SALES PROSPECTUS Veri ETF-Allocation Dynamic (previous fund name: A2A OFFENSIV)

Transcription

1 WERTE SCHAFFEN MIT SYSTEM SALES PROSPECTUS Veri ETF-Allocation Dynamic (previous fund name: A2A OFFENSIV) including Fund Rules OKTOBER 2013 Veritas Investment GmbH mainbuilding Taunusanlage Frankfurt am Main Commercial Register: Frankfurt HRB Managing Directors: Kerstin Behnke, Dr. Dirk Söhnholz

2 The purchase and sale of investment units shall be made on the basis of the currently applicable sales prospectus and the General Fund Rules in connection with the Special Fund Rules. It is not permitted to give any information or statements deviating from this detailed sales prospectus. Every purchase and sale of units on the basis of information or statements which are not included in this sales prospectus shall be exclusively at the buyer's risk. This sales prospectus is supplemented by the latest annual report. If the effective date of the latest annual report dates back more than eight months, the semiannual report also has to be offered to the purchaser prior to the conclusion of the transaction. The contractual relation between the Company and the investor as well as any pre-contractual relations are governed by German law. Pursuant to 23, section 2 of the General Fund Rules, the registered office of the Company is the place of jurisdiction for any disputes resulting from the contractual relationship, if the investor does not have a place of jurisdiction in Germany. Pursuant to 123, section 1 German Investment Act ("InvG"), all publications and advertising brochures shall be drafted in German or supplemented by a German translation. Further, the Company shall communicate with its investors in German only. In the case of complaints, please contact our complaints department, Veritas Investment GmbH, main building, Taunusanlage 18, Frankfurt, or ask for the appropriate person under In event of any disputes arising from the application of the provisions of the InvG customers may call upon the arbitration of the Ombudsstelle für Investmentfonds organised by BVI Bundesverband Investment und Asset Management e.v. The right to call upon courts remains unaffected hereof. The contact details of the Ombudsstelle are: Büro der Ombudsstelle des BVI Bundesverband Investment und Asset Management e.v. Unter den Linden Berlin Telefon: (030) Telefax: (030) info@ombudsstelle-investmentfonds.de In event of any disputes arising from the application of the provisions of the German Civil Code relating to distance contracts of financial services, the participants may call upon the arbitration board of the German Federal Bank, PO Box in Frankfurt, telephone 069/ or -1906, fax 069/ , schlichtung@bundesbank.de. The right to call upon courts remains unaffected hereof. 1

3 Contents BASIC INFORMATION... 3 INVESTMENT MANAGEMENT COMPANY... 3 DEPOSITORY BANK... 3 THE FUND... 4 Name, date of issue, term... 4 Risk profile of the fund... 4 Investment objective and investment principles... 6 Increased volatility Loan transactions Repurchase agreements Borrowing Valuation UNITS Issue and redemption of units and order placements Stock exchanges and regulated Markets Issue and redemption prices COSTS PERFORMANCE RULES FOR THE CALCULATION AND APPLICATION OF PROFITS ABSTRACT OF TAX PROVISIONS RELEVANT FOR INVESTORS OUTSOURCING ANNUAL, SEMI-ANNUAL REPORTS, AUDIT PAYMENTS TO UNITHOLDERS/DISTRIBUTION OF REPORTS AND OTHER INFORMATION OTHER INVESTMENT FUNDS UNDER THE INVESTMENT COMPANY'S MANAGEMENT THE BUYER'S RIGHT OF CANCELLATION PURSUANT TO SECTION 126 INVG (DOOR-TO-DOOR SELLING) GENERAL REGULATIONS SPECIAL REGULATIONS SURVEY OF UNIT CLASSES ORGANIZATION

4 BASIC INFORMATION Veri ETF-Allocation Dynamic is a UCITS fund in accordance with the German Investment Act ("InvG"). It is managed by Veritas Investment GmbH (hereinafter referred to as the "Company"). The management of the Fund principally comprises investing the funds deposited by investors with the Company in various assets separate to the Company's assets, under consideration of risk diversification principles. The Fund is not part of the Company's insolvency assets. The InvG and the Fund Rules govern the relationship between the Company and the investors. These documents define in which assets the Company is entitled to invest the money and which provisions must be observed thereby. The Fund Rules consist of a general and a special part ("General Fund Rules" and "Special Fund Rules" - together the "Fund Rules"). The application of fund rules for a fund is subject to approval by the Federal Financial Supervisory Authority ("BaFin"). Sales materials The sales prospectus, the key investor information, the Fund Rules and the current annual and semi-annual reports are available free of charge from the Company and on the website Additional information on investment limits, risk management of this Fund, the risk management methods and the latest developments of the risks and yields of the major asset categories are available free of charge from the Company and on the website Fund rules The Fund Rules are included in this sales prospectus. The Fund Rules can be amended by the Company. Amendments to the Fund Rules require approval by the BaFin. Amendments of the investment principles of the Fund also require approval of the supervisory board of the Company. Intended amendments are published in the Federal Gazette and on the website If those amendments relate to remuneration and reimbursement of expenses, which may be taken from Fund, to investment principles of the Fund or to fundamental investors rights, the investors are also informed of such amendments in paper or electronic form by their respective custodians. That information includes the key contents of the intended amendments, their background, the rights of the investors in connection with the amendment as well as an indication as to where and how further information can be obtained. The amendments will enter into force on the day after their publication at the earliest. Amendments to the 3 provisions on remuneration and expenses will enter into force no earlier than three months after their publication, unless the BaFin has consented to a shorter period. Amendments to the applicable investment principles of the Fund will also enter into force no earlier than three months after their publication. The changes will only be valid under the condition that the Company offers investors to exchange their units free of charge to units of a fund with similar investment principles, if such a fund is managed by the Company