim profits ad o the gais from the sale of the ivestmet fud uits cotaied i the sales proceeds/redemptio price, provided that the taxpayer submits proof of o-residet status. If the istitutio maitaiig the custody accout is ot aware of the ivestor s o-residet status, or if such status is ot verified i time, the foreig ivestor must use the reimbursemet procedure defied i article 37 (2) of the Germa Fiscal Code (Abgabeordug; AO) to apply for a refud of the tax withheld. The tax office havig jurisdictio over the busiess operatios of the istitutio maitaiig the custody accout will be resposible for processig such a refud applicatio. If a foreig ivestor has uits of reivestig ivestmet fuds held i custody by a domestic credit istitutio, the 25% withholdig tax plus solidarity surcharge for icome reivested before Jauary 1, 2012, will be refuded upo verificatio of his o-residet status for tax purposes, isofar as the tax withheld does ot relate to domestic divideds. If the refud applicatio is delayed, a refud ca be applied for i accordace with article 37 (2) AO eve after the date of reivestmet, as i the case of delayed proof of o-residet status with distributig fuds. If icome is reivested i this case after December 31, 2011, o tax is withheld provided it does ot relate to Germa divideds or Germa retal icome. I cotrast, Germa divideds ad Germa retal icome are subject to withholdig tax. The extet to which withholdig tax ca be offset or refuded for the o-residet ivestor depeds o the double taxatio covetio i place betwee the tax residece of the ivestor ad the Federal Republic of Germay. Ivestmet icome tax o Germa divideds ad Germa retal icome uder the DTC is refuded by the Germa Federal Tax Office (Budeszetralamt für Steuer - BZSt) i Bo. IV Solidarity surcharge A solidarity surcharge of 5.5% is levied o the amout of tax to be withheld i the case of distributios or reivestmet. The solidarity surcharge ca be offset agaist icome tax ad corporate icome tax. If there is o withholdig tax or if tax withheld is credited to the ivestor o reivestmet before Jauary 1, 2012, e.g., i the case of a sufficiet exemptio form, submissio of a o-assessmet certificate or proof of o-residet status, o solidarity surcharge shall be withheld or, i the case of reivestmet, it shall be credited. V Church tax Provided that icome tax is already beig withheld by a domestic istitutio maitaiig the custody accout (withholdig aget), the church tax attributable will be withheld as a surcharge o the tax withheld at the church tax rate of the religious group to which the church tax payer belogs. For this purpose, the church tax payer may declare his religious affiliatio to the withholdig aget i a writte applicatio. Spouses must also declare i the applicatio the proportio of the ivestmet icome attributable to each spouse as related to the total ivestmet icome of the spouses, so that the church tax ca be apportioed, retaied ad paid accordigly. If such a proportio is ot declared, apportiomet will be o a per-capita basis. The deductibility of the church tax as a special expese is take ito accout ad used to reduce withholdig. VI Foreig withholdig tax Local withholdig tax is i some cases levied o ivestmet fud icome geerated abroad. The ivestmet compay ca deduct such creditable withholdig tax as icome-related expeses at the level of the ivestmet fud. I such a case, foreig withholdig tax is either creditable or deductible at ivestor level. If the ivestmet compay chooses ot to exercise its optio to deduct foreig withholdig tax at fud level, the creditable withholdig tax will be used to reduce withholdig. VII Separate assessmet, exteral audits The bases of taxatio determied at the level of the ivestmet fud are to be assessed separately. For this purpose, the ivestmet compay must submit a separate declarative statemet to the relevat tax office. Modificatios of declarative statemets, e.g., due to a exteral audit (article 11 (3) IvStG) by the tax authorities, become effective for the fiscal year i which the modified determiatio of taxatio bases becomes icotestable. The