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Sales Prospectus including Management Regulations
swiss hedgeDirective-compliant investment fund set up under Luxembourg law
Issue 01 January 2017
This is not an advertising prospectus Only to be used for individual investment advice
---------------------------------------English Translation - only the German version is legally binding
-----------------------------------------------The Translation is done very carefully but neither the Investment Manager nor the Management Company will be liable for the
correctness of the translated version of the prospectus
2 Sales prospectus SWISS HEDGE - General Information
SWISS HEDGE
Supplement to the Prospectus dated May 2015 for SWISS HEDGE
Additional information for United Kingdom investors only
This supplemental prospectus for investors from the United Kingdom forms part of the prospectus dated May 2015 (the
Prospectus) and should be read in the context of, and in conjunction with the Prospectus. This Supplement contains
specific information in relation to SWISS HEDGE (the Fund), was established as an open-ended investment fund without
legally independent status in the form of a collective investment fund (“fonds com¬mun de placement”, FCP) governed
by the law of Luxembourg and authorised by the Commission de Surveillance du Secteur Financier (the Financial
Regulator). The Fund has been authorised under Part I of the amended Luxembourg law of 17 December 2010 relating
to collective investment undertakings (loi relative aux organismes de placement collectif, the 2010 Law) and qualifies
as an Undertaking for Collective Investments in Transferable Securities (UCITS), and may therefore be offered for sale in
European Union Member States (subject to registration in countries other than the Grand Duchy of Luxembourg).
The Directors of the Fund, whose names appear in the Board of Directors section of the Prospectus, accept responsibility
for the information contained in the Prospectus and this Supplement.
FACILITIES AGENT SERVICES IN THE UK
KB Associates Consulting (UK) LLP has been appointed to act as facilities agent for the Fund in the United Kingdom (the
Facilities Agent). The Facilities Agent has agreed to provide facilities at its offices located at 42 Brook Street London, W1K
5DB, United Kingdom where:
a ) (a Shareholder may redeem his or her Shares and from which payments of the price on redemption may be
obtained;
b ) (a Shareholder may lodge a complaint concerning the operation of the Fund or sub-funds of the Fund (together
the Funds);
c ) (a Shareholder may obtain, during usual business hours on any business day, copies of the Funds’ most recent
Management Regulations, Prospectus, Key Investor Information Document, annual and semi-annual reports; and
d ) (information can be obtained in writing about the Funds’ most recently published Share prices.
Any person with questions relating to their ability to invest in the Funds should consult a financial adviser specialising in advising on participation in collective investment schemes. If you are in any doubt about the contents of this document, you should consult your professional adviser authorised pursuant to the FCA.
Words and expressions defined in the Prospectus shall, unless the context otherwise requires, have the same meaning when used in this Supplement.
Dated: January 2017
Sales prospectus SWISS HEDGE - General Information 3
BayernInvest Luxembourg S.A.
6B, rue Gabriel Lippmann
L-5365 Munsbach
www.bayerninvest.lu
Commercial Register
Luxembourg HR B 37803
Legal representatives:
Dr Volker van Rüth
Katja Lammert
Marjan Galun
(from 16/06/2016:)
Michael Löb
4 Sales prospectus SWISS HEDGE - General Information
Subscriptions are only valid if made on the basis of this
current sales prospectus or the Key Investor Information
Document (hereinafter referred to as “KIID”) accompanied
by the annual report for the previous year and, if the
annual report dates back more than eight months, a more
recent semi-annual report. These reports are an integral
part of this sales prospectus.
In addition to this sales prospectus, a KIID will be issued
that contains important information on the SWISS HEDGE
Fund. This KIID and all other sales documents must be
made available at no charge to prospective investors prior
to subscription.
Prospectuses, KIIDs (Key Investor Information
Documents), annual and semi-annual reports, the Articles
of association of the Management Company and the
Management Regulations of the Fund may be obtained
at no charge at the registered office of the Management
Company, the Custodian or at the Paying Agents.
This prospectus does not constitute an offer for sale
in any jurisdiction in which such offer is unlawful, nor
does it constitute an offer for sale if it is presented by
any persons who are not authorised to do so, or by any
persons who are not legally authorised to make such offer.
Prospective investors should inform themselves as to the
legal requirements, exchange control regulations and tax
regulations applicable in the countries of their citizenship
or legal residence.
If any information contained in this prospectus or the
KIID is unclear, please consult your financial, legal or tax
advisor.
Special notes for US citizens (FATCA)
BayernInvest Luxembourg S.A. and the units of the Fund
are not and shall not be registered in accordance with
the United States Investment Company Act of 1940
(as amended). The units of the Fund are not and shall
not be registered in accordance with the United States
Securities Act of 1933 (as amended) or in accordance with
the securities laws of a federal state of the United States
of America (USA). Units of the Fund must not be offered
or sold either in the USA or its territories, or to a US person
or for the account thereof. Applicants may be required to
demonstrate that they are not US persons and that they
are not acquiring the units on behalf of US persons or
selling them on to US persons.
US persons are persons who are US citizens or residents
and/or are subject to taxes in the USA. The assignment of
units to such persons is likewise prohibited. US persons
may also be partnerships or corporations established in
accordance with the laws of the USA or a federal state,
territory, or possession of the USA.
If BayernInvest Luxembourg S.A. or the Transfer Agent
becomes aware that a unitholder is a US person or that
the units are held for the benefit of a US person, the
aforementioned companies are entitled to demand the
immediate return of these units at the prevailing and
latest available unit value.
Sales prospectus SWISS HEDGE - General Information 5
Organisation
Management Company and Central Administration Agent
BayernInvest Luxembourg S.A.
6B, rue Gabriel Lippmann
L-5365 Munsbach
Phone: (00352) 28 26 24 0
Fax: (00352) 28 26 24 99
www.bayerninvest.lu
Legal form: Société Anonyme
Established: 26 August 1991
Subscribed capital as at 31/12/2014:
EUR 153,387.56
Commercial register: Luxembourg HR B 37803
Board of Directors
Chairman
Dr Volker van Rüth
Management Board Spokesperson
BayernInvest Kapitalanlagegesellschaft mbH,
Munich
Members
Marjan Galun
Business Operations & Process Division Head
Management
BayernInvest Kapitalverwaltungsgesellschaft mbH,
Munich
Katja Lammert
Management Board
BayernInvest Kapitalverwaltungsgesellschaft mbH,
Munich
Michael Löb
Management Board Spokesperson
BayernInvest Luxembourg S.A., Luxembourg
Management
Michael Löb
Management Board Spokesperson
BayernInvest Luxembourg S.A., Luxembourg
Jörg Schwanitz
BayernInvest
Luxembourg S.A., Luxembourg
Custodian, Principal Paying Agent
M.M.Warburg & CO Luxembourg S.A.
2 pl. François-Joseph Dargent
L-1413 Luxembourg
Fund accounting
BayernInvest Kapitalverwaltungsgesellschaft mbH
Karlstraße 35
D-80333 Munich
Independent Auditors of the Fund and the Management Company
Until 31/03/2016:
KPMG Luxembourg
Société coopérative
39, Avenue John F. Kennedy
L-1855 Luxembourg
From 01/04/2016:
PricewaterhouseCoopers, Société coopérative
2, rue Gerhard Mercator
L-1014 Luxembourg
Investment Manager
Tell AG
(prior to 27/10/2016 operating under the name swiss
hedge capital ag)
Gerbergasse 5
CH-8001 Zurich
Initiator
Tell AG
(prior to 27/10/2016 operating under the name swiss
hedge capital ag)
Gerbergasse 5
CH-8001 Zurich
Information Agent in Germany
GerFIS - German Fund Information Service UG
Zum Eichhagen 4
D-21382 Brietlingen
Germany
6 Sales prospectus SWISS HEDGE - General Information
Paying Agent in United Kingdom
KB Associates Consulting (UK) LLP
42 Brook Street
London, W1K 5DB
United Kingdom
Information concerning the distribution in Switzerland - to qualified investors only
See no. 29 / page 49
Legal advisor
GSK Stockmann + Kollegen
44, Avenue John F. Kennedy
L-1855 Luxembourg
Supervisory Authority
Commission de Surveillance du Secteur Financier (CSSF)
283, Route d’Arlon
L-1150 Luxembourg
(as at: January 2017)
The semi-annual and annual reports regularly provide updates about changes
to the information on this page.
Content 7
Table of Content
Additional information for United Kingdom investors only 2
FACILITIES AGENT SERVICES IN THE UK 2
1. Basic provisions 10
2. Management company 10
2.1 Firm, legal form and registered office 10
2.2 Board of Directors/Management/ Unitholders‘ Equity 10
2.3 Remuneration policy 10
3. Custodian 11
3.1 Duties of the Custodian 12
3.2 Cash flows 12
3.3 Safekeeping of financial instruments and assets 12
3.4 Sub-custodian services 13
3.5 Insolvency of the Custodian 16
3.6 Liability of the Custodian 16
4. Conflicts of interest 16
4.1 Measures for dealing with conflicts of interests 17
4.2 Additional information 18
5. Fund 18
5.1 Name, formation, term 18
5.2 Investment objective, investment principles and advisor/Fund Manager 19
6. Valuation (see also Art. 8 of the management regulations) 26
6.1 Assets listed on a stock exchange/traded on a regulated market 26
6.2 Unlisted assets/assets without a representative most recent sales price 26
6.3 Units of other UCITS or UCI 26
6.4 Liquid Assets 26
6.5 Unlisted bonds and borrowers‘ notes 26
6.6 Option rights and futures 26
6.7 Fair Value 27
7. Performance 28
8 Content
8. Risk advice 28
8.1 General 28
8.2 Potential range of investments 28
8.3 Market risk 29
8.4 Specific industry risks 29
8.5 Country or transfer risk 29
8.6 Settlement risk 29
8.7 Liquidity risk 29
8.8 Settlement default risk 29
8.9 Currency Risk 29
8.10 Custodial risk 30
8.11 Concentration risk 30
8.12 Inflation risk 30
8.13 Legal and tax risk 30
8.14 Changes in the investment policy 30
8.15 Amendment to the Management Regulations; liquidation or merger 30
8.16 Risk of suspension of redemption 30
8.17 Key personnel risk 30
8.18 Regulatory risk 30
8.19 Risks on domestic and foreign holidays 31
8.20 Risks associated with derivative transactions 31
8.21 Risk associated with the use of securities lending transactions and repurchase agreements 31
9. Increased Volatility 31
10. Units 31
11. Issue and redemption of units and order acceptance deadline 32
11.1 Net asset value 32
11.2 Issue of Units 32
11.3 Redemption and conversion of Units 32
11.4 Late trading and market timing 32
12. Publication of the issue and redemption prices and other communications to Unitholders 33
13. Administration and other costs 33
14. Specific provisions regarding the acquisition of investment Units 34
15. Unit classes 35
Content 9
16. Income Equalisation Procedure 35
17. Financial year 36
18. Liquidation and transfer of the Fund or sub-funds 36
18.1 Liquidation 36
18.2 Transfer 36
19. Tax notice 36
20. Note on the taxation of earnings on foreign investments for investors in the Federal Republic of Germany 37
20.1 Taxation on income 37
20.2 Interim income 37
20.3 Capital gains tax 37
20.4 Solidarity surcharge 38
20.5 Foreign withholding tax 38
20.6 Sales 38
20.7 Tax notice 38
21. Outsourcing 39
22. Annual reports/Semi-annual reports/Other sales documents 39
23. Auditor 39
24. Additional notices to investors in the Federal Republic of Germany 39
25. Payments to Unitholders/Dissemination of reports and other information 40
26. General Information for Unitholders 40
27. Other investment funds managed by the Company 40
28. Purchaser‘s right of revocation under Art. 305 KAGB (off-premises transactions) 40
29. Additional Information for Investors in the United Kingdom 41
30. Information concerning the distribution in Switzerland - to qualified investors only 42
30.1 Representative 42
30.2 Paying Agent 42
30.3 Location where the relevant documents may be obtained 42
30.4 Payment of retrocessions and rebates 42
30.5 Place of performance and jurisdiction 42
31. Overview of SWISS HEDGE 43
SWISS HEDGE - Twintrade 44
32. Management Regulations 52
10 Sales prospectus SWISS HEDGE - General Information
General Part of the sales prospectus
1. Basic provisions
SWISS HEDGE (hereinafter referred to as “SWISS HEDGE”
or the “Fund”) is an investment fund with an umbrella
structure comprising one or more sub-funds. It was
established on 7 November 2011 in conformity with Part I
of the Law of 17 December 2010 on Undertakings for
Collective Investment in Transferable Securities, including
amendments and supplements thereto. It meets the
requirements of EC Council Directive 2009/65/EC in the
version as of 13 July 2009.
The Management Regulations of SWISS HEDGE in the
version as of 7 November 2011 entered into force on
7 November 2011 and were lodged on 7 November 2011
at the Registre de Commerce et des Sociétés (commercial
register). The registration notice was published in
Mémorial, on 12 November 2011.
The modified management regulations dated
28 November 2014 were registered on 29 November
2014 with the Registre de Commerce et des Sociétés.
The registration notice was published in Mémorial,
on 21 November 2014.
The modified management regulations dated
21 December 2014 were registered on 17 December
2014 with the Registre de Commerce et des Sociétés.
The registration notice was published in Mémorial,
on 29 December 2014.
The Management Regulations of SWISS HEDGE in the
version as of 23 November 2016 entered into force on
1 January 2017 and were lodged on 2 January 2017 at
the Registre de Commerce et des Sociétés (commercial
register). The registration notice was published in the
Recueil Électronique des Sociétés et Associations (RESA).
The fund is managed by BayernInvest Luxembourg S.A.
(“Management Company”), Luxembourg. The Custodian of
the assets of the Fund is M.M.Warburg & CO Luxembourg
S.A. (“Custodian”), Luxembourg.
2. Management company
2.1 Firm, legal form and registered office
Bayerninvest Luxembourg S.A. (the “Management
Company”) was set up on 26 August 1991 as a public
limited company of unlimited duration under Luxembourg
law with registered office in the City of Luxembourg. The
latest amendment to the articles of association of the
Management Company were registered on 19 December
2014 and has been published in Mémorial, the official
company and associations journal.
The purpose of the Company is the investment,
development, servicing, administration and management
of Undertakings for Collective Investment in Transferable
Securities (UCITS) pursuant to the amended Directive
85/611/EEC as of 20 December 1985 or its replacement,
Directive 2009/65/EC as of 13 July 2009 on the
coordination of laws and regulations relating to certain
UCITS and other Undertakings for Collective Investment
(UCI) pursuant to the law as of 17 December 2010 on
Undertakings for Collective Investment. The Company‘s
business is managed by the management board. It is
responsible in particular for the management of the fund‘s
assets and has the authority to act both in and out of court
in the name of the Company.
The Management Company is bound by the management
regulations in the administration of Fund assets.
2.2 Board of Directors/Management/ Unitholders‘ Equity
For more information on the management, the
composition of the Board of Directors and the equity
capital, please refer to the section “Organisation” at the
beginning of the sales prospectus.
2.3 Remuneration policy
As the Management Company, BayernInvest Luxembourg
S.A. is obligated to define remuneration principles as
per Art. 12 of the amended Law as of 12 July 2013 on
Alternative Investment Fund Managers and Art. 111 of the
amended Law as of 17 December 2010 on Undertakings
for Collective Investment in Transferable Securities. The
remuneration system requirements are determined in
greater detail as per Annex II to Directive 2011/61/EU
(AIFMD) and Article 14a(2) and Article 14b(1), (3) and
Sales prospectus SWISS HEDGE - General Information 11
(4) of Directive 2009/65/EC (UCITS Directive). The ESMA
guidelines on remuneration shall also apply.
BayernInvest Luxembourg S.A. has adopted a remuneration policy that complies with the aforementioned requirements. It contains the following aspects in particular:
a ) Both the organisational structure and the services
offered by BayernInvest Luxembourg S.A. are
aligned in accordance with the principles of
sustainability, transparency and solidarity and aim
to ensure long-term company stability.
b ) Remuneration is compatible with and conducive to
constant and effective risk management and does
not encourage the assumption of risks that are
incompatible with the risk profiles, Management
Regulations and Articles of association as well as
the sales prospectuses/issuing documentation of
the managed AIF and UCITS.
c ) The remuneration policy is in line with the
business strategy, objectives, values and interests
of the Management Company and of the UCITS
under its management, as well as investors in any
such UCITS, and it includes measures for avoiding
conflicts of interest.
d ) Variable remuneration, including the retained
portion, is only paid out or earned if it is tenable
with regard to the overall financial position of the
Management Company and is justified due to the
performance of the relevant business unit, UCITS
and relevant person.
e ) With respect to employees not covered by
collective wage agreements, the fixed and variable
components of total remuneration are adequately
related to each other, where the portion of the
fixed element in the total remuneration is high
enough to provide full flexibility in relation to the
variable remuneration components, including
the option to dispense with payment of a variable
component.
f ) The remuneration system is reviewed on an annual
basis in terms of effectiveness, appropriateness
and conformity with the legal and regulatory
requirements and amended where required.
Further details on the Company’s current remuneration
policy are published online at http://www.bayerninvest.lu/
de/globale-navigation/disclaimer/index.html. This
includes a description of the methods for calculating
remuneration and benefits for certain groups of
employees, as well as details on those responsible for
allocating such amounts. The Company shall provide
this information in paper form, free of charge, upon
request.
3. Custodian
The Fund’s sole Custodian is M.M.Warburg & CO
Luxembourg S.A., with its registered office at 2, Place
François-Joseph Dargent, L-1413 Luxembourg. The
Custodian is a public limited company established
under Luxembourg law and conducts banking business.
Its equity as at 31 December 2015 amounted to
EUR 32.7 million (LUXGAAP). The rights and obligations
of the Custodian are governed by the Law as of
17 December 2010, the Custodian Contract, this Sales
Prospectus and these Management Regulations.
The appointment of the Custodian may be terminated
in writing by the Custodian or the Management
Company with a notice period of three months. Such
termination will, however, only take effect when
another bank that has been previously approved by the
relevant Luxembourg supervisory authority assumes
the responsibilities and functions of the Custodian
in accordance with the provisions of the General
Management Regulations.
In performing its tasks, the Custodian shall act honestly,
professionally, independently and in the interests of the
Fund and its investors.
The Custodian may not perform any functions with
respect to the Fund or the Fund’s Management Company
that may cause conflicts of interest between the Fund,
the Fund’s investors, the Management Company, the
Custodian’s representative and itself. This shall not apply
if the duties it performs as Custodian are functionally and
hierarchically segregated from the duties that could be in
a potential conflict with them and the potential conflicts
of interest are properly determined, managed, monitored
and disclosed to the Fund’s investors.
12 Sales prospectus SWISS HEDGE - General Information
All information regarding the identity of the Fund’s
Custodian, its duties, the conflicts of interest that may
arise, the description of all custodian functions delegated
by the Custodian and a list of sub-custodians, specifying
all conflicts of interest that may result from the delegation
of duties, shall be provided to investors on request free of
charge in the most up-to-date version.
3.1 Duties of the Custodian
The function of the Custodian is based on the amended
Law as of 17 December 2010, CSSF Circular 14/587,
the Custodian Contract, the Management Regulations
(Article 3) and the Prospectus. Transactions within the
fund portfolio are carried out through the Custodian.
The Custodian acts exclusively in the interest of
Unitholders.
The Custodian
a ) shall ensure that the sale, issue, redemption,
payout and cancellation of units of the Fund
are carried out in accordance with applicable
Luxembourg law and the Management
Regulations;
b ) shall ensure that the value of the units of the
Fund is calculated in accordance with applicable
Luxembourg law and the Management
Regulations;
c ) shall comply with instructions issued by the
Management Company unless they contravene
Luxembourg law or the Management Regulations;
d ) shall ensure, in the case of fund asset transactions,
that the countervalue is transferred to the Fund
within the usual period of time;
e ) shall ensure that income of the Fund is used in
accordance with applicable Luxembourg law and
the Management Regulations.
Foreign securities that are acquired or sold abroad or
that the Fund has the Custodian keep in this country or
abroad are normally subject to a foreign legal system.
The rights and obligations of the Custodian or Fund are
therefore determined by this legal system, which may also
permit the disclosure of the investor’s name. The investor
should be aware when buying units in the Fund that the
Custodian may have to issue such information to foreign
bodies if appropriate because it is obliged to do so by law
or regulation.
Bank deposits held with the Custodian, as well as those
held with other financial institutions if applicable, are not
protected by a deposit securing facility.
3.2 Cash flows
The Custodian shall ensure that the cash flows of the Fund
are monitored properly and, in particular, ensure that
all payments made by or in the name of investors upon
subscribing to units are received and that all monies of
the Fund are posted to cash accounts which:
a ) are opened in the name of the Fund, in the name
of the Management Company acting on behalf of
the Fund or in the name of the Custodian acting
on behalf of the Fund;
b ) are opened with an organisation stipulated in
Article 18(1)(a), (b) and (c) of Directive 2006/73/EC
of the European Commission and
c ) are managed in accordance with the principles
stipulated in Article 16 of Directive 2006/73/EC.