or another company of its corporate group or redeem their units prior to the effectiveness of the amendment at no additional cost. INVESTMENT MANAGEMENT COMPANY Company, legal form and registered office The Fund Veri ETF-Allocation Dynamic is managed by Veritas Investment GmbH ( Company ), founded on September 13 th, 1991, with its registered office in Frankfurt/Main. The Company is an investment company under the InvG having the legal form of a limited liability company (GmbH). In addition to securities funds (since September 13 th, 1991), Veritas Investment has been authorized to manage money market funds (since January 10 th, 1995), fund-of-funds (since December 2 nd, 1998), mixed securities (since December 2 nd, 1998), and pension provision funds (since December 2 nd, 1998). Following amendment of the InvG, the Company has been authorized to manage UCITS funds, pension provision funds and special funds since March 1 st, Board of directors, supervisory board, share capital Further information concerning the management, composition of the supervisory board and the shareholders as well as the amount of the subscribed and paid up capital can be found at the end of the sales prospectus. DEPOSITORY BANK InvG implements a separation of the management and custodial functions of funds. The Company has appointed a credit institute to act as Custodian and to hold the assets of the Fund. The depository bank will hold the assets in blocked securities accounts or blocked accounts. In particular, the depository bank will ensure that the issue and redemption of units and the determination of the value of units are undertaken in accordance with the InvG and the Fund Rules. In addition, it shall ensure that the proceeds of transactions made on account of the Fund are transferred to it for safe custody within the customary deadlines and that the income of the Fund is used in accordance with the InvG and the Fund Rules. Further, the depository bank will examine whether assets can be invested in blocked accounts or block

5 custody accounts of other credit institutes, investment firm or another manager in accordance with the InvG and the Fund Rules. If is the case, the depository bank shall consent to such investment. The Depositary Bank is generally responsible for all assets that are held by it or by another depot with its consent and is liable for any losses thereof. If securities are however held abroad and the foreign custodian is not Clear-stream Banking AG or a foreign branch of the Depositary Bank, the liability of the Depositary Bank is limited to the careful selection, continuous and careful supervision and instruction of the foreign custodian. The value of the Fund as well as the unit value will be determined by the Company under the supervision of the depository bank. For the fund, Société Générale S.A., Zweigstelle Frankfurt am Main, Neue Mainzer Straße 46-50, has been appointed as Depository Bank. The depository bank is a German branch of a credit institute formed under French law. Its main tasks are Retail Banking & Specialized Financial Services, corporate and investment banking as well as global investment management and services. THE FUND Name, date of issue, term The fund Veri ETF-Allocation Dynamic was launched on February 1 st, 2002 and has been established for an unlimited duration. The investors hold rights as coowners over the assets of the Fund on a fractional basis in proportion to the number of units held by them. WKN: ISIN: DE Risk profile of the fund Profile of the typical investor An investment in Veri ETF-Allocation Dynamic Fund is suitable for experienced investors who are capable of assessing the risk and value of the investment. The investor must be able and willing to accept fluctuations of unit value and, if applicable, accept a significant loss of capital. The investor should have an investment horizon of at least ten years. Significant risks of the Fund investments Fluctuations in Fund share value The assets in which the Company invests in for account of the Fund bear not only opportunities for capital appreciation, but also risks. There may be losses in value due to a decrease of the market value compared to the cost price. If an investor redeems units of the Fund at a point in time when the prices of the assets held in the Fund are lower compared to the day of purchase, the investor does not receive back all the money invested by it in the Fund. Although each fund seeks to realize constant capital appreciation, such capital appreciation cannot be guaranteed. The investor's risk is however limited to the amount invested. There shall be no obligation for the investor to provide further funds in addition to the money already invested. Influence of fiscal aspects on the individual performance The tax treatment of income from financial investments depends on the individual circumstances of the respective investor and may be subject to future changes. For specific issues - in particular the individual tax situation - the investor should contact his personal tax advisor. For an investment decision also non tax issues should be taken into account. Risk relating to suspension of redemptions The Company may suspend the redemption of units temporarily in case of exceptional circumstances that make the suspension appear necessary to protect the interests of investors. The Company will then redeem the units only at later date and at the then valid redemption price. This price may be lower than the price before the suspension of redemption. Liquidation and merger In the Fund Rules of the Fund, the Company reserves the right to terminate the management of the Fund. The management function would then be transferred to the depository bank. The depository bank may then liquidate the fund or transfer the management to another investment management company. The Company may alternatively merge the fund with another fund. Consequently, there is a risk for the investor that the holding period as intended by the investor cannot be realized. The transfer to the depository bank may trigger taxes. tax-related risk A change of an erroneously determined tax base of the fund for previous business years (e.g. due to external tax review) can result in an essentially disadvantageous correction for previous years being borne by an investor who was not a unit holder at that point in time. In turn, there may be the case for the investor that there may be an essentially favorable tax correction for the current and previous business years, when the investor was a unit holder of the Fund, that the investor cannot benefit from due to redemption or sale of units prior to the implementation of the respective correction. In-addition, a correction of fiscal data may result in the fact that taxable income or tax benefits are actually assessed in another assessment period than the cor- 4

