INSIGHT LIQUIDITY FUNDS

Transcription

1 INSIGHT LIQUIDITY FUNDS p.l.c. (An umbrella type open-ended investment company with variable capital with segregated liability between sub funds. A company incorporated with limited liability under the laws of Ireland with registered number PROSPECTUS This Prospectus is dated 21 October 2013 The Directors of Insight Liquidity Funds p.l.c. whose names appear in this Prospectus accept responsibility for the information contained in this Prospectus and in the Supplements. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. This Prospectus should be read in conjunction with the relevant Supplement dealing with each Fund. M

2 IMPORTANT INFORMATION The authorisation of Insight Liquidity Funds p.l.c. (the Company) by the Central Bank of Ireland (the Central Bank) shall not constitute a warranty as to the performance of the Company and the Central Bank shall not be liable for the performance or default of the Company. The value of and income from Shares in the Company may go up or down and you may not get back the amount you have invested in the Company. Information applicable to the Company generally is contained in this Prospectus. Each Fund offered by the Company and the shares available in the Fund are described in the relevant Supplement for that Fund. Before investing in the Company, you should consider the risks involved in such investment. Please see "Risk Factors" applicable to the Fund in this Prospectus and the Supplements thereto. If you are in any doubt about the contents of this Prospectus you should consult your Stockbroker, Bank Manager, Solicitor, Accountant or other financial adviser. Distribution of this Prospectus is not authorised in any jurisdiction unless accompanied by a copy of the then latest by a copy of the then latest annual report and audited accounts of the Company and, if published after such report, a copy of the then latest semi-annual report and unaudited accounts. Such reports and this Prospectus together form the prospectus for the issue of Shares in the Company. The Company is an umbrella investment company with variable capital and segregated liability between Funds incorporated on 3 December 2002 and is authorised in Ireland as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended). Such authorisation is not an endorsement or guarantee of the Company or any Fund by the Central Bank, nor is the Central Bank responsible for the contents of this Prospectus. The Company has segregated liability between its Funds and accordingly any liability incurred on behalf of or attributable to any Fund shall be discharged solely out of the assets of that Fund. Application may be made to list Shares of the Company on the main securities market of the Irish Stock Exchange. Details of any such listing are set out in the Supplement of the relevant Fund. No application has been made for the Shares of the Company to be listed on any other stock exchange. The Directors do not anticipate that an active secondary market will develop in the Shares of the Company. Neither the admission of Shares of the Company to the official list and trading on the main securities market of the Irish Stock Exchange nor the approval of the Prospectus shall constitute a warranty or representation by the Irish Stock Exchange as to the competence of M

3 service providers to or any other party connected with the Company, the adequacy of information contained in the Prospectus or the suitability of the Company for investment purposes. This Prospectus may not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised. In particular, the Shares have not been registered under the United States Securities Act of 1933 (as amended) and may not, except in a transaction which does not violate US securities laws, be directly or indirectly offered or sold in the United States or to any United States Person. The Company will not be registered under the United States Investment Company Act of This Prospectus is issued in the United Kingdom ( UK ) by Insight Investment Funds Management Limited, which is regulated in the conduct of its investment business by the Financial Conduct Authority. The Company is recognised for distribution in the UK for the purpose of the Financial Services and Markets Act 2000 of the United Kingdom and the rules of the Financial Conduct Authority made thereunder. This document is not addressed to or intended for any individual or legal entity in the Netherlands except individuals or legal entities who qualify as qualified investors (as defined by section 1:1 of the Act on financial supervision (Wet op het financieel toezicht), as amended). The Articles of the Company give powers to the Directors to impose restrictions on the holding of Shares by (and consequently to repurchase Shares held by), or the transfer of Shares to, any United States Persons or by any person who appears to be in breach of the laws or requirements of any country or government authority or by any person or persons in circumstances (whether directly or indirectly affecting such person or persons, and whether taken alone or in conjunction with any other persons, connected or not, or any other circumstances appearing to the Directors to be relevant) which, in the opinion of the Directors, might result in the Company incurring any liability to taxation or suffering any other pecuniary, regulatory legal or material administrative disadvantage which they might not otherwise have incurred or suffered. The Articles of Association also permit the Directors where necessary to repurchase and cancel Shares (including fractions thereof) held by a person who is, or is deemed to be, or is acting on behalf of, an Irish Taxable Person on the occurrence of a chargeable event for Irish taxation purposes. Potential subscribers and purchasers of Shares should inform themselves as to (a) the possible tax consequences, (b) the legal requirements, (c) any foreign exchange restrictions or exchange control requirements and (d) any other requisite governmental or other consents or formalities which they might encounter under the laws of the countries of their incorporation, citizenship, residence or domicile and which might be relevant to the subscription, purchase, holding or disposal of Shares. M

