fund initiator: multi-leaders-fund holding ltd

Transcription

1 sales prospectus icludig terms ad coditios of ivestmet for a directive-compliat ivestmet fud, issued may 2014 asset maagemet compay: deutsche asset & wealth maagemet ivestmet gmbh fud iitiator: multi-leaders-fud holdig ltd

2 Sales Prospectus ad Terms ad Coditios of Ivestmet Sales Prospectus Notice regardig the sales prospectus Sellig restrictios 1 Most importat legal implicatios of the cotractual relatioship 1 Geeral priciples 1 Maagemet Compay 2 Custodia 2 Sub-custody 3 Liability of the Custodia 3 Compay ame, legal form ad registered office of the Custodia 3 Risk warigs 3 Ivestmet priciples ad limits 7 Securities ledig trasactios 11 Repurchase agreemets 11 Collateral strategy 11 Borrowig 12 Leverage 12 Valuatio 12 Special rules for the valuatio of idividual assets 12 Moey market istrumets 12 Sub-fuds 13 Uits 13 Costs 14 Determiatio of icome 15 Liquidatio ad merger of the fud 16 Settlemet whe distributig the liquidatio proceeds 16 Coditios for the merger of the fud 16 Outsourcig 17 Coflicts of iterest 17 Fair treatmet of ivestors / Hadlig of coflicts of iterest 17 Auditor 18 Paymets to ivestors / Distributio of reports ad other iformatio 18 Service providers 19 Summary of tax regulatios of importace to ivestors 19 Ivestmet udertakigs maaged by DeAWM Ivestmet GmbH 24 Fud-specific regulatios 25 Terms ad Coditios of Ivestmet Geeral Terms ad Coditios of Ivestmet 28 Special Terms ad Coditios of Ivestmet MULTI-LEADERS-FUND NEXT GENERATION 33

3 Sales Prospectus Notice regardig the sales prospectus The purchase ad sale of uits of ivestmet fuds discussed i this sales prospectus takes place o the basis of the respective applicable versios of the sales prospectus, the key ivestor iformatio documet ad the Geeral Terms ad Coditios of Ivestmet i cojuctio with the Special Terms ad Coditios of Ivestmet. The Geeral Terms ad Coditios of Ivestmet ad the Special Terms ad Coditios of Ivestmet are aexed to this sales prospectus. The sales prospectus, together with the most recetly published aual report ad ay semiaual report published after the aual report, must be provided free of charge upo request to persos iterested i purchasig a uit of this ivestmet fud. I additio, the key ivestor iformatio documet must be provided free of charge to such iterested persos i good time before eterig ito ay agreemet. Iformatio or statemets other tha those cotaied i the sales prospectus must ot be provided. Ay purchase ad sale of uits o the basis of iformatio or statemets ot cotaied i the sales prospectus or i the key ivestor iformatio documet shall be at the exclusive risk of the purchaser. The sales prospectus is supplemeted by the most recet aual report ad by ay semiaual report published after the aual report. This sales prospectus cosists of a geeral sectio ad of fud-specific regulatios. The geeral sectio cotais geeral regulatios o the type of ivestmet fud discussed i this sales prospectus. Special, partly restrictive ad specific regulatios for the relevat ivestmet fud are set forth i the fud-specific regulatios. Sellig restrictios The uits of this ivestmet fud that have bee issued may be offered for sale or sold to the public oly i coutries where such a offer or such a sale is permissible. Uless the Compay, or a third party authorized by it, has obtaied permissio to do so from the local regulatory authorities, this sales prospectus does ot costitute a solicitatio to purchase ivestmet fud uits, or may this sales prospectus be used for the purpose of solicitig the purchase of ivestmet fud uits. Deutsche Asset & Wealth Maagemet Ivestmet GmbH ad/or this ivestmet fud are ot, ad will ot be, registered uder the Uited States Ivestmet Compay Act of 1940, as ameded. The uits of this ivestmet fud are ot, ad will ot be, registered uder the Uited States Securities Act of 1933, as ameded, or uder the securities laws of ay state of the Uited States of America. Uits of this ivestmet fud may ot be offered or sold i the Uited States or to or for the accout of U.S. persos. Applicats may be required to declare that they are ot U.S. persos ad that they are ot acquirig uits o behalf of, or for resale to, U.S. persos. U.S. persos are persos who are citizes or permaet residets of the Uited States ad/or subject to taxatio i the Uited States. Parterships or corporatios established uder the laws of the Uited States, or those of ay state, territory or possessio of the Uited States, ca also be U.S. persos. I cases whe the Compay receives kowledge that a uitholder is a U.S. perso or holds uits for the accout of a U.S. perso, the Compay may demad the immediate retur of the uits to the Compay at the last determied et asset value per uit. Ivestors that are cosidered restricted persos as defied i Rule 2790 of the Natioal Associatio of Securities Dealers i the Uited States (NASD Rule 2790) must report their holdigs i the ivestmet fud to the Compay without delay. This sales prospectus may be used for sales purposes oly by persos who have express writte authorizatio from the Compay (grated directly or idirectly via authorized sales agets) to do so. Declaratios or represetatios by third parties that are ot cotaied i this sales prospectus or i the documetatio have ot bee authorized by the Compay. These documets are available to the public at the registered office of the Compay. MOST IMPORTANT LEGAL IMPLICATIONS OF THE CONTRACTUAL RELATIONSHIP By purchasig uits, the ivestor becomes a joit ower, o a fractioal basis, of the assets held by this fud. The ivestor has o cotrol over the assets. The uits do ot covey votig rights. The cotractual relatioship ad all pre-cotractual relatioships betwee Deutsche Asset & Wealth Maagemet Ivestmet GmbH ad the ivestor are govered by Germa law. The locatio of the registered office of Deutsche Asset & Wealth Maagemet Ivestmet GmbH shall be the place of jurisdictio for ay disputes arisig from this cotractual relatioship if the ivestor does ot have a geeral place of jurisdictio i Germay. All publicatios ad advertisig documetatio must be prepared i Germa or accompaied by a traslatio ito Germa. I additio, Deutsche Asset & Wealth Maagemet Ivestmet GmbH will commuicate with its ivestors etirely i Germa. I the case of disputes arisig i coectio with the provisios of the Germa Ivestmet Code, cosumers may cotact the ivestmet fuds ombudsma s office ( Ombudsstelle für Ivestmetfods ) at BVI Budesverbad Ivestmet ud Asset Maagemet e.v. This shall ot affect ay right of recourse to the courts. The ivestmet fuds ombudsma s office at BVI Budesverbad Ivestmet ud Asset Maagemet e.v. ca be cotacted at: Büro der Ombudsstelle (Office of the Ombudsma) BVI Budesverbad Ivestmet ud Asset Maagemet e.v. Uter de Lide Berli, Germay Tel.: +49 (0) Fax: +49 (0) ifo@ombudsstelle-ivestmetfods.de I the case of disputes arisig from the applicatio of the provisios of the Germa Civil Code cocerig distace sellig cotracts ivolvig fiacial services, the parties may also cotact the arbitratio office of the Deutsche Budesbak. This shall ot affect ay right of recourse to the courts. The office ca be cotacted at: Schlichtugsstelle der Deutsche Budesbak (Deutsche Budesbak Arbitratio Office) PO Box Frakfurt/Mai, Germay Tel.: +49 (0) or Fax: +49 (0) schlichtug@budesbak.de Geeral priciples The ivestmet fud (the fud) This ivestmet fud (hereiafter fud ) is a collective ivestmet udertakig (hereiafter ivestmet udertakig ), which collects capital from a umber of ivestors i order to ivest it accordig to a defied ivestmet policy for the beefit of those ivestors. The fud is a ivestmet udertakig accordig to Directive 2009/65/EC of the Europea Parliamet ad of the Coucil of July 13, 2009, o the coordiatio of laws, regulatios ad admiistrative provisios relatig to udertakigs for collective ivestmet i trasferable securities (hereiafter UCITS ) as defied by the Germa Ivestmet Code (hereiafter KAGB ). It is maaged by Deutsche Asset & Wealth Maagemet Ivestmet GmbH (hereiafter the Compay ). The Compay ivests the capital deposited with it i its ow ame for the collective accout of the ivestors i the form of ivestmet fuds pursuat to the priciple of risk-spreadig i assets permitted uder the KAGB, but separate from its ow assets. The assets i which the Compay may ivest ivestor moies, ad the provisios to be complied with whe so doig, are stated i the KAGB ad associated regulatios, ad i the Terms ad Coditios of Ivestmet, which gover the legal relatioship betwee the ivestors ad the Compay. The Terms ad Coditios of Ivestmet cotai a geeral sectio ad a special sectio ( Geeral Terms ad Coditios of Ivestmet ad Special Terms ad Coditios of Ivest- 1

4 met ). Terms ad Coditios of Ivestmet for a ivestmet udertakig must be approved by the Germa Federal Fiacial Supervisory Authority (hereiafter BaFi ) prior to their approval. The fud is ot part of the Compay s isolvecy assets. Sales documetatio ad disclosure of iformatio The sales prospectus, the key ivestor iformatio documet ad the Terms ad Coditios of Ivestmet, as well as the most recet aual ad semiaual reports, are available free of charge from the Compay. The text of the Terms ad Coditios of Ivestmet is aexed to this sales prospectus. They ca also be viewed o the Iteret at Additioal iformatio o risk maagemet ivestmet limitatio for the fud, risk maagemet methods ad the latest developmets cocerig risks ad returs of the most importat categories of assets are available from the Compay i electroic or writte form. Terms ad Coditios of Ivestmet ad amedmets thereto The text of the Terms ad Coditios of Ivestmet is aexed to this sales prospectus i this documet. The Terms ad Coditios of Ivestmet may be ameded by the Compay. Amedmets to the Terms ad Coditios of Ivestmet require the approval of BaFi. Amedmets to the fud s ivestmet priciples additioally require the coset of the Compay s supervisory board. Amedmets to the fud s ivestmet priciples are oly permitted o the coditio that the Compay makes a offer to ivestors either to redeem their uits at o additioal cost prior to the amedmets takig effect or to exchage their uits, free of charge, for uits of ivestmet udertakigs havig comparable ivestmet priciples, provided such ivestmet udertakigs are maaged by the Compay or by aother etity belogig its group of compaies. Ay proposed amedmets shall be aouced i the Budesazeiger (Federal Gazette) ad, i additio, i a busiess publicatio or daily ewspaper with sufficiet circulatio, or o the Iteret at If the amedmets relate to fees ad expese reimbursemets that may be charged to the fud or if they ivolve the ivestmet priciples of the fud or sigificat ivestor rights, ivestors shall additioally be iformed o paper or i electroic format (so-called durable medium ). This iformatio shall iclude the material cotet of the proposed amedmets ad their backgroud, the rights of ivestors i coectio with the amedmets, as well as a otice idicatig where ad how more iformatio ca be obtaied. The earliest date o which amedmets shall come ito force is o the day followig their publicatio. Amedmets to the provisios cocerig fees ad reimbursemet of expeses shall come ito force o earlier tha three moths uless a earlier date has bee specified with the coset of BaFi. Amedmets to the fud s curret ivestmet priciples shall likewise take effect o earlier tha three moths after their aoucemet. Maagemet Compay Compay ame, legal form ad registered office The Compay is a asset maagemet compay as defied by the KAGB fouded o May 22, 1956, i the legal form of a compay with limited liability (Gesellschaft mit beschräkter Haftug; GmbH). The Compay s ame is Deutsche Asset & Wealth Maagemet Ivestmet GmbH (prior to August 2013, DWS Ivestmet GmbH). The Compay has its registered office at Maizer Ladstraße , Frakfurt/Mai, Germay, ad is registered i Part B of the Commercial Register of the Frakfurt/Mai Local Court uder the umber HRB Sice 1994, the Compay has bee authorized to maage moey market fuds ad equity ivestmet fuds i additio to securities ivestmet fuds, ad sice 1998, it has bee authorized to maage fuds of fuds, mixed securities ad real estate ivestmet fuds, as well as retiremet ivestmet fuds. Sice 2004, followig adaptatio to the Germa Ivestmet Act, the Compay has bee authorized to maage ivestmet udertakigs compliat with the UCITS Directive, Mixed ivestmet udertakigs ad retiremet ivestmet fuds, as well as ivestmet fuds with additioal risks (hereiafter hedge fuds ) ad fuds of fuds with additioal risks (hereiafter fuds of hedge fuds ). Sice 2008, the Compay has additioally bee authorized to maage Other ivestmet udertakigs. The Compay has a authorizatio as a ivestmet compay uder the Germa Ivestmet Act; the authorizatio as a UCITS asset maagemet compay uder the KAGB is thus deemed grated by implicatio. BaFi has ot yet grated to the Compay a authorizatio as a AIF asset maagemet compay uder the KAGB. Eve before authorizatio is grated, the Compay may lauch ad market ew ivestmet udertakigs withi the cofies of its existig busiess authorizatio, i compliace with legal requiremets. Maagemet ad supervisory board For further iformatio o the maagemet of the Compay ad the compositio of its supervisory board, please cosult the fial sectio of this documet. Equity capital ad additioal ow fuds The Compay has capital stock i the amout of EUR 131 millio (as of December 31, 2012). The liable equity capital of the Compay amouts to EUR millio (as of December 31, 2012). Both disclosures reflect the merger of Deutsche Asset Maagemet Ivestmetgesellschaft mbh ito Deutsche Asset & Wealth Maagemet Ivestmet GmbH. The Compay has accouted for the professioal liability risks that arise from the maagemet of ivestmet udertakigs that do ot comply with the UCITS Directive, so-called Alterative Ivestmet Fuds (hereiafter AIFs ), ad which are due to professioal egligece by its goverig bodies or employees, with ow fuds i the amout of at least 0.01 percet of the value of all AIF portfolios uder maagemet; this amout shall be reviewed ad adjusted aually. These ow fuds are icluded i the disclosed liable equity capital. Custodia The KAGB provides for a separatio of the duties of maagemet ad custody for ivestmet fuds. The Custodia is a credit istitutio. It keeps the fud s assets i blocked custody ad cash accouts ad moitors whether the Compay s use of these assets is i compliace with the provisios of the KAGB ad the Terms ad Coditios of Ivestmet. The ivestmet of assets i bak balaces at aother credit istitutio, as well as the use such bak balaces, are permissible oly with the coset of the Custodia. The Custodia must grat its coset if such ivestmet or use of assets is cosistet with the Terms ad Coditios of Ivestmet ad the provisios of the KAGB. The Custodia additioally has the followig duties, i particular: Issuig ad redeemig uits of the fud. Esurig that the issue ad redemptio of uits, as well as the determiatio of the et asset value per uit, comply with the provisios of the KAGB ad the Terms ad Coditios of Ivestmet. Esurig that, for trasactios coducted for the collective accout of the ivestors, custody of the equivalet value is take withi the customary time limits, ad that the icome of the fud is used i accordace with the provisios of the KAGB ad the Terms ad Coditios of Ivestmet. The Custodia must further review whether the use of blocked cash accouts or blocked custody accouts at aother credit istitutio, a securities firm or aother custodia is cosistet with the KAGB ad the Terms ad Coditios of Ivestmet. If this is the case, it must grat its coset to such ivestmet. Esurig that the icome of the fud is used as provided for by the KAGB ad Terms ad Coditios of Ivestmet. Moitorig borrowig by the Compay for the accout of the fud ad, where required, cosetig to such borrowig. Esurig that collateral for securities loas has bee provided i a legally valid maer ad is available at all times. 2