If the cash accounts are opened in the name of the
Custodian acting on behalf of the Fund, only monies of
the Fund shall be posted to such accounts.
3.3 Safekeeping of financial instruments and assets
The assets of the Fund are entrusted to the Custodian for
safekeeping as follows:
a ) For financial instruments that can be lodged for
safekeeping, the following applies:
i ) the Custodian shall hold all financial instruments
that are eligible to be posted to an account for
financial instruments with the Custodian and
all financial instruments that can be physically
transferred to the Custodian;
Sales prospectus SWISS HEDGE - General Information 13
ii ) the Custodian shall ensure that financial
instruments that are eligible to be posted to
an account for financial instruments with the
Custodian are registered in the Custodian’s books
in segregated accounts, as per the principles
defined in Article 16 of Directive 2006/73/EC,
that have been opened in the name of the Fund
or the Management Company acting on behalf
of the Fund so that the financial instruments can
be identified clearly at any time as instruments
belonging to the Fund under the prevailing law;
b ) The following shall apply to other assets:
i ) the Custodian examines whether the Fund or
the Management Company acting on behalf
of the Fund has title to the relevant assets by
determining, based on information or documents
provided by the Fund or the Management
Company and to the extent available based
on external evidence, whether the Fund or the
Management Company acting on behalf of the
Fund is the owner;
ii ) the Custodian keeps records on the assets for
which it has ascertained that the Fund or the
Management Company acting on behalf of the
fund has title and it keeps its records up-to-date.
The assets held in custody by the Custodian shall not
be reused for their own account by the Custodian or a
third party to which the custodian function has been
delegated. Re-use is considered to be any transaction of
the assets held in custody, including transfer, pledging,
sale and lending.
The assets held in custody by the Custodian may only be
re-used if
i ) the assets are re-used for the account of the Fund,
ii ) the Custodian is observing the instructions of the
Management Company acting on behalf of the
Fund,
iii ) the re-use is for the benefit of the Fund as well as
in the interests of Unitholders and
iv ) the transaction is covered by high-quality liquid
collateral that the Fund has received in accordance
with an agreement on a transfer of title.
The market value of the collateral must at all times be at
least as high as the market value of the re-used assets plus
a supplement.
3.4 Sub-custodian services
The Custodian may outsource the safekeeping of assets
held for the account of the Fund to sub-custodians.
The sub-custodians may in turn outsource the custodian
duties delegated to them subject to relevant legal
conditions. The Custodian may not delegate the duties
described in sections 3.1 and 3.2 above to third parties.
The Management Company is dependent on the supply
of information by the Custodian and cannot verify the
accuracy and completeness in detail.
The Custodian shall ensure when delegating custodian
duties to third parties that they are subject to certain
requirements regarding effective supervisory regulation
and supervision.
3.4.1 Delegation of custodian duties
The following countries are covered by the sub-custodians
listed below:
AUSTRALIA
BRAZIL
CANADA
CHINA
HONG KONG
ICELAND
INDIA
INDONESIA
ISRAEL
JAPAN
MALAYSIA
MEXICO
14 Sales prospectus SWISS HEDGE - General Information
NEW ZEALAND
NORWAY
PHILIPPINES
RUSSIA
SINGAPORE
SWITZERLAND
SOUTH AFRICA
SOUTH KOREA
THAILAND
TURKEY
UNITED STATES OF AMERICA
Sales prospectus SWISS HEDGE - General Information 15
List of sub-custodians:
Name Address
Attrax S.A. 308, route d’Esch, L-1471 Luxembourg
Brown Brothers Harriman & Co Talstrasse 83, CH-8001 Zurich
Citibank (Luxembourg) S.A. 58, Boulevard Grande-Duchesse Charlotte, P.O. Box
1373, L-1330 Luxembourg
Clearstream Banking S.A. 42 Avenue J.F. Kennedy, L-1885 Luxembourg
Deutsche Bank Mumbai Kodak House 222, Dr. D.N. Road, FortMumbai – 400
001, India
HSBC Institutional Trust Services (Asia) Ltd. 17/F Tower 2&3 HSBC Centre, 1 Sham Mong Road,
Kowloon, Hong Kong
KBLUX 43, Boulevard Royal, L-2955 Luxembourg
M.M.Warburg & CO (AG & Co.) KGaA Ferdinandstraße 75, D-20095 Hamburg
Sal. Oppenheim jr. & Cie. Luxembourg S.A. Parc d’Activité Syrdall 2, L-5365 Munsbach
UniCredit Bank Austria AG Schottengasse 6-8, A-1010 Vienna, Austria
An up-to-date overview of the sub-custodians can
be found at http://www.bayerninvest.lu/de/globale-
navigation/disclaimer/index.html and http://www.
mmwarburg.lu/de/depotbank/weitere-informationen.
html or it can also be requested free of charge from the
Management Company or Custodian.
Most recent update: December 2016
The Management Company received the information
detailed in this section from the Custodian. The
Management Company has only verified the information
in terms of plausibility. It, however, depends on
information being delivered by the Custodian and cannot
verify the accuracy and completeness in detail.
16 Sales prospectus SWISS HEDGE - General Information
3.5 Insolvency of the Custodian
In the event of the insolvency of the Custodian and/or a
third party based in Europe to which the custody of the
fund assets was delegated, the fund assets held in custody
shall not be distributed to the creditors of this Custodian
and/or this third party or used for their benefit.
3.6 Liability of the Custodian
The Custodian shall be liable to the Fund and the
Unitholders for the loss of any financial instruments held
in custody of the Custodian or of a third party to whom
custody thereof has been delegated.
In the event that a financial instrument held in custody
is lost, the Custodian shall immediately return a
financial instrument of the same type to the Fund or the
Management Company acting on behalf of the Fund or
reimburse it with an equivalent amount. As per the Law
as of 17 December 2010 and the relevant regulations,
the Custodian shall not be liable if it is able to prove that
the loss is ascribable to external events which could not
reasonably have been controlled by the Custodian and
the consequences of which could not have been avoided
in spite of reasonable efforts.
The Custodian shall also be liable to the Fund and the
investors of the Fund for all other losses they incur due
to the negligent or wilful non-performance of the legal
obligations of the Custodian.
Subject to the legal exceptions, the liability of the
Custodian remains unaffected by any delegation
according to the “Sub-custodian” section above.
Unitholders may assert a claim in relation to the
Custodian’s liability, be it directly or indirectly, through the
Management Company, provided that this does not result
in the duplication of damage claims or lead to unequal
treatment of Unitholders.
4. Conflicts of interest
Potential conflicts of interest could arise when the
Custodian delegates particular custodial duties or
sub-custodianship to another outsourcing company.
If this other outsourcing company is an entity affiliated
with the Management Company or Custodian (e.g. group
parent), potential conflicts of interest could arise from
the interaction between this outsourcing company
and the Management Company or Custodian (e.g. the
Management Company or Custodian could favour
a company affiliated with itself over equivalent bidders
when a contract for custodial duties is awarded or when
a sub-custodian is selected).
4.6.1 Potential situation of conflicts of interest between the Custodian and sub-custodians
There is a group affiliation between the Custodian
M.M.WARBURG & CO LUXEMBOURG S.A. and
M.M.WARBURG & CO (AG & Co.) KGaA as a possible
sub-custodian, which is realised in such a way that
the Custodian is a subsidiary of M.M.WARBURG & CO
(AG & Co.) KGaA. M.M.Warburg & CO (AG & Co.) KGaA
also provides members of the Supervisory Board to the
Custodian. The delegation of custodian functions to
affiliated companies may give rise to potential conflicts of
interests.
As part of this group affiliation, the Custodian and
M.M.WARBURG & CO (AG & Co.) KGaA as a possible
sub-custodian apply guidelines and procedures to ensure
that they
a ) recognise all conflicts of interests resulting from
this affiliation;
b ) carry out all suitable measures to avoid such
conflicts of interests.
The appointment of third parties as sub-custodians may
also give rise to potential conflicts of interests. Where third
parties are appointed as sub-custodians, the Custodian
shall ensure that it and the appointed third parties have
taken all necessary measures regarding compliance
with requirements for organisation and avoidance of
conflicts of interests as they are specified in the laws and
regulations of Luxembourg and shall monitor compliance
with these requirements.
Sales prospectus SWISS HEDGE - General Information 17
At the time this Prospectus was drafted, aside from the
aforementioned group affiliation, an issue which is being
resolved using the described measures in the interests of
investors, no relevant further conflicts of interests with
sub-custodians were known. Should such conflicts of
interests arise, they shall be resolved in accordance with
the existing guidelines and procedures and disclosed to
investors as part of the next Prospectus update.
4.6.2 Potential conflicts of interests situations between the Custodian and the Management Company
No relevant affiliation or group affiliation exists between
the Fund or the Management Company and the
Custodian as per Article 1 of the level 2 Regulation on
Directive 2014/91/EU (UCITS V).
The function of the Custodian or sub-custodians that
have been commissioned to carry out the custodian
functions can also be assumed by an associated company
of the Management Company. Insofar as they are
affiliated, the Management Company and the Custodian
have appropriate structures in place in order to avoid
potential conflicts of interests which could arise from the
affiliation. If conflicts of interests cannot be prevented, the
Management Company and the Custodian shall identify,
manage, monitor and disclose such conflicts of interests,
insofar as any exist.
The following conflicts of interests may arise from this
delegation:
– The sub-custodian M.M.Warburg & CO (AG & Co.)
is a company affiliated with the Custodian. The
approach to conflicts of interests is dealt with on
its website www.mmwarburg.lu.
4.1 Measures for dealing with conflicts of interests
The Management Company and Custodian have
implemented appropriate and effective measures (e.g.
policies and organisational measures) to completely avoid
potential conflicts of interests, or in cases where this is
not possible, to rule out the potential impairment of the
investors’ interests. Compliance with these measures is
monitored by an independent compliance function.
4.1.1 Identification of conflicts of interests
The Management Company and the Custodian must
thoroughly check each Fund structure and each
contractual relationship for potential conflicts of interests.
In the following cases, the companies must assume that
there is a high probability that a conflict of interests exists:
– The Management Company, Custodian or an
associated person must do their best to generate
gains or avoid losses at the cost of the Fund
– The Management Company, Custodian or an
associated person has an interest in the outcome
of a service/activity/transaction carried out in
respect of a fund or another customer for their
benefit if this service does not stand up to a
comparison among third parties or is carried
out for their benefit where this service/activity/
transaction is not in the interest of the Fund.
– The Management Company, Custodian or an
associated person is persuaded for financial or
other reasons to treat the interests of a customer
or customer group preferentially to the interests
of a fund
– The Management Company, Custodian or an
associated person carries out the same activities
for a fund as for one or more customers that are
not funds
– The Management Company, Custodian or an
associated person carries out the same or different
activities related to the Fund at the same time or
consecutively
– The Management Company, Custodian or an
associated person receives from another entity
18 Sales prospectus SWISS HEDGE - General Information
than the Fund an advantage related to portfolio
management activities in the form of money,
goods or services, such as the commissions and
fees that are normally paid for these services.
– The Management Company, Custodian or an
associated person occupy both a position on
the Supervisory Board/Board of Directors of the
Management Company and of one of the SICAVs
it manages. If the Compliance Officer determines
that one of these criteria is fulfilled, the conflict
of interests is recorded in the conflict of interests
register and will undergo a conflict management
process.
4.1.2 Avoidance of conflicts of interests
The Management Company and Custodian shall strive
to structure themselves and their organisation in such
a way that conflicts of interests do not arise from the
outset. For this purpose, the companies have each
appointed an independent compliance officer. It is
incumbent upon this officer to monitor the adequacy,
effectiveness and appropriateness of measures and
procedures implemented to deal with and, in particular,
to avoid conflicts of interests, to check them regularly,
at least once a year, and to develop them. In particular,
the Management Company has integrated the following
measures into its organisational procedures:
– Separation of functions/responsibilities
– Four-eyes principle
– Ensuring best execution
– Gift policy
– Regulations on the topic of market abuse,
proprietary trading and personal employee
transactions
– Due diligence tests of service providers and fund
initiators
– A remuneration policy in compliance with the
relevant guidelines
– Voting rights policy
– Careful selection and regular training of
employees
4.1.3 Dealing with conflicts of interests
The primary objective is to avoid conflicts of interests. If
conflicts of interests cannot be avoided in specific cases,
BayernInvest Luxembourg S.A. and the Custodian shall
maintain a conflict register. Here the Compliance Officer
shall document existing conflicts of interests and the
measures taken. The conflict register shall be maintained
on a regular basis and as required under the responsibility
of the Compliance Officer.
Conflicts of interests that could be resolved shall
be marked as resolved in the conflict register and
documented. Unresolved conflicts of interests shall be
marked as existing conflicts of interests and disclosed to
investors as part of the next Prospectus update.
4.2 Additional information
On request, the Management Company shall provide
investors with up-to-date information on the Custodian
and its obligations, the sub-custodians and possible
conflicts of interests in connection with the Custodian’s
activities or the sub-custodians’ activities.
A description of the methods used by the Management
Company to deal with conflicts of interests can be found
on the BayernInvest Luxembourg S.A website at http://
www.bayerninvest.lu/de/globale-navigation/disclaimer/
index.html.
The Custodian’s conflict of interests policy can be
found on their website at http://www.mmwarburg.
lu/export/download/mmwarburg_luxemburg/
Grundsaetze_fuer_die_Ausfuehrung_von_Auftraegen_
in_Finanzinstrumenten.pdf.
5. Fund
5.1 Name, formation, term
The fund has been set up for an indeterminate duration.
The individual sub-funds may be created for a stipulated
length of time and thus deviate from the duration of
the fund. If a sub-fund has been created for a stipulated
Sales prospectus SWISS HEDGE - General Information 19
duration then further information on this can be found
in the respective fund description in the Prospectus
under “Overview of SWISS HEDGE”. Investors share in the
securities of the individual funds and are co-owners to the
exact percentage of their share.
5.2 Investment objective, investment principles and advisor/Fund Manager
5.2.1 Investment objective/Investment principles
The investment objectives of the individual Sub-funds are
presented in the section “Overview of SWISS HEDGE”. Assets
permissible pursuant to the Law of 17 December 2010
on Undertakings for Collective Investment and Article 4
of the Management Regulations may be acquired for the
sub-funds.
5.2.2 Fund Manager (Investment Manager)
The name of the Fund Manager and/or Investment
Advisor of each sub-fund is detailed in the sub-fund
description (see Overview of SWISS HEDGE), if a Fund
Manager or Investment Advisor has been appointed
for the sub-fund. Fund Managers/Investment Advisors
to a sub-fund may delegate their duties, under the
responsibility and control of the Management Company,
partially or completely to one or more other companies
under the condition that any such company is at least
majority owned by companies in the same group of
companies as the Fund Manager/Investment Advisor.
The Investment Advisors are authorised to make
recommendations on the acquisition or sale of
investments within the framework of the provisions of
Article 2 of the Management Regulations.
The Fund Manager/Investment Advisor can enter
into contracts with Brokers/Counterparties in which
the Brokers/Counterparties pay for services provided
to the Fund Manager/Investment Advisor by third
parties (so-called “soft commission arrangements”).
Under these agreements, payment for such services
is made from turnover commissions received by the
Brokers/Counterparties for trades executed for the
sub-fund. Acting In accordance with the principle that
the best interest of the sub-fund is to be assured, the
Fund Manager/Investment Advisor can have Brokers/
Counterparties with whom such arrangements have been
entered into execute trades in return for services received.
Receiving these services (for example, information on
potential investments) expands the opportunities of the
Fund Manager/Investment Advisor and permits access to
the assessments and information of third parties.
These agreements are only entered into under the
following conditions: 1) the Fund Manager/Investment
Advisor acts in the interest of the Unitholders when
entering into such agreements; 2) the services received
by the Fund Manager/Investment Advisor are in direct
connection with his duties; 3) the agreements are only
entered into with legal entities and not with natural
persons; 4) the Fund Manager/Investment Advisor shall
inform the Management Company of these agreements
when reporting services received.
5.2.3 Techniques and instruments
The Fund‘s assets are invested in compliance with the
conditions of the Luxembourg Law on Undertakings
for Collective Investment in transferable securities of
17 December 2010 and the Directive of the European
Parliament and the Council of 13 July 2009 (2009/65/EC).
5.2.4 Investment in sub-funds of the same UCI
A sub-fund may subscribe, acquire and/or hold securities
issued by, or to be issued by, one or more sub-funds of the
same UCI if:
• the target fund is itself not invested in the sub-fund
that is invested in such target sub-funds; and
• the sub-funds that are to be acquired may not,
pursuant to their articles of association, invest more
than 10% of their assets in Units of other UCIs of the
same sub-funds; and
• any voting rights associated with the securities in
question are suspended during such time that they
are held by the corresponding sub-fund, irrespective
of whether they are appropriately recorded in the
annual accounts and the period reports; and
20 Sales prospectus SWISS HEDGE - General Information
• as long as these securities are held by the UCI, their
value is in no case accounted for when calculating the
net assets of the UCI with regard to determining the
minimum amount for net assets as required by this
law; and
• there is no doubling of management fees, sales
charges or redemption fees at the level of the
sub-fund of the UCI that has invested in the target
sub-fund and paid to that target fund.
5.2.5 Techniques for efficient portfolio management
In accordance with CSSF Circular 13/559, techniques for
efficient portfolio management may be used for the Fund.
This also includes any form of derivative transactions,
securities loans and repurchase agreements.
These techniques and instruments must be used for
the purposes of efficient portfolio management; in
accordance with CSSF Circular 08/356 and ESMA guideline
2012/832, this assumes that the following criteria are met:
a ) They are economically suitable in the sense that their
implementation is profitable;
b ) they are used to achieve one or more of the following
objectives:
– reduction of risks
– reduction of costs
– creation of capital or additional income for the
UCITS with a degree of risk that is compatible with
its risk profile and the rules of risk diversification
applicable to it;
c ) The risks associated with the techniques and
instruments are taken into account in an appropriate
manner as part of the UCITS’s risk management
process.
Under no circumstances may the use of these transactions
by the sub-fund in question result in a change in the
investment policy set out in the Management Regulations
and this Prospectus or result in an assumption of
additional risk higher than the risk profile described in this
Prospectus (see “Overview of SWISS Hedge”).
5.2.5.1 Derivatives
For the purposes of efficient portfolio management, the
Company may hedge each of the sub-funds by trading in
derivatives as part of its investment strategy (this may be
detailed in the investment policy of each sub-fund (see
“Overview of SWISS HEDGE”)). Consequently, the risk of
losses for that sub-fund may increase temporarily. Trading
in derivatives takes place within the investment limits and
serves to allow the efficient management of the Fund’s
assets and the maturity and risk management of the
investments.
In its business, the Company may, under no
circumstances, deviate from the investment principles
outlined in this Prospectus.
The Management Company shall ensure that the entire
derivatives risk for any sub-fund does not exceed the
value of that sub-fund.
When calculating the market risk potential for each
sub-fund from using derivatives, the Management
Company shall classify each sub-fund by reference to CSSF
circular 11/512, depending on the type and scope of the
derivative used. Detailed information on this is included in
the Prospectus of each sub-fund.
5.2.5.2 Futures
Futures are contracts binding on both partners whereby
a fixed volume of a fixed underlying security is purchased
or sold at a pre-determined price at a certain point in
time, the final settlement date, or within a fixed period.
5.2.5.3 Options
An option consists of a third party having the right, for
a premium (the option premium), during a certain time
period or at the end of a certain period, to delivery or
disposal of a security, at a pre-determined price (base
price) or to demand the delivery or removal of the assets
Sales prospectus SWISS HEDGE - General Information 21
or the payment of the difference or also to purchase the
relevant option rights.
5.2.5.4 Swaps
These are exchange contracts whereby the underlying
cash flows or risks are swapped between the contracting
parties.
On the basis of the investment principles, the
management company may deal in interest rate, foreign
exchange, equity, interest rate/forex and credit default
swaps on behalf of the sub-fund.
• interest rate transactions,
• foreign exchange transactions,
• equity transactions,
• interest rate/currency swaps,
• credit default swaps
on behalf of the sub-fund.
5.2.5.4.1 Swaptions
Swaptions are options on swaps. A swaption is the right,
but not the obligation to assume the swap defined in the
agreement at a certain time or after a certain period.
5.2.5.5 Credit default swaps
Credit default swaps are credit derivatives that enable
a potential volume of credit defaults to be passed on to
another party. As consideration for assuming the credit
default risk, the seller of the risks pays a premium to the
contract partner.
5.2.5.6 Securitised financial instruments
The Company may acquire the above-mentioned
financial instruments when they have been securitised.
This business may also be only partially securitised (e.g.
warrant bonds). The chance and risk forecasts for such
securitised financial instruments apply proportionately,
except that the loss risk for securitised financial
instruments is limited to the NAV of the security.
