EDMOND DE ROTHSCHILD FUND. Société d Investissement à Capital Variable (SICAV)

Transcription

1 EDMOND DE ROTHSCHILD FUND Société d Investissement à Capital Variable (SICAV) AUGUST 2007

2 1. INTRODUCTION EDMOND DE ROTHSCHILD FUND (hereinafter the Company ) is a limited company (société anonyme) incorporated in the form of an Investment Company with Variable Capital (société d'investissement à capital variable - SICAV) with multiple Sub- Funds under the laws of the Grand-Duchy of Luxembourg. The aim of the Company is to enable investors to invest in portfolios made up of diversified transferable securities according to the specific approach of the Sub-Funds offered, to best achieve the performances expected by the investors. EDMOND DE ROTHSCHILD FUND is registered on the official list of Undertakings for Collective Investment in accordance with the Law of 20 December 2002 on Undertakings for Collective Investment (hereinafter the "Law of 2002") and is governed by Part I of the Law of 2002 and qualifies as a self-managed SICAV in accordance with article 27 of the Law of This registration cannot be construed as an approval by the controlling authority regarding the contents of this Prospectus or the quality of the securities offered by EDMOND DE ROTHSCHILD FUND. Any representation to the contrary is unauthorised and unlawful. This Prospectus may not be used for the purpose of offering and promoting sales in any country or any circumstance where such offers or promotions are not authorised. None of the Shares has been or will be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or under the securities laws of any state or political subdivision of the United States of America or any of its territories, commonwealths, possessions or other areas subject to its jurisdiction including the Commonwealth of Puerto Rico (the "United States"), and such Shares may be offered, sold or otherwise transferred only in compliance with the 1933 Act and such state or other securities laws. The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "1940 Act"), nor under any other U.S. Federal laws. Accordingly, no shares are being offered to U.S. Persons (as defined under U.S. Federal securities and commodities laws) or persons who are in the United States at the time the shares are offered or sold (except as may be otherwise provided under the section titled The hares - Redemption of Shares in this Prospectus). The attention of investors is drawn to certain compulsory redemption terms applicable to U.S. Persons described under "Redemptions" in this Prospectus. The shares have not been approved or disapproved by the U.S. Securities and Exchange Commission (the "SEC") or any other regulatory agency in the United States, nor has the SEC or any other regulatory agency in the United States passed upon the accuracy or adequacy of this Prospectus or the merits of the shares. Any representation to the contrary is a criminal offence. The U.S. Commodity Futures Trading Commission has not reviewed or approved this offering or any offering memorandum for the Company. No person is authorised to give any information other than that contained in this Prospectus or the documents mentioned herein and which are available for inspection by the general public. The Board of Directors of EDMOND DE ROTHSCHILD FUND is responsible for the accuracy of the information contained in this Prospectus at the time of its publication. This Prospectus may be updated from time to time with significant amendments. Consequently, subscribers are advised to ask EDMOND DE ROTHSCHILD FUND for the most recent issue of the Prospectus. Potential subscribers are also advised to seek professional advice on the laws and regulations (such as those on taxation and exchange control) applicable to the subscription, purchase, holding, redemption and sale of shares in their countries of citizenship, residence or domicile. This Prospectus is valid only if it is accompanied by the latest available annual report and by the latest semi-annual report if published after such annual report. These documents are an integral part of this Prospectus. 2

3 2. NOTE TO INVESTORS The Board of Directors will apply national and international regulations for the prevention of money laundering. Measures aimed towards the prevention of money laundering require a detailed verification of an investor s identity in accordance with the applicable laws and regulations in Luxembourg in relation to money laundering obligations, as amended from time to time. EDMOND DE ROTHSCHILD FUND (and the Central Administration Agent acting on behalf of the Company) reserves the right to request such information as is necessary to verify the identity of an investor in conformity with the before mentioned laws and regulations. In the event of delay or failure by the subscriber to produce any information required for verification purposes, the Company (and the Central Administration Agent acting on behalf of the Company) may refuse to accept the application and all subscription monies. 3

4 3. CONTENTS 1.INTRODUCTION 2 2.NOTE TO INVESTORS 3 3.CONTENTS 4 4.GLOSSARY 5 5.ADMINISTRATION OF THE COMPANY 7 6.GENERAL CHARACTERISTICS OF THECOMPANY 9 7.INVESTMENT POLICY AND OBJECTIVES SPECIAL CONSIDERATIONS ON RISKS 11 9.CO-MANAGEMENT AND POOLING INVESTMENT RESTRICTIONS MANAGEMENT OF THE COMPANY INVESTMENT MANAGERS CUSTODIAN BANK CENTRAL ADMINISTRATION DISTRIBUTORS AND NOMINEES ERROR! BOOKMARK NOT DEFINED. 16. SHARES NET ASSET VALUE SUSPENSION OF THE CALCULATION OF NET ASSET VALUE AND OF THE ISSUE, REDEMPTION AND CONVERSION OF SHARES ISSUE OF SHARES, SUBSCRIPTION AND PAYMENT PROCEDURE CONVERSION OF SHARES REDEMPTION OF SHARES DISTRIBUTION POLICY TAX CONSIDERATIONS CHARGES AND EXPENSES GENERAL MEETING OF SHAREHOLDERS ERROR! BOOKMARK NOT DEFINED. 26. DISSOLUTION - MERGER SHAREHOLDERS INFORMATION INFORMATION TO THE ATTENTION OF SWISS INVESTORS ANNEX I SUB-FUNDS DETAILS 42 4

5 4. GLOSSARY Definition of indexes DJ Stoxx Small 200 : this Dow Jones index is a capitalization-weighted index of the small capitalization stocks within the STOXX family. The index was developed with a base value of 100 as of December 31, EONIA Capitalised: (Euro OverNight Index Average) is an index representative of domestic rate in the Euro zone. The day s rate is based on the weighted average of all unsecured loan operations on the interbank market. It is calculated by the European Central Bank and is fixed once a day between 18h45 and 19h00. It is representative of a short-term capitalised money market investment (reinvested every day). Euro-Aggregate Treasury 3-5 Years: The Euro-Aggregate Treasury 3-5 years, drawn up by Lehman Brothers, is an index which contains the local currency government debt of the European Monetary Union Member States, with final maturities of between 3 and 5 years. Euro-Aggregate Treasury 7-10 Years: The Euro-Aggregate Treasury 7-10 years, drawn up by Lehman Brothers, is an index which contains the local currency government debt of the European Monetary Union Member States, with final maturities of between 7 and 10 years. Euro-Aggregate Corporates 3-5 Years: The Euro-Aggregate Corporates 3-5 Years, drawn up by Lehman Brothers, is an index contains only euro denominated securities from industrial, utility and financial issuers. Inclusion is based on the currency of the issue and not the domicile of the issuer. All issues must be rated investment grade or above, with final maturities between 3 and 5 years. Merril Lynch Euro High Yield Constrained: is an index of high-yield debts issued in Euro. The Index tracks the performance of below investment grade euro and euro legacy currency denominated bonds of corporate issuers domiciled in countries having an investment grade foreign currency long term debt rating (based on a composite of Moody s and S&P). Each issuer can not weight more than 3% of the total index and each issuance has a minimum amount outstanding of 50 million Euro. MSCI AC Far East Ex-Japan Free: is an index made up of several local MSCI indexes in Southeast Asia (Malaysia Free, Singapore Free, etc.) excluding Japan (Ex-Japan) and all shares not available to a European investor, hence Free. All local MSCI indexes making up the MSCI Far East Ex-Japan Free are calculated on the basis of the weighted capitalisation of each share. MSCI Emerging Markets Free: is an index made up of several (26) local emerging market MSCI indexes world-wide (Argentina Free, China Free, Mexico Free, etc.) excluding shares not available to a European investor, hence Free. All local MSCI indexes constituting the MSCI Emerging Markets Free are calculated on the basis of the weighted capitalisation of each share. MSCI Europe: is an index made up of the main local MSCI indexes in Europe (UK, France, Germany, Belgium, etc.) excluding the least industrialised countries. All local MSCI indexes making up the MSCI Europe are calculated on the basis of the weighted capitalisation of each share. S&P 500: is an index made up of the 500 largest American companies (in terms of market capitalisation). It represents the US domestic economy through the variations of all component stocks. Topix: (Tokyo Price Index): is an index made up of the largest Japanese companies (in terms of market capitalisation) listed on the Tokyo stock exchange. 5

6 Other terms A1 short-term rating: is a rating given to an issuer of certificates of deposit and commercial paper. It is the best rating granted by Standard and Poor s ADEF. ADR: American Depository Receipts. Certificates issued on the US market representing a position in transferable securities issued on another market. Category: type of share in a Sub-Fund of the Company offered to a certain type of investor or via a specific marketing network. There are two categories of shares, A and D as defined in the chapter entitled "Shares" below. CSSF: the Commission de Surveillance du Secteur Financier. Eligible State: any EU Member State, any member state of the Organisation for Economic Co-operation and Development ( OECD ), and any other state which the Board of Directors deems appropriate with regard to the investment objectives of each Sub-Fund. Eligible States include in this category countries in Africa, the Americas, Asia, Australasia and Europe. GDR: Global Depository Receipts. Certificates issued on a domestic market and representing a position in transferable securities issued on another market. Monetary papers: Generally defined as securities with a short maturity. OTC: Market for trading securities that are not listed on a Regulated Market. Participating, non-voting securities: bonds issued by nationalised French companies whose coupon is indexed to turnover, earnings or cash flow. No voting right is attached to these securities. Price Earnings Ratio or EV/EBITDA: is a statistic (a ratio) obtained by dividing the market price of a quoted stock by the company's earnings per share figure over the last 12 months. The result gives an idea of the relative price of the share. The higher the PER, the higher earnings growth is to be expected to justify this high relative market price. The lower the PER, the lower the relative market price of the share will be, but not necessarily without risk for the investor. PERs depend on markets and sectors (e.g. a technological stock with a PER of 40 can be considered as a good deal; a banking share with a PER of 40 would be considered as very expensive). EV/EBITDA: (Enterprise Valuation/Earnings Before Interest, Taxes, Depreciation and Amortisation) is similar to PER. This ratio also lets the investor assess if a share is under or over-valued in its market or sector in relation to other companies in a similar market or sector. Regulated Market: is the market defined in item 13 of Article 1 of Council Directive 93/22/EECof 10 th May 1993 on investment services in the transferable securities field, as amended, as well as any other market in an Eligible State which is regulated, operates regularly and is recognised and open to the public. Euro Zone: zone including all European Union States participating in the Economic and Monetary Union. 6

7 5. ADMINISTRATION OF THE COMPANY PROMOTER LA COMPAGNIE FINANCIERE EDMOND DE ROTHSCHILD BANQUE 47, rue du Faubourg Saint Honoré F Paris BOARD OF DIRECTORS LA COMPAGNIE FINANCIERE EDMOND DE ROTHSCHILD BANQUE, Chairman of the Board represented by Mr. Samuel Pinto, Deputy General Manager 47, rue du Faubourg Saint Honoré F Paris EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S, Director represented by Mr Philippe Couvrecelle, Chairman of the Executive Board 47, rue du Faubourg Saint Honoré F Paris Mr. Christophe Boulanger, Director Chief Financial Officer, Edmond De Rothschild Asset Management S.A.S 47, rue du Faubourg Saint Honoré F Paris Mr. Frederic Otto, Director Chief Executive Officer, Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais L Luxembourg Mr. Geoffroy Linard de Guertechin, Director Vice-Chairman of the Management Committee Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais L Luxembourg Mr. Pierre Marie Valenne, Director Vice-Chairman of the Management Committee Banque Privée Edmond de Rothschild Europe 20, boulevard Emmanuel Servais L Luxembourg CONDUCTING PERSONS Mr. Benoît Durand Head of Client Services, Edmond De Rothschild Asset Management S.A.S 47, rue du Faubourg Saint Honoré F Paris Mr. Joseph Stevens Vice-President,Pri Investment 20, boulevard Emmanuel Servais L Luxembourg HEAD OFFICE 20, boulevard Emmanuel Servais L Luxembourg CUSTODIAN BANK, Banque Privée Edmond de Rothschild Europe REGISTRAR AND TRANSFER 20, boulevard Emmanuel Servais AGENT, DOMICILIARY L Luxembourg AGENT, CENTRAL ADMINISTRATION, PAYING AGENT INDEPENDENT AUDITORS PRICEWATERHOUSECOOPERS Espace Ariane, 400, Route d Esch L Luxembourg 7

8 INVESTMENT MANAGERS EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. 47, rue du Faubourg Saint Honoré F Paris RFS GESTION 47, rue du Faubourg Saint Honoré F Paris LEGAL ADVISER ELVINGER, HOSS & PRUSSEN 2 Place Winston Churchill B.P. 425 L-2014 Luxembourg DISTRIBUTORS - GROUP LA COMPAGNIE FINANCIÈRE EDMOND DE ROTHSCHILD BANQUE 47, rue du Faubourg Saint Honoré F Paris BANQUE PRIVÉE EDMOND DE ROTHSCHILD S.A. 18 rue de Hesse CH-1204 Geneva And all banks or financial professionals related to or affiliated with those companies. 8