5 SUB-CUSTODY I the coutries below, the Custodia has delegated the custody of the assets to the sub-custodias listed: Name of sub-custodia The Hog Kog ad Shaghai Bakig Corporatio Ltd. Deutsche Bak AG, Netherlads Citibak, N.A. Skadiaviska Eskilda Bake AB (publ) Deutsche Bak AG Skadiaviska Eskilda Bake AB (publ) Deutsche Bak AG BNP Paribas Securities Services, S.C.A. Stadard Chartered Bak (Hog Kog) Ltd. Deutsche Bak AG Clearstream Bakig, S.A. Euroclear Bak S.A./N.V. Bak Hapoalim B.M. Deutsche Bak S.p.A. Mizuho Corporate Bak, Ltd. The Hog Kog ad Shaghai Bakig Corporatio Ltd. State Street Trust Compay Caada Deutsche Bak AG The Hog Kog ad Shaghai Bakig Corporatio Ltd. Deutsche Bak (Malaysia) Berhad HSBC Bak Malta, plc Baco Nacioal de México S.A. The Hog Kog ad Shaghai Bakig Corporatio Ltd. Deutsche Bak AG, Netherlads Skadiaviska Eskilda Bake AB (publ) Deutsche Bak AG Citibak del Perú, S.A. Deutsche Bak AG Bak Hadlowy w Warszawie S.A. Deutsche Bak AG Limited Liability Compay Deutsche Bak Skadiaviska Eskilda Bake AB (publ) UBS AG Credit Suisse AG Citibak, N.A. Českosloveská obchoda baka, a.s. UiCredit Baka Sloveija d.d. Deutsche Bak S.A.E. FirstRad Bak Limited Stadard Bak of South Africa Ltd. Deutsche Bak AG Stadard Chartered Bak (Thai) Public Compay Limited Českosloveská obchoda baka, a.s. Citibak, A.Ş. UiCredit Bak Hugary Zrt. State Street Bak ad Trust Compay, Uited Kigdom brach BNP Paribas Securities Services, S.C.A. Coutry Australia Belgium Brazil Demark Germay / CBF Filad Frace Greece Hog Kog Idoesia Iteratioal Iteratioal Israel Italy Japa Japa Caada Korea (Republic of Korea) Korea (Republic of Korea) Malaysia Malta Mexico New Zealad Netherlads Norway Austria Peru Philippies Polad Portugal Russia Swede Switzerlad Switzerlad Sigapore Slovak Republic Sloveia Spai South Africa South Africa Taiwa Thailad Czech Republic Turkey Hugary Uited Kigdom Cyprus I additio to keepig actual custody of foreig securities at the foreig sub-custodia accordig to the laws ad customs of the respective coutry of custody, the foreig-sub-custodia additioally provides for the redemptio of iterest, divided ad icome coupos, ad for the redemptio of securities repayable at maturity. Furthermore, the sub-custodia forwards iformatio o corporate actios relatig to the foreig securities held i custody. The Custodia has idicated that it will hadle coflicts of iterest as follows: the so-called three-poit declaratio will be made available periodically. The Custodia has ot idicated ay further coflicts of iterest. LIABILITY OF THE CUSTODIAN The Custodia is geerally resposible for all assets held i custody by it, or by aother istitutio with its coset. I the case of a loss of such a asset, the Custodia is liable to the fud ad its ivestors, uless such loss is attributable to evets beyod the ifluece of the Custodia. For losses that are ot losses of assets, the Custodia is geerally oly liable if it has failed to meet its obligatios pursuat to the provisios of the KAGB ad if such failure was at least egliget. COMPANY NAME, LEGAL FORM AND REGISTERED OFFICE OF THE CUSTODIAN The credit istitutio State Street Bak GmbH, whose registered office is located at Brieer Straße 59, Muich, Germay, has assumed the fuctio of Custodia for the fud. The Custodia is a credit istitutio uder Germa law. Its pricipal activities cosist of depository ad custodial services. Risk warigs Before makig ay decisio to purchase uits of the fud, ivestors should read carefully the followig risk warigs together with the other iformatio cotaied i this sales prospectus, ad give due cosideratio to them whe makig their ivestmet decisio. The occurrece of oe or more of these risks by itself or i combiatio with other circumstaces ca adversely affect the performace of the fud, or of the assets held i the fud, ad may cosequetly have a adverse effect o the et asset value per uit. If the ivestor sells uits of the fud o a date at which the prices of the assets cotaied i the fud have falle i relatio to the date at which the uits were purchased, the ivestor will get back oe or less tha the full amout of the capital ivested i the fud. The ivestor could lose part or eve all of the capital ivested i the fud. Appreciatio of capital caot be guarateed. The ivestor s risk is limited to the sum ivested. There is o obligatio to make subsequet 3

6 paymets i additio to the capital ivested by the ivestor. Aside from the risks ad ucertaities described i what follows, or elsewhere i the sales prospectus, the performace of the fud might also be adversely affected by various other risks ad ucertaities that are curretly ukow. The order i which the followig risks are listed shall ot be costrued as a idicatio either of the probability of their occurrece or of the scope or sigificace of the occurrece of particular risks. Risks of ivestig i the fud I the followig, the risks typically associated with a ivestmet i a UCITS are preseted. These risks ca have a adverse effect o the et asset value per uit, o the capital ivested by the ivestor ad o the ivestor s plaed holdig period for the fud ivestmet. Fluctuatio of the fud s et asset value per uit The fud s et asset value per uit is calculated as the value of the fud divided by the umber of uits i circulatio. The value of the fud is equal to the sum of the market values of all assets held i the fud, less the market values of all liabilities of the fud. The fud s et asset value per uit is thus depedet o the assets held i the fud ad o the amout of the fud s liabilities. If the value of these assets declies, or if the value of the liabilities rises, the fud s et asset value per uit falls. Impact of tax aspects o idividual results The tax treatmet of icome from capital assets depeds o the idividual circumstaces of the respective ivestor, ad may be subject to chage i the future. The ivestor should cosult his persoal tax advisor o ivestor-specific issues givig particular cosideratio to the persoal tax situatio. Suspesio of the redemptio of uits The Compay may susped the redemptio of uits uder exceptioal circumstaces that make a suspesio appear ecessary whe takig ito cosideratio the iterests of ivestors. Exceptioal circumstaces by this defiitio ca be, for example, ecoomic or political crises, exceptioally extesive redemptio requests, the closig of exchages or markets, tradig costraits or other factors that adversely affect the determiatio of the et asset value per uit. The ivestor caot retur his uits durig such periods. The et asset value per uit ca fall eve whe the redemptio of uits is suspeded, as would be the case if the Compay were forced to sell assets below market value durig a suspesio of the redemptio of uits. The et asset value per uit after resumptio of the redemptio of uits ca be lower tha the et asset value per uit before suspesio of redemptio. Amedmet of the ivestmet policy ad of the Terms ad Coditios of Ivestmet The Compay ca chage the Terms ad Coditios of Ivestmet with the approval of BaFi. A chage i the Terms ad Coditios of Ivestmet ca also chage regulatios affectig the ivestor. For istace, by chagig the Terms ad Coditios of Ivestmet, the Compay ca chage the fud s ivestmet policy or icrease the costs to be charged to the fud. The Compay ca additioally chage the ivestmet policy withi the statutorily ad cotractually permissible ivestmet spectrum, ad thus without chagig the Terms ad Coditios of Ivestmet ad without BaFi approval. This ca result i a chage to the risk associated with the fud. Liquidatio of the fud The Compay has the right to termiate its maagemet of the fud. After termiatio of maagemet, the Compay ca completely liquidate the fud. After a six-moth period of otice, the right to dispose of the fud passes to the Custodia. For the ivestor, this etails the risk that the holdig period plaed by the ivestor will ot be realized. Whe the fud passes to the Custodia, taxes other tha Germa icome taxes may be imposed o the fud. Icome taxes may be imposed o the ivestor whe the fud uits are removed from the ivestor s custody accout after completio of the liquidatio proceedigs. Trasfer of all the assets of the fud to aother retail ivestmet udertakig (merger) The Compay ca trasfer all the assets of the fud to aother UCITS. I this case, the ivestor ca (i) retur his uits, (ii) retai his uits ad cosequetly become a ivestor of the receivig UCITS or (iii) exchage his uits for uits of a ope-eded retail ivestmet udertakig havig comparable ivestmet priciples, provided the Compay or a etity affiliated with it maages such a ivestmet udertakig havig comparable ivestmet priciples. The same applies if the Compay trasfers all the assets of aother ope-eded retail ivestmet udertakig ito the fud. The ivestor must therefore, i the cotext of the trasfer, make a ew ivestmet decisio prematurely. Icome taxes may be icurred whe returig the uits. I a exchage of uits for uits of a ivestmet udertakig havig comparable ivestmet priciples, the ivestor may be charged icome taxes if, for istace, the value of the uits received is higher tha the value of the old uits at the time of purchase. Profitability ad fulfillmet of the ivestor s ivestmet objectives No assurace ca be give that the ivestor will achieve his desired ivestmet performace. The et asset value per uit of the fud ca fall ad lead to ivestor losses. There are o guaratees from the Compay or from third parties cocerig a particular miimum paymet commitmet upo redemptio or a particular ivestmet performace of the fud. A iitial sales charge paid i a purchase of uits, or a redemptio fee paid i a sale of uits, ca additioally reduce or eve completely cosume the performace of a ivestmet, particularly i the case of a short ivestmet period. Ivestors could receive back a amout that is lower tha the amout origially ivested. Risk of egative performace of the fud (market risk) The risks described below ca affect the performace of the fud or of the assets held i the fud, ad ca thus also adversely affect the et asset value per uit ad the capital ivested by the ivestor. Risks of chages i value The assets i which the Compay ivests for the accout of the fud are subject to risks. Losses of value ca thus occur if the market value of the assets falls i relatio to the purchase price, or if spot ad forward prices develop differetly. Capital-market risk The price or market performace of fiacial products depeds, i particular, o the performace of the capital markets, which i tur are affected by the overall ecoomic situatio ad the geeral ecoomic ad political framework i idividual coutries. Irratioal factors such as setimet, opiios ad rumors ca also have a effect o geeral price performace, particularly o a exchage. Fluctuatios of market prices ad values ca also be attributable to chages i iterest rates or exchage rates, or to a chage i the creditworthiess of a issuer. Risk of price chages i equities Equities are kow to be subject to strog price fluctuatios ad thus also to the risk of price declies. These price fluctuatios are particularly iflueced by the issuig compay s earigs performace ad by developmets i the idustry ad i the overall ecoomy. The cofidece of market participats i the particular compay ca affect price performace as well. This is especially true for compaies whose shares have oly bee admitted to a exchage or other orgaized market for a shorter period of time; eve slight chages i estimates ca trigger strog price movemets i the shares of such compaies. If a particular stock has a low proportio of shares that trade freely ad are owed by may shareholders (the so-called free float ), eve smaller buy ad sell orders for that stock ca have a strog impact o the market price, thus leadig to higher price fluctuatios. Risk of chages i iterest rates Ivestig i fixed-rate securities is associated with the possibility that the level of market iter- 4