5.2.5.7 OTC derivative trading
The Company may undertake trading in derivatives
that are admitted to a securities exchange or to another
organised market, and also in so-called over the counter
(OTC) business.
5.2.5.8 Collateral management for transactions with OTC derivatives and techniques for efficient portfolio management
The Fund may receive collateral for transactions with
OTC derivatives and reverse repurchase agreements to
reduce counterparty risk. As part of its securities lending
transactions, collateral must be provided with a value
corresponding to at least 90% of the total value of the
securities loaned for the duration of the agreement
(taking into account interest, dividends, any other
potential rights and agreed discounts or minimum
transfer amounts).
The Fund may accept all collateral that meets the
regulations of the CSSF Circulars 08/356, 11/512 and
13/559 to back up liabilities.
1 . This collateral must have been received before or at
the time of transferring the loaned securities in the
case of securities lending. If the securities are loaned
via mediatory authorities, the transfer of the securities
may take place before receipt of the collateral
provided that the respective mediatory authority
guarantees the proper conclusion of the transaction.
Said mediatory authority may provide collateral in
place of the borrower.
2 . In principle, collateral for securities lending
transactions, reverse repurchase agreements and
transactions with OTC derivatives (excluding forward
currency contracts) should be provided in one of the
following forms:
a ) liquid assets such as cash, short-term bank deposits,
money market instruments as per the definition
in Directive 2007/16/EC of 19 March 2007, letters
of credit and guarantees payable on first demand
issued by first-class banks not affiliated with the
counterparty, or bonds issued by an OECD member
22 Sales prospectus SWISS HEDGE - General Information
state or its local authorities or by supranational
institutions and authorities at a municipal, regional
or international level;
b ) units in a UCI investing in money market
instruments which calculates a net asset value
daily and has a rating of AAA or a comparable
rating,
c ) units in a UCITS which mainly invests in bonds/
shares listed in the next two points,
d ) bonds that are issued or guaranteed by first-class
issuers with adequate liquidity, or
e ) shares permitted or traded on a regulated market
of a member state of the European Union or
on a stock exchange of an OECD member state
provided that these shares are listed on a major
index.
3 . Accepted cash securities should only:
• be invested as demand deposits at entities
in accordance with Article 50 Letter f of Directive
2009/65/EC;
• be invested in high-quality government bonds;
• be invested in money market funds with a short
maturity structure in accordance with the definition
in the CESR’s Guidelines on a common definition of
European money market funds.
Reinvested cash securities should be diversified in
accordance with the diversification requirements
for non-cash securities. Non-cash securities and
reinvested cash securities received by the relevant
fund should be taken into account as an aggregate
in the fulfilment of diversification requirements
concerning the securities received by the relevant
fund.
4 . Securities not issued as cash or UCI/UCITS units must
be issued by a legal entity not affiliated with the
counterparty.
5 . If the security is provided in the form of cash and as
a result there is a credit risk for the Company with
regard to the manager of this security, this risk is
subject to the 20% limit stated in Article 43 paragraph
1 of the Law of 17 December 2010. The custody of
this kind of cash security also must not be carried
out by the counterparty unless it is legally protected
from the consequences of a payment default by the
counterparty.
6 . The custody of non-cash securities must not be carried
out by the counterparty unless they are separated
from the counterparty’s own assets in a suitable
manner.
7 . If a security fulfils a number of criteria such as the
standards for liquidity, rating, creditworthiness of the
issuer, correlation and diversification, it may be offset
against the counterparty’s gross exposure. If a security
is offset, its value can be reduced by a percentage
(a “discount”) depending on the price volatility of the
security, which should absorb short-term fluctuations
in the value of the exposure and the security
The criterion of adequate diversification with regard to
issuer concentration is deemed satisfied if, in effective
portfolio management or transactions in OTC derivatives,
the sub-fund of a counterparty has a collateral basket
where the maximum total value of the open positions
to a particular issuer does not exceed 20% of the net
asset value. If a sub-fund has various counterparties,
the different collateral baskets should be aggregated to
calculate the 20% limit for the total value of the open
positions to a particular issuer.
8 . The discounts applied to securities are either
geared at:
a ) The counterparty’s creditworthiness,
b ) The securities’ liquidity,
c ) Their price volatility,
d ) The creditworthiness of the issuer and/or
Sales prospectus SWISS HEDGE - General Information 23
e ) The country or market in/on which the security is
traded.
9 . Assets that are highly volatile in terms of price
should only be accepted as securities if appropriate
conservative valuation haircuts are applied.
Depending on the type of securities received, e.g. the
creditworthiness of the counterparty, the due date,
the currency and the price volatility of the assets, the
valuation haircuts listed in the table below may be
made:
Type of security Valuation
haircut
Cash in the Fund’s currency 0%
Cash in a currency other than the
Fund’s currency, limited to EUR,
CHF, USD
up to 10%
Bonds and/or other debt
instrument or debt securities with
fixed or variable interest rates
up to 10%
Other assets that meet the
requirements for securities
may also be accepted on an
exceptional basis
up to 30%
It is possible that transactions in OTC derivatives may be
accepted for the Fund without securities being requested
from the counterparty, e.g. for currency futures with the
Custodian and for amounts below the threshold or the
minimum transfer amount.
10 . The discounts applied are reviewed for their suitability
at regular intervals – at least annually – and adjusted
accordingly if necessary.
11 . The Company (or its representative) carries out a
valuation of the securities received every day. If the
value of the securities already granted are deemed
insufficient in light of the amount to be covered, the
counterparty must provide additional collateral at
very short notice. If appropriate, the exchange or
market risks associated with the securities accepted
as collateral are taken into account by means of safety
margins.
12 . The Company will ensure that it can assert its rights
regarding securities if an event occurs which makes
the exercise of these rights necessary; i.e. the security
must be available at all times either directly or via
the mediatory authority of a first-class financial
institution or a wholly-owned subsidiary company of
this institute in a format that enables the Company to
appropriate or liquidate the securities provided if the
counterparty does not fulfil its obligation to return the
loaned securities.
13 . For the duration of the agreement, the security cannot
be sold, provided as collateral or pledged elsewhere
unless the Company has other funds to cover risks.
14 . A sub-fund that receives securities for at least 30% of
its assets shall examine the associated risk by means
of regular stress tests under normal and exceptional
conditions, the effects of changes in the market value
and the liquidity of the securities.
5.2.5.9 Loans on securities
If the Fund’s investment guidelines in the following
Special Section do not contain any significant restrictions,
the Fund may conduct securities lending transactions.
The respective restrictions can be found in the most
recent version of CSSF circular 08/356 and in guideline
ESMA/2012/832.
The Fund may only conduct securities lending
transactions in compliance with the following provisions:
(i) The Fund may only lend securities using a
standardised system operated by a recognised clearing
house or a securities lending programme operated by
a top-rated financial institution, insofar as this financial
institution specialises in such transactions and is subject
to supervisory regulations that, in the opinion of the CSSF,
are comparable with the provisions of Community law.
24 Sales prospectus SWISS HEDGE - General Information
(ii) The borrower must be subject to supervisory
regulations that the CSSF consider to be comparable with
the provisions of Community law.
(iii) The counterparty risk arising from one or
several securities lending transaction(s) with a single
counterparty (which, for clarification, can be reduced by
the use of collateral) may not exceed 10% of the assets of
the respective sub-fund if the counterparty is a financial
institution falling under Article 41(1)(f ) of the Law of 2010
or 5% of the sub-fund’s assets in all other cases.
These transactions may be entered into for one or more of
the following purposes:
(i) Risk reduction,
(ii) Cost reduction and
(iii) To achieve an increase in capital or earnings at a risk
level that corresponds to the risk profile of the fund and
the applicable provisions on risk spreading.
These transactions may be carried out on the basis of
100% of the Fund, provided
(i) that the transaction volume is always kept at an
appropriate level or the redemption of the loaned
securities can be demanded in such a way that the fund
can fulfil its redemption obligations at any time, and
(ii) that these transactions do not jeopardise the
management of fund assets in accordance with the
investment policy of the respective sub-fund. The
risks of these transactions are managed as part of the
Management Company’s risk management process.
Securities lending transactions can also be carried out
synthetically (“synthetic securities lending”). Synthetic
securities lending takes place when a security in the
relevant sub-fund is sold to a counterparty at the current
market price. The sale is carried out subject to the
condition that the sub-fund simultaneously receives an
unleveraged securitised option from the counterparty,
entitling the sub-fund at a later point in time to demand
the provision of securities of the same type, quality and
quantity as the sold securities. The price for the option
(“option price”) corresponds to the current market price
from the sale of the securities, minus
a ) the securities lending fee,
b ) the returns (e.g. dividends, interest payments,
corporate actions) from the securities that can be
reclaimed when exercising the option, and
c ) the exercise price associated with the option. The
option will be exercised at the exercise price during its
term.
If the security on which the synthetic securities lending is
based is sold during the option’s term for the purpose of
implementing the investment strategy, this may also be
done by selling the option at the then prevailing market
price minus the exercise price.
Securities lending transactions may also be conducted
with regard to individual unit classes in consideration of
their respective special features and/or investor profiles,
where all revenue claims and collateral forming part of
such securities lending transactions arise at the level of
the relevant unit classes.
The Fund will, in its semi-annual and annual reports,
disclose the value as at the relevant reporting date of the
securities surrendered or received by way of a loan.
In terms of loans on securities, the Fund may act as lender
or borrower on the condition that such transactions are in
accordance with the following rules.
a) Lender
As a principle, when acting as lender the Fund must
receive a guarantee at least equal to the value of the
securities loaned out. The guarantee must be in the form
of liquid assets and/or securities issued by a member
country of the OECD or its regional authorities or by
an international institution or institutions of a federal,
regional or worldwide dimension. The guarantees remain
in escrow in favour of the Fund until termination of the
contract. Such a guarantee is not required when the
Sales prospectus SWISS HEDGE - General Information 25
securities loan is cleared through Euroclear, Clearstream
or another recognised clearing house that guarantees
lenders the return of their securities or provides other
forms of guarantee.
If the Fund is lender, such loans shall not exceed 50%
of the value of the sub-fund securities portfolio. This
restriction does not apply where the Fund has at all times
the right to cancel the agreement and enforce return of
the securities. A loan of securities may not exceed 30 days.
b) Borrower
Securities that are, as an exception, accepted by way
of loan cannot be accessed during the time they are in
the Fund’s possession, unless the Fund has sufficient
guarantee to be able to repay the loan securities at the
end of the contract. If the Fund is the recipient of the loan,
loan securities received may not exceed 10% of the total
value of the securities portfolio of a sub-fund and such
transactions may only be entered into for short periods.
The Fund may act as recipient of a loan in securities
transactions under the following terms and conditions:
1) During a period of time in which securities have been
sent off to be registered, 2) where securities have been
surrendered by way of a loan and have not returned in
due time, and 3) in order to avoid the non-performance of
a securities transaction where the Custodian is unable to
meet its delivery obligations.
5.2.5.10 Repurchase agreements
Unless otherwise specified in the following Special
Section (see “Overview of SWISS HEDGE”), the Fund may
a ) enter into repurchase agreements consisting of the
purchase and sale of securities and including a right
or obligation on the part of the seller to repurchase
the securities sold from the buyer at a price and under
conditions contractually agreed upon by both parties,
and it may
b ) enter into reverse repurchase agreements consisting
of futures that, when they fall due, oblige the buyer
(counterparty) to repurchase the securities sold and
oblige the Fund to return the securities received as
part of the transaction (together, the “repurchase
agreements”).
The Fund may act as either buyer or seller for individual
repurchase agreements or a series of consecutive
repurchase agreements. However, participation in these
transactions is subject to the following conditions:
a ) The Fund may only purchase or sell securities as part
of a repurchase agreement if the counterparty for the
transaction is subject to regulatory provisions that
the CSSF considers comparable to the provisions of
EU law.
b ) The counterparty risk from one or more repurchase
agreements with respect to a single counterparty
(which, in the interests of clarity, can be reduced
through the use of collateral), where this is a financial
institution under Article 41 paragraph 1 letter f ) of the
Law of 2010, must be no more than 10% of the Fund’s
assets, or, in all other cases, no more than 5% of the
Fund’s assets.
c ) During the term of a repurchase agreement in which
the Fund acts as buyer, the Fund may not sell the
securities forming the subject of the agreement until
the counterparty has exercised its right to repurchase
these securities or the deadline for repurchase has
expired, unless the Fund has access to other covering
funds.
d ) The securities acquired by the Fund as part of a
repurchase agreement must be consistent with the
Fund’s investment policy and investment restrictions,
and be restricted to:
– short-term bank certificates or money market
instruments in accordance with the definition in
Directive 2007/16/EC dated 19 March 2007,
– bonds from non-governmental issuers that
provide adequate liquidity, or
26 Sales prospectus SWISS HEDGE - General Information
– assets referred to above in the second, third and
fourth sections under a) Securities lending.
e ) The Management Company will disclose the total
amount of its open repurchase agreements on the
reporting dates of its annual and semi-annual reports.
Repurchase agreements may also be conducted with
regard to individual unit classes in consideration of their
respective special features and/or investor profiles, where
all revenue claims and collateral forming part of such
repurchase agreements arise at the level of the relevant
unit classes.
5.2.5.11 Borrowing
Short-terms loans worth up to 10% percent of the value of
each sub-fund may be taken out for the collective account
of the investors provided the terms of credit are fair and
the Custodian agrees to the loan.
6. Valuation (see also Art. 8 of the management regulations)
6.1 Assets listed on a stock exchange/traded on a regulated market
Securities and money-market instruments with (residual)
maturities of more than one year and other assets
permitted under the law and in accordance with these
Management Regulations that are listed on an official
exchange or traded on another regulated market which
operates regularly and is recognised and open to the
public, are valued on the basis of the last known sales
price. If the same security is traded on different markets,
the last known sales price on the main market will be
used.
6.2 Unlisted assets/assets without a representative most recent sales price
Non-listed securities and other legal assets and securities,
which are allowed by these Management Regulations,
that are listed or are traded on a recognised market,
but for which the latest sales price is not representative,
shall be valued at market value as determined by the
Management Company in good faith, applying generally
recognised valuation principles which can be examined
by an independent auditor.
6.3 Units of other UCITS or UCI
Units of other UCITS or UCIs are calculated using their
most recent net asset value.
6.4 Liquid Assets
Liquid assets shall be valued at their par value plus
accrued interest.
The valuation of money-market instruments and other
asset investments with a remaining maturity of less than
one year may be adjusted to the redemption price of
corresponding money-market instruments and other
asset investments on the basis of the price paid at
acquisition less the costs associated with acquisition,
while assuming a constant return on investment. The
Management Company shall ensure that if these asset
investments are sold, the sales price will not be less than
the yield rate.
In the event of significant changes in the market, the
valuation basis will be adjusted to reflect current market
yields.
If an exchange rate is necessary for determining the net
asset value of a sub-fund, the last known exchange rate
will be used.
6.5 Unlisted bonds and borrowers‘ notes
The prices used for the valuation of bonds not authorised
for trade on a stock exchange or included on an
organised market (e.g. unlisted bonds, commercial
papers and investment certificates) and for the valuation
of borrowers‘ notes are those agreed to for comparable
borrowers‘ notes and prices agreed to for borrowers‘
notes, and, if applicable, the market prices of bonds of
comparable issuers with corresponding terms and interest
rates. If necessary, a deduction is made to account for the
lower level of saleability.
6.6 Option rights and futures
Option rights accruing to a sub-fund and debt arising
from options bestowed by a third party that are admitted
Sales prospectus SWISS HEDGE - General Information 27
for trading on an exchange or on another organised
market are valued at their latest quoted price.
This also applies to receivables and payables arising out
of futures purchased or sold on account of a sub-fund.
Any valuation gain or loss observed on a trading day is
aggregated with any margin falling due to the sub-fund.
6.7 Fair Value
If the assets of the sub-fund cannot be valued on the
basis of their “market value” because no market price is
available, valuation will be made on the basis of the “fair
value”.
This is oriented to the principles of the “Position paper of
the IDW (German Institute of Chartered Accountants) on
accounting and valuation issues related to the subprime
crisis of 10 December 2007”.
The presence of an active market is particularly relevant in
connection with the classification of financial instruments
and the determination of fair value.
An active market requires that:
• the items traded within the market are homogeneous;
• willing buyers and sellers can normally be found at
any time; and
• prices are available to the public.
A financial instrument is considered to be listed on an
active market if quoted prices are readily and regularly
available from an exchange, a dealer or broker, an
industry group, a price-service agency, such as Reuters
or Bloomberg, and these prices represent actual and
regularly occurring market transactions on an arm‘s-
length basis.
An active market is assumed for all price quotations on
a regulated market. If, however, the volume of trade on
organised markets is exceptionally low, each specific
case must be reviewed as to whether the securities listed
on the organised market should be considered as being
listed on an active market.
A market is no longer active when there is no longer
detectable market liquidity due to the complete and long-
term withdrawal of buyers and/or sellers from the market.
In the absence of an active market, the valuation of assets
is undertaken at fair value. The fair value of financial
instruments is the amount for which an asset could be
exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction. For the
determination of fair value, prices that have arisen due to
forced transactions, involuntary liquidation or distressed
sales are not taken into account.
The following hierarchy is used to determine fair value:
on an active market
1 . price on trade date
2 . price shortly before the trade date, which is adjusted
if the economic fundamentals have changed
significantly since the pricing date.
If the economic fundamentals have changed significantly
since then, the last available price is adjusted on the basis
of appropriate procedures (e.g. performance of an index,
rating of securitised loans).
Derivation of fair value using valuation techniques when
there is no active market
1 . Use of the most recent arm’s length transactions
between knowledgeable and willing parties for the
same financial instrument
2 . Comparison to the current fair value of another,
substantially identical financial instrument
3 . Use of valuation models (e.g. discounting expected
cash flows, option pricing models or any other
valuation models commonly used by market
participants for the valuation of that instrument).
28 Sales prospectus SWISS HEDGE - General Information
The objective is to determine the transaction price that
would result from an arm‘s length transaction on the
valuation date. Market conditions at the valuation date
are used as the basis for this. The fair value calculated
using the valuation process should appropriately reflect
how the market would value the financial instruments
at the valuation date. The data used in the valuation
method must appropriately reflect all the inherent market
expectations and calculations of risk-return factors of the
financial instruments.
Generally, a distinction can be drawn between analytical
models and simulation models. All models are based
on the discounted cash flow method, i.e. the cash flows
resulting from the financial instrument are projected and
discounted with a maturity- and risk-equivalent interest
rate.
In addition to the amount of the cash flows and the
observable market situation, statements about the timing
of possible defaults must also be observed in determining
the interest rate. The illiquidity of the market must also be
considered as an additional input factor.
7. Performance
The performance of the sub-fund can be found in the specific information on the sub-fund in the KIID. If a sub-fund has been newly launched, no past performance can be indicated.
The performance of individual sub-funds can also be found in the published half yearly/annual management reports and on the company's website www.bayerninvest.lu.
No forecast can be made as to the future performance of the sub-fund based on its past performance.
8. Risk advice
8.1 General
The assets in which the Management Company invests
for the account of the investment fund contain risks as
well as opportunities for growth. Losses may be incurred
if the market value of the assets decreases in relation to
the purchase price. If an investor disposes of units in a
sub-fund at a time when the quoted price of the sub-fund
securities is less than at the time of investment then the
investor will not recover the full value of moneys invested.
Even though all sub-funds seek to achieve constant value
growth, this cannot be guaranteed. However, investor risk
is limited to the amount invested. Investors will not be
required to make any payments beyond the sum invested.
NO GUARANTEE CAN BE GIVEN THAT THE OBJECTIVES OF THE RESPECTIVE SUB-FUND WILL BE ACHIEVED.
8.2 Potential range of investments
In observance of the investment principles and limits set
forth in the law of 17 December 2010 on Undertakings for
Collective Investment in Transferable Securities and the
terms and conditions, which provide a broad framework
for the SWISS HEDGE and its sub-funds, the actual
investment policy may be oriented towards acquiring
assets primarily, for example, from only a few sectors,
markets or regions/countries. This focus on a few specific
investment sectors may be associated with particular
opportunities, but they are countered by corresponding
risks (e.g. narrow markets, broad range of opportunities
within certain economic cycles).
Risks associated with the investment policy of individual
sub-funds are described under Overview of SWISS HEDGE.
Sales prospectus SWISS HEDGE - General Information 29
8.3 Market risk
The price or market performance of financial products
depends to a great extent on the performance of the
capital markets, which is in turn affected by the overall
economic situation worldwide and the general economic
and political framework in individual countries. Illogical
factors such as moods, opinions and rumours may have
an impact on the general price trend, especially on a stock
market.
8.4 Specific industry risks
Investing a high proportion in securities of one sector can
mean the risks specific to that sector are over-represented
in the sub-fund.
