BETA1 ETFUND P.L.C. OPEN-ENDED INVESTMENT COMPANY WITH VARIABLE CAPITAL PROSPECTUS. for. β1 - MSCI Euro. β1 - Ethical Index Euro. β1 - MSCI Pan Euro

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1 Dated: 9 July 2009 BETA1 ETFUND P.L.C. OPEN-ENDED INVESTMENT COMPANY WITH VARIABLE CAPITAL PROSPECTUS for β1 - MSCI Euro β1 - Ethical Index Euro β1 - MSCI Pan Euro UMBRELLA FUND McCann FitzGerald Solicitors Riverside One Sir John Rogerson s Quay Dublin 2

2 INDEX Clause Page 1. STRUCTURE Investment Objective of β1 - MSCI Euro Investment Objective of β1 - Ethical Index Euro Investment Objective of β1 - MSCI Pan Euro Dividend Policy Subscriptions and Redemptions Stock Exchange Listings of the Approved Funds Taxation Costs and Expenses Dealing Days Investor Restrictions Investment Risks DEFINITIONS INTRODUCTION INVESTMENT OBJECTIVE AND POLICIES Investment Objective and Policies of the Company Dividends RISK FACTORS FEES, COSTS AND EXPENSES MANAGEMENT AND ADMINISTRATION The Board of Directors and Secretary The Investment Manager The Administrator The Custodian The Investment Sub-Manager The Distributor MSCI E. Capital Partners S.p.A ADMINISTRATION OF THE COMPANY Determination of the Net Asset Value Procedures for Subscriptions and Redemptions Subscribing for Participating Shares Redemption of Participating Shares Transfer of Participating Shares Conversion of Participating Shares Publication of the Price of the Participating Shares...38

3 6.8 Temporary Suspension of Valuation of the Participating Shares and of Sales, Redemptions and Conversions TAXATION GENERAL...47 SCHEDULE I VALUATIONS OF FUNDS...53 SCHEDULE II COLLECTIVE INVESTMENT SCHEMES OTHER THAN UCITS...56 SCHEDULE III INVESTMENT RESTRICTIONS...57

4 BETA1 ETFUND P.L.C. an open-ended investment company with variable capital incorporated with limited liability in Ireland and established as an umbrella Fund as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (S.I. Number 211 of 2003) (as amended) PROSPECTUS for β1 - MSCI Euro β1 - Ethical Index Euro β1 - MSCI Pan Euro Dated 9 July 2009

5 IMPORTANT NOTICE This Prospectus is issued as an invitation to investors to subscribe for Participating Shares in the Company. Unless defined elsewhere in the Prospectus, all capitalised letters used in this Prospectus shall have the meanings assigned to them in the Section entitled Definitions beginning on page 8. Participating Shares are offered solely on the basis of the information and representations contained in this Prospectus. No person is authorised to give any information or make any representation other than those contained in this Prospectus and if given or made such information or representation may not be relied upon as having been authorised by the Company or its Directors. This Prospectus does not constitute an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. No person may treat this Prospectus as constituting an invitation to him unless in the relevant territory such an invitation could lawfully be made to him without compliance with any registration or other legal requirements. It is the responsibility of any person outside Ireland wishing to make an application hereunder to satisfy himself as to full observance of the laws of the relevant territory in connection therewith, including the obtaining of any governmental or other consents which may be required or other formalities needing to be observed or transfer or other taxes requiring to be paid in such territory. The Directors of the Company have taken all reasonable care to ensure that the facts stated herein are true and accurate in all material respects and that there are no other material facts the omission of which would make misleading any statement herein, whether of fact or of opinion. Statements made in this Prospectus are based on the law and practice currently in force in Ireland and are subject to changes therein. After publication of an annual or half yearly report this Prospectus should be accompanied by, and read in conjunction with, the latest annual report and accounts and any subsequent half yearly report. This Prospectus may be translated into other languages provided that any such translation shall only contain the same information and shall have the same meaning as this Prospectus. The Articles of Association of the Company and each published annual and half yearly report and accounts will be available for inspection at the registered office of the Company. The Participating Shares have not been, and will not be, registered under the 1933 Act or the securities laws of any of the states of the US and the Company has not been, and will not be, registered under the 1940 Act or the laws of any of the states of the United States. Accordingly the Participating Shares may not be offered or sold directly or indirectly in the US or to or for the account or benefit of any US Person. The authorisation of this Company by IFSRA is not an endorsement or guarantee of the scheme by IFSRA nor is IFSRA responsible for the contents of this Prospectus. The 1

