SHB SICAV DECEMBER Société d'investissement à capital variable. Luxembourg PROSPECTUS. GEDI: v3

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1 VISA 2012/ PC L'apposition du visa ne peut en aucun cas servir d'argument de publicité Luxembourg, le Commission de Surveillance du Secteur Financier SHB SICAV Société d'investissement à capital variable Luxembourg PROSPECTUS DECEMBER 2011

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3 INTRODUCTORY INFORMATION SHB SICAV (the "Fund") is registered under Part I of the Luxembourg law of 17 December 2010 relating to undertakings for collective investment (the "2010 Law"). The Fund qualifies as an Undertaking for Collective Investment in Transferable Securities ("UCITS") under the Directive 2009/65/EC of the European Parliament and of the Council of 13 July The Fund is a self-managed investment company within the meaning of Article 27 of the 2010 Law. The Shares have not been registered under the United States Securities Act of 1933 and may not be offered directly or indirectly in the United States of America (including its territories and possessions) to nationals or residents thereof or to persons normally resident therein, or to any partnership or persons connected thereto unless pursuant to any applicable statute, rule or interpretation available under United States law. The distribution of this document in other jurisdictions may also be restricted; persons into whose possession this document comes are required to inform themselves about and to observe any such restrictions. This document does not constitute an offer by anyone in any jurisdiction in which such offer is not authorised or to any person to whom it is unlawful to make such offer. Any information or representation given or made by any person which is not contained herein or in any other document which may be available for inspection by the public should be regarded as unauthorised and should accordingly not be relied upon. Neither the delivery of this Prospectus nor the offer, issue or sale of Shares in the Fund shall under any circumstances constitute a representation that the information given in this Prospectus is correct as at any time subsequent to the date hereof. All references herein to times and hours are to Luxembourg local time. All references herein to: EUR are to Euros; GBP are to Great Britain Pounds; HKD are to Hong Kong Dollars; NOK are to Norske Kroner; SEK are to Svenska Kronor; and USD are to United States Dollars. Shareholders are informed that their personal data or information given in the subscription documents or otherwise in connection with an application to subscribe for Shares, as well as details of their shareholding, will be stored in digital form and processed in compliance with the provisions of the Luxembourg law of 2 August 2002 on data protection, as amended

4 The Fund draws the investors attention to the fact that any investor will only be able to fully exercise his investor rights directly against the Fund, notably the right to participate in general Shareholders meetings if the investor is registered himself and in his own name in the Shareholders register of the Fund. In cases where an investor invests in the Fund through an intermediary investing into the Fund in his own name but on behalf of the investor, it may not always be possible for the investor to exercise certain Shareholder rights directly against the Fund. Investors are advised to take advice on their rights

5 SHB SICAV Société d'investissement à capital variable Registered office: 15, rue Bender, L-1229 Luxembourg Grand-Duchy of Luxembourg R.C.S. Luxembourg B Board of Directors Chairman Magnus Fageräng, Senior Vice President, Svenska Handelsbanken AB (publ), Kungsträdgårdsgatan 2, SE Stockholm, Sweden Directors Jacques Elvinger, Maître en Droit and Partner, Elvinger, Hoss & Prussen, 2, Place Winston Churchill, L-2014 Luxembourg Julie Elizabeth Anne Krentz, Head of Investment Funds, Svenska Handelsbanken AB (publ), Luxembourg branch, 15, rue Bender, L-1229 Luxembourg Pär Nürnberg, Head of Business Development, Handelsbanken Funds, SE Stockholm, Sweden Conducting Officers (dirigeants) Julie Elizabeth Anne Krentz, Head of Investment Funds, Svenska Handelsbanken AB (publ), Luxembourg branch, 15, rue Bender, L-1229 Luxembourg Henrik Beck-Norén, Managing Director, Xact Fonder AB, Blasieholmstorg 12, SE Stockholm, Sweden Investment Manager Handelsbanken Fonder AB, Blasieholmstorg 12, SE Stockholm, Sweden Promoter Svenska Handelsbanken AB (publ), Kungsträdgårdsgatan 2, SE Stockholm, Sweden - 5 -

6 Custodian Brown Brothers Harriman (Luxembourg) S.C.A., 2-8, Avenue Charles de Gaulle, B.P. 403, L-1653 Luxembourg Corporate and Domiciliary Agent Svenska Handelsbanken AB (publ), Luxembourg branch, 15, rue Bender, L-1229 Luxembourg In this context, the SICAV is authorised to have its registered office at the address of 15, rue Bender, L-1229 Luxembourg. Administrative Agent, Paying Agent, Registrar and Transfer Agent Brown Brothers Harriman (Luxembourg) S.C.A., 2-8, Avenue Charles de Gaulle, B.P. 403, L-1653 Luxembourg Auditors KPMG Audit, 9, Allée Scheffer, L-2520 Luxembourg Legal advisors Elvinger, Hoss & Prussen, 2, Place Winston Churchill, L-2014 Luxembourg - 6 -