In particular, investments in industries that are
strongly dependent on research and development
(e.g. biotechnology, pharmaceuticals, e.g.) or that
are comparatively new may be subject to significant
price fluctuations when developments with industry-
wide implications cause premature investor reactions.
The success of these industries is frequently based on
speculations about and expectations concerning future
products. However, if these products do not meet these
expectations or if they suffer other setbacks, there may be
unexpected losses throughout the entire industry.
However, there may be dependencies in other industries
that lead to unfavourable developments such as delivery
bottlenecks, shortages of raw materials, tightening of
legal requirements, etc., that subject the industry to
significant fluctuations.
8.5 Country or transfer risk
Country risk refers to the risk that a foreign debtor, despite
solvency, cannot make payments on time or cannot make
them at all, due to lack of the ability or willingness to
transfer payments on the part of his country of residence.
So, for example, payments to which the sub-fund has
a right may remain unsettled or may be received in
a currency that is no longer convertible due to currency
restrictions.
8.6 Settlement risk
Investments in unlisted securities are particularly subject
to the risk that settlement through a transfer system may
not be executed according to expectations because of a
delayed payment or deliver of a payment or delivery that
is not in compliance with the agreement.
8.7 Liquidity risk
The sub-fund may also acquire securities that are not
admitted to an official exchange or listed on an organised
market. The acquisition of such assets is associated with
the risk that there could be problems in reselling the
assets to third parties.
In particular, market segments just being established
may experience bottlenecks in tradability sooner than
in highly developed markets. It may be difficult and
timeconsuming to establish valuations and sell individual
investments. A loss may have to be taken on sales.
8.8 Settlement default risk
The sub-fund may suffer losses due to the default of an
issuer or counterparty.
Issuer risk describes the effect of the particular
developments concerning the respective issuer, which,
in addition to the general trends on the capital markets,
have an effect on the price of a security. Even when
securities are carefully selected, the possibility cannot
be excluded that losses may result from a decline in the
assets of issuers.
Counterparty risk comprises the risk that a counterparty
to a reciprocal contract partially or completely defaults on
its liabilities. This applies to all agreements concluded on
behalf of a sub-fund.
8.9 Currency Risk
When the assets of a sub-fund are invested in a currency
other than the currency of the corresponding sub-fund,
the sub-fund receives income, repayments and proceeds
from such investments in the corresponding currency.
30 Sales prospectus SWISS HEDGE - General Information
If the value of that currency falls against the fund currency
then the value of the sub-fund is reduced.
8.10 Custodial risk
When assets are held in custody, there is a risk of loss
resulting from the insolvency, violation of due diligence
or improper conduct on the part of the custodian or a
sub- custodian. In this case, there is the possibility that
the Fund may, in whole or in part and to its detriment, be
deprived of access to the investments held in custody.
8.11 Concentration risk
Further risks can arise from a concentration of the
investments in particular assets or markets. The sub-
fund is then particularly vulnerable to the performance
of those securities or markets. This is associated with a
concentration of the settlement default risk.
8.12 Inflation risk
Inflation contains the risk that the assets will drop in value.
8.13 Legal and tax risk
The legal and tax treatment of funds may change in a
manner that cannot be predicted or influenced. A change
in incorrectly established tax bases for the sub-fund for
previous financial years can bring about fundamentally
negative tax adjustments for the investor, and the
investor must bear the tax burden of those prior years'
adjustments, even though it may be that the investor
had no investment in the fund at the time in question.
Similarly, the consequence may also arise for the
investor that a correction that has tax advantages for the
current and for previous financial years in which he was
invested in the sub-fund may not benefit him because
he redeemed or sold his Units before the correction in
question was implemented.
In addition, a correction of tax information may result
in income that is subject to taxation or tax advantages
being actually assessed for tax purposes in a different
tax assessment period from the period that is really
appropriate this could have a negative impact on the
individual investor.
8.14 Changes in the investment policy
The sub-fund’s risk exposure may substantially change if
the investment policy is changed within the sub-fund’s
authorised investment scope.
8.15 Amendment to the Management Regulations; liquidation or merger
In the Management Regulations, the Management
Company reserves the right to amend the Management
Regulations (see also Number 2: “General Provisions”).
In addition, the Company may, in accordance with the
Management Regulations, completely liquidate a sub-
fund or merge it with another sub-fund. For the investor,
this entails the risk that the holding period planned by the
investor will not be realised.
8.16 Risk of suspension of redemption
Investors may request that the Management Company
redeem their Units on any valuation date, but not at
month-end. The Management Company may, however,
temporarily suspend redemption of Units for a limited
period in exceptional circumstances and then redeem the
Units at a later date at the applicable price at that time.
This price may be lower than the price before suspension
of redemption.
8.17 Key personnel risk
The success of a sub-fund over a particular period may
be thanks to the abilities of its trading staff and thus to
the appropriateness of decisions taken by management.
Personnel making up the Fund management can change.
New decision-makers may not necessarily trade with the
same success.
8.18 Regulatory risk
The sub-fund may also make investments abroad.
This is accompanied by the risk of potential adverse
international political developments, changes in policy
of the respective government, changes in regulatory
environment, changes in tax base and other legal
developments. In particular, restrictions may be placed
on assets that may be acquired for the sub-fund, which
Sales prospectus SWISS HEDGE - General Information 31
may therefore adversely affect the performance of the
sub-fund.
8.19 Risks on domestic and foreign holidays
Due to local holidays in certain regions/countries there
may be discrepancies between the trading days on the
stock exchanges of these countries/regions and the
valuation days of the sub-fund. Therefore, on a day that is
not a valuation day, the sub-fund may not be able to react
to market developments in the countries/regions on the
same day or may not be able to trade on the local market
on a valuation day that is not a trading day in those
countries. This can give rise to liquidity problems in the
disposal of units.
8.20 Risks associated with derivative transactions
Buying and selling options and entering into futures
contracts or swaps carry the following risks:
1 . Changes in the price of the underlying securities
may decrease the value of an option right or the
futures contract until it becomes financially worthless.
Changes in the value of an asset being used as an
underlying security for a swap may result in significant
losses to the sub-fund.
2 . Any necessary counter-transaction (closing-out) will
incur costs.
3 . As a result of the leveraging effect of options, they
may have a greater influence on Fund assets than the
direct purchase of the underlying securities would.
4 . The purchase of options entails the risk that some
options will not be exercised because the prices of
the underlying securities do not develop as they are
expected to, so that the option premium paid by the
sub-fund is forfeited. When options are sold, there is
the risk that a sub-fund will be obliged to purchase
assets at a price higher than the market price, or to
deliver assets at a price lower than the current market
price. This will result in the sub-fund suffering a loss
in the amount of the price difference less the option
premium received.
5 . Futures contracts also contain the risk that a sub-
fund will suffer losses as a result of an unexpected
development of the market price at maturity.
8.21 Risk associated with the use of securities lending transactions and repurchase agreements
If the counterparty to a securities lending transaction or
repurchase agreement drops out, the Fund may suffer
a loss in that the return from the sale of the collateral
held by the Fund in connection with the securities
lending transaction or repurchase agreement may be
lower than the ceded securities. Moreover, the Fund
may, through bankruptcy or a similar procedure against
the counterparty of the securities lending transaction
or repurchase agreement or any other form of non-
compliance with the return of the securities, suffer losses,
e.g. loss of interest, loss of the relevant security, or costs
from late payment and enforcement with regard to the
securities lending transaction or repurchase agreement.
It can be assumed that the use of acquisition with a
repurchase option or a reverse repurchase agreement
and securities lending agreement will have no significant
impact on the sub-fund’s performance. Such use may,
however, have a significant effect, whether positive or
negative, on the net asset value of the sub-fund.
9. Increased Volatility
The onset of volatility in a sub-fund, i.e. particularly severe
variations in the Unit price over a short period, is due
for the most part to general market phenomena which
cannot be assessed in advance. However, the risk of a
high level of volatility increases when the investment
instruments have a focus.
For more details, see the heading “Overview of SWISS
HEDGE”.
10. Units
The rights of investors on creation of a sub-fund are
exclusively securitised in global certificates. These global
certificates are held in custody by a securities depository
bank. No claim can be made by the investor for the
32 Sales prospectus SWISS HEDGE - General Information
delivery of individual Unit certificates. The acquisition
of Units is only possible in conjunction with depository
custody. The Units are bearer Units and certify the claims
of the bearer vis-à-vis the Company.
The various Unit classes are arranged in accordance with
Article 7 of the Regulations. The Management Company
shall issue one or more of these classes per sub-fund. The
unit classes issued for each sub-fund are detailed in the
Prospectus under the heading “Overview of SWISS HEDGE”.
11. Issue and redemption of units and order acceptance deadline
11.1 Net asset value
The net asset value per unit for each unit class of
each sub-fund is calculated in the base currency on
the valuation day and is published on the website
www.bayerninvest.lu on each valuation day. The base
currency of each sub-fund is stated in the corresponding
description of the sub-fund. Article 8 of the Management
Regulations provides more information on the net asset
value.
11.2 Issue of Units
Units are issued pursuant to Articles 5 and 6 of the
Management Regulations. Units of each sub-fund can
be acquired on a valuation day from the Management
Company, from the Custodian and from any Paying Agent
listed in the Prospectus.
The issue price is the NAV per unit in each sub-fund as
published on the corresponding valuation day (trading
day) after the purchase agreement is received by the
Management Company.
There is no general restriction regarding the number of
Units issued per sub-fund. The Units may be acquired
from the Management Company. They are issued by the
Custodian at the issue price. The issue price of each Unit
certificate class may be increased by the amount of any
stamp duties or other charges to which the Management
Company is subject, as well as by a sales commission
plus a sales charge paid to the distributors, as set by
the Management Company. The Company reserves the
right to temporarily or permanently suspend the issue
of Units.
11.3 Redemption and conversion of Units
Unitholders can submit requests for redemption and
conversion of their Units on any valuation date.
The Units may be redeemed or converted through the
Management Company, the Custodian or any Paying
Agent. The redemption or conversion will be executed in
accordance with the provisions set forth in Articles 10 and
11 of the Regulations.
When a substantial number of redemptions are requested,
the Management Company can, with the approval
of the Custodian, delay payment of the redemption
price until such time as the corresponding assets have
been disposed of (see Article 8 of the Management
Regulations).
The redemption price may be higher or lower than the
issue price paid (purchase price) depending on the NAV
performance of the sub-fund in question.
The redemption price of each Unit certificate class may
be increased by the amount of any stamp duties or other
charges to which the Management Company is subject,
as well as by a redemption fee. The Company reserves
the right to temporarily or permanently suspend the
redemption of Units.
The Management Company does not intend to charge
any conversion fee.
When an investor switches Units from a sub-fund to
another with a higher issue premium, however, then
the Management Company will charge the positive
difference.
The Management Company may, in exceptional
circumstances, temporarily suspend the calculation of a
sub-fund’s NAV and consequently the issue, redemption
or conversion of Units in the sub-fund or in all the sub-
funds (see Article 9 of the management regulations).
11.4 Late trading and market timing
On the date the request for subscription, redemption
or conversion is received, the subscription, redemption
Sales prospectus SWISS HEDGE - General Information 33
or conversion of Units is executed at unknown issue
and redemption prices. The subscription, redemption
or conversion application must be received by the
Management Company before 2 p.m. (Luxembourg time)
of the corresponding valuation date.
Subscription, redemption or conversion applications that
the Company receives after 2 p.m. Luxembourg time on
a valuation day are treated as if the Company had not
received them until the following valuation day.
The Management Company shall implement appropriate
measures to counteract the misuse of market timing and,
if market timing is suspected, take the necessary steps to
prevent this practice.
12. Publication of the issue and redemption prices and other communications to Unitholders
The relevant issue and redemption price shall generally
be published on the Management Company’s website
(http://www.bayerninvest.lu/de/fondsdaten/fondspreise/
index.html) and may also be published in a daily
newspaper or other online medium.
Other information for Unitholders, if required under the
Management Regulations, is published in the Recueil
Électronique des Sociétés et Associations (RESA) of
the Grand Duchy of Luxembourg. They may also be
published in a Luxembourg newspaper and in other
newspapers selected by the Management Company,
specifically in those countries in which Fund Units are
offered.
The net asset value per Unit of each sub-fund and the
issue and redemption prices may be obtained from the
head office of the Management Company, the Custodian
and at any Paying Agent.
At those same locations, the current sales prospectus with
the Management Regulations, the KIID and the annual
and semi-annual reports may also be obtained.
13. Administration and other costs
The Management Company charges a maximum annual
administration fee of 2.5%. Any Fund Manager fees
and any Investment Advisor fees incurred including
performance-related fees relating to the management of
a sub-fund‘s assets may be charged separately to the sub-
fund. Details of the management fees, any Fund Manager
fees and any Investment Advisor fees incurred, including
performance related fees and how these are calculated,
are set out in the overview of each sub-fund.
The Custodian charges an annual custodian fee
(“custodian fee”) of a maximum of 0.7%, payable every
month, calculated based on the last net asset value of any
sub-fund at the end of any month. These custody fees do
not include any third party custody or management fees
charged by other correspondent banks and/or clearing
houses (e.g. Clearstream or Euroclear) for the custody of
fund assets.
Apart from the above remuneration, the following
expenses are charged to the respective sub-fund:
1 . The usual broker’s and banker’s fees accruing to each
sub-fund‘s business;
2 . The printing costs for unitholder certificates, the
costs of preparing and/or official scrutiny of the
management regulations and all other documents
related to the fund, including authorisation
applications, Prospectuses, KIIDs and any applications
for amendment made to authorities in various
countries in their respective language and relating to
the offering for sale of fund Units;
3 . The costs of printing and mailing annual and interim
reports and other notifications to Unitholders in the
relevant language as well as the costs of publishing
the issue and redemption prices, and the publication
of profit sharing information and all other notifications
made to Unitholders;
4 . The costs of accounting, registration and transfer,
measurement of sub-fund performance, risk
34 Sales prospectus SWISS HEDGE - General Information
management and the daily calculation of NAV and
publication of this;
5 . Auditors’ fees;
6 . The costs of EMIR related reportings;
7 . The costs of any transactions for stabilising prices;
8 . Any VAT incurred;
9 . The cost of sales promotion;
10 . The costs of consultations with lawyers and
other similar administration costs incurred by the
Management Company or the Custodian when acting
in the interests of Unitholders;
11 . The costs for announcing the tax base and
certification that tax details have been determined in
accordance with the regulations of German tax law.
12 . The costs of exchange listing(s) and/or registration of
Units for sale to the public in various countries;
13 . An annual duty (“taxe d’abonnement”) is levied by the
Grand Duchy of Luxembourg on total NAV.
14 . The Management Company has the right to charge
a sales commission on certain Unit classes, up to a
maximum of 0.5% p.a. on the percentage of the NAV
of that Unit class within the sub-fund as set out in the
Prospectus. The calculation method used is described
in the overview of each of the sub-funds.
If any of the above-mentioned fund issues cannot be
allocated to a particular sub-fund, then the issue will be
allocated to all the sub-funds in proportion to their NAV.
If the fund makes the above-mentioned issue for a distinct
sub-fund or in connection with a distinct sub-fund, then
the issue will be allocated to that sub-fund.
All periodically recurring costs are borne directly by the
fund; other expenses can be written off over 5 years.
The expenses (except transaction fees) falling to the
account of the sub-funds are p ublished in the fund’ s
annual report and shown as a ratio to the published fund
volume (“ Total expense ratio”– TER).
In the course of business the Management Company may
incur costs for valuable services (such as broker research,
financial analyses, market and quotation information
systems), which are used for the taking of investment
decisions in the interests of investors.
14. Specific provisions regarding the acquisition of investment Units
In addition to the fee for the management of the sub-
funds, a management fee is also charged for the target
fund Units held in the sub-funds. Sub-funds are not
invested in underlying funds charging management fees
of more than 5% p.a.
All types of fees, costs, taxes, commissions and other
expenses that can be charged to the respective target
funds in accordance with their terms and conditions are
to be borne indirectly or directly by the investors in the
sub-fund. These include in particular transaction costs,
normal custodial fees, costs of printing, distribution and
notification of the annual and semi-annual reports and
liquidation reports for investors, costs of publication
of the issue and redemption prices and distributions,
audit costs of the target funds, any taxes, costs of the
notification of tax bases and costs for the assertion and
enforcement of legal rights.
Conversely, each sub-fund assumes in full the trail
commission paid by the underlying fund company to the
Management Company.
If a sub-fund acquires Units in another UCITS and/or
UCI that is managed directly or indirectly by another
Management Company with which the Management
Company is linked through common management or
Sales prospectus SWISS HEDGE - General Information 35
control or through a substantial direct or indirect holding,
then no issue fees, sales commission or redemption
commission will be levied for the subscription or
redemption of Units in the other UCITS and/or UCI. If
a sub-fund invests in one of these types of UCITS, fees
(management fees, investment advisor/fund manager
fees and custodian bank fees) charged to the sub-fund
insofar as these are for the same entity, will be discounted
for that proportion. Investments in other funds may result
in duplicate charges, which will be reported in the audited
financial report. Target funds are purchased under usual
bank terms and conditions, so that there is only ever a
small risk of duplicate charges. In addition, any discounts
received are credited to the sub-fund’s assets.
The issue and redemption fees paid by the sub-fund for
acquiring or redeeming Units in another investment fund
are published in the annual and semi-annual reports. In
addition, details are published of any expenses charged
by a Management Company or other company associated
with the Company to a sub-fund as management fees for
the Units held by the sub-fund.
15. Unit classes
The various Unit classes are arranged in accordance with
Article 7 of the Regulations. The Management Company
will assign each sub-fund one or more of these Unit
classes. The unit classes issued for each sub-fund are
detailed in the Prospectus under the heading “Overview
of SWISS HEDGE”.
The following Unit classes may be assigned by the
Management Company.
Unit class:
A: Distribution with sales commission
D: Distribution without sales commission
T: Reinvestment with sales commission
O: Reinvestment without sales commission
InstA: Restricted to institutional investors (inst) –
Distribution with sales commission
InstD: Restricted to institutional investors
(inst) – Distribution without sales
commission
InstT: Restricted to institutional investors
(inst) – Reinvestment with sales
commission
InstO: Restricted to institutional investors
(inst) – Reinvestment without sales
commission
If a country in which Units are distributed charges
stamp duties or other fees, the issue price will be raised
accordingly.
The Management Company may reject purchase orders at
its discretion and suspend or limit the issue of Units (see
Management Regulations, Article 5).
16. Income Equalisation Procedure
The Management Company applies a so-called income
netting procedure to the sub-fund. This means that the
proportional income accruing during the financial year
that the acquirer of the fund Units must pay as part of
the issue price and that the seller of the Unit certificates
receives as payment as part of the redemption price is
continuously netted. The expenses incurred are taken into
account in calculating the income equalisation.
The income equalisation procedure serves to adjust for
fluctuations in the relationship between income and
other assets caused by net fund inflows or outflows due to
the sale or redemption of Units. Otherwise, every net fund
inflow would reduce the returns on the net asset value of
the sub-funds and viceversa.
The result of the income netting process is that the
distribution per unit is not affected by unforeseen
developments in the sub-fund or in the turnover of
36 Sales prospectus SWISS HEDGE - General Information
holdings. In doing so, it is accepted that investors who, for
example, purchase Units shortly before the distribution
date, receive back the portion of the issue price accruing to
income in the form of a distribution, although the capital
paid in did not contribute to the generation of the income.
17. Financial year
The financial year of the Fund and of each sub-fund ends
on 31 December of each year.
The first financial year begins with the launch of the first
sub-fund and ends on 31 December 2012.
The first report will be the unaudited semi-annual report
covering the period from the launch of the first sub-fund
to 30 June 2012.
The audited annual report is prepared as at 31 December
of each year. The first audited annual report will be
prepared as at 31 December 2012.
The unaudited semi-annual report is prepared as at 30
June of each year. The first unaudited semi-annual report
will be prepared as at 30 June 2012.
18. Liquidation and transfer of the Fund or sub-funds
18.1 Liquidation
The fund or individual sub-funds may be wound up at any
time by mutual agreement of the Management Company
and the Custodian. Moreover, the Fund shall be liquidated
upon activation of the provisions of Article 22 of the law
of 17 December 2010 on Undertakings for Collective
Investment in Securities.
As soon as a decision is taken to wind up the fund or a
sub-fund, no more Units in the fund or that sub-fund
will be issued or redeemed (unless all investors can
be treated on an equal basis). This will be announced
to the Unitholders as provided for in Article 16 of the
Management Regulations. The Management Company
will dispose of the assets of any such sub-fund in the
interest of the Unitholders and the Custodian will
pay out the net liquidation proceeds, less liquidation
expenses and fees, to the Unitholders of the sub-fund
in proportion to their respective holdings, as instructed
by the Management Company. After liquidation has
been completed, amounts that were generated by the
liquidation of the Fund or its sub-funds and not claimed
by the rightful Unitholders are deposited by the Custodian
with the “Caisse de Consignation” in Luxembourg for the
benefit of the rightful Unitholders. The proceeds shall be
forfeited if they are not claimed within 30 years of deposit.