6 rect assessment period, thus resulting in a negative effect for the individual investor. Potential investment scope Under consideration of the investment principles and limits stipulated by the lnvg and the Fund Rules, which provide the Veri ETF-Allocation Dynamic with very broad discretion, the actual investment policy can also aim at purchasing assets predominantly focused, e.g. on a small number of sectors, markets or regions / countries. This concentration on such a small number of specific investment sectors can bear particular investment opportunities, but also corresponding risks (e.g. tight market conditions, high volatility within special economic cycles). The details of the investment policy are published later in the annual report for the expired reporting year. Risks of investing in individual assets Market risk The price and market value development of financial products depends particularly on the development of the capital markets, which are in turn influenced by the general situation of the global economy as well as by the economic and political conditions of the respective countries. Irrational factors such as sentiments, opinions and rumors may also influence the general price developments, in particular, at a stock exchange. Country and transfer risk Country risk means that a foreign debtor despite his solvency is not able to make payments in due time or at all because of lacking transfer ability or willingness of the country where the debtor is domiciled. Consequently, for example, payments that are owed to the Fund may not be transferred at all or are transferred in a currency that can no longer be converted due to foreign exchange restrictions. Settlement risk In particular, an investment in unquoted securities carries the risk that settlement through a transfer system cannot be concluded as expected, due to a delayed or wrongly executed payment or delivery. Liquidity risk Assets can be purchased for the Fund that are not admitted to trading on a market of a stock exchange or included in another organized market. The purchase of such assets bears the risk that the resale of the assets to a third party may be problematic. In particular these markets can have restrictions as to the tradability on a long-term basis. Therefore, the valuation and the sale of individual investments may be difficult and timeconsuming. It may be the case that sales are only possible with a significant loss in value. Default risk Through the default of an issuer or counter-party losses may arise for the Fund. The issuer risk describes the effects of the particular developments of the respective issuer that affect the price of a security in addition to the general tendencies of the capital markets. Even careful selection of securities cannot prevent that losses arise through the financial collapse of issuers. Counterparty risk includes the risk of the party to a mutual contract that own receivables are partially or completely lost. This applies to all contracts that are concluded for the account of the Fund. Exchange rate risk The value of assets held by the Fund in a foreign currency is subject to exchange rate changes. To the extent that assets of the Fund are invested in currencies other than the respective Fund currency, the Fund is entitled to earnings, rebates and revenues of such investment in the respective currency. If the value of such currency to the Fund s currency decreases, the value of the Fund is also reduced. Custodial risk A risk of loss associated with the custody of assets, in particular in foreign countries, results from insolvency, violations of fiduciary duties or abusive conduct of the custodian or a sub-custodian. The Depositary Dank does not have unlimited liability for the loss or destruction of assets that are held by other custodians abroad (see section "Depositary Bank ). Concentration risk Further risks may arise through a concentration of the investments in particular assets or markets. In such a case the Fund is particularly dependent on the development of these assets or markets. Inflation risk Inflation bears a devaluation risk for all assets. Key person risk Funds that stand out due to strong results over a particular timeframe also attribute this success to the ability of the people acting for the fund and thereby the correct decisions of the fund managers. The personal composition of the fund management may nevertheless change. New decision makers may potentially be less successful. Interest rate risk An investment in fixed interest securities brings with it the risk that the prevailing market interest rates may change. A rise in market interest rates compared to those at the time of issue generally leads to a fall in the price of fixed interest securities. Conversely, a fall in market interest rates leads to an increase in the price of fixed interest securities. This price change results in the current rate of return for the fixed interest security 5

7 equating roughly to the current market interest rates. However, these price changes vary according to the term (duration) of the fixed interest securities. Fixed interest securities with shorter terms have lower price risks compared to fixed interest securities with longer terms. Accordingly, fixed interest securities with shorter terms generally offer lower returns compared to fixed interest securities with longer terms. Money market instruments tend to have lower price risk due to their shorter term of maximum 397 days. Risk associated with derivatives transactions The purchase and sale of options and the conclusion of future contracts or swaps are connected with the following risks: Price changes of the underlying instrument may reduce the value of the option or the future contract to the point of the total loss of value. Value changes of an asset that forms the basis of a swap may also result in losses for the Fund. Offsetting transactions that may be necessary to close out a position result in additional costs. The leverage provided by options means that options may affect the value of the Fund more strongly than would be the case if the underlying instruments were purchased directly. The acquisition of options involves the risk that the prices of the underlying instruments do not develop as