7 CONTENTS INTRODUCTORY INFORMATION 3 CONTENTS 7 DEFINITIONS 9 THE FUND 17 INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS Investment Objectives and Investment Policies Investment and borrowing restrictions Financial derivative instruments Use of techniques and instruments relating to transferable securities and money market instruments Mitigation of counterparty risk exposure RISK-MANAGEMENT PROCESS 31 RISK WARNINGS Introduction General risks Underlying Asset risks Other risks LATE TRADING AND MARKET TIMING 39 ISSUE, SUBSCRIPTION, REDEMPTION AND CONVERSION OF SHARES Issue of Shares Subscription of Shares Dealing in Class ETF Shares Dealing in Class B Shares Dealing in Class C Shares Common provisions to Class ETF Shares, Class B Shares and Class C Shares DISTRIBUTION POLICY General distribution policy Specific distribution policy MANAGEMENT AND ADMINISTRATION Conducting Officers Investment Manager Custodian and Administrative Agent etc Corporate and Domiciliary Agent

8 FEES AND EXPENSES Dealing fees Management and Service Fee Extraordinary expenses TAXATION The Fund Shareholders GENERAL INFORMATION Organisation The Shares Meetings Reports and accounts Allocation of assets and liabilities among the Sub-Funds Determination of the Net Asset Value of Shares Temporary suspension of issues, subscriptions, redemptions and conversions Merger or liquidation of Sub-Funds Liquidation of the Fund Material contracts Documents Interpretation PRODUCT ANNEX 1: SHB SICAV SUB-FUND ONE 71 PRODUCT ANNEX 2: SHB SICAV XACT NORDIC PRODUCT ANNEX 3: SHB SICAV XACT NORDIC BANK & INSURANCE 79 PRODUCT ANNEX 4: SHB SICAV XACT NORDIC CONSTRUCTION & REAL ESTATE 83 PRODUCT ANNEX 5: SHB SICAV XACT NORDIC CONSUMER 87 PRODUCT ANNEX 6: SHB SICAV XACT NORDIC ENERGY 91 PRODUCT ANNEX 7: SHB SICAV XACT NORDIC HEALTH CARE 95 PRODUCT ANNEX 8: SHB SICAV XACT NORDIC INDUSTRIALS 99 PRODUCT ANNEX 9: SHB SICAV XACT NORDIC MATERIALS 103 PRODUCT ANNEX 10: SHB SICAV XACT COMMODITY 107 PRODUCT ANNEX 11: SHB SICAV XACT OIL SERVICE 111 PRODUCT ANNEX 12: SHB SICAV XACT SWEDEN ALL BOND 115 PRODUCT ANNEX 13: SHB SICAV XACT SWEDEN REPO 119 PRODUCT ANNEX 14: SHB SICAV XACT HANG SENG CHINA 123 PRODUCT ANNEX 15: SHB SICAV XACT RUSSIA

9 DEFINITIONS 2010 Law Means the Luxembourg law of 17 December 2010 relating to undertakings for collective investment, as may be amended from time to time. Administrative Agent and Paying Agent Articles of Incorporation Authorised Participant Board of Directors Capitalisation Shares Class or Classes Clearing Agent Conducting Officers Confirmation Note Means Brown Brothers Harriman (Luxembourg) S.C.A. Means the articles of incorporation of the Fund. Means the financial institution(s) that have signed a Participation Agreement with the Fund. Means the board of directors of the Fund. Means Shares not distributing dividends. Means, in respect of each Sub-Fund, a separate class or separate classes of Shares that the Board of Directors may decide to issue, pursuant to the Articles of Incorporation, whose assets will be commonly invested but where a specific sales or redemption charge structure, fee structure, minimum investment amount, currency, taxation, distribution policy or other feature (including for the purpose of this listing) may be applied. Means any entity affiliated with one or more Relevant Stock Exchanges and which facilitates the validation, delivery and settlement of transactions in the Fund's Shares. Means the persons appointed by the Board of Directors of the Fund in order to conduct the business of the Fund in compliance with the Investment Restrictions and the 2010 Law. Means the note to be sent by the Administrative Agent to a Shareholder confirming the orders placed

10 Corporate and Domiciliary Agent Custodian Cut-Off Deadline Creation/Redemption Unit CSSF Directive Distributor Distribution Shares Eligible Market Eligible State ETF EU EU Member State Means Svenska Handelsbanken AB (publ), Luxembourg branch. Means Brown Brothers Harriman (Luxembourg) S.C.A., holding the assets of the Fund under custody or control. Means the standard time on each day specified for each Sub- Fund or Class in the relevant Product Annex or the Participation Agreement, by which applications for subscription, redemption or conversion of/for Shares must be received by the Administrative Agent to be processed on that day, as further set out in the Product Annex. Means the smallest number of Class ETF Shares that can be created/redeemed by an Authorised Participant through delivering/receiving securities and/or cash. Means the Luxembourg Commission de Surveillance du Secteur Financier. Means the Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities. Means any distributor appointed from time to time by the Fund for the purpose of distributing its Shares, and disclosed in the relevant Product Annex. Means Shares distributing dividends. Means a Regulated Market in an Eligible State. Means any EU Member State or any other state in Eastern and Western Europe, Asia, Africa, Australia, North and South America and Oceania. Means exchange traded fund(s). Means the European Union. Means a member state of the EU