18.2 Transfer
Sub-funds may be merged under the conditions described
in the Management Regulations by merging one
sub-fund into another or by merging them into another
Undertaking for Collective Investment (“UCI”). A merger
of sub-funds or merger into another UCITS will be carried
out upon decision of the Management Company.
19. Tax notice
In Luxembourg, the assets of the sub-funds are subject
to a tax (Taxe d’abonnement) that is currently 0.05% p.a.
of the respective net fund assets. If a sub-fund controls
an institutional Unit class, the taxe d’abonnement for
this Unit class currently amounts to 0.01% p.a. Taxe
d’abonnement is currently charged quarterly against
the net asset value of the sub-fund on the last day of the
quarter.
Unitholders who are not resident or located in
Luxembourg and who have not been granted a residency
permit for Luxembourg are currently subject neither to
the Luxembourg investment income tax, income tax,
withholding tax, gift or inheritance tax nor any other
Luxembourg tax on the Units of the Fund or sub-fund
they hold. Income from investment in the Fund may be
subject to taxes in other countries in which Fund assets
are invested. Neither the Management Company nor
the Custodian will obtain receipts for such taxes for any
Unitholders.
In accordance with the provisions of the Directive on
taxation of interest payments (the “Directive”), which
entered into force on 1 July 2005, the possibility cannot
be excluded that in certain cases withholding tax may
be deducted if a Paying Agent effects distributions and
Sales prospectus SWISS HEDGE - General Information 37
redemptions of Units in a sub-fund and the recipient of
the amounts paid out is an individual who is resident
in another EU Member State. The withholding tax rate
on these distributions and redemptions is 35%, unless
the individual expressly requests that he be subject
to the information exchange system of the Directive.
The Unitholder may have any withholding tax offset
against his income tax obligations in his own country of
residence.
Interested investors should obtain information and, if
appropriate, consult an advisor concerning the laws
and regulations applying to the subscription, purchase,
holding and sale of shares at their place of residence.
20. Note on the taxation of earnings on foreign investments for investors in the Federal Republic of Germany
20.1 Taxation on income
For private investors resident in Germany, distributed
income and/or income that is to be considered distributed
from the sub-fund is subject to income tax (withholding
tax). Private investors must disclose income separately
in “Interest and other income”. For corporate investors,
these gains represent taxable operating income. However,
dividends from German and foreign companies as well as
distributed capital gains from securities transactions with
shares, realised applying the Investment Tax Act, are tax-
free for corporations. Only half the amount of this income
is taxed for partnerships and other companies. All other
distributed capital gains are fully taxable.
20.2 Interim income
As a result, investment funds and/or investment
companies are required to calculate interim income
each valuation day and to publish it together with the
redemption price. Fees for accrued interest, interest
claims, income and interim income from other foreign and
domestic investment assets received by the investor for
the sale, redemption or assignment of share certificates
are considered to be interim income. Private investors
resident in Germany are required to pay tax on interim
income realised upon redemption. The interim income
paid by the investor in the issue price on the acquisition of
shares can be deducted as negative income from interim
income received or other income such as distributions
on investment shares in the respective calendar year.
The tax obligation on interim income and distributed or
accumulated interest income thus applies only to the
actual time the investor owns the shares.
20.3 Capital gains tax
If an investor holds Units in a securities account with
one of the Custodians located in the Federal Republic of
Germany, in its role as Paying Agent, the credit institution
maintaining custody withholds 30% of the distributed
income that is subject to capital gains tax (principally
interest income and other earnings). However, no tax is
withheld on accumulations.
When shares are sold, Paying Agents in the Federal
Republic of Germany withhold 30% of the interim income
contained in the redemption price - where applicable
reduced by interim income paid - and on the accumulated
gains.
The German Paying Agent will not withhold capital
gains tax if the investor submits either an application
for a tax allowance in a timely manner (for the portion
of earnings subject to capital gains tax a maximum of
EUR 801 for individuals or EUR 1,602 for married couples
filing jointly) or a tax exemption certificate or for investors
domiciled abroad, proof of non-resident status. If the
share certificates are held as operating assets, tax must be
withheld.
If the investor does not hold shares in custody in a
securities account with a domestic credit institution
(non-securities account), but does not present the
income certificates to the domestic credit institution
for paying out or the share certificates for sale or
redemption, the capital gains tax withholding is
increased from 30% to 35%.
If distributed or accumulated investment income is
withheld from an investor, the investor receives a tax
38 Sales prospectus SWISS HEDGE - General Information
certificate for the capital gains tax withheld from the
institution maintaining custody. The domestic investor
then has the opportunity to offset this amount of the
certified income tax withheld against his individual
income tax liability on submission of his income tax or
corporate tax return.
20.4 Solidarity surcharge
Since 1 January 1995, in the Federal Republic of Germany,
a solidarity surcharge of currently 5.5% has been levied
on the capital gains tax due. Like capital gains tax, the
solidarity surcharge can also be offset against income tax
liabilities. If no capital gains tax is due, for example, if an
application for tax allowance or a tax emption certificate is
presented, no solidarity surcharge will be withheld.
20.5 Foreign withholding tax
Withholding tax is sometimes withheld on foreign income
in the country of origin. The following applies to the tax
handling of the investor’s withholding taxes:
If the Fund already exercises its authority to withhold
foreign taxes when calculating taxable income as
advertising costs (option), the deduction or withholding
by the investor is no longer possible.
If, however, the Fund has not already offset the foreign
withholding tax when calculating income as advertising
costs, provided that it is not applied to tax- free income,
this foreign withholding tax is deductible upon request
when calculating total income or can be offset against the
portion of German income or corporate tax of the investor
that is due on the corresponding foreign income.
20.6 Sales
Private investors must pay tax on gains from the sale
of their Unit certificates. Taxes on investment income
and capital gains from foreign investment funds are
not automatically withheld. The following special
characteristics apply to the taxation of gains on sales of
foreign investment Unit certificates held as operating
assets: Only one-half of the gains resulting from sales of
domestic or foreign shares (gain on proportional holdings
of shares) are taxable (private companies and other
companies) or basically tax- free (corporations). Gains on
sales from any real estate income and gains exempted
from income under double taxation agreements (gain
on proportional holdings of real estate) are tax free. The
same applies to losses and sales and for depreciation of
the partial value of fund shares. Gains on shares and gains
on real estate are calculated and published for the Fund
as a percentage. The gains on proportional holdings of
shares and real estate must be calculated individually
by professional investors on the basis of the published
percentages.
20.7 Tax notice
The above tax principles (so-called transparent taxation)
only apply if all the tax bases as defined in Article 5
paragraph 1 InvStG are published (so-called obligation to
publish tax information). This also applies if the sub-fund
has acquired units in other investment funds (target funds
as defined in Article 10 InvStG), provided that they fulfil
their obligations to publish tax information.
The Management Company publishes all tax bases to
which it has access.
However, the required publication cannot be guaranteed
if a sub-fund has acquired target funds that do not fulfil
their obligations to publish tax information. In this case,
the distributions and the interim income of the respective
target fund and 70% of the increase in value of the last
calendar year of the respective target fund (however, no
less than 6% of the redemption price) are recognised as
taxable income at the level of the respective subfund.
Note:
Fiscal remarks are based on the legal situation established
at present. However, we are unable to guarantee that
evaluation for tax will not change the fiscal as a result of
legislation, jurisdiction or financial authority directives.
This notice is not intended to replace a tax consultation.
Sales prospectus SWISS HEDGE - General Information 39
21. Outsourcing
The Management Company has transferred the following
duties to other companies as per the relevant provisions:
The function of Transfer Agent has been outsourced to
M.M.Warburg & CO Luxembourg S.A.
Services in connection with fund accounting
shall be performed by BayernInvest
Kapitalverwaltungsgesellschaft mbH.
Risk and performance measurement for
each sub-fund is carried out by BayernInvest
Kapitalverwaltungsgesellschaft mbH, Munich.
22. Annual reports/Semi-annual reports/Other sales documents
The annual and semi-annual reports and the current KIID
and the full sales prospectus with the current version of
the Management Regulations are available free of charge
from the Management Company and on the website
www.bayerninvest.lu.
23. Auditor
PricewaterhouseCoopers Luxembourg Société coopérative, 2, rue Gerhard Mercator, L-1014 Luxembourg, has been commissioned with the auditing of the Fund, the sub-funds and the annual report.
24. Additional notices to investors in the Federal Republic of Germany
The issue and redemption prices are available in the
Federal Republic of Germany in the full prospectus and
from paying and information agents indicated in the KIID
in the Federal Republic of Germany.
At those same locations, Unitholders may also obtain,
at no charge, the Sales Prospectus, the KIIDs, the
Management Regulations and the annual and
semi-annual reports for the acquisition of Units in
electronic or paper form and may inspect the Custodian
Contract, the transfer agent agreement, the fund
accounting agreement, the fund manager agreements,
the investment advisor agreements and the Articles of
association of the Management Company.
Issue and redemption prices and other required
communications to Unitholders are also published in
accordance with the current applicable provisions of
German law in the Börsen-Zeitung.
After publication in one of these information media stated
in this Sales Prospectus, investors shall in certain cases
also receive information without delay via their Custodian
on a medium on which information can be visibly
reproduced without modification and stored for a period
appropriate for the purposes of the information, such as
in paper form or electronic form (“durable medium”), as
per Section 167 of the German Capital Investment Code
(KAGB) in conjunction with Section 298 II of the KAGB.
This information includes the essential content of the
proposed amendments, their background, the rights of
investors in connection with the amendment, as well
as an indication of where and how further information
can be obtained. The information provided on a durable
medium includes the following situations:
1 . the suspension of the redemption of units or shares of
an investment fund;
2 . the termination of the management of an investment
fund or its liquidation;
3 . changes to the investment terms and conditions
that are not compatible with the current investment
principles, affect essential investor rights or relate to
the fees and reimbursements that can be drawn from
the investment fund, including the background to the
changes and the rights of investors in a clear manner
in addition to where and how further information can
be obtained on these matters;
4 . the merger of investment funds in the form of merger
information to be provided as per Article 43 of
Directive 2009/65/EC and
5 . the conversion of an investment fund into a feeder
fund or a change relating to a master fund in the form
of information to be provided as per Article 64 of
Directive 2009/65/EC.
40 Sales prospectus SWISS HEDGE - General Information
Proceeds from redemptions, distributions to Units and
other payments will be made to Unitholders in the Federal
Republic of Germany at the offices of the Paying Agents in
the Federal Republic of Germany.
25. Payments to Unitholders/Dissemination of reports and other information
The engagement of the Custodian ensures that investors
will receive the distributions due to them and that Units
can be redeemed. The information mentioned in this sales
prospectus can be obtained from the sources listed under
number 1 “Basic information” in this sales prospectus.
26. General Information for Unitholders
The Management Company draws investors’ attention
to the fact that investments in UCITS are often executed
through an intermediary which makes investments it its
own name but on behalf of the investor. In this context,
investors may not necessarily be able to assert all investor
rights directly against the UCITS. Investors are advised to
update themselves as to their rights.
27. Other investment funds managed by the Company
Directive-compliant investment funds:
BayernInvest, Luxembourg investment fund with an
umbrella structure with the following sub-funds:
• BayernInvest Short Term Fund
• BayernInvest Total Return Corporate Bond Fund
• BayernInvest Global Flex Income
• BayernInvest Active Global Balanced
• BayernInvest Osteuropa Fund
DKB, Luxembourg investment fund with an umbrella
structure with the following sub-funds:
• DKB Europa Fund
• DKB Nordamerika Fund
• DKB Asien Fund
• DKB Pharma Fund
• DKB TeleTech Fund
• DKB Zukunftsfonds
GREIFF, Luxembourg investment fund with an umbrella
structure with the following sub-funds:
• GREIFF – Pro Art ERV
BILKU 1, Luxembourg investment fund with an umbrella
structure with the following sub-funds:
• BILKU 1 EPOS Fund
• BILKU 1 OPAL Fund
HUK-Vermögensfonds, Luxembourg investment fund with
an umbrella structure with the following sub-funds:
• HUK-Vermögensfonds Basis
• HUK-Vermögensfonds Balance
• HUK-Vermögensfonds Dynamik
Timberland, SICAV, Luxembourg investment fund with an
umbrella structure with the following sub-funds:
• Timberland, SICAV - Timberland Top - Dividende
International
Most recent update: December 2016
28. Purchaser‘s right of revocation under Art. 305 KAGB (off-premises transactions)
If the purchase of investment Units is made on the basis
of oral negotiations outside of the permanent business
premises of the party making or brokering the sale, then
the purchaser may revoke his declaration of the sale in
writing to the foreign management company within a
period of two weeks (Right of Revocation); this is also true
when the party selling or brokering the sale of the Units
does not have any permanent business premises. For
distance selling as defined by Section 312b of the German
Civil Code (Bürgerliches Gesetzbuch, BGB), revocation
will be precluded in the case of the purchase of financial
services, the price of which on the financial markets is
subject to fluctuations (Section 312g(II)(8) BGB).
The timely dispatch of the revocation notice is sufficient
for the purpose of observing the time limit. The revocation
must be notified in writing directly to
BayernInvest Luxembourg S.A.
the Legal, Tax and Compliance Department,
Sales prospectus SWISS HEDGE - General Information 41
6B, rue Gabriel Lippmann
L-5365 Munsbach
including information on the person making the declaration
and his address; no reason for the revocation is required.
The deadline for revocation does not commence until
a copy of the concluded contract has been delivered to
the purchaser or a contract note has been sent to him
or her, including instructions regarding the right of the
revocation similar to the above.
If the beginning of the period is in dispute, the burden of
proof lies with the seller.
The right of revocation does not apply if the seller can
prove that either the investor acquired the Units as part
of his commercial operations, or that he called on the
investor to conduct negotiations leading to the sale of the
Units as a result of a previous order (Article 55, Para. 1 of
the German Industrial Code [Gewerbeordnung]).
If the revocation is exercised after the investor has made
payment, the foreign investment company is obliged
to repay the investor‘s costs – incrementally as the
purchased Units are transferred back to the investment
company, if necessary – in addition to an amount
corresponding to the value of the purchased Units the day
after the revocation was received.
The right of revocation cannot be waived.
29. Additional Information for Investors in the United Kingdom
These additional notes are directed at investors from the
United Kingdom only.
These additional notes are part of the Prospectus and
should be read in conjunction with it. These additional
notes contain special information on Swiss Hedge.
Swiss Hedge is launched as an unincorporated “fonds
commun de placement” with an indefinite term and is
subject to Luxembourg legislation and the Luxembourg
financial market supervisory authority, the Commission
de Surveillance du Secteur Financier (CSSF). The Fund
was launched pursuant to Part I of the Luxembourg Law
dated 17 December 2010 on Undertakings for Collective
Investment in Transferable Securities (Law of 2010), and is
considered to be a Directive-compliant investment fund
(UCITS). On this basis, the Fund may, following a successful
distribution notice, be offered for sale to the public in the
member states of the European Union except the Grand
Duchy of Luxembourg.
The competent Board of Directors for this Fund (see
“Organisation” in this Prospectus) is responsible for the
correctness of the information in this Prospectus and in
these notes.
Facilities Agent Services in the UK
KB Associates has been appointed to perform the duties
of Facilities Agent for Swiss Hedge, and the Facilities
Agent has accepted these duties.
KB Associates, with registered office at 42 Brook Street,
London, W1K 5DB, United Kingdom, has agreed to
perform the duties of Facilities Agents at its business
premises.
From the same premises, unitholders may:
(a) return their units and obtain the prevailing redemption
price;
(b) submit complaints with regard to the activities of the
Fund or sub-funds;
(c) during normal business hours on any banking day,
view or obtain up-to-date copies of the Management
Regulations, the Prospectus, the Key Investor Information
Documents and the annual and semi-annual reports; and
(d) obtain written information on the currently published
unit certificate prices.
All investors should, with regard to their opportunities for investing in Swiss Hedge, first consult a tax advisor or financial advisor specialising in advice relating to investment funds. In the event of uncertainty regarding the content of this Prospectus, you should consult a professional advisor authorised by the FCA.
The terms and expressions used in this Prospectus
are used in the same context as in these notes unless
otherwise permitted by context.
42 Sales prospectus SWISS HEDGE - General Information
30. Information concerning the distribution in Switzerland - to qualified investors only
30.1 Representative
The representative in Switzerland is Valex Capital AG,
Schützenstrasse 18, CH-8808 Pfäffikon SZ
30.2 Paying Agent
The paying agent in Switzerland is Neue Helvetische Bank
AG, Seefeldstrasse 215, 8008 Zürich
30.3 Location where the relevant documents may be obtained
The prospectus, the key investors information document
(KIIDs) and the management regulations as well as the
annual and semi-annual reports may be obtained free of
charge from the representative.
30.4 Payment of retrocessions and rebates
29.4.1 The Management Company and its agents
may pay retrocessions as remuneration for distribution
activity in respect of fund units in or from Switzerland. The
remuneration may be deemed payment for the following
services in particular:
– Screening and analysis of fund universe and
selection of appropriate funds
– Ongoing information of investors
Retrocessions are not deemed to be rebates even if they
are ultimately passed on, in full or in part, to the investors.
The recipients of the retrocessions must ensure
transparent disclosure and inform investors, unsolicited
and free of charge, about the amount of remuneration
they may receive for distribution.
On request, the recipients of retrocessions must disclose
the amounts they actually receive for distrib-uting the
collective investment schemes of the investors concerned.
29.4.1 In the case of distribution activity in or from
Switzerland, the Management Company and its agents
may, upon request, pay rebates directly to investors. The
purpose of rebates is to reduce the fees or costs incurred
by the investors in question. Rebates are permitted
provided that
– they are paid from fees received by the
Management Company and therefore do not
represent an additional charge on the fund assets;
– they are granted on the basis of objective criteria;
– all investors who meet these objective criteria and
demand rebates are also granted these within the
same timeframe and to the same extent.
The objective criteria for the granting of rebates by the
Management Company are as follows:
– the volume subscribed by the investor or the
total volume he or she holds in the collective
investment scheme or, where applicable, in the
product range of the promoter;
– the amount of fees generated by the investor;
– the investment behavior shown by the investor
(e.g. expected investment period);
– the investor’s willingness to provide support in the
launch phase of a collective investment scheme.
At the request of the investor, the Management Company
must disclose the amounts of such rebates free of charge.
30.5 Place of performance and jurisdiction
In respect of the units distributed in or from Switzerland,
the place of performance and jurisdiction is the registered
office of the Representative.
44 Sales prospectus SWISS HEDGE - General Information
SWISS HEDGE - Twintrade
The assets in the sub-fund are invested on the principle
of risk diversification, based on the investment policy
principles described below and in accordance with
the investment restrictions defined in Article 4 of the
Management Regulations.
Investment Policy
The investment policy objective is to generate long-
term positive and uncorrelated returns by investing in
a stock portfolio with a focus on investing in European
companies. Instead of direct investments, investments
may be made in derivative financial instruments, on which
equities are directly or indirectly based.
Investment Strategy
Bank deposits, money-market instruments, equities,
interest-bearing securities, convertible loans, convertible
and warrant bonds, participation certificates, which
must be at least investment- grade, i.e. BBB (Standard &
Poor‘s), Baa (Moody‘s) or comparable, option warrants on
securities and securities in the form of index certificates
may be acquired for the sub-fund assets. Assets are
invested primarily in securities issued by
• Top-rated financial institutions or companies,
• States in the European Economic Area,
• State organisations of OECD Member States,
or
• Supra-national public organisations in which at least
one EEA state is a member.
SWISS HEDGE Twintrade may invest up to 10% of its assets
in Units of other UCITS or UCI.
Borrowing for short-term redemptions and liquidity
bottlenecks is permitted up to 10% of net sub-fund assets.
For hedging purposes and as part of the investment
strategy, the sub-fund may use derivatives as well as other
techniques and instruments. The overall risk incurred
through derivatives may not exceed the net asset value of
the sub-fund.
Techniques for a more efficient portfolio management
In accordance with the investment limits specified in
Article 4 of the Management Regulations, the investment
policy of the sub-fund is, using certain techniques and
instruments for a more efficient portfolio management,
primarily implemented through the use of suitable
derivatives, for example using performance swaps
negotiated with a counterparty under standard market
conditions. In the context of a performance swap of
this type, the sub-fund and the respective counterparty
agree, from an economic perspective, on the partial
or complete exchange of any profits or losses in the
portfolio underlying the performance swap. Favourable
performance of the portfolio underlying the performance
swap has a positive impact on the sub-fund‘s
performance. If, on the other hand, the portfolio performs
poorly, losses from the performance swap have a negative
or value-reducing impact on the sub-fund‘s assets.
The issuer limit in this regard applies in each case to both
the sub-fund assets and the portfolio underlying the
swap.
The portfolio underlying the performance swap chiefly
pursues investment strategies based on generating
income that is independent of the market, using absolute-
return strategies.