9 6. GENERAL CHARACTERISTICS OF THE COMPANY EDMOND DE ROTHSCHILD FUND, hereinafter referred to as the "Company", is an Investment Company with Variable Capital (SICAV) with multiple Sub-Funds incorporated under the laws of Luxembourg, which has been set up for an unlimited duration in Luxembourg on 15 June 2000 under the name of R FUND and which has been renamed LCF ROTHSCHILD FUND on 4 October 2000, and EDMOND DE ROTHSCHILD FUND on 31 December 2003, in accordance with the provisions of Part I of the Law of 2002 and the Law of 10 August 1915 on Commercial Companies as amended (hereinafter the "Law of 1915"). EDMOND DE ROTHSCHILD FUND is organised as an umbrella fund, which means it is comprised of several Sub-Funds each of which represents a separate pool of assets and liabilities and each with a distinct investment policy. This structure offers investors the advantage of being able to choose between the various Sub-Funds and then switch from one Sub-Fund to another at will, as explained in the chapter "Conversion of shares". The Company includes the following Sub-Funds: Short-term Sub-Funds EDMOND DE ROTHSCHILD FUND - EURO SHORT TERM * Bond Sub-Funds Government bond Sub-Funds EDMOND DE ROTHSCHILD FUND - EURO GOVERNMENT BONDS MID TERM * EDMOND DE ROTHSCHILD FUND - EURO GOVERNMENT BONDS LONG TERM * Corporate bond Sub-Funds Convertible bond Sub-Fund EDMOND DE ROTHSCHILD FUND - EURO CORPORATE BONDS SHORT TERM * EDMOND DE ROTHSCHILD FUND - EURO CORPORATE BONDS MID TERM * EDMOND DE ROTHSCHILD FUND - EURO CORPORATE BONDS HIGH YIELD EDMOND DE ROTHSCHILD FUND - EUROPEAN CONVERTIBLE BONDS * Share Sub-Funds EDMOND DE ROTHSCHILD FUND - EUROPE MID CAPS * EDMOND DE ROTHSCHILD FUND - EUROPE VALUE * EDMOND DE ROTHSCHILD FUND - ASIA EX-JAPAN VALUE* EDMOND DE ROTHSCHILD FUND - WORLD FOOD & HEALTH * EDMOND DE ROTHSCHILD FUND - NORTH AMERICA VALUE * EDMOND DE ROTHSCHILD FUND - EMERGING MARKETS EQUITIES Currently, only the Sub-Funds mentioned above marked with * are available to investors. The Board of Directors, however, reserves the right to launch new Sub-Funds in the future, the investment policy and selling methods of which will be announced in due course through an addendum to this Prospectus. Investors may be informed through a newspaper announcement if deemed appropriate by the Board of Directors. Similarly, the Board of Directors may propose to shareholders the closing of a Sub-Fund. The articles of incorporation of the Company, dated 15 June 2000, were published in the Mémorial C, Recueil des Sociétés et Associations (the "Mémorial ) on 3 August 2000 and amended by an extraordinary general meeting held on 4 October 2000, and subsequently by an extraordinary general meeting held on 31 December The consolidated articles of incorporation were published in the Mémorial on 28 January The articles of incorporation have been amended for the last time by an extraordinary general meeting held on 30 December 2005 and have been published in the Mémorial on 25 January The articles of incorporation have been deposited with the Register of Commerce and Companies in Luxembourg. These documents are available for inspection and copies can be obtained on payment of the administrative costs as determined by grand-ducal regulation. The Company is registered with the Register of Commerce and Companies in Luxembourg under the number B , and its registered office is established in Luxembourg. The capital of the Company is at all times equal the total net assets of the various Sub-Funds and is represented by shares issued with no par value and fully paid up. Variations in the capital can take place without further consideration or inquiry and without the need for publication or registration with the Register of Commerce and Companies in Luxembourg. The minimum capital required for the Company is EUR 1,250,000 (one million two hundred and fifty thousand Euro). This minimum has to be reached within six months after registration of the Company on the official list of Undertakings for Collective Investment. 9

10 7. INVESTMENT POLICY AND OBJECTIVES The main objective of the Company is to preserve the capital in real terms and ensure the growth of its assets. Obviously, no guarantee is given that this objective will be achieved. The Company intends to achieve this objective by the active management of the Sub-Funds which can be broken down into five categories. The first category deals primarily with short-term transferable securities and money market instruments. The second category concentrates exclusively on bonds. The third category concerns exclusively stocks and shares. The fourth category invests both in international bonds and equities. Lastly, the fifth category offers specifically profiled investments in terms of risk/return or a combination of both in the makeup of its portfolio. Generally speaking, the Sub-Funds' portfolios will consist of transferable securities, without restriction or limitation as to industrial, economic or geographical diversification, unless otherwise specifically defined in the investment policy of each Sub-Fund offered. The investment policy and objectives of each Sub-Fund are detailed in the Annex to the present Prospectus, which is an integral part of the present Prospectus. Information on the historical performance of each Sub-Fund may be found in the relevant Sub-Fund s Simplified Prospectus. 10

11 8. SPECIAL CONSIDERATIONS ON RISKS With regard to each Sub-Fund, future investors are recommended to consult their professional advisers to evaluate the suitability of an investment in a specific Sub-Fund, in view of their personal financial situation. The number and allocation of portfolio assets in each Sub-Fund should reduce the Sub-Fund's sensitivity to risks associated with a particular investment. Nevertheless, potential investors should be aware of the fact that there can be no assurance that their initial investment will be preserved. In addition, future investors should give careful consideration to the following risks linked to an investment in certain Sub-Funds: Acceptable markets Some markets, in particular Russia, on which securities that may be acquired are listed may not qualify as acceptable markets under Article 41 (1) of the Luxembourg Law of Investments in securities on these markets will be considered as investments in unlisted transferable securities. Accordingly, the total amount of net assets in a Sub-Fund invested in these unlisted shares and securities will be limited to 10%. Investments may be by means of ADRs or GDRs to limit emerging market risks. Investments in Russia will be by means of ADRs and GDRs only. Emerging markets Investors should be aware that some markets in which Sub-Funds may invest are emerging markets subject to periods of growth, instability and change. The activity of custodian banks is not as developed in emerging countries and this may lead to difficulties in the liquidation and registration of transactions. The stock exchanges concerned are smaller and more volatile than the stock markets of more developed countries - a small number of issuers account for a large share of market capitalisation and quotation value of these exchanges. In the past, some of these exchanges have experienced substantial volatility of prices or were closed unexpectedly and for long periods of time. There is no guarantee that such events will not be repeated. In emerging markets there is the risk of political or economic changes which could unfavourably influence the value of a Sub-Fund s investments. Moreover, investments in Eastern Europe, the former Soviet Union and in Russia will be subject to the following risks: there may not be sufficient government control, issuers may sometimes not be independent, management may be unsatisfactory and conflicts of interests may arise, the registration of securities may be a problem and there may be lack of experience in modern market practices, e.g. risk of error, negligence, bad management. In these regions, the risk that the main investment objective, i.e. appreciation of capital, will not be achieved is even more substantial. Foreign exchange risks Certain Sub-Funds investing in securities denominated in currencies other than their reference currency, may be subject to fluctuations in exchange rates resulting in a reduction in the Sub-Fund's net asset value. Risk of limited trading volume Trading volumes of emerging country stock exchanges can be considerably lower than in leading world exchanges. The resulting lack of liquidity may adversely affect the price at which the securities held by a Sub-Fund can be sold. Accounting and statutory standards It may occur in some countries, where a Sub-Fund may potentially invest, that standards of accountancy, auditing and reporting are less strict than the standards applicable in more developed countries and that investment decisions have to be taken based on information less complete and accurate than that available in more developed countries. Investment in small and medium-size companies Investment in small and medium-size companies can involve more risks than those normally associated with investment in larger and better established companies. Smaller companies, in particular, often have limits as regards product range, markets or financial resources, and there may be only one or two key managers. 11

12 9. CO-MANAGEMENT AND POOLING To ensure effective management, the Board of Directors may decide to manage all or part of the assets of one or more Sub-Funds with other Sub-Funds in the Company (technique of pooling) or to co-manage all or part of the assets, except for a cash reserve, if necessary, of one or more Sub-Funds in EDMOND DE ROTHSCHILD FUND with assets of other Luxembourg investment funds or of one or more sub-funds of other Luxembourg investment funds (hereinafter called "Party(ies) to co-managed assets") for which the Company s Custodian is appointed as the custodian bank. These assets will be managed in accordance with the respective investment policy of the Parties to co-managed assets, each of which pursuing identical or comparable objectives. Parties to co-managed assets will only participate in co-managed assets as stipulated in their respective Prospectus and in accordance with their respective investment restrictions. Each Party to co-managed assets will participate in co-managed assets in proportion to the assets contributed thereto by it. Assets will be allocated to each Party to co-managed assets in proportion to its contribution to co-managed assets. The entitlements of each Party to comanaged assets apply to each line of investment in the aforesaid co-managed assets. The aforementioned co-managed assets will be formed by the transfer of cash or, if necessary, other assets from each Party participating in the co-managed assets. Thereafter, the Board of Directors may regularly make subsequent transfers to co-managed assets. The assets can also be transferred back to a Party to co-managed assets for an amount not exceeding the participation of the said Party to co-managed assets. Dividends, interest and other distributions deriving from income generated by co-managed assets will accrue to the Parties to co-managed assets in proportion to their respective investments. Such income may be kept by the Party to co-managed assets or reinvested in the comanaged assets. All charges and expenses incurred in respect of co-managed assets will be applied to these assets. Such charges and expenses will be allocated to each Party to co-managed assets in proportion to its respective entitlement in the co-managed assets. In the case of infringement of investment restrictions affecting a Sub-Fund of the Company, when such a Sub-Fund takes part in comanagement and even though the manager has complied with the investment restrictions applicable to the co-managed assets in question, the Board of Directors of the Company shall ask the manager to reduce the investment in question proportionally to the participation of the Sub-Fund concerned in the co-managed assets or, if necessary, reduce its participation in the co-managed assets so that investment restrictions for the Sub-Fund are observed. When the Company is liquidated or when the Board of Directors of the Company decides - without prior notice - to withdraw the participation of the Company or a Sub-Fund of the Company from co-managed assets, the co-managed assets will be allocated to Parties to co-managed assets proportionally to their respective participation in the co-managed assets. The investor must be aware of the fact that such co-managed assets are employed solely to ensure effective management, and provided that all Parties to co-managed assets have the same custodian bank. Co-managed assets are not distinct legal entities and are not directly accessible to investors. However, the assets and liabilities of each Sub-Fund of the Company will be constantly separated and identifiable. 12

13 10. INVESTMENT RESTRICTIONS The Board has adopted the following restrictions relating to the investment of the Company s assets and its activities. These restrictions and policies may be amended from time to time by the Board if and as it shall deem it to be in the best interests of the Company in which case this Prospectus will be updated. The investment restrictions imposed by Luxembourg law must be complied with by each Sub-Fund. The restrictions mentioned in paragraph 1. (D) below are applicable to the Company as a whole. I. Investment in eligible assets (A) (1)The Company will exclusively invest in: a) transferable securities and money market instruments admitted to or dealt in on a Regulated Market; and/or b) transferable securities and money market instruments dealt in on another regulated market in an Eligible State; and/or c) recently issued transferable securities and money market instruments, provided that the terms of issue include an undertaking that application will be made for admission to official listing on an official stock exchange or another Regulated Market and such admission is achieved within one year of the issue; and/or d) units of an undertaking for collective investment in transferable securities authorised according to Council Directive 85/611/EEC of 20 th December 1985, as amended ("UCITS") and/or of an undertaking for collective investment or investment fund within the meaning of the first and second indent of Article 1(2) of Council Directive 85/611/EEC of 20 th December 1985, as amended ("other UCIs"), whether situated in an EU member state or not, provided that: - such other UCIs have been authorised under the laws of any member country of the European Union or under the laws of Canada, Hong Kong, Japan, Norway, Switzerland or the United States of America, - the level of protection for unitholders in such other UCIs is equivalent to that provided for unitholders in a UCITS, and in particular that the rules on assets segregation, borrowing, lending, and uncovered sales of transferable securities and money market instruments are equivalent to the requirements of directive 85/661/EEC, - the business of such other UCIs is reported in half-yearly and annual reports to enable an assessment of the assets and liabilities, income and operations over the reporting period, - no more than 10% of the assets of the UCITS or of the other UCIs, whose acquisition is contemplated, can, according to their constitutional documents, in aggregate be invested in units of other UCITS or other UCIs; and/or e) deposits with credit institutions which are repayable on demand or have the right to be withdrawn, and maturing in no more than 12 months, provided that the credit institution has its registered office in a country which is an OECD member state and a FATF country; and/or f) financial derivative instruments, including equivalent cash-settled instruments, dealt in on a regulated market referred to in subparagraphs (a) and (b) above, and/or financial derivative instruments dealt in over-the-counter ("OTC derivatives"), provided that: - the underlying consists of instruments covered by this section (A) (1), financial indices, interest rates, foreign exchange rates or currencies, in which the Portfolios may invest according to their investment objective; - the counterparties to OTC derivative transactions are institutions subject to prudential supervision, and belonging to the categories approved by the Luxembourg supervisory authority; - the OTC derivatives are subject to reliable and verifiable valuation on a daily basis and can be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the Company's initiative. 13

14 and/or g) money market instruments other than those dealt in on a Regulated Market, if the issue or the issuer of such instruments are themselves regulated for the purpose of protecting investors and savings, and provided that such instruments are: - issued or guaranteed by a central, regional or local authority or by a central bank of an EU member state, the European Central Bank, the European Union or the European Investment Bank, a non-eu member state or, in case of a Federal State, by one of the members making up the federation, or by a public international body to which one or more EU member states belong, or - issued by an undertaking any securities of which are dealt in on Regulated Markets, or - issued or guaranteed by a credit institution which has its registered office in a country which is an OECD member state and a FATF country, or - issued by other bodies belonging to the categories approved by the CSSF provided that investments in such instruments are subject to investor protection equivalent to that laid down in the previous three indents and provided that the issuer is a company whose capital and reserves amount to at least ten million Euro (EUR 10,000,000) and which presents and publishes its annual accounts in accordance with the fourth Directive 78/660/EEC, is an entity which, within a group of companies, is dedicated to the financing of the group or is an entity which is dedicated to the financing of securitisation vehicles which benefit from a banking liquidity line. (2) In addition, the Company may invest a maximum of 10% of the net asset value of any Sub-Fund in transferable securities and money market instruments other than those referred to under (1) above. (B) (i) The Company may hold ancillary liquid assets. (ii) The Company will ensure that the global exposure relating to derivative instruments does not exceed the total net value of the Sub-Fund to which they apply. The exposure is calculated taking into account the current value of the underlying assets, the counterparty risk, foreseeable market movements and the time available to liquidate the positions. This shall also apply to the following subparagraphs. The Company may invest, as part of the investment policy of its Sub-Funds and within the limits laid down in paragraph C)(v), in financial derivative instruments provided that the exposure to the underlying assets does not exceed in aggregate the investment limit laid down in paragraph C). When the Company, on behalf of any of its Sub- Funds, invests in index-based financial derivative instruments, these investments do not have to be combined to the limits laid down in paragraph C). When a transferable security or money market instrument embeds a derivative, the latter must be taken into account when complying with the requirements of this item B). (C) (i) The Company may invest no more than 10% of the assets of any Sub-Fund in transferable securities or money market instruments issued by the same body. The Company may not invest more than 20% of the assets of such Sub-Fund in deposits made with the same body. The risk exposure to a counterparty of a Sub-Fund in an OTC derivative transaction may not exceed 10% of its assets when the counterparty is a credit institution referred to in (A) (1) (e) above or 5% of its assets in other cases. (ii) Furthermore, the total value of the transferable securities and money market instruments held by the Company on behalf of a Sub-Fund in the issuing bodies in each of which it invests more than 5% of its assets must not exceed 40% of the value of its assets. This limitation does not apply to deposits and OTC derivative transactions made with financial institutions subject to prudential supervision. 14