6 authorisation of this scheme by IFSRA shall not constitute a warranty as to the performance of the scheme and IFSRA shall not be liable for the performance or default of the scheme. The Directors of the Company ( Directors ), whose names appear under Management and Administration herein, are the persons responsible for the information contained in this document. To the best of the knowledge and belief of such Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is at its date in accordance with the facts and does not omit anything likely to affect the import of such information. The Directors accept responsibility accordingly. Investors should note that since transferable securities may depreciate as well as appreciate in value, no assurance can be given by the Company or the Directors or any of the persons referred to in this Prospectus that the Company will attain its objectives. The price of Participating Shares, in addition to the income therefrom, may decrease as well as increase. Accordingly, an investment should only be made where the investor is or would be in a position to sustain any loss on his or her investment. The difference at any one time between the sale and redemption price of the Participating Shares of any Fund means that the investment should be regarded as medium to long term. A redemption charge of up to 3 per cent. of the redemption monies may be payable on redemptions of Participating Shares. Investors attention is drawn to Section 4.3 of the Prospectus entitled Risk Factors. If you are in any doubt regarding the action you should take, please consult your stockbroker, bank manager, solicitor, accountant or other professional adviser. 2

7 LIST OF PARTIES AND ADDRESSES Secretary Registered Office Board of Directors Custodian Richard Barkley Riverside One Sir John Rogerson s Quay Dublin 2 Riverside One Sir John Rogerson s Quay Dublin 2 Richard Barkley Robert Burke Ciro Beffi Sergio Vicinanza BNY Mellon Trust Company (Ireland) Limited Guild House Guild Street International Financial Services Centre Dublin 1 (Registered Office) Promoter and Investment Eurizon Capital SGR S.p.A. Manager Piazzale Cadorna, Milan Italy Distributor Eurizon Capital SGR S.p.A. Piazzale Cadorna Milan Italy Investment Epsilon Associati SGR S.p.A. Sub-Manager Piazzale Cadorna, Milan Italy Administrator BNY Mellon Fund Services (Ireland) Limited Guild House Guild Street International Financial Services Centre Dublin 1 3

8 Auditors Legal Advisers Ireland KPMG Chartered Accountants 5 George s Dock IFSC Dublin1 McCann FitzGerald Riverside One Sir John Rogerson s Quay Dublin 2 4

9 BETA1 ETFUND P.L.C. SUMMARY 1. STRUCTURE The Company is an umbrella fund established as an open-ended investment company with variable capital under the laws of Ireland as a public limited company pursuant to the Companies Acts, 1963 to 2006 and the Regulations and has been authorised by IFSRA as a UCITS. Its share capital is divided into a number of classes each representing interests in a Fund and each Fund shall comprise a distinct portfolio or pool of investments. The Subscriber Shares do not entitle the holders to participate in the assets of any Fund. This Prospectus relates to the three Funds of the Company, β1 - MSCI Euro, β1 - Ethical Index Euro and β1 - MSCI Pan Euro. 1.1 Investment Objective of β1 - MSCI Euro The investment objective of β1 - MSCI Euro is to track closely the MSCI Euro Index thereby allowing investors to obtain market exposure to the companies comprising the Index through the holding of Participating Shares in this Fund. 1.2 Investment Objective of β1 - Ethical Index Euro The investment objective of β1 - Ethical Index Euro is to track closely the Ethical Index Euro thereby allowing investors to obtain market exposure to the companies comprising the Index through the holding of Participating Shares in this Fund. 1.3 Investment Objective of β1 - MSCI Pan Euro The investment objective of β1 - MSCI Pan Euro is to track closely the MSCI Pan Euro Index thereby allowing investors to obtain market exposure to the companies comprising the Index through the holding of Participating Shares in this Fund. 1.4 Dividend Policy It is proposed that, in the case of the Approved Funds, distributions may be paid out of net income at such times and in such amounts as may be determined by the Directors. The dividend policy for any future Funds will be determined by the Directors and set out in the applicable Supplement. 1.5 Subscriptions and Redemptions Typically, subscriptions and redemptions in each Fund shall be for 25,000 Participating Shares (a Creation Unit ) or integer multiples of that amount and shall be payable in kind. A Transaction Fee will be payable both on subscriptions for and redemptions of Participating Shares. Any subscriptions and redemptions made in cash or for amounts other than one Creation Unit or integer multiples of that amount will be subject to a charge of up to 3 per cent. of the subscription price or redemption price for the relevant Participating Shares. However, where a Transaction Fee payable in respect of a redemption of shares exceeds 3 per cent. of the redemption price, the maximum fee payable by the investor will be 3 per cent. of the redemption price. 5

