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State Street Global Advisors
Luxembourg SICAV
Prospectus
Valid from 7 th Septemb er 2026
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2026/6168-O5881-0-PC 2026-08-28
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Important Information
Prospective investors are advised to review this Prospectus (including the Relevant Supplement(s)) and the PRIIPs KID(s) or KIID(s) (as applicable) carefully and in their entirety and, before making any investment decision with respect to an investment in a Fund, should consult a stockbroker, bank manager, lawyer, accountant or other financial adviser for independent advice in relation to: (a) the leg al requirements within their own countries for the purchase, holding, exchanging, redeeming or disposing of Shares; (b) any foreign exchange restrictions to which they are subject in their own countries in relation to the purchase, holding, exchanging, red eeming or disposing of Shares; (c) the legal, tax, financial or other consequences of subscribing for, purchasing, holding, exchanging, redeeming or disposing of Shares; and (d) the provisions of this Prospectus. This Prospectus comprises information relating to the Company, an open - ended umbrella fund authorised pursuant to the 2010 Law. The Company is authorised in Luxembourg by the Commission de Surveillance du Secteur Financier (CSSF) as a UCITS for the purposes of the 2010 Law. The Company is structured as an umbrella fund in that different sub - funds may be established with the prior approval of the CSSF. The authorisation of the Company is not an endorsement or guarantee of th e Company by the CSSF nor is the CSSF responsible for the contents of this Prospectus and any Supplements. The authorisation of the Company by the CSSF does not constitute a warranty as to the performance of the Company and the CSSF shall not be liable for the performance or default of the Company. In addition, each Fund may have more than one Class allocated to
it. A Class within a Fund will not have a separate investment portfolio. The creation of any class must be notified to and cleared in advance with the CSSF. The Board has taken all reasonable care to ensure that the information contained in this Prospectus is, to the best of its knowledge and belief, in accordance with the facts and does not omit anything material to such information. The Board accepts respons ibility accordingly. No person is authorised to give any information or to make any representation other than those contained in this Prospectus, the PRIIPs KID or KIID (as applicable) and the annual reports and any subscription and/or purchase made by any person on the basis of statements or representations not contained in or inconsistent with the information contained in this Prospectus, the PRIIPs KID or KIID (as applicable) and the annual reports shall be solely at the risk of the subscriber/purchaser. Furthermore, the delivery of this Prospectus or any issue of Shares shall not, under any circumstances, create any implication that the affairs of the Company have not changed since the date of this Prospectus. Subscriptions are not valid unless they are based on this Prospectus or the PRIIPs KID or KIID (as applicable) in conjunction with the most recent annual report and the most recent semi - annual report where this is published after the annual report. Investors should be aware that the price of Shares may fall as well as rise, and investors may not get back any of the amount invested. Risk factors for investors to consider are set out in the “Risk Information” section. Risks of particular relevance to t he Funds are described in the Relevant Supplement.
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In cases where an investor invests in the Company through an intermediary which invests into the Company in the intermediary’s own name but on behalf of the investor, it may not always be possible for the investor to exercise certain Shareholder rights dir ectly against the Company. Investors are advised to take advice on their rights. The distribution of this Prospectus and the offering or purchase of Shares may be restricted or prohibited by law in certain jurisdictions. This Prospectus does not constitute and may not be treated as an offer or solicitation by or to anyone in any jurisd iction in which such offer or solicitation is not lawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. It is the responsibility of any persons in p ossession of this Prospectus and any persons wishing to apply for Shares pursuant to this Prospectus to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction. As Shares in the Company are not registered in the United States in accordance with the U.S. Securities Act, or the securities laws of any of the states or possessions of the United States, and the Company is not registered under the U.S. Investment Compan y Act, they may neither be offered nor sold nor delivered directly or indirectly in the U.S., or to or for the account or benefit of any U.S. Person (as such term is defined in Regulation S under the U.S. Securities Act). A prospective investor will be req uired at the time of acquiring Shares to represent that such investor is not a U.S. Person or acquiring Shares for or on behalf of a U.S. Person or acquiring the Shares with the assets of an ERISA plan (as defined below). Shares may not be acquired or owned by, or acquired with the assets of:
i. any retirement plan subject to Title I of ERISA; or ii. any individual retirement account or plan subject to Section 4975 of the United States Internal Revenue Code of 1986, as amended;
which are hereinafter collectively referred to as “ERISA plans”. Shareholders are required to notify the UCI Administrator, immediately in the event that they become U.S. Persons, will no longer meet the eligibility criteria or otherwise hold Shares which might result in the Company or the Management Company incurring any liability to taxation or suffering pecuni ary disadvantages which the Company or the Management Company might not otherwise have incurred or suffered, or requiring the Company or the Management Company to register under the U.S. Investment Company Act, or register any Shares under the U.S. Securit ies Act. Where the Board becomes aware that any Shares are directly or beneficially owned by any person in breach of the above restrictions, they may direct the Shareholder to transfer his Shares to a person qualified to own such Shares or request the Company to re deem the Shares, in default of which the Shareholder shall, on the expiration of thirty (30) days from the giving of such notice, be deemed to have given a request in writing for the redemption of the Shares. The Shares will be redeemed in accordance with the provisions of the Articles. As of the date of this Prospectus, the Company is a “recognised scheme” for the purposes of Section 264 of the UK’s Financial Services and Markets Act 2000. The UK left the EU on 31 January 2020 and entered the transition period agreed as part of the Withdrawal Agreement between the UK and the EU. It is anticipated that following the end of the transition period, the Company will be marketed
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in the UK under temporary permissions regime followed by a formal application for recognition under Section 272 of the UK’s Financial Services and Markets Act 2000 or its recognised replacement. The Prospectus and PRIIPs KIDs/ KIIDs may be translated into other languages. Any such translation shall only contain the same information and have the same meaning as the English language Prospectus and/or PRIIPs KID/ KIID. To the extent that there is any inconsistency between the English language Prospectus and/or PRIIPs KID/ KIID and the Prospectus in another language, the English language Prospectus and/or PRIIPs KID/ KIID will prevail. All disputes as to the contents of this Prospectus and related PRIIPs KIDs / KIIDs shall be governed in accordance with the laws of Luxembourg.
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Table of Contents
STATE STREET GLOBAL ADVISORS LUXEMBOURG SICAV ................................ ................................ ............ 1
IMPORTANT INFORMATION ................................ ................................ ................................ ................ 2
1. Glossary ................................ ................................ ................................ ................................ 7 2. Directory ................................ ................................ ................................ .............................. 18 3. General Information about the Company ................................ ................................ ........... 20 3.1. The Company ................................ ................................ ................................ ........... 20 3.2. Management and Administration ................................ ................................ .............. 20 3.3. General Meeting of Shareholders ................................ ................................ ............ 25 3.4. Rights of Shareholders ................................ ................................ ............................. 25 3.5. Financial year and statements ................................ ................................ .................. 26 3.6. Liquidation ................................ ................................ ................................ ................ 26 3.7. Merger of the Company, a Fund or a Class ................................ ............................. 27 3.8. Applicable Law and Jurisdiction ................................ ................................ ............... 28 3.9. Remuneration policy ................................ ................................ ................................ . 28 4. Risk Information ................................ ................................ ................................ .................. 29 5. Shares ................................ ................................ ................................ ................................ . 76 5.1. Types of Shares ................................ ................................ ................................ ....... 76 5.2. Class es ................................ ................................ ................................ ..................... 77 5.3. Class Currencies and Class Currency Hedging ................................ ....................... 79 5.4. Minimum investments and holdings for Non - ETF Shares ................................ ........ 80 5.5. The Non - ETF Shares ................................ ................................ ............................... 81 5.6. The ETF Shares ................................ ................................ ................................ ....... 86 5.7. Dilution Adjustment ................................ ................................ ................................ ... 93 5.8. Distribution ................................ ................................ ................................ ................ 94 5.9. Excessive Trading Policy ................................ ................................ .......................... 94 5.10. Prevention of Money Laundering ................................ ................................ .............. 95 5.11. Liquidity management tools ................................ ................................ ...................... 95 6. Valuation and Calculation of NAV ................................ ................................ ....................... 96 6.1. Calculation of NAV ................................ ................................ ................................ ... 96 6.2. Valuation Procedure ................................ ................................ ................................ . 96 6.3. Publication of NAV and iNAV ................................ ................................ ................... 98 6.4. Temporary Suspension of NAV Calculation and Dealings ................................ ....... 99 6.5. Investors’ rights ................................ ................................ ................................ ...... 100 7. Fees and Expenses ................................ ................................ ................................ .......... 101 7.1. Operating and Administrative Expenses ................................ ................................ 101 7.2. Directors’ and Officers’ Fees ................................ ................................ .................. 102 7.3. Depositary and UCI Administrator’s Fees ................................ .............................. 102 7.4. Investment Management Fee ................................ ................................ ................. 102 7.5. Fees of the Global Distributor, Distributors and Sub - distributors ........................... 103 7.6. Formation Expenses ................................ ................................ ............................... 103 7.7. Embedded Costs ................................ ................................ ................................ .... 104 7.8. Allocation of Expenses ................................ ................................ .............................. 104 8. Investment Techniques ................................ ................................ ................................ ..... 105 8.1. Investment Strategies ................................ ................................ ............................. 105 8.2. Investment Restrictions and Limits ................................ ................................ ......... 109 8.3. Financial Derivative Instruments ................................ ................................ ............ 116 8.4. Proxy Voting and Asset Stewardship ................................ ................................ ..... 122
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8.5. Sustainable Investing ................................ ................................ ............................. 123 8.6. Taxonomy Regulation ................................ ................................ ............................. 124 9. Luxembourg taxation ................................ ................................ ................................ ........ 126 9.1. Taxation of the Company ................................ ................................ ....................... 126 9.2. Taxation of Luxembourg non - resident Shareholders ................................ ............. 128 9.3. Taxation of Luxembourg Shareholders ................................ ................................ .. 129 9.4. Exchange of Information ................................ ................................ ......................... 130 9.5. FATCA ................................ ................................ ................................ .................... 131 10. French taxation ................................ ................................ ................................ ................. 133 10.1. Plan d’Epargne en Actions (“PEA”) eligibility – France ................................ .......... 133 11. Other Information ................................ ................................ ................................ .............. 134 11.1. Where to learn more about the Funds ................................ ................................ .... 134 11.2. Complaints ................................ ................................ ................................ .............. 134 11.3. Class action policy ................................ ................................ ................................ .. 134 11.4. Distribution and Selling Restrictions ................................ ................................ ....... 135 11.5. Benchmark Contingency Plan ................................ ................................ ................ 135 11.6. Data Protection ................................ ................................ ................................ ....... 136 11.7. Changes to the Prospectus ................................ ................................ .................... 136 11.8. Listing of Shares ................................ ................................ ................................ ..... 136 Appendix 1 – Index Disclaimers ................................ ................................ ................................ .. 137 Bloomberg ................................ ................................ ................................ ....................... 137 FTSE ................................ ................................ ................................ ................................ 138 ICE ................................ ................................ ................................ ................................ 138 J.P. Morgan ................................ ................................ ................................ ...................... 139 Markit iBoxx ................................ ................................ ................................ ..................... 139 MSCI ................................ ................................ ................................ ................................ 140 S&P 500 ................................ ................................ ................................ ............................ 141 Appendix 2 – Sub - Custodians ................................ ................................ ................................ .... 143 Supplements – Index Bond Funds ................................ ................................ ................................ . 148 Supplements – Index Equity Funds ................................ ................................ ............................... 194 Supplements – Multi - Asset Allocation Funds ................................ ................................ ................. 225 Supplements – Fundamental Equity Funds ................................ ................................ ................... 241 Supplements – Multi - Factor Equity Fund ................................ ................................ ....................... 263 Supplements – Quantitative Equity Funds ................................................................................. 267 Supplements – Managed Volatility Equity Funds ................................ ................................ ............ 29 5 Supplements – Defensive Equity Funds ................................ ................................ ........................ 299 Supplements – Systematic Equity Tilted Beta Fund ................................ ................................ ........ 30 3 Supplements – Systematic Corporate Bond Tilted Beta Funds ................................ ........................ 30 7 SFDR Annexes ................................ ................................ ................................ ............................. 31 4
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1. Glossary
The following summarises the principal features of the Company and should be read in conjunction with the full text of this Prospectus. 1915 Law the Luxembourg law of 10 August 1915 on commercial companies, as may be amended from time to time.
2010 Law the Luxembourg law of 17 December 2010 relating to undertakings for collective investment, as may be amended from time to time.
Access Programme(s) existing or future “access” products or programmes such as QFI, Stock Connect, the CIBM Direct Access Programme, Bond Connect or any other investment programme through which a Fund may access PRC Investments.
UCI Administrator the central administration agent, registrar and transfer agent, principal paying agent, and domiciliary and corporate agent appointed by the Management Company, with the consent of the Company, in accordance with the requirements of the 2010 Law and pursua nt to an administration agreement, as identified in the “Directory” section of this Prospectus.
AML/CFT anti - money laundering and countering the financing of terrorism.
AML/CFT Rules the Luxembourg law of 12 November 2004 on the fight against money laundering and terrorist financing, as amended, (the " 2004 Law "), the Grand Ducal Regulation of 10 February 2010 providing details on certain provisions of the 2004 Law, as amended, the CSSF Regulation N°12 - 02 of 14 December 2012 on the fight against money laundering and terrorist financing, as amended, (" CSSF Regulation 12 - 02 "), relevant CSSF Circulars in the field of AML/CFT as well as the set of rules formed by European Directives on the preventions of the use of the financial system for the purpose of money laundering and terrorist financing, as amended from time to time an d the Financial Action Task Force (FATF) recommendations, as amended from time to time.
Application Form form used to establish an account for purchases of Shares.
Articles the articles of association of the Company, as may be amended from time to time.
Auditor a firm of chartered accountants as may from time to time be appointed as auditors to the Company, as identified in the “Directory” section of the Prospectus.
Authorised Participant with respect to ETF Shares, a M arket M aker or a broker - dealer entity, which has entered into a n Authorised Participant Agreement for the purposes of directly subscribing and/or redeeming ETF Shares in a Fund with the Company (i.e. primary market). Authorised Participant Agreement
The agreement entered into by the Company with each Authorised participant in respect of a subscription and/or redemption of ETF Shares.
Authorised Participant Operating Guidelines
the operating guidelines with respect to ETF Shares for Authorised Participants setting out details for the procedures for directly subscribing and/or redeeming ETF Shares in a Fund with the Company (i.e. primary market) and which is available to Authorise d Participants only from the Investment Manager.
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Base Currency the currency in which a Fund is denominated, as specified in the Relevant Supplement.
Benchmark Regulation
Regulation (EU) 2016/1011 of the European Parliament and Council of 6 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds.
Board the board of directors of the Company as identified in the Directory.
Board of Directors the directors of the Management Company as identified in the Directory.
Bond Connect Authorities
the exchanges, trading systems, settlement systems, governmental, regulatory or tax bodies which provide services and/or regulate Bond Connect and activities relating to Bond Connect, including, without limitation, PBoC, the HKMA, HKEx, CFETS, the CMU, CCD C and SHCH and any other regulator, agency or authority with jurisdiction, authority or responsibility in respect of Bond Connect.
Bond Connect Securities
any bonds tradable in the PRC through Bond Connect.
Business Day a day on which banks are scheduled to be open for non - automated business in Luxembourg , United Kingdom and the country (other than Poland) in which the Investment Manager and the relevant Sub - Investment Manager is located, provided that each exchange or market on which a substantial portion of the relevant Fund’s investments is traded is also open and/or s uch other day or days as the Directors may determine and notify in advance to Shareholders. See also: Dealing Calendar.
CBI The Central Bank of Ireland.
CCASS The PRC’s Central Clearing and Settlement System.
CCDC China Central Depository & Clearing Co., Ltd.
Central Securities Depositary/CSD
A recognised clearing system, which is a national settlement system for individual national markets. For Funds that issue ETF Shares through an ICSD, Central Securities Depositaries would be Participants in the ICSD.
CET central European time.
CFETS China Foreign Exchange Trading System (also known as the National Interbank Funding Centre). China A Shares shares of companies incorporated in the PRC and listed on the Shanghai and/or Shenzhen Stock Exchanges which are quoted in RMB.
China Connect Securities
any securities and/or UCIs listed and traded on the SSE or SZSE which may be traded by Hong Kong and international investors under Stock Connect. CIBM the China interbank bond market.
CIBM Direct Access Programme
direct access programme under People’s Bank of China Announcement [2016] No.3. facilitating access to the China interbank bond.