15 Notwithstanding the individual limits laid down in paragraph (C) (i), the Company may not combine for each Sub- Fund: - investments in transferable securities or money market instruments issued by a single body, - deposits made with a single body, and/or - exposures arising from OTC derivative transactions undertaken with a single body in excess of 20% of its assets. (iii) (iv) The limit of 10% laid down in paragraph (C)(i) above may be of a maximum of 35% in respect of transferable securities or money market instruments which are issued or guaranteed by an EU member state, its local authorities or by an Eligible State or by public international bodies of which one or more EU member states are members. The limit of 10% laid down in paragraph (C) (i) above may be of a maximum of 25% certain debt securities when they are issued by a credit institution which has its registered office in an EU member state and is subject by law, to special public supervision for the purpose of protecting the holders of such debt securities. In particular, sums deriving from the issue of such debt securities must be invested in accordance with the law, in assets which, during the whole period of validity of the debt instruments, are capable of covering claims attaching to the bonds and which, in case of bankruptcy of the issuer, would be used on a priority basis for the repayment of principal and payment of accrued interest. If a Sub-Fund invests more than 5% of its assets in the debt securities referred to in the sub-paragraph above and issued by one issuer, the total value of such investments may not exceed 80% of the value of the assets of such Sub- Fund. (v) The transferable securities and money market instruments referred to in paragraphs (C)(iii) and (C)(iv) are not included in the calculation of the limit of 40% referred to in paragraph (C)(ii). The limits set out in paragraphs (C)(i), (C)(ii), (C)(iii) and (C)(iv) above may not be aggregated and, accordingly, investments in transferable securities or money market instruments issued by the same body, in deposits or derivative instruments made with this body, carried out in accordance with paragraphs (C)(i), (C)(ii), (C)(iii) and (C) (iv) may not, in any event, exceed a total of 35% of any Sub-Fund s assets. Companies which are included in the same group for the purposes of consolidated accounts, as defined in accordance with directive 83/349/EEC or in accordance with recognised international accounting rules, are regarded as a single body for the purpose of calculating the limits contained in this paragraph (C). A Sub-Fund may cumulatively invest up to 20% of its assets in transferable securities and money market instruments within the same group. (vi) Without prejudice to the limits laid down in paragraph (D), the limits laid down in this paragraph (C) are raised to a maximum of 20% for investments in shares and/or bonds issued by the same body when, according to the Prospectus, the aim of a Sub-Fund s investment policy is to replicate the composition of a certain stock or bond index which is recognised by the CSSF, on the following basis - the composition of the index is sufficiently diversified, - the index represents an adequate benchmark for the market to which it refers, - it is published in a appropriate manner. The limit laid down in the subparagraph above is raised to 35% where it proves to be justified by exceptional market conditions in particular in Regulated Markets where certain transferable securities or money market instruments are highly dominant. The investment up to 35% is only permitted for a single issuer. (vii) Notwithstanding the provisions of paragraph (C), the Company id authorised to invest up to 100% of the assets of any Sub-Fund, in accordance with the principle of risk spreading, in transferable securities and money market instruments issued or guaranteed by an EU member state, by its local authorities or by an Eligible State which is an OECD member state, or by public international bodies of which one or more EU member states are members, provided that such Sub-Fund must hold securities from at least six different issues and securities from any one issue may not account for more than 30% of the total amount. 15

16 (D) (i) The Company may not acquire shares carrying voting rights which would enable the Company to exercise significant influence over the management of the issuing body. (ii) The Company may acquire no more than (a) 10% of the non-voting shares of the same issuer, (b) 10% of the debt securities of the same issuer, (c) 25% of the units of the same UCITS and/or other UCI; and/or (d) 10% of the money market instruments of the same issuer. However, the limits laid down in (b) to (d) 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 units or the net amount of instruments in issue cannot be calculated. (iii) The limits set out in paragraph (D)(i) and (ii) above shall not apply to: (a) transferable securities and money market instruments issued or guaranteed by an EU member state or its local authorities; (b) transferable securities and money market instruments issued or guaranteed by a non-member state of the EU; (c) transferable securities and money market instruments issued by public international bodies of which one or more EU member states are members; (d) shares held by a Sub-Fund in the capital of a company incorporated in a non- member state of the EU which invests its assets mainly in the securities of issuing bodies having their registered office in that state where, under the legislation of that state, such a holding represents the only way in which the Sub-Fund can invest in the securities of the issuing bodies of that state, provided, however, that such company in its investment policy complies with the limits laid down in Articles 43, 46 and 48 (1) and (2) of the Law of 2002; (e) shares held by one or more investment companies in the capital of subsidiary companies which, exclusively on its or their behalf carry on only the business of management, advice or marketing in the country where the subsidiary is located, in regard to the redemption of shares at the request of shareholders. (E) (i) No Sub-Fund may invest in aggregate more than 10% of its assets in the units or shares of other UCITS or UCI. For the purpose of the application of this investment limit, each compartment of a UCI with multiple compartments within the meaning of article 133 of the Law of 2002 is to be considered as a separate issuer provided that the principle of segregation of the obligations of the various compartments vis-à-vis third parties is ensured. (ii) (iii) When the Company invests in the units of other UCITS and/or other UCIs that are managed directly or by delegation, by the same management company or by any other company with which the management company is linked by common management or control, or by way of a direct or indirect stake of more than 10% of the capital or votes, that management company or other company may not charge subscription, redemption or management fees on account of the Company investment in the units of such other UCITS and/or UCIs. When the Company invests an important part of its assets in units of other UCITS and/or other UCIs other than those described in the preceding paragraph, the maximum level of the management fees that may be charged both to the Company itself and to the other UCITS and/or other UCIs in which it intends to invest is fixed at 2.5% per annum. The Company will indicate in its annual report the total management fee charged both to the relevant Sub-Fund and other UCTS and/or UCIs in which such Sub-Fund has invested during the relevant period. The underlying investments held by the UCITS or other UCIs in which the Company invests do not have to be considered for the purpose of the investment restrictions set forth under paragraph I. (C) above. II. (A) (B) Investment in other assets The Company will not make investments in precious metals or certificates representing these. The Company may not enter into transactions involving commodities or commodity contracts, except that the Company may employ techniques and instruments relating to transferable securities within the limits set out in paragraph III. below. 16

17 (C) (D) (E) (F) (G) (H) III. The Company will not purchase or sell real estate or any option, right or interest therein, provided the Company may invest in transferable securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein. The Company may not carry out uncovered sales of transferable securities, money market instruments or other financial instruments referred to in paragraph I.(A) (1) d), f) and g). The Company may not make loans to or act as guarantor for third parties, provided that this restriction shall not prevent the Company from acquiring transferable securities or money market instruments or other financial instruments referred to in paragraph I. (A)(1) d), f) and g). The Company may not borrow for the account of any Sub-Fund, other than amounts which do not in aggregate exceed 10% of the net assets of the Sub-Fund, and then only on a temporary basis. However, the Company may acquire foreign currency by means of back-to-back loans. The Company will not mortgage, pledge, hypothecate or otherwise encumber as security for indebtedness any securities held for the account of any Sub-Fund, except as may be necessary in connection with the borrowings mentioned in (F) above, and then such mortgaging, pledging, or hypothecating may not exceed 10% of the asset value of each Sub-Fund. In connection with OTC transactions including amongst others, swap transactions, option and forward exchange or futures transactions, the deposit of securities or other assets in a separate account shall not be considered a mortgage, pledge or hypothecation for this purpose. The Company will not underwrite or sub-underwrite securities of other issuers. Financial Techniques and instruments Pursuant to Article 42(2) and 47 of the Law of 2002 the Company, for each of its Sub-Funds, is authorised to employ techniques and instruments to protect its assets against exchange risks and may employ techniques and instruments relating to transferable securities for the purpose of efficient portfolio management, provided that the global exposure relating to derivative instruments does not exceed the total net assets of the relevant Sub-Fund. The techniques and instruments which the Company is authorised to use under this provision are more fully described hereafter. A. Techniques and instruments relating to transferable securities. For the purpose of efficient portfolio management, the Company may, on behalf of each Sub-Fund, participate in transactions relating to - options; - financial futures and related options; - securities lending; - repurchase agreements. 1 Transactions relating to options on transferable securities. The purchase and writing of call and put options by the Company is permitted provided such options are traded on a regulated market which is operating regularly, recognised and open to the public. When entering into these transactions, the Company must comply with the following rules: 1.1 Rules applicable to the purchase of options. The total premiums paid for the acquisition of call and put options outstanding and referred to herein may not together with the total of the premiums paid for the purchase of call and put options outstanding and referred to in heading 2.3. below, exceed 15 per cent. of the net assets of a Sub-Fund. 1.2 Rules to ensure the coverage of the commitments resulting from options transactions. Upon the conclusion of contracts whereby call options are written, the relevant Sub-Fund must hold either the underlying securities, or equivalent call options or other instruments capable of ensuring adequate coverage of the commitments resulting from such contracts, such as warrants. The underlying securities related to call options written may not be disposed of as long as these options are in existence unless such options are covered by matching options or by other instruments that can be used for that purpose. The same applies to equivalent call options or other instruments which the relevant Sub-Fund must hold where it does not have the underlying securities at the time of the writing of such options. 17

18 As an exception to this rule, a Sub-Fund may write call options on securities it does not hold at the entering into the option contract provided the following conditions are met: - the aggregate exercise (striking) price of such uncovered call options written shall not exceed 25 per cent. of the net assets of the relevant Sub-Fund; - the Company must at any time be in the position to ensure the coverage of the position taken as a result of the writing of such options. Where it writes put options, a Sub-Fund must be covered during the entire duration of the option contract by adequate liquid assets that may be used to pay for the securities which could be delivered to it in case of the exercise of the option by the counterpart. 1.3 Conditions and limits for the writing of call and put options. The aggregate of the commitments arising from the writing of put and call options (excluding call options written in respect of which the relevant Sub-Fund has adequate coverage) and the aggregate of the commitments from the transactions referred to in heading 2.3. hereafter may not, at any time, exceed the value of the net assets of the Sub-Fund concerned. In this context, the commitment on call and put options written is deemed to be equal to the aggregate of the exercise (striking) prices of those options. 1.4 Swap Agreements The Company may, on a ancillary basis, enter into swap agreements whereby the income produced by the investment in interest rate instruments, in equities and in money market instruments will be waived to the counterparty of the swap agreement in order to obtain, in exchange, a return based on the return on interest rate, on equities or a basket of equities or an index or a basket of indices. The Company may enter into said transactions for the purpose of achieving a higher rate of return than that produced by the holding of equities over the same period, and/or when it is unable to allocate a portion of the assets of the Company to a selected Manager or to subscribe in existing Undertakings for Collective Investment. These swap agreements will be standardised agreements as set up by the International Swaps and Derivatives Association (ISDA). The counterparties in the swap agreements must be institutions financially capable of meeting their obligation under the swap contract and must be a first class financial institution specialised in this kind of transactions. However, the counterparty s risk will remain. During the period pursuant to the terms of the swap agreements, the Company will not directly benefit from the income produced by the underlying investments but from the income stipulated by the terms of the swap agreements. 2 Transactions relating to futures and option contracts relating to financial instruments. Except for transactions by private contract mentioned under heading 2.2. below, the transactions described herein may only relate to contracts that are dealt in on a regulated market which is operating regularly, recognised and open to the public. Subject to the conditions specified below, these transactions may be made for hedging or other purposes. 2.1 Transactions with the purpose of hedging risks connected to the evolution of stock markets. A Sub-Fund may sell stock index futures for the purpose of hedging against a global risk of an unfavourable evolution of stock markets. For the same purpose, it may also write call options on stock indices or purchase put options thereon. The hedging purpose of these transactions presupposes that there exists a sufficient correlation between the composition of the index used and the corresponding portfolio. In principle, the aggregate commitments resulting from futures contracts and stock index options may not exceed the aggregate estimated market value of the securities held by the relevant Sub-Fund in the corresponding market. 2.2 Transactions with the purpose of hedging interest rates. A Sub-Fund may sell interest rate futures contracts for the purpose of achieving a global hedge against interest rate fluctuations. It may also for the same purpose write call options or purchase put options on interest rates or enter into interest rate swaps by private agreement with highly rated financial institutions specialised in this type of operation. In principle, the aggregate of the commitments relating to futures contracts, options and swap transactions on interest rates may not exceed the aggregate estimated market value of the assets to be hedged and held by the relevant Sub-Fund in the currency corresponding to those contracts. 18