7 est rates existig at the time a security is issued will chage. If market iterest rates rise relative to the iterest rates at the time of their issue, the prices of fixed-iterest securities will fall as a rule. If, o the other had, the market iterest rate falls, the price of fixed-rate securities will rise. This price tred meas that the curret retur o a fixed-rate security is roughly equivalet to the curret market iterest rate. However, these price fluctuatios vary accordig to the (residual) term to maturity of the fixed-rate securities. Fixed-rate securities with shorter maturities are geerally associated with lower price risks tha fixed-rate securities with loger maturities. Coversely, fixed-rate securities with shorter maturities geerally have lower returs tha loger-term fixed-rate securities. Due to their short terms ot exceedig 397 days, moey market istrumets ted to be associated with lower price risks. I additio, the iterest rates of differet iterest-related fiacial istrumets deomiated i the same currecy ad with similar residual terms to maturity ca perform differetly. Risk of price chages i covertible ad warrat-liked bods Covertible ad warrat-liked bods securitize the right to covert the bod ito stock, or to acquire stock. The chage i the value of covertible ad warrat-liked bods is thus depedet o the price performace of the uderlyig stock. The performace risk of the uderlyig stocks ca therefore also have a effect o the performace of the covertible or warrat-liked bod. Warrat-liked bods that give the issuer the right to issue to the ivestor a predetermied umber of shares istead of payig back a pricipal amout (reverse covertibles) are depedet o the price of the correspodig stock to a greater extet. Risks associated with derivative trasactios The Compay may eter ito derivative trasactios for the fud. Buyig ad sellig optios, as well as the coclusio of futures cotracts or swaps, ivolves the followig risks: Price chages i the uderlyig ca cause a decrease i the value of the optio or future. If the value decreases to a total loss, the Compay may be forced to allow the rights acquired to expire. Chages i the value of the asset uderlyig a swap ca also result i losses for the fud. The leverage effect of optios may alter the value of the fud s assets more strogly tha the direct purchase of uderlyigs would. The risk of loss may ot be determiable whe eterig ito the trasactio. There may be o liquid secodary market for a specific istrumet at a particular poit i time. I that case, it may ot be possible to close a derivative positio uder certai circumstaces. The purchase of optios etails the risk that the call optios are ot exercised because the prices of the uderlyigs do ot develop as expected, meaig that the fud loses the optio premium it paid. If optios are sold, there is the risk that the fud may be obligated to buy assets at a price that is higher tha the curret market price, or obliged to deliver assets at a price that is lower tha the curret market price. I that case, the fud suffers a loss amoutig to the price differece less the optio premium received. I futures cotracts, there is a risk that the Compay will be obligated, for the accout of the fud, to bear the differece betwee the price uderlyig the cotract whe it was etered ito ad the market price whe the trasactio is closed or matures. That would result i losses for the fud. The risk of loss is ot determiable whe eterig ito the futures cotract. Ay ecessary back-to-back trasactios (closig of positio) icur costs. Forecasts made by the Compay about the future developmet of uderlyig assets, iterest rates, prices ad currecy markets may tur out to be icorrect i retrospect. It may ot be possible to buy or sell the assets uderlyig the derivatives at a favorable time; coversely, it may be ecessary to buy or sell them at a ufavorable time. Usig derivatives ca result i potetial losses that are ot foreseeable uder certai circumstaces ad which may eve exceed the iitial margis paid. The followig risks ca occur i over-thecouter ( OTC ) trasactios: There may be o orgaized market, ad it may therefore be difficult or impossible for the Compay to sell the fiacial istrumets acquired i the OTC market for the accout of the fud. Give the idividual ature of agreemets, back-to-back trasactios (closig of positio) may be difficult or impossible, or may etail substatial costs. Risks i securities ledig trasactios If the Compay grats a loa of securities for the accout of the fud, it trasfers the securities to a borrower, which returs securities of the same kid, quatity ad quality at the ed of the trasactio (securities loa). For the duratio of the trasactio, the Compay has o right to use let securities. If the security loses value durig the trasactio ad the Compay wats to dispose of the security altogether, it must termiate the ledig trasactio ad await the customary settlemet cycle, which ca result i a risk of loss for the fud. Risks i repurchase agreemets If the Compay sells securities uder a repurchase agreemet, it udertakes to buy them back at the ed of the agreemet term i retur for a premium. The repurchase price ad the premium to be paid by the seller at the ed of the term is set whe the agreemet is etered ito. If the securities sold uder a repurchase agreemet should lose value durig the term of the agreemet, ad if the Compay wated to sell them to limit the losses of value, it ca do so oly by exercisig the right of early termiatio. Early termiatio of the agreemet ca etail fiacial losses for the fud. It is also possible that the premium payable at the ed of the term will tur out to be higher tha the icome the Compay geerated through reivestmet of the cash received. If the Compay buys securities uder a repurchase agreemet, it must sell them back at the ed of a agreemet term. The repurchase price is set whe the agreemet is etered ito. Securities bought uder a repurchase agreemet serve as collateral for providig the liquidity to the couterparty. The fud does ot beefit from ay icreases i the value of the securities. Risks associated with the acceptace of collateral The Compay receives collateral for derivative trasactios, securities ledig trasactios ad repurchase agreemets. Derivatives, let securities ad securities sold uder repurchase agreemets ca icrease i value. I that case, the collateral provided might o loger fully cover the Compay s delivery or retrasfer claim agaist the couterparty. The Compay ca ivest cash collateral i blocked cash accouts, i high-quality govermet bods or i moey market fuds with short-term maturity structures. However, it is possible for the credit istitutio holdig bak balaces to default. Govermet bods ad moey market fuds ca perform egatively. Whe the trasactio is eded, the collateral thus ivested might o loger be fully available, eve though collateral must be retured by the Compay for the fud i the amout origially grated. I that case, the Compay ca be obligated, for the accout of the fud, to top up the collateral to the amout grated, thereby compesatig for the loss icurred through the ivestmet. Risk i securitizatio positios with o retetio The fud may acquire securities backed by loas (loa securitizatio positios) issued after Jauary 1, 2011, oly if the leder retais a iterest i the securitizatio of at least 5 percet ad complies with other requiremets. The Compay is therefore obligated to iitiate corrective measures i the iterests of the ivestors if loa securitizatios issued after this date fail to meet these EU stadards. As part of these corrective measures, the Compay may be forced to sell such loa securitizatio positios. Give the legal requiremets for baks, fud compaies ad possibly isurace compaies i the future as well, there is a risk that the Compay will ot be able to sell such loa securitizatio positios held i the fud, or will be able to do so oly with deep discouts or after very log delays. 5

8 Iflatio risk All assets are subject to a risk of devaluatio through iflatio. This is also true for the assets held i the fud. The rate of iflatio ca exceed the growth rate of the fud. Currecy risk Assets of the fud ca be ivested i a currecy other tha the fud currecy. The fud receives the icome, repaymets ad proceeds of such ivestmets i that other currecy. If the value of that currecy falls i relatio to the fud currecy, the value of such ivestmets, ad thus also the value of the fud s assets, is reduced. Cocetratio risk If ivestmet is cocetrated o particular assets or markets, the fud becomes particularly heavily depedet o the performace of these assets or markets. Risks associated with ivestmet i ivestmet fud uits The risks etailed i ivestmet udertakigs whose uits are acquired for the fud (so-called target fuds ) are closely liked to the risks iheret i the idividual assets cotaied i these target fuds, ad i the ivestmet strategies pursued by these target fuds. However, sice the maagers of the idividual target fuds operate idepedetly of oe aother, it is also possible that several target fuds will be egaged i similar or mutually opposig ivestmet strategies. This ca result i a cumulative effect of existig risks, ad ay opportuities might be offset. It is geerally ot possible for the Compay to cotrol the maagemet of the target fuds. Their ivestmet decisios do ot ecessarily have to cocur with the Compay s assumptios or expectatios. The Compay ofte will ot have timely kowledge of the curret compositio of target fuds. If the compositio does ot match the Compay s assumptios or expectatios, it may ot be able to react without a cosiderable delay by returig target fud uits. Ope-eded ivestmet udertakigs i which the fud acquires uits might additioally susped the redemptio of uits from time to time. I that case, the Compay is preveted from disposig of the uits of the target fud by returig them to the maagemet compay or custodia of the target fud agaist paymet of the redemptio price. Risks arisig from the ivestmet spectrum I observace of the ivestmet priciples ad limits stipulated i the law ad i the Terms ad Coditios of Ivestmet, which provide the fud with a very wide framework, the actual ivestmet policy ca also be directed at primarily acquirig assets of oly a few idustries, markets or regios/coutries, for example. This cocetratio o a few specific ivestmet sectors ca etail risks (e.g., arrow markets, broad rage of fluctuatio withi certai ecoomic cycles). The aual report provides retrospective iformatio regardig the cotet of the ivestmet policy for the reportig year eded. Risks of restricted or elevated liquidity of the fud (liquidity risk) I the followig, the risks that may adversely affect the liquidity of the fud are preseted. This may result i the fud beig temporarily or permaetly uable to meet its paymet obligatios, ad i the Compay beig temporarily or permaetly uable to meet the redemptio requests of ivestors. The ivestor might ot be able to realize a potetially plaed holdig period, ad some or all of the capital ivested might ot be available to the ivestor for a idefiite period of time. The realizatio of the liquidity risks could also cause the et asset value of the fud, ad thus the et asset value per uit, to declie i cases where, for istace, the Compay is forced, with appropriate legal permissibility, to sell assets for the fud at less tha market value. Risk from ivestig i assets It is also permitted to acquire assets for the fud that are either admitted to a exchage or admitted to or icluded i a orgaized market. A potetial sale of these assets may be possible oly with high price discouts or with delays, or ot at all. Eve for assets admitted to a exchage a potetial sale might ot be possible, or be possible oly with high price discouts, depedig o the market situatio, the volume, the time frame ad plaed costs. Although oly assets that ca geerally be liquidated at ay time may be acquired for the fud, it caot be ruled out that it might temporarily or permaetly be possible to dispose of these assets oly with realizatio of losses. Risk from fudig liquidity The Compay may borrow for the accout of the fud. There is a risk that the Compay might ot be able to get a correspodig loa, or be able to get oe oly at sigificatly more ufavorable terms. Adjustable-rate loas ca additioally have a egative impact whe iterest rates rise. Isufficiet fudig liquidity ca affect the liquidity of the fud, with the result that the Compay may be forced to sell assets prematurely or at terms iferior tha plaed. Risks from icreased redemptios or issues Buy ad sell orders from ivestors cause liquidity to flow ito ad out of the fud, respectively. The iflows ad outflows, after ettig, ca result i either a et iflow or a et outflow of the fud s liquid assets. This et iflow or et outflow ca cause the fud maager to buy or sell assets, which geerates trasactio costs. This is especially true whe liquid assets exceed or fall short of a ratio set by the Compay for the fud as a result of the iflows or outflows. The resultig trasactio costs are charged to the fud s assets ad ca adversely affect the fud s performace. I the case of iflows, a icreased fud liquidity ca dimiish the performace of the fud if the Compay caot ivest the fuds uder adequate coditios. Risk associated with public holidays i specific regios/coutries Accordig to the ivestmet strategy, ivestmets for the fud are to be made i specific regios ad coutries. Local public holidays i these regios or coutries may result i differeces betwee exchage tradig days of these regios or coutries ad the valuatio dates of the fud. The fud may cosequetly be uable to react to market developmets i these regios or coutries o the same day if that day is ot a valuatio date, or it may be uable to act o a valuatio date that is ot a tradig day i the markets of these regios or coutries. As a result, the fud might be preveted from sellig assets i the time required. This ca adversely affect the ability of the fud to meet redemptio requests or other paymet obligatios. Couterparty risk icludig credit ad receivable risk I the followig, the risks that ca arise for the fud i the cotext of a cotractual relatioship with aother party (a so-called couterparty ) are preseted. Here there is a risk that the couterparty might o loger be able to meet its cotractual obligatios. These risks ca affect the performace of the fud, ad ca thus also adversely affect the et asset value per uit ad the capital ivested by the ivestor. Risk of default / Couterparty risks (except cetral couterparties) The default of a issuer or of a cotractig party (couterparty) agaist which the fud has claims ca lead to losses for the fud. Issuer risk describes the effect of particular developmets at the idividual issuer that will affect the price of a security i additio to geeral treds i the capital markets. The risk of a declie i the assets of issuers caot be etirely elimiated eve through careful selectio of securities. The other party to a cotract etered ito for the accout of the fud ca default i whole or i part (couterparty risk). This applies to all cotracts that are etered ito for the accout of the fud. Risk from cetral couterparties A cetral couterparty ( CCP ) acts as a itermediary istitutio i particular trasactios for the fud, especially trasactios i derivative fiacial istrumets. I this case, the CCP acts as the buyer toward the seller, ad as the seller toward the buyer. A CCP hedges its couterparty default risks by meas of a series of protective measures, icludig iitial margis (e.g., collat- 6

9 eralizatios), that eable it to offset losses from trasactios etered ito at ay time. These protective measures otwithstadig, it caot be ruled out that a CCP might default, which would also affect claims of the Compay for the fud, This ca result i losses for the fud that are ot hedged. Risks of default i repurchase agreemets I repurchase agreemets, the collateral is provided as cosideratio by the couterparty. I the evet of a default of the couterparty durig the term of the repurchase agreemet, the Compay has a right of use with respect to the securities purchased or to the cash received uder the agreemet. A risk of loss to the fud ca esue from the fact that the collateral provided is o loger sufficiet to cover the Compay s retrasfer claim i full because of the temporary deterioratio i the creditworthiess of the issuer, or because the prices of the securities sold have rise. Risks of default i securities ledig trasactios If the Compay grats a loa of securities for the accout of the fud, it must obtai sufficiet collateral to protect agaist the default of the couterparty. Collateral is provided i a amout at least equivalet to the market value of the securities trasferred i the securities loa. The borrower must provide additioal collateral if the value of the let securities icreases, if the quality of the collateral provided decreases or if the fiacial situatio of the borrower deteriorates ad the collateral already provided is ot sufficiet. If the borrower is uable to meet this obligatio to provide additioal collateral, there is a risk that the Compay s retrasfer claim is ot fully hedged i the evet of a couterparty default. If the collateral is held i custody at a istitutio other tha the Custodia, there is also the risk that the collateral might ot be available for full or immediate use i the evet of a borrower default. Operatioal ad other risks of the fud I the followig, the risks that ca arise, for example, from iadequate iteral processes ad from huma error or system failures at the Compay or at exteral third parties are preseted. These risks ca affect the performace of the fud, ad ca thus also adversely affect the et asset value per uit ad the capital ivested by the ivestor. Risks from crimial acts, shortcomigs or atural disasters The fud may become a victim of fraud or other crimial acts. It may suffer losses due to misuderstadigs or errors by employees of the Compay or of exteral third parties, or be damaged by outside evets such as atural disasters. Coutry or trasfer risk There is a risk that a foreig borrower, despite ability to pay, caot make paymets at all, or ot o time, or ca oly pay i aother currecy, because the currecy i the coutry of domicile is ot freely trasferable or the coutry of domicile is uwillig to execute trasfers, or for other reasos. This meas that, for example, paymets to which the Compay is etitled for the accout of the fud may ot occur, or may be i a currecy that is ot covertible (aymore) due to restrictios o currecy exchage, or may be i aother currecy. If the borrower pays i aother currecy, this positio is subject to the currecy risk preseted above. Legal ad political risks Ivestmets for the fud may be udertake i jurisdictios i which Germa law does ot apply, or where, i the case of disputes, the place of jurisdictio is outside Germay. Ay resultig rights ad obligatios of the Compay for the accout of the fud may differ from those i Germay to the detrimet of the fud or the ivestor. Political or legal developmets, icludig chages to the legal framework i these jurisdictios, may ot be detected by the Compay, or may be detected too late, or they may lead to restrictios i terms of acquirable assets or assets that have already bee acquired. These cosequeces ca also arise whe the legal framework for the Compay ad/or the admiistratio of the fud i Germay chages. Chages i the tax framework, tax risk The iformatio provided here is based o our uderstadig of curret tax laws. It is addressed to persos subject, without limitatio, to icome tax or corporate icome tax i Germay. However, o resposibility ca be assumed for potetial chages i the tax structure through legislatio, court decisios or the orders of the tax authorities. I the case of a correctio with tax cosequeces that are essetially ufavorable for the ivestor, chages to the fud s taxatio bases for precedig fiscal years made because these bases are foud to be icorrect (e.g., based o exteral tax audits) ca result i the ivestor havig to bear the tax burde resultig from the correctio for precedig fiscal years, eve though he may ot have held a ivestmet i the fud at the time. Coversely, the ivestor may fail to beefit from a essetially favorable correctio for the curret or precedig fiscal years durig which he held a ivestmet i the fud because he redeemed or sold his uits before the correctio takes place. I additio, a correctio of tax data ca result i a situatio where taxable icome or tax beefits are actually assessed for tax i a differet assessmet period to the applicable oe ad that this has a egative effect for the idividual ivestor. Key idividual risk If the ivestmet performace of the fud durig a particular period is very positive, this success may also deped o the abilities of the idividuals actig o behalf of the fud, ad hece o the correct maagemet decisios. Fud maagemet persoel ca chage, however. New decisio-makers might ot be as successful. Custody risk The custody of assets, especially i foreig coutries, ivolves a risk of loss that may result from isolvecy, violatio of due diligece or force majeure. Risks from tradig ad clearig mechaisms (settlemet risk) I the settlemet of securities trasactios through a electroic system, there is a risk that oe of the cotractig parties is late or fails to pay, or fails to deliver securities o time. INVESTMENT PRINCIPLES AND LIMITS Assets The Compay ca acquire the followig assets for the accout of the fud: Securities accordig to article 193 KAGB Moey market istrumets accordig to article 194 KAGB Bak balaces accordig to article 195 KAGB Ivestmet fud uits accordig to article 196 KAGB Derivatives accordig to article 197 KAGB So-called other ivestmet istrumets accordig to article 198 KAGB The Compay may acquire these assets withi the ivestmet limits preseted i the sectios Ivestmet priciples ad limits Assets Ivestmet limits for securities ad moey market istrumets, icludig whe derivatives are used, ad bak balaces ad Ivestmet priciples ad limits Assets Other assets ad their ivestmet limits, i particular. Details of these acquirable assets, ad of the ivestmet limits applicable to them, are preseted below. Securities The Compay may acquire the securities of domestic ad foreig issuers for the accout of the fud if 1. they are admitted for tradig o a exchage i a member state of the Europea Uio ( EU ) or i aother state that is a party to the Agreemet o the Europea Ecoomic Area ( EEA ) or are admitted for tradig or icluded i aother orgaized market i oe of these states; 2. they are exclusively admitted for tradig o a exchage outside the member states of the EU or outside the other states that are parties to the Agreemet o the EEA or are admitted for tradig or icluded i aother orgaized mar- 7