tax allocatio of this modified determiatio of taxatio bases for the ivestor the takes place at the ed of the relevat fiscal year or o the distributio date for the distributio of the relevat fiscal year. The chages thus have a fiacial impact o those ivestors who are ivested i the ivestmet fud at the time of the chage. The tax effects may be either positive or egative. VIII Taxatio of iterim profits Iterim profits cosist of icome from iterest received or accrued ad of gais from the sale of debt istrumets ot listed i article 1 (3), setece 3, o. 1 (a) through (f), IvStG that are icluded i the sale or redemptio price but have ot yet bee distributed or reivested by the fud ad have therefore ot yet become taxable for the ivestor (somewhat comparable to accrued iterest from fixed-rate securities). The iterim profits eared from the ivestmet fud are subject to icome tax if the uits are redeemed or sold by Germa tax residets. The withholdig tax o iterim profits is 25% (plus solidarity surcharge ad, where applicable, church tax). Iterim profits paid durig the purchase of uits may be deducted by the idividual ivestor i the year of paymet for icome tax purposes as egative icome if a icome adjustmet is carried out ad this is poited out both i the publicatio of the iterim profit ad withi the scope of the tax data to be certified by the professioals. It is take ito accout to reduce withholdig for the idividual ivestor. If actual iterim profits are ot published, 6% (pro rata temporis) of the amout paid for the redemptio or sale of the ivestmet fud uit must be assessed each year as iterim profits. For busiess ivestors, the iterim profit paid is a itegral part of the acquisitio costs, which are ot to be corrected. Upo redemptio or sale of the ivestmet fud uit, the iterim profit received forms a itegral part of the sales proceeds. A correctio should ot be made. IX Results of mergig ivestmet fuds I cases where a Germa ivestmet fud is merged with aother Germa ivestmet fud, hidde reserves will ot be disclosed either at the level of the ivestors or at the level of ivestmet fuds ivolved, i.e., such a trasactio is tax-eutral. The same holds true for the trasfer of all assets of a Germa ivestmet fud to a Germa ivestmet stock corporatio or a sub-fud of a Germa ivestmet stock corporatio. If the ivestors of the trasferred assets receive a cash paymet, as defied i article 40h IvG, this is to be treated i the same way as a distributio of ay other icome. Icome geerated by the trasferrig ivestmet fud ad ot yet distributed is allocated to the ivestors for tax purposes as socalled icome equivalet to distributios as of the key date of trasfer. A distributig ivestmet fud is, i its fial fiscal year before the amalgamatio, to be treated for tax purposes like a reivestig ivestmet fud. 15
18 X Trasparet, semi-trasparet ad o-trasparet taxatio The above taxatio priciples (termed trasparet taxatio) apply oly if all taxatio bases are made kow as defied by article 5 (1) IvStG (termed the tax otificatio requiremet). This also applies if the ivestmet fud has acquired uits of other domestic ivestmet fuds, EC ivestmet fud uits ad foreig ivestmet fud uits that are ot EC ivestmet fud uits (target fud as defied i article 10 IvStG) ad these meet their tax otificatio obligatios. If the iformatio pursuat to article 5 (1), o. 1 (c) or (f), IvStG is ot provided, all icome is taxable i its etirety ( semi-trasparet taxatio ). If the otificatio requiremet pursuat to article 5 (1) IvStG is violated ad there is o istace of semi-trasparet taxatio, all distributios ad the iterim profit as well as 70% of the positive differece betwee the first ad the last redemptio price of the ivestmet fud uit determied i the caledar year shall be assessed for taxatio at ivestor level; at least 6% of the last redemptio price determied i the caledar year shall be assessed (termed otrasparet taxatio). If a target fud does ot comply with its tax otificatio obligatios pursuat to article 5 (1) IvStG, a taxable icome amout, to be determied accordig to the priciples described i the