19 2.3 Transactions made for a purpose other than hedging. Besides option contracts on transferable securities and contracts on currencies, a Sub-Fund may, for a purpose other than hedging, purchase and sell futures contracts and options on any kind of financial instruments provided that the aggregate commitments in connection with such purchase and sale transactions together with the amount of the commitments relating to the writing of call and put options on transferable securities does not exceed at any time the value of the net assets of the relevant Sub-Fund. The writing of call options on transferable securities for which the relevant Sub-Fund has adequate coverage are not considered for the calculation of the aggregate amount of the commitments referred to above. In this context, the concept of the commitments relating to transactions other than options on transferable securities is defined as follows: - the commitment arising from futures contracts is deemed equal to the value of the underlying net positions payable on those contracts which relate to identical financial instruments (after setting off all sale positions against purchase positions), without taking into account the respective maturity dates and - the commitment deriving from options purchased and written is equal to the aggregate of the exercise (striking) prices of net uncovered sales positions which relate to single underlying assets without taking into account respective maturity dates. The aggregate amount of premiums paid for the acquisition of call and put options outstanding which are referred to herein, may not, together with the aggregate of the premiums paid for the acquisition of call and put options on transferable securities mentioned in heading 1.1. above, exceed 15 per cent. of the net assets of the relevant Sub-Fund. With respect to options referred to in the foregoing restrictions, the Company, on behalf of each Sub-Fund, may enter into OTC option transactions with first class financial institutions that specialise in this type of transaction. 3 Securities lending transactions. The Company may enter into securities lending transactions provided the following rules are complied with: 3.1 Rules intended to ensure proper completion of lending transactions. The Company may only participate in securities lending transactions within a standardised lending system organised by a recognised securities clearing institution or by a first class financial institution specialised in that type of transaction. In relation to its lending transactions, the Company, on behalf of the relevant Sub-Fund, must in principle receive security of a value which, at the conclusion of the lending agreement, must be at least equal to the value of the global valuation of the securities lent. This collateral must be given in the form of cash and/or of securities issued or guaranteed by member States of the OECD or by their local authorities or by supranational institutions and organisations with EEC, regional or worldwide scope and blocked in favour of the Company until termination of the lending contract. 3.2 Conditions and limits of lending transactions. Lending transactions may not be carried out on more than 50 per cent. of the aggregate market value of the securities in the portfolio. This limit is not applicable where the Company has the right, at any time, to terminate the contract and obtain restitution of the securities lent. Lending transactions may not extend beyond a period of 30 days. 4 Repurchase agreements. The Company may, from time to time, enter into repurchase agreements which consist in the purchase and sale of securities whereby the terms of the agreement entitle the seller to repurchase from the purchaser the securities at a price and at a time agreed amongst the two parties at the conclusion of the agreement. The Company may act either as purchaser or seller in repurchase transactions. However, in entering into such agreements the Company is subject to the following rules: 4.1 Rules intended to ensure the proper completion of repurchase agreements. The Company, on behalf of its Sub-Funds, may purchase or sell securities in the context of a repurchase agreement only if its counterpart is a highly rated financial institution specialised in this type of transaction. 19

20 4.2 Conditions and limits of repurchase transactions. During the lifetime of a repurchase agreement, the Company may not sell the securities which are the object of the agreement (i) either before the repurchase of the securities by the counterparty has been carried out or (ii) the repurchase period has expired. The Company must ensure to maintain the importance of purchased securities subject to a repurchase obligation at a level such that it is able, at all times, to meet its obligations to redeem its own shares. B. Techniques and instruments intended to hedge currency risks to which the Company and its Sub-Funds are exposed to in the management of their assets and liabilities. In order to protect each Sub-Fund s assets against currency fluctuations, the Company may, on behalf of each Sub-Fund, enter into transactions the objects of which are currency forward contracts as well as the writing of call options and the purchase of put options on currencies. The transactions referred to herein may only concern contracts which are traded on a regulated market which is operating regularly, recognised and open to the public. For the same purpose, the Company may also, on behalf of each Sub-Fund, enter into forward sales of currencies or exchange currencies on the basis of private agreements with highly rated financial institutions specialised in this type of transaction. The herebefore mentioned transactions objective of achieving a hedge presupposes the existence of a direct relationship between them and the assets to be hedged. This implies that transactions made in one currency may in principle not exceed the valuation of the aggregate assets denominated in that currency nor exceed the period during which such assets are held. IV. Risk-management process The Company will employ a risk-management process which enables it to monitor and measure at any time the risk of the positions and their contribution to the overall risk profile of each Sub-Fund. The Company will employ, if applicable, a process for accurate and independent assessment of the value of any OTC derivative instruments. V. General The Company need not comply with the investment limit percentages laid down above when exercising subscription rights attached to securities which form part of its assets. In addition, the Company need not comply with the investment limits set out in paragraph I (C) above during the first 6 month period following its authorisation in Luxembourg. If such percentages are exceeded for reasons beyond the control of the Company or as a result of the exercise of subscription rights, the Company must adopt as a priority objective for its sales transactions the remedying of that situation, taking due account of the interests of its Shareholders. 20

21 11. MANAGEMENT OF THE COMPANY The Board of Directors of the Company is responsible for the Company's management and the control of its operations as well as determining and implementing its investment policy The Board of Directors of the Company has appointed the Conducting Persons as listed above in order to supervise and coordinate the activities of the Company, in compliance with the provisions of the CSSF Circular 03/108 which apply to self-managed SICAVs. The Conducting Persons shall supervise and coordinate the functions delegated to the different service providers and shall ensure that an appropriate risk management method is applied to the Company. The Company has entered into an agreement dated as of 1st November 2006 with the above mentioned Conducting Persons. This Agreement has been concluded for an unlimited duration. Each party may terminate this Agreement by way of registered mail with a three months prior notice. The Board of Directors may, under its control and responsibility, delegate the execution of the day to day management of the assets of the Sub-Funds to one or several persons which need not be members of the Board of Directors. Such persons shall have the powers and duties given to them by the Board of Directors. 21

22 12. INVESTMENT MANAGERS The Board of Directors has decided to delegate, under its responsibility, the management of the assets of the Company to the following Investment Managers : a. EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. is a 99.99% subsidiary of La Compagnie Financière Edmond de Rothschild Banque, Paris, which is a French commercial bank, belonging to the Edmond de Rothschild Group. It was created as a bank in It is active in national and international banking operations and asset management for both private and institutional customers. EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. is in charge of the management of the assets of the following Sub- Funds : EDMOND DE ROTHSCHILD FUND EUROPEAN CONVERTIBLE BONDS * EDMOND DE ROTHSCHILD FUND EUROPE MID CAPS * EDMOND DE ROTHSCHILD FUND EUROPE VALUE * EDMOND DE ROTHSCHILD FUND ASIA EX-JAPAN VALUE * EDMOND DE ROTHSCHILD FUND WORLD FOOD & HEALTH * EDMOND DE ROTHSCHILD FUND NORTH AMERICA VALUE * EDMOND DE ROTHSCHILD FUND EMERGING MARKETS EQUITIES b. RFS GESTION. RFS GESTION, a subsidiary of Edmond de Rothschild Group, is a portfolios management company authorised by the French regulator, l'autorité des Marchés Financiers, on 15 April 2004 and incorporated as a société anonyme with Directoire and Conseil de Surveillance, with a share capital of As from the 1 st March 2007, EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S. will be replaced by RFS GESTION as Investment Manager of the assets of the following Sub-Funds : EDMOND DE ROTHSCHILD FUND EURO SHORT TERM * EDMOND DE ROTHSCHILD FUND EURO GOVERNMENT BONDS MID TERM * EDMOND DE ROTHSCHILD FUND EURO GOVERNMENT BONDS LONG TERM * EDMOND DE ROTHSCHILD FUND EURO CORPORATE BONDS SHORT TERM * EDMOND DE ROTHSCHILD FUND EURO CORPORATE BONDS MID TERM * EDMOND DE ROTHSCHILD FUND EURO CORPORATE BONDS HIGH YIELD The remuneration of the Investment Managers for their services is described in the chapter "Charges and expenses" below. 22

23 13. CUSTODIAN BANK Banque Privée Edmond de Rothschild Europe has been appointed Custodian of the Company s assets under the terms of an agreement of unlimited duration. Banque Privée Edmond de Rothschild Europe is a wholly-owned subsidiary of Banque Privée Edmond de Rothschild S.A., Genève. Either party may terminate the agreement with 90 days prior written notice. The custody of the Company s assets has been entrusted to the Custodian Bank or, in accordance with banking practice and under its responsibility, to correspondents. The Custodian shall exercise reasonable care in the selection and supervision of correspondents and will be responsible for the transfer of instructions or Company assets to the correspondents. Unless the Custodian has been negligent, the Custodian shall be responsible for the acts of the correspondents selected only to the extent it is refunded by them for damage caused to the Company. The Custodian will not be liable for losses resulting from the bankruptcy or insolvency of a correspondent if it was not negligent in its selection and supervision. The Custodian must moreover: a) ensure that the sale, issue, redemption and cancellation of shares carried out by the Company or on its behalf, are in accordance with the law or the Company s articles of incorporation; b) ensure that in the case of transactions involving the Company s assets, consideration is remitted to it within the usual time limits; c) ensure that income of the Company is applied in accordance with the articles of incorporation. Fees and costs of the Custodian are charged to the Company in conformity with normal practice in Luxembourg. Such fees will be calculated quarterly on the basis of the average net assets of the Company during each quarter. 23

24 14. CENTRAL ADMINISTRATION The Company's Central Administration will be carried out in Luxembourg, at 20 Boulevard Emmanuel Servais, by Banque Privée Edmond de Rothschild Europe. In fact, - accounts will be kept there and accounting records will be available there; - issues and redemptions will be carried out there; - the Register of Shareholders will be kept there; - the prospectus, financial reports and all other documents related to investments will be drawn up there; - correspondence, dispatch of financial reports and all other documents intended for shareholders or bearers of shares will be sent from Luxembourg; - calculation of net asset values will be carried out there. 24

25 15. DISTRIBUTORS AND NOMINEES In the context of selling shares, the Company may enter into agreement with distributors and/or selling networks also able to act as nominees depending on rules applicable in the countries concerned and investor demands. In compliance with the Distribution contracts, the Distributor acting as nominee will be registered on the Register of Shareholders but not the clients who have invested in the Company. Terms and conditions of the Distribution contract provide, among other things, that a client who has invested in the Company via a nominee, may at any time request that shares subscribed via the nominee be transferred to his own name, so that the client is registered under his own name in the Register of Shareholders upon reception of such instructions from the nominee. In case of nominee, investors must be aware that subscriptions to shares may be made both through the nominee or directly to the Company. 25

26 16. SHARES Shares are issued in registered form for each Sub-Fund. They must be fully paid up and are issued with no par value. Fractions of shares will be issued with four decimal places. There is no limit to the number of shares to be issued. Shares redeemed by the Company are cancelled. The Company may issue shares of two categories (A and D) in each Sub-Fund, especially depending on the category of the investor targeted or on the different fee charges described at the end of this chapter: - "A": offered to individuals and legal entities - "D": reserved for distributors especially approved by EDMOND DE ROTHSCHILD FUND subscribing on behalf of their clients or on their own behalf. As a result, the relation between the types of distributor and categories of share can be summarised as follows: Category D is reserved for distributors especially approved by EDMOND DE ROTHSCHILD FUND. Category A is available for all other investors of EDMOND DE ROTHSCHILD FUND. If the subscription form does not specify the category of shares chosen, shares of category A will be issued. It is not the intention of the Board of Directors to propose the payment of a dividend. However, this does not prevent the Board of Directors to propose to the general meeting of Shareholders of each category the distribution of a dividend if circumstances so allow. Assets of the various categories of shares form a single mass. When a dividend is paid out to the shares of categories A and D, assets attributable to the shares of these categories are reduced by the global amount of the dividend. The Company may open other Sub-Funds and create new shares in each category representing assets of these Sub-Funds. No share certificate will be issued; instead, a confirmation of registration in the share register will be issued by the Transfer Agent. Each share carries one voting right. The rights attached to shares are those set forth in the Luxembourg Law of 1915 so long as these do not depart from the Law of Shareholders have no preferential subscription right for new shares. All shares are freely transferable and have equal rights to a share in profits, liquidation proceeds and dividends, if applicable, of the Sub-Fund to which they relate. Fractions of shares have no voting rights, but have rights to dividends and liquidation proceeds. The distribution of dividends is approved by the general meeting of holders of the category or class of shares concerned. Any change in the articles of incorporation resulting in a change of the rights of a Sub-Fund must be approved by the Shareholders' General Meeting of the Sub-Fund concerned. The different categories of shares for EDMOND DE ROTHSCHILD FUND Category Management and administration fee (as % of quarterly average net asset value in each Sub-Fund) Entry fee paid to manager (as % of net asset value per share subscribed) Entry fee paid to distributor (as % of net asset value per share subscribed) Conversion fee paid to distributor (as % of net asset value of the Sub- Fund redeemed) A Max 1.75% Max 0.5% Max 4% Max 0.5% None D Max 2.5% Max 0.5% None None None Minimum subscription amount 26