The investment of the Fund‘s assets in the performance
swap is made primarily in equities of European
companies. Investments in other countries may also be
added.
In the swap portfolio, a suitable combination of long and
short positions, or a suitable hedging of long positions,
is used to try to achieve an absolute return, while
ensuring that the overall risk associated with derivatives
does not exceed the total net value of the portfolio by
a factor of 2.
Sales prospectus SWISS HEDGE – Twintrade 45
Leverage of up to 2 will be used for investment purposes
for the portfolio underlying the performance swap.
Risk Profile
The performance of the sub-fund is considerably
influenced by the performance of the performance swaps
that are used. Through broad diversification and active
management of the portfolio underlying the performance
swaps, the sub-fund seeks to generate income that is
independent of trends, using absolute-return strategies.
Equities Risk
Acquiring equities may incur particular market and
company risks. The value of equities does not always
reflect the actual value of the company. As a result, there
may be large and rapid fluctuations in these securities
if market circumstances and assessments by market
participants change with regard to the value of these
investments. In addition, the rights resulting from equities
are always satisfied subordinate to the claims of all the
issuer‘s creditors. Consequently, equities are in general
subject to larger fluctuations in value than fixed-income
securities, for example.
Given that the acquisition of mid- and small caps from
all market segments can increase the potential for the
generation of income, there is a possibility that the
sub-fund will also from time to time include an increased
number of smaller and medium-sized companies. In
particular, equities from predominantly smaller, less
mature companies are as a rule subject to higher
fluctuations than the market in general. This is because
the securities are generally traded in smaller quantities
and these companies are exposed to greater business risk.
Where the sub-fund primarily comprises shares, this
may, in light of the danger of greater and more frequent
fluctuations in share values, give rise to correspondingly
large and small changes in the value of the sub-fund.
The risk associated with equity investments may also
impact indirectly on the Fund due to derivatives based on
equities.
Risks related to derivative transactions, buying and
selling options as well as entering into forward contracts
or swaps can be associated with the following risks:
Price changes in the underlying security may reduce the
value of the swap, option right or forward contract such
that it becomes worthless. sub-fund assets may also suffer
losses due to changes in the value of the asset on which
a swap is based. The equities risk may have an indirect
effect due to the equities on which the swap is based.
From time to time, payment obligations towards the
swap partner may result in a significant increase of the
sub-fund's risk of loss.
Any necessary back-to-back transactions (closing of
position) incur costs.
The leverage effect of options may alter the value of the
Fund’s assets more strongly than would be the case with
the direct purchase of assets.
The purchase of options carries the risk that the option
may not be exercised because the prices of the underlying
assets do not perform as expected, with the result that the
option premium paid by the Fund‘s assets is lost. When
options are sold, there is the risk that the sub-fund will
be obliged to purchase assets at a price higher than the
current market price, or to deliver assets at a price lower
than the current market price. This will result in the assets
of the sub-funds suffering a loss in the amount of the
price difference less the option premium received.
There is also the risk, in the case of forward contracts, that
the fund assets may suffer a loss on maturity due to an
unexpected performance of the market price.
The costs resulting from currency futures transactions
and from the acquisition of the corresponding rights to
options and option certificates and any possible losses
may reduce the performance of the sub-fund.
Interest rate fluctuation risk
With investments in fixed-income securities there is
always the possibility that market interest rates prevailing
at the time a security is issued may subsequently change.
46 Sales prospectus SWISS HEDGE – Twintrade
If market interest rates rise in comparison with the rates
that were current at the time of issue then, as a rule,
the price of the fixed-income security will fall. If market
interest rates should fall, then generally the price of
fixed-income securities will rise. This price adjustment
means that yields from fixed-income securities at any
point in time are roughly equal to current market interest
rates. These price fluctuations vary according to the
maturity dates of each fixed-income security. Short-dated
fixed-income securities hold less price risk than longer-
dated securities. However, short-dated fixed-income
securities generally offer lower yields than longer-dated
fixed-income securities. Money-market instruments
with residual maturities of less than 12 months tend
to represent a lower price risk due to their short-term
maturity.
Currency Risk
In cases where a sub-fund holds investments in currencies
other than that in which the sub-fund is denominated,
the sub-fund will receive the income, repayments and
proceeds from these investments in that currency. When
the value of this currency falls compared to the value of
the currency of the sub-fund, the value of the assets of the
sub-fund is reduced.
Key personnel risk
The success of a sub-fund, the investment results of which
are extremely positive over a specific period, is due to
the intuition of the Fund’s individual traders, i.e. the right
decisions taken by the Fund managers. Personnel making
up the Fund management can change. New decision-
makers may not necessarily trade with the same success.
Market risk
The price or market performance of financial products
depends to a great extent on the performance of the
capital markets, which is in turn affected by the overall
economic situation worldwide and the general economic
and political framework in individual countries. Illogical
factors such as moods, opinions and rumours may have
an impact on the general price trend, especially on a stock
market.
Increased Volatility
The sub-fund may be subject to significantly higher
fluctuations than pure bond funds due to the equities risk
with an indirect effect arising from the use of performance
swaps.
Leverage
The investment strategy can be associated with leverage
and is subject to the risks connected with it. Significant
adverse exchange rate movements will generally give rise
to the possibility that the sub-fund will suffer considerable
losses.
The Management Company calculates the extent of
the Fund’s leverage using the sum of the notionals of
derivative financial instruments. With this approach, the
values to be assessed arising from contrary positions are
not balanced but added, meaning that the derivative
financial instruments with a positive value used for
hedging purposes must be taken into account in the
addition. The extent of the expected leverage shown
below is expressed as the ratio between the sum of the
nominal values and the net Fund assets and is based on
historical values and expected trends. It is expected that
the amount of leverage will generally be between 1 on
average and 2 maximum in terms of the net Fund assets.
A leverage of 0 in this context means that the Fund does
not contain any derivative financial instruments or other
securities to be assessed.
It should be taken into account that derivative financial
instruments may be used for various purposes and the
calculation of the expected amount of leverage does
not differentiate between these different purposes.
The amount of the expected leverage shown therefore
does not reflect the Fund’s degree of risk. New market
conditions may change both the weighting of the
individual derivative financial instruments and the
characteristics of the risk factors for each derivative
financial instrument may change over time.
Sales prospectus SWISS HEDGE – Twintrade 47
Investors must in this respect anticipate that in exceptional
cases, the expected leverage effect may differ from the
range shown above.
(See also Chapter 7 “Risk Disclaimer”)
Investors should be aware that no assurances can be
made with regard to achieving the investment objectives,
and there may be a risk of suffering total loss or receiving
a lower amount back than originally invested.
Profile of a typical investor
Any investment in the SWISS HEDGE Twintrade sub-
fund is only suitable for experienced investors who are
in a position to assess the risks and the value of the
investment, and who wish to participate indirectly in the
performance of companies listed on European equity
markets. Investors must be prepared and in a position to
accept large fluctuations in the value of the Units and,
possibly, a substantial loss of capital, up to complete loss.
Investors should have a long-term investment horizon.
48 Sales prospectus SWISS HEDGE – Twintrade
Key figures
Launch date: 04 January 2012
First quotation: 04 January 2012
Value date for subscriptions and
redemption of Units:
The following trading day + 3 Luxembourg banking days
Unit class: D-EUR
Currency: Euro
Initial issue price: EUR 100.00
Minimum subscription: EUR 10,000
Use of income: Distribution
Sales charge: max. 5% (contained in the precentage of the net inventory value per share)
Redemption commission: N/A
Management fee 2.15% p.a.
Minimum fee of EUR 24,000 (based on sub-fund assets)
(calculated in % based on an average value calculated at each month end derived from the Fund’s net asset values determined on the valuation dates and payable at the end of each month)
The management fee includes the investment manager fee.
Taxe d’abonnement: 0.05% p.a.
Securities identification number: A1JNWM
ISIN: LU0700553844
Unit class: D-USD
Currency: USD
Initial issue price: USD 100.00
Minimum subscription: USD 10,000
Use of income: Distribution
Sales charge: max. 5% (contained in the precentage of the net inventory value per share)
Redemption commission: N/A
Management fee 2.15% p.a.
Minimum fee of EUR 24,000 (based on sub-fund assets)
(calculated in % based on an average value calculated at each month end derived from the Fund’s net asset values determined on the valuation dates and payable at the end of each month)
The management fee includes the investment manager fee.
Taxe d’abonnement: 0.05% p.a.
Securities identification number: A1JNWN
ISIN: LU0700553927
Unit class: D-CHF
Currency: CHF
Initial issue price: CHF 100.00
Minimum subscription: CHF 10,000
Use of income: Distribution
Sales prospectus SWISS HEDGE – Twintrade 49
Sales charge: max. 5% (contained in the precentage of the net inventory value per share)
Redemption commission: N/A
Management fee: 2.15% p.a.
Minimum fee of EUR 24,000 (based on sub-fund assets)
(calculated in % based on an average value calculated at each month end derived from the Fund’s net asset values determined on the valuation dates and payable at the end of each month)
The management fee includes the investment manager fee.
Taxe d’abonnement: 0.05% p.a.
Securities identification number: A1JNWP
ISIN: LU0700554149
Unit class: A-EUR
Currency: Euro
Initial issue price: EUR 100.00
Use of income: Distribution
Sales charge: max. 5% (contained in the precentage of the net inventory value per share)
Redemption commission: none
Management fee: Maximum 2.50% p.a.
Minimum fee of EUR 24,000 (based on sub-fund assets)
(calculated in % based on an average value calculated at each month end derived from the Fund’s net asset values determined on the valuation dates and payable at the end of each month)
The management fee includes the investment manager fee.
Taxe d’abonnement: 0.05% p.a.
Securities identification number: A1JNWQ
ISIN: LU0700554495
Unit class: A-USD
Currency: USD
Initial issue price: USD 100.00
Use of income: Distribution
Sales charge: max. 5% (contained in the precentage of the net inventory value per share)
Redemption commission: none
Management fee: maximum 2.50% p.a.
Minimum fee of EUR 24,000 (based on sub-fund assets)
(calculated in % based on an average value calculated at each month end derived from the Fund’s net asset values determined on the valuation dates and payable at the end of each month)
The management fee includes the investment manager fee.
Taxe d’abonnement: 0.05% p.a.
Securities identification number: A1JNWR
ISIN: LU0700554651
Unit class: A-CHF
Currency: CHF
50 Sales prospectus SWISS HEDGE – Twintrade
Initial issue price: CHF 100.00
Use of income: Distribution
Sales charge: max. 5% (contained in the precentage of the net inventory value per share)
Redemption commission: none
Management fee: Maximum 2.50% p.a.
Minimum fee of EUR 24,000 (based on sub-fund assets)
(calculated in % based on an average value calculated at each month end derived from the Fund’s net asset values determined on the valuation dates and payable at the end of each month)
The management fee includes the investment manager fee.
Taxe d’abonnement: 0.05% p.a.
Securities identification number: A1JNWS
ISIN: LU0700554735
All Unit classes:
Fund Manager:
Custodian fee: 0.06% p.a. (minimum fee EUR 15,000 p.a.)
(calculated in % based on average net sub-fund assets at each month end
and payable in euro at the end of each month)
Performance fee: In addition to the investment manager fee, each quarter the Investment
Manager also receives a performance fee of up to 20% of the amount of
the positive performance of the Units in circulation. The high watermark
principle will apply. The performance fee is calculated each valuation day
and accrued in the assets of the sub-fund. It is paid from the assets of the
sub-fund to the management company. The performance fee accrued at
each quarter is payable in arrears at the end of each quarter.
Swap counterparty for Performance
Swaps:
Merrill Lynch International
2 King Edward Street, London, EC1A 1HQ
Portfolio Manager for Performance
Swaps:
Tell AG
(prior to 27/10/2016 operating under the name swiss hedge capital ag)
Gerbergasse 5
CH-8001 Zurich
sub-fund currency: Euro
Valuation day: Every day that is an all-day banking day in Luxembourg and Frankfurt.
Subscriptions and redemptions: Every day that is an all-day banking day in Luxembourg, London and Frankfurt.
Total risk: The relative value at risk (99%, 20T) for the sub-fund is a maximum of 200%
of the value at risk of the benchmark portfolio.
Benchmark portfolio: Stoxx Europe 50 Index
Leverage: The maximum leverage amounts to 2
The average leverage amounts to 1
Sales prospectus SWISS HEDGE – Twintrade 51
Calculation method: Notional Sum
Units: Bearer Units with no par value
Certificates: Global certificates
Term: Unlimited
Authorised for sale in: Luxembourg, Germany, Great Britain, Switzerland (to qualified investors
only)
*Institutional investors must be disclosed by name to the Management Company on subscribing to the Fund
52 Sales prospectus SWISS HEDGE – Twintrade
32. Management Regulations
The Management Regulations of the SWISS HEDGE
investment fund (fonds commun de placement), as well
as all future amendments pursuant to Article 15 in this
connection, govern the legal relationships among:
I. The Management Company BayernInvest Luxembourg
S.A., a limited liability company with its registered office in
Luxembourg, 6B, rue Gabriel Lippmann, L-5365 Munsbach
II. The Custodian, M.M.Warburg & CO Luxembourg S.A.,
a limited liability company with its registered office in
Luxembourg, 2, Place François-Joseph Dargent, L-1413
(the “Custodian”), and
III. The subscribers and holders of SWISS HEDGE Units
(the “Unitholders”), who acknowledge the Management
Regulations through their purchase of the Units.
The contractual rights and obligations of the
Management Company, the Custodian and the
Unitholders with respect to the Fund are governed by the
Management Regulations set out below.
Article 1. The Fund
The Fund is a legally dependent special fund which
is founded as “fonds commun de placement” (FCP)
in accordance with the law of the Grand Duchy of
Luxembourg. It may consist of several sub-funds (the sub-
funds, hereinafter also collectively referred to as the Fund
Assets). The Board of Directors may, with the consent
of the Custodian, decide upon the launch of new sub-
funds or the dissolution of any individual sub-fund. Each
sub-fund, which constitutes an integral part of the Fund,
is deemed to be an independent Unit in the form of an
investment fund, over whose securities and other legally
valid assets the Unitholders acquire co-ownership.
The rights and obligations of the unitholders of a
sub-fund are completely separate from those of the
unitholders of the other sub-funds. This also applies in
relation to third parties to whom a sub-fund is responsible
only for the liabilities of that individual sub-fund. All sub-
funds are managed by the Management Company in the
interests of the Unitholders.
Unitholders hold the sub-fund’s assets in proportion to
the number of units they hold. By subscribing to units,
the Unitholder accepts the Management Regulations, the
Special Regulations of the relevant fund assets and all
approved and announced changes.
The assets of all of the sub-funds are kept in custody by
the Custodian and are kept separate from those of the
Management Company.
Article 2. The Management Company
The Fund is managed in the name of the Management
Company and for the joint account of the Unitholders
and in accordance with Part I of the law of 17 December
2010 on Undertakings for Collective Investment. The
Management Company has its registered office in
Luxembourg.
As per Luxembourg law, the Management Company
is obliged to act in the interests of the Unitholders in
respect of the management of the Fund. In particular, it
is entitled to purchase, sell, underwrite, exchange and
own securities, and to exercise all rights arising directly or
indirectly in connection with the fund assets.
The Board of Management of the Management Company
determines the investment policy of each of the sub-
funds, taking account of the restrictions.
The Board of Management of the Management Company
may by its own responsibility appoint, for one or more of
the sub-funds, an Investment Advisor or an investment
committee, which is composed of members of the Board
of Management and/or other persons and advises the
Board of Management and the Fund Managers, if any, in
respect of the general investment policy. Any Investment
Advisor fees incurred may be charged to the relevant
sub-funds. The Board of Directors may also delegate the
implementation of the investment policy and the general
management of the Fund Assets to employees of the
Management Company.
The Management Company has implemented a
Risk Management Procedure in relation to the fund
management, which calculates and observes the relevant
Sales prospectus SWISS HEDGE – Management Regulations 53
risk positions of any asset in relation to the overall risk
profile of the sub-fund at any time, as well as a procedure
for the precise and independent valuation of OTC
derivatives. The Management Company reports to CSSF
about the observance of the requirements of circular
11/512 dated 30 May 2011, in recurrent periods.
Article 3. The Custodian
The Management Company appoints a Custodian for the
Fund in the Special Regulations.
The Custodian is entrusted with the safekeeping of the
Fund assets. The Custodian’s rights and duties are laid
down in Luxembourg Law, the Management Regulations
and the Custodian Contract.
All the securities and other assets of the Fund are kept in
safe custody by the Custodian in blocked accounts and
securities accounts, which may be accessed in accordance
with the provisions of the Management Regulations
and the laws applicable in Luxembourg. The Custodian
may entrust third parties, in particular other banks and
collective securities depositaries, with the safe custody of
securities and other assets, under its own responsibility
and with the agreement of the Management Company.
The Custodian will have a claim for remuneration to
which it is entitled pursuant to the fee rate detailed in
the relevant sub-fund prospectus; it may withdraw the
amount of such remuneration from the separate blocked
account of a sub-fund only with the consent of the
Management Company.
The Custodian will only pay such remuneration to the
Management Company out of the separate blocked
accounts of a sub-fund as is provided for in the sub-fund
prospectus and the Management Regulations.
If permissible by law, the Custodian is entitled and obliged
to act in its own name to:
6 . Enforce claims of the Unitholders against the
Management Company or a former Custodian;
7 . Appeal against the enforcement of judgements by
third parties and prevent the enforcement of claims
against one of the sub-funds for which the latter is not
liable.
The Management Company and the Custodian must, in
carrying out their functions, act independently of each
other and solely in the interests of the Unitholders.
Either the Management Company or the Custodian may
terminate the Custodian’s appointment in writing by
mutual agreement or with three months’ notice at any
time. The Management Company may, however, only
dismiss the Custodian when a new Custodian will be
able to assume the functions and duties of a Custodian
pursuant to the Management Regulations within two
months of the date of the dismissal and once the CSSF
has granted its approval. Subsequent to its dismissal, the
Custodian must continue to carry out its functions as
per the legal and regulatory requirements for as long as
necessary in order to transfer the entire fund assets to the
new Custodian.
If the Custodian terminates its own appointment, the
Management Company will be obliged to appoint a new
Custodian to assume the functions and duties of the
Custodian pursuant to these Management Regulations.
In this case, the Custodian will continue to carry out its
functions as per the legal and regulatory requirements
until the fund assets have been transferred to the new
Custodian.
Article 4. Investment objective, investment policy and restrictions
The targets and specific constraints stipulated by the
investment policy of each sub-fund are described in the
Prospectus.
The assets of each sub-fund are invested in accordance
with the principle of risk spreading. In accordance with
the detailed description contained in the Prospectus, the
investment policy of the individual sub-funds comprises
investments in fixed and variable interest-bearing
securities, including convertible and warrant-linked
bonds, in warrants on securities, in shares and securities
akin to shares and in other permissible assets. The
investment policies of the individual sub-funds may vary,
in particular in terms of their subject, the region in which
investments are to be made, the securities which are to
be acquired, the currency in which those securities are
denominated, and the term of those securities.
54 Sales prospectus SWISS HEDGE – Management Regulations
The Management Company may, taking account of the
following investment constraints, make use of derivatives
or other techniques and instruments. A sub-fund may not
under any circumstances diverge from the investment
targets specified in its investment policy in respect of
any transactions in connection with derivatives or other
techniques and instruments.
The Management Company and the auditor will monitor
the transparency and traceability of the valuation
methods and the application thereof. If discrepancies
become apparent during monitoring, the Management
Company will arrange for their correction.
The total amount of liabilities arising out of credit default
swaps and other techniques and instruments may not
exceed the net asset value of a sub-fund. The calculation
of risks takes account of the market price of the base
values, the counterparty risk, future foreseeable market
developments and the liquidation time limits of the
positions. The use of derivative financial instruments may
double the total risk of the sub-fund maximum. The total
risk of the UCITS is thereby limited to a maximum of 200%.
The total amount of liabilities arising out of credit default
swaps (CDSs) may not exceed 20% of the net assets of
a sub-fund, where they are not undertaken for hedging
purposes. The valuation of CDSs is carried out on a regular
basis in accordance with traceable and transparent
methods.
The use of credit derivatives must be exclusively in the
interests of the individual sub-fund and the Unitholders,
and must also be in line with the investment policy and
the risk profile of the sub-fund.
Loans on securities
The fund may act as lender or borrower on condition that
such transactions are in accordance with the following
rules.
The fund may only grant or contract for loans within a
standardised system organised by a recognised clearing
organisation or by a first class financial institution
specialising in such transactions.
The fund shall, in its annual report, state the value of the
security loans granted or contracted for at the balance
sheet date of the report.