10 Subscriptions for Participating Shares in a Fund may be made up of either a portfolio of securities which closely replicates the composition and weighting of the securities held within the relevant Index, or cash, or a combination of both. 1.6 Stock Exchange Listings of the Approved Funds Application was made to list the Participating Shares of the Approved Funds on the Italian Stock Exchange and such listing became effective on 11 December 2002, in the case of β1 - MSCI Euro, 13 January 2003 in the case of β1 - Ethical Index Euro and 14 September 2004 in the case of β1 - MSCI Pan Euro. Application may be made to list the Participating Shares on other exchanges in Europe. If such applications are made it is expected that an active secondary market in the Participating Shares may develop in the Participating Shares listed on these exchanges. The listing of the Participating Shares on the Italian Stock Exchange enables investors to buy or sell Participating Shares on the secondary market in smaller quantities than would otherwise be possible if they purchased or redeemed Participating Shares through the Company without them having to incur the subscription and/or redemption charge. However, investors should note that transactions fees and expenses may be payable to brokers when purchases or sales are made on the secondary market. The settlement of Participating Shares traded on the Italian Stock Exchange will take place through Montetitoli. 1.7 Taxation As an investment undertaking, the Company is exempt from Irish tax on its income and gains and the Company will not be required to account for any tax in respect of Shareholders (1) whose Participating Shares are held in a recognised clearing system, as designated by order of the Irish Revenue Commissioners, or (2) who are not Irish Resident or Ordinarily Resident in Ireland for taxation purposes and have provided the appropriate declaration to the Company. The Company may be required to account for tax in respect of Shareholders who are Irish Resident or Ordinarily Resident in Ireland for tax purposes and whose Participating Shares are not held in a recognised clearing system. Shareholders who are not Irish Resident and not Ordinarily Resident in Ireland for taxation purposes will not be liable to Irish tax on income from their Participating Shares or gains made on the disposal of their Participating Shares, provided that the appropriate declaration has been provided and the Participating Shares are not held directly or indirectly by or for a branch or agency in Ireland. No stamp duty or other tax is payable in Ireland on the subscription, issue, holding, redemption or transfer of Participating Shares. The Participating Shares may be subject to Irish capital acquisitions tax. 1.8 Costs and Expenses Investors' attention is drawn to the details of the costs and expenses charged to each of the Approved Funds which are set out on pages 24 and Dealing Days 6

11 Subscriptions for Participating Shares and redemptions of Participating Shares may be made on a Dealing Day. Unless otherwise determined by the Directors, each Business Day shall be a Dealing Day, except that such days shall not constitute Dealing Days where the determination of the Net Asset Value of the Company or of any Fund has been temporarily suspended in the circumstances outlined on pages 38 and Investor Restrictions The Participating Shares may not be purchased or held by US Persons unless pursuant to a relevant exemption under applicable US law and may not be offered or sold in any jurisdiction in which such offer or sale is not lawful or in which the person making such offer or sale is not qualified to do so or to anyone to whom it is unlawful to make such an offer or sale Investment Risks An investment in a Fund involves investment risks, including possible loss of the amount invested. Moreover, there can be no assurance that a Fund will achieve its investment objective. A more detailed description of certain investment risks relevant to investors in the Approved Funds is set out under "Investment Objectives and Policies" and "Risk Factors". 2. DEFINITIONS In this Prospectus the following words and phrases shall have the meanings indicated below: "1933 Act" means the US Securities Act of 1933, as amended; "1940 Act" means the US Investment Company Act of 1940, as amended; "Administration Agreement" means the agreement dated 23 August 2002 (as amended from time to time) between the Company and the Administrator; "Administrator" means BNY Mellon Fund Services (Ireland) Limited or any successor administrator appointed in respect of the Company; Annual Expenses means all fees, costs and expenses connected with the establishment, management and operation of the Company and of each Fund including, but not limited to, the fees and reasonable out-of-pocket expenses of the Investment Manager, the Administrator, the Distributor, the Custodian and any subcustodians and all other fees and expenses incurred in relation to the ongoing costs of registrations of each Fund with any regulatory authority in any jurisdiction, the costs and expenses of any rating agency, the costs in relation to the publication of the Net Asset Value and any other publication of announcements or notices, the costs and expenses of listing and maintaining a listing of the Participating Shares on the stock exchanges. The Directors may, in their absolute discretion, include any other fees, expenses or costs relating to the ongoing management and operation of the Company in the Annual Expenses which they, from time to time, deem appropriate. "Articles" means the articles of association of the Company; 7

12 "Authorised Participant" means an entity authorised to subscribe for Participating Shares; "Base Currency" means the base currency of a Fund and which in the case of the Approved Funds is the euro; "Business Day" means in respect of each Fund, unless the Directors decide otherwise, every day on which banks are open for business in Milan and Dublin and any other financial centre in the world which the Directors may determine to be necessary. However, a business day shall not constitute a Business Day unless an Index is compiled and published on that day; "Collective Investment Schemes other than UCITS" means those schemes listed in Schedule II; "Company" means BETA1 ETFund p.l.c., an open-ended investment company with variable capital incorporated in Ireland pursuant to the Companies Acts, 1963 to 2006; "Creation Unit" means 25,000 Participating Shares of a Fund; "Custodian" means BNY Mellon Trust Company (Ireland) Limited or any successor custodian appointed in respect of the Company. "Custodian Agreement" means the agreement dated 23 August 2002 (as amended from time to time) between the Company and the Custodian; "Dealing Day" means any Business Day or such other days as the Directors may determine and as notified to the Shareholders (or in the event of any such other day not being a Business Day, the next following Business Day) on which subscriptions, redemptions and conversions of Participating Shares may be effected, provided that there shall not be less than two Dealing Days in respect of each class of Participating Shares per month except during a period of suspension of issues and redemptions of Participating Shares as described in Section 6 hereof. "Directors" means the directors of the Company for the time being and any duly constituted committee thereof; "Distribution Agreement" means the agreement dated 23 August 2002 (as amended from time to time) between the Company and the Distributor; "Distributor" means Eurizon Capital SGR S.p.A or any successor or new distributor appointed in respect of the Company or any Fund; "E. Capital Partners S.p.A. " means the company which compiles the Ethical Index Euro and which has entered into the License Agreement with the Investment Manager; "Ethical Index Euro" means the index compiled by E. Capital Partners S.p.A. which measures the performance of the largest, by way of market capitalisation, 150 European Socially Responsible companies. Further information on this index can be found on page 20. 8