27 17. NET ASSET VALUE The net asset value of the shares of each Sub-Fund is calculated on each bank working day in Luxembourg (the "Valuation Day"), by the Administrative Agent under the responsibility of the Board of Directors of the Company. If 30th September and/or 31st March are not a bank working days in Luxembourg, then, for the purpose of the Company financial reporting and statements, a net asset value per share will be calculated for each Sub-Fund as at these dates, provided that such net asset value will not be used for the purposes of subscription, redemption and conversion. The net asset value is expressed in the reference currency set for each Sub-Fund, in the chapter "Investment policy and objectives". The net asset value of shares in each Sub-Fund is determined by dividing the net assets of each Sub-Fund by the number of shares in the relevant Sub-Fund outstanding on the Valuation Day, by rounding up or down to the nearest whole unit of the reference currency of the Sub-Fund (e.g. for the euro it will be a cent). For shares in a given Sub-Fund of the Company, the value of each Distribution share is obtained by dividing the net assets of the Sub- Fund concerned by the number of outstanding Distribution shares, plus the number of outstanding Accumulation shares multiplied by the current "ratio". The value of one Accumulation share will correspond to the value of one Distribution share multiplied by the "ratio". The Board of Directors will determine a distinct amount of net assets per Sub-Fund. As regards the shareholders, this amount will only be allocated to shares issued on behalf of the Sub-Fund concerned, bearing in mind any possible breakdown of this amount between shares of categories A and D of this Sub-Fund. The total net asset value of the Company is expressed in euros, and consolidation of the various Sub-Funds is obtained by translating the net asset values of all Sub-Funds into euros and adding them. The net assets of the various Sub-Funds in the Company will be assessed as follows: I. The assets of the Company will include in particular: 1. all cash in hand and on deposit including accrued interest not yet collected and accrued interest receivable on these deposits until Valuation Day; 2. all bills and notes payable on demand and any amounts receivable (including the proceeds of the securities sold but not yet collected); 3. all securities, shares, stocks, bonds, option or subscription rights and other investments and transferable securities owned by the Company; 4. all dividends and distribution proceeds receivable in cash or in kind to the extent known to the Company; 5. all accrued interest not yet collected on any interest bearing securities until Valuation Day receivable on securities owned by the Company, except if such interest is comprised in the principal thereof; 6. preliminary expenses of the Company, insofar as they have not been written off; 7. all other permitted assets of any kind, including prepaid expenses. The value of these assets will be determined as follows: 1. The value of any cash on hand or on deposit, notes and bills payable on demand and accounts receivable, prepaid expenses and cash dividends and interest declared or accrued but not yet collected, shall be deemed the full amount thereof, unless it is improbable that it can be collected; in which case, the value thereof will be arrived at after deducting such amounts as the Board of Directors may consider appropriate to reflect the true value of these assets. 2. All securities quoted or dealt in on an official stock exchange or on any other Regulated Market will be valued at the last price known in Luxembourg on the Valuation Day and, if the security is traded on several markets, on the basis of the last known price on the main market of this security. If the last known price is not representative, valuation will be based on the fair value at which it is expected it can be resold, as determined with prudence and in good faith by the Board of Directors. 3. Futures contracts and options are valued based on their closing price the previous day on the market concerned. Prices used are settlement prices on forward markets. 4. Unlisted securities or securities not traded on a stock exchange or any other Regulated Market, will be valued based on the fair value at which it is expected they can be resold, as determined with prudence and in good faith by the Board of Directors. 5. Financial derivative instruments which are not listed on any official stock exchange or traded on any other Regulated Market will be valued in a reliable and verifiable manner on a daily basis and in accordance with market practice. 27

28 6. Securities denominated in a currency other than the Sub-Fund's reference currency will be translated at the average exchange rate of the currency concerned. 7. Shares or units of UCITS and other UCIs will be valued on the basis of their last available net asset value as reported by such undertakings. 8. The swap agreements, whereby income produced by the investment in interest rate instruments, in equities and in money market instruments will be waived to the counterparty of the swap agreement in order to obtain, in exchange, a return based on the return on interest rate, on equities or a basket of equities or an index or a basket of indices, in relation to the European and American markets, are valuated as follows: Floating leg A= B x (C D) - E E A Amount of difference in value of interest rate instruments, equities or a basket of equities or an index or a basket of indices. B Nominal amount. C Closing value of interest rate instruments, equities or a basket of equities or an index or a basket of indices at the valuation day. D Fees. E Initial value of interest rate instruments, equities or a basket of equities or an index or a basket of indices. Fixed payable leg Interests calculated at the fixed interest rate on the nominal amount of the transaction. The realised (or unrealised) gain or loss is the difference between the two legs. For the purpose of determining the value of Company assets, the Administrative Agent relies on information obtained from various sources of quotation (including fund administrative agents and brokers) and directives received from the Board of Directors of the Company. Unless there are manifest errors, the Administrative Agent is not responsible for such valuations coming from the aforementioned sources of quotation, nor for any errors in the valuation of net asset values as a result of such erroneous information. If one or more sources of quotation cannot provide relevant valuations to the Administrative Agent, the latter is authorised not to calculate the net asset value and, consequently, not to determine subscription and redemption prices. The Administrative Agent shall immediately inform the Board of Directors if such a situation were to arise. Henceforth, the Board of Directors may decide to suspend the calculation of the net asset value in compliance with procedures described in the chapter "Suspension of the calculation of net asset value and of the issue, redemption and conversion of shares". II. Liabilities of the Company will include in particular: 1. all borrowings, bills and other amounts due; 2. all known liabilities, due or not yet due, including all matured contractual obligations for payment in cash or kind, including the amount of dividends declared by the Company but not yet paid; 3. all reserves, authorised or approved by the Board of Directors, in particular those set aside in order to provide for any possible depreciation of certain investments of the Company; 4. any other liability of the Company, of whatever kind, with the exception of those represented by the Company's own capital. For the purpose of determining the value of these other liabilities, the Company will take into account all expenses to be borne by it, including, without limitation, the costs of its constitution and subsequent modifications of its articles of incorporation; fees and expenses payable to investment advisers, managers, accountants, custodian and correspondent agents, domiciliary agents, administrative agents, transfer agents, paying agents or other agents and employees of the Company, and permanent representatives of the Company in the countries where it is subject to registration; the cost of legal assistance and auditing of the Company's annual accounts; advertising expenses; the cost of printing and publishing the documents prepared to promote the sale of shares; printing and publication expenses of annual and half-year financial reports; expenses for holding shareholders and board meetings; reasonable travel expenses for directors and officers; attendance fees; expenses for registration declarations; all taxes and duties levied by government authorities and stock exchanges; expenses for publishing the issue and redemption prices as well as all other operating costs, including financial, banking or brokerage expenses incurred on purchase or sale of assets or otherwise and any other administrative expenses. 28

29 For the purposes of valuation of its liabilities, the Company will take into account prorata temporis the expenses, administrative and other costs of a regular or periodic nature. 5. Each Sub-Fund will be treated as a separate entity generating its own assets, liabilities, charges and expenses. The assets, liabilities, costs and expenses that cannot be allocated to one Sub-Fund will be allocated to the different Sub- Funds in equal parts or, as far as justified by the amounts concerned, in proportion to their respective net assets. III. Each share of the Company in the process of being redeemed will be regarded as a share issued and existing until the close of business on the Valuation Day applied to redemption of such share, and its price will be regarded as a liability of the Company from the close of business on that day until the price is paid. Each share to be issued by the Company in accordance with subscription applications received will be considered as being issued as of the close of business on the Valuation Day when its issue price is set, and its price will be considered as an amount due to the Company until it is received. IV. As far as possible, account will be taken of any investment or divestment decided by the Company until the Valuation Day. Orders from managers as well as confirmations from brokerage firms must reach the Custodian Bank before 5 p.m., Luxembourg time, one bank working day before Valuation Day. 29

30 18. SUSPENSION OF THE CALCULATION OF NET ASSET VALUE AND OF THE ISSUE, REDEMPTION AND CONVERSION OF SHARES The Board of Directors is authorised to temporarily suspend the calculation of the net asset value of one or more Sub-Funds, as well as the issue, redemption and conversion of shares in the following cases: a) during any period when any market or stock exchange which is the principal market or stock exchange on which a substantial portion of the Sub-Fund's investments is listed, is closed, otherwise than for ordinary holidays, or during which dealings are considerably restricted or suspended; b) if the political, economic, military, monetary or social situation, or any Act of God beyond the Company's responsibility and control, renders the valuation or disposal of assets impracticable by reasonable and normal means, without seriously harming shareholders interests; c) when a breakdown in the means of communication normally employed to determine the value of a significant portion of a Sub- Fund's investments hinders the correct valuation of net assets in acceptable time; d) if foreign exchange or capital movement restrictions prevent the execution of transactions on behalf of the Company or if it is impossible to buy or sell assets of the Company at normal exchange rates; e) if the Board of Directors so decides, provided all shareholders are treated on an equal footing and all relevant laws and regulations are applied, (i) as soon as a shareholders' meeting has been convened for the purpose of deciding on the dissolution/liquidation of the Company or a Sub-Fund, or (ii) provided that the Board is empowered to decide on this matter, as soon as the liquidation of a Sub-Fund has been decided by the Board of Directors; f) If there is no means to determine the price of undertakings for collective investment in which the Company invested (when the calculation of the net asset value of the undertaking for collective investment concerned is suspended). When exceptional circumstances might adversely affect shareholders interests, or in case of massive requests for redemption as described in the chapter "Redemption of shares", the Board of Directors of the Company reserves the right to set the value of a share only after having sold the necessary transferable securities, as soon as possible, on behalf of the Sub-Fund. In this case, subscriptions and requests for redemption and conversion in the process of execution will be treated on the basis of the net value thus calculated. Any such suspension of calculation of net asset value shall be notified to the subscribers and shareholders requesting redemption or conversion of their shares on reception of the request for subscription, redemption or conversion. Subscriptions and requests for redemption and conversion then outstanding may be withdrawn by written notification so long as they are received by the Company before the suspension ends. Suspended subscriptions, redemptions and conversions will be taken into account on the first Valuation Day after the suspension ends. 30

31 19. ISSUE OF SHARES, SUBSCRIPTION AND PAYMENT PROCEDURE The Board of Directors is authorised to issue shares of each Sub-Fund at any time and without limitation. Sub-Funds currently available for subscriptions are those marked by a * in the chapter "General characteristics of the Company" and listed in the subscription form. If the Board of Directors so decides, other Sub-Funds listed in this Prospectus may be opened in the future. Details of the subscription will be announced at that time through an amendment to this Prospectus and to the subscription form. In the event that a category of shares within a particular Sub-Fund has not been issued, it may be opened upon the acceptance of any application at an initial subscription price determined by the Company s Board of Directors on the basis of the latest available net asset value per share of the other category of the Sub-Fund concerned. However, the net asset value per share of the category of the Sub-Fund concerned will be adjusted by the Board of Directors to reflect the Administration and Management fees applicable to this category of shares, as described under Chapter "Shares". Current subscriptions The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the manager of the Sub-Fund concerned. Requests for subscription will be sent to the Company. On reception, the subscriber will only receive written confirmation. Requests for subscription received by the Company or by its Distributors before p.m. (Luxembourg time) on the bank working day preceding a Valuation Day will be handled, if accepted, on the basis of the net asset value determined on such Valuation Day. Requests notified after this limit will be handled on the next Valuation Day. The subscription price of each share must be paid within the three (3) bank working days after a Valuation Day. Shares can be issued, at the discretion of the Board of Directors, in consideration for the contribution to Sub-Funds of transferable securities insofar as investment policies and restrictions appearing in this Prospectus are observed and such securities have a value equal to the issue price of the relevant shares. Transferable securities brought into the Sub-Fund will be valued separately in a special report by the Company's independent auditor at the expense of the subscriber concerned. These contributions in kind of transferable securities are not subject to brokerage fees. The Board of Directors will only have recourse to this possibility (i) if such is the request of the investor in question; and (ii) if the transfer does not negatively affect existing shareholders. The Company reserves the right : a) to refuse all or part of a share subscription request, b) to redeem, at any time, shares held by persons not authorised to buy or own shares of the Company. 31

32 20. CONVERSION OF SHARES Any shareholder may ask to convert all or part of their shares into shares of the same category of another Sub-Fund, at a price equal to the respective net asset value of the shares of the relevant Sub-Funds, less a conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors. No such fee will be charged if two "short-term" Sub-Funds are involved. Requests for the conversion of shares from one category into another category in another Sub-Fund will be permitted only as described below: From Into A A Yes No D No Yes D The shareholder may request such a conversion by letter, telex or fax to the Company, indicating the number of shares to be converted, the category of shares to be converted, and the category of shares to be issued. The request must be accompanied by a conversion form duly filled or any other document attesting the transfer. This application must reach the Company or its Distributors before p.m. (Luxembourg time) at the latest on the bank working day preceding a Valuation Day. The number of shares to be allotted in the new Sub-Fund is calculated according to the following formula: A = (B X C X D)-E +/- Xp F A B C D E F stands for the number of shares to be allotted in the new Sub-Fund, stands for the number of shares to be converted in the initial Sub-Fund, stands for the net asset value, on the applicable Valuation Day, of the shares to be converted in the initial Sub-Fund, stands for the exchange rate applicable on the Valuation Day for the currencies of the two Sub-Funds, are the conversion expenses applicable stands for the net asset value, on the applicable Valuation Day, of the shares to be allotted in the new Sub-Fund. Conversions shall be made for fractions of shares of four decimal places maximum. Xp is the residual balance after conversion which will be refunded if it is higher than 1% of the net asset value of the initial Sub-Fund. If it is less, this amount will be abandoned to the initial Sub-Fund. Shareholders are deemed to have claimed the refund of the unallocated balance. After conversion, the Company will inform the shareholder of the number of new shares obtained following the conversion as well as of the cost price of the transaction. 32

33 21. REDEMPTION OF SHARES Any shareholder may at any time, request the Company to redeem all or part of their shares, and the application must be accompanied by certificates, if any, issued by the Company. The shares redeemed by the Company will be cancelled. Request for redemption must be addressed in writing, telex or fax to the Company. The request shall be irrevocable (subject to the provisions in the chapter "Suspension of the calculation of net asset value and of the issue, redemption and conversion of shares") and must indicate the number, the shares of which Sub-Fund should be redeemed and all useful references for settlement of the redemption. The request must indicate the name under which the shares are registered and include the documents attesting the transfer and the relevant share certificates, if any. If the request is to be dealt with on a specific Valuation Day, it must reach the Company in Luxembourg or its Distributors before p.m. (Luxembourg time) on the bank working day preceding a Valuation Day. The redemption price will be equal to the net asset value per share determined on such Valuation Day and no redemption fee will be charged. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day, provided all the documents attesting redemption were received by the Company. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. Nevertheless, if on a given Valuation Day, requests for redemption and conversion are received for more than 10% of the net assets of a Sub-Fund, the Company may decide to postpone the portion of such requests in excess of 10% of the net assets in the Sub-Fund until the next Valuation Day, by reducing all redemption and conversion requests received proportionally. Delayed requests will be given priority compared to later requests, but the Company may delay again those requests exceeding the above limit of 10%. The Board of Directors may, at their discretion, but in the respect of laws in force and after delivery of a report by the Company's independent auditor at the expense of the shareholder concerned, pay the shareholder in question the redemption price in kind by means of a payment in transferable securities or other assets of the Sub-Fund in question for the amount of redemption value. The Board of Directors will only have recourse to this possibility (i) if such is the request of the shareholder in question; and (ii) if the transfer does not negatively affect the remaining shareholders. The redemption price of the shares in the Company may be higher or lower than the purchase price paid by the shareholder at the time of subscription, depending on whether the net asset value has appreciated or depreciated. 33

