A.R.T. ABSOLUTE RETURN TARGET FUND

Transcription

1 A.R.T. ABSOLUTE RETURN TARGET FUND PROSPECTUS June 2013 GEDI: v4 VISA 2013/ PC L'apposition du visa ne peut en aucun cas servir d'argument de publicité Luxembourg, le Commission de Surveillance du Secteur Financier

2 NOTE TO INVESTORS A.R.T. ABSOLUTE RETURN TARGET FUND (the "Fund') invests mainly as a "Fund of Funds" in a portfolio of alternative investment funds which are generically known as "Hedge Funds". An investment in the Fund carries substantial risks. The risks inherent to an investment in Hedge Funds are of a nature and degree not typically encountered in investments in securities of companies listed on major securities markets worldwide. There can be no assurance that the Fund's investment objective will be achieved and investment results may vary substantially over time. Investors incur the risk to lose all or part of their investment in the Fund. An investment in the Fund is not intended to be a complete investment program for any investor. Prospective investors should carefully consider whether an investment in shares in the Fund is suitable for them in the light of their own circumstances and financial resources (see "Risk Factors" below). The board of directors of the Fund will, however, endeavour to monitor risks through the selection of the Fund's investments based on a due diligence procedure (see "Due Diligence Process" below). This should reduce the risks but not eliminate them totally. GEDI: v4 2

3 A.R.T. ABSOLUTE RETURN TARGET FUND is registered under Part II of the list of undertakings for collective investment ("UCI") provided by the Luxembourg law of 17 December 2010 relating to undertakings for collective investment, as amended (the "Law of 17 December 2010"). The registration on the official list of UCI cannot be construed as an approval by the controlling authority of the contents of this Prospectus or, of the quality of the securities offered and held by the Fund. Any representation to the contrary would be unauthorized and unlawful. Shares in the Fund are offered on the basis of the information and representations contained in this Prospectus or the documents specified herein and no other information or representation relating thereto is authorised. Neither the delivery of this Prospectus nor the offer, issue or sale of shares in the Fund shall under any circumstances constitute a representation that the information given in this Prospectus is correct as at any time subsequent to the date hereof. The Fund has not been authorised by the Swiss Federal Banking Commission as a foreign investment fund pursuant to Article 45 of the Swiss Mutual Fund Act of 18 March Accordingly, the shares may not be offered or distributed on a professional basis in or from Switzerland and neither this Prospectus nor any other offering material relating to the shares may be distributed in connection with any such offering or distribution. Shares may only be offered and the Prospectus may only be distributed in Switzerland without any public offering. If distributed in Switzerland and Italy, this Prospectus must be supplemented by an appendix containing specific information for Swiss and Italian investors. If distributed in Belgium: In case of an investment through an advisory mandate, shares may only be offered to investors residing in Belgium for a minimum initial subscription amount of Euro 250,000. As a consequence, the offering of the shares does not have a public character pursuant to the Belgian regulations and the Prospectus may be distributed in Belgium without the Fund needing to have an authorization from the Commission Bancaire, Financière et des Assurances or an approval of the Prospectus. The shares of the Fund have not been registered under the United States Securities Act of 1933 and may not be offered or sold directly or indirectly in the United States of America (including its territories and possessions), to residents, citizens thereof or companies or partnerships organized pursuant to the law of the States thereof. GEDI: v4 3

4 This Prospectus does not constitute and may not be used for the purposes of an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such solicitation. It is the responsibility of any person in possession of this Prospectus and of any person wishing to apply for shares to inform himself and to observe all relevant laws and regulations of the relevant jurisdiction. The information contained in this Prospectus is supplemented by the financial statements and further information contained in the latest annual and semi-annual reports of the Fund, copies of which may be requested free of charge at the registered office of the Fund or at the offices of Partners Advisers S.A. or Trendtrust S.A. This Prospectus is not intended to impart individual legal, tax or financial advice; investors should inform themselves of, and when appropriate, consult their own professional advisers on the legal, tax and other consequences of owning shares, including reference to the laws of their country of citizenship or domicile. The board of directors of the Fund (the "Board of Directors" or the "Directors") has taken all reasonable care to ensure that the facts stated herein are true and accurate in all material respects and that there are no other material facts the omission of which makes misleading any statement herein, whether of fact or of opinion. The Directors accept responsibility for the accuracy of the information contained in this Prospectus on the date of publication accordingly. The Fund draws the investors attention to the fact that any investor will only be able to fully exercise his investor rights directly against the Fund, notably the right to participate in general shareholders meetings if the investor is registered himself and in his own name in the shareholders register of the Fund. In cases where an investor invests in the Fund through an intermediary investing into the Fund in his own name but on behalf of the investor, it may not always be possible for the investor to exercise certain shareholder rights directly against the Fund. Investors are advised to take advice on their rights. GEDI: v4 4

5 CONTENTS I. INFORMATION ON THE FUND...6 II. THE FUND III. INVESTMENT OBJECTIVE AND POLICY OF THE FUND IV. INVESTMENT POLICY OF EACH SUB-FUND V. INVESTMENT RESTRICTIONS VI. CO-MANAGEMENT AND POOLING VII. RISK FACTORS VIII. DUE DILIGENCE PROCESS IX. MANAGEMENT OF THE FUND X. THE CUSTODIAN BANK AND CENTRAL ADMINISTRATION XI. THE SHARES XII. DISTRIBUTION XIII. ISSUE, CONVERSION AND REDEMPTION OF SHARES XIV. VALUATION OF SHARES XV. SUSPENSION OF THE CALCULATION OF THE NET ASSET VALUE AND OF THE ISSUE, REDEMPTION AND CONVERSION OF SHARES XVI. FEES AND EXPENSES XVII. TAXATION XVIII. DISSOLUTION OF THE FUND, LIQUIDATION AND MERGER OF SUB-FUNDS XIX. MEETINGS XX. SHAREHOLDERS INFORMATION APPENDIX I: FINANCIAL TECHNIQUES & INSTRUMENTS APPENDIX II: STATUTORY ANTI-MONEY LAUNDERING AND PREVENTION OF TERRORISM FINANCING NOTICE APPENDIX III: SUB-FUNDS DETAILS I. A.R.T. - ABSOLUTE RETURN TARGET FUND A Diversified Portfolio Trendtrust II. A.R.T. - ABSOLUTE RETURN TARGET FUND F Equity Strategy III. A.R.T. - ABSOLUTE RETURN TARGET FUND I Relative Value Strategy GEDI: v4 5

6 I. INFORMATION ON THE FUND A. THE FUND A.R.T. ABSOLUTE RETURN TARGET FUND is a fund of funds organised under the laws of Luxembourg as a société d'investissement à capital variable (SICAV), which offers investors a choice between several Sub-Funds. The Sub-Funds currently existing and their specific features are disclosed in Appendix III "Sub-Funds Details". The Board of Directors may decide at any time to launch other Sub-Funds and the present Prospectus will be updated accordingly. The Board of Directors may decide to create different classes of shares (each, a "Class") within each Sub-Fund, the specific features of which will be more fully described in the Appendix of the relevant Sub-Fund. As more fully described under section "XII. Shares" and in exceptional circumstances, the Board of Directors may, at its discretion, allocate illiquid investments held in a Sub-Fund to one separate Class (a "Side Pocket Class"). B. DIRECTORY Board of Directors Chairman: Mr. Luc Estenne, Director of Partners Advisers S.A., Geneva, Switzerland Directors: Mr. Dominique Dubois, Vice-President of Banque Privée Edmond de Rothschild Europe Mr. Eric Feyereisen, Vice-President of Banque Privée Edmond de Rothschild Europe Mr. Timothée Henry, Director of Partners Advisers S.A., Geneva, Switzerland Mr. Hugues Janssens van der Maelen, Director of Trendtrust S.A., Geneva, Switzerland Mr. Geoffroy Linard de Guertechin, Senior Vice-President of Banque Privée Edmond de Rothschild Europe M. Enrique Bouillot, Deputy Vice-President, Pri Investment S.A. GEDI: v4 6

7 Investment Managers PARTNERS ADVISERS S.A. 100 rue du Rhône CH-1204 GENEVA Tel: + (41) Fax: + (41) [email protected] TRENDTRUST S.A. 3 rue du Mont-Blanc CH-1201 GENEVA Tel: + (41) Fax: + (41) [email protected] Custodian Bank, Registrar and Transfer Agent, Domiciliary, Administrative, Paying and Listing Agent Banque Privée Edmond de Rothschild Europe 20, Boulevard Emmanuel Servais L-2535 Luxembourg Tel: + (352) Fax: + (352) Auditors Ernst & Young S.A. 7, rue Gabriel Lippmann L-5365 Munsbach Registered Office Banque Privée Edmond de Rothschild Europe 20, Boulevard Emmanuel Servais L-2535 Luxembourg Tel: + (352) Fax: + (352) GEDI: v4 7

8 Legal Adviser Elvinger, Hoss & Prussen 2, place Winston Churchill B.P. 425 L-2014 Luxembourg C. SUMMARY AND DEFINED TERMS Business Day CHF Dividends and Distributions EUR Financial Year GBP Hedge Fund Investment Fund JPY Any day on which banks in Luxembourg (Grand-Duchy of Luxembourg) are open for business. All references to 'CHF' are to the legal currency of Switzerland. It is not the intention of the Fund to make distributions of net income or capital gains by way of dividends or distributions unless otherwise decided by the General Meeting of Shareholders. Net income and capital gains are, therefore, effectively represented in the value of the shares. All references to 'EUR' in this Prospectus are to the currency of the European Economic and Monetary Union. The financial year of the Fund ends on 31 December. All references to 'GBP' are to the legal currency of the United Kingdom. Investment Fund using non-conventional or alternative asset management strategies. shall mean any undertaking the sole objective of which is the collective investment in securities, financial instruments and other assets. All references to 'JPY' are to the legal currency of Japan. GEDI: v4 8

9 Listing Luxembourg Investment Fund Minimum Subscription and Minimum Holding Multiple Compartment Investment Fund Net Asset Value Redemption Date Redemption fees Application has been made for shares in the Fund to be listed on the Luxembourg Stock Exchange. shall mean any Investment Fund registered under Luxembourg law. The minimum subscription and the minimum holding requirement for shares in each Sub-Fund is disclosed in the Annex of the relevant Sub-Fund and shall be determined by reference to the Subscription Price paid in respect of the shares held. Investment Fund which comprises multiple compartments each of which is represented by one or more classes of shares/units and where each compartment is distinguished by its specific investment policy or any other specific feature. The total assets minus liabilities and accrued expenses valued at current market prices. Date on which shares may be redeemed by a Shareholder which shall fall as at the last Valuation Date in each month or quarter (31 March, 30 June, 30 September and 31 December) or any other date applicable in respect of a Sub-Fund as further disclosed in the Appendix III "Sub-Funds Details". Redemption fee not exceeding 2% of the applicable Net Asset Value of the shares redeemed may be retained by the relevant Sub-Fund. In addition, the Board of Directors may decide, at its discretion, to charge a fee not exceeding 1% of the applicable Net Asset Value and to be retained by the relevant Sub-Fund for any redemption of shares requested within the first year following their subscription date provided that the redemption fees referred to here above may not exceed, in aggregate, 2% of the applicable Net Asset Value. GEDI: v4 9

10 Redemption Price Regulated Market Subscription Price Term Unofficial net asset values USD Valuation Date The Net Asset Value per share computed as at the applicable Valuation Date, less any applicable redemption fee. A market which is regulated, operates regularly and is recognised and open to the public. The Net Asset Value per share computed on the applicable Valuation Date. The Fund has been launched for an unlimited duration. Net asset values which are not generally used for the purposes of subscription and redemption of shares in the underlying Investment Funds as provided by the relevant administrators if more recent than their official net asset values. All references to 'USD' in this Prospectus are to the currency of the United States of America. The Net Asset Value is dated as at the last calendar day of each month or as at any other date as may be specified in the Appendix III "Sub-Fund Details" in respect of a Sub-Fund. However, considering the delay for the reception of the net asset values of the underlying Investment Funds, the Net Asset Value of the Fund will be calculated within 21 calendar days of the following month or within any other timeframe as may be specified in Appendix III "Sub-Fund Details" in respect of a Sub-Fund. GEDI: v4 10

11 II. THE FUND The Fund is a Luxembourg incorporated investment company (société d'investissement à capital variable) which was set up for an unlimited duration in Luxembourg in the form of a "société anonyme" on 20 December 2000, in accordance with the provisions of the Law of 10 August 1915 on Commercial Companies, as amended (the "Law of 10 August 1915") and subject to the Part II of the Law of 17 December The Fund s Articles of Incorporation were published in the Mémorial, Recueil des Sociétés et Associations (the "Mémorial") on 29 January 2001 and were deposited on 28 December 2000 with the Register of Commerce and Companies of Luxembourg. The Fund s Articles of Association were last amended on 2 December 2003 and the Deed was published in the Mémorial on 20 December These documents are available for inspection and copies can be obtained, upon request, on payment of the administrative costs as determined by grand-ducal regulation. Copies may also be obtained at the registered office of the Fund. The Fund is registered with the Register of Commerce and Companies of Luxembourg under number RCS B The Fund's consolidation currency is the USD. The Fund's capital corresponds at all times to the total net asset values of the different Sub-Funds and is represented by shares issued with no face value and fully paid-up. Variations in the capital shall be effected ipso jure and there are no provisions requesting publication and entry of such in the Register of Commerce and Companies as prescribed for increases and decreases of capital of limited companies. The Fund's minimum capital is the equivalent in USD of EUR 1,250,000. The Fund offers investors, within the same investment vehicle, a choice between several Sub-Funds (the "Sub-Funds"). The Board of Directors of the Fund may, at any time, decide the creation of further Sub-Funds in the future, the offering terms and conditions of which will be communicated in due course via an amendment to this Prospectus. III. INVESTMENT OBJECTIVE AND POLICY OF THE FUND The Fund s main objective is to achieve medium and long-term growth of its assets with a risk-adjusted performance better than the market and while protecting the invested capital. The Fund will pursue its objective by investing most of its assets in securities of Investment Funds GEDI: v4 11