4 This Prospectus may be translated into other languages. Any such translation shall only contain the same information and have the same meanings as this English language document. To the extent that there is any inconsistency between this English language document and the document in another language, this English language document shall prevail except to the extent (but only to the extent) required by the laws of any jurisdiction where the Shares are sold so that in an action based upon disclosure in a document of a language other than English, the language of the document on which such action is based shall prevail. Any information given, or representations made, by any dealer, salesman or other person not contained in this Prospectus or in any reports and accounts of the Company forming part hereof must be regarded as unauthorised and accordingly must not be relied upon. Neither the delivery of this Prospectus nor the offer, issue or sale of Shares shall under any circumstances constitute a representation that the information contained in this Prospectus is correct as of any time subsequent to the date of this Prospectus. To reflect material changes, this Prospectus may from time to time be updated and intending subscribers should enquire of the Administrator or the Investment Manager as to the issue of any later Prospectus or as to the issue of any reports and accounts of the Company. All Shareholders are entitled to the benefit of, are bound by and are deemed to have notice of the provisions of the Memorandum and Articles of Association of the Company, copies of which are available upon request. Defined terms used in this Prospectus shall have the meaning attributed to them in Appendix I. M

5 TABLE OF CONTENTS Insight Liquidity Funds p.l.c. Page Number DIRECTORY... 6 THE COMPANY... 8 Introduction... 8 Directors of the Company... 8 Investment Manager and Distributor Investment Adviser and Administrative Support Provider Custodian Administrator Investment Objective and Policies Investment Restrictions Use of Financial Derivative Instruments Efficient Portfolio Management Borrowing and Lending Powers Risk Factors Dividend Policy Applications for Shares Anti-Money Laundering Data Protection Form of Shares and Transfer of Shares Repurchases of Shares Exchange of Shares Issue and Repurchase Prices/Calculation of Net Asset Value/Valuation of Assets Suspension of Calculation of Net Asset Value Charges and Expenses Soft Commissions Company Transactions and Conflicts of Interest Taxation General Irish Taxation Shareholders UK Taxation Notification of Prices GENERAL INFORMATION Incorporation and Share Capital Memorandum and Articles of Association Litigation and Arbitration Directors' Interests Material Contracts Miscellaneous Information for investors in the United Kingdom Documents for Inspection M

6 Appendix I Definitions Appendix II Markets M

7 DIRECTORY Insight Liquidity Funds p.l.c., George s Court, Townsend Street, Dublin 2, Ireland INVESTMENT MANAGER AND DISTRIBUTOR Insight Investment Funds Management Limited, 160 Queen Victoria Street, London EC4V 4LA, England INVESTMENT ADVISER AND ADMINISTRATIVE SUPPORT PROVIDER Insight Investment Management (Global) Limited, 160 Queen Victoria Street, London EC4V 4LA, England CUSTODIAN Northern Trust Fiduciary Services (Ireland) Limited, George s Court, Townsend Street, Dublin 2, Ireland ADMINISTRATOR Northern Trust International Fund Administration Services (Ireland) Limited George s Court, Townsend Street, Dublin 2, Ireland INDEPENDENT AUDITORS KPMG Chartered Accountants, 1 Harbourmaster Place, International Financial Services Centre, Dublin 1, Ireland SECRETARY Northern Trust International Fund Administration Services (Ireland) Limited, George s Court, Townsend Street, Dublin 2, Ireland M

8 IRISH LEGAL ADVISERS TO THE COMPANY A & L Goodbody, International Financial Services Centre, North Wall Quay, Dublin 1, Ireland SPONSORING BROKER Investec, Harcourt Building, Harcourt Street, Dublin 2, Ireland M

9 1. THE COMPANY Introduction Insight Liquidity Funds p.l.c. (the Company ) is structured as an umbrella investment company with variable capital, in that different Funds may be established, from time to time, by the Directors with the prior approval of the Central Bank. Any supplement to the Prospectus in relation to a new Fund shall list all of the existing Funds. Shares of more than one class may be issued in relation to a Fund. The creation of further share classes must be notified to, and cleared, in advance with the Central Bank. On the introduction of any new class of Shares, the Company will prepare and the Directors will issue documentation setting out the relevant details of each such class of Shares. A separate portfolio of assets shall be maintained for each Fund and shall be invested in accordance with the investment objective applicable to such Fund. Particulars relating to individual Funds and the classes of Shares available therein, are given in the relevant Supplements. Insight Investment Funds Management Limited (the "Investment Manager") serves as investment manager of the Company and as a distributor of the Shares. The Company may decline any application for Shares in whole or in part without assigning any reason therefor and will not accept an initial subscription for Shares of any amount (exclusive of the preliminary charge, if any) which is less than the Minimum Initial Subscription as set forth in the relevant Supplement for each Fund, unless the Minimum Initial Subscription is waived by the Directors. After the initial issue, Shares will be issued and repurchased at the Net Asset Value per Share plus or minus duties and charges (as the case may be) including any preliminary or repurchase charge specified in the relevant Supplement for the Fund. The Net Asset Value of the Shares of each class and the issue and repurchase prices will be calculated in accordance with the provisions summarised under the heading "Issue and Repurchase Prices/Calculation of Net Asset Value/Valuation of Assets". Details of Dealing Days in respect of each Fund appear in the relevant Supplement. All holders of Shares will be entitled to the benefit of, will be bound by, and deemed to have notice of the provisions of the Memorandum and Articles of Association of the Company summarised under the heading "General Information", copies of which are available as detailed below. Directors of the Company The Directors of the Company are described below: Mr Charles Farquharson (British) Mr Farquharson joined Insight in January 2005 as head of distribution and is a board director. Before joining Insight, Mr Farquharson had been with Merrill Lynch Investment Management M