Class shares of a Fund representing an interest in that Fund but designated as a share class within such Fund for the purpose of attributing different proportions of the NAV of the relevant Fund to such ETF and/or Non - ETF Shares to accommodate different characte ristics including in relation to subscription, switching, and redemption charges, dividend arrangements, currencies, currency hedging policies, minimum investment and ongoing holding requirements and/or fee arrangements specific to such ETF and/or Non - ETF Shares.
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Clearstream Clearstream Banking Société Anonyme, Luxembourg.
CMU Central Moneymarkets Unit of the HKMA.
CNH RMB which is traded within the PRC’s offshore market.
CNY RMB which is traded within the PRC’s onshore market.
Company State Street Global Advisors Luxembourg SICAV.
CRS Law the Luxembourg law dated 18 December 2015 implementing Council Directive 2014/107/EU of 9 December 2014 as regards mandatory automatic exchange of information in the field of taxation, as may be amended from time to time.
CSDCC China Securities Depository and Clearing Corporation Limited.
CSRC China Securities Regulatory Commission.
CSSF Commission de Surveillance du Secteur Financier , the Luxembourg supervisory authority of the financial sector.
Daily Quota The daily quota to which each of SHHK Stock Connect and SZHK Stock Connect is subject.
Data Protection Legislation
(i) the Luxembourg law of 1 August 2018 on the organisation of the National Data Protection Commission and the general data protection framework, as may be amended from time to time, (ii) the General Data Protection Regulation (Regulation (EU) 2016/679 of the European Parliament and the Council of 27 April 2016) and any consequential data protection legislation applicable in Luxembourg and (iii) any guidance and/or codes of practice issued by the Luxembourg Data Protection Authority (CNPD) or other relevant supervisory authority, including without limitation the European Data Protection Board.
Dealing Calendar the calendar of all non - Dealing Days for the Funds as available on the Website.
Dealing Day every Business Day other than days during which normal dealing has been temporarily suspended.
Dealing Form form used to subscribe for or redeem Shares in a Fund.
Depositary the depositary bank appointed by the Company in accordance with the requirements of the 2010 Law and pursuant to a depositary agreement, as identified in the Directory.
Dilution Adjustment the Swing Pricing Adjustment or any other anti - dilution technique, as may be described in section “ Dilution Adjustment ” and detailed in the Relevant Supplement in respect of ETF and Non - ETF Share Class(es).
Directors the directors of the Company for the time being and any duly constituted committee thereof.
Distributor any person or entity appointed by the Global Distributor to distribute or arrange for the distribution of Shares.
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Duties and Charges in addition to those fees, costs and expenses as set out under section 7. ”Fees and Expenses” below and with respect to the ETF Shares only , all stamp duties and other duties, taxes, governmental charges, imposts, levies, exchange costs and commissions (including foreign exchange spreads), depositary and sub - custodian charges, transfer fees and expenses, agents’ fees, brokerage fees, commission s, bank charges, registration fees and other duties and charges, including any provision for the spread or difference between the price at which any asset was valued for the purpose of calculation of the Net Asset Value per ETF Share of any Fund and the estimated or actual price at which any such asset is purchased or expected to be purchased, in the case of subscriptions to the relevant Fund, or sold or expected to be sold, in the case of redemptions from the relevant Fund, incl uding, for the avoidance of doubt, any charges or costs arising from any adjustment to any swap or other derivative contract required as a result of a subscription or redemption, whether paid, payable or incurred or expected to be paid, payable or incurred in respect of the constitution, increase or reduction of all of the cash and other assets of the Company or the creation, acquisition, issue, conversion, exchange, purchase, holding, repurchase, redemption, sale or transfer of Shares (including, if releva nt the issue or cancellation of certificates for Shares) or investments by or on behalf of the Company.
Eligible State any EU Member State, any member state of the Organisation for Economic Cooperation and Development, any member state of the European Economic Area, and any other state which the Board deems appropriate with regard to the investment objective of a Fund.
Embedded Costs any costs indirectly incurred by each Fund as a result of its investment in underlying funds in which the Fund invests (which may be payable to the Investment Manager or its affiliates).
ERISA the United States Employee Retirement Income Security Act of 1974, as amended.
ESG Environmental, Social and Governance.
ESMA European Securities and Markets Authority.
ETF Share(s) a Share or Shares of an exchange traded Class in the capital of the Company (other than the Non - ETF Shares) entitling the holders to participate in the profits of the Company attributable to the relevant Fund as described in this Prospectus.
EU European Union.
EU Member State a member state of the EU.
Euroclear Euroclear Bank S.A./N.V.
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Exclusion List Methodology for screened Funds in SSGA Luxembourg SICAV
the methodology outlining the criteria for the assessment of the adherence of the Fund’s securities to certain sustainable investing criteria as laid out in the Relevant Supplement when applying a negative and/or norms based sustainable investing s creen to the Fund, as further described in the section “ Sustainable Investing” of this Prospectus. The Exclusion List Methodology for screened Funds in SSGA Luxembourg SICAV can be found on the Website under: ssim - approach - to - sustainable - investing - screening - methodology.pdf methodology.pdf . Additional information regarding State Street Investment Management’s sustainable investing approach can be found on the Website at Sustainable Investing | State Street . FATCA the provisions of the United States Hiring Incentives to Restore Employment (HIRE) Act of 18 March 2010 commonly referred to as the Foreign Account Tax Compliance Act as well as any related regulations or official interpretation thereof.
FATF Financial Action Task Force on Money Laundering.
Fund a portfolio of assets established by the Directors (with the prior approval of the CSSF) and constituting a separate fund represented by a separate series of Shares and invested in accordance with the investment objective and policies applicable to such po rtfolio of assets, as set out in the Relevant Supplement. Global Distributor State Street Global Advisors Europe Limited 1 or such other entity as may be appointed as global distributor from time to time, as identified in the Directory.
HKEx Hong Kong Exchanges and Clearing Limited.
HKMA Hong Kong Monetary Authority.
HKSCC Hong Kong Securities Clearing Company Limited.
ICSD an International Central Securities Depositary. International Central Securities Depositaries for the Funds are currently Euroclear Bank S.A./N.V. and Clearstream Banking, Société Anonyme, Luxembourg, and any successor entity thereto.
Index any financial index which a Fund will use, whether to track, outperform, as a performance comparator or otherwise reference (including where the financial index is referenced by a financial derivative instrument held by a Fund), as specified in the Relevan t Supplement.
In - Kind Settlement Deadline
5.00 p.m. CET on the fifth (5 th ) b usiness d ay in Luxembourg after the relevant Dealing Day, or such later date as may be determined by the Company and notified to Shareholders . i NAV means on each Dealing Day and with respect to ETF Shares, an indicative net asset value calculated and published on the basis of changes in the prices of the securities composing the relevant Fund.
1 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change does not affect the legal name or structu re of the management company , global distributor and the investment manager - State Street Global Advisors Europe Limited, the sub - investment managers – State Street Global Advisors Limited and State Street Global Advisors Trust Company or the management of the Company .
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Institutional Investor institutional investors as referred to in articles 174 to 176 of the 2010 Law and defined by the administrative practice of the CSSF. Further detail on the definition of an Institutional Investor can be found “ Classes ” section of this Prospectus.
Investment Manager State Street Global Advisors Europe Limited 2 or such other company as may from time to time be appointed to provide investment management services to the Company in accordance with the requirements of the CSSF, as identified in the Directory and also known as the Management Company. For the avoidanc e of doubt, the term “Investment Manager” shall include, where the context permits, any sub - investment manager appointed from time to time by the Investment Manager pursuant to its authority under the Management Company Agreement.
KIID the key investor information document in respect of any Class within the meaning of the 2010 Law, the UCITS Directive, and Commission Regulation (EU) No 583/2010 of 1 July 2010 implementing the UCITS Directive as regards key investor information and condit ions to be met when providing key investor information or the prospectus in durable medium other than paper or by means of a website, as updated from time to time.
Listing Stock Exchange
London Stock Exchange (LSE) , Borsa Italiana , Xetra, Euronext Amsterdam, Euronext Paris and Six Swiss Exchange as well as any such further selected exchanges as the Directors may determine from time to time in respect of a Share Class and which are specified on the Website.
Management Company
the management company appointed by the Company in accordance with the provisions of the 2010 Law and pursuant to a Management Company Agreement, as identified in the Directory. Pursuant to the terms of the Management Company Agreement the Management Compa ny also provides the investment management services and in this context is also known as the Investment Manager.
Management Company Agreement
means the Agreement dated 15 December 2017 between the Company and the Management Company, pursuant to which the Management Company was appointed as manager of the Company, as may be further amended from time to time.
Market Maker certain Authorized Participants or non - Authorized Participants who are financial institutions and a member of the Listing Stock Exchange and who have signed a market making contract with the Company, the Management Company or that are registered as such wi th the Listing Stock Exchange.
MiFID II the Markets in Financial Instruments Directive (recast) (2014/65/EU) together with the Markets in Financial Instruments Regulation (Regulation (EU) no. 600/2014).
NAV the net asset value of a Fund calculated as described in the “ Valuation and Calculation of the NAV ” section of this Prospectus.
NAV per Share the net asset value of a Share in any Fund, including a Share of any Class issued in a Fund calculated as described in the “ Valuation and Calculation of NAV ” section of this Prospectus.
2 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change does not affect the legal name or structu re of the management company , the global distributor and the investment manager - State Street Global Advisors Europe Limited, the sub - investment managers – State Street Global Advisors Limited and State Street Global Advisors Trust Company or the management of the Company .
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NAV Hedged Class any Class where the Base Currency NAV is hedged against the Class currency, together with Portfolio Hedged Class, the “ Hedged Classes ”.
Non - ETF Share a share of any Class in the capital of the Company (other than the ETF Shares) entitling the holders to participate in the profits of the Company attributable to the relevant Fund as described in this Prospectus.
OECD Organisation for Economic Cooperation and Development.
Participant An accountholder in the ICSD, which may include Authorised Participants, their nominees or agents, who hold their interest in ETF Shares of the Funds settled and/or cleared through the ICSD.
PBoC the People's Bank of China.
Portfolio Hedged Class
any Class where the currency exposure of the underlying assets is hedged against the Class currency, together with NAV Hedged Class, the “Hedged Classes”.
PRIIPs KID Packaged Retail and Insurance - based Investment Product key information document in respect of any Class within the meaning of the Regulation (EU) No1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents fo r packaged retail and insurance - based investment products (PRIIPs), as amended.
PRC the People's Republic of China (except, where the context requires, and for the purposes of this Prospectus and its related documents, references to PRC or “China” do not include Hong Kong, Macau and Taiwan) . PRC Investments investments that create exposure to (i) issuers from the PRC, or other issuers associated with the greater China region, such as Hong Kong, Macau or Taiwan and/or (ii) issuers which may be listed or traded on recognised or over - the - counter markets located both inside and outside of the greater China region, such as the United Kingdom, Singapore, Japan or the United States.
PRC Listco a PRC incorporated company which is listed on a stock exchange in the PRC.
PRC Sub - Custodian HSBC Bank (China) Company Limited or any other entity appointed to act as such sub - custodian and the interbank bond trade and settlement agent for the relevant Funds for the purposes of the investments made through CIBM Direct Access Programme and/or the Q FI.
Primary Market A market on which the ETF Shares of a Fund are subscribed for or redeemed (off exchange) directly with the Company.
Privacy Statement the privacy statement adopted by the Company as amended from time to time. The current version is appended to the Application Form and available via the website under https://www.ssga.com/global/en/legal/terms - and conditions - global.html . Prospectus this document, the Relevant Supplement for any Fund, the SFDR Annex (as applicable) and any other supplement or appendix designed to be read and construed together with and to form part of this document as updated from time to time.
QFI Qualified Foreign Investor, which shall include QFII and RQFII.
QFII Qualified Foreign Institutional Investor.
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Qualifying Agreement an investment management agreement or other arrangements entered into between certain Institutional Investors and the Investment Manager or any of its affiliates, in each case in a format satisfactory to the Directors for the purpose of considering eligibi lity for Class B Shares.
Redemption Price the price (exclusive of any applicable Dilution Adjustment) at which the Company may redeem Shares as determined for each Fund or Share Class on the basis of the NAV per Share as at the Valuation Point on the relevant Dealing Day.
Regulated Market a market as defined in item 14) of article 4 of the European Parliament and the Council Directive 2004/39/EC of 21 April 2004 on markets in financial instruments, as well as any other market which is regulated, operates regularly and is recognized and open to the public in an Eligible State.
Relevant Supplement a document containing information specific to a Fund.
Remuneration Policy the remuneration policies, procedures and practices to which the Management Company and the Investment Manager are each subject and which comply with the UCITS Directive.
RQFII the Renminbi Qualified Foreign Institutional Investor,
SAFE the PRC’s State Administration of Foreign Exchange.
SC Securities China Connect Securities invested through Stock Connect (as defined below).
Secondary Market A regulated market on which ETF Shares may be traded via a Recognised Market or OTC market. Securities Lending Programme
the securities lending programme, as described in the “ Financial Techniques and Instruments ” section of the “ Financial Derivative Instruments ” section, in which certain Funds are enrolled.
SEHK the Stock Exchange of Hong Kong Limited. Settlement Deadline 5.00 p.m. CET on the second business day in Luxembourg after the relevant Dealing Day, or such later date as may be determined by the Company and notified to Shareholders.
Severe ESG Controversies
screening topic considered by the Investment Manager and/or Sub Investment Manager for assessing whether the companies are involved in incidents/events that may pose business or reputational risk due to the potential impact on stakeholders, the environment , or the company’s operations. Severe ESG Controversies refer to exceptionally egregious corporate behaviour, high frequency of recurrence of incidents, very poor management of ESG risks, and a demonstrated lack of willingness by the company to address suc h risks.
SFDR Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability - related disclosures in the financial services sector and related delegated acts, as may be amended from time to time.
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SFDR Fund Classification
Article 8 SFDR – means a financial product that promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices. Article 9 SFDR – means a financial product that has a sustainable investment as its objective. SFDR Sustainable Investment
an investment in an economic activity that contributes to an environmental objective as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and gree nhouse gas emissions, or on its impact on biodiversity and the circular economy, or an investment in an economic activity that contributes to a social objective, in particular an investment that contributes to tackling inequality or that fosters social coh esion, social integration and labour relations, or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, renumeration of staff and tax compliance.
SFO the PRC’s Securities and Futures Ordinance.
Share or Shares a share or shares (including both ETF Shares and Non - ETF Shares) of any Class in the capital of the Company entitling the holders to participate in the profits of the Company attributable to the relevant Fund as described in this Prospectus.
Shareholder a person registered in the register of shareholders of the Company as a holder of Shares.
SHCH Shanghai Clearing House.
SHHK Stock Connect Shanghai - Hong Kong Stock Connect.
SPSA special segregated account in the CCASS to maintain holdings in SC Securities.
SSE Shanghai Stock Exchange.
SSGA European Valuation Committee
the committee tasked with assisting the State Street Global Advisors business in EMEA in carrying out its fiduciary valuation responsibilities.
Stock Connect the Shanghai - Hong Kong Stock Connect and/or the Shenzhen - Hong Kong Stock Connect.
Sub - Investment Manager
any entity appointed as sub - investment manager of a Fund by the Investment Manager or any Sub - Investment Manager pursuant to a sub investment management agreement and specified in the Relevant Supplement. Where such an appointment has been made, and where appropriate, references to Investment Manager herein will refer to the Sub Investment Manager. Subscription Price the price at which investors may subscribe for Shares as determined for each Fund or Class on the basis of the NAV per Share as at the Valuation Point on the relevant Dealing Day subject to any applicable Dilution Adjustment.
Substantial Shareholder
a shareholder holding 5% or more of the total issued shares, aggregating its positions with other group companies of a PRC Listco.
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Sustainability Risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment.