12 using non conventional or alternative asset management strategies (generically known as "Hedge Funds"). The Fund cannot guarantee that this objective will be met. IV. INVESTMENT POLICY OF EACH SUB-FUND The objective of each Sub-Fund is to achieve superior risk adjusted returns by investing mainly in Hedge Funds specialising in investing and/or arbitrage strategies. Investing strategies are strategies whereby the said funds invest long and short in a variety of financial instruments which respectively are perceived as being undervalued and overvalued by the manager of the underlying Investment Fund. Arbitrage strategies are strategies where the aim is to exploit, opportunistically, the perceived value discrepancies between equivalent, fungible, or similar groups of securities. The style seeks to exploit the differences in relative value of economically similar investments by simultaneously buying and selling securities. By capturing the "spread" or value differential between securities and any group of investments superior returns can be achieved with less reference to the performance of the underlying market. These strategies are also referred to as market neutral or non market dependent strategies. The specific investment policy of each Sub-Fund is disclosed in the Appendix of the relevant Sub-Fund. The Investment Funds in which each Sub-Fund invests will be carefully selected on the basis of the safeguards offered by the structure of the relevant Investment Funds in which the Sub-Fund proposes to invest like the submission of the manager to an investment management regulatory organisation or the fact that said Investment Funds have a first class depositary bank or a reputed auditor. The Investment Funds in which the Fund invests may invest in any geographical area. Each Sub-Fund may use techniques and instruments, including derivative instruments, on transferable securities or which are intended to hedge exchange risks, and may effect short sales within the limits described in Appendix I "Financial Techniques & Instruments". In exceptional GEDI: v4 12

13 circumstances, when market conditions so require, each Sub-Fund may be fully invested in cash equivalents in order to protect the interests of the investors. A. ALTERNATIVE VS TRADITIONAL ASSET MANAGEMENT Traditional asset management is based on the assumption of market efficiency. According to this principle, it is impossible to achieve long-term returns above the market without having to increase the risks to inappropriate levels. The premise of alternative asset management, however, is that markets are inefficient and that by exploiting market inefficiencies, it is possible to achieve better performances without having to increase the level of risks. The main principles of alternative asset management are the following: Alternative asset management intends to offer the investor the opportunity to capture or participate in market upside while limiting the downside risk. Accordingly, because of this capital protection objective, the alternative asset management should offer better risk-adjusted performance and less volatile returns than the market. Traditional asset management aims at delivering a performance which beats a pre-defined index benchmark while adopting an indexed and/or passive management. Accordingly, the performance is measured in relative terms. Alternative asset management however aims at delivering absolute performance independently of the market (in bull, bear and flat markets) while adopting a dynamic approach to asset management. Accordingly, traditional asset management will tend to produce performances that are correlated to market indices while alternative asset management should produce returns that are less correlated to market indices. Ideally, the returns should be highly correlated in bull markets and not correlated in bear markets. Traditional asset management focuses on creating portfolios of securities by creating long positions, mostly in equities and fixed-income. Alternative asset management not only uses long positions but also short positions. Moreover, the use of derivative financial instruments, either to hedge or to increase market exposure, is not limited in alternative asset management. In traditional asset management, the uses of leverage is banned or limited. In alternative asset management, leverage can be used and may be very important. GEDI: v4 13

14 B. HEDGE FUND: THE BASIC CONCEPT The initial investment vehicle of alternative asset management is the "Hedge Fund", also called "Absolute Return Fund" which was created in the 1940 s by Alfred Winslow who created the A. W. Jones & Co. Partnership. As opposed to some very complex current structures, his was very simple. His fund aimed at limiting the systematic market risk by combining long and short equity positions and using his stock picking skills. Using this approach, Alfred Winslow has been able to achieve better returns than the one produced by a long only approach. C. HEDGE FUND: A CONTEMPORARY DEFINITION Since then, the "Hedge Fund" concept has widened to include a variety of alternative investment strategies. Far from being a homogeneous group, Hedge Funds today cover different styles. Some implement a well-defined investment strategy while others are more opportunistic, some are highly leveraged while others simply do not use any leverage, some are highly risky while others are much more defensive. Among the main hedge fund strategies are the following: Security Selection Strategies These alternative investment strategies implement the founding concepts of hedge fund by exploiting the price movement difference of a basket of long equity positions and a basket of short equity positions. Security Selection managers combine long positions with short sales in order to extract returns on both sides of the portfolio and reduce systematic risk. These managers look for opportunities in under or overvalued equities, generally using bottom up fundamental analysis. Directional Trading Strategies These strategies not only invest in equity markets but also invest a large portion of their assets in government bonds, currencies and commodities, futures or forward contracts, options and other derivative instruments using either fundamental macro-economic analysis or quantitative systematic systems, in order to potentially benefit from macroeconomic trends and imbalances. Accordingly, these strategies implement a "top-down" analysis rather than a "bottom-up" approach and often use a high level of leverage. Relative Value Strategies These strategies are based on the following principle: when there is a price discrepancy between two financial instruments which are closely related, a relative value position can be established through the simultaneous purchase of the undervalued instrument and the GEDI: v4 14

15 sale of the overvalued one. If the relationship between these two financial instruments becomes fairly priced, a profit can be made. Convertible arbitrage, fixed income arbitrage, capital structure arbitrage and equity quantitative strategies are all sub-styles within relative value strategies. Multi-Process Strategies Multi-Process strategies use a combination of other strategies or styles to achieve attractive risk adjusted returns, including relative value strategies, quantitative strategies and event driven strategies. Event Driven Strategies in particular concentrate on securities of companies involved in important transactions such as merger, acquisition, take-over, spin-off, liquidation, restructurings, and other type of similar transactions. Specialist Credit Strategies Specialist Credit strategies focus on opportunities in under or overvalued credit instruments, generally using bottom up fundamental analysis. This strategy combine long positions with short sales in order to extract returns on both sides of the portfolio and reduce systematic risk. Other risks, including interest rate risks are usually hedged. Specialist Credit strategies can have both a long, variable or short market exposure and can be exposed to the whole spectrum of credit quality, from investment grade to bankruptcy. Asset-Based Lending Strategies Asset-Based Lending Strategies are a subset of Specialist Credit Strategies which involve direct lending activity typically structured under the form of a secured (usually first lien) and a well-collateralised loan to small and mid-market companies. The collateral assets would typically be balance sheet items but may also include future cash flows. For example, collateral may include but are not limited to: receivables, inventory, settlements, insurance, purchase and trade financing, sale/leasebacks, etc. The term of the loan will vary from short term i.e. less than 120 days to long term i.e. over 36 months. The borrower may use the proceeds for a variety of purposes including acquisition, business expansion or cash management. In addition, there may also be an equity related component such as warrants, options, equities, etc. V. INVESTMENT RESTRICTIONS The Fund is subject to and will conduct its investment operations in compliance with the following investment restrictions. Subject to the approval of the Board of Directors and other regulatory approval requirements, the investment policy of any Sub-Fund may be subject to different GEDI: v4 15

16 investment restrictions than those provided below, in which case such different restrictions are disclosed in the Appendix of the relevant Sub-Fund. 1 Investments in other Investment Funds 1.1. A Sub-Fund may not invest more than 20% of its net assets in securities issued by any single Investment Fund. For the purpose of this 20% limit, each compartment of a Multiple Compartment Investment Fund is to be considered as a distinct Investment Fund, provided however that the principle of segregation of the commitments of the different compartments vis-à-vis third parties is ensured A Sub-Fund may acquire more than 50% of the securities of any Investment Fund provided however that if the relevant Investment Fund is a Multiple Compartment Investment Fund, the Sub-Fund's investment into the Investment Fund must represent less than 50% of the Sub-Fund s net assets. The restrictions referred to in 1.1 and 1.2 above do not apply to securities issued by any Investment Fund accepting at least quarterly redemptions (actions taken by such Investment Fund to ensure that the stock exchange or market value of its securities does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption), to the extent, however, that such investment does not, in the judgement of the Board of Directors, lead to an excessive concentration in any such Investment Fund, provided that, for the purpose of this limit, each compartment of a Multiple Compartment Investment Fund is to be considered as a distinct Investment Fund if the principle of segregation of the commitments of the different compartments vis-à-vis third parties is ensured A Sub-Fund may not invest more than 10% of its net assets in Investment Funds the investment policy of which is principally the investment in other funds. The foregoing paragraph shall not apply to Feeder Funds. Feeder Funds are Investment Funds that invest substantially all their assets (except cash) in one other Investment Fund (a Master Fund). In relation to a Master-Feeder structure, the limits referred to in 1.1. and 1.2. above do not apply at the level of the Feeder Fund but shall apply at the level of the Master Fund if investments by the Fund in the Master Fund can only be made through one or more Feeder Funds. However, the Fund may not acquire shares or units carrying voting GEDI: v4 16

17 rights that would enable it to exercise a significant influence over the management of a Feeder Fund. The Fund shall only invest in Master-Feeder structures that would not cause a duplication of fees between the Master and the Feeder. 2 Investments in securities (other than Investment Funds) Each Sub-Fund of the Fund may invest in securities of issuers (other than Investments Funds), provided that the Fund shall not: 2.1. invest more than 20% of the net assets of any Sub-Fund in the securities of a single issuer; 2.2. acquire any securities if, as a result of this acquisition, the Fund or any Sub-Fund would own more than 10% of securities of the same kind issued by the same issuer; 2.3. invest more than 20% of the net assets of any Sub-Fund in securities which are not listed on a stock exchange or dealt in on another Regulated Market. This restriction does not apply to securities for which a listing has been requested and is obtained within one year, in which case they are considered as listed securities. This restriction is not applicable to money market instruments either (i) issued by first class issuers or (ii) which are traded regularly, or (iii) which have a residual maturity of less than 12 months. The average residual maturity of all money market instruments which are not traded regularly may not exceed 120 days. The restrictions referred to in 2.1., 2.2. and 2.3 are not applicable to securities issued or guaranteed by member-states of the Organisation of Economic Co-operation and Development ("OECD") or their local authorities or public international bodies with EU, regional or world-wide scope. 3 Additional investment restrictions 3.1 Each Sub-Fund may borrow up to 25% of its net assets. 3.2 The Sub-Funds may not invest through the use of managed accounts, neither directly, nor indirectly, through a subsidiary of the Fund. 3.3 Each Sub-Fund may acquire any foreign currency by means of a back-to-back loan. GEDI: v4 17

18 3.4 A Sub-Fund may not make investments (other than short sales) which exposes its portfolio to unlimited liability. 3.5 A Sub-Fund may not acquire real estate or invest in physical commodities, precious metals or other physical assets (such as art, antiques etc). 3.6 A Sub-Fund may not grant loans or guarantees in favour of a third party. 4 Excess of ceilings 4.1. The restrictions set forth above shall only be applicable at the time where the relevant investment is made and need not to be complied with when exercising subscription rights attaching to securities, which form part of the assets of the Fund If any of the above percentages are exceeded as a result of the exercise of subscription rights or as a result of any events other than the making of investments, the situation shall be remedied taking due account of the interests of its Shareholders. 5 Currency Hedging Transactions In order to hedge foreign exchange risks, the Fund may have outstanding commitments in currency futures and/or hold currency options provided such futures and options are dealt in on a Regulated Market, or enter into currency forward contracts or currency swaps with first class financial institutions, as further described under point B of Appendix I "Financial Techniques and Instruments". VI. 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 Fund (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 ART-ABSOLUTE RETURN TARGET 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 Fund's Custodian was appointed 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 GEDI: v4 18

19 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 co-managed 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 co-managed 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 to investment restrictions affecting a Sub-Fund of the Fund, when such a Sub-Fund takes part in co-management 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 Fund 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 Fund is liquidated or when the Board of Directors of the Fund decides - without prior notice - to withdraw the participation of the Fund or a Sub-Fund of the Fund 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. GEDI: v4 19

20 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 Fund will be constantly separated and identifiable. VII. RISK FACTORS A. GENERAL RISKS Prospective investors should be aware that an investment in the Fund involves a high degree of risk, including the risk of loss of the entire amount invested. The managers of the underlying Investment Funds may invest in and actively trade instruments with significant risk characteristics, including risks arising from the volatility of securities, financial futures, derivatives, currency and interest rate markets, the leverage factors associated with trading in such markets and instruments, and the potential exposure to loss resulting from counterparty defaults. There can be no assurance that a Sub-Fund s investment program will be successful or that the investment objective of a Sub-Fund will be achieved. Shares in the Fund may fluctuate in price and value, and the value of the shares may decline below the amount originally invested. Despite a strict Due Diligence procedure used to select and monitor the individual Investment Funds in which the assets of the Fund are invested, there can be no assurance that the past performance information will be indicative of how such investments will perform (either in terms of profitability or correlation) in the future. Upon a redemption of shares or the liquidation of the Fund, investors may receive less than the amount invested. The Fund intends to invest in Investment Funds which pursue a speculative investment policy. These Investment Funds will generally fall in the category commonly known as "Hedge Funds" or "alternative investments". Some investments may also be made in Investment Funds which trade in commodities futures and options, currencies and currency contracts or financial instruments. Thus, such Investment Funds use specific investment and trading techniques such as investments in options, use of futures or short sales of securities. The Fund will seek to achieve risk diversification by selecting Investment Funds managed by different managers with different investment styles or investing in different areas. GEDI: v4 20

21 B. LACK OF REGULATORY SUPERVISION The Fund is permitted to invest in Investment Funds established in jurisdictions where no or less supervision is exercised on such Investment Funds by regulators. Although the Fund will ensure that in any such event other safeguards are provided for the protection of the interest of the shareholders of such Investment Funds, such protection may be less efficient as if a supervision by a regulator was exercised. Further the efficiency of any supervision or of other safeguards may be affected by a lack of precision of investment and risk diversification guidelines applicable to, and the flexibility of the investment policies pursued by, such Investment Funds. However, in order to minimize these risks, a Due Diligence procedure has been put in place setting out various criteria for the selection of Investment Funds (see below "Due Diligence Process"). C. ILLIQUIDITY OF THE INVESTMENT FUNDS Although the Board of Directors will seek to select Investment Funds which offer the opportunity to have their shares or units redeemed within a reasonable time frame, there is no assurance that the liquidity of the investments of such Investment Funds will always be sufficient to meet redemption request as, and when made. Any lack of liquidity may affect the liquidity of the shares of the Fund and the value of its investments. For such reasons the treatment of redemption requests may be postponed in exceptional circumstances including if a lack of liquidity may result in difficulties to determine the Net Asset Value of the shares of the Fund and consequently a suspension of issues and redemptions. D. FEE STRUCTURE The Fund incurs the costs of the fees paid to the Investment Managers and the Custodian Bank and other service providers as well as a pro rata portion of the fees paid by the Investment Funds in which the Fund invests to their advisers or other service providers. As a result the operating expenses of the Fund may constitute a higher percentage of the Net Asset Value than could be found in other investment schemes. Further, some of the strategies employed at the level of the Investment Funds require frequent changes in trading positions and a consequent portfolio turnover. This may involve brokerage commission expenses to exceed significantly those of other investment schemes of comparable size. The Investment Managers will not receive from the underlying Investment Funds any commissions, rebates or soft dollar linked to these investments. If the Investment Managers may GEDI: v4 21