10 (formerly Mercury Asset Management) since During this time, before being appointed for his most recent role as head of institutional business ex US, Australia and Japan, he had worked in a number of senior management roles including company secretary, head of compliance and head of legal department. Prior to Merrill Lynch, he spent five years working in the banking department at Simmons and Simmons after qualifying as a solicitor. Mr Farquharson has a BA honours, MA degree in Law from Cambridge University. Mr Paul Dellar (British) Mr Dellar joined Insight Investment in January 2006 as head of product development. Before joining Insight he spent eight years at Deutsche Asset Management (DeAM - formerly Morgan Grenfell Asset Management) in various product development roles, ultimately heading up the product development team. Prior to DeAM, Mr Dellar had been with Mellon Trust, a provider of administration services to the fund management industry, where he headed the fund accounting, pricing and taxation departments. Paul is a qualified chartered accountant, having trained with KPMG, and holds a BSc Hons (Soc. Sci.) in Economics and Politics from the University of Southampton. Mr John Fitzpatrick (Irish) Mr Fitzpatrick has over 25 years experience in the management of mutual funds and currently acts as an independent director and consultant in relation to a number of management companies and investment funds. Mr Fitzpatrick was an Executive Director and Head of Product Development and Technical Sales at Northern Trust Investor Services (Ireland) Limited between 1990 and In this role, he was responsible for consulting with clients regarding fund structures, regulatory issues and industry developments and was responsible for business development in the Dublin office, representing Northern Trust's fund services business globally. Mr Fitzpatrick has served as Chairman of the Board for the Irish Funds Industry Association, and from 2002 to 2005 was Vice Chairman of the European Funds and Asset Managers Association. Prior to joining Northern Trust, Mr Fitzpatrick worked for PricewaterhouseCoopers and KPMG, where he specialized in Company Law and Tax Planning. He has worked at the senior level in all aspects of the mutual fund industry since Mr Michael Boyce (Irish) Mr Boyce is an independent Irish resident director who was director of Northern Trust Investor Services (Ireland) Limited until November From September 1997 to May 2000 he was an Executive Director and Head of Ulster Bank Investment Services. Mr Boyce has over 25 years experience in investment fund administration and is a member of the Securities Institute. Mr Boyce is an independent director of several other fund companies. Mr Barry McGrath (Irish) M

11 Mr McGrath (Irish) has been a partner with Maples & Calder since He was a partner with A&L Goodbody from 2003 until July 2008 and specialised in financial services and fund management law. He is a director of a number of other Irish collective investment schemes and has spoken at numerous Irish and international conferences on various aspects of Irish funds and regulatory law. No Director has: (i) (ii) (iii) any unspent convictions in relation to indictable offences; or been bankrupt or the subject of any individual voluntary arrangement, or has had a receiver appointed to any asset of such Director; or been a director of any company which, while he was a director with an executive function or within 12 months after he ceased to be a director with an executive function, had a receiver appointed or went into compulsory liquidation, creditors voluntary liquidation, administration or company voluntary arrangements, or made any composition or arrangements with its creditors generally or with any class of its creditors; or (iv) been a partner of any partnership, which while he was a partner or within 12 months after he ceased to be a partner, went into compulsory liquidation, administration or partnership voluntary arrangement, or had a receiver appointed to any partnership asset; or (v) (vi) had any public criticism by statutory or regulatory authorities (including recognised professional bodies); or been disqualified by a court from acting as a director or from acting in the management or conduct of the affairs of any company. For the purposes of this Prospectus, the address of all the Directors is the registered office of the Company. Save for the information outlined herein, no further information is required to be given in respect of the Directors pursuant to the listing requirements of the Irish Stock Exchange. The Company has delegated the day to day management and running of the Company in accordance with policies approved by the Directors to the Custodian, the Administrator and the Investment Manager. Consequently, all Directors of the Company are non-executive. Investment Manager and Distributor Pursuant to two agreements (summarised under the heading "General Information" below), Insight Investment Funds Management Limited serves as both Investment Manager of the Company and as distributor of Shares in the Company's Funds. M