13 "EU" means the European Union, whose member states currently include Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom; "euro" or means the currency referred to in the second sentence of Article 2 of the Council Regulation (EC) No. 974/98 of 3 May 1998 and as adopted as the single currency of the participating European Union Member States. "Eurozone" means the EU member states from time to time which have adopted the euro as their lawful currency; "Exempt Irish Investor" means: (i) a pension scheme which is an exempt approved scheme within the meaning of section 774 of the Taxes Act, or a retirement annuity contract or a trust scheme to which section 784 or 785 of the Taxes Act applies that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (ii) a company carrying on life business within the meaning of section 706 of the Taxes Act that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (iii) an investment undertaking within the meaning of section 739B of the Taxes Act that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (iv) a special investment scheme within the meaning of section 737 of the Taxes Act that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (v) a unit trust to which section 731(5)(a) of the Taxes Act applies that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (vi) a charity being a person referred to in Section 739D(6)(f)(i) of the Taxes Act that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (vii) a qualifying management company within the meaning of section 734 (1) of the Taxes Act that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (viii) a specified company within the meaning of section 734 (1) of the Taxes Act that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (ix) a person exempt from income tax and capital gains tax by virtue of section 784A(2) of the Taxes Act, where the Shares held are assets of an approved retirement fund or an approved minimum retirement fund and the qualifying fund manager 9

14 (within the meaning of section 784A of the Taxes Act) that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (x) a person exempt from income tax and capital gains tax by virtue of section 848E of the Taxes Act where the Shares held are assets of a special savings incentive account and the qualifying savings manager (within the meaning of section 848B of the Taxes Act) that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (xi) a person exempt from income tax and capital gains tax by virtue of section 787I of the Taxes Act where the units held are assets of a Personal Retirement Savings Account (within the meaning of Chapter 2A of Part 30 of the Taxes Act) and the PRSA Administrator (within the meaning of Chapter 2A of the Taxes Act) that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (xii) a Credit Union within the meaning of section 2 of the Credit Union Act 1997 that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (xiii) a company in respect of its investment in a money market fund within the meaning of Regulation (EC) No 2423/2001 of the European Central Bank of 22/11/2001, where such company is within the charge to corporation tax and has made a declaration to that effect to the Company and has supplied details of its corporation tax reference number to the Company; (xiv) the National Pensions Reserve Fund Commission, which has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event; (xv) a Qualifying Company that has made a Relevant Declaration to the Company, which is in the possession of the Company prior to the occurrence of a chargeable event and has supplied details of its corporation tax reference number to the Company; (xvi) an Intermediary acting on behalf of persons who are neither Resident in Ireland nor Ordinarily Resident in Ireland for tax purposes or an Intermediary acting on behalf of the persons Resident in Ireland listed above that has made a Relevant Declaration which is in the possession of the Company prior to the occurrence of a chargeable event. "Fund" means any separate investment Fund from time to time established and maintained for each class of Participating Shares by the Company with the prior approval of IFSRA of which the three Funds are β1 - MSCI Euro, β1 - Ethical Index Euro and β1 - MSCI Pan Euro (the Approved Funds ); "Group" means the Intesa Sanpaolo group of companies. 10