22 negotiate with the underlying Investment Funds any reduction of fees, it will be for the benefit of the Fund. Potential investors should be aware that the management fees and performance fees payable to the Investment Managers are in addition to the fees paid by the invested Investment Funds to their managers and advisers and that, there may be a duplication of fees. However, in any event, there will be no duplication of management fees, should the Fund invest in Investment Funds managed or advised by the Investment Managers and their affiliates. Accordingly, the Fund shall not incur any fee or expense payable to such Investment Funds. E. LEVERAGE Certain Investment Funds in which the Fund invests, operate with substantial degree of leverage and are not limited in the extent to which they either may borrow or engage in margin transactions. The positions maintained by such Investment Funds may in aggregate value be in excess of the Net Asset Value of the Fund. This leverage presents the potential for a rate of total return but also increases the volatility of the Fund, including the risk of a total loss of the amount invested. Potential investors should also be aware that the Fund may borrow or otherwise use leverage up to 25% of each Sub-Fund s net assets, provided that higher risks linked to said borrowing for investment purposes may be borne by the Fund taking into account that the return on investments shall not necessary cover the charges linked to said borrowings. F. SHORT SALES Short sales effected by the Fund Short selling can involve greater risk than investment based on a long position. A short sale of equity involves the risk of a theoretically unlimited increase in the market price of the equity, which could result in an inability to cover the short position and a theoretical loss. Short sales effected by underlying Investment Funds The Investment Funds in which the Fund invests may engage in short selling of securities which may expose the portion of the Investment Funds assets committed to such activities to unlimited risk due the lack of an upper limit on the price to which a security may arise. However, to the extent that the Fund participates in short selling activities through an Investment Fund, the Fund s losses will be limited to the amount invested in the particular Investment Funds. GEDI: v4 22

23 G. ABSENCE OF CUSTODIAN BANKS Some of the Investment Funds in which the assets of the Fund are allocated have a broker as a custodian instead of a bank. In certain cases these brokers may not have the same credit rating as a bank. In addition, contrary to custodian banks in regulated environments, these brokers will perform only safekeeping functions with no statutory supervisory obligations. H. CONFLICTS OF INTERESTS Conflicts of interests may arise between the Fund and the persons or entities involved as advisers in the management of the Fund and/or the managers of the Investment Funds in which the Fund invests. The managers normally manage assets of other clients that make investments similar to those made on behalf of the undertakings in which the Fund invests. Such clients could thus compete for the same trades or investments and whilst available investments or opportunities for each client are generally allocated in a manner to believed equitable to each, some of those allocation procedures may adversely affect the price paid or received for investments or the size of positions obtained or disposed. Conflicts may also arise as a result of the other services provided by the Investment Managers or their affiliates which may provide advisory, custody or other services to the Board of Directors, to other clients and some of the other Investment Funds in which the Fund invests. Similarly the Directors of the Fund as well as the Investment Managers may also be directors of Investment Funds in which the Fund may invest or of companies being active in the sector of alternative strategies and the interests of such Investment Funds or companies and of the Fund could result into conflicts. Furthermore, some managers have an equity stake in their own fund. Conflicts of interest can therefore not be ruled out at the level of the Investment Funds. Should such conflicts of interest arise, a fair solution for all parties must be found and conflicts must be resolved on an arm s length basis. I. NATURE OF THE INVESTMENTS IN THE FUND Although the Investment Managers seek to monitor investments and trading activities of the Investment Funds to which the Fund has allocated assets, investment decisions are normally made independently at the level of such Investment Funds and it is possible that some managers of the underlying Investment Funds will take positions in the same security or in issues of the same GEDI: v4 23

24 industry or country or in the same currency or commodity at the same time. Consequently, the possibility also exists that one Investment Fund purchases an instrument at about the same time when another Investment Fund decides to sell it. There is no guarantee that the selection of the managers of the underlying Investment Funds will actually result in a diversification of investment styles and that the positions taken by the underlying Investment Funds will always be consistent. The assets of the Fund may also be allocated to Investment Funds whose primary investment strategies include speculative trading of commodities futures and/or financial futures contracts and currencies. Commodity and currency futures prices can be highly volatile because of the low margin requirements in futures trading. An extremely high degree of leverage is typical for futures trading accounts. As a result, a relatively small price movement in a futures contract may result in substantial losses or gains to the investor. Similarly some of the Investment Funds may have the majority of their assets invested in options and other geared instruments, where a relatively small price movement in the underlying security or commodity may result in substantial losses or profits. There are only very limited constraints on the investment strategies and techniques that can be employed by the managers of the underlying Investment Funds. As a result of its diversified investments, the Fund may incur other risks, including currency exchange risks in respect of assets held in other currencies, tax risks in respect of assets invested in other jurisdictions, political risks relating to political, social and economic factors which may affect the assets of the Investment Funds in which the Fund invests, which are held in countries which may be subject to economic difficulties, political or social unrest. The foregoing list of risks factors does not purport to be a complete explanation of the risk involved. Prospective investors should read the entire Prospectus and fully evaluate all other information that they deem to be necessary for determining to invest in the Fund. Prospective investors should ensure that they fully understand the content of this Prospectus. ACCORDINGLY, INVESTMENT IN THE SHARES OF THE FUND IS ONLY APPROPRIATE FOR INVESTORS WHO ARE WILLING TO ACCEPT THE RISKS AND REWARDS STEMMING FROM SUCH AN APPROACH. GEDI: v4 24

25 J. SPECIFIC RISKS LINKED TO SECURITIES LENDING, SALE WITH RIGHT OF REPURCHASE AND REPURCHASE AND REVERSE REPURCHASE AGREEMENT TRANSACTIONS The use of such techniques and instruments involves certain risks, some of which are listed in the following paragraphs, and there can be no assurance that the objective sought to be obtained from such use will be achieved. In relation to reverse repurchase transactions and sales with right of repurchase transactions in which the Fund acts as purchaser and in the event of the failure of the counterparty with which securities have been purchased, investors must notably be aware that (A) there is the risk that the value of the securities purchased may yield less than the cash originally paid, whether because of inaccurate pricing of said securities, an adverse market value evolution, a deterioration in the credit rating of the issuers of such securities, or the illiquidity of the market in which these are traded; that (B) (i) locking cash in transactions of excessive size or duration, (ii) delays in recovering cash at maturity may restrict the ability of the Fund to meet repurchase requests, security purchases or, more generally, reinvestment. In relation to repurchase transactions and sales with right of repurchase transactions in which the Fund acts as seller and in the event of the failure of the counterparty to which securities have been sold, investors must notably be aware that (A) there is the risk that the value of the securities sold to the counterparty is higher than the cash originally received, whether because of a market appreciation of the value of said securities or an improvement in the credit rating of their issuer; that (B) (i) locking investment positions in transactions of excessive size or duration, (ii) delays in recovering, at maturity, the securities sold, may restrict the ability of the Fund to meet delivery obligations under security sales or payment obligations arising from repurchase requests. In relation to securities lending transactions, investors must notably be aware that (A) if the borrower of securities lent by the Fund fails to return these there is a risk that the collateral received may be realised at a value lower than the value of the securities lent out, whether due to inaccurate pricing of the collateral, adverse market movements in the value of the collateral, a deterioration in the credit rating of the collateral issuer, or the illiquidity of the market in which the collateral is traded and that (B) delays in the return of securities on loans may restrict the ability of the Fund to meet delivery obligations under security sales or payment obligations arising from repurchase requests. GEDI: v4 25

26 VIII. DUE DILIGENCE PROCESS The Due Diligence Process involves the following two steps: A. QUANTITATIVE ANALYSIS The quantitative analysis focuses on the statistical evaluation of the historical performance of a target Investment Fund s manager over different periods of time. By using a certain number of ratios it allows one to view various measures of risk and reward as well as compare the returns of a target Investment Fund s manager to those of another, or to those of an appropriate set of market indices, in order to determine correlation of returns or perform style analysis. Quantitative analysis alone, however, by focusing on past performance, is an unreliable prognosticator of future results. Moreover, in order to be truly useful, statistical analysis has to cover a reasonable measurement period. The idea is to test a target Investment Fund s manager s skill over a full market cycle, when possible. Quantitative analysis, therefore, has to be combined with a thorough qualitative analysis which will attempt to highlight various factors which may affect the performance of given target Investment Fund s manager and increase, or decrease, ones level of confidence in him. B. QUALITATIVE ANALYSIS The qualitative analysis allows one to differentiate between two apparently identical "statistical profiles" by assessing, among others, the following key points on a given target Investment Fund s manager or Investment Fund: Characteristics and driving forces of the target Investment Fund s manager s investment strategy. Is it well defined, what are the risks and are they efficiently controlled by the target Investment Fund s manager and his organization? In order to answer these questions, one has to go beyond the information contained in the disclosure document of a target Investment Fund s manager and endeavour, among other things, to understand how consistent a target Investment Fund s manager has been in applying his strategy and how susceptible it is to evolve over time both in relation to developments in financial markets and to assets under management. In addition, one will want to assess the type and liquidity of financial instruments used by the target Investment Fund s manager, the diversification of portfolio and concentration of investment positions, the use, if any, of leverage and derivatives and, more broadly, the general structure of the target Investment Fund s manager s current portfolio. GEDI: v4 26

27 IX. Background of the target Investment Fund s manager and of the principals in his organization. This involves checking the target Investment Fund s manager s regulatory history, his background, reputation within the industry and whether he had less successful past experiences as an investment manager. Structure of the Investment Fund. This point is often overlooked by investors. Other than a perfunctory look at the offering document of the Investment Fund to be familiar with the fee structure and the subscription and redemption conditions, investor will generally not get involved in analysing the details of the Investment Fund structure and in assessing the quality of the various parties involved in the Investment Fund. The due diligence procedure, however, should include a review of the various parties involved in the "life" of the Investment Fund, such as the custodian, the offshore administrator, the auditor and the legal advisor. Special attention must also be paid to corporate governance issues such as the existence, or not, of an independent board of directors or supervisory board of directors. MANAGEMENT OF THE FUND Investment Managers The Board of Directors of the Fund is responsible for the Fund s management and the control of its operations as well as determining and implementing its investment policy. The Board of Directors has required the assistance of PARTNERS ADVISERS S.A. and TRENDTRUST S.A., the "Investment Managers" for the management of the assets of the Fund, pursuant to the investment management agreement, dated 2 January Any details regarding the remuneration of the Investment Managers will be specified in Chapter XVII. "FEES AND EXPENSES". The investment management agreements provide for the appointment of the Investment Managers to continue for an unlimited period of time from the date of their signature. They may be terminated by the Fund or the Investment Managers on giving a 90 days' prior written notice. The Investment Managers provide the Directors with advice, reports and recommendations in connection with the management of the assets of the Fund and shall advise the Directors as to the selection of Investment Funds, liquid assets and other securities and assets constituting the portfolios of the Fund and, pursuant to the investment management agreements, have discretion, on a day to day basis and subject to the overall control and responsibility of the Directors, to purchase and sell the assets of the Fund and otherwise to manage the Fund s portfolios. GEDI: v4 27

28 The Investment Managers may, subject to the approval of the Directors, delegate their powers, in which case the Prospectus will be updated or supplemented accordingly. The leadership of the management of Fund will be borne by Partners Advisers S.A. through active day to day hedge fund search, selection and monitoring, as well as portfolio construction. Partners Advisers S.A. recommendations will be reviewed and discussed with Trendtrust S.A. Description of PARTNERS ADVISERS S.A. PARTNERS ADVISERS S.A. was created as a Société Anonyme in 1998 with its registered office in Geneva. Its main business activity consists in advising institutional and private international high net worth clients on alternative investments. Description of TRENDTRUST S.A. TRENDTRUST S.A. was created as a Société Anonyme in 1999 with its registered office in Geneva. It is active in the domain of financial transactions and the provision of financial services. X. THE CUSTODIAN BANK AND CENTRAL ADMINISTRATION The Custodian Bank and Central Administration BANQUE PRIVEE EDMOND DE ROTHSCHILD EUROPE, a Société Anonyme, (the "Custodian Bank") has been appointed Custodian Bank of the Fund's assets in accordance with an Agreement for an undetermined duration, signed on 20 December Each of the parties may terminate the Agreement subject to 90 days notice. BANQUE PRIVEE EDMOND DE ROTHSCHILD EUROPE is a company in the form of a Société Anonyme, which was granted statutory recognition as a bank on 24 October 1988 in Luxembourg and whose registered office is at 20 Boulevard Emmanuel Servais, Luxembourg. The safekeeping of the Fund's assets has been entrusted to the Custodian Bank who shall fulfil the obligations and duties stipulated by law. The Fund s assets shall be deposited with the Custodian Bank and/or the Custodian Bank s correspondents under the supervision of the Custodian Bank. The Custodian Bank shall exercise all reasonable care in the selection and supervision of its correspondents and the Custodian Bank GEDI: v4 28

29 shall be liable for proper instructions and transfer of the Fund s assets to such correspondents. Unless the Custodian Bank has been negligent in the performance of its duties the Custodian Bank shall not be liable to the Fund for the correspondents failure to perform their obligations and unless the Custodian Bank has been negligent in the selection and supervision of any such correspondent the Custodian Bank shall not be liable to the Fund for losses resulting from the bankruptcy or insolvency of a correspondent. In such case the Custodian Bank shall be liable to the Fund only to the extent that the correspondents are liable to the Custodian Bank and the Custodian Bank shall be obliged to credit to the Fund only such assets as will be returned by the correspondents where the assets have been placed. As the Domiciliary, Registrar, Transfer and Administrative Agent, Banque Privée Edmond de Rothschild Europe is also responsible for the general administrative functions of the Fund required by Luxembourg law and for processing the issue and redemption of shares, the calculation of the Net Asset Value of the shares in the Fund and the maintenance of accounting records for the Fund. The Custodian Bank has no duty to control the compliance of the Fund with its investment policy and restrictions. The fees for the Custodian Bank s services are charged in accordance with usual bank fees. The Custodian Bank will be entitled to a commission payable quarterly, pro rata temporis, based on the average of the net assets of each Sub-Fund calculated on each Valuation Date. XI. THE SHARES The shares will be issued in registered form only. No share certificates will be issued. A confirmation of registration in the register of shareholders will be sent to shareholders. The ownership of shares will be established by an entry in the register of shareholders maintained by the Administrative Agent at 20, Boulevard Emmanuel Servais, Luxembourg. Fractions of registered shares up to three decimal places shall be issued. Fractions of shares have no voting rights, but have rights to dividends and liquidation proceeds. The Board of Directors is authorised to issue, in each Sub-Fund, two or more Classes of shares with a different valuation currency. The Classes in issue for each Sub-Fund are disclosed in the Appendix of the relevant Sub-Fund. GEDI: v4 29