11 FATF Fund Handelsbanken Group Index Index Provider Initial Offering Period Institutional Investors Investment Manager Investment Objective Investment Policy Investment Restrictions Late Trading Launch Date Means the Financial Action Task Force (also referred to as Groupe d'action Financière). Means SHB SICAV, an investment company organised under Luxembourg law as a société anonyme qualifying as a société d'investissement à capital variable ("SICAV"). It may comprise several Sub-Funds. Means Svenka Handelsbanken AB (publ) and any group of companies for the purpose of the Swedish Companies Act. Has the meaning given to this term in the relevant Product Annex. Means the entity described in the relevant Product Annex, acting as sponsor of the Index. Has the meaning given to this term in the relevant Product Annex, any simplified prospectus or the subscription form, as the case may be. Means an investor meeting the requirements to qualify as an institutional investor for the purposes of Article 174 of the law of 17 December 2010 relating to undertakings for collective investment. Means Handelsbanken Fonder AB. Means the predefined investment objective of the Sub-Funds as specified below and in the relevant Product Annex. Means the predefined investment policy of the Sub-Funds as specified in the relevant Product Annex. Means the investment and borrowing restrictions set out in section 2. of the chapter 'Investment Objectives, Policies and Restrictions'. Has the meaning given to this term in the chapter 'Late Trading and Market Timing'. Means the first date on which the Fund issues Shares relating to a Sub-Fund in exchange for the subscription proceeds

12 Luxembourg Banking Day Market Makers Market Timing Maturity Date Net Asset Value NAV per Share OECD Participation Agreement Product Annex Prohibited Persons Means a day (other than a Saturday or a Sunday) on which commercial banks are open and settle payments in Luxembourg. Means the financial institutions that are members of the Relevant Stock Exchanges and have signed a Participation Agreement with the Fund or that are registered as Market Makers with the Relevant Stock Exchanges. Has the meaning given to this term in the chapter 'Late Trading and Market Timing'. Means the date (if any) designated in the relevant Product Annex as at which a Sub-Fund or the Shares of such Sub- Fund (as applicable) will mature and (if applicable) be automatically redeemed. Has the meaning given to this term in section 6. of the chapter 'General information'. Means the official Net Asset Value per Share for each Share of the relevant Class in a Sub-Fund determined by the Administrative Agent as of the relevant Valuation Day as detailed in section 6. of the chapter 'General information'. Means the Organisation for Economic Co-Operation and Development. Means each agreement entered into by the Fund and certain financial institutions, the Authorised Participants, determining the terms and conditions under which the Authorised Participants may subscribe for and request redemption of Shares in the Fund. Means an annex to this Prospectus describing the specific features of a Sub-Fund. The Product Annex is to be regarded as an integral part of the Prospectus. Means any person, firm or corporate entity, determined in the sole discretion of the Board of Directors as being not entitled to subscribe for or hold Shares in the Fund or, as the case may be, in a specific Sub-Fund or Class, (i) if in the opinion of the Board of Directors such holding may be

13 detrimental to the Fund, (ii) if it may result in a breach of any law or regulation, whether Luxembourg or foreign, (iii) if as a result thereof the Fund may become exposed to disadvantages of a tax, legal or financial nature that it would not have otherwise incurred, (iv) if such person would not comply with the eligibility criteria of a given Class or (v) such person does not qualify as a Qualified Holder. Prospectus Qualified Holder Redemption Fee Redemption Price Means this prospectus including any annual report, semiannual report and quarterly report (as the case may be) of the Fund, and Product Annexes, as amended, supplemented, restated or otherwise modified from time to time. Means any person, corporation or entity other than (i) a US Person (including those deemed to be US Persons under the 1940 Act and US Commodity Exchange Act, as amended (the "CEA")); (ii) any retirement plan subject to Title I of the US Employee Retirement Income Security Act of 1974, as amended or any individual retirement account or plan subject to Section 4975 of the United States Internal Revenue code of 1986, as amended; (iii) any other person, corporation or entity which cannot acquire or hold Shares without violating laws or regulations whether applicable to it or the Fund or otherwise or whose holding might result (either individually or in conjunction with other investors in Shares in the same circumstances) in the Fund incurring any liability to taxation or suffering pecuniary disadvantages which the Fund might not otherwise incur or suffer or the Fund being required to register or register any class of its securities under the laws of any jurisdiction (including, without limitation, the Securities Act, the 1940 Act or the CEA); or (iv) a custodian, nominee or trustee for any person, corporation or entity described in (i) to (iii) above. Means the charge not exceeding the percentage of the Redemption Price that may be applied to redemptions of Shares. Means the amount equal to the NAV per Share, as calculated as of the relevant Valuation Day, subject to any Redemption Fee