34 22. DISTRIBUTION POLICY It is not the intention of the Company to pay out dividends in each category of shares. The general meeting of shareholders holding shares in each category may, however, decide each year on proposals from the Board of Directors in this matter. The general meeting of shareholders concerned may approve the distribution of dividends from that portion of net investment income attributable to the relevant category of shares, including from capital gains, realised or unrealised, after deduction of capital losses, realised or unrealised. The Board of Directors may decide, for the categories of shares concerned, payment of interim dividends for the past or current year in compliance with legal requirements. When the Board of Directors decides to propose payment of a dividend to the general meeting, it will be calculated according to the limits provided for this purpose by the law and the articles of incorporation. Notice of dividend payment will be published if the Board of Directors considers suitable. Registered shareholders will be paid by cheque sent to the address indicated in the Register of Shareholders or by bank transfer according to their instructions. Each shareholder may reinvest the dividend without cost so long as this gives him the right to a full share. Dividends not claimed within five years after the date of payment will be foreclosed for the recipients and will return to the Sub-Fund concerned. 34

35 23. TAX CONSIDERATIONS Taxation of the Company According to the law and practice currently in force, the Company is not subject to any Luxembourg tax on income and capital gains, nor are dividends paid by the Company subject to any Luxembourg withholding tax. The Company is, however, subject in Luxembourg to a tax of 0.05% per annum of its net asset value (except for certain short-term Sub- Funds, which may benefit from the reduced rate of 0.01%). This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. Dividend and interest income from the Company portfolio may be subject to withholding taxes at variable rates in the countries of origin. Taxation of shareholders As holders of shares in the Company, shareholders do not have to pay any income and capital gains tax, any withholding tax, or any other form of tax in the Grand-Duchy of Luxembourg (except with regard to (i) shareholders domiciled, resident or having a permanent establishment in Luxembourg, (ii) some non-residents of Luxembourg who own 10% or more of the capital of the Company and who sell all or part of their shares within 6 months of acquisition, and (iii) in some limited cases, some categories of former residents of Luxembourg if they own 10% or more of the capital of the Company). The above information is based on the law and practice currently in force and is subject to changes. Potential shareholders are recommended to seek information and, if necessary, seek advice as to the laws and regulations (like those concerning taxation and exchange control) which are applicable to them because of subscription, purchase, holding and selling of shares in their country of origin, residence or domicile. EU Tax Considerations for individuals resident in the EU or in certain third countries or dependent or associated territories The Council of the EU has adopted on 3 rd June 2003 Council Directive 2003/48/EC on the taxation of savings income in the form of interest payments (the Directive ). Under the Directive, Member States of the EU will be required to provide the tax authorities of another EU Member State with information on payments of interest or other similar income paid by a paying agent (as defined by the Directive) within its jurisdiction to an individual resident in that other EU Member State. Austria, Belgium and Luxembourg have opted instead for a tax withholding system for a transitional period in relation to such payments. Switzerland, Monaco, Liechtenstein, Andorra and San Marino and the Channel Islands, the Isle of Man and the dependent or associated territories in the Caribbean, have also introduced measures equivalent to information reporting or, during the above transitional period, withholding tax. The Directive has been implemented in Luxembourg by a law dated June 21, 2005 (the Law ). Dividends distributed by a Sub-Fund of the Company will be subject to the Directive and the Law if more than 15% of such Sub-Fund s assets are invested in debt claims (as defined in the Law) and proceeds realised by shareholders on the redemption or sale of shares in a Sub-Fund will be subject to the Directive and the Law if more than 40% of such Sub-Fund s assets are invested in debt claims (such Sub-Funds, hereafter Affected Sub-Funds ). The applicable withholding tax will be at a rate of 15% from July 1, 2005 until June 30, 2008, 20%from July 1, 2008 until June 30, 2011 and 35% from July 1, 2011 onwards. Consequently, if in relation to an Affected Sub-Fund a Luxembourg paying agent makes a payment of dividends or redemption proceeds directly to a shareholder who is an individual resident or deemed resident for tax purposes in another EU Member State or certain of the above mentioned dependent or associated territories, such payment will, subject to the next paragraph below, be subject to withholding tax at the rate indicated above. No withholding tax will be withheld by the Luxembourg paying agent if the relevant individual either (i) has expressly authorised the paying agent to report information to the tax authorities in accordance with the provisions of the Law or (ii) has provided the paying agent with a certificate drawn up in the format required by the Law by the competent authorities of his state of residence for tax purposes. The Company reserves the right to reject any application for shares if the information provided by any prospective investor does not meet the standards required by the Law as a result of the Directive. The foregoing is only a summary of the implications of the Directive and the Law, is based on the current interpretation thereof and does not purport to be complete in all respects. It does not constitute investment or tax advice and investors should therefore seek advice from their financial or tax adviser on the full implications for themselves of the Directive and the Law. 35

36 24. CHARGES AND EXPENSES The Company shall pay for start-up costs, including the costs of drawing up and printing the prospectus, notary s fees, filing costs with administrative and stock exchange authorities, costs of printing certificates and all other costs and expenses incurred in the incorporation and launching of the Company. If a new Sub-Fund is created in the future, the preliminary and incorporation expenses of this Sub-Fund will in principle be borne by this Sub-Fund exclusively and amortised over a 5 year period, as of the aforesaid Sub-Fund launching date. In addition, the Company may draw up specific amortisation schedules relating to marketing costs incurred in foreign countries. Costs and expenses not attributable to a particular Sub-Fund will be charged to the various Sub-Funds in proportion to their respective net assets. The Company pays all its operating costs as described in the chapter "Net asset value", paragraph II 4. The Company will pay an administration and management fee that will include fees payable to managers and approved distributors for their services of administrative assistance to investors (such as making information on the Company available to investors and assistance services relating to subscriptions, conversions and redemptions). The above administration and management fee is set at a maximum of 2.50% per annum, payable quarterly and calculated on the average net asset value of each Sub-Fund concerned for the quarter in question. 36

37 25. GENERAL MEETING OF SHAREHOLDERS The Annual General Meeting of the shareholders is held each year at the registered office of the Company, or any other place in Luxembourg specified in the notice of meeting. The Annual General Meeting will be held on 28 July of each year, or, if this day is a holiday, the previous bank working day. Notices of all general meetings will be sent to registered shareholders at their address in the Register of Shareholders at least 8 days before the general meeting. These notices will set out the time and the place of the general meeting, admission requirements, agenda, and majority and quorum requirements as required by Luxembourg law. 37

38 26. DISSOLUTION - MERGER A. Dissolution of the Company The Company may be dissolved by a decision of the general meeting of shareholders in the conditions required by law to amend the articles of incorporation. Any decision to wind up the Company will be published in the Mémorial. As soon as the decision to wind up the Company is taken, the issue, redemption or conversion of shares in all Sub-Funds is prohibited and shall be deemed void. If the capital of the Company falls below two thirds of the minimum level required by law, the Board of Directors must convene a general meeting to be held within forty days from the date of ascertaining this fact and submit the question of the Company's dissolution. No quorum shall be prescribed and decisions will be taken by simple majority of the shares represented at the meeting. If the capital of the Company falls below one fourth of the legal minimum, the Board of Directors must submit the question of the Company's dissolution to the general meeting for which no quorum shall be prescribed. The dissolution may be resolved by the shareholders holding one fourth of the shares represented at the meeting. In the case of dissolution of the Company, the liquidation will be conducted by one or more liquidators, who may be individuals or legal entities and who will be appointed by a general meeting of shareholders. This meeting will determine their powers and compensation. The liquidation will be carried out in accordance with the Luxembourg Law of 2002 specifying how the net proceeds of the liquidation, less related costs and expenses, are to be distributed; such net proceeds will be distributed to the shareholders in proportion to their entitlements. The amounts not claimed by the shareholders at the time of closure of the liquidation will be deposited with the Caisse de Consignation in Luxembourg where they will be available to them for the period established by the law. At the end of such period unclaimed amounts will return to the Luxembourg State. B. Liquidation / merger of Sub-funds A general meeting of shareholders of a Sub-Fund, acting under the same majority and quorum requirements as are required to amend the articles of incorporation, may decide to cancel shares in a given Sub-Fund and refund shareholders for the value of their shares. As soon as the decision to wind up one of the Company's Sub-Fund is taken, the issue, redemption or conversion of shares in this Sub-Fund is prohibited and shall be deemed void. If the net assets of a Sub-Fund fall below the equivalent of five million euros (EUR 5,000,000), the Board of Directors may decide on a forced redemption of the remaining shares in the Sub-Fund concerned without approval of the shareholders being necessary. In this case, a notice relating to the closing of the Sub-Fund will be sent to all the shareholders of this Sub-Fund. This redemption will take place at the net asset value per share calculated after all assets attributable to this Sub-Fund have been sold. The amounts not claimed by the shareholders at the Custodian Bank within six months after the closure of the liquidation will be deposited at the Caisse de Consignation in Luxembourg where they will be available to them for the period established by law. At the end of such period unclaimed amounts will reverse to the Luxembourg State. The Board of Directors may propose to the shareholders the merger of one Sub-Fund with another Sub-Fund by sending them, at least one month prior to the effective merger date, a letter containing all the pertinent details. During this month, the shareholders of the Sub-Fund concerned have the right, without any cost, to request that their shares be redeemed or converted into those of another Sub-Fund. After this period, shares held by those shareholders who have not requested redemption shall be automatically converted into shares of the absorbing Sub-Fund. Once the decision to merge a Sub-Fund with another is taken, the issue of shares of the said Sub-Fund is no longer authorised. A meeting of Sub-Fund shareholders may decide to contribute the assets (and liabilities) of the Sub-Fund to another undertaking for collective investment in exchange for the distribution to shareholders of shares in this undertaking for collective investment. It is for the Company to publish this decision. The publication shall contain information on the new Sub-Fund or undertaking for collective investment and shall be released one month before the merger so as to give shareholders the time to request redemption without charge, prior to the effective transaction date. Decisions of a Sub-Fund shareholders meeting regarding the contribution of assets and liabilities of a Sub-Fund to another undertaking for collective investment are subject to the same quorum and majority conditions as are required by law to amend the articles of incorporation. In the case of a merger with a mutual fund or a foreign undertaking for collective investment, the decisions of the shareholders meeting only bind those shareholders who voted in favour of this merger. Providing the Board of Directors respects the terms of Article 264 of the Luxembourg Law of 1915, it may accept to merge another undertaking for collective investment or a sub-fund of another undertaking for collective investment into one of the Company s Sub- Funds. 38

39 27. SHAREHOLDERS INFORMATION 1. Publication of the net asset value The net asset value of each Sub-Fund as well as the issue and redemption price are made public on each Valuation Day at the registered office of the Company. The net asset value will also be the subject of an announcement in one or more newspapers, if the Board of Directors so decides. 2. Financial notices Financial notices will be published, on resolution of the Board of Directors, in those countries where the Company is marketed. 3. Financial year and reports for shareholders The financial year begins on the first of April and ends the last day of March. Each year, the Company publishes a report detailing its activity and the management of its assets, including the consolidated balance sheet and profit and loss account. At the end of each half-year, the Company will publish a semi-annual report including, inter alia, the composition of the portfolio, the movements in the portfolio over the period, the number of shares in circulation and the number of shares issued and redeemed since the last publication. The Company may also publish interim reports. 4. Independent auditors The auditing of the Company's accounts and annual reports is entrusted to PricewaterhouseCoopers s.à.r.l. 5. Documents available to the public The articles of incorporation, this Prospectus, the Simplified Prospectus(es) and financial reports of the Company as well as the agreements appointing the Company's advisers, managers, distributors (and nominees) and the agreement signed with the Custodian Bank are available for inspection at the registered office of the Company. Copy of these documents may be obtained by investors free of charge. 39

40 28. INFORMATION TO THE ATTENTION OF SWISS INVESTORS 1. Distribution in Switzerland The Swiss Federal Banking Commission authorised Banque Privée Edmond de Rothschild S.A., Genève, to offer and distribute Company shares in Switzerland or from Switzerland in conformity with the Swiss Federal Law on Collective Capital Investments dated 23 June The Company is authorised to operate in Switzerland as a foreign investment fund in conformity with Directive 85/611/EEC dated 20 December 1985, as amended, relating to Undertakings for Collective Investment in Transferable Securities. 2. Swiss representative and payment service Banque Privée Edmond de Rothschild S.A., Genève, domiciled at 18, rue de Hesse, 1204 Genève, is appointed as representative of the Company in Switzerland in conformity with the Swiss Federal Law on Collective Capital Investments dated 23 June Banque Privée Edmond de Rothschild S.A., Genève, is also responsible for ensuring payment services on behalf of the Company. The prospectus, articles of incorporation, annual and semi-annual reports can be obtained free of charge from Banque Privée Edmond de Rothschild S.A., Genève. 3. Publications Company publications in Switzerland are published in the Feuille Officielle Suisse du Commerce and in the Agefi Suisse. Share issue and redemption prices are published in Switzerland jointly and at regular intervals, at least twice a month, and furthermore, on each issue or redemption of shares in the Agefi Suisse. 4. Place of enforcement and jurisdiction The place of enforcement and jurisdiction for any dispute concerning the distribution of shares in Switzerland is the registered office of Banque Privée Edmond de Rothschild S.A., Genève. 5. Language of the prospectus In the scope of the distribution of the Company s shares in Switzerland, this Prospectus and the Simplified Prospectus, in their French version will prevail. 6. Investment in financial derivative instruments The investor's attention is drawn to the fact that certain sub-funds can have recourse to financial derivatives instruments up to 100% of their net assets. Accordingly, the global risk associated with the investments of the Sub-Fund may amount to 200% of the net assets of the Sub- Fund. The Company may not borrow, for the account of any Sub-Fund, other than amounts which do not in aggregate exceed 10% of the net assets of the Sub-Fund and then, only on a temporary basis. So, the global risk can reach 210% of the net assets of the Sub-Fund. 7. Informations regarding Company s charges In the scope of its distribution in Switzerland, the Company may, from the management fee received, pay retrocessions to the following institutional investors who, from a commercial perspective, are holding the Shares for third parties: life insurance companies, pension funds and other retirement provision institutions, investment foundations, Swiss fund management companies, foreign fund management companies and providers, investment companies. In the scope of its distribution in Switzerland, the Company may also, from the management fee received, pay trailer fees to the sale agents/partners indicated below: authorized distributors, distributors exempted from the authorization requirement, sales partners who place fund units exclusively with institutional investors with professional treasury facilities, sales partners who place fund units with their clients exclusively on the basis of a written commission-based asset management mandate. 40