Swing Pricing Adjustment
In respect of the Non - ETF Shares only, an adjustment of the NAV of the relevant Fund by an amount not exceeding either 2% or 3% of the NAV per Unit under normal market conditions (the “Swing Factor”) depending on each Fund’s investment policy as detailed in the Relevant Supplem ent. However, whilst the adjustment is normally not expected to exceed the threshold set out in each Relevant Supplement, the Board or the Board of Directors may decide to increase the Swing Pricing Adjustment limit in exceptional circumstances to protect Shareholders’ interests. The Swing Pricing Adjustment is used to reflect the dealing costs that may be incurred in relation to a Fund and the estimated bid/offer spread of the assets in which the Fund invests. It generally will be applied on any Dealing Da y when aggregate total of subscriptions, switches or redemption of Shares of all Classes of a Fund result in a net capital inflow or outflow which exceeds a pre - determined threshold, as determined and reviewed by the Management Company from time to time fo r that Fund. In addition, the Management Company may agree to include anticipated fiscal charges, trading costs, market impact and related expenses in the amount of the adjustment. The Swing Pricing Adjustment will be an addition when the net movement resu lts in a net capital inflow from all Classes of a Fund and a deduction when it results in a net capital outflow. As certain stock markets and jurisdictions may have different charging structures on the buy and sell sides, the resulting adjustment may be di fferent for net inflows than for net outflows. A periodical review will be undertaken in order to verify the appropriateness of the Swing Factor in view of market conditions. In certain circumstances, the Management Company may decide that it is not approp riate to make such an adjustment. The volatility of the NAV of the Fund might not reflect the true portfolio performance (and therefore might deviate from the Fund’s benchmark, where applicable) as a consequence of the application of swing pricing as further described in the “ Dilution Adjustment ” section of this Prospectus.
Switch switch of all or part of an investor’s holdings from one Class of a Fund into Shares of another Class of the same Fund provided the Shareholder is eligible to invest in the requested Class. Switch of Non - ETF Shares into ETF Shares and vice versa is not per mitted.
Switching Form the form used to switch from any Class of one Fund into Shares of a different Class of the same Fund.
SZHK Stock Connect Shenzhen - Hong Kong Stock Connect.
SZSE Shenzhen Stock Exchange.
Taxonomy Regulation Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 and related delegated acts, as may be amended from time to time.
TER the total expense ratio as described in the “ Fees and Expenses ” section of this Prospectus. UCI an undertaking for collective investment.
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UCITS an undertaking for collective investment in transferable securities within the meaning of the 2010 Law and UCITS Directive.
UCITS Directive Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, as may be amended from time to time.
US Investment Company Act
the United States Investment Company Act of 1940, as amended.
US Securities Act United States Securities Act of 1933, as amended.
Valuation Point the point on each Dealing Day for a Fund at which the assets are valued as detailed in the Relevant Supplement.
Website https://www.ssga.com/ic/fund - finder on which the NAV per Share, the portfolio holdings and any other relevant information relating to any Fund will be published and on which this Prospectus, the PRIIPs KIDs/KIIDs, the Remuneration Policy, sustainable investing matters and any other information in respect of the Company, including various Shareholder communications, may be published.
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2. Directory
The Company
State Street Global Advisors Luxembourg SICAV 17, Boulevard Kockelscheuer L - 18 21 Luxembourg
Board of Directors of the Company
Barbara Healy Independent Director
Lim Siong Kwong ( Benjamin ) Lam Thuon Mine , Independent Director
Thomas Coghlan Independent Director
Eric Linnane (Chair) Managing Director State Street Global Advisors
Rebecca Bridger Managing Director State Street Global Advisors
Management Company, Investment Manager and Global Distributor
State Street Global Advisors Europe Limited 3 78 Sir John Rogerson’s Quay Dublin 2 Ireland
3 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change does not affect the legal name or structu re of the management company, the global distributor and the investment manager - State Street Global Advisors Europe Limited, the
Board of Directors of the Management Company
Nigel Wightman (Chairman) Independent Director
Ann Prendergast Executive Vice President , State Street Global Advisors
Eric Linnane Managing Director, State Street Global Advisors
Scott Sanderson Managing Director, State Street Global Advisors
Marie - Anne Heeren Senior Managing Director State Street Global Advisors
Margaret Cullen Independent Director
Patrick Mulvihill Independent Director
Sub - Investment Managers
State Street Global Advisors Limited 4 20 Churchill Place Canary Wharf London E14 5HJ United Kingdom
State Street Global Advisors Trust Company 1 Iron Street Boston
sub - investment managers – State Street Global Advisors Limited and State Street Global Advisors Trust Company or the management of the Company. 4 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change
Massachusetts 02210 USA
State Street Global Advisors Singapore Ltd 168 Robinson Road # 33 - 01 Capital Tower Singapore 068912
Depositary
State Street Bank International GmbH, Luxembourg Branch 17, Boulevard Kockelscheuer L - 18 21 Luxembourg
does not affect the legal name or structure of the management company, the global distributor and the investment manager - State Street Global Advisors Europe Limited, the sub - investment managers – State Street Global Advisors Limited and State Street Glob al Advisors Trust Company or the management of the Company.
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UCI Administrator
State Street Bank International GmbH, Luxembourg Branch 17, Boulevard Kockelscheuer L - 18 21 Luxembourg
Auditor
PricewaterhouseCoopers Société Coopérative 2 rue Gerhard Mercator L - 2182 Luxembourg
Legal Advisor as to matters of Luxembourg law
Arendt & Medernach SA 41A, avenue J. F. Kennedy L - 2082 Luxembourg
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3. General Information about the
Company
3.1. The Company
The Company is an open - ended public limited company ( société anonyme ) with variable capital ( société d'investissement à capital variable or SICAV), which was incorporated in Luxembourg on 22 September 2008 under registration number B141.816 and is authorised by the CSSF as a UCITS. The Company has been structured as an umbrella fund, with segregated liability between Funds. The object of the Company is the collective investment in transferable securities and/or other liquid financial assets of capital raised from the public, operating on the principle of risk spreading in accordance with Part 1 of the 2010 Law. The capital of the Company is expressed in euro. It is determined by converting the total net assets of all Funds into euro. The Board may from time to time, with the prior approval of the CSSF, create different Funds representing separate portfolios of assets with each Fund comprised of one or more Classes. The investment policy and risk profile of each Fund will be determined by the Board in consultation with the risk management team established within the Investment Manager and any changes with respect to, inter alia , a Fund’s investment restrictions, policy or objective must be approved by the Board. The portfolio of assets maintained for each Fund will be invested in accordance with the investment objectives and policies applicable to such Fund as specified in the R elevant Supplement. In accordance with article 181(5) of the 2010 Law, each Fund is considered to constitute a single pool of assets and liabilities; therefore the rights of Shareholders and creditors concerning each Fund are limited to the assets of that Fund. However, there can be no assurance that, should an action be brought against the Company in the courts of another jurisdiction, the segregated nature of the Company and the Funds will be respected.
Further information with respect to Shares and Classes is outlined in the “ Shares ” section below.
3.2. Management and
Administration
3.2.1. The Directors The Board is responsible for managing the business affairs of the Company in accordance with the Articles. In particular, the Board is responsible for determining the corporate and investment policy for each Fund, based on the principle of risk spreading. Further, the Board is responsible for the overall supervision of the management and administration of the Company, including the selection and supervision of the Management Company and the general monitoring of the performance and operations of the Company . The members of the Board are elected by the general meeting of Shareholders, subject to the prior approval of the candidate by the CSSF. In the event of a vacancy on the Board, the remaining directors may elect a replacement to act as director until the ne xt general meeting of Shareholders. For the current composition of the Board please refer to the Directory. The Articles provide that a director may have an interest in any transaction or arrangement with the Company or in which the Company is interested provided that (s)/he has disclosed to the Board the nature and extent of any material interest which (s)/he m ay have. The Company has granted indemnities to the directors in respect of any loss or damages that they may suffer, save where this results from the director’s gross negligence or wilful misconduct. The members of the Board may also act as directors, officers or partners of other collective investment schemes and/or entities within the same group as the Man agement Company , Investment Manager and/or Sub - Investment Manager , or their respective affiliates. As a result, situations may arise in which the
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Directors have potential conflicts of interest in the performance of their duties to the Company or a Fund. In particular, the Directors may sit on the boards of, and attend meetings relating to, multiple funds managed by the Manage ment Company or its affiliates, and certain governance arrangements may be structured for operational efficiency . Notwithstanding any such arrangements, each Fund is considered separately and independently, and all decisions are taken in the best interests of the Company and the relevant Fund and its Shareholders. The Company has adopted a conflicts of interest policy designed to identify, manage, monitor and, where necessary, disclose conflicts of interest. Where a matter gives rise to a conflict of interest, the Directors are required to disclose the nature of tha t conflict and to comply with applicable procedures, which may include abstaining from discussions and/or decisions in respect of the relevant matter. The Directors will endeavour to ensure that conflicts of interest are resolved fairly and in the best interests of the Company and the relevant Fund and its Shareholders .
3.2.2. The Management Company The Board has appointed State Street Global Advisors Europe Limited 5 to be responsible for the day - to - day management of the Company’s affairs subject to the overall supervision of the Board. The Management Company is responsible for the investment management of the assets of the Company, the administration of the Company a nd the implementation of the Company’s and Funds’ distribution and marketing policy.
The Management Company is a private company limited by shares, which was incorporated in Ireland on 4 December 1974 under registration number 49934 and is authorised by the CBI under:
- the European Communities (Undertakings for Collective Investment in Transferable
5 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change does not affect the legal name or structu re of the management company, the global
Securities) Regulations 2011 (S.I. No. 352 of 2011), and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015, as amended as a UCITS management company; and - European Union (Alternative Investment Fund Managers) Regulations 2013, (S.I. No. 257 of 2013) in respect of MiFID services specified in Regulation 7. For the current composition of the Board of Directors of the Management Company please refer to the Directory .
3.2.3. The Depositary The Company has appointed State Street Bank International GmbH, acting through its Luxembourg Branch as its Depositary. State Street Bank International GmbH is a limited liability company organized under the laws of Germany, having its registered office at Brienner Str. 59, 80333 Munich, Germany and registered with the commercial register court, Munich under number HRB 4287 2. It is a credit institution supervised by the European Central Bank (ECB), the German Federal Financial Services Supervisory Authority (BaFin) and the German Central Bank. State Street Bank International GmbH, Luxembourg Branch is authorized by the CSSF in Luxembourg to act as depositary and is specialised in depositary, fund administration, and related services. State Street Bank International GmbH, Luxembourg Branch is registered in the Luxembourg Commercial and Companies’ Register (RCS) under number B 148 186. State Street Bank International GmbH is a member of the Stat e Street group of companies having as their ultimate parent State Street Corporation, a US publicly listed company. The Depositary has been entrusted with following main functions:
- ensuring that the sale, issue, repurchase, redemption and cancellation of Shares are carried out in accordance with applicable law and the Articles;
distributor and the investment manager - State Street Global Advisors Europe Limited, the sub - investment managers – State Street Global Advisors Limited and State Street Global Advisors Trust Company or the management of the Company.
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- ensuring that the value of the Shares is calculated in accordance with applicable law and the Articles;
- carrying out the instructions of the Management Company unless they conflict with applicable law and the Articles;
- ensuring that in transactions involving the assets of the Funds any consideration is remitted within the usual time limits;
- ensuring that the income of the Company is applied in accordance with applicable law and the Articles.
- monitoring of the Fund’s cash and cash flows;
- safe - keeping of the Fund’s assets, including the safekeeping of financial instruments to be held in custody and ownership verification and record keeping in relation to other assets.
Depositary’s liability In carrying out its duties the Depositary shall, at all times, act honestly, fairly professionally, independently and solely in the interests of the Company and its Shareholders. In the event of a loss of a financial instrument held in custody, determined in accordance with the 2010 Law, and in particular Article 18 of the Commission Delegated Regulation No 2016/438, the Depositary shall return financial instruments of identical ty pe or the corresponding amount to the Company without undue delay. The Depositary shall not be liable if it can prove that the loss of a financial instrument held in custody has arisen as a result of an external event beyond its reasonable control, the consequences of which would have been unavoidable despite all reasonab le efforts to the contrary pursuant to the 2010 Law and other applicable rules. In case of a loss of financial instruments held in custody, the Shareholders may invoke the liability of the Depositary directly or indirectly through the Company provided that this does not lead to a duplication of redress or to unequal treatment of the S hareholders. The Depositary will be liable to the Company for all other losses suffered by the Company as a result of the Depositary’s negligent or intentional failure to properly fulfil its obligations pursuant to the 2010 Law and other applicable rules.
To the extent permitted by applicable law the Depositary may not be liable for consequential or indirect or special damages or losses, arising out of or in connection with the performance or non - performance by the Depositary of its duties and obligations. Delegation The Depositary has full power to delegate the whole or any part of its safe - keeping functions subject to the terms of the depositary agreement but its liability will not be affected by the fact that it has entrusted to a third party some or all of the asse ts in its safekeeping. The Depositary’s liability shall not be affected by any delegation of its safe - keeping functions. Information about the safe - keeping functions which have been delegated and the identification of the relevant delegates and sub delegates are contained in Appendix 2 to the Prospectus. The latest version of the list of the relevant delegates can be consult ed on the Website .
Conflicts of Interest The Depositary is part of an international group of companies and businesses that, in the ordinary course of their business, act simultaneously for a large number of clients, as well as for their own account, which may result in actual or potential conflic ts. Conflicts of interest arise where the Depositary or its affiliates engage in activities under the depositary agreement or under separate contractual or other arrangements. Such activities may include: (i) providing nominee, administration, registrar and transfer agency, research, agent securities lending, investment management, financial advice and/or other advisory services to the Company; (ii) engaging in banking, sales and trading transactions including foreign exchange, derivative, principal lending, broking, market making or other financial transactions with the Company either as principal and in the interests of itself, or for other clients.
In connection with the above activities the Depositary or its affiliates: (i) will seek to profit from such activities and are entitled to receive and retain any profits or compensation in any form and are not
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bound to disclose to, the Company, the nature or amount of any such profits or compensation including any fee, charge, commission, revenue share, spread, mark up, mark - down, interest, rebate, discount, or other benefit received in connection with any such activities; (ii) may buy, sell, issue, deal with or hold, securities or other financial products or instruments as principal acting in its own interests, the interests of its affiliates or for its other clients; (iii) may trade in the same or opposite direction to the transactions undertaken, including based upon information in its possession that is not available to the Company; (iv) may provide the same or similar services to other clients including competitors of the Company; (v) may be granted creditors’ rights by the Company which it may exercise.
The Company may use an affiliate of the Depositary to execute foreign exchange, spot or swap transactions for the account of the Company. In such instances the affiliate shall be acting in a principal capacity and not as a broker, agent or fiduciary of the Company. The affiliate will seek to profit from these transactions and is entitled to retain and not disclose any profit to the Company. The affiliate shall enter into such transactions on the terms and conditions agreed with the Company. Where cash belonging to the Company is deposited with an affiliate being a bank, a potential conflict arises in relation to the interest (if any) which the affiliate may pay or charge to such account and the fees or other benefits which it may derive from holding such cash as banker and not as trustee. The Investment Manager or the Management Company may also be clients or counterparties of the Depositary or its affiliates. Potential conflicts that may arise in the Depositary’s use of sub - delegates include four broad categories: (i) conflicts from the sub - delegates selection and asset allocation among multiple sub delegates influenced by (a) cost factors, including lowest fees charged, fee rebates or similar incentives and (b) broad two - way commercial relationships in which the Deposi tary may act based on the economic
value of the boarder relationship, in addition to objective evaluation criteria; (ii) sub - delegates, both affiliated and non affiliated, act for other clients and in their own proprietary interest, which might conflict with clients’ interests; (iii) sub - delegates, both affiliated and non affiliated, have only direct relationships with clients and look to the Depositary as its counterparty, which might create incentive for the Depositary to act in its self - interest, or other clients’ interests to the d etriment of clients; and (iv) sub - delegates may have market - based creditors’ rights against client assets that they have an interest in enforcing if not paid for securities transactions.
In carrying out its duties the Depositary shall act honestly, fairly, professionally, independently and solely in the interests of the Company and its Shareholders. The Depositary has functionally and hierarchically separated the performance of its depositary tasks from its other potentially conflicting tasks. The system of internal controls, the different reporting lines, the allocation of tasks and the management re porting allow potential conflicts of interest and the Depositary issues to be properly identified, managed and monitored. Additionally, in the context of the Depositary’s use of sub delegates, the Depositary imposes contractual restrictions to address some of the potential conflicts and maintains due diligence and oversight of sub - delegates to ensure a high level of client service by those agents. The Depositary further provides frequent reporting on clients’ activity and holdings, with the underlying funct ions subject to internal and external control audits. Finally, the Depositary internally separates the performance of its custodial tasks from its proprietary activity and follows a standard of conduct that requires employees to act ethically, fairly and t ransparently with clients. Up - to - date information on the Depositary, its duties, any conflicts that may arise, the safe keeping functions delegated by the Depositary, the list of delegates and sub - delegates and any conflicts of interest that may arise from such a delegation will be made available by the Depositary to Shareholders on request.