14 Reference Currency Registrar and Transfer Agent Regulated Market Regulations Relevant Stock Exchanges Retail Investor Shareholder(s) Shares Sub-Funds Sub-Fund Business Day Means the currency specified as such in the relevant Product Annex. Means Brown Brothers Harriman (Luxembourg) S.C.A. Means any market within the meaning of Article 4(1)14 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments and any other market which is regulated, operates regularly and is recognised and open to the public. Means (i) Part I of the 2010 Law, (ii) the Directive, (iii) any amendment or replacement legislation thereto for the time being in force and (iv) any circulars, rules, guidelines and positions from time to time adopted by the CSSF pursuant thereto. Means markets or stock exchanges on which Shares of any Sub-Fund are or will be listed. Means an investor not qualifying as an Institutional Investor. Means the shareholder(s) duly registered in the Fund's register of shareholders. Has the meaning given to this term in section 1. of the chapter 'Issue, subscription, redemption and conversion of Shares'. Means the sub-funds that the Fund offers investors, within the same investment vehicle, each Sub-Fund being distinguished mainly but not exhaustively by their specific Investment Policy. The specifications of each Sub-Fund are described in the Product Annex to this Prospectus. The Board of Directors may, at any time, decide the creation of further Sub-Funds and in such case, a Product Annex to this Prospectus will be added. Each Sub-Fund may have one or more Classes. Means any day banks are open for business in both Luxembourg and Sweden, unless otherwise indicated in the description of the relevant Sub-Fund in the Product Annex

15 Subscription Fee Subscription Price Swap Calculation Agent Swap Counterparty Transaction Day UCI UCITS Underlying Asset Underlying Securities Means the fee levied upon the issue of Shares to investors which, until otherwise notified, will not exceed a percentage of the Subscription Price (as disclosed in the Product Annex or Participation Agreement) out of which the Fund may pay the fees of distributors, financial intermediaries or such other persons as the Fund may determine, in its absolute discretion. The Subscription Fee is to be considered as a maximum rate and the Fund may decide at its discretion to waive this charge in whole or in part with due regard to the equal treatment of shareholders. Means the NAV per Share of each Class, as calculated as of the relevant Valuation Day. Means Svenska Handelsbanken AB (publ), unless otherwise specified in the Product Annex. Means Svenska Handelsbanken AB (publ), unless otherwise specified in the Product Annex. Means a Sub-Fund Business Day on which subscriptions for, conversions from and redemptions of Shares can be accepted and approved and dealt with by the Administrative Agent as described in the chapter 'Issue, subscription, redemption and conversion of Shares'. Means an Undertaking for Collective Investment. Means an Undertaking for Collective Investment in Transferable Securities established pursuant to the Regulations. Means the underlying asset(s) to which the Investment Policy of a Sub-Fund may be linked insofar as described in the relevant Product Annex. Means, in respect of a relevant Underlying Asset, those transferable securities selected by the Index Provider as constituting such Underlying Asset. Where available and published, details of those Underlying Securities for an Index may be found in the relevant Product Annex

16 Valuation Day Means a day defined in the relevant Product Annex

17 THE FUND The Fund is an open-ended collective investment company (société d'investissement à capital variable) established under the laws of Luxembourg, with a so-called umbrella structure comprising different Sub-Funds and Classes. In accordance with the 2010 Law, a subscription of Shares constitutes acceptance of all terms and provisions of this Prospectus and the Articles of Incorporation. The Shares of each Sub-Fund are fully transferable to investors and, unless indicated to the contrary in the relevant Product Annex, are listed for trading on one or more stock exchanges. Shares of all Sub-Funds may be listed on any stock exchange at the discretion of the Board of Directors of the Fund and can be cleared through Clearstream, Euroclear or other central depositories. It is envisaged that Shares of Sub-Funds which, according to the relevant Product Annexes, are ETFs will be bought and sold in the secondary market in the same way as a company whose ordinary shares are admitted to trading on an exchange. There may be created within each Sub-Fund different Classes of Shares as described in the chapter 'Issue, subscription, redemption and conversion of Shares'

18 INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS 1. Investment Objectives and Investment Policies The provisions of this section apply only insofar as they are compatible with the specific Investment Policy disclosed in the Product Annexes to this Prospectus. The Board of Directors determines the specific Investment Policy and Investment Objective of each Sub-Fund, which are described in more detail in the respective Product Annexes to this Prospectus. The Investment Objectives of the Sub-Funds will be carried out in compliance with the Investment Restrictions set forth in section 2. Each Sub-Fund will adhere to the general Investment Objective as described hereunder, which in the absence of any unforeseen circumstances or other events may not change. (A) Sub-Funds giving exposure to an Underlying Asset The Investment Objective of the Sub-Funds is to provide the investors with a return on such payout date(s) as determined in the relevant Product Annex and linked to an Underlying Asset. In order for the Investment Objective to be achieved, the Shareholder of a Sub-Fund will be exposed to the performance of an Underlying Asset. Unless provided to the contrary in the relevant Product Annex, each Sub-Fund may hold ancillary liquid assets. The characteristics of such Underlying Asset will be described in the relevant Product Annex. The Sub-Funds may use various investment techniques to achieve this exposure to the Underlying Asset. Investment in financial derivative instruments For instance, the exposure may be achieved by way of financial derivative instruments such as OTC swap transactions negotiated at arm's length with the Swap Counterparty. Accordingly, the Sub-Fund may be at any time fully or partially exposed to an Underlying Asset through one or more OTC swap transaction(s). The return that the investor will receive will be dependent on the performance of the Underlying Asset and the performance of the derivative instrument(s) used to link the net proceeds from the issue of Shares to the Underlying Asset. Investment in Underlying Securities Insofar as provided for in the relevant Product Annex, the Sub-Funds may also invest in the Underlying Securities in proportion to their weighting in the Underlying Asset and will, subject to the concentration limits set out in section 2., normally aim to invest a substantial