30 Within the same Sub-Fund and with the exception of shares held in a Side-Pocket Class as more fully described hereof, all shares have equal rights as regards distribution and voting rights in all General Meetings of Shareholders and in all meetings of the Sub-Fund concerned. The Board of Directors may, in respect of shares of one or more Class(es) of shares, decide to close subscriptions temporarily, including those arising from the conversion of shares from another Class or another Sub-Fund. The Fund's capital corresponds at all times to the net asset value of the Fund and is represented by shares issued with no par value and fully paid-up. The Fund's minimum capital is the equivalent in USD of EUR 1,250,000. The Board of Directors may restrict or prevent the ownership of the Fund's shares as stated in the paragraph "Restriction on Ownership of Shares" of Chapter XV. "Issue, Conversion and Redemption of Shares" and the Registrar and Transfer Agent will apply the measures mentioned in Appendix II "Statutory Anti-Money Laundering Notice". As set out under section "I. Information on the Fund", each Sub-Fund has the possibility to launch one additional Class of shares whose purpose shall be to separate non-liquid assets from other more liquid investments held in such Sub-Fund. To this extent, redeeming Shareholders shall receive their redemption proceeds for the liquid portion of their investments and new shares within the newly created Side-Pocket Class for the non-liquid portion. Such Side-Pocket Class will be denominated in each relevant currency. All expenses entered in relation to a Side Pocket Class, excluding the set-up costs in relation thereto, will be borne by such Side-Pocket Class. Shares held in a Side-Pocket Class cannot be converted and are not redeemable by a Shareholder and must be held until the realization of the underlying assets. The provisions in relation to the valuation of shares as contained in section "XV. Valuation of Shares" shall also apply to the valuation of shares of a Side Pocket Class. XII. DISTRIBUTION It is not the intention of the Fund to make distributions of net income or capital gains by way of dividends or distributions. Capital gains and all incomes will be reinvested. However, each year the Board of Directors may propose to the General Meeting of Shareholders of each Sub-Fund that it decides, for each Class of shares in issue, how to use the net balance of investment income. Distribution of a dividend may be decided independently of all capital gains or GEDI: v4 30

31 losses, realised or unrealised. Moreover, dividends may include a distribution of capital up to the minimum legal capital foreseen in the Law of 17 December Consequently, the General Meeting of Shareholders may approve, for each Sub-Fund, the distribution to each Class of shares in issue of their relevant share in the net income and capital gains, realised or unrealised, after deduction of capital losses, realised or unrealised. The amounts corresponding to income attributable to the shares of a Class which decided not to pay a dividend will be capitalized in the assets of the Class concerned. The type of distribution (net investment income or capital) will be specified in the Fund s financial statements. Every resolution of the general meeting of shareholders deciding the distribution of a dividend on shares in a Class of shares of a Sub-Fund must be approved by the shareholders of the said Sub-Fund by a simple majority vote of the shareholders present or represented. For each Sub-Fund, the Board of Directors may decide on the payment of interim dividends for each Class of shares in issue in compliance with legal requirements. The specific distribution policy applicable to each Sub-Fund and each Class of shares is more fully disclosed in the Appendix of the relevant Sub-Fund. Shareholders shall be notified of the payment of dividends and interim dividends in a manner decided by the Board of Directors in compliance with the law. Dividends will be paid in the valuation currency of the Sub-Fund or, if issued, in the currency of the Class concerned. Registered shareholders will be paid by a cheque sent to the address indicated in the Register of Shareholders or by bank transfer, according to their instructions. The collection charges shall be paid by the shareholders. No interest shall be paid on uncollected dividends and interim dividends held by the Fund on behalf of shareholders. Dividends and interim dividends not claimed within five years of the date of payment will lapse and will return to the Sub-Fund concerned. GEDI: v4 31

32 XIII. ISSUE, CONVERSION AND REDEMPTION OF SHARES A. Issue of Shares If not otherwise disclosed in the Appendix of the relevant Sub-Fund, the minimum initial investment amount is USD 100,000, EUR 100,000, CHF 100,000, GBP 100,000 or JPY 10,000,000 per Class of the Sub-Fund concerned. The minimum holding amount is, at any time, equal to the minimum initial investment amount as set out here above per Class of the Sub-Fund concerned. In the event that, after redemption or conversion, the investment in a Class of a Sub-Fund becomes less than the minimum holding amount, the Board of Directors may decide, on a discretionary basis, to compulsorily redeem or convert the remaining shares. Subscriptions may be made for an amount only. The Directors are authorized to issue shares of each Sub-Fund at all times and without limits. Subscriptions may be made directly to the registered office of the Fund. If, within a Sub-Fund, the Board of Directors decides to create several Classes of shares, each with a different currency, the investor will subscribe to the Class of his choice in the currency of the Class concerned. If not otherwise disclosed in the Appendix of the relevant Sub-Fund, subscription applications received by the Fund before 6:00 p.m. (Luxembourg time) on the third Business Day preceding a Valuation Date will be executed, if accepted, on the basis of the Net Asset Value determined on such Valuation Date. Applications received after this deadline will be executed on the following Valuation Date. If not otherwise disclosed in the Appendix of the relevant Sub-Fund, the subscription amount will be received at the Custodian Bank on the third Business Day preceding the Valuation Date. Subscription monies are payable in the valuation currency of the relevant Class of the Sub-Fund concerned. Applications in any major freely convertible currency will be accepted but in such case, the conversion costs (i.e. conversion rate and conversion fee) will be borne by the investors. The Board of Directors may, at its discretion, issue fully paid shares at any time for cash or, further to the preparation of report drawn up by the auditor of the Fund established at the expense of the GEDI: v4 32

33 shareholder concerned and subject to the conditions laid down by the law and in compliance with the investment policies and restrictions laid down in the current Prospectus, for a contribution in kind of securities and other assets. No transaction charge will be chargeable to the investor in respect of such contribution of securities in kind. After the Net Asset Value calculation, the Fund will inform the shareholder as to the number of shares obtained as well as the applicable price. For each Sub-Fund, the Board of Directors may, in respect of shares of one or more Class(es) of shares, decide to close subscriptions temporarily, including those arising from the conversion of shares from another Class or another Sub-Fund. In the event that a Class of shares, closed for subscriptions because all the shares issued in that Class were redeemed, is reopened for subscriptions or in the event that no shares of a Class are subscribed during the initial subscription period of a Sub-Fund, the initial price per share of the Class of shares concerned will, at the time of the launch of the Class, be equal to 1,000 units of the reference currency of the EUR Class, USD Class, CHF Class as well as GBP Class but shall be equal to 100,000 units of the reference currency of the JPY Class, if there is no other Class of shares in issue in the relevant Sub-Fund at the time of launch of the Class, or will be based on the last available Net Asset Value per share of the other Class of the relevant Sub-Fund. Restriction of ownership of shares The Fund reserves the right to: (a) (b) refuse all or part of a subscription application for shares. redeem, at any time, shares held by investors not authorised to buy or own the Fund's shares. The shares of the Fund cannot be acquired or held directly or indirectly by United States persons (nationals or residents) as the shares have not been registered under the United States Securities Act of In particular, the Fund may restrict or prevent the ownership of shares in the Fund by any person, firm or corporate body or by any "United States person". The shares have not been registered under the United States Securities Act of 1933 and, except in a transaction which does not violate such Act, may not be directly or indirectly offered or sold in the United States of America, or any of its GEDI: v4 33

34 territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States person. For this purpose, "United States person" includes a national or resident of the United States of America, a partnership organised or existing in any state, territory or possession of the United States of America, a corporation organised under the laws of the United States of America or of any state, territory or possession thereof, or any estate or trust, other than estate or trust the income of which is not subject to United States federal income taxation regardless of its source. The attention of any United States person is drawn to the section "Issue of shares" and on the compulsory redemption powers of the Fund above. The Fund may restrict or prevent the ownership of shares of the Fund by any person, firm or corporate body if, in the judgment of the Board of Directors, such holding may be detrimental to the Fund or the majority of its Shareholders or any Sub-Fund or Class. For such purposes the Fund may: decline to issue any share and decline to register any transfer of a share where it appears to the Fund that such registration or transfer would or might result in beneficial ownership of such share by a person not authorised to own shares of the Fund; at any time require any person whose name is entered in or any person seeking to register the transfer of shares in the register of shareholders to provide information, supported by an affidavit, which the Fund may consider necessary for the purpose of determining whether or not beneficial ownership of such shareholder's shares rests or will rest with a person not authorised to own shares of the Fund; and where it appears to the Fund that any person not authorised to own shares of the Fund either alone or in conjunction with any other person is a beneficial owner of shares, compulsorily redeem such shares from any such shareholder. B. CONVERSION OF SHARES If not otherwise disclosed in the Appendix of the relevant Sub-Fund, shareholders may ask to convert all or part of the shares which they hold in a Class of a given Sub-Fund (hereinafter qualified as "First Class"): into shares of another Class in the same Sub-Fund or into shares of the same Class of another Sub-Fund or GEDI: v4 34

35 into shares of another Class of another Sub-Fund (all qualified hereinafter as "Second Class"). Such conversion will be accepted upon request at a price corresponding to the Net Asset Value per share of the relevant Class without conversion fee. For each Sub-Fund, the Board of Directors may, in respect of shares of one or more class(es) of shares, decide to close subscriptions temporarily, including those arising from the conversion of shares from another Class or another Sub-Fund. Any shareholder wishing to convert part or all of his holding should deliver a request for conversion in writing, or by fax to the Fund to the registered office of the Fund indicating the number of the shares to be converted from the First Class to the Second Class. Conversion requests are irrevocable except in the case of suspension of the calculation of the Net Asset Value as described in chapter XVI. "Suspension of the Calculation of the Net Asset Value and of the Issue, Redemption and Conversion of Shares". Conversion of shares may be subject to a prior notice. The procedures for the conversion of shares and the prior notice requirements (if any) are specifically disclosed in the Appendix of each Sub-Fund. The Board of Directors may, if condition so allow and upon notification to the relevant shareholders, wave the notice period, if any, and accept request for conversion on an earlier Valuation Date. In this case, all applications received so as to occur on a specific Valuation Date will be taken into account and dealt with on that earlier Valuation Date; provided the Board of Directors does not opt for the deferral procedure mentioned under the section C. "Redemption of shares", in case where conversion requests, taken together with the redemption requests applicable on the same day exceed 10% of the issued shares of the relevant Sub-Fund. Conversion will be carried out using the following formula: A = B x C x E D A B C being the number of Second Class shares that the shareholder will receive; being the number of First Class shares to be converted; being the Net Asset Value of the First Class shares; GEDI: v4 35

36 D E being the Net Asset Value of the Second Class shares; being the selling exchange rate of the currency of the Second Class shares expressed in relation to the currency of the First Class shares. After the conversion, the Fund will inform the shareholder as to the number of new shares obtained as a result of the conversion as well as the price. If not otherwise disclosed in the Appendix of the relevant Sub-Fund, the minimum holding amount is, at any time, USD 100,000, EUR 100,000, CHF 100,000, GBP 100,000 or JPY 10,000,000 per Class of the Sub-Fund concerned. In the event that, following a conversion, the investment in a Class of a Sub-Fund will represent an amount inferior to the relevant minimum holding amount per Class set out here above, the Board of Directors may decide, on a discretionary basis, to compulsorily redeem or convert the remaining shares. If there are no shares in issue in the Second Class on the applicable Valuation Date of that Class, the Net Asset Value of the Second Class shares taken into account for the conversion will correspond to 1,000 units of the currency of the Second Class shares, i.e. EUR 1,000, USD 1,000, CHF 1,000 as well as GBP 1,000 but will correspond to 100,000 units of the currency of the Second Class shares being the JPY Class, if there is no other Class of Shares in issue in the relevant Sub-Fund on the applicable Valuation Date or will be based on the Net Asset Value per share of the other Class of this Sub-Fund on the applicable Valuation Date. C. REDEMPTION OF SHARES The shareholder of any Sub-Fund is entitled to have his/her shares redeemed by the Fund at his/her request at the Net Asset Value less any applicable redemption fee. A redemption fee of up to 2% of the Net Asset Value of the shares redeemed may be applied, or may be waived in whole or in part at the discretion of the Board of Directors. The redemption fee (if any) will be retained by the redeeming Sub-Fund in order to compensate the fees required by underlying Investment Funds; provided that the same percentage shall be applied to all redemption requests accepted by the Fund and to be dealt with on the same Valuation Date. In addition to the redemption fee referred to here above, the Board of Directors may decide, at its discretion, to charge a fee not exceeding 1% of the applicable Net Asset Value for any redemption of shares requested within the first year following their subscription date (hereafter referred to as "advanced redemption". Such fee (if any) will be retained by the redeeming Sub-Fund and the same percentage shall be applied to all advanced redemption requests to be dealt with on the same Valuation Date. GEDI: v4 36

37 The redemption fee together with the fee the Board of Directors may decide to charge in case of advanced redemptions may not exceed, in aggregate, 2% of the applicable Net Asset Value. Subject to the conditions laid down by laws and to the preparation of a report drawn up by the auditor of the Fund at the expense of the shareholder concerned, the Board of Directors may also at its discretion, pay the redemption price to the relevant shareholder by means of a redemption in kind of securities and other assets of the relevant Sub-Fund up to the value of the redemption amount. The Board of Directors will only exercise this discretion if: (i) requested by the relevant shareholder; and (ii) if the transfer does not adversely affect the value of the shares of the Sub-Fund held by any other person. The Board of Directors may cause the Fund to redeem shares by payment of the redemption price in cash. Shares redeemed by the Fund shall be cancelled. Redemption procedure Any shareholder wishing to redeem part or all of his holding should deliver a redemption request which must be sent to the Fund in writing, or by fax. The redemption request is irrevocable except in the case of suspension of the calculation of the net asset value as described in Chapter XVI. "Suspension of the Calculation of the Net Asset Value and of the Issue, Redemption and Conversion of Shares", and must indicate the number of shares of the Sub-Fund to be redeemed as well as all useful references allowing the settlement of the redemption such as the name in which the shares to be redeemed are registered, if applicable, and the necessary information as to the investor to whom payment is to be made. If not otherwise disclosed in the Appendix of the relevant Sub-Fund, a redemption request must be received by the Fund in Luxembourg before 6:00 p.m. (Luxembourg time). Redemption of shares may be subject to a prior notice. The procedures for the redemption of shares and the prior notice requirements (if any) are specifically disclosed in the Appendix of each Sub-Fund. If not otherwise disclosed in the Appendix of the relevant Sub-Fund, the payment for shares redeemed shall be made within 90 calendar days following the applicable Valuation Date, GEDI: v4 37