Lender
As a principle, when acting as lender the Fund must
receive a guarantee at least equal to the value of the
securities loaned out. The guarantee must be in the form
of liquid assets and/or securities issued by a member
country of the OECD or its regional authorities or by
an international institution or institutions of a federal,
regional or worldwide dimension. The guarantees remain
in escrow in favour of the Fund until termination of the
contract. Such a guarantee is not required when the
securities loan is cleared through Euroclear, Clearstream
or another recognised clearing house that guarantees
lenders the return of their securities or provides other
forms of guarantee.
If the Fund is lender, such loans shall not exceed 50%
of the value of the sub-fund securities portfolio. This
restriction does not apply where the Fund has at all times
the right to cancel the agreement and enforce return of
the securities. A loan of securities may not exceed 30 days.
Borrower
Securities that are, as an exception, accepted by way
of loan cannot be accessed during the time they are in
the Fund’s possession, unless the Fund has sufficient
guarantee to be able to repay the loan securities at the
end of the contract. If the Fund is the recipient of the loan,
loan securities received may not exceed 10% of the total
value of the securities portfolio of a sub-fund and such
transactions may only be entered into for short periods.
The Fund may act as recipient of a loan in securities
transactions under the following terms and conditions:
1 . during a period of time in which securities have been
sent off to be registered,
Sales prospectus SWISS HEDGE – Management Regulations 55
2 . where securities have been surrendered by way of
a loan and have not returned in due time, and
3 . in order to avoid the non-performance of a securities
transaction where the Custodian is unable to meet its
delivery obligations.
Investment restrictions/limits
4.1
1 . The investments of each sub-fund may only comprise
the following assets:
a ) Securities and money market instruments which
are listed or traded on a regulated market; or
b ) Securities and money market instruments which
are traded on another market which is recognised,
regulated and open to the public and operates in a
proper manner, in a member state of the European
Union; or
c ) Securities and money market instruments that are
officially listed on a stock exchange in a country
that is not a part of the European Union or traded
on another regulated market in a country that is
not a part of the European Union which operates
regularly and is recognised and open to the public,
provided that the choice of this stock exchange or
market is provided for in the UCITS’ Management
Regulations.
d ) In the case of securities or money market
instruments from initial public offerings, the terms
of issue must contain the following obligations:
– that issue conditions contain the obligation
that requires that the permission is applied for
official listing on a securities exchange or on
another regulated market that is recognised,
open to the public and that operates in a proper
manner, and, insofar as the selection of this
exchange or this market is provided for in the
attachment to this administrative regulation
and the permission is obtained before the
period of one year following the issuance
expires at the latest.
e ) Shares in UCITS admitted pursuant to Directive
2009/65/EC and/or other UCIs within the meaning
of the first and second points of Article 1(2) of
Directive 2009/65/EC with their registered office in
a member state of the European Union or a non-EU
state, provided that:
– these UCIs are authorised pursuant to statutory
provisions which are comparable to those of
Community law and which subject the UCIs to
regulation by a supervisory authority.
– the shareholders of these UCIs are subject to a
level of protection which is equivalent to that
which is in place in respect of a UCITS, and the
provisions in respect of the custodianship of
the fund assets, the assumption of loans, the
granting of loans and short sales of securities
and money market instruments are equivalent
to the requirements of Directive 85/611 EEC in
this regard;
– the business activities of the other UCIs are
the subject of semi-annual and annual reports,
which enable investors to form an opinion
of their assets and liabilities, income and
transactions within the reporting period;
– the UCITS or the UCI whose shares are to
be acquired may, pursuant to its formation
documents, invest a maximum of 10% in total
of its assets in shares of another UCITS or UCI;
f ) Deposits at credit institutions that are repayable
on demand or within 12 months, provided that
the credit institution in question has its registered
office in a member state of the European Union or,
where the registered office of the credit institution
is located in a non-EU state (an OECD or FATF
member state), the credit institution is subject
to regulatory provisions which are equivalent to
those of Community law.
56 Sales prospectus SWISS HEDGE – Management Regulations
g ) Derivative financial instruments (“derivatives”),
including comparable cash-settled instruments
traded on the markets identified under items a),
b) and c), and/or derivative financial instruments
not traded on a stock exchange (“OTC derivatives”),
provided that:
– These instruments and techniques have as
their basis the securities, exchange rates or
currencies, interest rates or financial indices
in which the sub-fund is permitted to invest,
pursuant to the provisions of its investment
policy; OTC transactions are concluded
exclusively with major counterparties which
specialise in such transactions and are subject
to regulation by supervisory authorities; the
OTC transactions are subjected to regular,
reliable and verifiable valuations and may at
any time be sold, liquidated or offset by way of
a countertrade at their commensurate current
market value.
h ) Money market instruments which are not traded
on a regulated market and which are defined in
Article 1 of the law as of 17 December 2010, that
pertains to structures for joint investments, insofar
as the issuance or the issuer of these instruments
is also subject to the investment and investor
protection and provided that these instruments
have been:
– issued or guaranteed by a central, regional or
local authority or the central bank of a member
state, the European Central Bank, the European
Union or the European Investment Bank or by
a third country or, if the country is a federation,
a member country or an international public
sector institution to which at least one member
state belongs, or
– issued by a corporation whose securities are
traded on one of the markets referred to in a),
b) or c) above, or
– issued or guaranteed by an institution that,
pursuant to the criteria laid down in EU law,
is subject to official supervision or else an
institution that underlies and complies with
supervision that is as least as stringent as EU
law, or
– issued by another issuer which belongs to
a category authorised by the Luxembourg
supervisory authority (CSSF) and provided
investor protection measures exist for
investments in these instruments equivalent
to the first three paragraphs above and
provided the issuer is either a company with
share capital of at least ten million euros (EUR
10,000,000) and that compiles and publishes its
annual financial statements in accordance with
the Fourth Directive 78/660/EEC or is a legal
entity which is part of a group of companies
consisting of one or more listed companies
and where that company is responsible for
financing that group, or a legal entity financing
the securitisation of liabilities by means of a
line of credit granted by a bank.
However, a UCITS or sub-fund may not:
f ) invest more than 10% of its assets in securities and
money market instruments other than those listed in
paragraph 1;
g ) acquire precious metals or certificates in respect of
precious metals.
Each sub-fund may additionally hold liquid assets.
4.2
1 . Furthermore, each sub-fund is permitted to avail
itself of such techniques and instruments which
have securities and money market instruments as
their basis, provided that these techniques and
instruments are used to promote the efficient
management of the sub-fund in question and are
in compliance with the conditions and limitations
imposed by the Luxembourg supervisory authority.
Sales prospectus SWISS HEDGE – Management Regulations 57
The aforementioned conditions and limitations must
be in line with the provisions of the law where the
transactions relate to the use of derivatives.
The sub-fund may not under any circumstances
diverge, in the context of such transactions, from the
investment targets specified in its investment policy.
2 . Each sub-fund ensures that the total risk associated
with derivatives does not exceed the total net asset
value of the sub-fund. The total risk of the UCITS may
double at most, meaning that the total risk is limited
to 200%.
The calculation of the risk takes account of the
market price of the underlying securities, the risk of
default by a counterparty, future market fluctuations
and liquidation time limits. This also applies to the
following paragraphs.
Each sub-fund may invest in derivatives as part of
its investment strategy and within the boundaries
specified in point 4.3, provided that the total risk
associated with the underlying securities does not
exceed the investment limits specified under point 4.3.
Where a sub-fund invests in index-based derivatives, it
is not bound by the investment limits specified under
point 4.3.
Where a derivative is embedded in securities or a
money market instrument, this must also be taken into
account in respect of the provisions contained in this
section.
4.3
1 . Each sub-fund may invest a maximum of 10% of its net
assets in securities or money market instruments of a
single issuer. Each sub-fund may invest a maximum of
20% of its net assets with a single institution. The risk
of default by a counterparty in the case of transactions
with OTC derivatives effected by the sub-fund may not
exceed 10% of its net assets, where the counterparty is
a credit institution in terms of point 4.1(1) (f ). In other
cases, the limit constitutes a maximum of 5% of the
net assets.
2 . The total value of the securities and money market
instruments of issuers in which the sub-fund in each
case invests more than 5% of its net assets may
not exceed 40% of the value of its net assets. This
limitation does not apply in respect of deposits and
transactions involving OTC derivatives concluded with
financial institutions which are subject to regulation
by a supervisory authority. Notwithstanding the
individual upper limits contained in paragraph 1,
each sub-fund may invest a maximum of 20% of
its net assets with a single institution by way of a
combination of:
– Securities or money market instruments issued by
that institution,
– Deposits with that institution, and/or
– OTC derivatives traded with that institution.
3 . The upper limit specified in the first sentence of
the first paragraph of section 1 will amount to a
maximum of 35%, where the securities or money
market instruments in question have been issued or
guaranteed by a member state of the European Union
or one of its regional entities, by a non-EU state or by
international institutions of a public nature of which at
least one member state is a member.
4 . The upper limit specified in paragraph 1, sentence
1 will amount to a maximum of 25% in respect of
certain bonds, where these have been issued by a
credit institution with its registered office in a member
state of the European Union and which is subject to
regulation by a special supervisory authority pursuant
to statutory provisions for the protection of holders of
such bonds. In particular, the income from the issue of
such bonds must, pursuant to the statutory provisions,
be invested in assets which, during the entire term of
the bonds, adequately cover the resultant liabilities
and are preferentially earmarked for the repayment
of the capital, which will become necessary upon a
default by the issuer, and the payment of interest.
58 Sales prospectus SWISS HEDGE – Management Regulations
Where a sub-fund invests more than 5% of its net
assets in bonds, in terms of the preceding sub-
paragraph, which have been issued by a single issuer,
the total value of these investments may not exceed
80% of the value of the net assets of the sub-fund.
5 . The securities and money market instruments
specified in paragraphs 3 and 4 are not taken into
account in respect of the application of the investment
limits of 40% provided for in paragraph 2.
The limits specified in paragraphs 1, 2, 3 and 4 may not
be aggregated. That is, investments made pursuant
to paragraphs 1, 2, 3 and 4 in securities and money
market instruments of a single issuer, in deposits
with that issuer or in derivatives of that issuer, may
not exceed 35% of the net assets of the sub-fund
concerned.
Companies which belong to the same corporate
group, in terms of the preparation of their
consolidated financial statements in terms of Directive
83/349/EEC or pursuant to recognised international
accounting principles, are to be viewed as a single
issuer as regards the calculation of the investment
limits provided for in this section.
Each sub-fund may cumulatively invest up to 20%
of its net assets in securities and money market
instruments of a single corporate group.
4.4
1 . Notwithstanding the investment limits specified in
point 4.7, the upper limits for investments in shares
and/or debt instruments from a single issuer specified
under point 4.3 amount to a maximum of 20%, where
the intention of the investment policy of a sub-fund
is to replicate a specific share or debt instrument
index, described in greater detail in the appendix to
this Prospectus and recognised by the Luxembourg
supervisory authority (CSSF). This is conditional upon:
– The composition of the index being sufficiently
diversified,
– The index representing an adequate reference
point for the market on which it is based, and
– The index being published appropriately.
2 . The limit specified in paragraph 1 amounts to
35%, provided that this is justified on the basis of
extraordinary market conditions, in particular on
regulated markets where certain securities or money
market instruments dominate. An investment to this
upper limit may only be made in respect of a single
issuer.
4.5
1 . Notwithstanding the rules specified under point 4.3,
the Luxembourg supervisory authority (CSSF) may, in
accordance with the principle of risk spreading, permit
a sub-fund to invest up to 100% of its net assets in
securities and money market instruments from various
issues floated or guaranteed by a member state of
the European Union or one of its regional entities,
or by a non-EU state (an OECD member state), or by
international institutions of a public nature of which
at least one member state of the European Union is a
member.
2 . The Luxembourg supervisory authority (CSSF) will
grant the aforementioned approval only where it is
of the opinion that the Unitholders of the sub-fund
concerned enjoy the same protection as Unitholders
of sub-funds which comply with the limitations
outlined in points 4.3 and 4.4.
3 . The securities held by the sub-fund in question must
have been issued in the context of at least six different
issues, whereby the securities from a single issue may
not exceed 30% of the net assets of the sub-fund
concerned.
4 . If the approval referred to in paragraph 1 is granted,
the sub-funds concerned must explicitly list in an
annex to this Prospectus the states, regional entities or
international institutions of a public nature issuing or
guaranteeing securities in which the sub-funds intend
to invest more than 35% of their net assets.
Sales prospectus SWISS HEDGE – Management Regulations 59
5 . Furthermore, the sub-funds in question must,
where such approval is granted by the Luxembourg
supervisory authority (CSSF), explicitly refer to this
approval in the Prospectus, in the KIID and in any
other advertising materials in respect of the sub-funds
in question, and in doing so list the states, regional
entities or international institutions of a public nature
in whose securities the sub-funds in question intend
to invest or have invested more than 35% of their net
assets.
4.6
1 . The sub-fund may acquire units in other UCITS and/
or other UCIs as defined in Point 4.1(1) (e) provided it
does not invest more than 20% of its net assets in one
and the same UCITS or other UCI.
In the context of the application of the investment
limit, each sub-fund in the umbrella fund within the
meaning of Article 181 of the Law dated 17 December
2010 concerning Undertakings for Collective
Investment is to be viewed as an independent issuer,
provided that the principle of the several liability of
each sub-fund in respect of third parties applies.
Investments made as a UCITS in shares of other UCIs
may not exceed 30% of the net assets of the sub-fund
in question.
Where a sub-fund acquires shares of another UCITS
and/or another UCI, the investment values of the
UCITS or other UCI concerned will not be taken into
account in respect of the upper limits specified under
point 4.3.
If the sub-fund acquires Units in another UCITS
that is managed directly or indirectly by another
Management Company with which the Management
Company is linked through common management
or control or through a substantial direct or indirect
holding, then no issue fees, sales commission or
redemption commission will be levied for the
subscription or redemption of Units in the other UCITS.
If a sub-fund invests a significant portion of its assets
in other UCITS and/or other UCIs, its prospectus must
contain details on the maximum management fees to
be borne by the relevant UCITS itself and by the other
UCITS and/or other UCIs in which it intends to invest.
The UCITS shall state in its annual report the maximum
proportion of management fees to be borne by the
UCITS and the UCITS or other UCIs in which it invests.
4.7
1 . The Management Company may not acquire shares
with attached voting rights, which would enable
it to exercise an appreciable influence over the
management of an issuer, on behalf of any of the
sub-funds managed by it which fall within the scope
of application of Part I of the Law dated 17 December
2010 concerning Undertakings for Collective
Investment.
2 . Furthermore, no sub-fund may acquire more than:
– 10% of the non-voting shares of a single issuer,
– 10% of the bonds of a single issuer,
– 25% of the shares of a single UCITS and/or UCI, or
– 10% of the money market instruments of any
single issuing body.
It is not necessary to comply with the limitations
provided for in the preceding second, third and fourth
points in the context of an acquisition where the gross
amount of the bonds or money market instruments,
or the net amount of the issued shares, cannot be
calculated at the time of the acquisition.
60 Sales prospectus SWISS HEDGE – Management Regulations
3 . Paragraphs 1 and 2 do not apply in respect of:
a ) Securities and money market instruments issued
or guaranteed by a member state of the European
Union or one of its regional entities;
b ) Securities and money market instruments issued
by a non-EU member state;
c ) Securities and money market instruments issued
by international institutions of a public nature of
which one or more member states of the European
Union are members; or
d ) Shares held by a UCITS in the capital of a company
in a non-EU member state which primarily invests
its assets in securities of issuers domiciled in
that non-EU member state, and where such a
shareholding constitutes, due to the statutory
provisions of the non-EU member state, the only
possibility for the UCITS to invest in securities of
issuers domiciled in that non-EU member state.
However, this exception will only apply where the
Company domiciled in the non-EU member state
does not, in implementing its investment policy,
exceed the limitations specified in points 4.3,
4.6 and 4.7(1) and (2). Where it does exceed the
limitations specified in points 4.3 and 4.6, the rules
specified in point 4.8 will apply correspondingly.
4.8
1 . The sub-funds will not be required to comply with the
investment limitations provided for in this section in
respect of the exercise of subscription rights linked to
securities or money market instruments which form
part of the relevant sub-fund assets.
2 . Notwithstanding their obligation to comply with the
principle of risk spreading, newly-admitted UCITS may
diverge from the provisions specified in points 4.3, 4.4,
4.5 and 4.6 for a period of six months from the date of
their admission.
3 . If the limitations referred to under paragraph 1 are
exceeded, unintentionally or as a result of the exercise
of subscription rights, the sub-fund in question
must as a matter of priority endeavour to rectify this
situation by means of the sale of assets, taking account
of the interests of the Unitholders.
4 . In the event that an issuer forms a legal entity with
several sub-funds, in respect of which a sub-fund will
be liable with its assets exclusively against the claims
of the Unitholders of that sub-fund and also against
creditors whose claims have accrued as a result of the
formation, maturity or liquidation of the sub-fund,
each sub-fund is to be viewed as an independent
issuer for the purposes of the application of the rules
in respect of the spreading of risk in accordance with
points 4.3, 4.4 and 4.6.
4.9
1 . Each sub-fund may acquire foreign currencies by
means of a back-to-back loan.
2 . Each sub-fund may assume loans of up to 10% of
its net assets, provided that the loans are of short
duration.
3 . The Fund Assets may only be pledged as collateral,
transferred, assigned or otherwise encumbered to
the extent that this is required by a stock exchange,
in another market or in connection with contracted
transactions as a result of binding obligations.
No loans may be granted, and no surety obligations
on behalf of third parties may be entered into, at the
expense of the Fund Assets. This shall not prevent
such sub-funds from acquiring securities not yet paid
in full, money market instruments or other financial
instruments referred to in Point 4.1(1) (e), (g) and (h).
4.10
Short sales of securities, money market instruments or
other financial instruments specified under point 4.1(1)
(e), (g) and (h) may not be effected by management
Sales prospectus SWISS HEDGE – Management Regulations 61
companies or custodians acting for the account of the
Fund or its sub-funds.
4.11
The Management Company may, with the agreement of
the Custodian, impose additional investment restrictions
to correspond with the conditions in those countries in
which Units are distributed or are to be distributed.
4.12
A sub-fund may subscribe, acquire and/or hold securities
to be issued by or issued by one or more sub-funds of the
same UCI if:
• the target fund is itself not invested in the sub-fund
that is invested in such target sub-funds; and
• the sub-funds that are to be acquired may not,
pursuant to their articles of association, invest more
than 10% of their assets in Units of other UCIs of the
same sub-funds; and
• any voting rights associated with the securities in
question are suspended during such time that they are
held by the corresponding sub-fund, irrespective of
whether they are appropriately recorded in the annual
accounts and the period reports; and
• as long as these securities are held by the UCI, their
value is in no case accounted for when calculating the
net assets of the UCI with regard to determining the
minimum amount for net assets as required by this
law; and
• there is no doubling of management fees, sales
charges or redemption fees at the level of the
sub-fund of the UCI that has invested in the target
sub-fund and paid to that target fund.
Article 5. Issue of Units
The Management Company issues Units of each individual
sub-fund at the issue price specified in the Prospectus and
under the conditions specified therein. Unitholders are
co-owners of only that sub-fund in which they hold Units.
The Management Company observes the laws and
requirements of the countries in which Units are offered.
The Management Company may also impose further
requirements for the issue of Units outside Luxembourg,
which are documented in the Prospectuses for the
countries in question. The Management Company may
at any time and at its own discretion discontinue or
restrict the issue of Units, for a specified period of time or
indefinitely, in respect of private individuals or corporate
bodies in certain countries or regions. The Management
Company may preclude certain individuals or corporate
bodies from acquiring Units, where such measures
are necessary in the interests of the protection of the
Unitholders and the Fund.
The subscription application must be received by the
Management Company, the transfer authority, the sales or
paying agents before 2:00 p.m. Luxembourg time on the
valuation date. This is settled based on the net asset value
of the next valuation date. For subscription applications
received after 2:00 p.m. Luxembourg time on the relevant
valuation day, the corresponding units will be issued on
the basis of their net asset value on the valuation day
following the next valuation day.
In addition, the Management Company may reject
subscription applications at its own discretion, and
redeem Units belonging to Unitholders who have been
precluded from acquiring and owning Units at any time.
Payments received for subscription applications which
are not processed immediately shall be repaid by the
Custodian as soon as possible without interest.
Payments for the subscription of Units must be made to
the Custodian within 3 Luxembourg business days of the
relevant valuation day (trading day).
Any deviations from this regulation are listed in the
description of the respective sub-fund.
Article 6. Issue Price
The issue price is the net asset value per Unit of each
of the sub-funds as published on the next subsequent
62 Sales prospectus SWISS HEDGE – Management Regulations
valuation day, as defined in the Prospectus in respect of
each sub-fund, on which the subscription or redemption
application is received by the Management Company, the
Transfer Agent, the Sales Agent or Paying Agent.
The issue price of each Unit class may be increased by
the amount of stamp duty or other charges incurred
by the Management Company, or by the amount of
a sales commission, plus an issue premium paid to
the distribution agencies, which is determined by the
Management Company.