anticipated and the option is not exercised. This would result in a loss of the option premium paid by the Investment Fund. In case of the sale of options there is the risk that the Fund is obligated to purchase assets at a higher price than the current market price or deliver as-sets at a lower price than the cur-rent market price. The Fund then incurs a loss in the amount of the price difference minus the received option premium. There is also the risk for future contracts that the Fund suffers losses at the due date as a result of an unanticipated development of the market price. Risks in connection with fund of funds Fund of funds may contain the risks outlined above, depending on the investment policy of the target funds. The risks of the investment units purchased for the Fund are in close connection with the risks of the assets held in the Fund or the pursued investment strategies. However, the aforementioned risks can be reduced through diversification of the investments within the funds the units of which are purchased, as well as through diversification within this Fund. As the managers of the individual target funds act independently of each other, the case may arise that several target funds have the same or opposing investment strategies. This may result in an accumulation of existing risks and possible chances may cancel each other out. In general, the Company is not able to control the management of target funds. Their investment decisions do not necessarily correspond to the assumptions and expectations of the Company. The Company will often not have immediate knowledge of the current composition of the target funds. In case their composition does not correspond with its assumptions and expectations, the Company may be able to react only after a certain time by redeeming the respective units of the target fund. NO GUARANTEE CAN BE GIVEN THAT THE OBJEC- TIVES OF THE INVESTMENT POLICY WILL ACTUALLY BE ACHIEVED. Investment objective and investment principles Investment objective The investment fund's investment goal is to achieve maximum capital appreciation. Investment principles Eligible assets for the fund Veri ETF Allocation Dynamic are target funds acc. 50 of the Investment Act, securities acc. 47 of the Investment Act, bank balances gem. 49 of the Investment Act, money market instruments acc. 48 of the Investment Act and derivatives acc. 51 of the Investment Act. At least 51 % of assets must be invested in exchangetraded UCITS investment shares ("ETFs", target funds), while at least 60 % are to be invested in equity-marketoriented target funds or in equities. The term equitymarket-oriented target funds means investment funds that invest mostly in equities or have the investment objective to reflect the performance of equity indices (including market opposite indices). Investment instruments in detail Investment units The Company may invest up to 100 % of the value of the Fund in units of other funds, provided those mainly invest in securities and money market instruments according to their fund rules. Those other funds may invest a maximum of 10 % in units of other funds according to their fund rules. The following units can be purchased: units of domestic Directive-compliant and non-directive compliant funds, units in investment stock corporations as well as Directive-compliant EC units and other foreign investment units. There must be an redemption option of the units at any time. Only up to 20 % of the value of the Fund may be invested in units of a single investment fund. A total of only up to 30 % of the value of the Fund may be invested in non-directive compliant funds. 6

8 For the account of the Fund, the Company must not purchase more than 25 % of the units issued of another fund. It is possible that target funds, the fund is investing in, temporarily suspend the redemption of their units. Then the company is prevented from disposing the units of the other fund by redeeming them with the management company or custodian of the target fund in return for the redemption price. On the homepage of the Company will be published if and to what extent the fund is holding units of target funds that have currently suspended the redemption. Securities Securities that may be acquired by the Fund are in particular equity shares and bonds. The Company may acquire securities of domestic and foreign issuers on behalf of the Fund: 1. that are admitted to trading on a stock ex-change in a member state of the European Union or European Economic Area, or that participate in another organized market in such member state; or 2. that are admitted to trading on a recognized stock exchange or participate in an organized market, in each case where permitted by the BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht). Securities may be acquired in initial offerings where the subscription conditions require the application for admission to or inclusion in a stock exchange or organized market listed in 1. or 2. above, and the quotation or admission takes place within one year of issue. In addition, the requirements of 47 section 1 sentence 2 InvG must be complied with. Furthermore, securities may also be acquired in form of shares, to which the Fund is entitled to by way of a capital increase from a Company s own resources, or in form of units of closed funds that meet the criteria stated in 47 section 1 no. 7 InvG, or in form of financial instruments that meet the criteria stated in 47 section 1 no. 8 InvG, or belong to the Fund due to exercise of subscription rights. Subscription rights are also deemed to be securities, provided that the securities subject to the subscription rights may be held by the Fund. Money market instruments Money market instruments are instruments which are usually traded on the money market as well as interestbearing securities which have a maximum term or remaining maturity of 397 days when they are purchased for the Fund. If their term is longer than 397 days, interest must be adjusted to the market conditions regularly, at least once in 397 days. Money market instruments are also instruments which according to their risk profile correspond to the risk profile of such securities. Money market instruments can be purchased for the Fund, if they 1. are admitted to a stock exchange in a Member State or in another Contracting State or are admitted to trading at or included in another organized market in a Member State or in another Contracting State; 2. are admitted to trading on a stock ex-change outside the EEA or admitted to or included in