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3.2.4. The UCI Administrator The Company and the Management Company have appointed State Street Bank International GmbH, Luxembourg Branch to further act as the Company’s UCI administration agent, domiciliary and corporate agent, registrar and transfer agent and paying agent and to procure or provide services ancillary thereto. As UCI Administrator, State Street Bank International GmbH, Luxembourg Branch is responsible for the registrar function, the NAV calculation and accounting function and the client communication function as defined in CSSF Circular 22/811. Agreements have been entered into with various affiliates and agents to perform certain administrative or representative services or to facilitate the payment of Share distributions in relevant jurisdictions.
3.2.5. The Investment Manager State Street Global Advisors Europe Limited 6 also serves as the investment manager of the Company, subject to the supervision of the Board.
The Investment Manager provides investment management services to the Funds and has established a Polish Branch through which it may also provide these services.
The Investment Manager is authorised by the CBI in respect of these services and its investment management business includes but is not limited to management of other Irish authorised undertakings for collective investment.
The Investment Manager has the discretion to delegate to sub - investment managers all the powers, duties and discretions exercisable in respect of the management of the relevant percentage of such of the Funds as the Investment Manager and any Sub - Investmen t Manager may from time to time agree. A Sub
6 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change does not affect the legal name or structu re of the management company, the global distributor and the investment manager - State Street Global Advisors Europe Limited, the sub - investment managers – State Street Global Advisors Limited and State Street Global Advisors Trust Company or the manageme nt of the Company.
Investment Manager may further delegate. Any such delegation will be in accordance with the requirements of the CSSF. Details of sub investment managers appointed to any Fund will be available to Shareholders on request and will be disclosed in the Fund’s Relevant Supplement . Fees payable to any Sub Investment Manager appointed by the Investment Manager shall be paid by the Investment Manager out of the Investment Management fees.
3.2.6. The Sub - Investment Managers The Investment Manager has appointed the following discretionary sub - investment managers in respect of certain Funds, as indicated in the Relevant Supplement including, without limitation:
- State Street Global Advisors Limited, a private limited company regulated by the Financial Conduct Authority;
- State Street Global Advisors Trust Company, a Massachusetts trust company;
- State Street Global Advisors Singapore Ltd, a Singapore limited liability company, regulated by the Monetary Authority of Singapore.
3.2.7. The Global Distributor and distributors State Street Global Advisors Europe Limited 7 has also been appointed to act as the Global Distributor of the Company and to promote and market Shares. The Global Distributor is responsible for the marketing and distribution of the Shares in Luxembourg and other jurisdictions approved by the Board. The Global Distributor is authorised to appoint other Distributors, sub - distributors and intermediaries and enter into other similar agreements relating to the distribution of Shares. The Global Distributor is authorised to appoint its group companies, inc luding those set out in the “ Directory ” section of this
7 State Street Global Advisors is now State Street Investment Management. Effective June 30, 2025, State Street Global Advisors began operating under the marketing name State Street Investment Management. This change does not affect the legal name or structu re of the management company, the global distributor and the investment manager - State Street Global Advisors Europe Limited, the sub - investment managers – State Street Global Advisors Limited and State Street Global Advisors Trust Company or the manageme nt of the Company.
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Prospectus to carry out all or any of its duties and functions upon terms which are substantially similar to the terms of the distribution agreement.
3.2.8. Conflicts of interest The Company is committed to maintaining and operating effective organizational and administrative arrangements to identify and manage any potential conflicts of interests. The Management Company adopted written procedures with respect to conflicts of inter est. In formulating the conflicts of interest policy, the Management Company has taken into account the fact that it is a member of the State Street Corporation group. Once identified, potential conflicts are referred to the relevant governance body, as ap propriate. The Board, the Management Company, the Depositary, the UCI Administrator and other service providers of the Company, and/or their affiliates, members, employees or any person connected with them may be subject to various conflicts of interest in their relationships with the Company. In such event, each will at all times have regard to its obligations under any agreements to which it is party or by which it is bound in relation to the Company. In particular, when undertaking any dealings or investments where conflicts of interest may arise, each will respectively en deavour to ensure that such conflicts are resolved fairly. The risk warning headed “ Conflicts of Interest Risk ” in the “ Risk Information ” section of this Prospectus provide further details regarding the risks described above. As further described in the Articles and in section “ The Directors ” of this Prospectus, any director of the Company who has, directly or indirectly, an interest in a transaction submitted to the approval of the Board which conflicts with the Company’s interest, must inform the Board. The director may not take part in the discussions on and may not vote on the transaction. The Management Company has adopted and implemented a conflicts of interest policy and has made appropriate organisational and administrative arrangements to identify and manage conflicts of interests so as to minimise the risk of the Company’s interests be ing prejudiced, and if they cannot be avoided,
ensure that the Company is treated fairly and that such conflicts are resolved fairly taking into account investors’ interest.
3.3. General Meeting of
Shareholders
The annual general meeting of Shareholders of the Company takes place in Luxembourg every year at 11.00 a.m. (CET) on the fourth Thursday of April or, if this date does not fall on a business day in Luxembourg, the next following business day in Luxembourg . Other extraordinary general meetings of Shareholders of the Company or meetings of individual Funds or their Classes may be held from time to time. Notices to the annual general meeting and other meetings are issued in accordance with Luxembourg law. The notices contain information about the place and time of the general meeting, the requirements for attending the meeting, the agenda and, if necessary , the quorum requirements and majority requirements for resolutions. The requirements as to quorum and majorities at all general meetings will be those set out in the Articles and in the 1915 Law. All Shareholders may attend general meetings in person or by appointing another person as his proxy in writing or by other commu nication mediums accepted by the Company.
3.4. Rights of
Shareholders
Voting rights: Each Share entitles the Shareholder to one (1) vote at all general meetings of the Shareholders of the Company and at all meetings of the Fund or Class. Fractions of Shares do not entitle their holder to vote. Right to receive a share of the profits: The Shares issued are entitled to participate in the net assets allocated to the relevant Fund or Class as of the Dealing Day on which they are purchased and up until the date on which they are redeemed. Shareholder rights directly against the Company: The Company draws the Shareholders’ attention to the fact that a Shareholder will only be able to exercise its rights directly against the Company, notably the
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right to participate in general shareholders’ meetings, if such Shareholder is registered in his own name in the Shareholders’ register. In cases where an investor invests in the Company through an intermediary who invests into the Company in its own name but on behalf of the Shareholder, it may not be possible for such investor to exercise certain Shareholder rights directly against the Company. Investors are advised to seek advice in relation to their rights. Shareholder rights directly against the service providers: Generally, absent a direct contractual relationship between the Shareholders and the service providers mentioned in the “Management and Administration” section, Shareholders will have no direct rights against service providers and there will only be limit ed circumstances in which a Shareholder can potentially bring a claim against a service provider. Instead, the proper claimant in an action in respect of which a wrongdoing is alleged to have been committed against the Company by a service provider is, pri ma facie, the Company itself. As an exception to this general principle, the Shareholders should be able to invoke claims relating to the liability of the Depositary directly provided that this does not lead to a duplication pf redress or to unequal treatm ent of Shareholders.
3.5. Financial year and
statements
The Company's financial year ends on 31 December of each year. The Company will publish an annual report and audited annual accounts, which will be approved by the Board, within four (4) months of the end of the financial period to which they relate. Unaud ited semi annual reports will also be available no later than two (2) months after the end of the half year in question. Copies of these reports may be obtained, free of charge, from the national representatives and at the Company's registered office.
3.6. Liquidation
3.6.1. Termination and liquidation of Funds or Classes The Board may, having notified the Shareholders concerned in writing, compulsorily redeem all, but not some, of the Shares of any Fund, and may decide to subsequently terminate and liquidate the Fund or keep it dormant, in the event that, for any reason, t he Board determines that:
- the NAV of a Fund has decreased to, or has not reached, €100,000,000 or equivalent in the relevant Base Currency, the minimum level for that Fund to be managed and/or administered in an efficient manner; or
- changes in the economic or political circumstances would justify such liquidation
- it is / would be justified in the best interest of investors . The liquidation of a Fund associated with the compulsory redemption of all affected Shares for any other reason may only be carried out with the prior agreement of the Shareholders in the Fund to be liquidated at a meeting of Shareholders of the Fund in qu estion, convened in accordance with the Articles. The notice will explain the reasons and the process of the termination and liquidation. Such resolution may be passed with no quorum requirement and with a simple majority of the Shares attending/represente d and voting. Generally, if a Fund is liquidated, all Shares redeemed will be cancelled. Redemption proceeds which have not been claimed by former Shareholders upon the compulsory redemption will be deposited in escrow at the Caisse de Consignation in Luxembourg in accordance with applicable laws and regulations. Proceeds not claimed within the statutory period will be forfeited in accordance with applicable laws and regulations. The termination and liquidation of a Fund will have no influence on the existence of any other Fund. The termination and liquidation of the last Fund of the Company will result in the liquidation of the Company. The Board may also, at its sole discretion and at any time, close a Class.
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3.6.2. Dissolution and liquidation of the Company The Company is incorporated for an unlimited period. However, it may be dissolved at any time by a resolution passed at a general meeting of Shareholders adopted in compliance with applicable laws. If and when for any reason the capital of the Company falls below two - thirds of the minimum capital set out in the 2010 Law ( i.e. €1,250,000), the Board is required to submit the question of liquidation of the Company to a general meeting of Shareholders within forty (40) days. The general meeting may resolve the question of liquidation with a simple majority of the Shareholders pre sent/represented (no quorum is required). If the capital of the Company falls below one quarter of the minimum capital set out in the 2010 Law ( i.e. €1,250,000), the Board of the Company is required to submit the question of liquidation of the Company to a general meeting of the Shareholders, which must be called within the same period. In this case, a liquidation may be resolved by one - quarter of the votes of the Shareholders present/represented at the general meeting (no quorum is required). The compulsory dissolution of the Company may be ordered by Luxembourg competent courts in circumstances provided by the 2010 Law and the 1915 Law. As soon as a decision to dissolve the Company is taken, the issue, redemption or conversion of Shares in all Funds will be prohibited. In the event of a dissolution of the Company, the liquidators appointed by the general meeting of Shareholders, in accordance with the CSSF, will realise the assets of the Company in the interests of the Shareholders and will subsequently distribute the ne t proceeds of liquidation (after deducting all liquidation expenses) among Shareholders of each Fund in proportion to their holding of Shares in such Fund. Liquidation proceeds which have not been claimed by Shareholders at the time of the closure of the l iquidation will be deposited in escrow at the Caisse de Consignation in Luxembourg. Proceeds not claimed within the statutory period will be forfeited in accordance with applicable laws and regulations.
A liquidation of the Company will be carried out in accordance with the provisions of the 2010 Law and 1915 Law.
3.7. Merger of the
Company, a Fund or
a Class
The Board may decide to proceed with a merger of one or several Funds with one or several other Funds within the Company, or with one or several other Luxembourg or foreign UCITS or sub - funds thereof. In such event, notice of the merger will be given in wr iting to the Shareholders of the relevant Fund and each Shareholder shall be given the possibility, during a period of at least 30 days before the effective date of the merger (it being understood that the effective date of the merger normally takes place five business days after the expiry of such notice period), to request either the repurchase or switching of his Shares of the Fund, free of charge (other than the cost of disinvestment). In accordance with the provisions of the 2010 Law and the Articles, a merger does not require the prior consent of Shareholders except where the Company is the absorbed entity, which thus ceases to exist as a result of the merger. In such case, the general meeting of Shareholders of the Company must decide on the merger (and its effective date) of the Company with another Luxembourg or foreign UCITS before a notary. No quorum is required and the decision shall be taken at a simple majority of the Shareholde rs present or represented and voting. The general meeting of Shareholders will decide by resolution taken with the same quorum and majority requirements as stipulated in the Articles for a change to the Articles. In any case, the merger will be subject to the conditions and procedures imposed by the 2010 Law, in particular concerning the common draft terms of the merger to be established by the Board and the information to be provided to Shareholders. The Board may also decide, subject to at least 30 days’ prior notice to the shareholders in the Class, merge such Class with another Class of the same or another Fund.
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3.8. Applicable Law and
Jurisdiction
The Company’s a pplication fo form (the “Application Form”) shall be governed by and construed in accordance with the laws currently in force in Luxembourg. It contains a choice of international competence of the courts of Luxembourg. There are no legal instruments in Luxembourg required for the recognition and enforcement of judgments rendered by a Luxembourg court. If a foreign, i.e. non - Luxembourg court, on the basis of mandatory domestic provisions, renders a judgment against the Co mpany, the rules of the Regulation (EU) No 1215/2015 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), (regarding judgments from EU M ember States) or the rules of the Convention of Lugano of 30 October 2007 on jurisdiction and the enforcement of judgments in civil and commercial matters or of the private international law of Luxembourg (regarding judgments from non - EU Member States) con cerning the recognition and enforcement of foreign judgments apply. Investors are advised to seek advice, on a case - by - case basis, on the available rules concerning the recognition and enforcement of judgments.
3.9. Remuneration policy
The Management Company is subject to remuneration policies, procedures and practices (together, the “Remuneration Policy”) which complies with the UCITS Directive. The Remuneration Policy is consistent with and promotes sound and effective risk management. It is designed not to encourage risk - taking which is inconsistent with the risk profile of the Funds. The Remuneration Policy is in line with the business strategy, objectives, values and interests of the Management Company, the Company and of the Shareho lders. It includes measures to avoid conflicts of interest. The Remuneration Policy applies to staff whose professional activities have a material impact on the risk profile of the Management Company or the Company and ensures that no individual
will be involved in determining or approving their own remuneration. The Remuneration Policy shall include an assessment of performance set in a multi - year framework appropriate to the holding period recommended to the Shareholders in order to ensure that the assessment process is based on the longer - term performance of the Funds and their investment risks and in order to ensure that the actual payment of performance based components of remuneration is spread over the same period. In accordance with Luxembourg law, the Remuneration Policy shall appropriately balance fixed and variable components of total remuneration, where the fixed component represents a portion of the total remuneration which is sufficiently high so that a highly flexible policy may be applied with regards to the variable remuneration, including the possibility that no variable component may be paid at all. The Remuneration Policy will be reviewed annually. Details of the up - to - date Remuneration Policy are available on the Website . The Remuneration Policy will also be made available for inspection and may be obtained, free of charge, at the registered office of the Company. The Management Company, with the consent of the Board, has delegated certain activities, in respect of the investment management and risk management of the Funds, to the Sub Investment Managers. The global State Street remuneration policy applies to the Su b Investment Managers’ employees. Such remuneration policy is consistent with and promotes sounds and effective risk management and does not encourage risk taking that is inconsistent with the risk profile of the Funds managed by the Sub - Investment Manager s. Pursuant to A rticle 5 of SFDR, the details of how the Remuneration Policy is consistent with the integration of sustainability risks can be found on the Website.
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4. Risk Information
This section provides information regarding some of the general risks applicable to an investment in the Funds. Additional risk information specific to individual Funds is specified in the Relevant Supplement. This section is not intended to be a complete explanation and other risks may be relevant from time to time. In particular, the Company’s and each Fund’s performance may be affected by changes in market, economic and political conditions, and in legal, regulatory and tax requirements.
References to the Investment Manager in this section shall incorporate references to the Sub Investment Manager as may be applicable to a particular Fund and disclosed in the Relevant Supplement.
Investors should be aware that an investment in a Fund is not in the nature of a deposit in a bank account and is not protected by any government, government agency or other guarantee scheme. Before making an investment decision with respect to an investme nt in any Fund, prospective investors should carefully consider all of the information set out in this Prospectus and the Relevant Supplement, as well as their own personal circumstances, and should consult their own stockbroker, bank manager, lawyer, acco untant and/or financial adviser. An investment in the Shares of any Fund is only suitable for investors who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.
The price of the Shares of a Fund can go down as well as up and their value is not guaranteed. Shareholders may not receive, at redemption or liquidation, the amount that they originally invested in a Fund or any amount at all.
Although the Company will do its utmost to achieve the investment objectives of each
Fund, there can be no guarantee to which extent these objectives will be reached. Consequently, the NAV of the Shares may increase or decrease and positive or negative returns of different levels may arise.
Cash Position Risk: A Fund may hold a significant portion of its assets in cash or cash equivalents at the Investment Manager’s discretion. If a Fund holds a significant cash position, its investment returns may be adversely affected, and such Fund may not achieve its investm ent objective.
Concentration Risk: An actively managed Fund may focus its investments in companies or issuers in a particular industry, market, or sector. When a Fund focuses its investments in a particular industry market or sector, any financial, economic, business or other developments a ffecting issuers in that industry, market, or sector will have a greater effect on the Fund than if it had not focused its assets in that industry, market, or sector, which may, in turn, increase the volatility of the Fund. Any such investment focus may al so limit the liquidity of a Fund. In addition, investors may buy or sell substantial amounts of a Fund’s Shares in response to factors affecting or expected to affect an industry, market, or sector in which the Fund focuses its investments, resulting in ex treme inflows or outflows of cash into or out of the Fund. Such extreme cash inflows or outflows might affect management of the Fund adversely.