precedig, must be assessed for the respective target fud at the level of the ivestmet fud. XI EU Savigs Tax Directive/ Iterest Iformatio Regulatio The Iterest Iformatio Regulatio (abbreviated IIR) via which Coucil Directive 2003/48/EC of Jue 3, 2003, Official Joural EU o. L 157, p. 38, is implemeted, is iteded to esure effective cross-border taxatio of iterest paymets to atural persos withi the territory of the EU. The EU has agreemets i place with certai third coutries (most otably Switzerlad, Liechtestei, the Chael Islads, Moaco ad Adorra) that are largely cosistet with the EU Savigs Tax Directive. The geeral process is that iterest paymets credited to a atural perso residet i aother Europea coutry or i certai third coutries by a Germa credit istitutio (actig as the payig aget i this respect) are reported by the Germa credit istitutio to the Federal Tax Office ad by that office ultimately to the respective foreig tax office of the recipiet s coutry of residece. Coversely, iterest paymets credited to a atural perso residet i Germay by a foreig credit istitutio i aother Europea coutry or i certai third coutries are ultimately reported by the foreig credit istitutio to the tax office of the recipiet s Germa residece. Alteratively, some foreig coutries retai withholdig taxes that are creditable i Germay. Specifically affected therefore are idividual ivestors residet withi the Europea Uio ad i the associated third coutries that maitai their cash or securities accouts ad ear iterest i aother EU coutry. Amog others, Luxembourg ad Switzerlad have udertake to retai a 20% withholdig tax (35% from July 1, 2011) o iterest paymets. As part of his tax documetatio, the ivestor receives a tax certificate eablig him to have that withholdig tax credited i his icome tax retur. Alteratively, the idividual ivestor ca avoid foreig withholdig by authorizig the foreig bak to make volutary disclosures of his iterest paymets, allowig the istitutio to refrai from withholdig ad istead report the paymets to the tax authorities desigated i the respective statutes. If the assets of a fud cosist of o more tha 15% i claims as defied by the IIR, the payig agets that ultimately make use of the data disclosed by the ivestmet compay eed ot file reports with the Federal Tax Office. Crossig the 15% threshold obligates the payig agets to report to the Federal Tax Office the EU iterest portio cotaied i the distributio. If the 40% threshold (25% threshold from Jauary 1, 2011) is crossed, the sales proceeds must be reported whe fud uits are redeemed or sold. I the case of a distributig fud, the EU iterest portio cotaied i ay distributio must additioally be reported to the Federal Tax Office. I the case of a reivestig fud, reports are aturally oly filed whe fud uits are redeemed or sold. Note: The iformatio icluded here is based o our uderstadig of curret tax laws. It is addressed to persos subject, without limitatio, to icome tax or corporate icome tax i Germay. However, o resposibility ca be assumed for potetial chages i the tax structure through legislatio, court decisios or the orders of the tax authorities. Legal ad tax risk I the case of a correctio with tax cosequeces that are essetially ufavorable for the ivestor, chages to the fud s taxatio bases for precedig fiscal years made because these bases are foud to be icorrect (e.g., based o exteral tax audits) ca result i the ivestor havig to bear the tax burde resultig from the correctio for precedig fiscal years, eve though he may ot have held a ivestmet i the ivestmet fud at the time. Coversely, the ivestor may fail to beefit from a essetially favorable correctio for the curret or precedig fiscal years durig which he held a ivestmet i the ivestmet fud if the uits are redeemed or sold before the correctio takes place. I additio, a correctio of tax data ca result i a situatio where taxable icome or tax beefits are actually assessed for tax i a differet assessmet period to the applicable oe ad that this has a egative effect for the idividual ivestor. 16