another organized market, provided that BaFin has approved the selection of the stock exchange or market; 3. are issued or guaranteed by the European Communities, the federal government, a fund of the federal government, a state, another member state or any other central, regional or local authority or the European Central Bank or the European Investment Bank, a third state or, if this is a federal state, a constituent state of this federal state or an international public body which has at least one Member State as member; 4. are issued by a company whose securities are traded on the markets named under 1. and 2. above; 5. are issued or guaranteed by a credit institution that is supervised according to the criteria laid down by the European Com-munities or a credit institution that is subject to or complies with supervisory regulations which according to BaFin are equivalent to those laid down by the European Communities, 6. are issued by other issuers and the respective issuer is: a) a company with equity capital of at least 10 million Euros that prepares and publishes its annual accounts pursuant to the provisions of the Fourth Directive 78/660/EEC of the European Council of July 25, 1978 on the annual accounts of certain types of companies, last amended by Article 49 of the Directive 2006/43/EC of the European Parliament and the European Council of May 17, 2006; or b) an entity which is responsible within one company or a group of companies for the financing of the whole group; or c) an entity which shall finance the securitization of debts with a credit line granted by the bank, To the securitization and the credit line granted by a bank, Article 7 of Directive 2007/16/EC shall apply. All aforementioned money market instruments may only be purchased if they comply with the provisions of Article 4 para. 1 and 2 of Directive 2007/16/EC. Money market instruments within the meaning of 1. and 2. above shall additionally be subject to Article 4 section 3 of Directive 2007/16/EC. 7

9 In respect of money market instruments within the meaning of 3. to 6. above, deposits and investors must be adequately protected, e.g. in the form of an investment grade rating, and additionally the provisions of Article 5 of Directive 2007/16/EC must be met. "Investment grade" means a rating of "BBB" or "Baa" or better within the context of credit analysis by a rating agency. The purchase of money market instruments is-sued by a regional or local authority of a Member State or by an international public body within the meaning of 3. above, but which are not guaranteed by that Member State, or, if the Member State is a federal state, by a constituent state of this federal state, and the purchase of money market instruments under 4. and 6. above shall both be subject to Article 5 para. 2 of Directive 2007/16/EC; the purchase of all other money market instruments under 3. above with the exception of money market instruments issued or guaranteed by the European Central Bank or the central bank of a Member State shall be subject to Article 5 section 4 of Directive 2007/16/EC. The purchase of money market instruments under 5. above shall be subject to Article 5 section 3 of Directive 2007/16/EC; in case such DAX Source ETF money market instruments are issued or guaranteed by a credit institution with supervisory regulations equal to those of EU law as confirmed by the BaFin, and the credit institution complies to those provisions, Article 6 of Directive 2007/16/EC shall apply. Investment limits for transferable securities and money market instruments The Company may invest up to 10 % of the Fund in securities or money market instruments issued by a single issuer (debtor). In this respect the total value of the securities and money market instruments of the issuers (debtors) may not exceed 40 % of the Fund. In addition, no more than 5 % of the Fund may be invested in securities and money market instruments of the same issuer (debtor). The Company may invest up to 35 % of the value of the Fund in debenture bonds, promissory notes and money market instruments is-sued by specific public bodies in accordance with 60 section 2 sentence 1 InvG. The Company may invest up to 25 % of the value of the Fund in secured debenture bonds (each). Where more than 5 % of the value of the Fund is invested in such debenture bonds of the same issuer, the total value of such debenture bonds may not exceed 80 % of the value of the Fund. The Company may invest up to 20 % of the value of the Fund in a combination of the following assets: securities or money market instruments issued by the same institution; deposits with this same institution; offset amounts for counterparty risk relating to offmarket derivative transactions, securities lending and repo transactions entered into with this same institution. In the case of specific public bodies pursuant to 60 section 2 sentence 1 InvG the combination of assets listed in sentence 1 may not exceed 35 % of the value of the Fund. The individual maximum limits remain unaffected in both cases. The offset amounts of securities and money market instruments of an issuer to the afore-mentioned limits can be reduced by the use of derivatives running reverse the market that have as basic value securities or money market instruments of the same issuer. That means that securities or money market instrument of the same issuer can be acquired for the account of the Fund beyond the aforementioned limits, if the increased issuer risk can be reduced again by hedging transactions. Investment restrictions for other investment instruments acc. 52 InvG The Company may invest up to 10 % of the value of the Fund in: securities which are not admitted to trading on a stock exchange or another organized market or included in it, but meet the criteria of 52 para. 1 no. 1 InvG, money market instruments of issuers that do not meet the requirements of 48 InvG, if the money market instruments comply with 52 para. 1 no. 2 InvG, stocks of new issues which have not been admitted to trading, note loans which can be assigned at least twice after having been purchased for the Fund and which were granted to: a) the federal government, a fund of the federal government, a state, the European Communities or a member state of the Organisation for Economic Cooperation and Development, b) another domestic authority of regional government or local authority of an-other Member State or another Contracting State, for which, according to Article 44 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, the weighting zero was published, c) other corporate bodies or institutions under public law having their registered seat in Germany or in another Member State or another Contracting State, 8