12 Insight Investment Funds Management Limited is a private limited company incorporated under the laws of England and Wales. It is authorised and regulated by the Financial Conduct Authority in the UK as an authorised fund manager of collective investment schemes. As at 31 December 2012 it had in excess of Stg 40.8 billion in funds under management. Insight Investment Funds Management Limited is a subsidiary of Insight Investment Management Limited and is part of The Bank of New York Mellon Corporation. Investment Adviser and Administrative Support Provider Pursuant to an agreement (summarised under the heading General Information below), Insight Investment Management (Global) Limited serves as Investment Adviser to the Company. Insight Investment Management (Global) Limited is a private limited company incorporated under the laws of England and Wales. It is regulated by the Financial Conduct Authority in the UK. It manages and advises on the investment of managed funds and as at 31 March 2013 had in excess of Stg billion in funds under management. Insight Investment Management (Global) Limited is a subsidiary of Insight Investment Management Limited and is part of The Bank of New York Mellon Corporation. The primary responsibility of the Investment Adviser is to provide investment advice to the Company. The Company has also appointed Insight Investment Management (Global) Limited to act as an Administrative Support Provider providing administration support services which are not covered by the Administration Agreement or Investment Management Agreement. Custodian Northern Trust Fiduciary Services (Ireland) Limited has been appointed Custodian for the assets of each Fund by agreement dated 23rd December 2002 (as amended and novated on 25 February 2008 the "Custody Agreement"). The Custodian is a company incorporated in Ireland on 5 July 1990 and is an indirect wholly owned subsidiary of Northern Trust Corporation and its subsidiaries comprise the Northern Trust Group, one of the world s leading providers of global custody and administration services to institutional and personal investors. As at 31 December 2012, the Northern Trust Group s assets under custody and administration totalled in excess of US $4.8 trillion. The primary responsibilities of the Custodian are to act as custodian of the assets of each Fund. The Custodian has the power to appoint agents, sub-custodians and delegates. The Custodian's liability shall not be affected by the fact that it has entrusted some or all of the assets in safekeeping to any third party. The parties agree that the Central Bank considers that in order for the Custodian to discharge its responsibilities in this regard under the Regulations, the Custodian must exercise care and diligence in choosing and appointing a third party to be a sub-custodian so as to ensure that the sub-custodian has and maintains the expertise, competence and standing appropriate to discharge the responsibilities involved. The Custodian shall maintain an appropriate level of supervision over a sub-custodian and make appropriate enquiries from time to time to confirm that the obligations of the sub-custodian continue to be M

13 competently discharged. This does not purport to be a legal interpretation of the Regulations or the corresponding provisions of the Directive. Administrator The Company has delegated responsibility for the administration (including acting as registrar and transfer agent) of the Company to the Administrator by agreement dated 23 rd December 2002 (as novated on 25 February 2008 the "Administration Agreement"). The Administrator was incorporated as a limited liability company on 15 June, The Administrator is an indirect wholly owned subsidiary of Northern Trust Corporation. Northern Trust Corporation and its subsidiaries comprise Northern Trust Group, one of the world s leading providers of global custody and administration services to institutional and personal investors. As at 31 December 2012 the Northern Trust Group s assets under custody and administration totalled in excess of US$4.8 trillion. The Administrator is responsible, under the Administration Agreement, for the administration of the Company's affairs including but not limited to maintaining the Company's accounting records, calculating the Net Asset Value of each Fund and the Net Asset Value per Share and serving as registrar and as transfer agent. Investment Objective and Policies The Articles provide that the investment objective and policies for each Fund will be formulated by the Directors at the time of the creation of the Fund. Details of the investment objective and policies for each Fund of the Company appear in the relevant Supplement for each Fund. In the absence of unforeseen circumstances, the principal investment objective and policies for any Fund will be adhered to for at least three years following the admission of the Shares of the relevant Fund to the Official List and trading on the main securities market of the Irish Stock Exchange. Any change in the investment objective of a Fund may only be made with the approval of an ordinary resolution of the Shareholders of the relevant Fund. The Directors have the power to change the investment policies of a Fund. In each case reasonable prior notice will be given to Shareholders to enable them to request the repurchase of their Shares prior to the implementation of the change. Investment Restrictions The particular investment restrictions for each Fund will be formulated by the Directors at the time of the creation of each Fund and will appear in the relevant Supplement for that Fund. Details of the investment restrictions laid down in accordance with the Regulations in respect of each Fund are set out below. 1. Permitted Investments Investments of each Fund are confined to: 1.1. Transferable securities and money market instruments as prescribed in the UCITS Notices which are either admitted to official listing on a stock exchange in a Member State or non-member State or which are dealt on a market which is M

14 regulated, operates regularly, is recognised and open to the public in a Member State or non-member State (and is provided for in Appendix I to this Prospectus). 1.2 Recently issued transferable securities which will be admitted to official listing on a stock exchange or other market (as described above) within a year. 1.3 Money market instruments, other than those dealt on a regulated market. 1.4 Units of UCITS. 1.5 Units of non-ucits as set out in the Central Bank s guidance note 2/ Deposits with credit institutions as prescribed in the Central Bank Notices. 1.7 Financial derivative instruments (FDI) as prescribed in the Central Bank Notices. 2. Transferable Securities This term means: - shares in companies and other securities equivalent to shares in companies ( shares ), - bonds and other forms of securitised debt ( debt securities ), - other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange, other than the techniques and instruments referred to in Regulation 69 (2)(a), and which fulfil the criteria set out below: (a) (b) (c) the potential loss which the Fund may incur with respect to holding those instruments is limited to the amount paid for them 1 ; their liquidity does not compromise the ability of the Fund to comply with Regulation 104(1); reliable valuation is available for them as follows: (i) in the case of securities admitted to or dealt in on a regulated market as referred to in subparagraphs (a) to (d) of Regulation 68(1), in the form of accurate, reliable and regular prices which are either market prices or prices made available by valuation systems independent from issuers; 1 A partly paid security must not expose the Fund to loss beyond the amount to be paid for it. M