10 ket i oe of these states, isofar as BaFi has approved the choice of this exchage or orgaized market. Securities from ew issues may be acquired if the terms of issue cotai the requiremet that a applicatio be filed for admissio for official listig o oe of the exchages or iclusio i oe of the orgaized markets metioed uder (1) or (2) above, ad if such admissio or iclusio takes place o later tha oe year after the issue. Securities by this defiitio also iclude: Uits of closed-eded ivestmet udertakigs i cotract or corporate form that are subject to cotrol by uitholders (so-called corporate goverace mechaisms ), i.e., the uitholders must have votig rights with respect to key decisios, ad the right to cotrol the ivestmet policy through appropriate mechaisms. The ivestmet udertakig must additioally be maaged by a etity that is subject to the regulatios for ivestor protectio uless the ivestmet udertakig is lauched i corporate form ad asset maagemet activity is ot performed by aother etity. Fiacial istrumets that are backed by, or liked to the performace of, other assets. If compoets of derivatives are embedded i such fiacial istrumets, additioal requiremets must be fulfilled before the Compay may acquire them as securities. The securities may oly be acquired uder the followig coditios: The potetial loss that might arise for the fud may ot exceed the purchase price of the security. There must be o obligatio to make subsequet paymets. The liquidity of the security acquired by the fud must ot result i the fud o loger beig able to meet the legal requiremets o the redemptio of uits. This applies takig ito accout the possibility provided for by law of suspedig the redemptio of uits i special cases (see sectios Uits Issue ad redemptio of uits Redemptio of uits, Uits Issue ad redemptio of uits Issue of uits ad Uits Issue ad redemptio of uits Suspesio of the redemptio of uits ). A reliable valuatio of the security by meas of accurate, reliable ad regular prices must be available; these must be either market prices or prices made available by valuatio systems idepedet from the issuer of the security. Appropriate iformatio about the security must exist, either i the form of regular, accurate ad comprehesive iformatio o the security to the market or, where relevat, i the form of a associated portfolio. The security is egotiable. The acquisitio of the security is cosistet with the ivestmet objectives or the ivestmet policy, or both, of the fud. The risks of the security are adequately captured by the risk maagemet process of the fud. Securities may additioally be acquired i the followig form: Equities to which the fud is etitled i the evet of a capital icrease from the issuig compay s ow fuds. Securities acquired whe exercisig subscriptio rights belogig to the fud. Subscriptio rights may also be acquired as securities by this defiitio isofar as the securities from which the subscriptio rights origiate may be icluded i the fud. Moey market istrumets The Compay may, for the accout of the fud, ivest i moey market istrumets that are usually traded i the moey market, as well as i iterest-bearig securities that, alteratively, have a (residual) term to maturity ot exceedig 397 days at the time of their acquisitio for the fud; have a (residual) term to maturity of more tha 397 days at the time of their acquisitio for the fud, but whose iterest paymets are adjusted to market rates regularly, at least oce every 397 days, pursuat to the terms ad coditios of issue; have a risk profile correspodig to the risk profile of securities that meet the criterio for residual term to maturity or iterest paymet adjustmet. Moey market istrumets may be acquired for the fud if 1. they are admitted for tradig o a exchage i a member state of the EU or i aother state that is a party to the Agreemet o the EEA or are admitted for tradig or icluded i aother orgaized market i oe of these states; 2. they are exclusively admitted for tradig o a exchage outside the member states of the EU or i aother state that is a party to the Agreemet o the EEA or are admitted for tradig or icluded i a orgaized market i oe of these states, isofar as BaFi has approved the choice of this exchage or market; 3. they are issued or guarateed by the EU, the Germa federal govermet, a special-purpose vehicle of the Germa federal govermet, a Germa federal state, aother member state or aother cetral, regioal or local authority or the cetral bak of a member state of the EU, the Europea Cetral Bak or the Europea Ivestmet Bak, a third coutry or, i the case of a federal state, by oe of the members makig up the federatio, or by a public iteratioal body of which oe or more member states of the EU are members; 4. they are issued by a compay whose securities are traded i the markets specified i os. 1 ad 2 above; 5. they are issued or guarateed by a credit istitutio that is subject to supervisio accordig to the criteria stipulated i EU legislatio, or by a credit istitutio that is subject to ad complies with prudetial rules cosidered by BaFi to be equivalet to those of Commuity legislatio; 6. they are issued by other issuers ad the respective issuer is a) a compay with capital ad reserves of at least EUR 10 millio that prepares ad publishes its aual fiacial statemets i accordace with the Europea directive goverig the aual fiacial statemets of corporatios; or b) a etity that, withi a group of compaies that icludes oe or more exchage-listed compaies, is dedicated to the fiacig of the group; or c) a etity that issues moey market istrumets backed by liabilities through use of a credit lie from a bak. These are products i which loa receivables of baks are packaged ito securities (so-called asset-backed securities ). All of the moey market istrumets metioed may be acquired oly if they are liquid ad their value ca be accurately determied at ay time. Moey market istrumets are liquid if they ca be sold at limited cost withi a adequately short time frame. Here the obligatio of the Compay to redeem uits of the fud at the request of ivestors ad, to that ed, to be able to sell such moey market istrumets correspodigly quickly, must be take ito accout. I additio, a accurate ad reliable valuatio system must exist for moey market istrumets that eables the determiatio of the et asset value of the moey market istrumet or is based o market data or o valuatio models such as systems that determie amortized costs. The liquidity requiremet for moey market istrumets is deemed met if they are admitted for tradig or icluded i a orgaized market withi the EEA, or if they are admitted for tradig or icluded i a orgaized market outside the EEA, isofar as BaFi has approved the choice of this market. For moey market istrumets that are ot listed o a exchage or admitted for tradig i a regulated market (see os. 3 through 6 above), the issue or the issuer of these istrumets must additioally be subject to regulatios for the protectio of savigs ad ivestors. Accordigly, appropriate iformatio must be available for these moey market istrumets that eables a appropriate assessmet of the credit risks associated with the istrumets, ad the moey market istrumets must be freely trasferable. Credit risks ca be evaluated, for istace, by way of a credit assessmet performed by a ratig agecy. For these moey market istrumets, the followig requiremets additioally apply uless they were issued or guarateed by the Europea Cetral Bak or the cetral bak of a member state of the EU: If issued or guarateed by the followig istitutios (metioed uder o. 3 above): the EU, the Germa federal govermet, 8

11 a special-purpose vehicle of the Germa federal govermet, a Germa federal state, aother member state, aother cetral govermet authority, the Europea Ivestmet Bak, a third coutry or, i the case of a federal state, oe of the members makig up the federatio, a public iteratioal body of which oe or more member states of the EU are members, appropriate iformatio o the issue or the issuace program, or o the legal ad fiacial situatio of the issuer prior to the issue of the moey market istrumet, must be available. If issued or guarateed by a credit istitutio supervised withi the EEA (see o. 5 above), appropriate iformatio o the issue or the issuace program, or o the legal ad fiacial situatio of the issuer prior to the issue of the moey market istrumet, must be available ad updated o a regular basis ad wheever a sigificat evet occurs. I additio, data (e.g., statistics) eablig a appropriate assessmet of the credit risks associated with a ivestmet must be available o the issue or the issuace program. If issued by a credit istitutio subject to supervisio outside of the EEA that is cosidered by BaFi to be equivalet to the requiremets o a credit istitutio withi the EEA, oe of the followig coditios must be met: The credit istitutio has its registered office i oe of the so-called Group of Te ( G10 ) groupig of leadig member coutries of the Orgaisatio for Ecoomic Co-operatio ad Developmet (hereiafter OECD ). The credit istitutio has at least a ivestmet-grade ratig. A ivestmet-grade ratig is a ratig of BBB or Baa or better assiged by a ratig agecy as part of credit assessmet. It ca be demostrated o the basis of a i-depth aalysis of the issuer that the prudetial rules applicable to that issuer are at least as striget as those laid dow by EU law. For the remaiig moey market istrumets that are ot listed o a exchage or admitted for tradig i a regulated market (see above uder os. 4 ad 6, as well as those remaiig uder o. 3), appropriate iformatio o the issue or the issuace program, ad o the legal ad fiacial situatio of the issuer prior to the issue of the moey market istrumet, must be available ad updated o a regular basis ad wheever a sigificat evet occurs, ad reviewed by third parties ot subject to istructios from the issuer. I additio, data (e.g., statistics) eablig a appropriate assessmet of the credit risks associated with a ivestmet must be available o the issue or the issuace program. Bak balaces Uless otherwise idicated i the Terms ad Coditios of Ivestmet, the Compay may, for the accout of the fud, oly hold bak balaces havig a term ot exceedig twelve moths. Such balaces shall be kept i blocked accouts at credit istitutios havig their registered offices i a member state of the EU or i aother state that is a party to the Agreemet o the EEA. They may also be held at credit istitutios havig their registered offices i a third coutry havig prudetial rules cosidered by BaFi to be equivalet to those of EU legislatio. Ivestmet limits for securities ad moey market istrumets, icludig whe derivatives are used, ad bak balaces Geeral ivestmet limits The Compay may ivest o more tha 10 percet of the fud s assets i securities ad moey market istrumets of the same issuer (borrower). I so doig, the total value of securities ad moey market istrumets from such issuers (borrowers) may ot exceed 40 percet of the fud s assets. Furthermore, the Compay may ivest o more tha 5 percet each of the fud s assets i securities ad moey market istrumets of the same issuer. Securities purchased uder repurchase agreemets shall be attributed to this ivestmet limit. The Compay may ivest o more tha 20 percet of the fud s assets i bak balaces at ay oe credit istitutio. Ivestmet limit for bods backed by special asset pools The Compay may ivest up to 25 percet of the fud s assets respectively i mortgage bods ad muicipal bods, as well as i bods issued by credit istitutios havig their registered offices i a member state of the EU or i aother state that is a party to the Agreemet o the EEA. This shall be subject to the coditio that the sums derivig from the issue of such bods are ivested i such a way that, durig the whole period of validity of the bods, they are capable of coverig the liabilities of the bods ad that, i the evet of default of the bod issuer, would be used o a priority basis for the repaymet of the pricipal ad paymet of the accrued iterest. Whe more tha 5 percet of the fud s assets are ivested i such bods issued by oe issuer, the total value of such bods may ot exceed 80 percet of the value of the assets of the fud. Securities purchased uder repurchase agreemets shall be attributed to this ivestmet limit. Ivestmet limits for public sector issuers The Compay may ivest up to 35 percet of the fud s assets respectively i bods, promissory ote loas ad moey market istrumets of special supraatioal public sector issuers. These public sector issuers iclude the Germa federal govermet, the Germa federal states, member states of the EU or their local authorities, ad public supraatioal bodies of which oe or more member states of the EU are members. This limit ca be exceeded for bods, promissory ote loas ad moey market istrumets if that is provided for i the Terms ad Coditios of Ivestmet ad the issuers are specified there. If this optio is availed of, the securities/moey market istrumets of these issuers i the fud must origiate from at least six differet issues; o more tha 30 percet of the fud s assets may be ivested i oe issue. Securities purchased uder repurchase agreemets shall be attributed to this ivestmet limit. Combiatio of ivestmet limits The Compay may ivest o more tha 20 percet of the value of the assets of the fud i a combiatio of the followig assets: securities or moey market istrumets issued by oe ad the same istitutio, deposits at this istitutio, i.e., bak balaces, attributable amouts for the couterparty risk of trasactios i derivatives, securities loas ad repurchase agreemets coducted with this istitutio. For special public sector issuers, (see sectio Ivestmet priciples ad limits Assets Ivestmet limits for securities ad moey market istrumets, icludig whe derivatives are used, ad bak balaces Ivestmet limits for public sector issuers ), a combiatio of the aforemetioed assets may ot exceed 35 percet of the value of the assets of the fud. The respective idividual upper limits shall remai uaffected. Ivestmet limits whe derivatives are used The amouts of securities ad moey market istrumets of a issuer attributed to the aforemetioed limits may be reduced through the use of offsettig derivatives whose uderlyigs are securities ad moey market istrumets of the same issuer. Securities or moey market istrumets of a issuer may therefore be acquired for the accout of the fud i excess of the aforemetioed limits as log as the esuig elevated issuer risk is lowered agai by meas of hedgig trasactios. Other assets ad their ivestmet limits The Compay may ivest a total of o more tha 10 percet of the fud s assets i the followig other assets: Securities that are ot admitted for tradig o a exchage or icluded i aother orgaized market, but which geerally fulfill the criteria for securities. I cotrast to traded ad admitted securities, reliable valuatio for these securities must be available i the form of a valuatio coducted o a periodic basis that is derived from iformatio from the issuer or from competet ivestmet research. Appropriate iformatio about the o-admitted or o-icluded security must exist i the form of regular, accurate iformatio from 9