19 part of its total assets in the Underlying Securities. Each Sub-Fund of this category may hold transferable securities tracking the Underlying Asset in accordance with the Investment Restrictions. Such transferable securities will allow a more practicable management of the Sub-Fund. Due to various factors, including the Sub-Funds' relevant fees and expenses, the concentration limits described in section 2., other legal or regulatory restrictions, and, in certain instances, certain securities being illiquid, it may not be possible or practicable or tax efficient to purchase all of the Underlying Securities in their weightings or purchase certain of them at all. There is no assurance that the Investment Objective of any Sub-Fund will actually be achieved. The Underlying Asset may have an Index Provider or other agents. The existence of such Index Provider and/or agents will be specified in the relevant Product Annex. Broker arrangements with Svenska Handelsbanken AB (publ) The Fund may enter into arm's length securities broker transactions with Svenska Handelsbanken AB (publ) or other broker institutions. Changes to Underlying Securities in which the Sub-Fund is invested Any changes to an Underlying Asset, such as the composition and/or weighting of its Underlying Securities, may require the Sub-Fund to make corresponding adjustments or rebalancings to its investment portfolio to conform to the relevant Underlying Asset. The Investment Manager will monitor such changes and make adjustments to the portfolio as necessary over several days, if necessary. Reliance on Index Providers In case the Underlying Asset is an Index, the Fund and/or the Investment Manager will rely solely on the Index Provider for information as to the composition and/or weighting of the Underlying Securities within the Index. If the Fund and/or the Investment Manager is unable to obtain or process such information then the composition and/or weighting of the Index most recently published may, subject to the Fund's and/or the Investment Manager's overall discretion, be used by the Sub-Fund for the purpose of all adjustments. Change of Underlying Asset The Board of Directors may decide if it considers it to be in accordance with the Regulations and in the interest of the Fund or any relevant Sub-Fund to do so, to substitute the existing Underlying Asset of a Sub-Fund for another Underlying Asset. The Board of Directors may, for instance, decide to substitute such an Underlying Asset in the following circumstances:

20 the swaps and other techniques or instruments described in section 2. which are necessary for the implementation of the relevant Sub-Fund's Investment Objective cease to be available in a manner which is regarded as acceptable by the Board of Directors; the accuracy and availability of data of a particular Underlying Asset has deteriorated; the components of a particular Underlying Asset would cause the Sub-Fund (if it were to follow the Underlying Asset closely) to be in breach of the Investment Restrictions and/or materially affect the taxation or fiscal treatment of the Fund or any of its Shareholders; a particular Underlying Asset ceases to exist or, in the determination of the Board of Directors, there is a material change in the formula for or the method of calculating a component of such Underlying Asset or there is a material modification of the component of such Underlying Asset; the counterparty of swap agreements or options or other derivative instruments notifies the Fund that there is limited liquidity in a portion of the component securities of the Underlying Asset or it becomes impractical to invest in the components of the Underlying Asset; the Index Provider increases its licence fees to a level which the Board of Directors considers excessive; or any successor Index Provider is not considered acceptable by the Board of Directors. The above list is indicative only and cannot be understood as being exhaustive or limiting the ability of the Board of Directors to change the Underlying Asset in any other circumstances as the Board of Directors considers appropriate. The Shareholders of the relevant Sub-Fund will be notified of the decision of the Board of Directors to proceed to change the Underlying Asset by the publication of a notice in a Luxembourg daily newspaper as well as, if necessary, in the official publications specified in the respective jurisdictions in which the Shares are made available for public distribution. The Prospectus will be updated in case of substitution of the existing Underlying Asset of a Sub-Fund for another Underlying Asset. Please refer to the description of the Investment Policy of such Sub-Fund in the relevant Product Annex to this Prospectus for further details. The historical performance of the Sub-Funds will be published in the simplified prospectus for each Sub-Fund one year after the Launch Date of such Sub-Fund. Past performance is not necessarily indicative of future results. (B) Sub-Funds not giving exposure to an Underlying Asset The Investment Objective of the Sub-Funds will be to provide a return by investing directly into permitted investments referred to in section

21 In the general pursuit of obtaining an above-average total investment return as may be consistent with the preservation of capital, efficient portfolio management techniques may be employed to the extent permitted by the Investment Restrictions stipulated by the Board of Directors. The Sub-Funds may from time to time also hold, on an ancillary basis, cash reserves or include other permitted assets with a short remaining maturity, especially in times when rising interest rates are expected. Investors are invited to refer to the description of the Investment Policy of each Sub-Fund in the relevant Product Annex to this Prospectus for details. 2. Investment and borrowing restrictions The Articles of Incorporation provide that the Board of Directors shall, based upon the principle of spreading of risks, determine the corporate and investment policy of the Fund and the investment and borrowing restrictions applicable, from time to time, to the investments of the Fund. In order for the Fund to qualify as a UCITS under the 2010 Law and the Directive, the Board of Directors has decided that the following restrictions shall apply to the investments of the Fund and, as the case may be and unless otherwise specified for a Sub-Fund in the relevant Product Annex to this Prospectus, to the investments of each of the Sub-Funds: I. (1) The Fund, for each Sub-Fund, may invest in: a) transferable securities and money market instruments (that is, instruments normally dealt in on a money market which are liquid and have a value which can be accurately determined at any time) admitted to or dealt in on an Eligible Market; b) recently issued transferable securities and money market instruments, provided that the terms of issue include an undertaking that application will be made for admission to official listing on an Eligible Market and such admission is secured within one year of the issue; c) units of UCITS and/or other UCIs, whether situated in an EU Member State or not, provided that: such other UCIs have been authorised under laws which provide that they are subject to supervision considered by the CSSF to be equivalent to that laid down in European Community law, and that cooperation between authorities is sufficiently ensured;