An index - tracking Fund's assets will generally be concentrated in an industry or group of industries or sector to the extent that such Fund's underlying specified index concentrates in a particular industry or group of industries or sector. When a Fund foc uses its investments in a particular industry or sector, any financial, economic, business or other developments affecting issuers in that industry, market, or sector will have a greater effect on the Fund than if it had not focused its assets in that indu stry, market, or sector, which may, in turn,
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increase the volatility of the Fund. Any such investment focus may also limit the liquidity of the Fund. In addition, investors may buy or sell substantial amounts of the Fund’s shares in response to factors affecting or expected to affect an industry, mar ket, or sector in which the Fund focuses its investments, resulting in extreme inflows or outflows of cash into or out of the Fund. Such extreme cash inflows or outflows might affect management of the Fund adversely.
Conflicts of Interest Risk : An investment in a Fund may be subject to a number of actual or potential conflicts of interest. Subject to applicable law, a Fund may engage in transactions that may trigger or result in a potential conflict of interest. For example: The Investment Manager or its affiliates may provide services to the Fund, such as securities lending agency services, depositary, custodial, administrative, bookkeeping, and accounting services, transfer agency, and shareholder servicing, and other services for which the Fund would compensate the Investment Manager and/or such affiliates.
A Fund may enter into securities transactions with the Investment Manager or an affiliate of the Investment Manager where the Investment Manager or an affiliate acts as agent for a Fund in connection with the purchase or sale of securities, or as principal , where the Investment Manager or an affiliate sells securities to a Fund or buys securities from a Fund for its own account.
The Investment Manager on behalf of the Fund may enter into repurchase agreements and derivatives transactions with or through Investment Manager or one of its affiliates. A Fund may invest in other pooled investment vehicles sponsored, managed, or otherwi se affiliated with the Investment Manager in which event the Fund may not be charged subscription or redemption fees on account of such investment but will bear a share of the expenses of those other pooled investment vehicles. Those investment vehicles ma y pay fees and other amounts to the Investment Manager or its affiliates, which might have the effect of increasing the expenses of the Fund. It is possible that other clients of the Investment
Manager will purchase or sell interests in such other pooled investments at prices and at times more favourable than those at which the Fund does so.
There is no assurance that the rates at which a Fund pays fees or expenses to the Investment Manager or its affiliates, or the terms on which a Fund enters into transactions with the Investment Manager or its affiliates or on which a Fund invests in any in vestment vehicles sponsored, managed, or otherwise affiliated with the Investment Manager will be the most favourable available in the market generally or as favourable as the rates the Investment Manager makes available to other clients. There will be no independent oversight of prices, fees or expenses paid to, or services provided by, the Investment Manager or its affiliates. Because of its financial interest, the Investment Manager may have an incentive to enter into transactions or arrangements on beha lf of a Fund with itself or its affiliates in circumstances where it might not have done so in the absence of that interest. Transactions and services with or through the Investment Manager or its affiliates will, however, be effected in accordance with th e applicable regulatory requirements.
The Investment Manager and its affiliates serve as investment manager to other clients and may make investment decisions for their own accounts and for the accounts of others that may be different from those that will be made by the Investment Manager on b ehalf of a Fund. For example, the Investment Manager may provide asset allocation advice to some clients that may include a recommendation to invest in or redeem from a particular issuer while not providing that same recommendation to all clients invested in the same or similar issuers.
Other conflicts may arise, for example, when clients of the Investment Manager invest in different parts of an issuer’s capital structure, so that one or more clients own senior debt obligations of an issuer and other clients own junior debt of the same issuer, as well as circumstances in which clients invest in different tranches of the same structured financing vehicle. In such circumstances, decisions over whether to trigger an event of
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default or over the terms of any workout may result in conflicts of interest. When making investment decisions where a conflict of interest may arise, the Investment Manager will endeavour to act in a fair and equitable manner, in accordance with its confl icts of interest policy, as between the relevant Fund and other clients. Subject to the foregoing, (i) the Investment Manager and its affiliates may invest for their own accounts and for the accounts of clients in various securities that are senior , pari passu or junior to, or have interests different from or adverse to, the securities that are owned by a Fund; and (ii) subject to applicable law, the Investment Manager may, at certain times, simultaneously seek to purchase (or sell) investments for a Fund and t o sell (or purchase) the same investment for accounts, funds or structured products for which it serves as investment manager now or in the future, or for other clients or affiliates and may enter into cross trades in such circumstances.
In addition, the Investment Manager and its affiliates may buy securities from or sell securities to a Fund, if permitted by applicable law. These other relationships may also result in securities laws restrictions on transactions in these instruments by a Fund and otherwise create potential conflicts of interest for the Investment Manager.
The Investment Manager, in connection with its other business activities, may acquire material non - public confidential information that may restrict the Investment Manager from purchasing securities or selling securities for itself or its clients (includin g a Fund) or otherwise using such information for the benefit of its clients or itself.
There is no prohibition on dealing in assets of a Fund by the Depositary or Investment Manager, or by any entities related to such parties, provided that such transactions are carried out as if effected on normal commercial terms negotiated at arms’ length and are in the best interest of Shareholders. Permitted transactions between a Fund and such parties are subject to (i) a certified valuation by a person approved by the Depositary (or the Directors in the case of a transaction involving the Depositary) a s independent and competent;
or (ii) execution on best terms on organised investment exchanges under their rules; or (iii) where (i) and (ii) are not practical, execution on terms the Depositary (or the Directors in the case of a transaction involving the Depositary) is satisfied conf orm to the principles set out above.
There is no prohibition on the Depositary, the UCI Administrator, the Investment Manager or any other party related to a Fund acting as a “competent person” for the purposes of determining the probable realisation value of an asset of the Fund in accordance with the valuation provisions outlined in “ Valuation and Calculation of the NAV ” section of this Prospectus. Investors should note however, that in circumstances where fees payable by a Fund to such parties are calculated based on the NAV, a conflict of interest may arise as such fees will increase if the NAV increases. Any such part y will endeavour to ensure that such conflicts are resolved fairly and in the best interest of the Shareholders.
The Investment Manager is required to provide best execution when executing orders or transmitting orders on behalf of the Fund. The Investment Manager will take all sufficient steps to obtain, when executing orders or transmitting orders on the Fund’s behalf, the best possible result for the Fund, taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to execution of the order. When executing or transmitting orders on behalf of the Fund, the Inve stment Manager will take into account any specific instruction from the Board or its duly authorised delegate regarding execution of the order.
A Director may be a party to, or otherwise interested in, any transaction or arrangement with a Fund or in which a Fund is interested, provided that he has disclosed to the other Directors prior to the conclusion of any such transaction or arrangement the nature and extent of any material interest of his therein. The Directors shall endeavour to ensure that any conflict of interest is resolved fairly.
The foregoing does not purport to be a comprehensive list or complete explanation of
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all potential conflicts of interests which may affect a Fund. A Fund may encounter circumstances, or enter into transactions, in which conflicts of interest that are not listed or discussed above may arise.
Costs of Buying or Selling ETF Shares Risk . Investors buying or selling ETF Shares in the S econdary M arket will pay brokerage commissions or other charges determined and imposed by the applicable broker. Brokerage commissions are often a fixed amount and may be a significant proportional cost for investors seeking to buy or sell relatively small amounts of ETF Shares. In addition, S econdary M arket investors will incur the cost of the difference between the price that an investor is willing to pay for ETF Shares (the “bid” price) and the price at which an investor is willing to sell ETF Shares (the “ask” price). This difference in bid and ask prices is often referred to as the “spread” or “bid/ask spread.” The bid/ask spread varies over time for ETF Shares based on trading volume and market liquidity, and is generally lower if a Fund’s ETF Shares have mor e trading volume and market liquidity and higher if a Fund’s ETF Shares have little trading volume and market liquidity. Further, increased market volatility may cause increased bid/ask spreads. Due to the costs of buying or selling ETF Shares, including b id/ask spreads, frequent trading of ETF Shares may significantly reduce investment results and an investment in ETF Shares may not be advisable for investors who wish to trade regularly in relatively small amounts.
Counterparty Risk : Each Fund will be subject to credit risk with respect to the counterparties with which such Fund enters into derivatives contracts foreign exchange, currency forward contracts and other transactions such as repurchase agreements. A Fund’s ability to profit from these types of investments and transactions will depend on the willingness and ability of its counterparty to perform its obligations. If a counterparty fails to meet its contractual obligations, the relevant Fund(s) may be unable to terminate or rea lize any gain on the investment or transaction, or to recover collateral posted to a counterparty, resulting in
a loss to such Fund(s). A Fund may experience significant delays and expenses in obtaining any recovery in an insolvency, bankruptcy, or other reorganization proceeding involving its counterparty (including recovery of any collateral posted by it) and may obtain only a limited recovery or may obtain no recovery in such circumstances. If a Fund holds collateral posted by its counterparty, it may be delayed or prevented from realizing on the collateral in the event of a bankruptcy or insolvency proceeding rel ating to the counterparty. Contractual provisions and applicable law may prevent or delay a Fund from exercising its rights to terminate an investment or transaction with a financial institution experiencing financial difficulties or to realize on collater al and another institution may be substituted for that financial institution without the consent of the impacted Fund(s). If the credit rating of a derivatives counterparty declines, an impacted Fund may nonetheless choose or be required to keep existing t ransactions in place with the counterparty, in which event such Fund would be subject to any increased credit risk associated with those transactions.
Under applicable law or contractual provisions, including if a Fund enters into an investment or transaction with a financial institution and such financial institution (or an affiliate of the financial institution) experiences financial difficulties, the Fund may in certain situations be prevented or delayed from exercising its rights to terminate the investment or transaction, or to realize on any collateral and may result in the suspension of payment and delivery obligations of the parties under such inv estment or transactions or in another institution being substituted for that financial institution without the consent of the Fund. Further, the Fund may be subject to “bail - in” risk under applicable law whereby, if required by the financial institution’s authority, the financial institution’s liabilities could be written down, eliminated or converted into equity or an alternative instrument of ownership. A bail - in of a financial institution may result in a reduction in value of some or all of its securitie s and a Fund that holds such securities or has entered into a transaction with such a financial security when a bail - in occurs may also be similarly impacted.
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OTC derivatives have similar risks as described above and may also be subject to the risk that a contract will be cancelled, for example due to bankruptcy, subsequent illegality or a change in the tax or accounting regulations since the conclusion of the O TC derivative contract.
Currency Hedging Risk: The Company may offer Portfolio Hedged Classes in a Fund which are currency - hedging share classes and seek to reduce the impact of exchange rate fluctuations between the Class currency of the Portfolio Hedged Class and the currency in which Fund’s underlying assets are denominated and NAV Hedged Classes in a Fund which are currency - hedged share classes and seek to reduce the impact of exchange rate fluctuations between the Class currency of the NAV Hedged Class and the Base Currency of the Fund. When a derivative is used as a hedge against a position that a Fund holds, any gain generated by the derivative ge nerally should be substantially offset by losses on the hedged investment, and vice versa. While hedging can reduce or eliminate losses, it can also reduce or eliminate gains. Hedges are sometimes subject to imperfect matching between a derivative and its reference asset. While a Fund is designed to hedge against currency fluctuations, it is possible that a degree of currency exposure may remain even at the time a hedging transaction is implemented. As a result, the Fund may not be able to structure its hed ging transactions as anticipated or its hedging transactions may not successfully reduce the currency risk included in the Fund's portfolio. The effectiveness of the Fund's currency hedging strategy will also generally be affected by the volatility of both the securities included in the portfolio, and the volatility of the base currency of the Fund relative to the currencies to be hedged. Increased volatility may reduce the effectiveness of the Fund's currency hedging strategy and may impact the costs assoc iated with hedging transactions. The effectiveness of the Fund's currency hedging strategy and the costs associated with hedging transactions may also in general be affected by interest rates. There can be no assurance that the Fund's hedging transactions will be effective . Significant differences between a Fund’s base currency interest rates and foreign currency interest rates may further impact the
effectiveness of the Fund's currency hedging strategy. The Fund will bear the costs associated with any such hedging transaction, regardless of any gain or loss experienced on the hedging transaction.
Where Classes denominated in different currencies are created within a Fund and currency hedging transactions are entered into to hedge any relevant currency exposure, each such transaction will be clearly attributable to the specific Class and any costs s hall be for the account of that Class only. It is intended that all gains/losses and expenses arising from such hedging transactions will be borne separately by the Shareholders of the respective Hedged Classes and accordingly, all such gains/losses and ex penses will be reflected in the NAV per Share of the applicable Hedged Class; however, as there is no segregation of liabilities between Classes of a Fund, there is a risk that, under certain circumstances, currency hedging transactions in relation to Hedg ed Classes of a Fund could ultimately result in liabilities which might affect the Fund as a whole.
As there is no segregation of liabilities between Classes of a Fund, there is a risk that, under certain limited circumstances, the liabilities of a particular Class might affect the NAV of other Classes. In particular, while the Investment Manager will se ek to ensure that gains/losses on and the costs of the relevant FDI associated with any currency hedging strategy used for the benefit of particular Hedged Class will accrue solely to this class and will not be combined with or offset with that of any othe r Class, there can be no guarantee that the Investment Manager will be successful in this. In addition, over hedged or under - hedged positions may arise unintentionally due to factors outside the control of the Investment Manager but the Investment Manager will ensure that over - hedged positions do not exceed 105% of the NAV of the relevant Hedged Class and under - hedged positions shall not fall short of 95% of the portion of the NAV of the relevant Hedged Class. The Investment Manager will monitor hedging and such monitoring will incorporate a procedure to ensure that positions materially in excess of or below 100% will not be carried forward from month to month. For Portfolio Hedged Classes, to the extent that hedging is successful, the
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performance of the relevant Portfolio Hedged Class is likely to move in line with the performance of the underlying assets. The use of currency hedging may substantially limit holders of the Portfolio Hedged Class from benefiting if the Share currency fall s against the Base Currency and/or the currency in which the assets of the Fund are dominated.
There can be no guarantee that the Investment Manager will be successful in such hedging activities and unsuccessful hedging activities may have a material impact on Shareholder’s returns. Recent regulatory changes in a number of jurisdictions require that certain currency transactions be subject to collateral requirements. These changes could increase the costs to a Fund of entering into currency transactions.
Currency Risk : Investments in issuers in different countries are often denominated in currencies different from a Fund’s Base Currency. Changes in the values of those currencies relative to a Fund’s Base Currency may have a positive or negative effect on the values of a Fund’s investments denominated in those currencies. The values of other currencies relative to a Fund’s Base Currency may fluctuate in response to, among other factors, interest rate changes, intervention (or failure to intervene) by national governments, central banks, or supranational entities such as the International Monetary Fund, the imposition of currency or capital controls, and other political or regulatory developments. Currency values can decrease significantly both in the short term and over the long term in response to these and other developments.
Cybersecurity Risk : With the increased use of technologies such as the Internet and the dependence on computer systems to perform business and operational functions, funds (such as the Company) and its service providers (including the Investment Manager) may be prone to opera tional and information security risks resulting from cyber - attacks and/or technological malfunctions. In general, cyber attacks are deliberate, but unintentional events may have similar effects. Cyber - attacks include, among others, stealing or corrupting d ata maintained online or digitally, preventing
legitimate users from accessing information or services on a website, releasing confidential information without authorization, and causing operational disruption. Successful cyber attacks against, or security breakdowns of, the Company, the Investment Man ager or the Depositary, a sub - custodian, UCI Administrator, or other affiliated or third - party service providers may adversely affect the Company or its Shareholders. For instance, cyber - attacks or technical malfunctions may interfere with the processing of Shareholders’ or other transactions, affect a Fund’s ability to calculate its NAV, cause the release of private Shareholder information or confidential Company and/or Fund information, impede trading, cause reputational damage, and subject the Company to regulatory fines, penalties or financial los ses, reimbursement or other compensation costs, and additional compliance costs. Cyber - attacks or technical malfunctions may render records of Company assets and transactions, Shareholder ownership of Company Shares, and other data integral to the function ing of the Company and each Fund inaccessible or inaccurate or incomplete. The Company may also incur substantial costs for cybersecurity risk management in order to prevent cyber incidents in the future. The Company and its shareholders could be negativel y impacted as a result. While the Investment Manager, Depositary and UCI Administrator have established business continuity plans and systems designed to minimise the risk of cyber attacks through the use of technology, processes and controls, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified given the evolving nature of this threat. The Company relies on third - party service providers for many of its day - to - day operations, and will be subject to the risk that the protections and protocols implemented by those service providers will be ineffective to protect the Company from cyber - attack. S imilar types of cybersecurity risks or technical malfunctions also are present for issuers of securities in which a Fund invests, which could result in material adverse consequences for such issuers, and may cause the Fund’s investment in such securities t o lose value.