12 the fud or, where relevat, the associated portfolio must be available. Moey market istrumets of issuers that do ot meet the requiremets metioed above, provided they are liquid ad their value ca be accurately determied at ay time. Moey market istrumets are liquid if they ca be sold at limited cost withi a adequately short time frame. Here the obligatio of the Compay to redeem uits of the fud at the request of ivestors ad, to that ed, to be able to sell such moey market istrumets correspodigly quickly, must be take ito accout. I additio, a accurate ad reliable valuatio system must exist for moey market istrumets that eables the determiatio of the et asset value of the moey market istrumet or is based o market data or o valuatio models such as systems that determie amortized costs. The liquidity requiremet for moey market istrumets is deemed met if they are admitted for tradig or icluded i a orgaized market withi the EEA, or if they are admitted for tradig or icluded i a orgaized market outside the EEA, isofar as BaFi has approved the choice of this market. Newly issued equities if, accordig to their terms of issue, their admissio for tradig o a exchage i a member state of the EU or i aother state that is a party to the Agreemet o the EEA or their admissio to a orgaized market or their iclusio i such a market i a member state of the EU or i aother state that is a party to the Agreemet o the EEA must be applied for uder the terms of issue, isofar as their admissio for tradig o a exchage or i a orgaized market, or their iclusio i such a market, outside the member states of the EU or outside the other states that are parties to the Agreemet o the EEA must be applied for uder the terms of issue, isofar as BaFi has approved of the choice of exchage or orgaized market ad the admissio or iclusio takes place withi oe year of their issue. Promissory ote loas ( Schuldscheidarlehe ) that ca be assiged at least twice followig acquisitio for the fud ad which were grated to oe of the followig istitutios: a) the Germa federal govermet or a special-purpose vehicle thereof, a EU coutry or a OECD member coutry, b) aother domestic authority, regioal govermet or local authority of aother member state of the EU or aother state that is a party to the Agreemet o the EEA, provided that the receivable ca be treated, accordig to the regulatio o prudetial requiremets for credit istitutios ad ivestmet firms, i the same maer as a receivable from the cetral govermet o whose sovereig territory the regioal govermet or local authority is located, c) other corporate bodies or istitutios uder public law domiciled i Germay or i aother member state of the EU, or i aother state that is a party to the Agreemet o the EEA, d) compaies that have issued securities that have bee admitted for tradig i a orgaized market withi the EEA or which have bee admitted for tradig i aother regulated market as defied by the directive o markets for fiacial istrumets, as ameded, or e) other borrowers, provided that oe of the bodies desigated i (a) through (c) above has udertake to guaratee the paymet of iterest ad repaymet of pricipal. Ivestmet fud uits I the sectio Fud-specific regulatios Ivestmet objectives ad strategy Ivestmet strategy ad i the Terms ad Coditios of Ivestmet, the extet to which the Compay ca ivest for the accout of the fud i uits of target fuds that are ope-eded domestic ad foreig target fuds is preseted. The Compay predomiatly acquires uits i member states of the EU, the EEA ad the G20 for the fud. The target fuds may, accordig to their terms ad coditios of ivestmet or articles of icorporatio, ivest o more tha 10 percet of their assets i uits of other ope-eded ivestmet udertakigs. For uits of AIFs, the followig requiremets additioally apply: The target fud shall have bee authorized uder legal provisios that make it subject to effective public supervisio for the protectio of ivestors, ad there must be sufficiet assurace of satisfactory cooperatio betwee competet supervisory authorities. The level of protectio for ivestors must be equivalet to that provided for ivestors i a domestic UCITS, especially as regards separatio of maagemet ad custody of assets, borrowig, ledig ad short sales of securities ad moey market istrumets. The busiess activity of the target fud must be reported i aual ad semiaual reports ad allow ivestors to make their ow assessmet of the assets ad liabilities, icome ad operatios over the reportig period. The target fud must be a retail fud i which the umber of uits is ot limited ad where ivestors have the right to redeem uits at ay time. No more tha 20 percet of the fud s assets may be ivested i a sigle target fud. No more tha 30 percet of the fud s assets i total may be ivested i AIFs. The Compay may acquire for the accout of the fud o more tha 25 percet of the issued uits of a target fud. Target fuds ca temporarily susped the redemptio of uits to the extet permitted by law. I that case, the Compay will ot be able to retur the target fud uits to the maagemet compay or custodia of the target fud agaist paymet of the redemptio price (see also the sectio Risk warigs Risk of egative performace of the fud (market risk) Risks associated with ivestmet i ivestmet fud uits ). The extet to which the fud holds uits of target fuds that have curretly suspeded redemptios, if ay, is posted o the Compay s Web site at Derivatives The Compay may coduct trasactios with derivatives for the fud as part of the ivestmet strategy. This icludes derivative trasactios for efficiet portfolio maagemet ad for achievig additioal icome, i.e., also for speculative purposes. That ca icrease the risk of loss i the fud at least temporarily. A derivative is a istrumet whose price depeds o the price fluctuatios or expected prices of other ( uderlyig ) assets. The followig discussio cocers both derivatives ad fiacial istrumets with derivative compoets (hereiafter collectively derivatives ). The market risk of the fud may ot be more tha doubled through the use of derivatives ( market risk limit ). Market risk is the risk of loss arisig from fluctuatios i the market values of assets held i the fud that are attributable to chages i variable market prices ad rates such as iterest rates, exchage rates ad the prices of equities ad commodities, or to chages i the creditworthiess of a issuer. The Compay must comply with the market risk limit o a ogoig basis. It must determie o a daily basis the extet to which the market risk limit has bee reached as provided for by law, specifically the Regulatio o Risk Maagemet ad Risk Measuremet whe usig Derivatives, Securities Loas ad Repurchase Agreemets i Ivestmet Udertakigs accordig to the Germa Ivestmet Code (hereiafter Derivatives Regulatio ). Precise details o which derivatives the Compay may acquire for the accout of the fud, ad o the method beig used for determiig the extet to which the market risk limit has bee reached, are preseted i the sectio Fud-specific regulatios Derivatives. Futures cotracts Futures cotracts are agreemets that ucoditioally bid both parties to buy or sell a particular amout of a certai uderlyig at a predetermied price at a certai poit i time, at maturity or withi a certai period. The Compay may, withi the scope of the ivestmet priciples, eter ito futures cotracts for the accout of the fud o assets acquirable for the fud, as well as o iterest rates, exchage rates, currecies ad qualified fiacial idices. Futures cotracts are etered ito i the form of both futures ad forwards. Couterparties to forwards must have a miimum ratig of A-/A3. 10

13 Optios I optios trasactios, a third party is grated, i exchage for a cosideratio (optio premium), the right to demad delivery or acceptace of assets durig a specific period of time or at the ed of a specific period at a predetermied price (strike price), or to demad paymet of a cash settlemet, or to acquire correspodig optios. The Compay may take part i optios trasactios for the accout of the fud withi the scope of the ivestmet priciples. Swaps Swaps are exchage cotracts i which the parties swap the cash flows or risks uderlyig the respective trasactio. The Compay may eter ito iterest rate swaps, currecy swaps, equity swaps ad credit default swaps for the accout of the fud withi the scope of the ivestmet priciples. Swaptios Swaptios are optios o swaps. A swaptio is the right, but ot the obligatio, to coduct a swap trasactio, the terms of which are precisely specified, at a certai poit i time or withi a certai period. I all other aspects, the priciples established for optios apply. The Compay may oly coclude swaptios for the accout of the fud that cosist of the optios ad swaps described above. Credit default swaps Credit default swaps are credit derivatives that eable the trasfer of a volume of potetial credit defaults to other parties. As compesatio for acceptig the credit default risk, the seller of the risk pays a premium to its couterparty. The Compay may oly coclude simple, stadardized credit default swaps for the accout of the fud that are used for hedgig agaist idividual credit risks i the fud. I all other aspects, the iformatio for swaps applies accordigly. Securitized fiacial istrumets The Compay may also acquire for the accout of the fud the fiacial istrumets described i the precedig if they are securitized. It is also possible for the trasactios ivolvig fiacial istrumets to be oly partly securitized (as i the case of warrat-liked bods). The statemets o opportuities ad risks apply accordigly to such securitized fiacial istrumets, but with the coditio that the risk of loss i the case of securitized fiacial istrumets is limited to the value of the security. OTC derivative trasactios The Compay may coduct for the accout of the fud both those derivative trasactios admitted for tradig o a exchage or admitted to or icluded i aother orgaized market ad so-called over-the-couter ( OTC ) trasactios. The Compay may coduct derivative trasactios that are either admitted for tradig o a exchage or admitted to or icluded i aother orgaized market oly with suitable credit istitutios or fiacial services istitutios o the basis of stadardized master agreemets. For derivatives traded other tha o a exchage, the couterparty risk of a cotractig party is limited to 5 percet of the fud s assets. If the couterparty is a credit istitutio havig its registered office i a member state of the EU, i aother state that is a party to the Agreemet o the EEA or i a third coutry with a comparable level of supervisio, the couterparty risk may amout to 10 percet of the fud s assets. Derivative trasactios coducted other tha o a exchage where the couterparty is the cetral clearighouse of a exchage or aother orgaized market are ot icluded whe determiig couterparty limits if the derivatives are marked to market daily, with a daily margi settlemet. However, amouts due to the fud from a itermediary trader are attributed to these limits, eve if the derivative is traded o a exchage or i aother orgaized market. SECURITIES LENDING TRANSACTIONS The securities held i the fud ca be trasferred as a loa to third parties i exchage for appropriate market cosideratio. I so doig, all of the fud s securities holdigs ca be trasferred as a loa to third parties oly for a period that is idefiite. The Compay has the optio to termiate the ledig trasactio at ay time. It must be cotractually agreed that securities of the same kid, quality ad quatity will be retured to the fud withi the customary settlemet period followig the edig of the ledig trasactio. A requiremet for the trasfer of securities as a loa is that the fud must be provided with sufficiet collateral. For this purpose, balaces may be assiged or pledged, ad securities or moey market istrumets may be trasferred or pledged. The fud is etitled to the icome from the ivestmet of the collateral. The borrower must additioally pay to the Custodia, for the accout of the fud, ay iterest received from let securities at maturity. The value of all securities trasferred to ay oe borrower may ot exceed 10 percet of the fud s assets. If exteral compaies are ivolved i the executio of securities loas, this fact will be disclosed i the Service Providers sectio. The Compay may ot grat moey loas to third parties for the accout of the fud. Repurchase agreemets The Compay may eter ito repurchase agreemets havig a maximum maturity of twelve moths for the accout of the fud with credit istitutios ad fiacial services istitutios. I so doig, it ca both trasfer securities of the fud to a trasferee i exchage for a cosideratio (simple repurchase agreemet) ad accept securities withi the scope of the respectively applicable ivestmet limits (reverse repurchase agreemet). The Compay has the optio to termiate the repurchase agreemet at ay time, except i the case of repurchase agreemets havig a term of less tha oe week. If a simple repurchase agreemet is termiated, the Compay has the right to demad the retur of the securities trasferred uder the agreemet. The termiatio of a reverse repurchase agreemet ca result i the refud of either the etire sum of moey or the accrued sum of moey i the amout of the curret market value. Repurchase trasactios are oly permitted i the form of so-called geuie repurchase agreemets. I these trasactios, the trasferee assumes the obligatio to retrasfer the securities o a fixed date or o a date to be determied by the trasferor, or to pay back the sum of moey with iterest. COLLATERAL STRATEGY As part of derivative trasactios, securities ledig ad repurchase agreemets, the Compay accepts collateral for the accout of the fud. The purpose of the collateral is to fully or partially reduce the risk of default of the couterparty to these cotracts. Types of permissible collateral I derivative trasactios, securities ledig ad repurchase agreemets, the Compay will accept the followig assets as collateral, or as assets that meet the followig coditios: This collateral shall have bee received before or at the time of the trasfer of the let securities i the case of a securities loa. If the securities are let via itermediaries, the trasfer of the securities ca take place before receipt of the collateral as log as the respective itermediary esures the orderly completio of the trasactio. Such itermediary ca provide collateral i place of the borrower. I geeral, collateral for securities ledig trasactios, reverse repurchase agreemets ad trasactios with OTC derivatives (ot icludig currecy futures) must be provided i oe of the followig forms: liquid assets such as cash, short-term bak deposits, moey market istrumets accordig to the defiitio i Directive 2007/16/EC of March 19, 2007, letters of credit ad first-demad guaratees that are issued by top-rated credit istitutios ot affiliated with the couterparty, or bods issued by a OECD member coutry or its local authorities or by supraatioal istitutios ad authorities at local, regioal or iteratioal level; uits of a UCI ivestig i moey market istrumets that calculates a et asset value daily ad has a ratig of AAA or a equivalet ratig; 11