22 the level of protection for unitholders in such other UCIs is equivalent to that provided for unitholders in a UCITS, and in particular that the rules on assets segregation, borrowing, lending, and uncovered sales of transferable securities and money market instruments are equivalent to the requirements of the Directive; the business of such other UCIs is reported in half-yearly and annual reports to enable an assessment of the assets and liabilities, income and operations over the reporting period; no more than 10% of the assets of the UCITS or of the other UCIs, whose acquisition is contemplated, can, according to their constitutional documents, in aggregate be invested in units of other UCITS or other UCIs; d) deposits with credit institutions which are repayable on demand or have the right to be withdrawn, and maturing in no more that 12 months, provided that the credit institution has its registered office in an EU Member State or, if the registered office of the credit institution is situated in a non-eu Member State, provided that it is subject to prudential rules considered by the CSSF as equivalent to those laid down in European Community law; e) financial derivative instruments, including equivalent cash-settled instruments, dealt in on an Eligible Market and/or financial derivative instruments dealt in over-the-counter ("OTC derivatives"), provided that: the underlying consists of instruments covered by this sub-section 2. I. (1), financial indices, interest rates, foreign exchange rates or currencies, in which the Sub-Funds may invest according to their Investment Objective; the counterparties to OTC derivative transactions are institutions subject to prudential supervision, and belonging to the categories approved by the CSSF; the OTC derivatives are subject to reliable and verifiable valuation on a daily basis and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the Fund's initiative; and/or

23 II. f) money market instruments other than those dealt in on an Eligible Market, if the issue or the issuer of such instruments are themselves regulated for the purpose of protecting investors and savings, and provided that such instruments are: issued or guaranteed by a central, regional or local authority or by a central bank of an EU Member State, the European Central Bank, the EU or the European Investment Bank, a non-eu Member State or, in case of a federal state, by one of the members making up the federation, or by a public international body to which one or more EU Member States belong; issued by an undertaking any securities of which are dealt in on Eligible Markets; issued or guaranteed by an establishment subject to prudential supervision, in accordance with criteria defined by European Community law, or by an establishment which is subject to and complies with prudential rules considered by the CSSF to be at least as stringent as those laid down by European Community law, such as, but not limited to, a credit institution which has its registered office in a country which is an OECD member country and a FATF country; or issued by other bodies belonging to the categories approved by the CSSF provided that investments in such instruments are subject to investor protection equivalent to that laid down in the first, the second or the third indent and provided that the issuer is a company whose capital and reserves amount to at least EUR 10 million and which presents and publishes its annual accounts in accordance with the Fourth Council Directive 78/660/EEC of 25 July 1978, is an entity which, within a group of companies which includes one or several listed companies, is dedicated to the financing of the group or is an entity which is dedicated to the financing of securitisation vehicles which benefit from a banking liquidity line. (2) In addition, the Fund may invest a maximum of 10% of the net assets of any Sub-Fund in transferable securities and money market instruments other than those referred to in sub-section 2. I. (1). The Fund may hold ancillary liquid assets. III. a) (i) The Fund will invest no more than 10% of the net assets of any Sub- Fund in transferable securities and money market instruments issued by the same issuing body

24 (ii) The Fund may not invest more than 20% of the net assets of any Sub- Fund in deposits made with the same body. (iii) The risk exposure of a Sub-Fund to a counterparty in an OTC derivative transaction may not exceed 10% of its net assets when the counterparty is a credit institution referred to in sub-section 2. I. (1) d) or 5% of its net assets in other cases. b) Moreover, where the Fund holds on behalf of a Sub-Fund investments in transferable securities and money market instruments of issuing bodies which individually exceed 5% of the net assets of such Sub-Fund, the total of all such investments must not account for more than 40% of the total net assets of such Sub-Fund. This limitation does not apply to deposits and OTC derivative transactions made with financial institutions subject to prudential supervision. Notwithstanding the individual limits laid down in sub-section 2. III. a), the Fund may not combine for each Sub-Fund: investments in transferable securities or money market instruments issued by a single body; deposits made with a single body; and/or exposures arising from OTC derivative transactions undertaken with a single body; in excess of 20% of its net assets. c) The limit of 10% laid down in sub-section 2. III. a) (i) is increased to a maximum of 35% in respect of transferable securities or money market instruments which are issued or guaranteed by an EU Member State, its local authorities, or by another Eligible State, including the federal agencies of the United States of America, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or by public international bodies of which one or more EU Member States are members. d) The limit of 10% laid down in sub-section 2. III. a) (i) is increased to 25% for certain bonds when they are issued by a credit institution which has its registered office in an EU Member State and is subject by law, to special public supervision designed to protect bondholders. In particular, sums deriving from the issue of these bonds must be invested in conformity with the law in assets which, during the whole period of validity of the bonds, are capable of covering claims attaching to the bonds and which, in case of bankruptcy of the issuer, would be used on a priority basis for the repayment of principal and payment of the accrued interest. If a Sub-Fund invests more than 5% of its net assets in the bonds referred to in this paragraph and issued