15 "IFSRA" means the Irish Financial Services Regulatory Authority, as a constituent part of the Central Bank and Financial Services Authority of Ireland, and any successor regulator of the Company; "Index" means any of the MSCI Euro Index or the Ethical Index Euro or the MSCI Pan Euro Index or all of them, as the case may be; "Intermediary" means a person who: (i) carries on a business which consists of, or includes, the receipt of payments from an investment undertaking on behalf of other persons; or (ii) holds Participating Shares in an investment undertaking on behalf of other persons; "Investment Management Agreement" means the agreement dated 23 August 2002 (as amended from time to time) between the Company and the Investment Manager; "Investment Manager" means Eurizon Capital SGR S.p.A or any successor or new investment manager appointed in respect of the Company or any Fund; "Investment Sub-Manager" means Epsilon Associati SGR S.p.A.; "Investment Sub-Management Agreement" means the agreement dated 23 August 2002 between the Investment Manager and the Investment Sub-Manager; "Irish Resident" means: (i) (ii) (iii) in the case of an individual, means an individual who is resident in Ireland for tax purposes; in the case of a trust, means a trust that is resident in Ireland for tax purposes; in the case of a company, means a company that is resident in Ireland for tax purposes; An individual will be regarded as resident in Ireland for a particular tax year if he/she: (1) spends 183 days or more in Ireland in that tax year; or (2) has a combined presence of 280 days in Ireland, taking into account the number of days spent in Ireland in that tax year together with the number of days spent in the State in the preceding tax year. Presence in a tax year by an individual of not more than 30 days in the State will not be reckoned for the purpose of applying the two year test. A trust will generally be Irish resident where all of the trustees are resident in Ireland. A company will be resident in Ireland if its central management and control resides in the Republic of Ireland irrespective of where it is incorporated. For Ireland to be treated as the location for central management and control this typically means that Ireland is the location where all fundamental policy decisions of the Company are made. A company which does not have its central management and control in Ireland but which is incorporated in Ireland is resident in Ireland except where: (1) the company or a related company carries on a trade in Ireland, and either the company is ultimately controlled by persons resident in EU member states or, resident in 11

16 countries with which the Republic of Ireland has a double taxation treaty, or the company or a related company are quoted companies on a recognised stock exchange in the EU or in a taxation treaty country, or (2) the company is regarded as not resident in Ireland under a double taxation treaty between the Republic of Ireland and another country. It should be noted that the determination of a company's residence for tax purposes can be complex in certain cases and declarants are referred to the specific legislative provisions which are contained in section 23A of the Taxes Act; "License Agreement" means the agreement dated 25 June 2002 between the Investment Manager and Morgan Stanley Capital International Inc. ( MSCI ); the agreement dated 4 April 2002 between the Investment Manager and E. Capital Partners S.p.A; and the agreement dated 25 June 2002 between the Investment Manager and MSCI in relation to the use of the relevant Indexes in connection with each of the Approved Funds; "Memorandum" means the memorandum of association of the Company; "Money Market Instruments" means instruments normally dealt in on the money market which : - are liquid, ie. capable of being converted to cash within 7 Business Days at a price closely approximating their current value; and - have a value which can be accurately determined at any time. "MSCI" means Morgan Stanley Capital International Inc., the company which compiles MSCI Euro Index and which has entered into a License Agreement with the Investment Manager; "MSCI Euro Index" means the index compiled by MSCI which measures the performance of the top, by way of market capitalisation, Eurozone companies with the objective of reflecting the market sector leaders in the Eurozone and which is derived from the MSCI EMU Indices. Further information on this index can be found on page 20; MSCI Pan Euro Index means the index complied by MSCI and which is the subset of the broader standard MSCI Europe Index and aims to capture 90% of the market capitalisation of the broader benchmark. Further information on this index can be found on page 20; "Net Asset Value" means the net asset value of the Company, or of a Fund, as appropriate, calculated as described herein; "Net Asset Value per Participating Share means in respect of any Participating Shares the Net Asset Value attributable to the Participating Shares issued in respect of a Fund divided by the number of Participating Shares in issue in respect of that Fund rounded to the nearest whole Participating Share of the Base Currency; "Notices" means the series of UCITS notices issued by IFSRA as amended and updated from time to time; 12

17 "OECD" means the Organisation for Economic Co-operation and Development, whose member states currently include Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland. Ireland, Italy, Japan, Korea, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States; "Ordinarily Resident in Ireland" The term ordinary resident as distinct from resident relates to a persons normal pattern of life and denotes residence in a place with some degree of continuity. (i) (ii) in the case of an individual, means an individual who has been resident in the State for three consecutive tax years becomes ordinarily resident with effect from the commencement of the fourth tax year. An individual who has been ordinarily resident in the State ceases to be ordinarily resident at the end of the third consecutive tax year in which s/he is not resident. "Participating Share" or "Share" means the Participating Shares of no par value in the Company; Promotional Expenses means all expenses relating to the printing and distribution of any sales literature of any kind relating to the Funds and advertising and promotional costs of any kind. Qualifying Company means a qualifying company within the meaning of section 110 of the Taxes Act. Recognised Clearing System includes any of the following clearing systems: - Central Moneymarkets Office Clearstream Banking SA; Clearstream Banking AG; CREST; Depository Trust Company of New York; Deutsche Bank A.G., Depository and Clearing System; Euroclear; Japan Securities Depository Centre (JASDEC); Monte Titoli SPA; Netherlands Centraal Instituut voor Giraal Effectenverkeer BV; 13