14 uits of a UCITS that ivests predomiatly i the bods ad equities listed uder the ext two idets; bods issued or guarateed by top-rated issuers with appropriate liquidity; or equities admitted to or tradig i a regulated market i a member state of the Europea Uio or o a exchage i a OECD member coutry, as log as these equities are cotaied i a major idex. Scope of collateralizatio Securities ledig trasactios are fully collateralized. The price of the securities trasferred i the securities loa, alog with the associated icome, costitutes the secured value. The value of the collateral provided by the borrower may ot be less tha the secured value plus a market premium. Furthermore, derivative trasactios, securities ledig ad repurchase agreemets must be collateralized to a extet that will esure that the amout attributable for the risk of default of the respective couterparty does ot exceed five percet of the fud s assets. If the couterparty is a credit istitutio havig its registered office i a member state of the EU or i aother state that is a party to the Agreemet o the EEA or i a third coutry where equivalet prudetial rules apply, the amout attributable for the risk of default may costitute 10 percet of the fud s assets. Strategy for discoutig valuatios (haircut strategy) The discouts applied to collateral are govered by: a) the couterparty s creditworthiess, b) the liquidity of the collateral, c) the price volatility of the collateral, d) the credit quality of the issuer ad/or e) the coutry or market i which the collateral is traded. The discouts applied are reviewed for appropriateess o a regular basis, at least oce each year, ad are adjusted accordigly if ecessary. Ivestmet of cash collateral Cash collateral i the form of bak balaces may be held i blocked accouts at the fud s Custodia or, with the Custodia s coset, at aother credit istitutio. Reivestmet may occur exclusively i high-quality govermet bods or i moey market fuds with short-term maturity structures. Cash collateral ca additioally be ivested by way of a reverse repurchase agreemet with a credit istitutio if the recovery of the accrued balace is assured at all times. Borrowig Short-term borrowig of up to 10 percet of the fud s assets for the collective accout of the ivestors is permissible if the borrowig coditios are customary i the market, ad if the Custodia grats its coset. LEVERAGE Leverage is defied as ay method by which the Compay ca icrease the ivestmet level of the fud. This ca take place by eterig ito securities loas, through leverage fiacig embedded i derivatives or i other ways. The possibility of usig derivatives ad etry ito securities ledig trasactios is preseted i the sectios Ivestmet priciples ad limits Assets Derivatives, Fud-specific regulatios Derivatives ad Ivestmet priciples ad limits Assets Securities ledig trasactios. The possibility of borrowig is preseted i the sectio Ivestmet priciples ad limits Borrowig. The market risk of the fud may ot be more tha doubled through the use of derivatives (see sectio Ivestmet priciples ad limits Assets Derivatives ). The Compay expects that fud will ot be leveraged by more tha twice the value of its assets uless otherwise provided for i the sectio Fud-specific regulatios Derivatives. Leverage is calculated through divisio of the total exposure of the fud by its et asset value. To calculate the total exposure, the et asset value of the fud is aggregated with all omial amouts of the derivative trasactios beig used i the fud. Ay effects from the reivestmet of collateral i securities ledig trasactios ad repurchase agreemets are also take ito accout. Depedig o market coditios, however, leverage ca fluctuate, ad the targeted level may therefore be exceeded i spite of costat moitorig by the Compay. Derivatives ca be used by the Compay with differig objectives such as for hedgig or to optimize retur. However, the calculatio of the total exposure does ot distiguish betwee the differig objectives of derivative use. For that reaso, the sum of the omial amouts is ot a idicator of the fud s risk exposure. Valuatio Geeral asset valuatio rules Assets admitted for tradig o a exchage / traded i a orgaized market Assets that are admitted for tradig o a exchage or admitted to or icluded i aother orgaized market, as well as subscriptio rights for the fud, are valued at the most recet available tradig price permittig reliable valuatio, uless otherwise provided for i the followig sectio Ivestmet priciples ad limits Valuatio Special rules for the valuatio of idividual assets. Assets ot listed o exchages or traded i orgaized markets, or assets havig o tradig price Assets that are either admitted for tradig o exchages or admitted to or icluded i aother orgaized market, or for which there is o tradig price, are valued at the curret market value deemed appropriate o the basis of a careful assessmet usig suitable valuatio models ad takig ito cosideratio curret market coditios, uless otherwise provided for i the followig sectio Ivestmet priciples ad limits Valuatio Special rules for the valuatio of idividual assets. Special rules for the valuatio of idividual assets Ulisted bods ad promissory ote loas For the purposes of valuig bods that are either admitted for tradig o a exchage or admitted to or icluded i aother orgaized market (e.g., ulisted debt istrumets, commercial papers ad certificates of deposit) ad for the valuatio of promissory ote loas ( Schuldscheidarlehe ), the market prices agreed for comparable bods ad ote loas ad, if applicable, the market prices of bods of comparable issuers ad with equivalet maturities ad iterest rates are used, less a discout to compesate for limited marketability, if ecessary. Moey market istrumets Moey market istrumets are valued at the prevailig market rates. Optios ad futures cotracts Optios belogig to the fud ad liabilities from optios grated to third parties that are admitted for tradig o a exchage or admitted to or icluded i aother orgaized market are valued at the most recet available tradig price permittig reliable valuatio. The same applies with respect to amouts receivable ad payable uder futures cotracts sold for the accout of the fud. The iitial margis charged to the fud are icluded i the value of the fud, takig ito accout the gais ad losses i valuatio established o the day of tradig. Swaps Swaps are valued at the market value deemed appropriate o the basis of a careful assessmet usig suitable valuatio models ad takig ito cosideratio overall circumstaces. Bak balaces, other assets, liabilities, time deposits, ivestmet fud uits ad loas Bak balaces ad certai other assets (e.g., iterest receivable), receivables (e.g., accrued iterest receivable) ad liabilities are geerally measured at their omial value plus accrued iterest. Time deposits are valued at their market value, provided that the time deposit may be cacelled at ay time ad repaymet is ot at omial value plus iterest. Ivestmet fud uits (uits of target fuds) are geerally recogized at the most recetly determied redemptio price or at the most 12

15 recet available tradig price permittig reliable valuatio. If these values are ot available, ivestmet fud uits are valued at the curret market value deemed appropriate o the basis of a careful assessmet usig suitable valuatio models ad takig ito cosideratio curret market coditios. Repaymet claims arisig from ledig trasactios are govered by the applicable price of the assets trasferred as loas. Repurchase agreemets Assets sold uder repurchase agreemets for the accout of the fud shall cotiue to be take ito accout i the valuatio. I additio, the amouts received for the accout of the fud uder repurchase agreemets shall be reported as bak balaces. Assets purchased uder repurchase agreemets for the accout of the fud shall ot be take ito accout i the valuatio. Because of the paymets made by the fud, a claim agaist the trasferor i the amout of the discouted repaymet claims must be take ito accout i the valuatio. Assets deomiated i foreig currecy Assets deomiated i foreig currecy shall be coverted o the same day ito the currecy of the fud usig the currecy s morig fixig by Thomso Reuters (Markets) Deutschlad GmbH at 10:00 AM CET. SUB-FUNDS The fud is ot a sub-fud of a umbrella structure. Uits The rights of the ivestors are represeted exclusively by global certificates whe the fud is lauched. These global certificates are kept at a cetral depository for securities. Ivestors are ot etitled to receive physical delivery of idividual share certificates. Uits may oly be acquired for holdig i custody accouts. Share certificates are made out to bearer ad are issued for oe uit or multiples thereof. Whe a share certificate is trasferred, the rights represeted by it are trasferred also. Issue ad redemptio of uits The Compay prohibits all activities coected with market timig ad similar practices, ad it reserves the right to refuse buy, sell ad exchage orders if it suspects that such practices are beig applied. I such cases, the Compay will take all measures ecessary to protect the other ivestors i the fud. Issue of uits The umber of uits issued is geerally ulimited. Uits ca be purchased from the Custodia. They are issued by the Custodia at the issue price, which is equal to the et asset value per uit plus a iitial sales charge. Acquisitio through a itermediary is also possible; additioal costs may be icurred whe so doig. The Compay reserves the right to susped or permaetly discotiue the issue of uits. If a miimum ivestmet is required for a ivestmet, this fact is disclosed i the sectio Fud-specific regulatios Miimum ivestmet. Redemptio of uits Ivestors ca geerally request the redemptio of uits uless the Compay has temporarily suspeded the redemptio of uits (see sectio Uits Issue ad redemptio of uits Suspesio of the redemptio of uits ). Redemptio orders shall be placed with the Custodia or with the Compay itself. The Compay is obligated to redeem uits at the redemptio price applicable o the settlemet date, which correspods to the et asset value per uit determied o that date less ay applicable redemptio fee. Redemptio through a itermediary is also possible; additioal costs may be icurred whe so doig. Settlemet whe issuig ad redeemig uits The Compay complies with the priciple of equal treatmet of ivestors by esurig that o ivestor ca gai a advatage by buyig or sellig uits at kow et asset values per uit. It therefore imposes a daily order acceptace deadlie. The settlemet of issue ad redemptio orders received at the offices of the Custodia or the Compay by the order acceptace deadlie takes place regularly at the et asset value per uit determied o the date the order is received (= the settlemet date). Orders received by the Custodia or the Compay after the acceptace deadlie are ot settled util the ext valuatio date (= the settlemet date) at the et asset value per uit determied o that date. The Fud-specific regulatios sectio ca provide otherwise i particular idividual cases. The order acceptace deadlie for this fud is published o the Compay s Web site at www. dws.de. It ca be chaged by the Compay at ay time. Third parties like the istitutio maitaiig the custody accout, for example, ca additioally act as itermediaries i the issue ad redemptio of uits. This ca result i loger settlemet periods. The Compay has o ifluece o the differet settlemet arragemets of istitutios maitaiig custody accouts. Uless otherwise specified i the Fud-specific regulatios sectio, the postig of the respective uits or the trasfer of the amout to be received takes place two bak busiess days after the settlemet date. This period refers to the processig activity betwee the istitutio maitaiig the custody accout ad the Custodia. Postig or trasfer from the istitutio maitaiig the custody accout to the desired recipiet accout must follow afterward, ad may lead to additioal delays. Ivestors should therefore allow sufficiet time whe plaig for specific paymet dates. Suspesio of the redemptio of uits The Compay may susped the redemptio of uits uder exceptioal circumstaces that make a suspesio appear ecessary whe takig ito cosideratio the iterests of ivestors. Such exceptioal circumstaces iclude, for example, the uscheduled closig of a exchage o which a sigificat portio of the securities of the fud is traded or that the assets of the fud caot be valued. A temporary suspesio of redemptio is admissible particularly if the paymet obligatios resultig from the redemptio caot be met out of the liquid assets of the fud. As log as redemptio is suspeded, o ew shares may be issued. The Compay shall, without delay, otify BaFi ad the competet istitutios of those other member states of the EU or those other states that are parties to the Agreemet o the EEA i which it sells uits of its decisio to susped redemptio. The Compay reserves the right ot to redeem or exchage uits util it has disposed of assets of the fud without delay, but servig the iterests of all ivestors, at the redemptio price the applicable. The Compay shall otify the ivestors by meas of a aoucemet i the Budesazeiger ad additioally i busiess publicatios ad daily ewspapers with sufficiet circulatio, or o the Iteret at about the suspesio of the redemptio of uits ad its resumptio. Ivestors shall additioally be iformed o paper or i electroic format via their istitutios maitaiig custody accouts. If it is ot possible to fulfill all ivestor claims for redemptio of uits, the claims shall be fulfilled i the chroological order of their assertio. Claims made o the same day shall be fulfilled pro rata. Liquidity maagemet The Compay has specified writte priciples ad procedures that eable it to moitor the fud s liquidity risks ad to esure that the liquidity profile of the ivestmets of the fud matches the uderlyig liabilities of the fud. The priciples ad procedures iclude: The Compay moitors the liquidity risks that may arise at the level of the fud or of the assets. It makes a assessmet of the liquidity of the assets held i the fud i relatio to the fud s assets ad stipulates a liquidity ratio. The evaluatio of liquidity icludes, for example, a aalysis of the tradig volume, the complexity of the asset ad the umber of tradig days that are required to dispose of the respective asset without ifluecig the market price. The Compay also moitors the ivestmets i target fuds ad their redemptio policies, ad ay resultig impact o the liquidity of the fud. 13