25 by one issuer, the total value of such investments may not exceed 80% of the net assets of the Sub-Fund. e) The transferable securities and money market instruments referred to in subsections 2. III. c) and d) shall not be included in the calculation of the limit of 40% in sub-section 2. III. b). The limits set out in sub-sections 2. III. a), b), c) and d) may not be aggregated and, accordingly, investments in transferable securities or money market instruments issued by the same issuing body, in deposits or in derivative instruments effected with the same issuing body may not, in any event, exceed a total of 35% of any Sub-Fund's net assets. Companies which are part of the same group for the purposes of the establishment of consolidated accounts, as defined in accordance with Council Directive 83/349/EEC of 13 June 1983 or in accordance with recognised international accounting rules, are regarded as a single body for the purpose of calculating the limits contained in sub-sections 2. III. a) to e). The Fund may cumulatively invest up to 20% of the net assets of a Sub-Fund in transferable securities and money market instruments within the same group. f) Notwithstanding the above provisions, the Fund is authorised to invest up to 100% of the net assets of any Sub-Fund, in accordance with the principle of risk spreading, in transferable securities and money market instruments issued or guaranteed by an EU Member State, by its local authorities or agencies, or by another OECD member country, or by public international bodies of which one or more EU Member States are members, provided that such Sub-Fund must hold securities from at least six different issues and securities from one issue do not account for more than 30% of the net assets of such Sub-Fund. IV. a) Without prejudice to the limits laid down in sub-section 2. V., the limits provided in sub-sections 2. III. a) to e) are raised to a maximum of 20% for investments in shares and/or bonds issued by the same issuing body if the aim of the Investment Policy of a Sub-Fund is to replicate the composition of a certain stock or bond index which is sufficiently diversified, represents an adequate benchmark for the market to which it refers, is published in an appropriate manner and disclosed in the relevant Sub-Fund's Investment Policy

26 b) The limit laid down in sub-section IV. a) is raised to 35% where this proves to be justified by exceptional market conditions, in particular on Regulated Markets where certain transferable securities or money market instruments are highly dominant. The investment up to this limit is only permitted for a single issuer. V. a) The Fund may not acquire shares carrying voting rights which should enable it to exercise significant influence over the management of an issuing body. b) The Fund may acquire no more than: 10% of the non-voting shares of the same issuer; 10% of the debt securities of the same issuer; 25% of the shares or units of one and the same UCI; 10% of the money market instruments of the same issuer. c) The limits under the second, third and fourth indents of sub-section 2. V. b) may be disregarded at the time of acquisition, if at that time the gross amount of debt securities or of the money market instruments cannot be calculated. The provisions of sub-section 2. V. shall not be applicable to transferable securities and money market instruments issued or guaranteed by an EU Member State or its local authorities or by any other Eligible State, or issued by public international bodies of which one or more EU Member States are members. These provisions are also waived as regards shares held by the Fund in the capital of a company incorporated in a non-eu Member State which invests its assets mainly in the securities of issuing bodies having their registered office in that state, where under the legislation of that state, such a holding represents the only way in which the Fund can invest in the securities of issuing bodies of that state provided that the investment policy of the company from the non-eu Member State complies with the limits laid down in sub-sections 2. III. a) to e), 2. V. a) and b), and 2. VI. VI. a) The Fund may acquire units of the UCITS and/or other UCIs referred to in sub-section 2. I. (1) c), provided that no more than 10% of a Sub-Fund's net assets be invested in aggregate in the units of such UCITS or other UCIs, unless otherwise provided for in the relevant Product Annex. For the purpose of the application of this investment limit, each compartment of a UCI with multiple compartments is to be considered as a separate issuer provided that the principle of segregation of the obligations of the various compartments vis-à-vis third parties is ensured

27 b) The underlying investments held by the UCITS or other UCIs in which the Fund invests do not have to be considered for the purpose of the investment and borrowing restrictions set forth in sub-sections 2. III. a) to e). c) When a Sub-Fund invests in the units of other UCITS and/or other UCIs that are managed, directly or by delegation, by the same management company (the "Management Company") or by any other company with which the Management Company is linked by common management or control, or by a substantial direct or indirect holding, that Management Company or other company may not charge a subscription fee or a redemption fee on account of the Sub-Fund's investment in the units of such other UCITS and/or UCIs. A Sub-Fund that invests a substantial proportion of its assets in other UCITS and/or UCIs shall disclose in the relevant Product Annex the maximum level of the management fees that may be charged both to the Sub-Fund itself and to the other UCITS and/or UCIs in which it intends to invest. In the annual report of the Fund it shall be indicated for each Sub- Fund the maximum proportion of management fees charged both to the Sub-Fund and to the UCITS and/or UCIs in which the Sub-Fund invests. In case of a UCITS or other UCI with multiple compartments, this restriction is applicable by reference to all units issued by the UCITS or other UCI concerned, all compartments combined. If a Sub-Fund invests in units of a UCITS or other UCI pursuant to the above paragraph which has a lower actual (all-in) investment management fee than the management fee of such Sub-Fund, the Sub-Fund may charge the difference between the actual management fee of the Sub-Fund and the actual (all-in) investment management fee of the other UCITS or UCI. d) The Fund may acquire no more than 25% of the units of the same UCITS or other UCI. This limit may be disregarded at the time of acquisition if at that time the net amount of the units in issue cannot be calculated. In case of a UCITS or other UCI with multiple compartments, this restriction is applicable by reference to all units issued by the UCITS or other UCI concerned, all compartments combined. VII. a) The Fund shall ensure for each Sub-Fund that the global exposure relating to derivative instruments does not exceed the net assets of the portfolio of the relevant Sub-Fund. b) The global exposure relating to derivative instruments held in each Sub- Fund will be calculated using the commitment approach methodology. Investors may obtain any further information on the global exposure calculation methodology upon request