38 provided the Fund has received all the documents certifying the redemption and in any case before the availability of the Net Asset Value calculated for the following Valuation Date. If not otherwise disclosed in the Appendix of the relevant Sub-Fund, the minimum holding amount is, at any time, USD 100,000, EUR 100,000, CHF 100,000, GBP 100,000 or JPY 10,000,000 per Class of the Sub-Fund concerned. In the event that, after redemption the investment in a Class of a Sub-Fund will represent an amount inferior to the relevant minimum holding amount per Class set out here above, the Board of Directors may decide, on a discretionary basis, to compulsorily redeem or convert the remaining shares. The Board of Directors may, if conditions so allow and upon notification to the relevant shareholders, wave the notice period referred to here above and accept request for redemption on an earlier Valuation Date. In this case, all redemption request received so as to occur on a specific Valuation Date will be taken into account and dealt with on that earlier Valuation Date; provided the Board of Directors does not opt for the deferral procedure mentioned below in case where redemption requests, in aggregate with conversion requests to be dealt with on the same Valuation Date, exceed 10% of the shares in issue of the relevant Sub-Fund. The shares, which are redeemed, will be cancelled by the Fund. Redemption monies shall be paid in the valuation currency of the relevant Class of the Sub-Fund concerned. Reimbursements in any other major freely convertible currency will be accepted. In such a case, the exchange costs (i.e. exchange rate and exchange fee) will be borne by the shareholders. The price of the shares redeemed of the Fund may be higher or lower than the purchase price paid by the shareholder at the time of subscription due to the appreciation or depreciation of the Net Asset Value of the Fund. Deferrals In the event that redemption or conversion requests on any given Valuation Date exceed 10% of the issued shares in a Sub-Fund (or any other percentage disclosed in the Appendix III "Sub-Funds Details"), the Directors may decide that the portion of the redemption/conversion requests exceeding 10% (or any other percentage disclosed in the Appendix III for a specific Sub-Fund) of the shares in issue in the Sub-Fund concerned be deferred to the following Valuation Date and any subsequent Valuation Date for as long as redemption/conversion requests exceed 10% (or any other percentage disclosed in the GEDI: v4 38

39 Appendix III for a specific Sub-Fund); provided however that if a Sub-Fund issues shares within different classes, the percentage referred to in this paragraph shall apply to the aggregate number of shares of all the Classes in issue and requested to be redeemed/converted on the same Valuation Date. In the case of deferrals all pending redemption/conversion requests will be reduced proportionally and, for any given Valuation Date, deferred redemption/conversion requests will be dealt with prior to new redemption/conversion requests in the Sub-Fund concerned. The redemption/conversion price applicable to deferred redemption/conversion requests will be the price as at the Valuation Date the portion of the deferred redemption/conversion request has been effectively taken into account. Compulsory redemption In the event that the net assets of a Sub-Fund or a Class are less than the equivalent of USD 5,000,000 for a period of at least six consecutive months, the Board of Directors may decide on the basis of the conditions laid down in Chapter XIX "Dissolution of the Fund, Liquidation and Merger of Sub-Funds" to compulsorily redeem all the remaining shares of the Sub-Fund or the Class of shares concerned. Such redemption will be made at the Net Asset Value applicable on the day on which all assets attributable to such Sub-Fund or Class of shares have been realised. XIV. VALUATION OF SHARES The Net Asset Value is dated as at the applicable Valuation Date as further described in the applicable Annex to a Sub-Fund and under the responsibility of the Board of Directors. However, considering the delay for the reception of the net asset values of the underlying Investment Funds, the Net Asset Value of the Fund will be calculated within 21 calendar days of the applicable Valuation Date. The Net Asset Value of the shares of each Sub-Fund in operation is calculated in Luxembourg by the Administrative Agent, under the responsibility of the Board of Directors, by dividing the value of the net assets of the Sub-Fund in question which corresponds to the value of this Sub-Fund's assets minus its commitments by the number of outstanding shares in the relevant Sub-Fund on the same date and rounding up or down to the second decimal place of the currency in which the Net Asset Value of the relevant Class of shares is calculated. The Net Asset Value will be calculated and subscriptions and redemptions will be made in the currency of the Class concerned. In the financial statements and reports, the Net Asset Value of each Class of shares shall be expressed in USD. GEDI: v4 39

40 The percentage of the total value of net assets attributed to each Class of shares in a Sub-Fund shall be decided by the ratio between the number of shares issued in each Class of shares in that Sub-Fund and the total number of shares issued in the same Sub-Fund and will subsequently be adjusted in accordance with dividend distributions and issues, conversions and redemptions of shares. The net assets of the different Sub-Funds of the Fund shall be assessed as follows: I. In particular, the Fund's assets shall include: 1. all cash on hand and on deposit, including interest due but not yet collected and interest accrued on these deposits up to the Valuation Date; 2. all bills and demand notes payable and accounts receivable (including proceeds of securities sold but not delivered); 3. all bonds, time notes, certificates of deposit, shares, stock, debentures, debenture stocks, subscription rights, warrants, options and other securities, financial instruments and similar assets owned or contracted for by the Fund (provided that the Fund may make adjustments in a manner not inconsistent with paragraph (a) below with regards to fluctuations in the market value of securities caused by trading ex-dividends, ex-rights, or by similar practices); 4. all stock dividends, cash dividends and cash distributions received by the Fund to the extent information thereon is reasonably available to the Fund; 5. all interest accrued on any interest-bearing assets owned by the Fund except to the extent that the same is included or reflected in the principal amount of such asset; 6. the liquidation value of all forward contracts and all call or put options the Fund has an open position in; 7. the preliminary expenses of the Fund, including the cost of issuing and distributing shares of the Fund, insofar as the same have not been written off; and 8. all other assets of any kind and nature including expenses paid in advance. GEDI: v4 40

41 If, in the same Sub-Fund one or several Classes of shares have been created, the allocation rules mentioned above shall apply, if appropriate, to these Classes of shares. The value of these assets shall be determined as follows: (a) (b) (c) (d) (e) (f) (g) The value of any cash on hand or on deposit, bills and demand notes and accounts receivable (including any rebates on fees and expenses payable by any Investment Fund), prepaid expenses, cash dividends declared and interest accrued, and not yet received shall be deemed to be the full amount thereof, unless, however, the same is unlikely to be paid or received in full, in which case the value thereof shall be determined after making such discount as the Directors may consider appropriate to reflect the true value thereof. The value of securities which are quoted, traded or dealt in on any stock exchange shall be based on the latest available price or, if appropriate, on the average price on the stock exchange which is normally the principal market of such securities, and each security traded on any other regulated market shall be valued in a manner as similar as possible to that provided for quoted securities. For non-quoted securities or securities not traded or dealt in on any stock exchange or other regulated market (including securities of closed-ended Investment Funds) as well as quoted or non-quoted securities on such other market for which no valuation price is available, or securities for which the quoted prices are, in the opinion of the Directors, not representative of the fair market value, the value thereof shall be determined prudently and in good faith by the Directors on the basis of foreseeable sales prices. Liquid assets and money market instruments may be valued at nominal value plus any accrued interest or on an amortised cost basis. All other securities and assets will be valued at fair market value as determined in good faith pursuant to procedures established by the Directors. Futures and options are valued by reference to the previous day's closing price on the relevant market; the market prices used are the futures exchanges settlement prices. Swaps are valued at fair value based on the last available closing price of the underlying security. GEDI: v4 41

42 (h) Investments in open-ended Investment Funds will be taken at their latest official net assets values or at their latest unofficial net asset values (i.e. which are not generally used for the purposes of subscription and redemption of shares of the underlying Investment Funds) as provided by the relevant administrators or investment managers if more recent than their official net asset values and for which the Administrative Agent has sufficient assurance that the valuation method used by the relevant administrator for said unofficial net asset values is coherent as compared to the official one. If events have occurred which may have resulted in a material change of the net asset value of such shares or units in other Investment Funds since the day on which the latest official net asset value was calculated, the value of such shares or units may be adjusted in order to reflect, in the reasonable opinion of the Directors, such change of value. For the purpose of determining the value of the Fund's assets, the Administrative Agent relies upon information received from various professional pricing sources (including fund administrators and brokers). In the absence of manifest error and having due regards to the standard of care and due diligence in this respect the Administrative Agent shall not be responsible for the accuracy of the valuations provided by such pricing sources. In circumstances where one or more pricing sources fails to provide valuations for an important part of the assets to the Administrative Agent, the latter is authorised not to calculate a net asset value and as a result may be unable to determine subscription and redemption prices. The Directors shall be informed immediately by the Administrative Agent should this situation arise. The Directors may then decide to suspend the Net Asset Value calculation, in accordance with the procedures set out in Chapter XVI. "Suspension of the Calculation of the Net Asset Value, and of the Issue, Redemption and Conversion of Shares". II. The Fund's liabilities shall include: 1. all loans, bills and accounts payable; 2. all accrued interest on loans of the Fund (including accrued fees for commitment for such loans); 3. all accrued or payable expenses (including administrative expenses, management fees, incentive fees, custodian fees, and corporate agents fees); GEDI: v4 42

43 4. all known liabilities, present and future, including all matured contractual obligations for payments of money or property, including the amount of any unpaid dividends declared by the Fund; 5. an appropriate provision for future taxes based on capital and income to the Valuation Date, as determined from time to time by the Fund, and other reserves (if any) authorised and approved by the Directors, as well as such amount (if any) as the Directors may consider to be an appropriate allowance in respect of any contingent liabilities of the Fund; 6. all other liabilities of the Fund of whatsoever kind and nature reflected in accordance with generally accepted accounting principles. In determining the amount of such liabilities the Fund shall take into account all expenses payable by the Fund which may comprise formation and launching expenses, fees payable to its investment manager (if any), investment adviser, fees and expenses payable to its auditors and accountants, custodian and its correspondents, domiciliary and corporate agent, registrar and transfer agent, listing agent (if any), any paying agent, any permanent representatives in places of registration, as well as any other agent employed by the Fund, the remuneration (if any) of the Directors and their reasonable out-of-pocket expenses, insurance coverage, and reasonable travelling costs in connection with board meetings, fees and expenses for legal and auditing services, any fees and expenses involved in registering and maintaining the registration of the Fund with any governmental agencies or stock exchanges in the Grand Duchy of Luxembourg and in any other country, reporting and publishing expenses, including the cost of preparing, printing, advertising and distributing prospectuses, explanatory memoranda, periodical reports or registration statements, and the costs of any reports to shareholders, all taxes, duties, governmental and similar charges, and all other operating expenses, including the cost of buying and selling assets, interest, bank charges and brokerage, postage and telephone. The Fund may accrue administrative and other expenses of a regular or recurring nature based on an estimated amount rateably for yearly or other periods. III. Each of the Fund's shares in the process of being redeemed shall be considered as a share issued and existing until the close of business on the Valuation Date applied to the Redemption of such share and its price shall be considered as a liability of the Fund from the close of business on this date and this until the price has been paid. GEDI: v4 43

44 Each share to be issued by the Fund in accordance with subscription applications received shall be considered as issued from the close of business on the Valuation Date of its issue price and its price shall be considered as an amount owed to the Fund until it has been received by the Fund. IV. As far as possible, all investments and disinvestments decided by the Fund must, in order to be taken into consideration, be transmitted and confirmed by the broker to the Custodian Bank before 6:00 p.m. (Luxembourg time) the Business Day preceding the Valuation Date. V. As regards relations between shareholders each Sub-Fund is treated as a separate entity, generating without restriction its own contributions, capital gains and capital losses, fees and expenses. The Fund constitutes a single legal entity; however with regard to third parties, in particular towards the Fund's creditors, each Sub-Fund shall be exclusively responsible for all liabilities attributable to it. XV. SUSPENSION OF THE CALCULATION OF THE NET ASSET VALUE AND OF THE ISSUE, REDEMPTION AND CONVERSION OF SHARES The Directors are authorised to temporarily suspend the calculation of the Net Asset Value of one or more Sub-Funds, as well as issues, redemptions and conversions of shares in the following instances: (a) (b) (c) (d) for any period during which a market or stock exchange which is the main market or stock exchange on which a substantial portion of the Fund's investments is listed at a given time, is closed, except in the case of regular closing days, or for days during which trading is considerably restricted or suspended. when the political, economic, military, monetary or social situation, or Act of God beyond the Fund's responsibility or control, make it impossible to dispose of its assets through reasonable and normal channels, without seriously harming the interests of shareholders. in the case of a breakdown in the normal means of communication used for the valuation of any investment of the Sub-Fund or if, for any reason, the value of any asset of the Sub-Fund may not be determined as rapidly and accurately as required. whenever exchange or capital movement restrictions prevent execution of transactions on behalf of the Fund or in case purchase and sale transactions of the Fund's assets are not GEDI: v4 44

45 realisable at normal exchange rates. Any period when the Fund is unable to repatriate funds for the purpose of making payment on the redemption of share. (e) (f) when the Directors so resolve subject to maintenance of the principle of shareholder equality and in accordance with applicable laws and regulations, (i) as soon as a meeting of shareholders is called during which the liquidation / dissolution of the Fund shall be considered; or, (ii) in the cases where the Directors have the power to resolve thereon, as soon as they decide the liquidation of a Sub-Fund. any other exceptional circumstance or circumstances where a failure to do so might result in the Fund or its shareholders incurring any liability to taxation or suffering other pecuniary disadvantage or other detriment which the Fund or its shareholders might not otherwise have suffered. Under exceptional circumstances that may adversely affect the interests of shareholders, or in instances of massive redemption applications of one Sub-Fund, the Directors reserve the right only to determine the share price after having executed, as soon as possible, the necessary sales of transferable securities on behalf of the Sub-Fund. In this case, subscriptions, redemption and conversion applications in process shall be dealt with on the basis of the Net Asset Value thus calculated. Subscribers and shareholders tendering shares for subscription redemption and conversion shall be advised of the suspension of the calculation of the Net Asset Value at the time of the filing of their written request for such subscription, redemption or conversion. Suspended subscription, redemption and conversion applications may be withdrawn by means of a written notice, provided the Fund receives such notice before the suspension ends. Suspended subscription and redemption and conversions applications shall be taken into consideration on the first Valuation Date after the suspension ends. XVI. FEES AND EXPENSES A. Management Fees The Fund will pay a global fee that will include fees payable to the Investment Managers of maximum 1.75% p.a., calculated on the average Net Asset Value of each Sub-Fund GEDI: v4 45