16 The Compay moitors the liquidity risks that ca result from elevated demad by ivestors for the redemptio of uits. Here it forms expectatios about et chages i capital, takig ito accout available iformatio o the ivestor structure ad experiece from historical et chages i capital. It takes ito accout the effects of large-scale call risks ad other risks (such as reputatioal risks). The Compay has established adequate liquidity risk limits for the fud. It moitors compliace with these limits ad has specified procedures to follow if the limits are or might be exceeded. The procedures istituted by the Compay esure cosistecy betwee liquidity ratio, the liquidity risk limits ad the et chages i capital to be expected. The Compay reviews these priciples regularly ad updates them accordigly. The Compay coducts stress tests o a regular basis, at least oce each year, with which it ca evaluate the liquidity risks of the fud. The Compay coducts the stress tests o the basis of reliable ad curret quatitative or, where that is ot appropriate, qualitative iformatio. This iformatio icudes ivestmet strategy, redemptio periods, paymet obligatios ad periods withi which the assets ca be sold, as well as iformatio relatig to geeral ivestor behavior ad market developmets. The stress tests simulate ay potetial lack of liquidity of the assets i the fud, as well as requests for redemptios that are uusual i terms of umber ad scope. They cover market risks ad their effects, icludig margi calls, collateral requiremets or lies of credit. They take ito accout valuatio sesitivities uder stress coditios. They are performed at frequecies appropriate for the type of fud, takig ito accout the ivestmet strategy, the liquidity profile, the ivestor structure ad the redemptio priciples of the fud. The redemptio rights uder ormal ad exceptioal circumstaces, as well as the suspesio of the the redemptio of uits, are preseted i the sectios Uits Issue ad redemptio of uits Issue of uits, Uits Issue ad redemptio of uits Redemptio of uits ad Uits Issue ad redemptio of uits Suspesio of the redemptio of uits ). The associated risks are explaied uder Risk warigs Risks of ivestig i the fud Suspesio of the redemptio of uits ad Risks of restricted or elevated liquidity of the fud (liquidity risk). Fair treatmet of ivestors ad uit classes Uless the Fud-specific regulatios sectio provides otherwise, all uits issued have the same cofiguratio characteristics ad o uit classes shall be formed. If the Fud-specific regulatios sectio does provide for the formatio of uit classes, all issued uits of a specific uit class shall have the same cofiguratio characteristics. Additioal uit classes may be formed. The uit classes may especially differ with respect to the distributio policy, the iitial sales charge, the redemptio fee, the currecy of the et asset value per uit, the maagemet fee, the miimum ivestmet or a combiatio of these features. The Compay shall treat the fud s ivestors fairly. Whe maagig liquidity risk ad redeemig uits, it may ot place the iterests of oe ivestor or group of ivestors ahead of the iterests of aother ivestor or group of ivestors. Regardig the procedures used by the Compay to esure the fair treatmet of ivestors, see the sectios Uits Issue ad redemptio of uits Settlemet whe issuig ad redeemig uits, Uits Liquidity maagemet ad Fair treatmet of ivestors / Hadlig of coflicts of iterest. The Compay may, at its discretio, agree with idividual ivestors the partial repaymet to them of the maagemet fees collected. This ca be a cosideratio especially i the case of istitutioal ivestors who directly ivest large amouts for the log term. The Compay s Istitutioal Sales divisio is resposible for these matters. Issue ad redemptio prices I calculatig the issue price ad the redemptio price for the uits, the Custodia determies o each valuatio date, with the participatio of the Compay, the value of the assets owed by the fud less ay liabilities of the fud (the et asset value ). The result of dividig the et asset value thus determied by the umber of uits issued is the value of each uit (the et asset value per uit ). All exchage tradig days are days o which the et asset value per uit of the fud is determied. O public holidays withi the scope of the KAGB that are tradig days, as well as o December 24 ad December 31 of each year, the Compay ad the Custodia may refrai from calculatig these prices. No calculatio of the et asset value per uit curretly takes place o New Year s Day, Good Friday, Easter Moday, May Day, Ascesio Day, Whit Moday, Corpus Christi, the Day of Germa Uity, Christmas Eve, Christmas Day, St. Stephe s Day ad New Year s Eve. There are some additioal days such as foreig holidays that ca also be excluded as valuatio days i the Fud-specific regulatios sectio. Suspesio of the calculatio of the issue ad redemptio prices The Compay may susped the calculatio of the issue ad redemptio prices uder the same coditios as the redemptio of uits. These circumstaces are explaied i more detail i the sectio Uits Issue ad redemptio of uits Suspesio of the redemptio of uits. Iitial sales charge ad redemptio fee Precise details o the iitial sales charge ad o the redemptio fee are preseted i the sectios Fud-specific regulatios Iitial sales charge ad the Fud-specific regulatios Redemptio fee. Publicatio of the issue ad redemptio prices For each issue ad redemptio of uits, the issue ad redemptio prices shall be published i a busiess publicatio ad a daily ewspaper with sufficiet circulatio ad/or o the Iteret at If uits are redeemed through third parties, costs could be icurred for the redemptio of the uits. Costs higher tha the issue price may be charged if the uits are sold through third parties. Costs Costs related to the issue ad redemptio of uits No additioal costs are charged by the Compay or the Custodia for the issue ad redemptio of uits at the respective issue price (et asset value per uit plus iitial sales charge) or redemptio price (et asset value per uit). If the ivestor acquires uits through third parties, these third parties ca assess costs that are higher tha the iitial sales charge. If the ivestor redeems uits through third parties, these third parties ca assess their ow costs whe redeemig the uits. Admiistrative ad other costs Details o admiistrative ad other costs are preseted i the sectio Fud-specific regulatios Admiistrative ad other costs. Circumstaces particular to the acquisitio of ivestmet fud uits I additio to the fees for the maagemet of the fud, a maagemet fee is also assessed for the uits of target fuds held i the fud. These ogoig charges for the target fud uits held i the fud are take ito cosideratio whe calculatig the total expese ratio (see sectio Costs Total expese ratio ). I coectio with the acquisitio of target fuds, the followig types of fees, costs, taxes, commissios ad other expeses are bore directly or idirectly by the ivestors of the fud: the maagemet fee / all-i fee of the target fud; the performace-based fee of the target fud; the iitial sales charges ad redemptio fees of the target fud; reimbursemets of expeses by the target fud; other costs. Whe acquirig uits of ivestmet fuds that are directly or idirectly maaged by the Compay itself or by aother compay with which the 14

17 Compay is affiliated by virtue of joit maagemet or cotrol, or through a material direct or idirect equity iterest amoutig to more tha 10% of the capital or votig rights (hereiafter affiliated ivestmet fuds ), the fud may oly be charged a reduced all-i fee of 0.25% i respect of the extet of such ivestmets. If the Compay ivests i uits of affiliated fuds havig a all-i fee lower tha that of the fud, the Compay may, istead of chargig the reduced all-i fee, charge to the fud for the uits acquired the differece betwee the all-i fee of the fud ad the all-i fee of the affiliated ivestmet fud, which may be higher tha the reduced all-i fee. The same shall apply with respect to the maagemet fee if o all-i fee is charged to the fud ad/or the affiliated ivestmet fud. The sectio Fud-specific regulatios Circumstaces particular to the acquisitio of ivestmet fud uits may cotai differet provisios. The aual ad semiaual reports will cotai a disclosure of the iitial sales charges ad redemptio fees that have bee charged to the fud durig the reportig period for the acquisitio ad redemptio of uits of target fuds. The Compay or the other compay may ot charge iitial sales charges or redemptio fees whe purchasig affiliated ivestmet fuds. Also disclosed i the aual ad semiaual reports will be the fee that was charged to the fud as a maagemet fee for the target fud uits held i the fud by a domestic or foreig compay, or by a compay with which the Compay is affiliated through a material direct or idirect equity iterest. The same shall apply with respect to the all-i fee, if a all-i fee is charged to the fud ad/or the affiliated ivestmet fud. Buy ad sell orders for securities ad fiacial istrumets The Compay submits buy ad sell orders for securities ad fiacial istrumets directly to brokers ad traders for the accout of the fud. It cocludes agreemets with these brokers ad traders uder customary market coditios that comply with first-rate executio stadards. Whe selectig the broker or trader, the Compay takes ito accout all relevat factors, such as the credit ratig of the broker or trader ad the quality of the market iformatio, the aalyses, as well as the executio capacities provided. Moreover, the Compay cocludes agreemets uder which it ca take advatage of ad utilize valuable beefits offered by brokers ad traders. These valuable beefits, which are accepted i accordace with article 2 of the Germa statutory regulatio o rules of coduct ad orgaizatioal requiremets ( KAVerOV ), iclude services provided by the brokers ad traders directly ad those provided by third parties. These services may iclude the followig, for example: particular advice regardig the advisability of tradig a asset or its valuatio, aalyses ad cosultatio services, ecoomic ad political aalyses, portfolio aalyses (icludig valuatio ad performace measuremet), market aalyses, market ad price iformatio systems, iformatio services, computer hardware ad software, or ay ad all other meas of gatherig iformatio i the scope i which they are used to support the ivestmet decisio process ad the performace of the services owed by the Compay i respect of the ivestmets of the fud. That meas brokerage services may ot be limited to geeral aalysis, but may also iclude special services such as Reuters ad Bloomberg. Agreemets with brokers ad traders may iclude the coditio that traders ad brokers are to trasfer to third parties immediately or later a portio of the commissios paid for the purchase or sale of assets; said commissios shall be provided by the Compay for the services previously specified. The Compay shall comply with all valid regulatory provisios ad idustry stadards whe takig advatage of these beefits (ofte also called soft dollars ). I particular, the Compay shall ot accept ay beefits, or coclude ay agreemets o obtaiig such beefits, if these agreemets do ot support the Compay i its ivestmet decisio process accordig to reasoably prudet discretio. The prerequisite is that the Compay shall always esure that the trasactios are executed while takig ito accout the appropriate market at the appropriate time for trasactios of the appropriate type ad size at the best possible coditios ad that o uecessary busiess trasactios are cocluded to acquire the right to such beefits. The goods ad services received withi the scope of soft-dollar agreemets shall exclude travel, accommodatios, etertaimet, geeral admiistrative goods ad services, geeral office equipmet ad office space, membership fees, employee salaries ad direct cash paymets. Commissio sharig The Compay may coclude agreemets as defied i the Buy ad sell orders for securities ad fiacial istrumets sectio above with select brokers uder which the respective broker trasfers, either immediately or after a time delay, portios of the paymets it receives uder the relevat agreemet from the Compay for the purchase or sale of assets to third parties that will provide research or aalytical services to the Compay, or retais them as a fee for coductig its ow research or aalytical services o the istructios of the Compay. The services uder these so-called commissio-sharig agreemets are used by the Compay for the purpose of maagig the fud. To clarify: the Compay shall use these services as specified i ad oly i accordace with the coditios set out i the sectio Costs Buy ad sell orders for securities ad fiacial istrumets. The Compay offers to disclose more detailed iformatio to its ivestors. Total expese ratio I the aual report, the maagemet costs accrued ad charged to the fud durig the fiscal year are disclosed ad reported as a ratio of the fud s average et assets (total expese ratio). Maagemet costs cosist of fees for the maagemet of the fud, the remueratio of the Custodia ad the additioal expeses that ca be charged to the fud (see sectios Fud-specific regulatios Admiistrative ad other costs ad Costs Circumstaces particular to the acquisitio of ivestmet fud uits ). If the fud ivests a substatial portio of its assets i other ope-eded ivestmet udertakigs, the total expese ratio of these target fuds is additioally take ito accout. The total expese ratio icludes either icidetal costs or costs icurred i the purchase ad sale of assets (trasactio costs). The total expese ratio is published i the key ivestor iformatio documet as so-called ogoig charges. DETERMINATION OF INCOME Determiatio of icome, icome adjustmet procedure The fud geerates icome from the iterest, divideds ad icome from ivestmet fud uits that have accrued durig the fiscal year ad have ot bee applied to cover costs. The fud additioally receives cosideratios from ledig trasactios ad repurchase agreemets. Further icome ca result from the disposal of assets held for the accout of the fud. The Compay uses a so-called icome adjustmet procedure for the fud. This meas that the prorated icome over the fiscal year that the purchaser of uits must pay as part of the issue price, ad that the seller of share certificates receives as part of the redemptio price, are cotiually offset. Whe calculatig the icome adjustmet, the expeses icurred are take ito accout. This icome adjustmet procedure serves to eve out fluctuatios i the ratio betwee icome ad other assets caused by the et capital iflows ad outflows associated with issues ad redemptios of uits. Otherwise, every et capital iflow of liquid assets would decrease the proportio of icome i the et asset value of the fud, while every et capital outflow would icrease it. I the case of a distributig ivestmet fud, the ultimate effect of the icome adjustmet procedure is that the amout distributed per uit will ot be iflueced by uforeseeable developmets i the fud or the umber of uits outstadig. I doig so, it is accepted that ivestors acquirig uits shortly before a distributio date, for istace, will receive back the portio of the issue price attributable to icome i the form of a divided, eve though their paid-i capital did ot cotribute to the geeratio of that icome. 15

18 I the case of a reivestig ivestmet fud, the ultimate effect of the icome adjustmet procedure is that the icome per uit reported i the aual report will ot be iflueced by ay chages i the umber of uits outstadig. LIQUIDATION AND MERGER OF THE FUND Coditios for the liquidatio of the fud The ivestors are ot etitled to demad the liquidatio of the fud. The Compay may, however, termiate its right to maage the fud by givig a miimum of six moths otice by way of a aoucemet i the Budesazeiger ad additioally i the aual report or semiaual report. Ivestors shall additioally be iformed about the termiatio o paper or i electroic format via their istitutios maitaiig custody accouts. Upo the effective termiatio of its maagemet, the Compay s right to maage the fud shall cease. The Compay s right to maage shall also cease upo the istitutio of bakruptcy proceedigs cocerig its assets or whe a judicial order by which the applicatio for the istitutio of such proceedigs is rejected for lack of assets becomes fial ad bidig. Whe the Compay s right to maage expires, the right to dispose of the fud passes to the Custodia, which shall wid up the fud ad distribute the proceeds to the ivestors or, with the approval of BaFi, trasfer maagemet to aother asset maagemet compay. Procedure for the liquidatio of the fud Oce the right to dispose of the fud passes to the Custodia, the issue ad redemptio of uits ceases ad the fud is woud up. The proceeds from the sale of the fud s assets, less ay remaiig costs still payable by the fud ad the costs associated with the liquidatio, are distributed to the ivestors. The ivestors shall be etitled to a share of the liquidatio proceeds that is proportioal to the umber of uits they hold i the fud. The Compay will prepare a liquidatio report, dated to the day o which its right to maage expires, that meets the requiremets of a aual report. No later tha three moths after the date of liquidatio of the fud, the liquidatio report is published i the Budesazeiger. While the Custodia liquidates the fud, it prepares liquidatio reports that meet the requiremets of a aual report aually ad o the date that the liquidatio is completed. These reports must also be published i the Budesazeiger o later tha three moths after the date of liquidatio. Settlemet whe distributig the liquidatio proceeds Settlemet takes place three bak busiess days after the liquidatio date. This period refers to the processig activity betwee the istitutio maitaiig the custody accout ad the Custodia. Postig or trasfer from the istitutio maitaiig the custody accout to the desired recipiet accout must follow afterward, ad may lead to additioal delays. Ivestors should therefore allow sufficiet time whe plaig for specific paymet dates. CONDITIONS FOR THE MERGER OF THE FUND All the assets of this fud may, with the approval of BaFi, be trasferred to aother curretly existig ivestmet udertakig or to a ew ivestmet udertakig established by the merger that must fulfill the requiremets of a UCITS ad which was lauched i Germay or i aother EU or EEA state. All the assets of the fud may also be trasferred to a curretly existig domestic ivestmet stock corporatio with variable capital or to a ew oe established by the merger. The trasfer takes effect at the ed of the fud s fiscal year (the key date of trasfer ), uless aother key date of trasfer is specified. Rights of ivestors i the merger of the fud The istitutios maitaiig the custody accouts of the fud s ivestors will, o later tha 37 days before the proposed key date of trasfer, iform ivestors o paper or i electroic format about the reasos for the merger, the potetial effects for ivestors ad the rights of ivestors i coectio with the merger, as well as o material procedural aspects. Ivestors will further receive the key ivestor iformatio documet for the ivestmet udertakig to which the assets of the fud are to be trasferred. Ivestors have five workig days before the proposed key date of trasfer to either retur their uits at o additioal cost other tha the costs icurred for the liquidatio of the fud or to exchage their uits for uits of aother opeeded retail ivestmet udertakig that is also maaged by the Compay or aother etity belogig to the same group of compaies ad whose ivestmet priciples are comparable to those of the fud. O the key date of trasfer, the et asset values of the fud ad of the receivig ivestmet udertakig are calculated, the coversio ratio is determied, ad the etire exchage procedure is examied by the auditor. The coversio ratio is calculated o the basis of the ratio of the et asset values per uit of the fud ad of the receivig ivestmet udertakig at the time of the trasfer. The ivestor receives the umber of uits of the receivig ivestmet udertakig that correspods to the value of the uits held i the fud. If ivestors do ot avail of their redemptio or exchage right, they become ivestors i the receivig ivestmet udertakig o the key date of trasfer. The Compay ca also has the optio to arrage with the maagemet compay of the receivig ivestmet udertakig that ivestors i the fud shall receive a disbursemet i cash of up to 10 percet of the value of their uits. Oce all the assets of the fud are trasferred, the fud ceases to exist. If the trasfer takes place durig the curret fiscal year of the fud, the Compay must prepare a report, dated to the key date of trasfer, that meets the requiremets of a aual report. The Compay will aouce i the Budesazeiger, ad additioally i a busiess publicatio ad a daily ewspaper with sufficiet circulatio, whe the fud was merged ito aother ivestmet udertakig maaged by the Compay ad whe the merger took effect. If the fud is merged ito a ivestmet udertakig that is ot maaged by the Compay, the maagemet compay that admiisters the receivig or ewly established ivestmet udertakig makes the aoucemet of the merger takig effect. Outsourcig The Compay has outsourced the followig material activities to DWS Holdig & Service GmbH, Maizer Ladstraße , Frakfurt/Mai, Germay: fud accoutig, fud fiacial reportig, moitorig of compliace with laws (icludig ivestmet limit compliace testig), tax returs for ivestmet fuds, legal services. The followig coflicts of iterest could result from such outsourcig: DWS Holdig & Service GmbH is a compay affiliated with the Maagemet Compay. It caot be ruled out that the cotract might have bee cocluded i aother form if a maagemet compay were ivolved that is ot liked uder corporate law or persoally. DWS Holdig & Service GmbH has itself delegated the followig material activities: ivestmet limit compliace testig to DB Risk Ceter GmbH, Hardebergstraße 32, Berli, Germay, trasactio ad positio moitorig to Deutsche Bak AG, Tauusalage 12, Frakfurt/Mai, Germay, ad Deutsche Bak AG, Lodo Brach, 1 Great Wichester Street, Lodo EC2N 2DB, Uited Kigdom, portios of fud accoutig to DBOI Global Services Private Ltd., Evolve Mahidra Techology Park, Tower A1, Groud & 1st Floor, Iside Mahidra World City SEZ, Jaipur (Rajastha) Idia, legal services i coectio with OTC derivatives to Deutsche Bak AG, Tauusalage 12, Frakfurt/Mai, Germay, moitorig of compliace with laws (icludig moitorig of persoal employee trasactios) to Deutsche Bak AG, Tauusalage 12, Frakfurt/Mai, Germay. The followig coflicts of iterest could result from such outsourcig: DB Risk Ceter GmbH, Deutsche Bak AG ad DBOI Global Services Private Ltd. are compaies 16