28 c) If the Fund invests in financial derivative instruments, the exposure to the underlying assets may not exceed in aggregate the investment limits laid down in sub-sections 2. III. a) to e). When the Fund invests in index-based financial derivative instruments, these investments do not have to be combined to the limits laid down in sub-sections 2. III. a) to e). d) When a transferable security or money market instrument embeds a derivative, the latter must be taken into account when complying with the requirements of this sub-section 2. VII. VIII. a) The Fund may not borrow for the account of any Sub-Fund amounts in excess of 10% of the net assets of that Sub-Fund, any such borrowings to be from banks and to be effected only on a temporary basis, provided that the Fund may acquire foreign currencies by means of back to back loans. b) The Fund may not grant loans to or act as guarantor on behalf of third parties. This restriction shall not prevent the Fund from acquiring transferable securities, money market instruments or other financial instruments referred to in sub-sections 2. I. (1) c), e) and f) which are not fully paid. c) The Fund may not carry out uncovered sales of transferable securities, money market instruments or other financial instruments. d) The Fund may not acquire movable or immovable property. e) The Fund may not acquire either precious metals or certificates representing them. IX. a) The Fund needs not comply with the limits laid down in this chapter when exercising subscription rights attaching to transferable securities or money market instruments which form part of its assets. While ensuring observance of the principle of risk spreading, recently created Sub-Funds may derogate from sub-sections 2. III. a) to e), 2. IV., and 2. VI. a) and b) for a period of six months following the date of their creation. b) If the limits referred to in sub-section 2. IX. a) are exceeded for reasons beyond the control of the Fund or as a result of the exercise of subscription rights, it must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interest of its Shareholders. c) To the extent that an issuer is a legal entity with multiple compartments where the assets of the compartment are exclusively reserved to the investors in such compartment and to those creditors whose claim has arisen in connection with the creation, operation or liquidation of that compartment, each compartment is to be considered as a separate issuer for the purpose of the

29 application of the risk spreading rules set out in sub-sections 2. III. a) to e), 2. IV., and 2. VI. 3. Financial derivative instruments As specified in section 1 and sub-section 2. I. (1) e), the Fund may in respect of each Sub-Fund invest in financial derivative instruments. As further indicated in sub-section 2. VII a), the Fund shall ensure that the global exposure of each Sub-Fund relating to financial derivative instruments does not exceed the total net assets of the portfolio of that Sub-Fund. Each Sub-Fund's overall risk exposure shall consequently not exceed 200% of the total net assets of its portfolio. In addition, this overall risk exposure may not be increased by more than 10% by means of temporary borrowings (as referred to in subsection 2. VIII. a) so that it may not exceed 210% of the total net assets of any Sub-Fund's portfolio under any circumstances. The global exposure relating to financial derivative instruments is calculated taking into account the current value of the underlying assets, the counterparty risk, foreseeable market movements and the time available to liquidate the positions. Each Sub-Fund may invest in financial derivative instruments within the limits laid down in sub-section 2. III. e), provided that the exposure to the underlying assets does not exceed in aggregate the investment limits laid down in sub-section 2. III. When a Sub-Fund invests in index-based financial derivative instruments, these investments do not have to be combined to the limits laid down in sub-section 2. III. When a transferable security or money market instrument embeds a derivative, the latter must be taken into account when complying with the requirements of this restriction. The Sub-Funds may use financial derivative instruments for investment purposes and for hedging purposes, within the limits of the 2010 Law. Under no circumstances shall the use of these instruments and techniques cause a Sub-Fund to diverge from its Investment Policy. 4. Use of techniques and instruments relating to transferable securities and money market instruments The Fund, in order to generate additional revenue for Shareholders, may engage in securities lending transactions subject to complying with the provisions set forth in CSSF Circular 08/356. Cash collateral received by the Fund in relation to these transactions may be reinvested in a manner consistent with the Investment Objectives of the relevant Sub-Fund as set out in the relevant Product Annex. The Fund may enter, either as purchaser or seller, into repurchase agreements with highly rated financial institutions specialised in this type of transaction, subject to complying with the provisions set forth in CSSF Circular 08/356. During the lifetime of the repurchase agreements, the Fund may not sell the securities which are the object of the agreement either (i) before the repurchase of the securities by the counterparty has been carried out or (ii) before the repurchase period has expired. The Fund must ensure it restricts the value of