19 Ivestmet fuds maaged by DWS Ivestmet GmbH: Directive-compliat ivestmet fuds Equity fuds Astra-Fods DWS Akkumula DWS Aktie Schweiz DWS Aktie Strategie Deutschlad DWS Biotech Typ O DWS Deutschlad DWS Emergig Markets Typ O DWS Eergy Typ O DWS Europe Dyamic DWS Europea Opportuities DWS Europäische Aktie Typ O DWS Eurovesta DWS Fiacials Typ O DWS Germa Equities Typ O DWS Germa Small/Mid Cap DWS Global Growth DWS Global Metals & Miig Typ O DWS Global Small/Mid Cap DWS Health Care Typ O DWS Iteratioale Aktie Typ O DWS Itervest DWS Ivesta DWS Japa Opportuities DWS Klimawadel DWS Select-Ivest DWS Techology Typ O DWS Telemedia Typ O DWS Top 50 Asie DWS Top 50 Europa DWS Top 50 Welt DWS Top Dividede DWS TRC Deutschlad DWS TRC Top 50 Asie DWS TRC Top Dividede DWS US Equities Typ O DWS US Growth DWS Vermögesbildugsfods I DWS ZukuftsIvestitioe DWS Zukuftsressource DWS Zukuftsstrategie Aktie DWS Zürich Ivest Aktie Eurolad DWS Zürich Ivest Aktie Schweiz DWS-Merkur-Fods 1 E.ON Aktiefods DWS Gottlieb Daimler Aktiefods DWS LEA-Fods DWS Löwe-Aktiefods Rig-Aktiefods DWS Top 25 S Bod fuds Barmeia Reditefods DWS DWS Covered Bod Fud DWS Eurolad Strategie (Rete) DWS Europa Strategie (Rete) DWS Global-Gov Bods DWS Global Strategie (Rete) DWS High Icome Bod Fud DWS Iteratioale Rete Typ O DWS Iter-Reta DWS Vermögesbildugsfods R E.ON Retefods DWS Rig-Retefods DWS Moey market ad short-term bod fuds DWS Flexizis Plus DWS Iter-Vario-Ret Structured fuds DWS Bous Aktiv DWS Diskot Aktiv Mixed fuds Bethma Nachhaltigkeit Bethma Stiftugsfods Core Alpha DWS Bildugsfods DWS Covertibles DWS-Euro-Redite-Plus DWS Iter Geuß DWS PlusIvest (Balace) DWS PlusIvest (Eikomme) DWS PlusIvest (Wachstum) DWS Stiftugsfods DWS Timig Chace Vermögesmadat DWS Zürich Ivest Global Optimum Alpha Rig-Iteratioal DWS WvF Redite ud Nachhaltigkeit No-Directive-compliat ivestmet fuds Mixed fuds Argetos Saure Dyamik-Portfolio Argetos Saure Stabilitäts-Portfolio db Immoflex DWS ImmoFlex Vermögesmadat DWS Sachwerte Gothaer Comfort Balace Gothaer Comfort Dyamik Gothaer Comfort Ertrag WvF Strategie-Fods Nr. 1 Retiremet ivestmet fuds DWS Vorsorge AS (Dyamik) DWS Vorsorge AS (Flex) Other ivestmet fuds Capital Growth Fud PWM Commodity Optimum Fods (EUR) PWM Global Currecy Strategy Fud PWM US Dyamic Growth (USD) 17
20 Special sectio DWS Aktie Strategie Deutschlad Ivestmet fud, uit classes ad sub-fuds The ivestmet fud DWS Aktie Strategie Deutschlad was lauched o February 1, 1999, for a idetermiate period. The ivestors are joit owers or creditors of a fractio of the assets of the ivestmet fud i proportio to the umber of uits they hold. Share certificates are made out to the bearer ad embody the bearer s claims agaist the Compay. All uits issued have the same rights. No uit classes shall be formed. The ivestmet fud is ot a sub-fud of a umbrella structure either. Ivestmet objective The ivestmet fud s ivestmet objective is to achieve the highest possible appreciatio of capital. Icome is reivested. The HDAX serves as the bechmark. Ivestmet priciples The Compay may acquire the followig assets for the ivestmet fud: securities accordig to article 47 of the Germa Ivestmet Act (IvG); moey market istrumets accordig to article 48 IvG; bak balaces accordig to article 49 IvG; ivestmet fud uits accordig to article 50 IvG; derivatives accordig to article 51 IvG; other ivestmet istrumets accordig to article 52 IvG. Ivestmet policy The Compay acquires ad sells the assets permitted uder the Germa Ivestmet Act (IvG) ad the Terms of Cotract i accordace with its assessmet of ecoomic ad capital market coditios ad of future prospects o the exchages. At least 51% of the ivestmet fud s assets must be ivested i equities of Germa issuers. Ivestmets shall focus o traditioal stocks ad o equities of fast-growig small ad mediumsized eterprises. Up to 25% of the ivestmet fud s assets may be ivested i equities of foreig issuers. Up to 20% of the ivestmet fud s assets may be ivested i iterest-bearig securities. Covertible bods ad warrat-liked bods do ot costitute iterest-bearig securities i this respect. Up to 49% of the assets of the ivestmet fud