19 affiliated with the Maagemet Compay. It caot be ruled out that the respective cotracts might have bee cocluded i aother form if a maagemet compay were ivolved that is ot liked uder corporate law or persoally. The Compay has outsourced the followig activities to Deutsche Bak AG: moitorig of compliace with moey-lauderig regulatios. The followig coflicts of iterest could result from such outsourcig: Deutsche Bak AG is a compay affiliated with the Maagemet Compay. It caot be ruled out that the cotract might have bee cocluded i aother form if a maagemet compay were ivolved that is ot liked uder corporate law or persoally. The Compay has outsourced the followig activities to Securities Class Actio Services LLC, 702 Kig Farm Boulevard, Suite 400, Rockville, MD 20850, USA: legal services i coectio with classactio litigatio. If the Compay has outsourced portfolio maagemet, this fact is disclosed i the sectio Fud-specific regulatios. CONFLICTS OF INTEREST The followig coflicts of iterest ca occur at the Compay: The iterests of the ivestor ca coflict with the followig iterests: iterests of the Compay ad those of compaies affiliated with it, iterests of the Compay s employees or iterests of other ivestors i this fud or i other fuds. Circumstaces or relatioships that could create coflicts of iterest iclude, i particular: icetive systems for employees of the Compay, persoal employee trasactios, bouses to employees of the Compay, reallocatios i the fud, improvemet of fud performace for presetatio o reportig dates ( widow dressig ), trasactios betwee the Compay ad the ivestmet udertakigs or idividual portfolios maaged by it ad trasactios betwee the ivestmet udertakigs ad/or idividual portfolios maaged by the Compay, aggregatio of multiple orders ( block trades ), appoitmet of related parties, substatial idividual ivestmets, trasactios after the close of tradig at the already foreseeable closig price of the curret day, so-called late tradig. I relatio to trasactios for the accout of the fud, the Compay ca receive valuable bee fits (broker research, fiacial aalyses ad market ad price iformatio systems), which are used for ivestmet decisios i the iterests of the ivestors. The Compay does ot receive ay reimbursemet of the fees ad expese reimbursemets paid out of the fud to the Custodia ad third parties. The Compay grats brokerage fees, so-called trail commissios, to itermediaries such as credit istitutios o a recurrig basis, usually aually. Such paymets are i compesatio for distributio services performed o a agecy basis ad may costitute a substatial share of the Compay s maagemet fee. FAIR TREATMENT OF INVESTORS / HANDLING OF CONFLICTS OF INTEREST Guidig priciple The Compay coducts its operatios i such a way that coflicts of iterest are hadled i a fair maer, both betwee the Compay, its employees ad its cliets ad betwee oe cliet ad aother. I coflicts of iterest betwee the Compay or its employees o the oe had ad the cliet o the other had, cliet iterests shall always take priority. Itroductio As a globally active fiacial services provider, the Compay ad its affiliated compaies withi the Deutsche Bak Group (icludig Deutsche Bak AG) are costatly cofroted with actual or potetial coflicts of iterest. It is a priciple of the Compay to take all reasoable steps to establish orgaizatioal structures ad to apply effective admiistrative measures to eable the idetificatio, hadlig ad moitorig of the coflicts i questio. The Compay s maagemet is resposible for esurig that the systems, cotrols ad procedures of the Compay for the idetificatio, moitorig ad resolutio of coflicts of iterest are appropriate. The Compliace ad Legal departmets of the Compay provide support i the idetificatio ad moitorig of actual ad potetial coflicts of iterest. The Compay has appropriate procedures i place to idetify, hadle ad moitor actual or potetial coflicts of iterest o a divisio-specific basis. The Compay has established priciples for hadlig coflicts of iterest; they are available o the DeAWM Web site i their respective curret versio. Objective The Compay will take reasoable steps to idetify ad appropriately hadle coflicts of iterest that have a material adverse effect o cliet iterests. Correspodig guidelies specify the requiremets for appropriate procedures ad measures at Group ad divisioal level to idetify, prevet ad, where prevetio is ot possible, hadle all such material coflicts of iterest i the best iterests of the affected cliets. Fair treatmet of ivestors The Compay is obligated to treat the fud s ivestors fairly. It maages the lauched ivestmet udertakig accordig to the priciple of equal treatmet by ot givig preferetial treatmet to some ivestmet udertakigs, ad ivestors of the ivestmet udertakigs, at the expese of others. The decisio-makig processes ad orgaizatioal structures of the Compay are aliged accordigly. The Compay is aware that coflicts of iterest may arise based o the fuctios that employees of the Maagemet Compay perform as members of the Deutsche Bak Group. I respect of such evetualities, each Deutsche Bak Group member has udertake to edeavor, to a reasoable extet, to resolve such coflicts of iterest equitably (with regard to the members respective duties ad resposibilities), ad to esure that the iterests of the ivestors are ot adversely affected. The Compay is of the view that Deutsche Bak Group members possess the required aptitude ad competece to perform such duties. (Potetial) Material coflicts of iterest The followig material coflicts of iterest ca have a egative impact o the ecoomic result achievable by the ivestor ad i particular lead to lower payouts to ivestors (see also the risk warigs). I additio, other coflicts of iterest ca exist or occur i the future that might also have a egative impact particularly o the ecoomic result achievable by the ivestor, ad lead to lower payouts to ivestors. a) Coflicts of iterest at the level of the Compay Deutsche Bak AG ad the Compay, as well as the persos takig actios at these compaies, are all members of the Deutsche Bak Group (collectively Affiliated Etities ). Some of them are also ivolved or active i the same or similar fuctios at other fuds as at this fud, or will be i the future. This ca give rise to coflicts of iterest. The Affiliated Etities are directly or idirectly coected to each other uder corporate law or persoally. The partial idetities of the compaies ivolved, ad the corporate or persoal liks betwee them, ca lead to coflicts of iterest. It caot be ruled out that cotracts material for the fud might have bee cocluded i aother form if oly such compaies were ivolved that do ot perform multiple fuctios ad are ot liked uder corporate law or persoally. The iterests of the compaies ad persos ivolved ca coflict with each other. I the evet of coflicts of iterest affectig the Compay, 17

20 the Compay will edeavor to resolve such coflicts i favor of the fud s ivestors. Isofar as the iterests of the ivestors are also affected, the Compay will edeavor to avoid ay coflicts of iterest ad, if it is impossible to avoid such coflicts, to esure that ievitable coflicts of iterests are resolved while suitably protectig the iterests of the ivestors. The fud ca ivest i fiacial istrumets (e.g., moey market fuds) whose uderlyigs are the compaies of the Deutsche Bak Group ad their subsidiaries, or Affiliated Etities. I some cases, such trasactios, derivatives trasactios, derivatives cotracts or similar items may have to be evaluated o the basis of iformatio provided by the couterparties. Such iformatio may costitute i these cases the basis for calculatio of the value of particular assets of the respective fud by the Custodia. This ca give rise to coflicts of iterest. Assets of the fud i the form of bak balaces, uits of ivestmet udertakigs or securities (to the extet permissible accordig to the terms ad coditios of ivestmet of the respective fud) may be deposited with Affiliated Etities i accordace with the legal provisios at the Custodia. Bak balaces of the fud may be ivested i securities or certificates of deposit issued by Affiliated Etities or i bak deposits offered by Affiliated Etities. This ca have the cosequece that, i additio to the iterest rate (e.g., for bak balaces), other factors cocerig the ivestmet become relevat as well (e.g., flow of iformatio, but also ad especially the iterest of the Affiliated Etities i ivestmets i their ow products or those of Affiliated Etities). Bakig or comparable trasactios ca also be coducted with or through the Affiliated Etities. Affiliated Etities ca further be couterparties i derivatives trasactios or derivatives cotracts. This ca give rise to coflicts of iterest i the valuatio of such derivatives trasactios or derivatives cotracts. Notwithstadig provisios to the cotrary i this documet, the Compay may actively coduct trasactios for the accout of other fuds that ivolve the same uits, real estate, securities, assets ad istrumets i which the Compay will ivest. The Compay may provide for other fuds ad accouts ivestmet maagemet ad advisory services ad admiistrative services that have similar or differet ivestmet objectives to those of the fud ad/or which ca execute ivestmet programs similar to those of the fud ad i which they have o ivolvemet. The portfolio strategies that are used for these or other ivestmet fuds could coflict with the trasactios ad strategies that are recommeded by the Affiliated Etities i the maagemet of the fud, ad adversely affect the prices ad availability of the uits, securities ad istrumets i which the fud ivests. The Compay devotes to the activities of the fud as much time as it deems ecessary ad appropriate. There are o restrictios o the Compay whe it comes to lauchig additioal ivestmet fuds, especially with regard to eterig ito further ivestmet advisory relatioships or pursuig additioal busiess activities, eve if those activities are i competitio with the activities of the fud. b) Coflicts of iterest at the level of the distributors Because potetial distributors receive a share of fee compoets or other paymets from the Compay, there is a added icetive for the distributor to geerate sales. c) Repaymet of maagemet fees collected The Compay may, at its discretio, agree with idividual ivestors the partial repaymet to them of the maagemet fees collected. This ca be a cosideratio especially i the case of istitutioal ivestors who directly ivest large amouts for the log term. The Compay s Istitutioal Sales divisio is resposible for these matters. Auditor The audit firm KPMG AG, THE SQUAIRE, Am Flughafe, Frakfurt/Mai, Germay, has bee appoited auditor of the fud ad of the aual report. The auditor audits the aual report of the fud. Whe performig the audit, the auditor shall also determie whether the fud has bee maaged i compliace with the provisios of the KAGB ad those of the Terms ad Coditios of Ivestmet. The auditor shall summarize the fidigs of the audit i a special report; the auditor s report shall be reproduced i full i the aual report. The auditor shall submit the auditor s report for the fud to BaFi o request. PAYMENTS TO INVESTORS / DISTRIBUTION OF REPORTS AND OTHER INFORMATION The appoitmet of the Custodia esures that ivestors will receive divided distributios ad that uits will be redeemed. The ivestor iformatio metioed i this sales prospectus ca be obtaied i the maer idicated i the sectio Geeral priciples Sales documetatio ad disclosure of iformatio. The documetatio ca also be obtaied at the Custodia. Service providers Compaies that are assumig fuctios outsourced by the Compay are preseted uder Outsourcig. The Compay has additioally appoited the followig service providers: KPMG AG Wirtschaftsprüfugsgesellschaft, THE SQUAIRE, Am Flughafe, Frakfurt/ Mai, Germay, as the auditor of the fud ad of the aual report. State Street Bak, Brieer Straße 59, Muich, Germay, for the admiistratio of collateral i coectio with securities ledig ad derivatives trasactios. JP Morga Chase Bak, Natioal Associatio, Lodo brach, 1 Kightsbridge, Lodo SW1X 7LX, Uited Kigdom, for the admiistratio of collateral i coectio with securities ledig trasactios. Istitutioal Shareholder Services, Te Bishops Square, Lodo E1 6EG, Uited Kigdom, for the preparatio of proposals o exercisig votig rights. WM Dateservice, Düsseldorfer Straße 16, Frakfurt/Mai, Germay, as service provider for publicatios. Bloomberg, Neue Maizer Straße 75, Frakfurt/Mai, Germay, as service provider for publicatios. Smarthouse Media GmbH, Hirschstraße 2, Karlsruhe, Germay, for hostig ad operatig the Web site. Keip Commuicatio S.A., 26/28 rue Edward Steiche, 2540 Luxembourg, Luxembourg. The appoitmet of the service providers does ot give rise to coflicts of iterest. If a ivestmet advisor is beig used, this fact is disclosed i the sectio Fud-specific regulatios. Deutsche Asset & Wealth Maagemet Ivestmet GmbH will gladly provide the ames of further service providers (e.g., the law firms ad tax firms egaged) o request. 18