The issue price will be rounded to the nearest two decimal
places.
Article 7. Units in a Sub-Fund
Subject to local legislation in the countries in which
the Units are being offered, the Units will be issued as
registered Units or as bearer Units.
The Management Company may issue fractions of Units of
up to four decimal places for registered Units or for bearer
Units confirmed by global certificates.
After receipt of the issue price in the account of the Fund
at the Custodian, the Units will be immediately transferred
on behalf of the Management Company by the Custodian
through a credit to a securities account of the investor.
This also applies to Unit confirmations when the Units are
entered in the Unit register.
As a principle, all the units in a sub-fund have equal rights.
The Management Company may offer several categories
of Units for every sub-fund with the features and rights
laid down by the Management Company in each case, as
described in the Prospectus for each sub-fund. The Unit
classes may be differentiated by the dividend distribution
policy (distribution or reinvestment), the investor profile
(institutional investor or non-institutional investor),
the fee policy (e.g. issue premium, sales commission,
management fee) or other features and rights laid
down by the Management Company and shown in the
Prospectus.
A maximum issue fee of 5% will be charged on the Unit
classes with issue premium; a maximum sales commission
of 0.5% will be charged on the Unit classes with sales
commission (see Article 12). The maximum issue fees and
maximum sales commissions are listed in the description
of the respective sub-fund.
Article 8. Net Asset Value
The net asset value per Unit of any sub-fund will be
determined under the supervision of the Custodian by
the Management Company or a company instructed by
the latter in Luxembourg on the valuation day, as laid
down for every sub-fund in the Prospectus, by dividing
the net asset value of the corresponding sub-fund (assets
minus liabilities) by the number of Units of this sub-fund
in circulation. The net asset value for every sub-fund is
expressed in the currency of the relevant sub-fund.
Unless otherwise specified in the relevant Sub-Fund
description, is considered the valuation of each full-day
bank business day in Luxembourg and Frankfurt am Main.
The value of the assets of every sub-fund is determined as
follows:
1 . Securities and money market instruments with a
(residual) term of more than one year, and other
securities that are admissible at law or under the
management regulations, are valued at their latest
quoted price when they are listed on an official
exchange or are traded in another regulated market
that is recognised, open to the public and operates
regularly. When a single security is traded on several
markets, then the latest quoted price from the
security’s main market shall be used.
2 . Non-listed securities and other legal assets and
securities, which are allowed by these Management
Regulations, that are listed or are traded on a
recognised market, but for which the latest sales
price is not representative, shall be valued at market
value as determined by the Management Company in
good faith, applying generally recognised valuation
Sales prospectus SWISS HEDGE – Management Regulations 63
principles which can be examined by an independent
auditor.
3 . Units of other UCITS or UCIs are calculated using their
most recent net asset value.
4 . Liquid assets are calculated at their nominal value plus
interest accrued.
5 . When valuing debenture bonds that are not admitted
to an official market or are not listed in an organised
market (e.g. unlisted loans, commercial papers and
loan certificates) and the valuation of promissory
notes, the agreed price for similar debenture bonds
and promissory notes is used and, where applicable,
the quoted price for debt issued by a similar issuer for
the same term and same interest rate less any discount
necessary to take account of the lower marketability.
6 . Option rights accruing to a sub-fund and debt arising
from options bestowed by a third party that are
admitted for trading on an exchange or on another
organised market are valued at their latest quoted
price. This also applies to receivables and payables
arising out of futures purchased or sold on account of
a sub-fund. Any valuation gain or loss observed on a
trading day is aggregated with any margin falling due
to the sub-fund.
The valuation of money market paper and other securities
with a residual term of less than a year can be based on
the original cost less expenses paid at purchase and by
comparison with equivalent money market paper or
other securities with a constant return. The Management
Company ensures that on disposal the sale price attained
is not below the yield-implied price.
Consequently, the valuation basis is adjusted to take
account of significant changes in market circumstances.
Whenever a foreign exchange rate is needed for
establishing the NAV of a sub-fund, then the last known
average rate is used.
In addition, appropriate measures will be taken to
calculate the fees charged and the reinvested income for
each sub-fund.
Should unusual circumstances arise, which make the
valuation impossible or inappropriate in accordance with
the above-mentioned criteria, the Management Company
is authorised to temporarily pursue other valuation rules
determined in good faith, which are generally recognised
and verifiable by independent auditors, in order to achieve
an appropriate valuation of the fund assets.
For the purpose of drawing up annual and semi-annual
reports, the entire fund assets are expressed in EUR;
this value corresponds to the balance of all assets and
liabilities of every sub-fund within the fund.
The net asset value of every individual sub-fund is
converted into Euro for this valuation.
Insofar as several Unit categories are established for a
sub-fund in accordance with Article 7 of the management
regulations, the following special features occur for the
Unit valuation:
a ) The Unit valuation takes place separately for each Unit
class under the criteria listed in paragraph 1 of this
Article.
b ) The inflow of funds on the basis of the issue of Units
increases the percentage proportion of the relevant
Unit class in the overall value of the net fund assets
of the relevant sub-fund. The outflow of funds owing
to the redemption of Units reduces the percentage
proportion of the relevant Unit class in the total value
of the net fund assets of the relevant sub-fund.
c ) In the event of a distribution, the Unit value – of
distribution Units is reduced by the amount of the –
distribution. This means that at the same time the
percentage proportion of the Units with a distribution
is reduced in the value of the net fund assets of
the relevant sub-fund by the total amount of the
64 Sales prospectus SWISS HEDGE – Management Regulations
distribution, whilst the percentage proportion of
the accumulation Units – which are not entitled to a
distribution– increases in the net fund assets of the
relevant sub-fund.
d ) The expense of the sales commission, which is
charged to the Units with sales commission, reduces
the percentage proportion of the Units with sales
commission in the entire value of the net fund assets
of the relevant sub-fund, whilst the percentage
proportion of the Units with issue premium increases
in the net fund assets of the relevant sub-fund.
If there are widespread requests for redemption,
which cannot be satisfied from the liquid funds and
permitted borrowing of the relevant sub-fund, then the
Management Company may, with the prior consent of
the Custodian, determine the net asset value of the Units
of a sub-fund on the basis of the rates on the valuation
day on which it disposes of the necessary assets for
the corresponding sub-fund, acting without delay and
protecting the interests of the relevant Unitholders. It
can only then redeem the Units at the corresponding net
asset value; this then also applies to the applications for
subscription for the corresponding sub-fund which are
submitted at the same time.
Article 9. Periodic suspension of the valuation of the net asset value and the issue, redemption and conversion of the Units of one or all sub-funds
The Management Company may periodically suspend
the valuation of the net asset value of any sub-fund and
consequently the issue, redemption and conversion of the
Units of one or all sub-funds if:
• a stock exchange or a regulated market on which a
substantial part of the securities of a sub-fund are
quoted or traded is closed (apart from on normal
weekends or public holidays) or if the trade on such
a stock exchange or on such market is restricted or
suspended;
• political, economic, military, monetary emergencies,
which lie outside the control, responsibility or
influence of the Management Company, make acts of
disposal of the relevant sub-fund assets impossible;
• an interruption to communications or any other
reason makes it impossible to determine the value of a
substantial part of a sub-fund;
• transactions for the relevant sub-fund become
impossible to carry out owing to restrictions on
foreign exchange operations or other transfers of
assets or if evidence can be provided objectively that
purchases or sales of a substantial part of the assets of
a sub-fund are not able to be carried out at rates in line
with the market.
Article 10. Redemption
Unitholders may submit applications for the redemption
of their Units at any time under the conditions laid down
in the Prospectus and at the redemption price indicated
therein.
The redemption price of any sub-fund is the net asset
value per Unit, as determined on the day of receipt of
the redemption application and in the event of Unit
certificates, receipt of the corresponding certificates
in accordance with the conditions laid down in the
Prospectus, or alternatively as published on the
following day.
The redemption application must be received by the
Management Company, the transfer authority, the sales or
paying agents before 2:00 p.m. Luxembourg time on the
valuation date. This is settled based on the net asset value
of the next valuation date. For redemption applications
received after 2:00 p.m. Luxembourg time on the relevant
valuation day, the corresponding units will be issued on
the basis of their net asset value on the valuation day
following the next valuation day.
Depending on the development of the net asset value, the
redemption price may be higher or lower than the issue
price paid.
The redemption price of each Unit certificate class may
be reduced by taxes or other charges incurred by the
Management Company, as well as by any fee charged by
Sales prospectus SWISS HEDGE – Management Regulations 65
the sales office and a redemption fee, which is determined
by the Management Company. The redemption price is
rounded to two decimal places.
The Management Company must ensure that the
sub-fund assets possess sufficient liquid funds after
receipt of redemption applications to be able to redeem
Units under normal circumstances within 3 Luxembourg
business days after the corresponding valuation day
(trading day).
The Custodian is obliged to pay the redemption
price within 3 Luxembourg business days after the
corresponding valuation day (trading day), except
for where specific statutory provisions apply, such as
foreign exchange restrictions, or where a circumstance
outside the control of the Custodian arises which makes
it impossible to transfer the redemption price into the
country from which the application for the redemption
was made. In addition, the Management Company may
postpone the payment of the redemption price with
the consent of the Custodian in the event of extensive
redemption applications until the corresponding assets
have been disposed of (see Article 8).
Any deviations from this regulation are listed in the
description of the respective sub-fund.
Article 11. Conversion of Units
The conversion of Units from one Unit class of a sub-fund
into Units in a different Unit class of the same sub-fund
or the same or a different Unit class of another sub-fund
may take place on every valuation day in Luxembourg
by submitting a conversion request to the Management
Company, on condition that the requirements for the
investment in the new Unit class are satisfied. The
conversion takes place on the date the request is received
at the net asset value per Unit of the Unit class of the
sub-fund concerned on the same day or the subsequent
valuation day under the conditions laid down in the
Prospectus, published on the subsequent day and by
applying the most recent foreign exchange rate at the
time of the conversion.
The Conversion request must be received by the
Management Company, the transfer authority, the sales
or paying agents before 2:00 p.m. Luxembourg time on
the valuation date. This is settled based on the net asset
value of the next valuation date. For Conversion requests
received after 2:00 p.m. Luxembourg time on the relevant
valuation day, the corresponding units will be issued on
the basis of their net asset value on the valuation day
following the next valuation day.
If an investor converts his Units from one Unit class in
a sub-fund into another Unit class of a sub-fund with
a higher issue premium, then the positive difference
between these issue fees is taken into account.
Article 12. Expenditure of the fund
The following costs are borne directly by the fund.
Provisions are made on each valuation day for significant
predictable Fund expenses.
1 . The Management Company charges a maximum
annual administration fee of 2.5%. Any Fund Manager
fees and any Investment Advisor fees incurred
including performance-related fees relating to the
management of a sub-fund‘s assets may be charged
separately to the sub-fund. The management fee, any
Fund Manager fees and any Investment Advisor fees
as well as their method of calculation are listed in the
overview of the relevant sub-fund.
2 . The Custodian charges an annual custodian fee
(“custodian fee”) of a maximum of 0.7%, payable
every month, calculated based on the last net asset
value of any sub-fund at the end of any month. These
custody fees do not include any third party custody
or management fees charged by other correspondent
banks and/or clearing houses (e.g. Clearstream or
Euroclear) for the custody of fund assets.
3 . The usual broker’s and banker’s fees accruing to each
sub-fund‘s business;
66 Sales prospectus SWISS HEDGE – Management Regulations
4 . The printing costs for Unitholder certificates, the
costs of preparing and/or official scrutiny of the
management regulations and all other documents
related to the fund, including authorisation
applications, Prospectuses, KIIDs and any applications
for amendment made to authorities in various
countries in their respective language and relating to
the offering for sale of fund Units;
5 . The costs of printing and mailing annual and interim
reports and other notifications to Unitholders in the
relevant language as well as the costs of publishing
the issue and redemption prices, and the publication
of profit sharing information and all other notifications
made to Unitholders;
6 . The costs of accounting, registration and transfer,
measurement of sub-fund performance, risk
management and the daily calculation of NAV and
publication of this;
7 . Auditors’ fees;
8 . The costs of EMIR related reportings
9 . The costs of any transactions for stabilising prices;
10 . Any VAT incurred;
11 . The cost of sales promotion;
12 . Costs for advertising the tax base and certification that
tax details have been determined in accordance with
the regulations of German tax law;
13 . The costs of consultations with lawyers and
other similar administration costs incurred by the
Management Company or the Custodian when acting
in the interests of Unitholders;
14 . Expenses of any market listing(s) and/or registration of
Units for sale to the public in various countries;
15 . An annual duty (“taxe d’abonnement”) is levied by the
Grand Duchy of Luxembourg on total NAV.
16 . the Management Company has the right to charge
a sales commission on certain Unit classes, up to a
maximum of 0.5% p.a. on the percentage of the NAV
of that Unit class within the sub-fund as set out in the
Prospectus. The calculation method is detailed in the
Prospectus for each sub-fund.
If any of the above-mentioned fund issues cannot be
allocated to a particular sub-fund, then the issue will be
allocated to all the sub-funds in proportion to their NAV.
If the fund makes the above-mentioned issue for a distinct
sub-fund or in connection with a distinct sub-fund, then
the issue will be allocated to that sub-fund.
All periodically recurring costs are borne directly by the
fund; other expenses can be written off over 5 years.
Article 13. Financial year, audit
The financial year of the fund ends on 31 December of
each year.
The annual accounts of the Management Company and
the statement of accounts of the fund are audited by
an authorised, independent auditor instructed by the
Management Company.
Article 14. Dividends
A dividend will be paid only on Units in a Unit class in
which dividends are paid. Income accruing to reinvesting
Unit classes is not paid out and will be re-invested.
The Management Company will pay out distributions
every year for the distribution Unit classes from the
ordinary net income and the net capital gains that flow
into these Unit classes within the relevant sub-fund.
Furthermore, the Management Company may carry out
any other disbursement in order to ensure a sufficient
amount for the dividend.
A dividend will not be paid if, as a result of so doing, the
net assets of the fund would fall below the minimum of
EUR 1,250,000.00 prescribed by Luxembourg legislation.
Sales prospectus SWISS HEDGE – Management Regulations 67
Dividends which have not been claimed five years after
the date they were paid out will be retained by the
relevant Unit class in the relevant sub-fund from which
they originate.
Article 15. Amendment of the management regulations
The Management Company may amend the management
regulations in full or in part at any time if this is in the
interest of the Unitholders and occurs with the agreement
of the Custodian and the Luxembourg supervisory
authorities.
Amendments to the management regulations are
recorded at the Commercial Register of the District Court
in Luxembourg and a note of this record is published in
Mémorial, the official journal.
The amendments enter into force on the day the
management regulations, which have been amended in
full or in part, are signed.
Article 16. Publications
The net asset value and the issue and redemption price of
every sub-fund can be requested from the Management
Company, the Custodian and every Paying Agent.
The audited annual report, which is published within 4
months of the end of the financial year, and all the semi-
annual reports, which are published within 2 months
of the end of the reporting period, are accessible to
Unitholders at the registered office of the Management
Company, the Custodian and the paying and distribution
agents.
The announcement of the liquidation of the Fund shall
be published in the RESA, Recueil Électronique des
Sociétés et Associations. The announcement of the Fund’s
liquidation shall also be published in a Luxembourg daily
newspaper and as per the legal and regulatory provisions
of the countries in which Units are offered or sold.
Announcements of the merger of sub-funds, the transfer
of a sub-fund to another UCITS under Luxembourg or
foreign law and the liquidation of a sub-fund shall be
published as per the legal and regulatory provisions of the
countries in which Units are offered or sold. Notifications
to Unitholders, including notifications on the waiver of
the valuation of the net asset value and the issue and
redemption price of a sub-fund, shall be published as per
the legal and regulatory provisions of the countries in
which Units are offered or sold.
Article 17. Duration and liquidation of the fund, winding-up of a sub-fund
The fund has been set up for an indeterminate duration.
The individual sub-funds may be created for a stipulated
length of time and thus deviate from the duration of
the fund. If a sub-fund has been created for a stipulated
duration then further information on this can be found in
the respective fund description in the Prospectus under
“Overview of SWISS HEDGE”.
Liquidation
The fund or individual sub-funds may be wound up at any
time by mutual agreement of the Management Company
and the Custodian. Moreover, the Fund shall be liquidated
upon activation of the provisions of Article 22 of the law
of 17 December 2010 on Undertakings for Collective
Investment in Securities.
As soon as a decision is taken to wind up the fund or a
sub-fund, no more Units in the fund or that sub-fund
will be issued or redeemed (unless all investors can be
treated on an equal basis). The Unitholders are informed
of this in accordance with Article 16 of these management
regulations. The Management Company sells off the
assets in each fund in the interest of the Unitholders
in the respective sub-fund and the Custodian pays out
the net liquidation proceeds on instructions from the
Management Company after deduction of liquidation
costs and expenses to the Unitholders of each sub-fund in
proportion to their holdings.
After liquidation has been completed, amounts that were
generated by the liquidation of the Fund or its sub-funds
and not claimed by the rightful Unitholders are deposited
by the Custodian with the “Caisse de Consignation” in
Luxembourg for the benefit of the rightful Unitholders.
The proceeds shall be forfeited if they are not claimed
within 30 years of deposit.
68 Sales prospectus SWISS HEDGE – Management Regulations
Sub-funds may be merged, under the following terms and
conditions, in that one sub-fund is brought into another
of the fund’s sub-funds or they can be transferred into
another Undertaking for Collective Investment ("UCI").
Mergers (amalgamations of sub-funds)
A merger, i.e. a transaction in which:
a ) one or more UCITS or sub-funds thereof, the
“transferring UCITS”, in the process of winding up
without settlement, transfers all assets and liabilities to
another existing UCITS or a sub-fund of such a UCITS,
the “acquiring UCITS”, and their unitholders in return
receive units of the acquiring UCITS and, if applicable,
a cash payment amounting to a maximum of 10% of
the net asset value of these units;
b ) two or more UCITS or sub-funds thereof, the
“transferring UCITS”, in the process of winding up
without settlement, transfer all assets and liabilities to
a UCITS formed by them or a sub-fund of such a UCITS,
the “acquiring UCITS”, and their unitholders in return
receive units of the acquiring UCITS and, if applicable,
a cash payment amounting to a maximum of 10% of
the net asset value of these units;
c ) one or more UCITS or sub-funds thereof, the
“transferring UCITS”, which continue to exist until the
liabilities are repaid, transfer their net assets to another
sub-fund of the same UCITS, to a UCITS formed by
them, or to another existing UCITS or a sub-fund of
such a UCITS, the “acquiring UCITS”;
or
a cross-border merger, i.e. a merger of UCITS
a ) of which at least two are established in different
member states or
b ) established in the same member state with a newly
formed UCITS established in another member state;
or
a domestic merger, i.e. a merger of UCITS established in
the same member state, if at least one of the UCITS in
question has been notified in accordance with Article 93
of Directive 2009/65/EC.
Mergers take place under the conditions of Chapter
8 of the Law of 17 December 2010 on Undertakings
for Collective Investment and upon a resolution by
the Management Company to decide on the date and
effectiveness of a merger with another UCITS.
The Management Company can decide to merge sub-
funds if the management of one or all the merging sub-
funds can no longer be carried on in an efficient manner
or in the event of a change in the economic or political
situation.
In the event of a merger of sub-funds, the Management
Company will notify Unitholders of the sub-fund(s) to be
merged of the intention to merge them by a notification
in accordance with the provisions of Article 16 of these
management regulations at least one month before the
merger decision enters into force; these Unitholders then
have the right to return all or some of their Units at the net
asset value without further costs.
Article 18. Statute of limitations
Claims by the Unitholders against the Management
Company or the Custodian shall expire 5 years after the
date of the event which has given rise to the claim.
Article 19. Law to be applied, place of jurisdiction and contractual language
The District Court of Luxembourg is responsible for
any disputes between Unitholders, the Management
Company and the Custodian. Luxembourg law shall apply.
However, the Management Company and the Custodian
submit themselves and the Fund to the jurisdiction of
the countries in which Units are offered and sold if claims
are made by Unitholders who are resident in the relevant
country and if such claims refer to matters relating to the
subscription and redemption of Units by these investors.
Sales prospectus SWISS HEDGE – Management Regulations 69
The German version of these management regulations
is legally binding. The Management Company and the
Custodian do, however, permit translations, which they
have approved, in the languages of any countries in
which Units are offered and sold. If there is any doubt, the
German version is legally binding.
Article 20. Inception
The Management regulations are valid from
1 January 2017.
Luxembourg, December 2016
BayernInvest Luxembourg S.A.
M.M.Warburg & CO Luxembourg S.A.
BayernInvest Luxembourg S.A.
6B, rue Gabriel Lippmann
L-5365 Munsbach, Luxembourg
Telephone (00352) 28 26 24 0
Fax (00352) 28 26 24 99
www.bayerninvest.lu