10 d) companies that issued securities which are admitted to trading at an organized market within the meaning of 2 para. 5 German Securities Trading Act ("WpHG") or admitted or included to another organized market that meets the major requirements on regulated markets under 52 para. 1 no. 4 d) InvG, or e) other debtors, if one authority mentioned in letters a to c guarantees interest and redemption. Bank deposits Up to 40 % of the value of the Fund can be invested in bank deposits with a maximum term of 12 months. These balances shall be deposited on blocked accounts with a credit institution domiciled in an EU Member State or an EEA Contracting State. In accordance with the stipulations of the General Fund Rules, such balances may also be kept with a credit institution domiciled in a third state. The Company may only invest up to 20 % of the value of the Fund in bank deposits with a single credit institution. Derivatives The Company may subject to an adequate risk management system invest in all derivatives or financial instruments with a derivative component under Article 10 para. 1 of Directive 2007/16/EC which are derived from assets which may be purchased for the Fund or financial indices under Article 9 section 1 of Directive 2007/16/EC, interest rates, exchange rates or currencies. These include, in particular, options, financial futures, swaps and combinations thereof. The Company may purchase derivatives for the Fund for purposes of hedging, effective portfolio management and achieving additional income, i.e. also for speculative purposes. Through the use of derivatives the market risk potential of the Fund can be increased. However, the market risk potential may never exeed 200 % of the market risk potential of a comparable, though using no derivatives, fund. Market risk refers to the risk for the Fund resulting from adverse changes in market prices. In determining the market risk potential for the use of derivatives, the Company uses the qualified approach within the meaning of the Derivateverordnung (Derivative Regulations). Risks connected with the use of derivatives are controlled by a risk management system that allows for constant supervision and measurement of the risk associated with the investment position as well as the respective share in the overall risk profile of the investment portfolio. The Company may trade derivative on behalf of the fund Veri ETF-Allocation Dynamic as part of the investment strategy. This includes transactions in derivatives for efficient portfolio management and for generating additional income, i.e. also for speculative purposes. This may increase the Fund's risk of loss, at least temporarily. The use of derivate instruments may double the market risk of the fund. The term market risk means the risk deriving from unfavourable development of market values. For calculating the market risk potential the company is using the so called qualified approach as regulated by the Derivateverordnung. Independent from the mandatory upper limit, the Company strives to that the use of derivatives will not increase the market risk potential of the Fund by more than 100 % of the Fund. This leverage effect is calculated by adding the nominal values of all derivative instruments that are used on behalf of the fund. Effects from reinvesting collateral received due to securities lending and repo agreements are taken into account. Depending on market conditions the leverage effect can vary and the said 100 % mark may be surpassed. Options The Company may within the limits of the investment principles participate in options transactions for the account of the Fund. Options are instruments that grant the right to a third party in exchange for a fee (option premium) to demand during a specific period or at the end of a specific period of time the delivery or purchase of assets or the payment of a difference at a price specified in advance (exercise price) or to purchase the respective option rights. Futures contracts The Company may within the limits of the investment principles purchase and sell for the account of the Fund future contracts on financial indices (e.g. equity-, bond- and interest indices) and single securities as well as foreign currencies. Future contracts are contracts which are unconditional and binding to both parties to buy or sell a specified amount of a specified underlying asset at a predetermined price at a certain date, the maturity date or within a certain period of time in the future. Swaps The Company may within the limits of the investment principles conclude for the account of the Fund the following: interest rate swaps; currency swaps; interest rate currency swaps; equity swaps; and credit default swaps. Swaps are exchange contracts under which the payment flows or risks underlying the transaction are exchanged between the contracting parties. Swaptions Swaptions are options on swaps. A swaption is the right, but not the obligation, to enter into a swap, 9

11 whose conditions were specified in de-tail, at a certain point in time or within a certain period of time. Credit Default Swaps Credit default swaps are credit derivatives which allow for transfer of the volume of a potential credit default risk to others. In exchange for assuming the credit default risk, the seller of the risk pays a premium to the counterparty. In any other respect, the statements made in relation to swaps apply accordingly. Financial instruments certificated in securities The aforementioned financial instruments can also be purchased by the Company if they are certificated in securities. In this context, trans-actions on financial instruments may only be partially be included in securities (e.g. bonds with warrants). The statements on chances and risks apply accordingly to such certificated financial instruments, but subject to the condition that the loss risk of certificated financial instruments is limited to the value of the security. OTC derivatives The Company may enter into transactions with derivatives that are admitted to trading at a stock exchange or included in another organized market, i.e. also overthe-counter (OTC-) transactions. The Company may conclude transactions with derivatives which are not admitted to trading at a stock exchange or not included in another organized market only with suitable credit institutions or financial services institutions on the basis of