41 8. Segregation of liability between the sub-funds The SICAV is composed of several sub-funds, each representing an amount of specific assets and liabilities and each following a distinct investment policy. Each sub-fund is treated as a separate entity with regard to the shareholders relations between the sub-funds. The shareholder only has the right to the wealth and the income of the sub-fund in which he has invested. The liabilities contracted by a sub-fund are only covered by the assets of that sub-fund. 41

42 29. ANNEX I SUB-FUNDS DETAILS The information contained in this Annex I should be read in conjunction with the full text of the Prospectus of which this forms an integral part. Currently, only the Sub Funds which are mentioned hereinafter and which are marked with * are available to investors. 42

43 EDMOND DE ROTHSCHILD FUND EURO SHORT TERM* SHORT-TERM SUB-FUND In view of the Sub-Fund s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective The objective is to offer investors short-term returns on their investments over periods of up to 3 months. For information, the benchmark reference of this Sub-Fund is the capitalised EONIA. Investment policy The Sub-Fund will invest at least two thirds of its total assets in: - bonds, - euro short term notes, - monetary papers, - any other debt instruments, with a residual maturity of less than 3 months, and issued by organisations with a A1 short-term rating or, at least, a A long term rating on the Standard & Poor's classification or an equivalent rating from another rating agency. The average maturity of the assets, in this Sub-Fund, shall be significantly less than 12 months. At least two thirds of Sub-Fund s total assets will be denominated in euros. The exchange rate risk linked to the investments in currencies other than the euro could be hedged. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub-Fund can be subject to the credit risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experience investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for more experienced investors wishing to attain defined investment objectives. Experience of capital market products is not required. The investor must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 3 years. 43

44 IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Euro Short Term Class A Euro Short Term Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged except when two "short-term" Sub-Funds are involved. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 0.3% per annum for Class A and 0.45% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 807% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 0.68% of the average net assets of the Sub-Fund and for the class D, 0.81% of the average net assets of the Sub-Fund. XII. INVESTMENT MANAGER The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F Paris, as Investment Manager of the Sub-Fund. 44

45 XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.01% per annum of its net asset. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 45

46 EDMOND DE ROTHSCHILD FUND EURO GOVERNMENT BONDS MID TERM* BOND SUB-FUND In view of the Sub-Fund s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective The management objective is to outperform the Euro-Aggregate Treasury 3-5 Years index over a 3 to 5-year investment period. Investment policy The Sub-Fund will invest at least two third of its total assets in bonds, issued or guaranteed by an OECD member State, in euros. A maximum of 25% of the Sub-Fund s total assets may be invested in convertible bonds. The Sub-Fund will invest on an ancillary basis, in negotiable debt instruments in euros, with fixed, variable or revisable rates, or indexed bonds. The Sub-Fund may not invest more that one third of its total assets in monetary papers. The Sub-Fund may also invest on an ancillary basis, i.e. to the extent of not more than one third of its total assets, in bonds issued or guaranteed by an OECD member State in currencies other than the euro. These holdings could be hedged for exchange risks against the euro. The average maturity of the assets in this Sub-Fund will not exceed 5 years and the residual maturity of each asset 10 years. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub Fund can be subject to the credit risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experienced investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for or more experienced investors wishing to attain defined investment objectives within medium to long term. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 2 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Euro Government Bonds Mid Term Class A Euro Government Bonds Mid Term Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. 46

47 V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 0.6 % per annum for Class A and 0.9 % per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to -331% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 1.25% of the average net assets of the Sub-Fund. The class D is not available to investors. XII. INVESTMENT MANAGER The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY Each bank working day in Luxembourg. XIII. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. 47

48 XIV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XV. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 48

49 EDMOND DE ROTHSCHILD FUND EURO GOVERNMENT BONDS LONG TERM* BOND SUB-FUND In view of the Sub-Fund s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective The management objective is to outperform the Euro-Aggregate Treasury 7-10 Years index over an investment period greater than 5 years. Investment policy The Sub-Fund will invest a least two thirds of its total assets, in bonds issued or guaranteed by an OECD member State, in euros. A maximum of 25% of the Sub-Fund s total assets may be invested in convertible bonds. The Sub-Fund will invest its net assets, on an ancillary basis, in negotiable debt instruments in euros, with fixed, variable or revisable rates, or indexed bonds. The Sub-Fund may not invest more that one third of its total assets in monetary papers. The Sub-Fund may also invest on an ancillary basis, i.e. to the extent of not more than one third of its total assets, in bonds issued or guaranteed by an OECD member State in currencies other than the euro. The holdings could be hedged for exchange risks against the euro. The average maturity of the assets in this Sub-Fund will not exceed 10 years. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub-Fund can be subject to the credit risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experienced investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for or more experienced investors wishing to attain defined investment objectives within medium to long term. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 1 year. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Euro Government Bonds Long Term Class A Euro Government Bonds Long Term Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. 49

50 V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMISTRATION FEE The administration and management fee is set at 0.6% per annum for Class A and 0.9% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to -904% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 1.62% of the average net assets of the Sub-Fund. The class D is not available to investors. XII. INVESTMENT MANAGER The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. 50

51 XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 51

52 EDMOND DE ROTHSCHILD FUND EURO CORPORATE BONDS SHORT TERM* BOND SUB-FUND In view of the Sub-Fund s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective This Sub-Fund will invest in bond issues denominated in euros offering superior returns compared to government debt, issued by rated issuers with a Standard & Poor's rating of between BBB- and AAA or an equivalent rating issued by another rating agency, or issued by unrated issuers who, in the opinion of the Sub-Fund's manager, have an equivalent rating. For information, the benchmark reference of this Sub-Fund is the capitalised EONIA. Investment policy The Sub-Fund will invest, at least two thirds of its total assets, in all forms of bonds denominated in euros and listed on an official stock exchange, or negotiated on a regulated market, issued by companies listed on an official stock exchange, with fixed, variable or revisable rates, indexed or not. The Sub-Fund may also invest, on an ancillary basis, i.e. to the extent of not more than one third of its total assets: - in convertible bonds or bonds with option provided that investments in convertible bonds and/or bonds with option shall never exceed 25% of the total assets of the Sub-Fund; - in non listed bonds or notes, or other debt instruments within the limits set forth in Chapter 10 "Investment Policy and Investment Restrictions"; - in bonds and similar debt instruments denominated in currencies other than the euro; and - in monetary papers. These holdings could be hedged for exchange risks against the euro. The average modified duration of the whole Sub-Fund's assets will not exceed 1. The residual maturity of each investment will not exceed 5 years, taking into account the option of redemption before maturity. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub Fund can be subject to the credit risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experienced investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for more experienced investors wishing to attain defined investment objectives. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 6 months to 1 year. 52

53 IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Euro Corporate Bonds Short Term Class A Euro Corporate Bonds Short Term Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged except when two "short-term" Sub-Funds are involved. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 0.4 % per annum for Class A and 0.6% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 69% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 0.65% of the average net assets of the Sub-Fund. The class D is not available to investors. XII. INVESTMENT MANAGER The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F Paris, as Investment Manager of the Sub-Fund. 53

54 XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.01% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 54

55 EDMOND DE ROTHSCHILD FUND EURO CORPORATE BONDS MID TERM* BOND SUB-FUND In view of the Sub-Fund s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective This Sub-Fund will invest in bond issues denominated in euros offering a superior return compared to government debt, issued by rated issuers with a Standard & Poor's rating of between BBB- and AAA or equivalent rating from another rating agency, or issued by unrated issuers who, in the opinion of the Sub-Fund's manager, have an equivalent rating. The management objective is to outperform the Euro-Aggregate Corporates 3-5 Years index over an investment period of 3 to 5 years. Investment policy The Sub-Fund will invest at least two thirds of its total assets in medium-term bonds denominated in euros issued by companies listed on an official stock exchange. The Sub-Fund will invest on an ancillary basis, in: - negotiable debt instruments issued in the Euro zone, with fixed, variable or revisable rates, - indexed bonds, convertible bonds (with a maximum of 25% of its total assets), - any existing or future form of bond corresponding to the Sub-Fund objectives. The Sub-Fund may not invest more than one third of its total assets in monetary papers. The Sub-Fund may also invest on an ancillary basis, not more than one third of its total assets, in bonds denominated in currencies other than the euro. These holdings could be hedged for exchange risks against the euro. The average maturity of the assets in this Sub-Fund will not exceed 6 years and the residual maturity of each asset 10 years. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub Fund can be subject to the credit risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experience investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for more experienced investors wishing to attain defined investment objectives. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 2 years. 55

56 IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Euro Corporate Bonds Mid Term Class A Euro Corporate Bonds Mid Term Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 0.8% per annum for Class A and 1.2% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 18% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 1.28% of the average net assets of the Sub-Fund. The class D is not available to investors. XII. INVESTMENT MANAGER The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F Paris, as Investment Manager of the Sub-Fund. 56

57 XIII. VALUATION DAY Each bank working day XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XV. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 57

58 EDMOND DE ROTHSCHILD FUND EURO CORPORATE BONDS HIGH YIELD BOND SUB-FUND In view of the Sub-Fund s investment policy, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective This Sub-Fund will invest in bond issues denominated in euros offering a far higher return than the rate of return from government debt of similar sensitivity, issued by rated issuers with a Standard & Poor's rating equal to or below BBB- or an equivalent rating from another rating agency, or issued by unrated issuers who, in the opinion of the Sub-Fund's manager, have an equivalent rating. The management objective is to outperform substantially the Merril Lynch Euro High Yield Constrained index over an investment period of 3 to 5 years. Investment policy The portfolio of this Sub-Fund will primarily consist, i.e. to the extent of at least two thirds of the Sub-Fund s total assets, of all forms of bonds denominated in euros issued by companies listed on an official stock exchange, and on an ancillary basis, in negotiable debt instruments denominated in euros, with fixed, variable or revisable rates, indexed or convertible bonds (with a maximum of 25% of the Sub-Fund s total assets). The Sub-Fund may not invest more than one third of its total assets in monetary papers. The Sub-Fund may also invest, to the extent of not more than one third of its total assets, in bonds denominated in currencies other than the euro. These holdings could be hedged for exchange risks against the euro. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experience investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for more experienced investors wishing to attain defined investment objectives. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable for investors who can afford to set aside the capital for at least 2 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Euro Corporate Bonds High Yield Class A Euro Corporate Bonds High Yield Class D Currency EUR EUR ISIN code / / The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. 58

59 V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.2% per annum for Class A and 1.8% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. CUSTODIAN BANK'S FEE AND OTHER EXPENSES Banque Privée Edmond de Rothschild Europe is entitled to charge commission of a maximum of 0,30% per annum for acting as Registrar, Transfer, Domiciliary, Administrative and Paying Agent and Custodian to the Company. Such fees will be calculated quarterly on the basis of the average net assets of the Company during each quarter. The Sub-Fund shall be charged for other ordinary costs and expenses mentioned in Chapter 23 of the Prospectus. XI. INVESTMENT MANAGER The Company has appointed RFS GESTION 47, rue du Faubourg Saint-Honoré F Paris, as Investment Manager of the Sub-Fund. XII. VALUATION DAY Each bank working day in Luxembourg XIII. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. 59

60 XIV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XV. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 60

61 EDMOND DE ROTHSCHILD FUND EUROPEAN CONVERTIBLE BONDS* BOND SUB-FUND To the extent more than 40% of the Sub-Fund s net assets are invested in debt claims, the dividends distributed and capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling in the scope of the Directive. I. OBJECTIVE AND INVESTMENT POLICY Objective The objective of this Sub-Fund is to achieve medium term capital growth by managing a portfolio of convertible bonds in European markets. The investments of the Sub-Fund will be managed by trading convertible bonds trending to behave more like stocks for less sensitive convertible bonds. Investment policy The Sub-Fund will invest a minimum of 80% of its total assets in convertible or exchangeable bonds and participating securities denominated in euros and/or euro IN-currencies. The Sub-Fund will invest at all times, at least two thirds of its total assets, in convertible bonds issued by issuers domiciled in Europe or exercising a preponderant part of their economic activity in that region. The Sub-Fund will invest not more than 10% of its total assets, in equity securities or other participating rights. The Sub-Fund may, on an ancillary basis, invest not more than one third of its total assets, in warrants on transferable securities, subscription warrants and in monetary papers. Investments in warrants, although expected to provide higher returns than shares due to their high leverage, are subject to volatility in their price and subsequent greater risks of loss. Moreover, these instruments can lose their entire value. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub-Fund can be subject to the credit risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for conservative or less experienced investors including those who are not interested in or informed about capital market topics, but who see investment fund as a convenient saving product. It is also suitable for more experienced investors wishing to attain defined investment objectives. Experience of capital market products is not required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable for investors who can afford to set aside the capital for at least 2 years. 61

62 IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares European Convertible Bonds Class A European Convertible Bonds Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.2% per annum for Class A and 1.8% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to -31% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 1.57% of the average net assets of the Sub-Fund and for the class D, 2.18% of the average net assets of the Sub-Fund. XII. INVESTMENT MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY 62

63 Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 63

64 EDMOND DE ROTHSCHILD FUND EUROPE MID CAPS* SHARE SUB-FUND In view of the Sub-Fund s investment policy, capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling out of the scope of the Directive whereas dividend distributions, if made, are to be considered, in the Company s opinion, as falling in the scope of the Directive if at least 15% of the Sub-Funds net assets are invested in debt claims. I. OBJECTIVE AND INVESTMENT POLICY Objective The management objective of this Sub-Fund is to outperform the DJ Stoxx Small 200 in the long term. The managers of this Sub-Fund will make a very special effort as regards company analysis with visits, due diligence, etc. Investment policy The Sub-Fund will invest at least two thirds of its total assets, in shares of companies of medium size or market capitalisation (i.e. between EUR 0.3 and 5 bil.) domiciled in Europe or exercising a preponderant part of their economic activity in that region and listed on European markets. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub Fund can be subject to foreign exchange risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for experienced investors wishing to attain defined investment objectives. The investors must have experience of volatile products. The investor must be able to accept significant temporary loses, thus, this Sub-fund is suitable for the investors who can afford to set aside the capital for at least 5 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Europe Mid Caps Class A Europe Mid Caps Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of 64