46 determined on each Valuation Date, in each quarter during the continuance of the investment management agreements. This fee must be paid on a quarterly basis. Regarding A.R.T. ABSOLUTE RETURN TARGET FUND A Diversified Portfolio Trendtrust, no Management Fees will be charged. B. Performance Fee The Investment Managers may, in addition to the management fee, be entitled to a performance fee. Details of such performance fee (if applicable) are set out in the Appendix of the relevant Sub-Fund. C. Custodian Bank and Administrative Agent's Fees The Fund pays fees, in accordance with normal practice in Luxembourg, to the Custodian Bank. The fees are payable quarterly and are based on the average Net Asset Value of the Fund. In addition to said custodian fees, the Fund also pays the correspondents fees (clearing or banking system) of the Custodian Bank to whom the safekeeping of the Fund's assets have been entrusted). D. Other Fees and Costs Other fees and costs charged to the Fund include: (a) (b) (c) (d) upfront costs (including the cost of drawing up and printing the Prospectus, notarial fees, fees for registration with administrative and stock exchange authorities, marketing expenses and any other costs relating to the incorporation and launch of the Fund and the Sub-Funds and to registration of the Fund and the Sub-Funds in other countries), and expenses related to subsequent amendments to the articles of incorporation; the fees and/or expenses of the domiciliary agents and all other agents of the Fund as well as the sales agent(s) under the terms of any agreements with the Fund, and any financial or due diligence consulting agents; legal expenses and annual audit fees incurred by the Fund; advertising, distribution and translation costs; GEDI: v4 46

47 (e) (f) (g) (h) (i) (j) (k) printing costs, translation (if necessary), publication and distribution of the half-yearly report and accounts, the certified annual accounts and report and all expenses incurred in respect of the Prospectus and publications in the financial press; costs incurred by meetings of shareholders and meetings of the Board of Directors; attendance fees (where applicable) for the Directors and reimbursement to the Directors of their reasonable travelling expenses, hotel and other disbursements inherent in attending meetings of Directors or general meetings of shareholders of the Fund; expenses (including insurance costs) incurred by the Directors in the performance of their duties; fees and expenses incurred in respect of registration (and maintenance of the registration) of the Fund (and/or each Sub-Fund) with the public authorities or stock exchanges in order to license product selling or trading irrespective of jurisdiction; all taxes and duties levied by public authorities and stock exchanges; all other operating expenses, including licensing fees due for utilisation of stock indices and financing, finder fees, banking and brokerage fees incurred owing to the purchase or sale of assets or by any other means; all other administrative expenses. All recurring charges will be charged first against income, then against capital gains and then against assets. E. Formation expenses and amortisation method If a new Sub-Fund is created in the future, the costs related to its creation will be borne by the Sub-Fund exclusively and will be amortised over a maximum period of 5 years with effect from the launch date of the said Sub-Fund. The Prospectus will be amended accordingly. GEDI: v4 47

48 XVII. TAXATION A. The Fund Under current law and practice the Fund is not liable to any Luxembourg income tax, nor are dividends paid by the Fund liable to any Luxembourg withholding tax. However, the Fund is liable in Luxembourg to a tax of 0.05% per annum or its assets, such tax being payable quarterly and calculated on the Net Asset Value of the Fund at the end of the relevant quarter. For the portion of the assets of the Fund invested in other Luxembourg Investment Funds, no such tax is payable. For A Diversified Portfolio Trendtrust Sub-Fund, which is exclusively reserved to clients under discretionary management mandate by Trendtrust S.A., a tax of 0.01% per annum will be applicable. No stamp duty or other tax is payable in Luxembourg on the issue of shares in the Fund. Under current law and practice, it is anticipated that no capital gains tax is payable on the realised or unrealised capital appreciation of the assets of the Fund. Dividends and interest on securities issued in other countries may be subject to withholding taxes imposed by such countries. B. Shareholders Under current legislation shareholders are not subject to any capital gains, income, withholding, estate, inheritance or other taxes in Luxembourg (except for those domiciliated, resident or having a permanent establishment in Luxembourg). Investors should consult their professional advisers on the possible tax or other consequences of buying, holding, transferring or selling any of the Fund s shares under the laws of their countries of citizenship, residence or domicile. EU Tax Considerations The Council of the EU has adopted on 3 June 2003 a Council Directive 2003/48/EC on the taxation of savings income in the form of interest payments (the "Directive"). Under the Directive, EU member states will be required to provide the tax authorities of another EU member state with details of payments of interest or other similar income paid by a person within its jurisdiction to an individual resident in that other EU member state. Luxembourg has opted instead for a withholding tax system for a transitional period in relation to such GEDI: v4 48

49 payments. The applicable withholding tax rate amounts 35%. Because of the Fund s structure and the investment policy it pursues, it is presently expected that dividends distributed by a Sub-Fund and capital gains realised by shareholders on the disposal of shares in a Sub-Fund will not be subject to such reporting or withholding tax. XVIII. DISSOLUTION OF THE FUND, LIQUIDATION AND MERGER OF SUB-FUNDS A. Dissolution of the Fund The Fund may be dissolved by the general meeting of shareholders in the conditions that are required by law to amend the articles of incorporation. Any decision to wind up the Fund will be published in the Mémorial. As soon as the decision to wind up the Fund 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 Fund falls below two thirds of the minimum level required by law, the Board of Directors must call a general meeting to be held within forty days from the date of ascertaining this fact and submit the question of the Fund'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 Fund falls below one fourth of the legal minimum, the Directors must submit the question of the Fund'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 Fund, the liquidation will be conducted by one or more liquidators, who may be individuals or legal entities and who will be appointed by a meeting of shareholders. This meeting will determine their powers and compensation. The liquidation will be carried out in accordance with the Law of 17 December 2010 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 GEDI: v4 49

50 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 Sub-Fund may be dissolved by compulsory redemption of Shares of the Sub-Fund concerned, upon a decision of the Directors: (a) if the Net Asset Value of the Sub-Fund concerned has decreased below USD 5 million or the equivalent in another currency, or (b) (c) if a change in the economical or political situation relating to the Sub-Fund concerned would have material adverse consequences on the investments of the Sub-Fund, or in order to proceed to an economic rationalisation. The Redemption Price will be the Net Asset Value per share (taking into account actual realisation prices of investments and realisation expenses), calculated as of the Valuation Date at which such a decision shall take effect. The Fund shall serve a written notice to the holders of the relevant shares prior to the effective date of the compulsory redemption, which will indicate the reasons for, and the procedure of the redemption operations. Shareholders shall be notified in writing. Unless it is otherwise decided in the interest of, or to keep equal treatment between the shareholders, the shareholders of the Sub-Fund concerned may continue to request redemption or conversion of their shares free of charge (but taking into account actual realisation prices of investments and realisation expenses) prior to the effective date of the compulsory redemption. Notwithstanding the powers conferred to the Directors by the preceding paragraph, a general meeting of shareholders of any Sub-Fund may, upon proposal from the Directors, redeem all the shares of such Sub-Fund and refund to the shareholders the Net Asset Value of their shares (taking into account actual realisation prices of investments and realisation expenses) calculated as of the Valuation Date at which such decision shall take effect. There shall be no quorum requirements for such a general meeting of shareholders at which resolutions shall be adopted by simple majority of those present or represented, if such a decision does not result in the liquidation of the Fund. GEDI: v4 50

51 Assets which may not be distributed to their beneficiaries upon the implementation of the redemption will be deposited with the Custodian Bank for a period of six months; after such a period, the assets will be deposited in escrow with the Luxembourg Caisse de Consignation on behalf of the persons entitled thereto. All redeemed shares shall be cancelled. Under the circumstances provided for under the first paragraph of this Section, the Directors may decide to allocate the assets of any Sub-Fund to those of another existing Sub-Fund within the Fund or to another undertaking for collective investment organised under the Law of 17 December 2010, or to another class within such other undertaking for collective investment (the "new Sub-Fund") and to re-designate the shares of the Sub-Fund concerned as shares of another Sub-Fund (following a split or consolidation, if necessary, and the payment of the amount corresponding to any fractional entitlement to shareholders). Such decision will be notified to the shareholders concerned (and, in addition, the notification will contain information in relation to the new Sub-Fund), one month before the date on which the amalgamation becomes effective in order to enable shareholders to request redemption or conversion of their shares, free of charge, during such period. Notwithstanding the powers conferred to the Directors by the preceding paragraph, a contribution of the assets and liabilities attributable to any Sub-Fund to another Sub-Fund of the Fund may be decided upon by a General Meeting of the Shareholders of the contributing Sub-Fund for which there shall be no quorum requirements and which shall decide upon such an amalgamation by resolution adopted by simple majority of those present or represented, if the amalgamation does not result in the liquidation of the Fund. A contribution of the assets and liabilities attributable to any Sub-Fund to another undertaking for collective investment or to another class within such other undertaking for collective investment shall be decided by a General Meeting of Shareholders and shall require a resolution of the shareholders of the contributing Sub-Fund where no quorum is required and adopted by a simple majority of the shares represented at such meeting, except when such amalgamation is to be implemented with a Luxembourg undertaking for collective investment of the contractual type ("fonds commun de placement") or a foreign based undertaking for collective investment, in which case resolutions shall be binding only on the shareholders of the contributing Sub-Fund who have voted in favour of such amalgamation. GEDI: v4 51

52 XIX. MEETINGS The annual general meeting of shareholders of the Fund will be held at the registered office of the Fund in Luxembourg on the 4 th Friday of April in each year at 11 a.m. or if any such day is not a Business Day in Luxembourg on the next following Business Day. Notices of all general meetings will be published in the Mémorial to the extent required by Luxembourg law and in such other newspapers as the Board of Directors shall determine and will be sent to the shareholders by post at least eight days prior to the meeting at their addresses in the register of shareholders. Such notices will include the agenda and specify the time and place of the meeting, the conditions of admission and will refer to the requirements of Luxembourg law with regard to the necessary quorum and majorities required for the meeting. The requirements as to attendance, quorum and majorities at all general meetings will be those laid down in articles 67, 67-1 and 68 of the Law of 10 August 1915 and in the Articles of Incorporation. Matters regarding the Sub-Funds, such as the vote on the payment of a dividend on a particular Sub-Fund, may be decided by a vote of the meeting of shareholders of the Sub-Fund concerned. Any change in the Articles of Incorporation affecting the rights of shareholders of a Sub-Fund must be approved by a resolution of both the general meeting of the Fund and the shareholders of the Sub-Fund concerned. XX. SHAREHOLDERS INFORMATION A. Publication of the Net Asset Value The most recent computed Net Asset Value of each Sub-Fund as well as the issue and redemption price are made public on each applicable Valuation Date at the registered office of the Fund as further disclosed in the Appendix III "Sub-Funds Details". The Net Asset Value will also be the subject of an announcement in one or more newspapers if the Board of Directors so decides. B. Financial notices Financial notices will be published, on resolution of the Board of Directors, in those countries where the Fund is marketed. GEDI: v4 52

53 C. Financial year and reports for shareholders The financial year begins on the first of January and ends the last day of December. Each year, the Fund 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 Fund 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 Fund may also publish interim reports. D. Independent auditors The auditing of the Fund's accounts and annual reports is entrusted to Ernst & Young S.A. E. Documents available to the public Copies of the material contracts referred below are available for inspection at the registered office of the Fund in Luxembourg. Copies of the Articles of Incorporation of the Fund, of the current Prospectus and of the latest financial reports may be obtained on request at the Fund s registered office. a) The Investment Management Agreements between the Fund and PARTNERS ADVISERS S.A. and TRENDTRUST S.A. b) The Custodian Bank and Services Agreement between the Fund and the Bank, acting as Domiciliary Agent, Central Administration Custodian Bank, Registrar, Transfer and Paying Agent and Listing Agent. GEDI: v4 53

54 APPENDIX I: FINANCIAL TECHNIQUES & INSTRUMENTS A. TECHNIQUES AND INSTRUMENTS RELATING TO TRANSFERABLE SECURITIES 1. Options on various securities The Fund may buy and sell call and put options provided that these options are traded on a regulated market which operates regularly and is recognised and open to the public ("Regulated Market"). It being understood, however, such contracts may also be concluded by private agreement (OTC transactions) on the condition that they are contracted with first class financial institutions with first class ratings and which specialise in these types of transactions. When entering into these transactions, the Fund must adhere to the following regulations: 1.1. Regulations in respect of the acquisition of options The total of premiums paid for the acquisition of call and put options which are considered here may not, together with the total of the premiums paid for the acquisition of call and put options described in section 2.3. below, exceed 15% of the net asset value of each Sub-Fund of the Fund Regulations to ensure the coverage of commitments arising from options transactions At the conclusion of contracts for the sale of call options, the concerned Sub-Fund must hold either the underlying securities, matching call options, or other instruments which provide sufficient coverage of the commitments resulting from the contracts in question (such as warrants). The underlying securities of a call option sold may not be disposed of as long as these options exist, unless they are covered by matching options or by other instruments which can be used for the same purpose. The same regulations also apply to matching call options or other instruments that the concerned Sub-Fund must hold when it does not have the underlying securities at the time of the sale of the relevant options. GEDI: v4 54

55 As an exception to this regulation, the concerned Sub-Fund may write call options on securities that it does not own at the conclusion of the option contract if the following conditions are met: - the aggregate exercise price of the call options sold in this way does not exceed 25% of the net asset value of each Sub-Fund. - the concerned Sub-Fund must at all times be able to cover the positions taken on these sales. Where a put option is sold, the concerned Sub-Fund must be covered for the full duration of the option contract by liquid resources sufficient to pay for the securities deliverable to it on the exercise of the option by the counterparty. If the Fund sells call options that are not covered, it runs a risk of loss which is, in theory, unlimited. In the case of selling put options, the Fund runs a risk of loss if the price of the underlying securities falls below the strike price as reduced by the collected premium Conditions and limits for the sale of call and put options The Fund may buy and sell options on transferable securities, for a purpose other than hedging, provided that the total commitment of all uncovered options, together with the total commitment of all futures and options on financial instruments undertaken for purposes other than hedging does not exceed the total net asset value of each Sub-Fund of the Fund. Sales of call options on transferable securities for which the Fund has sufficient coverage are not included in the calculation of the total commitment referred to above. In this context, the commitment on call and put options sold is equal to the total of the exercise prices of those options. 2. Transactions relating to futures and options on financial instruments The transactions described here relate to contracts which are dealt in on a Regulated Market. It being understood however such contracts may also be concluded by private GEDI: v4 55