18 National Securities Clearing System; Sicovam SA; SIS Sega Intersettle AG; The Canadian Depository for Securities Ltd; VPC AB (Sweden); and Any other system for clearing securities which is designated by the Revenue Commissioners as a recognised clearing system. "Recognised Market" means with the exception of permitted investments in unlisted securities or in units of open-ended collective investment schemes, the Company s investments will be restricted to securities listed or traded on exchanges and markets listed below:- (a) all stock exchanges in a member state of the European Union ; (b) (c) (d) (e) (f) (g) (h) (i) (j) a stock exchange located within the United States of America, Iceland, Liechenstein, Canada, Japan, Norway, Switzerland, Australia, New Zealand and Hong Kong; the market organised by the members of the International Capital Markets Association; the market conducted by the listed money market institutions as described in the Financial Services Authority publication Regulation of Wholesale Cash and OTC Derivatives Markets : The Grey Paper, as amended from time to time; AIM - the Alternative Investment Market in the UK, regulated and operated by the London Stock Exchange; The over-the-counter market in Japan regulated by the Securities Dealers Association of Japan; NASDAQ in the United States; the market in US government securities conducted by primary dealers regulated by the Federal Reserve Bank of New York; the over the counter market in the United States of America regulated by the National Association of Securities Dealers Inc.; The French market for Titres de Créance Négotiable (over-the-counter market in negotiable debt instruments); 14

19 (k) (l) NASDAQ Europe. NASDAQ Europe is a recently formed market and the general level of liquidity may not compare favourably to that found on more established exchanges; The over-the-counter market in Canadian Government Bonds, regulated by the Investment Dealers Association of Canada; The exchanges and markets are listed in the Articles of Association and in accordance with the requirements of IFSRA, which does not issue a list of approved markets. "Regulations" means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (Statutory Instrument No.211 of 2003) as amended; Relevant Declaration means the declaration relevant to the Shareholder as set out in Schedule 2B Taxes Act; "Shareholder" means a holder of Participating Shares; "Subscriber Shares" means a subscriber share in the capital of the Company issued in accordance with the Articles. "Supplemental Prospectus" means any supplemental prospectus issued by the Company in connection with a Fund from time to time; Taxable Corporate Shareholder means a corporate shareholder who is not an Exempt Irish Investor and who is Irish resident for the purposes of Irish tax; "Taxes Act" means the Taxes Consolidation Act, 1997 (as amended) of the Republic of Ireland; "Transaction Fee" means a fee which will be payable on in kind subscriptions for, or redemptions of, Participating Shares, being 3,500 per subscription transaction and 6,000 per redemption transaction; "Transferable Securities" means shares in companies and other securities equivalent to shares in companies, bonds and other forms of securitised debt and any other negotiable securities which carry the right to acquire any such Transferable Securities by subscription or exchange, other than techniques and instruments utilised for efficient portfolio management; "UCITS" means an undertaking the sole object of which is the collective investment in Transferable Securities and/or other liquid financial assets permitted under the Regulations of capital raised from the public and which operates on the principle of risk-spreading and the units of which are at request of the holders repurchased or redeemed directly or indirectly out of those undertakings assets. Action taken by a UCITS to ensure that the stock exchange value of its units does not vary significantly from their net asset value shall be regarded as equivalent to such repurchase or redemption. Other liquid financial assets include cash deposits, financial derivative instruments, other collective investment undertakings and Money Market Instruments; 15

20 "UCITS Directive" means the Council Directive 85/611/EEC of the European Community as amended by the Council Directive 2001/108/EC (the UCITS Product Directive ) and the Council Directive 2001/107/EC (the UCITS Management Directive ) and as may be further amended from time to time; "US" means the United States of America, its territories, possessions and all other areas subject to its jurisdiction; "US$" or "US Dollars" means US Dollars, the lawful currency of the US; "US Person" means, unless otherwise determined by the Directors, (i) a citizen or resident of the US; (ii) a partnership organised or existing in or under the laws of the US; (iii) a corporation organised under the laws of the US; (iv) any estate or trust which is subject to US federal income tax on its income regardless of its source. "Valuation Point" means 7.00pm (GMT) on the relevant Dealing Day for which assets are being valued or such other day as may be determined by the Directors provided there shall be at least one Valuation Point for each Dealing Day. 3. INTRODUCTION The Company is an open-ended investment company with variable capital organised under the laws of Ireland as a public limited company pursuant to the Companies Acts, 1963 to The Company has been authorised by IFSRA as a UCITS within the meaning of the Regulations. It was incorporated on 26 June 2002 under registration number Its object, as set out in Clause 3 of the Company's Memorandum, is the collective investment in Transferable Securities and/or other liquid financial assets referred to in the Regulations of capital raised from the public and which operates on the principle of risk spreading. The Company is structured as an umbrella Fund. The Articles provide that the Company may offer separate classes of Participating Shares, each representing interests in a Fund comprising a distinct portfolio of investments. The Company has obtained the approval of IFSRA for the establishment of three Approved Funds, with one class of Participating Shares in each Approved Fund. With the prior approval of IFSRA, the Company from time to time may create an additional Fund or Funds in which case a supplemental prospectus incorporating details relating to each Fund will be issued by the Company. In addition, each Fund may be further divided into a number of different classes within the Fund. IFSRA shall be notified in the event that such different classes are created. This Prospectus relates to the Company s three Approved Funds: β1 - MSCI Euro; β1 - Ethical Index Euro and β1 MSCI Pan Euro Index. The Base Currency of each Approved Fund is euro. The Base Currency of any new Fund will be determined by the Directors at the time of the launch of the Fund. 4. INVESTMENT OBJECTIVE AND POLICIES 4.1 Investment Objective and Policies of the Company 16