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Depositary and Custodial Risk: There are risks involved in dealing with the Depositary, sub - custodians or brokers who hold a Fund’s investments or settle a Fund’s trades. The Depositary will hold assets in compliance with applicable laws (including but not limited to the UCITS Directive and Commission Delegated Regulations) and such specific provisions as agreed in the depositary agreement. Such requirements are designed to safe keep the assets and provide certain protections against losses including losses from the insolvency of the Dep ositary or any - sub - custodian but there is no guarantee they will successfully do so.
In certain circumstances, it is possible that, in the event of the insolvency or bankruptcy of a sub - custodian or broker, the Fund would be delayed or prevented from recovering its assets from the sub - custodian or broker, or its estate, and may have only a general unsecured claim against the sub - custodian or broker for those assets.
Depositary Receipts Risk: A Fund may invest in American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and European Depositary Receipts (“EDRs”). ADRs are typically trust receipts issued by a U.S. bank or trust company that evidence an indirect interest in underl ying securities issued by a foreign entity. GDRs, EDRs, and other types of depositary receipts are typically issued by international banks or financial institutions to evidence an interest in underlying securities issued by either a U.S. or a non - U.S. enti ty. Investments in depositary receipts may be less liquid and more volatile than the underlying securities in their primary trading market. If a depositary receipt is denominated in a different currency than its underlying securities, an investing Fund wil l be subject to the currency risk of both the investment in the depositary receipt and the underlying security. There may be less publicly available information regarding the issuer of the securities underlying a depositary receipt than if those securities were traded directly. Depositary receipts may or may not be sponsored by the issuers of the underlying securities, and information regarding issuers of securities underlying unsponsored depositary receipts may be more limited than for sponsored depositary receipts. The values
of depository receipts may decline for a number of reasons relating to the issuers or sponsors of the depository receipts, including, but not limited to, insolvency of the issuer or sponsor. Holders of depositary receipts may have limited or no rights to t ake action with respect to the underlying securities or to compel the issuer of the receipts to take action.
Debt Securities Risk : The values of debt securities may increase or decrease as a result of the following: market fluctuations, increases in interest rates, actual or perceived inability or unwillingness of issuers, guarantors or liquidity providers to make scheduled principal or interest payments or illiquidity in debt securities markets; the risk of low rates of return due to reinvestment of securities during periods of falling interest rates or repayment by issuers with higher coupon or interest rates; and/or the risk of low inc ome due to falling interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. A rising interest rate environmen t may cause the value of a Fund’s fixed income securities to decrease, a decline in the Fund’s income and yield, an adverse impact on the liquidity of the Fund’s fixed income securities, and increased volatility of the fixed income markets. If the principa l on a debt obligation is prepaid before expected, the prepayments of principal may have to be reinvested in obligations paying interest at lower rates. During periods of falling interest rates, the income received by a Fund may decline. Changes in interes t rates will likely have a greater effect on the values of debt securities of longer durations. Returns on investments in debt securities could trail the returns on other investment options, including investments in equity securities.
• Credit Risk : Credit risk is the risk that an issuer, guarantor or liquidity provider of a fixed - income security held by a Fund may be unable or unwilling, or may be perceived (whether by market participants, ratings agencies, pricing services or otherwise) as unable or unwilling, to make timely principal and/or interest payments, or
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to otherwise honour its obligations. It includes the risk that the security will be downgraded by a credit rating agency; generally, lower credit quality issuers present higher credit risks. An actual or perceived decline in creditworthiness of an issuer o f a fixed - income security held by a Fund may result in a decrease in the value of the security. It is possible that the ability of an issuer to meet its obligations will decline substantially during the period when the Fund owns securities of the issuer or that the issuer will default on its obligations or that the obligations of the issuer will be limited or restructured.
The credit rating assigned to any particular investment does not necessarily reflect the issuer’s current financial condition and does not reflect an assessment of an investment’s volatility or liquidity.
Securities rated in the lowest category of investment grade and securities rated below investment - grade and unrated securities of comparable credit quality (commonly known as “high - yield bonds” or “junk bonds”) typically lack outstanding investment charact eristics and have speculative characteristics and are subject to greater credit and market risks than higher - rated securities. The lower ratings of junk bonds reflect a greater possibility that adverse changes in the financial condition of the issuer or in general economic conditions, or an unanticipated rise in interest rates, may impair the ability of the issuer to make payments of interest and principal. If this were to occur, the values of such securities held by a Fund may become more volatile and the Fund could lose some or all of its investment. Investment - grade investments generally have lower credit risk than investments rated in below investment grade, however such investments may share some of the risks of lower - rated investments, including the po ssibility that the issuers may be unable to make
timely payments of interest and principal and thus default. Consequently, there can be no assurance that investment grade securities will not be subject to credit difficulties leading to the loss of some or all of the sums invested in such securities.
If a security held by a Fund loses its rating or its rating is downgraded, the Fund may nonetheless continue to hold the security in the discretion of the Investment Manager.
In the case of asset - backed or mortgage - related securities, changes in the actual or perceived ability of the obligors on the underlying assets or mortgages to make payments of interest and/or principal may affect the values of those securities.
A Fund will be subject also to credit risk with respect to the counterparties with which a Fund enters into derivatives contracts and other transactions.
• Extension Risk: During periods of rising interest rates, the average life of certain types of securities may be extended because of slower - than expected principal payments. This may increase the period of time during which an investment earns a below market interest rate, increase the security’s duration and reduce the value of the security. Extension risk may be heightened during periods of adverse economic conditions generally, as payment rates decline due to higher unemployment levels and other factors.
• Income Risk: A Fund’s income may decline due to falling interest rates or other factors. Issuers of securities held by a Fund may call or redeem the securities during periods of falling interest rates, and such Fund would likely be required to reinvest in securities pa ying lower interest rates. If an obligation held by the Fund is
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prepaid, the Fund may have to reinvest the prepayment in other obligations paying income at lower rates. A reduction in the income earned by the Fund may limit the Fund’s ability to achieve its investment objective.
• Interest Rate Risk: Interest rate risk is the risk that the securities held by a Fund will decline in value because of increases in market interest rates. Debt securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more vo latile than debt securities with shorter durations. Falling interest rates also create the potential for a decline in a Fund’s income and yield. Interest only and principal - only securities are especially sensitive to interest rate changes, which can affect not only their prices but can also change the income flows and repayment assumptions about those investments. Variable and floating rate securities also generally increase or decrease in value in response to changes in interest rates, although generally t o a lesser degree than fixed - rate securities. A substantial increase in interest rates may also have an adverse impact on the liquidity of a security, especially those with longer durations. Changes in governmental policy, including changes in central bank monetary policy, could cause interest rates to rise rapidly, or cause investors to expect a rapid rise in interest rates. This could lead to heightened levels of interest rate, volatility and liquidity risks for the fixed income markets generally and coul d have a substantial and immediate effect on the values of the a Fund’s investments.
• Below Investment Grade Securities Risk: Securities rated below investment - grade and unrated securities of comparable credit quality (commonly known as “high - yield bonds” or “junk bonds”) lack strong investment characteristics, are considered predominantly speculative
with respect to the issuer’s continuing ability to make principal and interest payments, and are subject to greater levels of credit, liquidity and market risk than higher - rated securities. Such securities can involve a substantially greater risk of defaul t than higher - rated securities, and their values can decline significantly over short periods of time and some of a Fund’s investments in such securities may be in default. The lower ratings of high - yield bonds/junk bonds reflect a greater possibility that actual or perceived adverse changes in the financial condition of the issuer or in general economic conditions, or an unanticipated rise in interest rates, may impair the ability of the issuer to make payments of interest and principal. If this were to oc cur, the values of such securities held by a Fund may fall substantially and the Fund could lose some or all of the value of its investment. Lower - quality debt securities tend to be more sensitive to adverse news about the issuer, or the market or economy in general, than higher quality debt securities. The market for lower quality debt securities can be less liquid than for higher quality debt securities, especially during periods of recession or general market decline, which could make it difficult at tim es for the Fund to sell certain securities at prices used in calculating the Fund’s NAV. These securities may have significant volatility.
• Call /Prepayment Risk: Call/prepayment risk is the risk that an issuer will exercise its right to pay principal on an obligation held by a Fund earlier than expected or required. This may occur, for example, when there is a decline in interest rates, and an issuer of bonds or pr eferred stock redeems the bonds or stocks in order to replace them with obligations on which it is required to pay a lower interest or dividend rate. It may also occur when there is an unanticipated increase in the rate at which mortgages or other receivab les underlying
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mortgage - or asset - backed securities held by a Fund are prepaid. In any such case, a Fund may be forced to invest the prepaid amounts in lower - yielding investments, resulting in a decline in the Fund’s income.
• Variable and Floating Rate Securities: Variable or floating rate securities are debt securities with variable or floating interest rates payments. Variable or floating rate securities bear rates of interest that are adjusted periodically according to formulae intended generally to reflect marke t rates of interest and allow the Fund to participate (determined in accordance with the terms of the securities) in increases in interest rates through upward adjustments of the coupon rates on the securities. However, during periods of increasing interes t rates, changes in the coupon rates may lag behind the changes in market rates or may have limits on the maximum increases in coupon rates. Alternatively, during periods of declining interest rates, the coupon rates on such securities will typically readj ust downward resulting in a lower yield.
If indicated in the Relevant Supplement, the Fund may also invest in variable or floating rate equity securities, whose dividend payments vary based on changes in market rates of interest or other factors.
Derivatives Risk: A Fund may use derivative instruments for both efficient portfolio management and for investment purposes. Each Fund’s Relevant Supplement will indicate if and how the Fund intends to use derivative instruments. A Fund’s use of derivative instruments invol ves risks different from, and possibly greater than, the risks associated with investing directly in securities.
A derivative is a financial contract the value of which depends on, or is derived from, the value of an underlying asset, interest rate, or index. Derivative transactions typically involve
leverage and may have significant volatility. It is possible that a derivative transaction will result in a loss greater than the principal amount invested, and a Fund may not be able to close out a derivative transaction at a favourable time or price. Ris ks associated with derivative instruments include potential changes in value in response to interest rate changes or other market developments or as a result of the counterparty’s credit quality; the potential for the derivative transaction not to have the effect the Investment Manager anticipated or a different or less favourable effect than the Investment Manager anticipated; the failure of the counterparty to the derivative transaction to perform its obligations under the transaction or to settle a trade ; possible mispricing or improper valuation of the derivative instrument; imperfect correlation in the value of a derivative with the asset, currency, rate, or index underlying the derivative; the risk that the Fund may be required to post collateral or ma rgin with its counterparty, and will not be able to recover the collateral or margin in the event of the counterparty’s insolvency or bankruptcy; the risk that a Fund will experience losses on its derivatives investments and on its other portfolio investme nts, even when the derivatives investments may be intended in part or entirely to hedge those portfolio investments; the risks specific to the asset underlying the derivative instrument; lack of liquidity for the derivative instrument, including without li mitation absence of a secondary trading market; the potential for reduced returns to the Fund due to losses on the transaction and an increase in volatility; the potential for the derivative transaction to have the effect of accelerating the recognition of gain; and legal risks arising from the documentation relating to the derivative transaction.
Directed Trading Risk . Investors transacting on the P rimary M arket only may request the execution of a transaction, including, without limitation, the sale or purchase of securities on their behalf, in accordance with specific terms, which may include, without limitation, the use of a particular broker, counterparty or market or in any way other than in accordance with the standard terms on which the Investment Manager executes transactions for the Company generally, having regard to its
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obligation to provide best execution to the Company. Where such a request is agreed to, neither the Company nor its agents, including, for the avoidance of doubt, the Investment Manager, shall be liable for any loss, damage or delay, including any delay i n effecting or failure to effect a subscription or redemption, caused by any omission, error, failed or delayed trade or settlement on the part of the investor or the designated broker or other counterparty. Should the investor or the designated broker or other counterparty default on, or otherwise fail to complete, any part of the relevant transaction, the investor shall bear all associated risks and costs and the Company shall have the right to amend the terms of the transaction (including the choice of b roker) and the investor's subscription or redemption, to take into account such default and/or failure and in order to complete the transaction.
EMIR and OTC derivatives contract risk : As a result of the European regulation commonly referred to as the European Market Infrastructure Regulation or “EMIR”, OTC derivatives markets have been and will be subject to significant regulation, potentially including, without limitation, increased m argin requirements, mandatory reporting, centralised clearing and execution of transactions. These regulations may result in increased costs, reduced profit margins and reduced investment opportunities, all of which may negatively impact the performance of the Funds.
EMIR imposes certain requirements to collateralise derivative transactions that are not cleared through a clearing house or traded on an exchange, including FX forward transactions. As a result, collateral may need to be exchanged between a Fund and tradin g counterparties to cover daily mark - to - market exposures of either party under an FX forward transaction. This may necessitate the amendment of the Company’s existing OTC derivative contracts which would result in additional costs. The variation margin rul es will also require certain haircuts to be applied to collateral received for OTC derivative contracts, which will vary depending on the issuer, credit rating, currency and residual maturity of the collateral. As the variation margin rules are likely to r esult in an increase in the level of its
assets which a Fund will be required to retain in cash or very liquid assets in order to have available for use as collateral, this could result in a reduced proportion of the Fund’s assets being available for allocation to the Fund’s investment policy and , consequently, an increase in the potential tracking error for the Fund.
While some of the obligations under EMIR have come into force, a number of the requirements are subject to phase - in periods. As a consequence, it is as yet unclear how the derivatives markets will adapt to the new regulatory regime. Accordingly, it is diff icult to predict the full impact of EMIR on the Company, although this may include an increase in the overall costs of entering into and maintaining OTC derivative contracts.
Emerging Markets Risks: Investments in emerging markets are generally subject to a greater risk of loss than investments in developed markets. This may be due to, among other things, the possibility of greater market volatility, lower trading volume and liquidity, greater risk of expropriat ion, nationalisation, and social, political and economic instability, greater reliance on a few industries, international trade or revenue from particular commodities, less developed accounting, legal and regulatory systems, higher levels of inflation, def lation or currency devaluation, risk that the country will limit or prevent the conversion or repatriation of amounts denominated in that country’s currency, risk that it may not be possible to undertake currency hedging techniques, greater risk of market shut down, and more significant governmental limitations on investment policy as compared to those typically found in a developed market.
In addition, issuers (including governments) in emerging market countries may have less financial stability than in other countries. The securities of emerging market companies may trade less frequently and in smaller volumes than more widely held securiti es and may have significant price volatility and thus the accumulation and disposal of holdings may be more expensive, time - consuming and generally more difficult than in more developed markets.
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Further, given the lack of an adequate regulatory structure, it is possible that securities in which investments are made may be found to be fraudulent.
Market disruptions or substantial market corrections may limit very significantly the liquidity of securities of certain companies in a particular country or geographic region, or of all companies in the country or region. In some cases, emerging markets m ay restrict the access of foreign investors to securities. As a result, certain equity securities may not always be available to a Fund because, for example, the maximum permitted number of or aggregate investment by foreign shareholders has been reached. In addition, the outward remittance by foreign investors of their share of net profits, capital and dividends may be restricted or require governmental approval. A Fund may be unable to liquidate its positions in such securities at any time, or at a favour able price, in order to meet the Fund’s obligations. There is also the potential for unfavourable actions such as embargo and acts of war. As a result, there will tend to be an increased risk of price volatility in investments in emerging market countries, which may be magnified by currency fluctuations relative to a Fund’s Base Currency.
Settlement and asset custody practices for transactions in emerging markets may differ and may be less developed than those in developed markets. Standards may not be as high and supervisory and regulatory authorities not as sophisticated. Such differences may include possible delays in settlement and certain settlement practices, such as delivery of securities prior to receipt of payment, which increase the likelihood of a “failed settlement”. Failed settlements can result in losses. Custodial services are often more expensive and other investment - related costs higher in emerging countries than in developed countries.
For these and other reasons, investments in emerging markets are often considered speculative and losses may be incurred.
Equity Investing Risk: The market prices of equity securities owned by a Fund may go up or down, sometimes rapidly or unpredictably.