56 agreement (OTC transactions) on the condition that they are contracted with first class financial institutions with first class ratings and that specialise in these types of transactions. Subject to the conditions defined below, such transactions may be undertaken for hedging or other purposes Hedging operations relating to the risks attached to the general movement of stock markets As a global hedge against the risk of unfavourable stock market movements, the concerned Sub-Fund may sell or buy futures on stock market indices. For the same purpose, the concerned Sub-Fund may also sell call options or put options or buy call or put options on stock market indices. The objective of these hedging operations assumes that a sufficient correlation exists between the composition of the index used and the concerned Sub-Fund's corresponding portfolio. The total commitment relating to futures and option contracts on stock market indices may not exceed the global valuation of securities held by each Sub-Fund of the Fund in the market corresponding to each index Transactions relating to interest rate hedging As a global hedge against interest rate fluctuations the concerned Sub-Fund may sell interest rate futures contracts. For the same purpose, it can also sell call options or buy put options on interest rates or make interest rate swaps on a mutual agreement basis with first class financial institutions specialising in this type of transaction. The total commitment in financial futures contracts, option contracts and interest rate swaps may not exceed the global valuation of the assets to be hedged held by each Sub-Fund of the Fund in the currency corresponding to these contracts Transactions which are undertaken for purposes other than hedging The markets of future contracts and options are extremely volatile and the risk of loss is very high. GEDI: v4 56

57 Apart from option contracts on transferable securities and contracts relating to currencies, the concerned Sub-Fund may also for a purpose other than hedging, buy and sell futures contracts and option contracts on any type of financial instrument, providing that the total commitment arising on these purchase and sale transactions together with the total commitment arising on the sale of call and put options on transferable securities at no time exceeds the net asset value of each Sub-Fund of the Fund. Sales of call options on transferable securities for which the concerned Sub-Fund has sufficient coverage are not included in the calculation of the total commitment referred to above. In this context, the commitment arising on transactions which do not relate to options on transferable securities is defined as follows: - the commitment arising on futures contracts is equal to the liquidation value of the net position of contracts relating to similar financial instruments (after netting off purchase and sale positions), without taking into account the respective maturities; and - the commitment relating to options bought and sold is equal to the sum of the exercise prices of those options representing the net sold position in respect of the same underlying asset, without taking into account the respective maturities. It should be remembered that the total of the premiums paid to acquire call and put options as described here, together with the total of the premiums paid to acquire call and put options on transferable securities as described in section 1.1., may not exceed 15% of the net assets of each Sub-Fund of the Fund. 3. Securities lending, "réméré" transactions and repurchase agreements To the maximum extent allowed by, and within the limits set forth in, applicable Luxembourg regulations, including the 2010 Law as well as any present or future related Luxembourg laws or implementing regulations, circulars and positions of the Commission for the Supervision of the Financial Sector (hereinafter referred to as the "CSSF") and more particularly the provisions of CSSF Circular 08/356 relating to the rules applicable to undertakings for collective investments when they use certain techniques and instruments GEDI: v4 57

58 relating to transferable securities and money market instruments as completed by CSSF Circular 11/512 (as these pieces of regulations may be amended or replaced from time to time), the Fund may, for the purpose of generating additional capital or income or for reducing costs or risks engage in securities lending transactions as well as in sale with right of repurchase transactions, repurchase and reverse repurchase agreement transactions Securities lending The Fund may enter into securities lending transactions on condition that they comply with the following regulations: A. Regulations to ensure the proper completion of lending transactions The concerned Sub-Fund may only lend securities through a standardised lending system organised by a recognised clearing institution or through a first class financial institution specialising in this type of transaction. As part of lending transactions, the concerned Sub-Fund must in principle receive an appropriate guarantee in the meaning of section II b) of the CSSF circular 08/356. B. Conditions and limits of securities lending The concerned Sub-Fund must ensure that the volume of the securities lending transactions is kept at an appropriate level or that it is entitled to request the return of the securities lent in a manner that enables it, at all times, to meet its redemption obligations and that these transactions do not jeopardise the management of the assets in accordance with its investment policy Repurchase agreements and "réméré" transactions The concerned Sub-Fund may occasionally enter into "réméré" transactions which consist in the purchase and sale of securities with a clause reserving the seller the right to repurchase from the acquirer the securities sold at a price and term specified by the two parties in a contractual agreement. The concerned Sub-Fund can act as either purchaser or seller in "réméré" transactions. GEDI: v4 58

59 The concerned Sub-Fund may occasionally enter into repurchase agreements which consist of the purchase and sale of securities with an obligation for the seller to repurchase from the acquirer the securities sold at a price and term specified by the two parties in a contractual agreement. The concerned Sub-Fund can act as either purchaser or seller in a repurchase agreement. Their involvement in such transactions is however, subject to the following regulations: A. Regulations to ensure the proper completion of repurchase agreements or "réméré" transactions The concerned Sub-Fund may not buy or sell securities using a repurchase agreement or réméré transaction unless the counterparties in such transactions are first class financial institutions specialising in this type of transactions. B. Conditions and limits of repurchase transactions During the life of a sale with right of repurchase agreements where the Fund acts as purchaser, the Fund may not sell the securities which are the object of the contract before the counterparty has exercised its right to repurchase these securities or until the deadline for the repurchase term has expired, unless the Fund has other means of coverage. As the Fund is open-ended, it must ensure that the value of such transaction is kept at a level such that it is able, at all times, to meet its redemption obligation. The same conditions are applicable in the case of a repurchase transaction on the basis of a purchase and firm re-sale agreement where the Fund acts as purchaser (transferee). Where the Fund acts as seller (transferor) in a repurchase transaction, the Fund may not, during the whole duration of the repo, transfer the title to the security under the repo or pledge them to a third party, or repo them a second time, in whatever form. The Fund must at the maturity of the repurchase transactions hold sufficient assets to pay, if appropriate, the agreed upon repurchase price payable to the transferee. GEDI: v4 59

60 B. TECHNIQUES AND INSTRUMENTS TO HEDGE CURRENCY RISKS To protect assets against the fluctuation of currencies, the concerned Sub-Fund may enter into transactions the purpose of which is the purchase or sale of forward foreign exchange contracts, purchase or sale of call options or the purchase or sale of put options in respect of currencies. The transactions referred to here may only be entered into via contracts which are dealt in on a Regulated Market. Concerning the above transactions, the concerned Sub-Fund may also buy or sell currencies forward or exchange currencies on a mutual agreement basis with first class financial institutions specialising in this type of transaction. The hedging objective of the transactions referred to above presupposes the existence of a direct or indirect relationship between these transactions and the assets which are being hedged and implies that transactions in a given currency could exceed the total valuation of assets denominated in that currency but the duration of these transactions cannot exceed the period for which the respective assets are held. C. SHORT SALES 1. Short sales may, in principle, not result in the Fund holding, on behalf of each Sub-Fund: a) a short position on transferable securities which are not listed on a stock exchange or dealt on another Regulated Market. However the Fund may hold short positions on transferable securities which are not quoted and not dealt on a Regulated Market if such securities are highly liquid and do not represent more than 10% of the net assets of the Sub-Fund; b) a short position on transferable securities which represent more than 10% of the securities of the same type issued by the same issuer; c) a short position on transferable securities of the same issuer, (i) if the sum of the prices at which the short sales relating thereto have been effected represents more than 10% of the net assets of each Sub-Fund, or (ii) if the short position entails a commitment exceeding 5% of the net assets. GEDI: v4 60

61 2. The commitments arising from short sales on transferable securities at a given time correspond to the cumulative non-realised losses resulting, at that time, from the short sales made by the Fund, for each Sub-Fund. The non-realised loss resulting from a short sale is the positive amount equal to the market price at which the short position can be covered less the price at which the relevant transferable security has been sold short. 3. The aggregate commitments of the relevant Sub-Fund resulting from short sales may at no time exceed 50% of the net assets of the Sub-Fund. If the Fund, for each Sub-Fund, enters into short sales, it must hold sufficient assets enabling it at any time to close the open positions resulting from such short sales. 4. The short sales of transferable securities for which the Fund, for each Sub-Fund, holds adequate coverage are not considered for the purpose of calculating the total commitments referred to above. It is to be noted that the fact for the Fund to grant a security, of whatever nature, on its assets to third parties to guarantee its obligations towards such third parties, is not to be considered as adequate coverage for the Fund's commitments on behalf of a Sub-Fund. 5. In connection with short sales on transferable securities, the Fund is authorised to enter, as borrower, into securities lending transactions with first class professionals specialised in this type of transactions. The counterparty risk resulting from the difference between (i) the value of the assets transferred by the Fund to a lender as security in the context of the securities lending transactions and (ii) the debt of the Fund owed to such lender may not exceed 20% of the net assets of the relevant Sub-Fund. It is to be noted that the Fund may, in addition, grant guarantees in the context of systems of guarantees which do not result in a transfer of ownership or which limit the counterparty risk by other means. The aggregate commitments resulting from short sales of transferable securities together with the commitments resulting from financial derivative instruments entered into by private agreement and, if applicable, the commitments resulting from financial derivative instruments dealt in on an organised market may not at any time exceed the value of the assets of the Fund. GEDI: v4 61

62 APPENDIX II: STATUTORY ANTI-MONEY LAUNDERING AND PREVENTION OF TERRORISM FINANCING NOTICE The Board of Directors has the right: (i) to accept or decline, in whole or in part, any subscription request, regardless of the reason; (ii) to limit the distribution of a Sub-Fund s shares to certain specific countries, and (iii) to compulsorily redeem the shares held by persons not authorised to buy or hold the Fund's shares. The Administrative Agent will apply national and international regulations for the prevention of money laundering and terrorism financing which oblige subscribers to establish their identity with the Fund. This is why subscribers, in order for their subscription to be considered as valid and acceptable by the Fund, must attach the following identification documents to their subscription form: - for individuals, a copy of an identity document (passport or identity card); - for legal entities, a copy of company documents (e.g. consolidated articles of incorporation, published balance sheets, extract of the Register of Commerce, etc.) and the identity documents of the beneficial owners (passport or identity card). These documents must be duly certified by a local public authority (for example a notary, a member of the police, an ambassador). This obligation is absolute, except (i) if the subscription form is remitted to the Fund by one of its distributors when such distributor is a professional intermediary with obligations relating to the identification of subscribers equivalent to those required by Luxembourg law, or, (ii) if the Subscription Price is paid by bank transfer from an account maintained by the subscriber with a bank established in a country in which financial intermediaries are subject to identification obligations equivalent to those required by Luxembourg law or from an account with a subsidiary (which is established in a country that is not a signatory to the FATF convention) of a banking institution which is established in a country that is a signatory to the FATF convention and which imposes its own control procedures on its subsidiary. A list of the countries in which financial intermediaries are subject to identification obligations equivalent to those required by Luxembourg law may be obtained from the Administrative Agent in Luxembourg. These are the countries which are signatories to the FATF convention. GEDI: v4 62

63 APPENDIX III: SUB-FUNDS DETAILS I. A.R.T. - ABSOLUTE RETURN TARGET FUND A Diversified Portfolio Trendtrust 1. Name of the Sub-Fund A Diversified Portfolio Trendtrust (the "Sub-Fund") 2. Investment Objectives and Policy The Sub-Fund is designed to answer the needs of investors who seek to gain exposure to a diversified portfolio of Hedge Funds in terms of strategies and numbers of underlying Hedge Funds. Typically, the number of underlying Hedge Funds will not be less than 20 while the maximum allocation to any single Hedge Fund will be limited to 10% of the Net Asset Value of the Sub-Fund, provided that, for the purpose of this limit, each compartment of a Multi Compartment Investment Fund is to be considered as a distinct Investment Fund if the principle of segregation of the commitments of the different compartments vis-à-vis third parties is ensured. The Sub-Fund will invest in Investment Funds that pursue an investment policy diversified among Arbitrage and Investing strategies. Liquidity In order to ensure an adequate liquidity of its portfolio, the Sub-Fund's portfolio will be invested in a manner to pass at all times all of the following tests: - a minimum of 60 per cent of the net assets will be invested in Investment Funds accepting at least quarterly redemptions (actions taken by such an Investment Fund to ensure that the stock exchange or market value of its securities does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption); and - a maximum of 20 per cent of the net assets may be invested in Investment Funds that are not listed on a stock exchange or dealt in on another Regulated Market and accepting redemptions less than once per year. GEDI: v4 63

64 Hedging The Investment Managers of the Sub-Fund may discretionary decide to hedge the foreign exchange risk related to the assets of a Class denominated in a currency other than the currency of the relevant Class. The charges and expenses incurred in hedging transactions shall be paid for by the Class of shares concerned. However, it is not the intention of the Investment Managers to systematically hedge all the assets in each Class. If so decided by the Investment Managers on behalf of each Class, derivative instruments such as futures, options or forward contracts will be used with the aim of protecting the assets of the relevant Class against foreign exchange fluctuations. These derivative instruments are more fully described in point B of Appendix I "Financial Techniques & Instruments" of the Prospectus. 3. Risk Factors Potential investors should consult their stockbroker, bank manager, solicitor, accountant or other independent financial adviser before investing. The risk factors relating to the investments of the Sub-Fund are described in section VII "Risk Factors" of the Prospectus. 4. Share Classes At the date of the present Prospectus, the Sub-Fund offers shares in four Class of shares, namely USD Class, CHF Class, GBP Class and JPY Class with the following specific features: Investors Initial Minimum Investment and Holding Subsequent Minimum Investment Fees and Expenses Redemption fee* USD Class CHF Class GBP Class JPY Class restricted to Trendtrust clients restricted to Trendtrust clients restricted to Trendtrust clients restricted to Trendtrust clients USD 100,000 CHF 100,000 GBP 100,000 JPY 10,000,000 none none none none up to 2% of the applicable NAV up to 2% of the applicable NAV up to 2% of the applicable NAV up to 2% of the applicable NAV GEDI: v4 64