21 The Company has been incorporated to provide investors with an opportunity to purchase Participating Shares in a Fund whose investment objective is to seek to replicate so far as possible and practicable the price and yield performance of a selected index thereby allowing investors to obtain risk exposure to the market represented by the selected Index in an easily tradeable form. Each Fund will seek to hold a portfolio of transferable securities that so far as possible and practicable consists of a considerable number of the component securities of the selected Index in different weightings from the Index provided that the investment objective of the Fund is achieved. Investment Objective of β1 - MSCI Euro The investment objective of the β1 - MSCI Euro is to seek to track so far as is possible and practicable the performance of the MSCI Euro Index. The Investment Sub-Manager will try to reduce, so far as is possible, administrative costs related to investing in all of the companies whose securities comprise the selected Index. Investment Objective of β1 - Ethical Index Euro The investment objective of the β1 - Ethical Index Euro is to seek to track so far as is possible and practicable the performance of the Ethical Index Euro. The Investment Sub-Manager will try to reduce, so far as is possible, administrative costs related to investing in all of the companies whose securities comprise the selected Index. Investment Objective of β1 - MSCI Pan Euro The investment objective of the Fund is to see to track so far as is possible and practicable the performance of the MSCI Pan - Euro Index. The Investment Sub- Manager will try to reduce, so far as is possible, administrative costs related to investing in all of the companies whose securities comprise the Index. Investment Policies of the Approved Funds Each Fund will pursue the objective of replicating, so far as is possible and practicable, the price and yield performance of the relevant Index diminishing so far as is possible administrative costs related to investing in the companies whose securities comprise the selected Index by seeking to hold a portfolio of transferable securities that consists of a considerable number of the component securities of that Index in different weightings from the Index, provided that the investment objective of the Fund is achieved. The securities in which each Fund will invest will principally be ordinary shares or common stock. The composition of the securities held by each Fund will be adjusted periodically to seek to replicate the price and yield performance of the relevant Index in order to reduce, so far as is possible, administrative costs related to investing in the companies whose securities comprise the selected Index. The ability of each Fund to replicate the yield performance of the relevant Index will be affected by the costs and expenses incurred by the Fund and marginally by the fact that composition and weighting of the securities in the relevant Fund may not be a reflection of composition and weighting of the securities of the Index. It will not always be possible or convenient for a Fund to replicate and maintain exactly the composition and weighting of the relevant Index 17

22 due to capital changes in the Index, to particular administrative costs related to investing in all the companies whose securities comprise the selected Index, or to price impact due to lack of liquidity, and/or limited pricing and because the Fund will have operating expenses whereas the Index does not and also for the reasons set out on page 22 under "Investment Risk". No Fund will be managed according to the traditional methods of active management, which involve the buying and selling of securities based upon economic, financial and market analyses and investment judgement. Instead, the investment style will be to replicate the relevant Index. The purchases and sales of securities that will be made will be those necessary to create, to the extent feasible, a portfolio that is designed to replicate the relevant Index. As a result the financial or other condition of an issuer will not result in the elimination of its securities from the portfolio unless the securities of such an issuer are removed from the relevant Index or keeping the securities in the portfolio does not improve the quality of tracking the relevant Index but rather causes an administrative cost increase. It is anticipated that ancillary liquid assets will not form a substantial part of a Fund s assets. However, any liquid assets that each Fund holds may be invested in short-term investments such as commercial paper, bankers' acceptances, certificates of deposit and government securities issued by OECD member countries or by any supranational entity and which are traded on a Recognised Market in an OECD member country and rated investment grade or better by a rating agency, such as Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody's Investors Services, Inc. In addition, each Fund may invest in collective investment schemes which have a primary objective of investing in such short-term investments, including government securities. Investment in collective investment schemes by the β1 - MSCI Pan Euro Fund will not exceed 1 per cent. of the Fund s assets. Each Fund's investments will be limited to investments permitted by the Regulations which are described in more detail in Schedule III. The markets in which each Fund will invest are listed in the definition of Recognised Markets. IFSRA does not issue a list of approved markets or exchanges. Any change in the investment objective or material change in the investment policy will be subject to the prior consent of Shareholders evidenced either by a majority vote at a meeting of Shareholders of a Fund or by the written consent of all of the Shareholders. In the event of a change in the investment objective and/or investment policy of a Fund a reasonable notification period shall be provided by the Company to the Shareholders to enable the Shareholders to redeem their Participating Shares prior to the implementation of the change. THE INDEXES MSCI Euro Index SM The MSCI Euro Index is a subset of the broader MSCI Standard EMU index, and aims to capture 90% of the market capitalization of the broader benchmark. It was established on 31 December 1998 and is specifically designed to include the largest and most liquid securities from the broader index, as it aims to serve as the basis for derivative contract, exchange traded funds and other index- based investment 18