standardized master agreements. In case of OTC derivatives the counterparty risk for a counterparty shall be limited to 5 % of the value of the Fund. If the counterparty is a credit institution having its registered seat in the European Union, the European Economic Area or a third state with similar supervisory regulations, the counterparty risk can be up to 10 % of the value of the Fund. OTC derivatives concluded with a central clearing house of a stock exchange or another organized market as counterparty are not included in the counter-party risk limits, if the derivatives are subject to daily valuation at market prices and margin off-setting on a daily basis. Claims of the Fund against an intermediary account however are to be credited to such limits, even though the derivative was traded on an exchange or in another organized market. Increased volatility The Fund Veri ETF-Allocation Dynamic demonstrates an increased volatility due to its composition and investment strategy as well as the potential use of derivatives, i.e. the unit price can be subject to significant fluctuations within short periods of time. Loan transactions The assets in the Fund can be transferred to third parties at prices in line with market conditions under a loan agreement. Should the assets be transferred for an unlimited period of time, the Company shall have the right to terminate at any time. It must be contractually agreed that assets of the same type, quality and number are transferred back to the Fund after the end of the loan term. Condition for the transfer of assets under a loan agreement is the granting of sufficient collateral to the Fund. For this purpose, balances or securities or money market instruments can be assigned or pledged. The Fund shall be entitled to earnings from investing such collateral. In addition, the borrower is obliged to pay the interest when due on securities granted under the loan to the Depository Bank for the account of the Fund. It is not allowed to lend securities for a limited period of time. The value of all securities transferred to one borrower must not exceed 10 % of the value of the Fund. The Company must not grant money loans to third parties for the account of the Fund. Repurchase agreements For the account of the Fund, the Company may enter into repurchase agreements with a maximum term of twelve months with credit institutions and financial services institutions. The company must reserve the right to terminate the repurchase agreement at any time. Repurchase agreements are only permitted if they are so-called genuine repurchase agreements. In this case, the borrower assumes the obligation to retransfer the assets at a fixed date or at a date to be determined by the lender. Borrowing Short-term borrowing for the joint account of the investors is permitted for up to 10 % of the value of the Fund, if the borrowing conditions are customary in the market and the Depository Bank approves of the transaction. Valuation General rules for valuation of assets Quoted or traded assets Assets that are admitted to trading on a stock exchange or that participate in another organized market, as well as subscription rights for the Fund, will be valued at the last available marketable price that ensures a reliable valuation, unless otherwise required by the "Special Valuation Rules". Assets not quoted at a stock ex-change or traded in an organized market and assets without a tradable price Assets which are neither admitted to trading at a stock exchange or another organized market nor included 10

12 therein and for which no tradable price is available, shall be valued at the current market value as deemed appropriate after thorough assessment of valuation processes taking into account the current market conditions, unless otherwise provided for in the "Special valuation rules for individual assets" below. Special valuation rules for individual assets Unquoted bonds and note loans For the valuation of bonds which are not admit-ted to trading at a stock exchange or another organized market or included therein (i.e. non-quoted bonds, commercial paper or certificates of deposits), and note loans agreed prices for similar bonds and note loans and, if applicable, market values of bonds of similar issuers with respective terms and interest, if necessary, with a discount to balance out a lower sale potential are used as reference. Money market instruments Interest and interest-related returns as well as expenses (e.g. administration costs, custodial fees, auditors fees, publication expenses, etc.) relating to money market instruments held by the Fund will be accounted for up to the day before the valuation day. Derivative Instruments Options and futures Options held by the Fund and liabilities resulting from option rights granted to a third party, which are admitted to trading on a stock ex-change or included in another organized market, will be valued at the last available market-able price that ensures a reliable valuation. The same applies to claims and liabilities on futures sold for the account of the Fund. Mar-gins paid out of the Fund are added to the value of the Fund under incorporation of the valuation profits and losses determined on the valuation date. Bank deposits, fixed term deposits, investment units and loans Bank deposits will generally be valued at their nominal value plus interest earned. Fixed term deposits will be valued at fair market value, provided that such fixed term deposit is terminable at any time and the repayment upon termination is not calculated on the basis of nominal value plus interest. Investment units will generally be valued at the last determined redemption price or at the last available marketable value that ensures a reliable valuation. If these values are not avail-able, investment units will be valued at their current fair market value, which will be appropriately determined based on detailed estimaions using suitable valuation models and recognition of the current market situation. For repayment claims on loans the respective market value of the assets transferred under the loan is decisive. Assets made out in foreign currency Assets made out in foreign currency are converted into Euro at 1:30 p.m. based on the noon fixings by the Reuters AG at the currency rate of the prior day. Umbrella Fund The Fund Veri ETF-Allocation Dynamic is not part of an umbrella fund. UNITS The investors' rights shall be exclusively evidenced by global certificates upon issue of the Fund. These global certificates are held in safe custody by a