15 (ii) in the case of other securities as referred to in Regulation 68(2)(a), in the form of a valuation on a periodic basis which is derived from information from the issuer of the security or from competent investment research; (d) appropriate information is available for them as follows: (i) (ii) in the case of securities admitted to or dealt in on a regulated market as referred to in subparagraphs (a) to (d) of Regulation 68(1), in the form of regular, accurate and comprehensive information to the market on the security or, where relevant, on the portfolio of the security; in the case of other securities as referred to in Regulation 68(2)(a), in the form of regular and accurate information to the Fund on the security or, where relevant, on the portfolio of the security; (e) (f) (g) they are negotiable; their acquisition is consistent with the investment objectives or the investment policy, or both, of the Fund; their risks and their contribution to the overall risk profile of the portfolio are adequately captured by the risk management process of the Fund which must be assessed on an on-going basis. For the purposes of subparagraphs (b) and (e), and unless there is information available to the Fund that would lead to a different determination, financial instruments which are admitted or dealt in on a regulated market in accordance with Regulation 68(1)(a), (b) or (c) shall be presumed not to compromise the ability of the Fund to comply with Regulation 104(1) and shall also be presumed to be negotiable. For the purposes of subparagraph (b) above, where information is available to the Fund that would lead it to determine that a transferable security could compromise the ability of the Fund to comply with Regulation 104(1), the Fund must assess its liquidity risk. The liquidity risk is a factor that the Fund must consider when investing in any financial instrument in order to be compliant with the portfolio liquidity requirement to the extent required by Regulation 104(1). In taking this prudent approach, the following are examples of the matters a Fund may need to consider: - the volume and turnover in the transferable security; - if price is determined by supply and demand in the market, the issue size, and the portion of the issue that the asset manager plans to buy; also evaluation of the opportunity and timeframe to buy or sell; M

16 - where necessary, an independent analysis of bid and offer prices over a period of time may indicate the relative liquidity and marketability of the instrument, as may the comparability of available prices; - in assessing the quality of secondary market activity in a transferable security, analysis of the quality and number of intermediaries and market makers dealing in the transferable security concerned should be considered. In the case of transferable securities which are not admitted to trading on a regulated market as defined in Regulation 68(1)(a) to (d), liquidity cannot automatically be presumed. The Fund will therefore need to assess the liquidity of such securities where this is necessary to meet the requirements of Regulation 104(1). If the security is assessed as insufficiently liquid to meet foreseeable redemption requests, the security must only be bought or held if there are sufficiently liquid securities in the portfolio so as to be able to meet the requirements of Regulation 104(1). In the case of transferable securities which are not admitted to trading on a regulated market as defined in Regulation 68(1)(a) to (d) negotiability cannot automatically be presumed. The Fund must assess the negotiability of securities held in the portfolio, with a view to ensuring compliance with the requirements of Regulation 104(1). 2.1 Closed Ended Funds Transferable securities include: (a) Units in closed end funds, constituted as investment companies or as unit trusts, which fulfil the following criteria: (i) they fulfil the criteria set out in paragraph 1; (ii) (iii) they are subject to corporate governance mechanisms applied to companies; where asset management activity is carried out by another entity on behalf of the closed end fund, that entity is subject to national regulation for the purpose of investor protection; (b) units in closed end funds constituted under the law of contract which fulfil the following criteria: (i) they fulfil the criteria set out in paragraph 1; (ii) they are subject to corporate governance mechanisms equivalent to those applied to companies as referred to in subparagraph 2.1 (a)(ii); M

17 (iii) they are managed by an entity which is subject to national regulation for the purpose of investor protection; In assessing whether the corporate governance mechanisms for closed ended funds in contractual form are equivalent to investment companies, the following factors are indicators which can be used as a guidance: Unit holders' rights. The contract on which the fund is based should provide for: (i) (ii) (iii) right to vote of the unit holders in the essential decision making; processes of the fund (including appointment and removal of asset management company, amendment to the contract which set up the fund, modification of investment policy, merger, liquidation); right to control the investment policy of the fund through appropriate mechanisms. The assets of the fund should be separate and distinct from that of the asset manager and the fund must be subject to liquidation rules adequately protecting the unit holders. A Fund may not make investment in closed ended funds for the purposes of circumventing the investment limits set out in the Regulations. 2.2 Structured Financial Instruments Transferable securities include financial instruments which: (a) fulfil the criteria set out in paragraph 1; (b) are backed by, or linked to the performance of, other assets, which may differ from those referred to in Regulation 68(1); provided that where a financial instrument covered by this subparagraph contains an embedded derivative component as referred Regulation 69(4)(c) and 69(5), the requirements of Regulations 69(1), (2), (4) and (6) shall apply to that component. 3 Money Market Instruments This term means instruments normally dealt in on the money market which are liquid, and have a value which can be accurately determined at any time. These shall be understood by a reference to the following paragraphs: (a) (b) financial instruments which are admitted to trading or dealt in on a regulated market in accordance with subparagraphs (a), (b) and (c) of Regulation 68(1); financial instruments which are not admitted to trading. M