The value of a security may decline for a number of reasons that may directly relate to the issuer, such as management performance, financial leverage, non - compliance with regulatory requirements and reduced demand for the issuer’s goods or services. The v alues of equity securities also may decline due to general industry or market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings , changes in interest or currency rates or adverse investor sentiment generally. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. A Fund may continue to accept new subscription s and to make additional investments in equity securities even under general market conditions that the Investment Manager views as unfavourable for equity securities.
ETF Liquidity Risk . Any decrease in the liquidity of the investments of a Fund may, for a period, affect a Fund’s own liquidity. As a result the relevant Fund may trade less frequently on exchanges and its price may be more variable. This may in turn impact the ease and pr ice at which an investor is able to buy or sell the Fund’s Shares in the P rimary or S econdary M arket.
Whilst it is anticipated that the investments made by a Fund will enable it to satisfy redemption requests, in exceptional circumstances, where the sales of certain securities are not possible or would materially harm existing Shareholders, the Directors o f the Fund may impose restrictions on the size and/or timing of redemptions, as described in the “Determination of Net Asset Value Temporary Suspension of Dealings” section.
Failure to Settle – ETF Shares . If an Authorised Participant submits a dealing request and subsequently fails or is unable to settle and complete the dealing request, as the Authorised Participant is not a registered Shareholder of the Company, the Company will have no recourse to the A uthorised Participant other than its contractual right to recover such costs. In the event that no recovery can be made from the Authorised Participant and any
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costs incurred as a result of the failure to settle will be borne by the Fund and its investors.
Fluctuation of Net Asset Value and Market Pricing Risk. The Net Asset Value per Share will generally fluctuate with changes in the market value of a Fund’s securities holdings. The market prices of Shares will generally fluctuate in accordance with changes in a Fund’s Net Asset Value and supply and demand of E TF Shares on the Listing Stock Exchange. It cannot be predicted whether ETF Shares will trade below, at or above the Net Asset Value per Share. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for ETF Shares will be closely related to, but not identical to, the same forces influencing the prices of the securities of an Index trading individually or in the aggregate at any point in time. The market prices of ETF Shares may deviate significantly from the Net Asset Value per Share during periods of market volatility. However, given that ETF Shares can be created and redeemed in large volumes, large discounts or premiums to the Net Asset Value per Share should not be sustained. While the creation/redemption feature is designed to help make it likely that ETF Shares normally will trade close to the Net Asset Value per Share, disruptions or suspensions to creations and redemptions may result in trading prices that differ significantly fr om the Net Asset Value per Share. Losses may be incurred, or profits reduced, if ETF Shares are purchased at a time when the market price is at a premium to the Net Asset Value per Share or sold at a time when the market price is at a discount to the Net Asset Value per Share.
Foreign Exchange Risk . The Company on behalf of a Fund may enter into a variety of different foreign currency transactions, including, by way of example, currency forward transactions, spot transactions, futures contracts, swaps, or options. Most of these transactions are ent ered into “over the counter,” and the Fund assumes the risk that the counterparty may be unable or unwilling to perform its obligations, in addition to the risk of unfavorable or unanticipated changes in the values of the currencies underlying the transact ions. Over - the - counter currency
transactions are typically uncollateralized, and a Fund may not be able to recover all or any of the assets owed to it under such transactions if the counterparty should default. Many types of currency transactions are expected to continue to be traded ove r the counter even after implementation of the clearing requirements under the Dodd - Frank Wall Street Reform and Consumer Protection Act. In some markets or in respect of certain currencies, a Fund may be required, or agree, in the Company’s discretion, t o enter into foreign currency transactions via the Depositary’s relevant sub - custodian. The Company may be subject to a conflict of interest in agreeing to any such arrangements on behalf of a Fund. Such transactions executed directly with the sub - custod ian are executed at a rate determined solely by such sub - custodian. Accordingly, a Fund may not receive the best pricing of such currency transactions. Recent regulatory changes in a number of jurisdictions may require that certain currency transactions be subject to central clearing, or be subject to new or increased collateral requirements. These changes could increase the costs of currency transactions to a Fund and may make certain transactions unavailable; they may also increase the credit risk of s uch transactions to a Fund.
Sustainable Investing Risk: A Fund's incorporation of sustainable investing considerations in its investment process may cause it to make different investments than funds that have a similar investment universe and/or investment style but that do not incorporate such considerations in their investment strategy or processes. In app lying sustainable investing criteria to its investment decisions, a Fund may forgo higher yielding investments that it would invest in, or suffer increased tracking error, absent the application of its sustainable investing criteria. A Fund's investment process may affect its exposure to certain investments, which may impact its relative investment performance depending on whether such investments are in or out of favour with the market. The Investment Manager relie s on available information to assist in the sustainable investing evaluation process, and the process employed for a Fund may differ from processes employed for other funds. A Fund will seek to identify companies and/or
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issuers that it believes meet its sustainable investing criteria based on the data provided by third parties. In evaluating a company and/or issuer , the Investment Manager is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could cause the Investment Manager to incorrectly assess a company's sustainable investing characteristics . A Fund may invest in companies and/or issuers that do not reflect the beliefs and values of any particular investor. See also Sustainability Risk . Frequent Trading/Portfolio Turnover Risk: A Fund may engage in active and frequent trading of its portfolio securities. Fund turnover generally involves a number of direct and indirect costs and expenses to the trading Fund, including, for example, brokerage dealing commissions, dealer mark - ups an d bid/asked spreads, and transaction costs on the sale of securities and reinvestment in other securities. The costs related to increased portfolio turnover have the effect of reducing the Fund’s investment return and the sale of securities by a Fund may r esult in the realisation of taxable capital gains, including short term capital gains. Frequent trading can also result in increased tax liability for the trading Fund.
Futures Contracts and other Exchange Traded Derivatives Risks : Certain Funds may purchase futures contracts and other exchange - traded derivatives. The ability to establish and close out positions in futures contracts and other exchange - traded derivatives will be subject to the development and maintenance of a liqui d secondary market. There is no assurance that a liquid secondary market on an exchange will exist for any particular futures contract or other exchange traded derivative or at any particular time. In the event no such market exists for a particular deriv ative, it might not be possible to effect closing transactions, and a Fund will be unable to terminate its exposure to the derivative. If a Fund uses futures contracts or other exchange traded derivatives for hedging purposes, there is a risk of imperfect correlation between movements in the prices of the derivatives and movements in the securities or index underlying the derivatives or movements in the prices of the Fund’s securities that are the subject of a
hedge. The prices of futures and other exchange - traded derivatives, for a number of reasons, may not correlate perfectly with movements in the securities or index underlying them. A Fund will incur brokerage fees in connection with its exchange - traded deri vatives transactions. A Fund will typically be required to post margin with its applicable counterparty in connection with its transactions in futures contracts and other exchange - traded derivatives. In the event of an insolvency of the counterparty, the Fund may not be able to recover all (or any) of the margin it has posted with the counterparty, or to realise the value of any increase in the price of its positions.
Geographic Concentration Risk : A Fund that invests its assets in a small number of countries, or in a particular geographic region or regions will be more closely tied to market, currency, economic, political, environmental, or regulatory conditions and developments in the countries or regions in which such Fund invests, and consequently its performance may be more volatile than the performance of a more geographically - diversified fund.
Index Licensing Risk : It is possible that the license under which the Investment Manager or the applicable Fund is permitted to replicate or otherwise use an index will be terminated or may be disputed, impaired or cease to remain in effect. In such a case, the Investment Manag er may be required to replace the index with another index which it considers to be appropriate in light of the investment strategy of the applicable Fund. The use of and/or transition to any such substitute index may have an adverse impact on such Fund’s performance. In the event that the Investment Manager is unable to identify a suitable replacement for the relevant index, the Fund may be closed.
Index Risk : As set forth in the Relevant Supplement, certain Funds are managed with an indexed investment strategy, attempting to track the performance of an unmanaged Index of securities. Such Fund will seek to replicate Index returns regardless of the current or proj ojected performance of the Index or of the actual securities comprising the Index. The Fund generally will buy and will not sell a
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security included in the Index as long as the security is part of the Index regardless of any sudden or material decline in value or foreseeable material decline in value of the security, even though the Investment Manager may make a different investment d ecision for other managed accounts or portfolios that hold the security. As a result, an index tracking Fund’s performance may be less favourable than that of a portfolio managed using an active investment strategy. The structure and composition of the Ind ex will affect the performance, volatility and risk of the Index (in absolute terms and by comparison with other indices) and, consequently, the performance, volatility and risk of the relevant Fund. Such Fund’s performance may not match that of the Index. This differs from an actively - managed Fund, which typically seeks to outperform an Index.
Index Error Risk: If a Fund has the investment objective to seek to track the performance of index as published by the relevant index provider, there is a risk that the index provider will not compile or calculate the index accurately. Although the index provider provides d escriptions of what the index is designed to achieve, the index provider does not provide any warranty or accept any liability in relation to any error relating to the index, including any error in respect of the quality, accuracy or completeness of index data, and does not guarantee that the index will be in line with the described index methodology. The Company does not provide any warranty or guarantee for index provider errors and does not have any responsibility for the identification or correction of such errors. Errors in respect of the quality, accuracy and/or completeness of index data may occur from time to time and may not be identified and corrected for a period of time. Gains, losses or costs associated with index provider errors will be borne by the Fund an d its investors. For example, during a period where the index contains incorrect constituents, a Fund tracking such published index would have market exposure to such constituents and would be underexposed to the constituents that should have been included in the index. Therefore, such errors may result in a negative or positive performance impact to the Fund and its investors. Any gains from index provider
errors affecting the Fund will be kept by the Fund and its investors and any losses resulting from such index provider errors will be borne by the Fund and its investors.
Index Tracking Risk : The investment objective of certain Funds will be to track the performance of a specified index. While the Investment Manager seeks to track the performance of the index (i.e., achieve a high degree of correlation with the index), a Fund’s return may not m atch the return of the specified index for a number of reasons. For example, the return on the sample of securities purchased by such Fund to replicate the performance of the index may not correlate precisely with the return of the index. Each index tracki ng Fund incurs a number of operating expenses not applicable to the index, and incurs costs in buying and selling securities. In addition, each of these Funds may not be fully invested at times, either as a result of cash flows into or out of the Fund or r eserves of cash held by the Fund to meet redemptions. Changes in the composition of the index and regulatory requirements also may impact an index tracking Fund’s ability to match the return of the specified index. The Investment Manager may apply one or m ore “screens” or investment techniques to refine or limit the number or types of issuers included in the index in which a Fund may invest. Application of such screens or techniques may result in investment performance below that of the index and may not pr oduce results expected by the Investment Manager. Index tracking risk may be heightened during times of increased market volatility or other unusual market conditions.
Inflation Risk: Inflation risk is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of a Fund’s assets can decline .
Inflation - Indexed Securities Risk: The principal amount of an inflation - indexed security typically increases with inflation and decreases with deflation, as measured by a specified index. It is possible that, in a period of declining inflation rates, a Fund could receive at maturity less th an the initial principal amount of an inflation - indexed security. Depending on the changes in inflation rates during the period a
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Fund holds an inflation - indexed security, such Fund may earn less on the security than on a conventional bond. In relation to actively managed strategies in particular, changes in the values of inflation indexed securities may be difficult to predict, and it is possible that an investment in such securities will have an effect different from that anticipated by the Investment Manager. The principal amounts of inflation indexed securities are typically only adjusted periodically and changes in the values of the securities may only approximately reflect changes in inflation rates and may occur substantially after the changes in inflation rates in question occur.
Investment in Multiple Countries: Investments in securities of companies from multiple countries and/or securities of companies with significant exposure to multiple countries can involve additional risks and costs. Political, social and economic instability, the imposition of currency or capital controls or the expropriation or nationalisation of assets in a particular country can cause dramatic declines in that country’s economy and affect a Fund’s investments exposed to such country. Investing in multiple counties creates operational ris ks due to different systems, procedures and requirements in a particular country, different accounting, auditing, financial reporting, legal standards and practices and varying laws regarding withholding and other taxes. Enforcing legal rights can be diffi cult, costly, and slow in some countries and can be particularly difficult against governments.
Markets in different countries have different clearance and settlement procedures and in certain markets there have been times when settlements have been unable to keep pace with the volume of transactions. Delays in settlement may increase credit risk to a Fund, limit the ability of the Fund to reinvest the proceeds of a sale of securities, hinder the ability of the Fund to lend its portfolio securities and potentially subject the Fund to penalties for its failure to deliver to on - purchasers of securities whose delivery to the Fund was delayed. Delays in the settlement of securities purchased by the Fund may limit the ability of the Fund to sell those securities at times and prices it considers desirable and may subject
the Fund to losses and costs due to its own inability to settle with subsequent purchasers of the securities from it. The Fund may be required to borrow monies it had otherwise expected to receive in connection with the settlement of securities sold by it, in order to meet its obligations to others. Limits on the ability of the Fund to purchase or sell securities due to settlement delays could increase any variance between the Fund’s performance and that of its Index.
In some countries, transaction costs such as brokerage commissions and custody costs may be high.
A Fund invested in multiple countries will be exposed to such risks in more than one country.
Investment Risk: Investment risk includes the possible loss of the entire amount of capital that a Shareholder invests. The value of securities and other investments held by the Fund may increase or decrease, at times rapidly and unexpectedly. Shareholder’s investment in a Fund may at any point in the future be worth less than his/her original investment. Accordingly, it is important that each Shareholder periodically evaluate his/her investment in a Fund.
Investment Style Risk – Geographic Focus:
Asia : Certain Funds will concentrate investments in companies in Asia Pacific and, consequently, such Fund’s performance is expected to be closely tied to the social, political, and economic conditions within that region, and its exposure to related risks coul d make its performance more volatile than the performance of more geographically diversified funds. Certain Asian economies have experienced high inflation, high unemployment, currency devaluations and restrictions, and over - extension of credit. Many Asian economies have experienced rapid growth and industrialization and there is no assurance that this growth rate will be maintained. During the recent global recession, many of the export driven Asian economies experienced the effects of the economic slowdow n in Europe and the United States and certain Asian governments implemented stimulus plans, low rate monetary policies and currency
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devaluations. Economic events in any one Asian country may have a significant economic effect on the entire Asian region, as well as on major trading partners outside Asia. Any adverse event in the Asian markets may have a significant adverse effect on som e or all of the economies of the countries in which the Fund invests. Many Asian countries are subject to political risk, including corruption and regional conflict with neighbouring countries. In addition, many Asian countries are subject to social and la bour risks associated with demands for improved political, economic and social conditions. These risks, among others, may adversely affect the value of the Fund's investments.
PRC and Greater China Region Risks: One or more Funds may make PRC Investments through Access Programmes. By using these Access Programmes, the Fund may be subject to new, uncertain or untested rules and regulations promulgated by the relevant regulatory authorities. Moreover, current regula tions governing a Fund’s investment in PRC companies may be subject to change. There can be no guarantee that the PRC regulatory authorities would not provide a requirement in the future affecting the relevant Fund's ability to achieve its investment alloc ation, for example, introducing a mandatory investment allocation requirement under the relevant PRC regulations (e.g. a minimum percentage of the PRC Investments should be invested in a particular type of asset). There can be no assurance that the Access Programmes will not be abolished. Any Fund investing in securities issued by issuers from the PRC or the greater China region using an Access Programme may be adversely affected as a result of such changes. In addition to the risks pertinent to investment in emerging markets, investors in such Funds should also consider also the following risks.
PRC Foreign Shareholding Restrictions Risk . There are limits on the total shares held by all underlying foreign investors and/or a single foreign investor in one PRC listed company based on thresholds as set out under the PRC regulations (as amended from time to time), and the capacity of the Fund (being a foreign
investor) to make investments in China A Shares will be affected by the relevant threshold limits and the activities of all underlying foreign investors. It will be difficult in practice to monitor the investments of the underlying foreign investors since an investor may make investment through different permitted channels under PRC laws. Should the shareholding of a single foreign investor in a China A Share listed company exceed the above restrictions, the investor would be required to unwind his position on the excessive shareholding according to a last in - first - out basis within a specific period. The SSE/SZSE and the SEHK will issue warnings or restrict the buy orders for the related China A Shares if the percentage of total shareholding is approaching t he upper limit of the aggregate foreign investor shareholding limit. Such restriction may affect the Funds in making investments in China A Shares, Stock Connect or the QFI regime.
PRC Short Swing Profit Rule Risk . According to PRC securities law, a Substantial Shareholder has to return any profits obtained from the purchase and sale of shares of such PRC Listco if both transactions occur within a six - month period. In the event that a Fund becomes a Substantial Shar eholder by investing in China A Shares, the profits that the Fund may derive from such investments may be limited, and thus the Fund's returns may be adversely affected depending on the Fund's size of investment in China A Shares.