23 products. It is published in real time through Bloomberg and Reuters and daily through MSCI vendors. The construction of the MSCI Euro Index begins with the securities included in the MSCI EMU Index. The less liquid securities in this broad benchmark are screened out based on the following liquidity screen: for each security within a country, daily traded value statistics for the latest quarter are calculated and the securities are ranked in order of decreasing liquidity. The bottom 5% of the least liquid securities, in terms of total market capitalization of the country in the MSCI EMU Index, is screened-out. This screening is performed on a country-by-country basis, since liquidity figures are not directly comparable across markets. From the list of securities that have passed the liquidity screen the largest securities in each country are selected until approximately 90% of the total market capitalization of the country in the MSCI EMU Index is captured. Similarly, the largest securities in each industry are selected, again capturing approximately 90% of the total market capitalization of the industry in the MSCI EMU Index. After the aggregation of these two lists, the largest securities are included in the MSCI Euro Index benchmark so as to capture approximately 90% of the total market capitalization of the MSCI EMU Index. Ethical Index Euro Ethical Index Euro is the index created by E. Capital Partners S.p.A., on October 2000, which measures the performances of 150 European companies that are selected according to E. Capital Partners Ethical Screening Methodology (see below for further information). All the securities are listed in the most important European Stock Exchanges: Eurozone, United Kingdom, Sweden, Norway, Denmark and Switzerland. The index weights of securities are calculated according to their market capitalization weighted by an adjustment factor (free float) from July The index is published daily and calculated in euro: since the securities are expressed in different currencies but evaluated in euro, the index reflects also the exchange rate risks. Ethical Screening Methodolgy The corporate analysis developed by E. Capital Partners S.p.A. combines the classical financial criteria with a method that entails the monitoring of a company s approach and behaviour towards society. E. Capital Partners S.p.A. takes into account the company s sensitivity towards economic, social and environmental issues as well as the clarity and coherence of the company s business mission and objectives in relation to the above. The company s business strategy is also analysed for transparency, management strategic objectives and management competencies. The Ethical Screening Methodology applies, as a first step, exclusionary criteria based on an analysis of the sector in which the company is involved. In particular, E. Capital Partners S.p.A. considers the company s turnover from the following sectors : pornography, nuclear, military, gambling, tobacco and alcohol. A turnover of less than 2% makes the company eligible for selection while the pornographic sector is never considered eligible. The index is calculated and published in two forms : 19

24 price index: considers only prices (base date: 12th October 2000); total return index: considers also dividends paid by the companies. Its periodical review is semi-annual, the second Wednesday after the first Friday of January and July. Information on the index can be found on Bloomberg: ECAPEP Index; ECAPER Index. MSCI Pan-Euro Index SM The MSCI Pan - Euro Index is a subset of the broader standard MSCI Europe Index, and aims to capture 90% of the market capitalization of the broader benchmark. It was established on 31 December 1998 and is specifically designed to include the largest and most liquid securities from the broader index, as it aims to serve as the basis for derivative contracts, exchange traded funds and other index-based investment products. It is published in real time through Bloomberg and Reuters and daily through MSCI vendors. The construction of the MSCI Pan - Euro Index begins with the securities included in the MSCI Europe Index. The less liquid securities in this broad benchmark are screened out based on the following liquidity screen: for each security within a country, daily traded value statistics for the latest quarter are calculated and the securities are ranked in order of decreasing liquidity. The bottom 5% of the least liquid securities, in terms of total market capitalization of the country in the MSCI Europe Index, is screened out. This screening is performed on a country-by country basis, since liquidity figures are not directly comparable across markets. From the list of securities that have passed the liquidity screen the largest securities in each country are selected until approximately 90% of the total market capitalization of the country in the MSCI Europe Index is captured. Similarly, the largest securities in each industry are selected, again capturing approximately 90% of the total market capitalization of the industry in the MSCI Europe Index. After the aggregation of these two lists, the largest securities are included in the MSCI Pan - Euro Index so as to capture approximately 90% of the total market capitalization of the MSCI Europe Index. Rebalancing of each Fund As the investment objective of each Fund is to seek to track so far as possible and practicable the performance of the relevant Index, any changes to that Index, such as the composition and/or weighting of the securities within the Index, may require the Fund to make corresponding adjustments to its portfolio from time to time to seek to replicate the relevant Index. The Investment Sub-Manager may adjust the composition and/or weighting of the securities held in a Fund from time to time and to the extent practicable and possible in order to seek to replicate changes in the composition and/or weighting of the securities within the Index in a manner as speedy and effective as possible. Certain adjustments to the portfolio and conforming changes may be made to each Fund when changes in the relevant Index are made or when significant corporate events occur which affect the nature of the securities in issue. 20