18 3.1 The reference to money market instruments as instruments normally dealt in on the money market shall be understood as a reference to financial instruments which fulfil one of the following criteria: (a) (b) (c) (d) they have a maturity at issuance of up to and including 397 days; they have a residual maturity of up to and including 397 days; they undergo regular yield adjustments in line with money market conditions at least every 397 days; their risk profile, including credit and interest rate risks, corresponds to that of financial instruments which have a maturity as referred to in subparagraphs (a) or (b), or are subject to a yield adjustment as referred to in subparagraph (c). 3.2 The reference to money market instruments as instruments which are liquid shall be understood as a reference to financial instruments which can be sold at limited cost in an adequately short time frame, taking into account the obligation of the Fund to repurchase or redeem its units at the request of any unit holder. When assessing the liquidity of a money market instrument, the following cumulative factors have to be taken into account: At the instrument level: (i) (ii) (iii) (iv) frequency of trades and quotes for the instrument in question; number of dealers willing to purchase and sell the instrument, willingness of the dealers to make a market in the instrument in question, nature of market place trades (times needed to sell the instrument, method for soliciting offers and mechanics of transfer); size of issuance/program; possibility to repurchase, redeem or sell the money market instrument in a short period (e.g. seven business days), at limited cost, in terms of low fees and bid/offer prices and with very short settlement delay; At the Fund level, the following relevant factors should be considered in order to ensure that any individual money market instrument would not affect the liquidity of the Fund at the Fund level: (i) (ii) unit holder structure and concentration of unit holders of the Fund; purpose of funding of unit holders; M

19 (iii) (iv) quality of information on the fund's cash flow patterns; prospectuses guidelines on limiting withdrawals. The fact that some of these conditions are not fulfilled does not automatically imply that the financial instruments should be considered as non-liquid. These elements must ensure that Fund will have sufficient planning in the structuring of the portfolio and in foreseeing cash flows in order to match anticipated cash flows with the selling of appropriately liquid instruments in the portfolio to meet those demands. 3.3 The reference to money market instruments as instruments which have a value which can be accurately determined at any time shall be understood as a reference to financial instruments for which accurate and reliable valuations systems, which fulfil the following criteria, are available: (a) (b) they enable the Fund to calculate a net asset value in accordance with the value at which the financial instrument held in the portfolio could be exchanged between knowledgeable willing parties in an arm s length transaction; they are based either on market data or on valuation models including systems based on amortised costs. With respect to the criterion "value which can be accurately determined at any time", if the Fund considers that an amortization method can be used to assess the value of a money market instrument, it must ensure that this will not result in a material discrepancy between the value of the money market instrument and the value calculated according to the amortization method as set out in the Central Bank Notice 17- Money Market Funds. 3.4 The criteria referred to in paragraphs 3.2 and 3.3 shall be presumed to be fulfilled in the case of financial instruments which are normally dealt in on the money market and which are admitted to, or dealt in on, a regulated market in accordance with subparagraphs (a), (b) or (c) of Regulation 68(1), unless there is information available to the Fund that would lead to a different determination. Where the presumption of "liquidity" and "accurate valuation" cannot be relied upon, the money market instrument should be subject to an appropriate assessment by the Fund. 3.5 The reference in subparagraph (h) of Regulation 68(1) to money market instruments, other than those dealt in on a regulated market, provided that the issue or the issuer is itself regulated for the purpose of protecting investors and savings, shall be understood as a reference to financial instruments which fulfil the following criteria: (a) they fulfil one of the criteria set out in paragraph 3.1 and all the criteria set out in paragraphs 3.2 and 3.3; M