65 the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.75% per annum for Class A and 2.5% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 85% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 2.18% of the average net assets of the Sub-Fund and for the class D, 2.90% of the average net assets of the Sub-Fund. XII. INVESTMENT MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 65

66 EDMOND DE ROTHSCHILD FUND EUROPE VALUE* SHARE SUB-FUND In view of the Sub-Fund s investment policy, capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling out of the scope of the Directive whereas dividend distributions, if made, are to be considered, in the Company s opinion, as falling in the scope of the Directive if at least 15% of the Sub-Funds net assets are invested in debt claims. I. OBJECTIVE AND INVESTMENT POLICY Objective Securities will mainly be selected on their capacity to offer a higher return than the MSCI Europe index. On an ancillary basis, the assets may be invested in shares considered by the manager to be undervalued compared to their sector or market. Under-valuation will be appreciated according to PER or EV/EBITDA for example. Investment policy The Sub-Fund will invest a minimum of two thirds of its total assets in shares of companies domiciled in Europe or exercising a preponderant part of their economic activity in that region. Securities will be chosen in the Euro zone market and in markets in the United Kingdom, Switzerland, Denmark, Sweden and Norway. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub Fund can be subject to froeign exchange risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable moderately experienced investors wishing to attain defined investment objectives. Some experience of capital market products is required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 5 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Europe Value Class A Europe Value Class D Currency EUR EUR ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. 66

67 V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.75% per annum for Class A and 2.5% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 111% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 2.08% of the average net assets of the Sub-Fund and for the class D, 2.79% of the average net assets of the Sub-Fund. XII. INVESTMENT MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. 67

68 XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is, subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 68

69 EDMOND DE ROTHSCHILD FUND ASIA EX-JAPAN VALUE* SHARE SUB-FUND In view of the Sub-Fund s investment policy, capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling out of the scope of the Directive whereas dividend distributions, if made, are to be considered, in the Company s opinion, as falling in the scope of the Directive if at least 15% of the Sub-Funds net assets are invested in debt claims. I. OBJECTIVE AND INVESTMENT POLICY Objective The management objective of this Sub-Fund is to outperform the MSCI AC Far East Ex-Japan Free index over a long period. Investment policy The Sub-Fund will invest at least two thirds of its total assets, in shares of companies domiciled in Asia or exercising a preponderant part of their economic activity in that region (excluding Japan). The Sub-Fund may invest within the limits described in the chapter "Investment policy and investment restrictions" of the Prospectus, in open-ended undertakings for collective investment pursuing a similar investment policy as the Sub-Fund. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of the fact that the assets can be invested in emerging markets, consequently the risk that the main investment objective, i.e. appreciation of capital, will not be achieved is even more substantial. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for experienced investors wishing to attain defined investment objectives. The investors must have experience of volatile products. The investor must be able to accept significant temporary loses, thus, this Sub-fund is suitable for the investors who can afford to set aside the capital for at least 5 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Asia Ex-Japan Value Class A Asia Ex-Japan Value Class D Currency USD USD ISIN code LU LU The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in $. 69

70 VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.75% per annum for Class A and 2.5% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 251% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 2.13% of the average net assets of the Sub-Fund and for the class D, 2.86% of the average net assets of the Sub-Fund. XII. INVESTMENT MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 70

71 EDMOND DE ROTHSCHILD FUND EMERGING MARKETS EQUITIES SHARE SUB-FUND In view of the Sub-Fund s investment policy, capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling out of the scope of the Directive whereas dividend distributions, if made, are to be considered, in the Company s opinion, as falling in the scope of the Directive if at least 15% of the Sub-Funds net assets are invested in debt claims. I. OBJECTIVE AND INVESTMENT POLICY Objective The objective of this Sub-Fund is to achieve capital growth over the long term through diversified investments in shares and other transferable securities of companies domiciled in so-called emerging countries around the world whose GDP per capita is between 1,000 and 15,000 US dollars per annum. From time to time and on an ancillary basis, i.e. to the extent of not more than one third of Sub-Fund total assets, the Sub-Fund may invest in shares of companies based outside of the emerging markets, which in the opinion of the Investment Manager, derive their income from operations and business relations with emerging countries. The reference index of the Sub-Fund is the MSCI Emerging Markets Free. Investment policy The Sub-Fund will invest at least two thirds of its total assets, in shares of companies domiciled in so-called emerging countries listed on stock exchanges of emerging countries throughout the world. The Sub-Fund will invest up to a maximum of 20% of its total assets in closed-end undertakings for collective investment, and also, in other transferable securities. Investments in closed-end undertakings for collective investment may only be made by the Sub-Fund under the following conditions: (a) Such undertakings for collective investment must be domiciled in regulated jurisdictions alone, i.e. the European Union, Switzerland, Japan, Hong Kong, USA and Canada; (b) The closed-end undertaking for collective investment must have the same investment policy as that of the Sub-Fund and the same investment restrictions; (c) The closed-end undertaking for collective investment shall not invest in venture capital, property companies and buildings, funds or futures; (d) If the closed-end undertaking for collective investment is managed by another company with which the Sub-Fund is linked by common management or control or through a substantial direct or indirect interest, no commission, fee or charge may be charged to the Company in respect of transactions involving units in such closed-end undertaking for collective investment. When the Company invests in closed-end undertakings for collective investment with no such common management and control, the investor must be aware that charges will be duplicated. The Sub-Fund may not invest more than one third of its total assets in bonds, convertible bonds and monetary papers. The net asset value of the Sub-Fund is expressed in US dollars. Investments may be by means of ADRs or GDRs to limit emerging market risks. Investments in Russia will be by means of ADRs and GDRs only. Investments in these markets may involve greater risks as described in the chapter "Special considerations on risks". II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of the fact that the assets can be invested in emerging markets, consequently the risk that the main investment objective, i.e. appreciation of capital, will not achieved is even more substantial. 71

72 III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for experienced investors wishing to attain defined investment objectives. The investors must have experience of volatile products. The investor must be able to accept significant temporary loses, thus, this Sub-fund is suitable for investors who can afford to set aside the capital for at least 5 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares Emerging Markets Equities Class A Emerging Markets Equities Class D Currency EUR EUR ISIN code / / The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.75% per annum for Class A and 2.5% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. CUSTODIAN BANK'S FEE AND OTHER EXPENSES Banque Privée Edmond de Rothschild Europe is entitled to charge commission of a maximum of 0,45% per annum for acting as Registrar, Transfer, Domiciliary, Administrative and Paying Agent and Custodian to the Company. Such fees will be calculated quarterly on the basis of the average net assets of the Company during each quarter. The Sub-Fund shall be charged for other ordinary costs and expenses mentioned in Chapter 23 of the Prospectus. 72

73 XI. INVESTMNET MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. XII. VALUATION DAY Each bank working day in Luxembourg XIII. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XIV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XV. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 73

74 EDMOND DE ROTHSCHILD FUND WORLD FOOD & HEALTH* SHARE SUB-FUND In view of the Sub-Fund s investment policy, capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling out of the scope of the Directive whereas dividend distributions, if made, are to be considered, in the Company s opinion, as falling in the scope of the Directive if at least 15% of the Sub-Funds net assets are invested in debt claims. I. OBJECTIVE AND INVESTMENT POLICY Objective The objective of this Sub-Fund is to achieve capital growth over the medium term by managing a portfolio of international shares and other transferable securities. Investment policy The Sub-Fund will invest primarily, i.e. to the extent of at least two thirds of its total assets, in shares of specialist companies concentrating on the following industries: agrifood agricultural products, intermediary and finished product food industries, beverages, catering; health biotechnology, pharmaceuticals, genetic engineering, medical diagnosis, hospital management and healthcare centres; and food or pharmaceutical retailing. The Sub-Fund may invest in all international markets. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub-Fund can be subject to foreign exchange risks. III. PROFILE OF THE TYPICAL INVESTOR The Sub-Fund is suitable for moderately experienced investors wishing to attain defined investment objectives. Some experience of capital market products is required. The investors must be able to accept moderate temporary losses, thus, this Sub-Fund is suitable to the investors who can afford to set aside the capital for at least 8 years. IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares World Food & Health Class A World Food & Health Class D Currency EUR EUR ISIN code LU / The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. 74

75 V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.75% per annum for Class A and 2.5% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 38% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 2.14% of the average net assets of the Sub-Fund. The class D is not available to investors. XII. INVESTMENT MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. 75

76 XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 76

77 EDMOND DE ROTHSCHILD FUND NORTH AMERICA VALUE* SHARE SUB-FUND In view of the Sub-Fund s investment policy, capital gains realised by shareholders on the disposal of the Sub-Fund s shares are to be considered, in the Company s opinion, as falling out of the scope of the Directive whereas dividend distributions, if made, are to be considered, in the Company s opinion, as falling in the scope of the Directive if at least 15% of the Sub-Funds net assets are invested in debt claims. I. OBJECTIVE AND INVESTMENT POLICY Objective The management objective of this Sub-Fund is to outperform its reference index, the S&P 500 index over the medium term. Investment policy The Sub-Fund will invest at least two thirds of its total assets, in shares of companies domiciled in North America or exercising a preponderant part of their economic activity in that region. Portfolio securities will mainly consist of shares of companies with a lower-than-average value for the market, and yield that is higher than market average. Valuation criteria used will include asset value, yield as measured by gross current year dividend, and ratios price/sales and EV/EBITDA. The Sub-fund will also invest, within the limits defined in chapter "Investment restrictions", in open-ended undertakings for collective investment pursuing the same investment policy as the Sub-Fund. It may also invest in transferable securities linked to a reference index representing the North American stock markets. The Sub-Fund will also invest in warrants on transferable securities. Warrants on transferable securities with a life of more than one year are also authorised. Investments in warrants, although expected to provide higher returns than shares due to their high leverage, are subject to volatility in their price and subsequent greater risks of loss. Moreover, these instruments can lose their entire value. Convertible bonds are authorised provided the underlying stocks are traded on the market targeted by the Sub-Fund. II. SUB-FUND S RISK PROFILE The investments of the Sub-Fund are subject to normal market fluctuation and other risks inherent in investing in securities and there can be no assurance that capital appreciation or distribution payments would occur. The value of investments and income from them, and therefore the value of the Shares of the Sub-Fund, can and do go down as well as up and an investor may not get back the amount he invests. The investor must be aware of that the Sub Fund can be subject to foreign exchange risks. III. PROFILE OF THE TYPICAL INVESTOR Edmond de Rothschild Fund - North America Value is suitable for experienced investors wishing to attain defined investment objectives linked to the North America stock markets. The investor must be able to accept significant temporary loses, thus, this Sub-fund is suitable for investors who can afford to set aside the capital for at least 5 years. 77

78 IV. CLASSES OF SHARES AVAILABLE AND CURRENCIES For this Sub-Fund, Shares of Class A and Class D are available to investors. Class of shares North America Value Class A North America Value Class D Currency USD USD ISIN code LU / The Company s Board of Directors may decide to temporarily close subscriptions to Shares in Class A and Class D as well as those subscriptions arising from the conversion of Shares of another Class or another Sub-Fund. Conversion of shares from one Class into shares of the other Class of the present Sub-Fund is not allowed. V. VALUATION CURRENCY The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial reports, the net value of each Class of Shares and the Sub-Fund's consolidated financial statements shall be expressed in $. VI. SUBSCRIPTION FEE The shares will be issued at a price corresponding to the net asset value per share plus a sales charge of a maximum of 4.5% of the net asset value per share as follows: a maximum of 4% will be paid to approved distributors and 0.5% maximum will be paid to the investment manager of the Sub-Fund. VII. REDEMPTION FEE None VIII. CONVERSION FEE A conversion fee of a maximum of 0.5% of the net asset value of the Sub-Fund redeemed paid to the approved distributors will be charged. IX. MANAGEMENT AND ADMINISTRATION FEE The administration and management fee is set at 1.75% per annum for Class A and 2.5% per annum for Class D, payable quarterly and calculated on the average net asset value of the Sub-Fund for the quarter in question. X. PORTFOLIO TURNOVER RATE The portfolio turnover rate as at 30 June 2007 amounts to 145% XI. TOTAL EXPENSE RATIO The Total Expense Ratio as of 30 June 2007, including all costs to be borne by the Sub-Fund with the exception of transaction costs included in the cost of the securities, is, for the class A, 2.29% of the average net assets of the Sub-Fund. The class D is not available to investors. XII. INVESTMENT MANAGER The Company has appointed EDMOND DE ROTHSCHILD ASSET MANAGEMENT S.A.S., Paris, as Investment Manager of the Sub-Fund. 78

79 XIII. VALUATION DAY Each bank working day in Luxembourg XIV. SUBSCRIPTION The deadline for the receipt of subscription requests is no later than p.m. (Luxembourg time) one banking day prior to the applicable Valuation Day. The amount subscribed is payable in USD, and must reach the Company within the three Luxembourg banking days of the Valuation Day applicable to the said subscriptions. XV. REDEMPTION The deadline for the receipt of redemption requests is no later than p.m. (Luxembourg time) one banking day prior to the Valuation Day. Payment of the proceeds of redeemed shares will be made within the three (3) bank working days following the Valuation Day. Payment will be made in the Sub-Fund currency or in any other currency, in accordance with instructions indicated in the request for redemption, in which case exchange fees will be borne by the shareholder. XVI. SUBSCRIPTION TAX (TAXE D ABONNEMENT) The Company is subject in Luxembourg to a tax of 0.05% per annum of its net asset value. This tax is payable quarterly on the basis of the net assets of the Company calculated at the end of the relevant quarter. However, this tax is not due for the part of the Company s net assets invested in other undertakings for collective investment in Luxembourg. 79