65 Management Fees none none none none Performance Fee none none none none * please refer to section "C. Redemption of Shares" in the Prospectus for details on the redemption fee 5. Investment Managers The Board of Directors has required the assistance of PARTNERS ADVISERS S.A. and TRENDTRUST S.A. (the "Investment Managers") for the management of the assets of the Sub-Fund. 6. Issue of Shares Applications to subscribe shares must be forwarded to the Fund in writing. Subscription applications received by the Fund before 6:00 p.m. (Luxembourg time) on the third Business Day preceding a Valuation Date will be executed, if accepted, on the basis of the Net Asset Value determined on such Valuation Date. Applications received after this deadline will be executed on the following Valuation Date. The subscription amount must have been received at the Custodian Bank on the third Business Day preceding the Valuation Date. 7. Redemption of Shares A Shareholder wishing to redeem part or all of his holding in the Sub-Fund must deliver a redemption request in writing or by fax to the Fund 62 calendar days preceding the applicable Redemption Date on which the application is to be effected. Applications for redemption of shares received after the deadline referred to here above shall be dealt with on the next applicable Redemption Date. The payment for shares redeemed shall be made within 90 calendar days following the applicable Redemption Date, provided the Fund has received all the documents certifying the redemption and in any case before the availability of the Net Asset Value calculated for the following Redemption Date. GEDI: v4 65

66 The Redemption Date shall fall as at 31 March, 30 June, 30 September and 31 December in each year. 8. Conversion of Shares A shareholder wishing to convert part or all of his holding should deliver a request for conversion in writing, or by fax to the Fund indicating the number of shares to be converted. Application to convert must have been received by the Fund at the latest by 6:00 p.m. (Luxembourg time), 62 calendar days preceding the Valuation Date of each quarter (i.e. the Net Asset Value dated 31 March, 30 June, 30 September and 31 December), date on which the conversion is to be effected. Applications received after this deadline shall be executed on the next applicable Valuation Date. The settlement date is the Business Day immediately following the day on which the applicable Net Asset Value (Net Asset Value dated 31 March, 30 June, 30 September and 31 December) will be published. 9. Reference 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 statements and reports, the Net Asset Value shall be expressed in USD. 10. Frequency of Calculation of the Net Asset Value Each Valuation Date. 11. Dividends The Sub-Fund does not intend to pay dividends. 12. Initial Subscriptions The Board of Directors has decided to delay the launch of CHF Class, GBP Class and JPY Class. As soon as their respective launch date has been determined by the Board of Directors, the present Annex will be updated accordingly. GEDI: v4 66

67 II. A.R.T. - ABSOLUTE RETURN TARGET FUND F Equity Strategy 1. Name of the Sub-Fund F Equity Strategy (the "Sub-Fund") 2. Investment Objectives and Policy The Sub-Fund is designed to answer the needs of investors who seek to gain a specialised and concentrated exposure to a specific Hedge Fund strategy or a specific type of risk. Typically, the number of underlying Hedge Funds in the Sub-Fund will not be less than 10 while the maximum allocation to any single Hedge Fund will be limited to 20% of the Net Asset Value of the Sub-Fund, provided that, for the purpose of this limit, each compartment of a Multi Compartment Investment Fund is to be considered as a distinct Investment Fund if the principle of segregation of the commitments of the different compartments vis-à-vis third parties is ensured. The Sub-Fund will invest in Investment Funds that pursue an investment policy that primarily focuses on Securities Selection strategies. Liquidity - a minimum of 60 per cent of the net assets will be invested in Investment Funds accepting at least quarterly redemptions (actions taken by such an Investment Fund to ensure that the stock exchange or market value of its securities does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption); and - a maximum of 20 per cent of the net assets may be invested in Investment Funds that are not listed on a stock exchange or dealt in on another Regulated Market and accepting redemptions less than once per year. Hedging The Investment Managers of the Sub-Fund may discretionary decide to hedge the foreign exchange risk related to the assets of a Class denominated in a currency other than the currency of such Class. The charges and expenses incurred in hedging transactions shall be paid for by the Class of shares concerned. However, it is not the intention of the Investment Managers to systematically hedge all the assets in each Class. If so decided by the Investment Managers on behalf of each Class, derivative instruments such as futures, options or forward contracts will be GEDI: v4 67

68 used with the aim of protecting the assets of the relevant Class against foreign exchange fluctuations. These derivative instruments are more fully described in point B of Appendix I "Financial Techniques & Instruments" of the Prospectus. 3. Risk Factors Potential investors should consult their stockbroker, bank manager, solicitor, accountant or other independent financial adviser before investing. The risk factors relating to the investments of the Sub-Fund are described in section VII "Risk Factors" of the Prospectus. 4. Share Classes At the date of the present Prospectus, the Sub-Fund offers five Classes of shares, namely USD Class, EUR Class, CHF Class, GBP Class and JPY Class with the following specific features: Investors Initial Minimum Investment and Holding Subsequent Minimum Investment Fees and Expenses Redemption fee* Management Fees Performance Fee USD Class EUR Class CHF Class GBP Class JPY Class no restriction on issue no restriction on issue no restriction on issue no restriction on issue no restriction on issue USD 100,000 EUR 100,000 CHF 100,000 GBP 100,000 JPY 10,000,000 none none none none none up to 2% of the applicable NAV up to 1.75% of the applicable NAV please see 5. hereunder up to 2% of the applicable NAV up to 1.75% of the applicable NAV please see 5. hereunder up to 2% of the applicable NAV up to 1.75% of the applicable NAV Please see 5. hereunder up to 2% of the applicable NAV up to 1.75% of the applicable NAV Please see 5. hereunder up to 2% of the applicable NAV up to 1.75% of the applicable NAV Please see 5. hereunder GEDI: v4 68

69 * please refer to section "C. Redemption of Shares" in the Prospectus for details on the redemption fee 5. Performance Fee The Investment Managers are entitled to a performance fee whose total amount shall not exceed under any circumstances the figures indicated below for each Class of Shares (the "Performance Fee") payable annually and calculated on a "High Water Mark" basis (i.e. the High Water Mark being the highest Net Asset Value as at the end of a financial year for which a Performance Fee has been paid). The Performance Fee will be calculated as follows: For the Class "USD" shares, the Performance Fee payable is 10% of the outperformance of the Net Asset Value of the Fund over the LIBOR bp. For the Class "EUR" shares, the Performance Fee payable is 10% of the outperformance of the Net Asset Value of the Fund over the EURIBOR bp. For the Class "CHF" shares, the Performance Fee payable is 10% of the outperformance of the Net Asset Value of the Fund over the LIBOR bp. For the Class "GBP" shares, the Performance Fee payable is 10% of the outperformance of the Net Asset Value of the Fund over the LIBOR bp. For the Class "JPY" shares, the Performance Fee payable is 10% of the outperformance of the Net Asset Value of the Fund over the LIBOR bp. The Performance Fee is accrued on each Valuation Date and payable within ten days after the approval of the audited annual report by the General Meeting of Shareholders. The Performance Fee on redeemed shares will be paid systematically. 6. Investment Managers The Board of Directors has required the assistance of PARTNERS ADVISERS S.A. and TRENDTRUST S.A. (the "Investment Managers") for the management of the assets of the Sub-Fund. GEDI: v4 69

70 7. Issue of Shares Applications to subscribe Shares must be forwarded to the Fund in writing. Subscription applications received by the Fund before 6:00 p.m. (Luxembourg time) on the third Business Day preceding a Valuation Date will be executed, if accepted, on the basis of the Net Asset Value determined on such Valuation Date. Applications received after this deadline will be executed on the following Valuation Date. The subscription amount must have been received at the Custodian Bank on the third Business Day preceding the Valuation Date. 8. Redemption of Shares A Shareholder wishing to redeem part or all of his holding in the Sub-Fund must deliver a redemption request in writing or by fax to the Fund 62 calendar days preceding the applicable Redemption Date on which the application is to be effected. Applications for redemption of shares received after the deadline referred to here above shall be dealt with on the next applicable Redemption Date. The Redemption Date shall fall as at 31 March, 30 June, 30 September and 31 December in each year. The payment for shares redeemed shall be made within 90 calendar days following the applicable Redemption Date, provided the Fund has received all the documents certifying the redemption and in any case before the availability of the Net Asset Value calculated for the following Redemption Date. 9. Conversion of Shares A shareholder wishing to convert part or all of his holding should deliver a request for conversion in writing, or by fax to the Fund indicating the number of Shares to be converted. Application to convert must have been received by the Fund at the latest by 6:00 p.m. (Luxembourg time), 62 calendar days preceding the Valuation Date on which the conversion is to be effected. Applications received after this deadline shall be executed on the next applicable Valuation Date. GEDI: v4 70

71 The settlement date is the Business Day immediately following the day on which the applicable Net Asset Value will be published. 10. Reference 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 statements and reports, the Net Asset Value of each Class of shares shall be expressed in USD. 11. Frequency of Calculation of the Net Asset Value Each Valuation Date. 12. Dividends The Sub-Fund does not intend to pay dividends. 13. Initial Subscriptions The Board of Directors has launched the share class CHF of the Sub-Fund on 30 April The Board of Directors has decided to delay the launch of GBP Class and JPY Class. As soon as their respective launch date has been determined by the Board of Directors, the present Annex will be updated accordingly. GEDI: v4 71

72 III. A.R.T. - ABSOLUTE RETURN TARGET FUND I Relative Value Strategy 1. Name of the Sub-Fund I Relative Value Strategy (the "Sub-Fund") 2. Investment Objectives and Policy The Sub-Fund is designed to answer the needs of investors who seek to gain a specialized and concentrated exposure to a specific Hedge Fund strategy or a specific type of risk. Typically, the number of underlying Hedge Funds in the Sub-Fund will not be less than 10 while the maximum allocation to any single Hedge Fund will be limited to 20% of the Net Asset Value of the Sub-Fund, provided that, for the purpose of this limit, each compartment of a Multi Compartment Investment Fund is to be considered as a distinct Investment Fund if the principle of segregation of the assets of the different compartments vis-à-vis third parties is ensured. The Sub-Fund will invest directly or indirectly in Investment Funds that pursue an investment policy that primarily focuses on Relative Value Strategies. Liquidity - a minimum of 60 per cent of the net assets will be invested in Investment Funds accepting at least quarterly redemptions (actions taken by such an Investment Fund to ensure that the stock exchange or market value of its securities does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption); and - a maximum of 20 per cent of the net assets may be invested in Investment Funds that are not listed on a stock exchange or dealt in on another Regulated Market and accepting redemptions less than once per year. Hedging The Investment Manager of the Sub-Fund may discretionary decide to hedge the foreign exchange risk related to the assets of a Class denominated in a currency other than the currency of such Class. The charges and expenses incurred in hedging transactions shall be paid for by the Class of shares concerned. However, it is not the intention of the Investment Manager to systematically hedge all the assets in each Class. If so decided by the Investment Manager on behalf of each Class, derivative instruments such as futures, options or forward contracts will be used with the aim of protecting the assets of the relevant Class against foreign exchange fluctuations. These derivative GEDI: v4 72

73 instruments are more fully described in point B of Appendix I "Financial Techniques & Instruments" of the Prospectus. 3. Risk Factors Potential investors should consult their stockbroker, bank manager, solicitor, accountant or other independent financial adviser before investing. The risk factors relating to the investments of the Sub-Fund are described in section VII "Risk Factors" of the Prospectus. 4. Share Classes At the date of the present Prospectus, the Sub-Fund offers five Classes of shares, namely USD Class, EUR Class, CHF Class, GBP Class and JPY Class with the following specific features: Investors Initial Minimum Investment and Holding Subsequent Minimum Investment Fees and Expenses Redemption fee* Management Fees Performance Fee USD Class EUR Class CHF Class GBP Class JPY Class no restriction on issue no restriction on issue no restriction on issue no restriction on issue no restriction on issue USD 100,000 EUR 100,000 CHF 100,000 GBP 100,000 JPY 10,000,000 none none none none none up to 2% of the applicable NAV up to 1.75% of the applicable NAV up to 2% of the applicable NAV up to 1.75% of the applicable NAV up to 2% of the applicable NAV up to 1.75% of the applicable NAV up to 2% of the applicable NAV up to 1.75% of the applicable NAV none none none none none up to 2% of the applicable NAV up to 1.75% of the applicable NAV * please refer to section "C. Redemption of Shares" in the Prospectus for details on the redemption fee GEDI: v4 73

74 5. Investment Manager The Board of Directors has required the assistance of PARTNERS ADVISERS S.A. (the "Investment Manager") for the management of the assets of the Sub-Fund. 6. Issue of Shares Applications to subscribe Shares must be forwarded to the Fund in writing. Subscription applications received by the Fund before 6:00 p.m. (Luxembourg time) on the third Business Day preceding a Valuation Date will be executed, if accepted, on the basis of the Net Asset Value determined on such Valuation Date. Applications received after this deadline will be executed on the following Valuation Date. The subscription amount must have been received at the Custodian Bank on the third Business Day preceding the Valuation Date. 7. Redemption of Shares A Shareholder wishing to redeem all or part of his holding in the Sub-Fund must deliver a redemption request in writing or by fax to the Fund 65 calendar days preceding the applicable quarterly Redemption Date on which the redemption is to be effected. Applications for redemption of shares received after the 65 calendar days cut-off point shall be dealt with on the next applicable quarterly Redemption Date. The payment for shares redeemed shall be made within 90 calendar days following the applicable Redemption Date, provided the Fund has received all the documents certifying the redemption and in any case before the availability of the Net Asset Value calculated for the following Redemption Date. The Redemption Date shall fall as at 31 March, 30 June, 30 September and 31 December in each year. By derogation to the provisions set out in section "C. Redemption of Shares Redemption procedure" of the Prospectus, the Board of Directors may opt for the deferral procedure mentioned therein in case where redemption requests, in aggregate with conversion requests to be dealt with on the same Valuation Date, exceed 25% instead of 10% of the shares in issue of the Sub-Fund. 8. Conversion of Shares A shareholder wishing to convert part or all of his holding should deliver a request for conversion in writing or by fax to the Fund indicating the number of Shares to be converted. GEDI: v4 74

75 Application to convert must have been received by the Fund at the latest by 06:00 p.m. Luxembourg time, 65 calendar days preceding the Valuation Date on which the conversion is to be effected. Applications received after this deadline shall be executed on the next applicable Valuation Date. The settlement date is the Business Day immediately following the day on which the applicable Net Asset Value (Net Asset Value dated 31 March, 30 June, 30 September and 31 December) will be published. 9. Reference 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 statements and reports, the Net Asset Value of each Class of shares shall be expressed in USD. 10. Frequency of Calculation of the Net Asset Value Each Valuation Date. 11. Dividends The Sub-Fund does not intend to pay dividends. 12. Initial Subscriptions The Board of Directors has launched the EUR Class on 1 July The Board of Directors has decided to delay the launch of the USD Class, CHF Class, GBP Class and JPY Class. As soon as their respective launch date has been determined by the Board of Directors, the present Annex will be updated accordingly. GEDI: v4 75