20 (b) (c) appropriate information is available for them, including information which allows an appropriate assessment of the credit risks related to the investment in such instruments, taking into account paragraphs 3.6, 3.7 and 3.8 of this definition; they are freely transferable. 3.6 For money market instruments covered by sub-paragraphs (h)(ii) and (h)(iv) of Regulation 68(1) or for those which are issued by a local or regional authority of a Member State or by a public international body but are not guaranteed by a Member State or, in the case of a federal State which is a Member State, by one of the members making up the federation, appropriate information as referred to in paragraph 3.5 (b) shall consist in the following: (a) (b) (c) (d) information on both the issue or the issuance programme and the legal and financial situation of the issuer prior to the issue of the money market instrument; updates of the information referred to in subparagraph (a) on an annual basis and whenever a significant event occurs the information referred to in subparagraph (a) verified by appropriately qualified third parties not subject to instructions from the issuer. Such third parties should specialise in the verification of legal or financial documentation and be composed of persons meeting professional standards of integrity; available and reliable statistics on the issue or the issuance programme. 3.7 For money market instruments covered by subparagraph (h)(iii) of Regulation 68(1), appropriate information as referred to in paragraph 3.5(b) shall consist of the following: (a) (b) (c) information on the issue or the issuance programme or on the legal and financial situation of the issuer prior to the issue of the money market instrument; updates of the information referred to in subparagraph (a) on a regular basis and whenever a significant event occurs; available and reliable statistics on the issue or the issuance programme or other data enabling an appropriate assessment of the credit risks related to the investment in such instruments. 3.8 For all money market instruments covered by subparagraph (h)(i) of Regulation 68(1), except those referred to in paragraph 3.6 of this definition and those issued by the European Central Bank or by a central bank from a Member State, appropriate information as referred to in paragraph 3.5(b) shall consist of M

21 information on the issue or the issuance programme or on the legal and financial situation of the issuer prior to the issue of the money market instrument. 3.9 The reference in subparagraph (h)(iii) of Regulation 68(1) to an establishment which is subject to and complies with prudential rules considered by the Central Bank to be at least as stringent as those laid down in a Community Act shall be understood as a reference to an issuer which is subject to and complies with prudential rules and fulfils one of the following criteria: (a) (b) (c) (d) it is located in the European Economic Area; it is located in the OECD countries belonging to the Group of Ten; it has at least investment grade rating; it can be demonstrated on the basis of an in-depth analysis of the issuer that the prudential rules applicable to that issuer are at least as stringent as those laid down in a Community Act The reference in subparagraph (h)(iv) of Regulation 68(1) to securitisation vehicles shall be understood as a reference to structures, whether in corporate, trust or contractual form, set up for the purpose of securitisation operations The reference in subparagraph (h)(iv) of Regulation 68(1) to banking liquidity lines shall be understood as a reference to banking facilities secured by a financial institution which itself complies with the subparagraph (h)(iii) of Regulation 68(1). 4 Investment Restrictions 4.1 Each Fund may invest no more than 10% of net assets in transferable securities and money market instruments other than those referred to in paragraph Each Fund may invest no more than 10% of net assets in recently issued transferable securities which will be admitted to official listing on a stock exchange or other market (as described in paragraph 1.1) within a year. This restriction will not apply in relation to investment by each Fund in certain US securities known as Rule 144A securities provided that: - the securities are issued with an undertaking to register with the US Securities and Exchanges Commission within one year of issue; and - the securities are not illiquid securities i.e. they may be realised by each Fund within seven days at the price, or approximately at the price, at which they are valued by the Fund. 4.3 Each Fund may invest no more than 10% of net assets in transferable securities or money market instruments issued by the same body provided that the total M

22 value of transferable securities and money market instruments held in the issuing bodies in each of which it invests more than 5% is less than 40%. 4.4 Subject to the prior approval of the Central Bank the limit of 10% in 4.3 is raised to 25%, in the case of bonds that are issued by a credit institution which has its registered office in a Member State and is subject by law to special public supervision designed to protect bond-holders. If a Fund invests more than 5% of its net assets in these bonds issued by one issuer, the total value of these investments may not exceed 80% of the net asset value of the Fund. 4.5 The limit of 10% in 4.3 is raised to 35% if the transferable securities or money market instruments are issued or guaranteed by a Member State or its local authorities or by a non-member State or public international body of which one or more Member States are members. 4.6 The transferable securities and money market instruments referred to in 4.4 and 4.5 shall not be taken into account for the purpose of applying the limit of 40% referred to in Each Fund may not invest more than 20% of net assets in deposits made with the same credit institution. Deposits with any one credit institution, other than: - a credit institution authorised in the EEA (European Union Member States, Norway, Iceland, Liechtenstein); - a credit institution authorised within a signatory state (other than an EEA Member State) to the Basle Capital Convergence Agreement of July 1988 (Switzerland, Canada, Japan, United States); or - a credit institution authorised in Jersey, Guernsey, the Isle of Man, Australia or New Zealand held as ancillary liquidity, must not exceed 10% of net assets. This limit may be raised to 20% in the case of deposits made with the Custodian. 4.8 The risk exposure of each Fund to a counterparty in an over the counter (OTC) derivative transaction may not exceed 5% of net assets. This limit is raised to 10% in the case of a credit institution authorised in the EEA; a credit institution authorised within a signatory state (other than an EEA Member State) to the Basle Capital Convergence Agreement of July 1988; or a credit institution authorised in Jersey, Guernsey, the Isle of Man, Australia or New Zealand. 4.9 Notwithstanding paragraphs 4.3, 4.7 and 4.8 above, a combination of two or more of the following issued by, or made or undertaken with, the same body may not exceed 20% of net assets: M