may be ivested i moey market istrumets ad bak balaces. The Compay may ivest up to 10% of the ivestmet fud s assets i uits of other ivestmet fuds. The proportio of ivestmet fud uits i excess of 5% of the ivestmet fud s assets may cosist oly of moey market fud uits. Performace DWS AKTIEN STRATEGIE DEUTSCHLAND vs. bechmark Performace at a glace i % year years Specific risk warigs years DWS Aktie Strategie Deutschlad Bechmark HDAX Data o euro basis BVI method performace, i.e., excludig the iitial sales charge. Past performace is o guide to future results. As of: September 30, 2011 Due to its compositio ad the techiques applied by its fud maagemet, the ivestmet fud is subject to icreased volatility, which meas that the price per uit may be subject to cosiderable dowward or upward fluctuatio, eve withi short periods of time. The performace of the ivestmet fud is iflueced i particular by the followig factors, which give rise to both opportuities ad risks: developmets i the equity markets, compay-specific developmets, exchage rate movemets of o-euro currecies i relatio to the euro. I additio, the ivestmet fud may temporarily cocetrate more or less itesively o particular sectors, coutries or market segmets. This, too, may give rise to risks. Derivatives The relative value-at-risk (VaR) approach is used to limit market risk for the ivestmet fud. To this ed, the potetial market risk of the ivestmet fud is measured with the aid of a referece portfolio that does ot cotai derivatives ad whose compositio correspods to the ivestmet objectives ad ivestmet policy of the ivestmet fud. The referece portfolio for the ivestmet fud DWS Aktie Strategie Deutschlad which does ot cotai derivatives icludes a selectio of Germa compaies. If required, the exact compositio of the bechmark ca be requested from the Maagemet Compay. Profile of a typical ivestor The ivestmet fud is iteded for the growth-orieted ivestor seekig returs higher tha those from capital market iterest rates, with capital appreciatio geerated primarily through opportuities i the equity ad currecy markets. Security ad liquidity are subordiate to potetial high returs. This etails higher equity, iterest rate ad currecy risks, as well as default risks, all of which ca result i loss of capital. Uits The rights of the ivestors i the ivestmet fud are certificated exclusively i global certificates. These global certificates are kept at a cetral depository for securities. Ivestors are ot etitled to receive physical delivery of idividual share certificates. Uits may oly be purchased if they are to be kept i custody accouts. Uits are made out to bearer ad embody the bearer s claims agaist the Compay. Issue of uits Uits may be purchased from the Custodia, the Compay or through a itermediary. The order acceptace deadlie for the issue of uits is 1:30 PM CET at the offices of the Compay or the Custodia. Deutsche Bak AG ad Deutsche Bak Privat- ud Geschäftskude AG will additioally act as secodary payig agets i Germay; i this capacity, they too will accept buy orders up util the order acceptace deadlie. Redemptio of uits Uits are redeemed by the Custodia. The order acceptace deadlie for the redemptio of uits is 1:30 PM CET at the offices of the Compay or the Custodia. Deutsche Bak AG ad Deutsche Bak Privat- ud Geschäftskude AG will additioally act as secodary payig agets i Germay; i this capacity, they too will accept sell orders up util the order acceptace deadlie. Issue ad redemptio prices ad costs Iitial sales charge The iitial sales charge for the ivestmet fud is curretly 5%. Costs The Compay shall receive from the assets of the ivestmet fud a daily all-i fee of 1.45% p.a. of the ivestmet fud s assets, based o the et asset value calculated each exchage tradig day (see article 18 of the Geeral Terms of Cotract). The followig fees ad expeses are icluded i the all-i fee, ad will ot be charged separately to the ivestmet fud: fees for the maagemet of the ivestmet fud (fud maagemet, admiistrative fuctios, distributio costs); 18
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