securities clearing and deposit bank. The investor shall not have the right of delivery of individual unit certificates. Units may only be purchased if they are held in safe custody. The units are bearer shares which represent the claims of the holder against the Company. Issue and redemption of units and order placements Issue of units The number of units issued is in principle unlimited. Units can be purchased from the Company and the depository bank. They are issued by the depository bank at the issue price, which equals the net asset value per unit plus any applicable sales charge. The Company reserves the right to partly or completely suspend the issue of units. Redemption of units Investors can generally request redemption of their units on any valuation day, regardless of a minimum investment amount (if applicable). Redemption requests must be submitted to the depository bank or the Company itself. The Company is obliged to redeem the units at the current applicable redemption price that corresponds to the unit value. Settlement of unit issue and redemption The Company takes the principle of equality of treatment of the investors into account by ensuring that no investor can gain advantages by buying or selling units at unit prices that are already known to him/her. Therefore, the Company sets a daily deadline for the acceptance of orders. The issue and redemption orders received by the depository bank or by the Company until such order acceptance deadline will be settled at the latest on the second day following receipt of the redemption order (day of settlement) at the unit price assessed on this day. Orders received by the depository bank or by the Company past this deadline will be settled on the second following day (day of settlement) at the unit price assessed on that day. The cut of time is published on the company s internet site 11

13 and can be changed by the company at any time. Suspension of unit redemption The Company may temporarily suspend the redemption of units under exceptional circumstances according to which a suspension is deemed necessary taking the interests of the investors into account. For example, an exceptional circumstance exists if a stock exchange at which a significant portion of the units of the Fund are traded is closed unscheduled or the assets of the Fund cannot be valued. The Company reserves the right to redeem or exchange the units at the then applicable price only after it has immediately sold assets of the Fund, however, taking the interests of all investors into account. The Company shall notify investors about suspension and resumption of the redemption of units by publication in the Federal Gazette and further on the website In addition, the investors are also informed by their custodian in paper or electronic form. Stock exchanges and regulated Markets The Company has knowledge that has units of the Fund are listed on the following markets: Dusseldorf, Frankfurt (Xetra), Stuttgart and Hamburg, Hanover and Munich. It can not be excluded that the shares are also traded on other markets. The market price of the fund s units at a stock exchange or an other market is not determined solely by the value of the Fund's assets held in assets, but also by supply and demand. Therefore, the market price may differ from the fund s unit value that is determined by the depository bank. Unit classes According to the Special Fund Rules, different unit classes can be formed. So far this option was not used. Issue and redemption prices For the determination of the issue and the redemption price of the units, the Company determines under supervision of the Depository Bank the value of the assets of the Fund on each valuation day minus the liabilities (net asset value). The division of the net asset value by the amount of units issued equals the "unit value". All trading days are valuation days for units of the Fund. The Company can nevertheless refrain from valuation on public holidays within the jurisdiction of the lnvg which are trading days as well as on 24 and 31 December each year. Currently, there is no valuation on legal holidays (federal and regional holidays, particular Hessian and Bavarian Holidays) as well as on Dec. 24 th and 31 st. Suspension of determination of issue / redemption price The Company can temporarily suspend the determination of the issue and redemption price under the same conditions as the redemption as set out under number "Suspension of unit redemption". Issue surcharge In determining the issue price, a issue surcharge is added to the unit value. The issue surcharge is 5.0 % of the unit value. This issue surcharge may - in particular in case of a short holding period - reduce or completely deplete the performance. The issue surcharge is essentially remuneration for the distribution of units in the Fund. The Company may pass on the issue surcharge as payment for distribution activities to any intermediaries. Redemption deduction There will be no deduction on redemption. Publication of issue and redemption prices The issue and redemption prices are published on a regular basis on the website Investment.de. In addition, the Company may publish the prices in daily or weekly newspapers, but also stop these publications at any time. Costs of issue and redemption of units The units are issued and redeemed by the Company or the Depository Bank at the issue price (unit value plus any applicable sales charge) or redemption price (unit value/unit value minus redemption deduction if applicable) without charging any additional costs. In case units are redeemed via a third party, additional costs at redemption may arise. Also, acquisition of units via a third party may incur higher costs then the issue surcharge. COSTS Administrative and other costs For management of the investment fund, the company will receive an annual management fee of 1.2 % of the value of the fund. This fee is calculated daily and based on the last calculated net asset value of the fund. The company may charge a lower fee for one or more unit classes. For management of the investment fund, the company will also receive a performance-based remuneration in the amount of to 10 % (maximum) of the amount by which the unit value at the end of the calculation period exeeds by more than 4 % the unit value at the beginning of the same calculation period (absolute positive unit value development), but not more than 10 % of the average net asset value of the fund in that calculation period. The company may charge a lower performance fee for one or more unit classes. 12