23 - investments in transferable securities or money market instruments; - deposits, and/or - counterparty risk exposures arising from OTC derivatives transactions The limits referred to in 4.3, 4.4, 4.5, 4.7, 4.8 and 4.9 above may not be combined, so that exposure to a single body shall not exceed 35% of net assets Group companies are regarded as a single issuer for the purposes of 4.3, 4.4, 4.5, 4.7, 4.8 and 4.9. However, a limit of 20% of net assets may be applied to investment in transferable securities and money market instruments within the same group Each Fund may invest up to 100 per cent of its net assets in transferable securities or money market instruments issued or guaranteed by any Member State, local authority of a Member State or by an OECD member country (provided they are investment grade), Japan, Canada, New Zealand, Australia, Norway, United States of America, Switzerland, European Union, European Investment Bank, Euratom, Eurofima, Council of Europe, The Asian Development Bank, Inter-American Development Bank, European Bank for Reconstruction and Development, International Bank for Reconstruction and Development (the World Bank), African Development Bank, International Finance Corporation, International Monetary Fund, Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae) provided further that the relevant Fund holds securities from at least six different issues and that securities from any one issue may not account for more than 30% of its net assets. 5 Investment in Collective Investment Schemes 5.1 A Fund may not invest more than 20% of net assets in open-ended collective investment schemes (CIS). 5.2 When a Fund invests in the units of other CIS that are managed, directly or by delegation, by the UCITS Management Company or by any other company with which the UCITS Management Company is linked by common management or control, or by a substantial direct or indirect holding, that management company or other company may not charge subscription, conversion or redemption fees on account of that Fund s investment in the units of such other CIS. 5.3 A Fund may not invest in any other Fund of the Company: without prior notification to the Central Bank; if that other Fund itself holds Shares in other Funds of the Company; M

24 5.3.3 if that other Fund itself charges the investing Fund an annual management fee in respect of that investment. 5.4 Where a commission (including a rebated commission) is received by the Investment Manager by virtue of an investment in the units of another CIS, this commission must be paid into the property of the Fund. 6 Index Tracking Funds 6.1 A Fund may invest up to 20% of net assets in shares and/or debt securities issued by the same body where the investment policy of the Fund is to replicate an index which satisfies the criteria set out in the UCITS Notices and is recognised by the Central Bank. 6.2 The limit in 6.1 above may be raised to 35%, and applied to a single issuer, where this is justified by exceptional market conditions. 7 General Provisions 7.1 The Company or management company acting in connection with all the CIS it manages may not acquire any shares carrying voting rights which would enable it to exercise significant influence over the management of an issuing body. 7.2 Each Fund may acquire no more than: (i) (ii) (iii) (iv) 10% of the non-voting shares of any single issuing body; 10% of the debt securities of any single issuing body; 25% of the units of any single CIS; 10% of the money market instruments of any single issuing body. NOTE: The limits laid down in (ii), (iii) and (iv) above may be disregarded at the time of acquisition if at that time the gross amount of the debt securities or of the money market instruments, or the net amount of the securities in issue cannot be calculated and 7.2 shall not be applicable to: (i) (ii) transferable securities and money market instruments issued or guaranteed by a Member State or its local authorities; transferable securities and money market instruments issued or guaranteed by a non-member State; (iii) M transferable securities and money market instruments issued by public

25 international bodies of which one or more Member States are members; (iv) (v) shares held by each Fund in the capital of a company incorporated in a non-member State which invests its assets mainly in the securities of issuing bodies having their registered offices in that State, where under the legislation of that State such a holding represents the only way in which each Fund can invest in the securities of issuing bodies of that State. This waiver is applicable only if in its investment policies the company from the non-member State complies with the limits laid down in 4.3 to 4.11, 5.1, 5.2, 7.1, 7.2, 7.4, 7.5 and 7.6, and provided that where these limits are exceeded, 7.5 and 7.6 are observed; shares held by a Fund in the capital of subsidiary companies carrying on only the business of management, advice or marketing in the country where the subsidiary is located, in regard to the repurchase of units at Shareholder s request exclusively on their behalf. 7.4 A Fund need not comply with the investment restrictions herein when exercising subscription rights attaching to transferable securities or money market instruments which form part of their assets. 7.5 The Central Bank may allow recently authorised Funds to derogate from the provisions of 4.3 to 4.12, 5.1, 5.2, 6.1 and 6.2 for six months following the date of their authorisation, provided they observe the principle of risk spreading. 7.6 If the limits laid down herein are exceeded for reasons beyond the control of a Fund, or as a result of the exercise of subscription rights, the Fund must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of its shareholders. 7.7 A Fund may not carry out uncovered sales of: - transferable securities; - money market instruments; - units of CIS; or - financial derivative instruments (FDIs). 7.8 A Fund may hold ancillary liquid assets 8 Financial Derivative Instruments 8.1 A Fund may invest in FDIs dealt in over the counter (OTC) provided that provided that the counterparties to the OTC transactions are institutions subject to prudential supervision and belonging to categories approved by the Central Bank M