PRC Disclosure of Interests Risk . Under the PRC disclosure of interest requirements, in the event a Fund becomes a Substantial Shareholder of a PRC Listco it may be subject to the risk that the Fund's holdings may have to be reported in aggregate with the holdings of such other persons me ntioned above. This may expose the Fund's holdings to the public. Under Hong Kong law, where a PRC incorporated company has both H Shares listed on SEHK and A Shares listed on the SSE or SZSE, if an investor is interested in more
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than a certain threshold (as may be specified from time to time) of any class of voting shares (including China A Shares) in such PRC Listco, the investor is under a duty of disclosure pursuant to Part XV of the SFO.
Suspensions, Limits and Other Disruptions Affecting Trading of China A Shares Risk . In order to mitigate the effects of extreme volatility in the market price of China A Shares, the SSE and SZSE currently limit the amount of fluctuation permitted in the prices of China A Shares during a single trading day. The daily limit governs only price movements and does not restrict trading within the relevant limit. However, the limit does not limit potential losses because the limit may work to prevent a liquidation of any relevant securities at the fair or probable realisation value for such securiti es which means that the relevant Fund may be unable to dispose of unfavourable positions. There can be no assurance that a liquid market on an exchange would exist for any particular China A Share or for any particular time.
Best E xecution Risk : Pursuant to the relevant PRC regulations, securities trades under Access Programmes may be executed through a limited number of PRC brokers / trading and settlement agents and accordingly may affect best execution of such trades. If, for any reason, the I nvestment Manager is unable to use the relevant broker / trading and settlement agent in the PRC, the operation of the relevant Fund may be adversely affected. The Fund may also incur losses due to the acts or omissions of any of the PRC broker(s) / tradin g and settlement agent in the execution or settlement of any transaction or in the transfer of any funds or securities. However, the Investment Manager shall, in the selection of PRC brokers / trading and settlement agent, have regard to factors such as th e competitiveness of commission rates, size of the relevant orders and execution standards. It is possible that a single PRC broker / trading and settlement agent will be appointed and the relevant Fund may not
necessarily pay the lowest commission available in the market. There is a risk that the relevant Fund may suffer losses from the default, insolvency or disqualification of a PRC broker/ trading and settlement agent. In such event, the relevant Fund may be adversely affected in the execution of transactions through such PRC broker/ trading and settlement agent. In addition, the broker may aggregate investment orders with its and its affiliates' own orders and those of its other clients, including the Funds. In some cases, aggregation may operate to the Funds' disadvantage and in other cases aggregation may operate to the Funds' advantage.
Effect of PRC R egulations on S ubscriptions, R edemptions and C onversions . The ability of a Shareholder to redeem Shares of a Fund depends, inter alia, on the PRC laws and practices affecting the Fund’s ability to liquidate investments and to repatriate the proceeds thereof out of the PRC. Any repatriation restrictions as may be applicable under PRC regulations in the future, where applicable, could restrict the Fund’s ability to satisfy all or any redemption requests in respect of any particular redemption day and accordingly, the Fund may have to manage the liquidity challenges through the maint enance of high cash balances and limiting, deferring or suspending redemptions, as described in the “Shares
– Redemption – Redemption limits” and the “ Valuation and Calculation of NAV Temporary Suspension of NAV Calculation and Dealings ” sections of this Prospectus respectively. Investors should not invest in the Fund if they have need of greater liquidity than that offered by the Fund.
Applications for subscription and/or conversion of Shares may be subject to sufficient available capacity for a Fund under the relevant Access Programme as combined with the relevant Fund's investment policy and restrictions. Applications received during a period when there is insufficient available capacity for the relevant Fund under the QFIs for
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example may be suspended and processed for subscription and/or conversion of Shares at the next following subscription date at which sufficient capacity is again available for the Fund. In addition, the Directors (or their duly authorised delegate(s)) may refuse applications and to temporarily or permanently suspend or limit any applications received during a period when there is insufficient available capacity for the relevant Fund under the QFI/CIBM Direct Access Programme.
Notwithstanding the above, the Directors (or their duly authorised delegate(s)) may decide to temporarily suspend the issue, subscription, redemption, conversion, payment of redemption proceeds and/or valuation of Shares of the relevant Fund, as described in the “Shares – Redemption Redemption limits” and the “ Valuation and Calculation of NAV – Temporary Suspension of NAV Calculation and Dealings ” sections of this Prospectus respectively, during any period when the Fund is unable to transmit subscription proceeds to or from the accounts of the Fund, or dispose of holdings or to repatriate the proceeds of such disposals, subject to certain quota or limits im posed by any regulatory or supervisory, governmental or quasi - governmental authority, any fiscal body or self - regulatory organisation (whether of a governmental nature or otherwise), for example when subscription proceeds cannot be remitted to the account of the relevant Fund due to the Fund being unable to dispose of holdings in the relevant Access Programme, or to repatriate the proceeds of such disposals.
Counterparty R isk to the PRC Sub Custodian and other D epositaries for PRC Investments . Any PRC Investments acquired through an Access Programme will be maintained by the Sub - Custodian, in electronic form via the securities account(s) and any cash will be held in Renminbi cash account(s)) with the Sub - Custodian. Securities account(s) and Renm inbi cash account(s) for the relevant Fund in the PRC are maintained in accordance with market
practice. Such account may be in the name of a nominee (for example, the QFI/ applicant under the CIBM Direct Access Programme) and not in the name of such Fund, and the assets within such account may be held for and on behalf of clients of the nominee inc luding but not limited to such Fund. PRC interbank bond investment of a Fund will be registered in the joint names of the Investment Manager (as the applicant under the CIBM Direct Access Program) and the relevant Fund, or in another name for the sole use and benefit of the relevant Fund as permitted or required pursuant to the relevant regulations. Even though the Chinese regulators have affirmed their recognition of the concepts of nominee holders and beneficiary owners and applicable PRC rules, regulatio ns and other administration measures and provisions generally provide for the concept of a "nominee holder" and recognise the concept of a "beneficial owner" of securities, these concepts are relatively new in the Chinese legal system and remain untested u nder the QFI scheme. Hence, the assets of such Fund held within such account may be subject to a risk of being treated as part of the assets of the nominee and be vulnerable to claims by creditors of the nominee in the event of the insolvency of the nomine e. Whilst the assets held in such accounts are segregated and held separately from the assets of the nominee and belong solely to the relevant Fund, it is possible that the judicial and regulatory authorities in the PRC may interpret this position differen tly in the future. In addition, the assets of the Fund may not be adequately segregated from the assets of other Funds, funds or clients investing through the nominee. The relevant Fund may also incur losses due to the acts or omissions of the Sub - Custodia n in the execution or settlement of any transaction or in the transfer of any funds or securities.
Cash held by the Sub - Custodian in the RMB cash account(s) will not be segregated in practice but will be a debt owing from the Sub - Custodian to the relevant Fund as a depositor. Such cash
47
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will be co - mingled with cash belonging to other clients of the Sub - Custodian. In the event of insolvency of the Sub - Custodian, the relevant Fund will not have any proprietary rights to the cash deposited in the cash account opened with the Sub Custodian, and the Fund will become an unsecured creditor, ranking pari passu with all other unsecured creditors, of the Sub Custodian. The Fund may face difficulties and/or encounter delays in recovering such debt, or may not be able to recover it in full or at all, in which case the relevant Fund will lose some or all of its cash.
Counterparty risk to PRC B roker(s) / T rading and S ettlement A gent . Pursuant to the relevant PRC regulations, securities trades under the Access Programme may be executed through a limited number of PRC brokers / trading and settlement agent that may be appointed for trading in any PRC stock exchange or interbank bond mark et for the relevant Fund. If, for any reason, the relevant broker / trading and settlement agent in the PRC cannot be used, the operation of the relevant Fund may be adversely affected. The Fund may also incur losses due to the acts or omissions of any of the PRC broker(s) / trading and settlement agent in the execution or settlement of any transaction or in the transfer of any funds or securities. However, the selection of PRC brokers / trading and settlement agent, should have regard to factors such as th e competitiveness of commission rates, size of the relevant orders and execution standards. It is possible that a single PRC broker / trading and settlement agent will be appointed and the relevant Fund may not necessarily pay the lowest commission availab le in the market. There is a risk that the relevant Fund may suffer losses from the default, insolvency or disqualification of a PRC broker/ trading and settlement agent. In such event, the relevant Fund may be adversely affected in the execution of transa ctions through such PRC broker/ trading and settlement agent. A Fund may be adversely affected, whether directly or indirectly, by (i) the acts or omissions by the broker/trade and settlement agent in the
settlement of any transaction or in the transfer of funds or securities; (ii) the default or bankruptcy of the broker/trade and settlement agent; and (iii) the disqualification of the broker/trade and settlement agent from acting in such capacity either on a temporary or permanent basis. Such acts, omissions, default or disqualification may also adversely affect a Fund in implementing its investment strategy or disrupt its operations, including causing delays in the settlement of any transaction or the tran sfer of any funds or securities in the PRC or in recovering assets, which may in turn adversely impact its NAV. Furthermore, regulatory sanctions can be imposed upon the broker/trade and settlement agent if it violates any provision under the Access Progra mme regulations. Such sanctions may adversely affect a Fund's investments in PRC Investments.
Risks Associated with Investment through Access Programmes
• Risks related to the Stock Connect Daily Quota and I nclusion or E xclusion as China Connect Securities . Each of SHHK Stock Connect and SZHK Stock Connect is subject to a Daily Quota. The Daily Quota limits the maximum net buy value of cross - boundary trades under the relevant Stock Connect each day. SEHK will monitor the usage of the Northbound daily quota (" Northbound Daily Quota") for each of SHHK Stock Connect and SZHK Stock Connect and publish the remaining balance of the Northbound Daily Quota on HKEx’s website. SEHK may include or exclude securities as China Connect Securities (as defined in the rules of exchange of the SEHK) and may change the eligibility of shares for Northbound trading on Stock Connect, the SHHK and SZHK Stock Connect. Once the remaining balance of the Northbound Daily Quota drops to zero or the Daily Quota is exceeded during the openi ng call session, new buy orders will be rejected on the relevant Stock Connect
48
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(though investors will be allowed to sell their cross - boundary securities regardless of the quota balance) and during the continuous auction session (or closing call auction session) for SZSE, no further buy orders will be accepted for the remaining of the day. The quota limitations may restrict a Fund’s ability to invest in China Connect Securities through Stock Connect on a timely basis. The Daily Quota may change from time to time without prior notice and investors should refer to the SEHK website and ot her information published by the SEHK for up - to - date information.
• Stock Connect Suspension risk . It is contemplated that SEHK, SSE and SZSE would reserve the right to suspend Northbound (for investment in PRC shares) and/or Southbound (for investment in Hong Kong shares) trading if necessary for ensuring an orderly and fair market and that risks are managed prudently. Where a suspension in the Northbound trading through Stock Connect is affected, a Fund’s ability to access the PRC market will be adversely affected. Securities (including the China Connect Securities) traded through Stock Connect may al so be more volatile and unstable if suspended from trading. Such suspension may prolong for a considerable period of time and volatility and settlement difficulties relating to the China Connect Securities may also result in significant fluctuations in the prices, and may adversely affect the value, of the China Connect Securities.
• Differences in T rading D ay . Stock Connect will only operate on days when both the relevant PRC and Hong Kong markets are open for trading and when banks in the relevant markets are open on the corresponding settlement days. By investing through Stock Connect, the Fund may be subject to a risk of price fluctuations in China Connect Securities during the time
when the relevant Stock Connect is not trading as a result.
• Stock Connect O perational R isk . Stock Connect is premised on the functioning of the operational systems of the relevant market participants. Market participants are able to participate in the relevant programme subject to meeting certain information technology capabilities, risk managem ent and other requirements as may be specified by the relevant exchange and/or clearing house.
Stock Connect requires market participants to configure and adapt their operational and technical systems. Further, it should be appreciated that the securities regimes and legal systems of each of the PRC and Hong Kong markets differ significantly and in order for the trial programme to operate, market participants may need to address issues arising from the differences on an on - going basis.
Further, the "connectivity" in Stock Connect requires routing of orders across PRC and Hong Kong. The SEHK has set up an order routing system to capture, consolidate and route the cross - boundary orders input by exchange participants. There is no assurance that the systems of the SEHK and market participants will function properly or will continue to be adapted to changes and developments in each market. In the event that the relevant systems fail to function properly, trading in each market through the prog ramme could be disrupted. In such a case, the Fund's ability to access the China A Share market (and hence to pursue its investment strategy) through Stock Connect will be adversely affected.
• Restrictions on S elling I mposed by P re - T rade M onitoring . PRC regulations require that before an investor sells any share, there should
49
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be sufficient shares in that investor's account; otherwise the SSE or SZSE will reject the sell order concerned. SEHK will carry out pre - trade checking on China Connect Securities sell orders of its participants (i.e. the stock brokers) to ensure there is no over selling.
If a Fund wishes to sell certain China Connect Securities it holds, it must transfer those China Connect Securities to the respective accounts of its brokers before the market opens on the day of selling. If it fails to meet this deadline, it will not be a ble to sell those shares on the trading day. Because of this requirement, the Fund may not be able to dispose of its holdings of China Connect Securities in a timely manner. PRC regulations may impose certain other restrictions on selling and buying which results in a Fund not being able to dispose of holdings of Connect Securities in a timely manner. This also raises concerns as to counterparty risks as securities may need to be kept by brokers overnight.
To facilitate investors whose SC Securities are maintained with custodians to sell their SC Securities without having to pre - deliver the SC Securities from their custodians to their executing brokers, the SEHK introduced an enhanced pre - trade checking mode l in March 2015, under which an investor may request its custodian to open a SPSA. An investor will only need to transfer all relevant SC Securities from its SPSA to its designated broker’s account after execution and not before placing the sell order. If the Fund is unable to utilise this model, it would have to deliver SC Securities to brokers before the trading day and the above risks may still apply.
• Recalling of E ligible S tocks . When a stock is recalled from the scope of eligible stocks for trading via Stock Connect, the stock can only be sold but will be restricted from being bought.
This may affect the investment portfolio or strategies of a Fund, for example, when it wishes to purchase a stock which is recalled from the scope of eligible stocks.
• Stock Connect C learing and S ettlement R isk . As the national central counterparty of the PRC’s securities market, CSDCC operates a comprehensive network of clearing, settlement and stock holding infrastructure. Should the remote event of CSDCC default occur and CSDCC be declared as a defaulter, HKSCC ’s liabilities in Northbound (for investment in China Connect Securities) trades under its market contracts with clearing participants will be limited to assisting clearing participants in pursuing their claims against CSDCC. In such an event, affected Fun ds may suffer delay in the recovery process or may not be able to fully recover their losses from CSDCC. Under Stock Connect, the relevant Funds which have acquired SC Securities should maintain such SC Securities with their brokers' or custodians' stock a ccounts with the CCASS operated by HKSCC.
• Risks associated with I nvestment in the ChiNext M arket and/or the Science and Technology Innovation Board (“STAR Board”) . A Fund which invests in China A Shares listed on the ChiNext market and/or the STAR Board are subject to risks including the following:
(i) Operating risk: listed companies on the STAR Board and/or ChiNext market are usually of emerging nature with smaller operating scale. They are usually smaller in scale, have less stable operations, and are less resilient against market risks and industry r isks. Although they may have higher growth potential and leverage more on technical innovations, their future performance
50
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particularly those without a profit track record is susceptible to great uncertainty.
(ii) High fluctuation on stock prices and liquidity risk: listed companies on the ChiNext market and /or STAR Board are subject to wide price fluctuation limits, and due to higher entry thresholds investors may have limited liquidity, compared to other boards. C ompanies listed on these boards may be subject to higher fluctuation in stock prices and liquidity risks and have higher risks and turnover ratios than companies listed on the main board of the SSE and SZSE due to changing market conditions, investor speculations, inconsistent financial results, etc. The unstable financial result also adds the difficulty to the company valuations . (iii) Over - valuation risk: stocks listed on the ChiNext and/or STAR Board may be overvalued and such exceptionally high valuation may not be sustainable. The price of such stock may be more susceptible to manipulation due to fewer circulating shares.
(iv) Differences in regulation: the rules and regulations regarding companies listed on the ChiNext market and STAR Board are less stringent in terms of profitability and share capital than those in the main board.
(v) Delisting risk: it may be more common and faster for companies listed on the ChiNext market and/or STAR
Board to delist. This may have an adverse impact on the relevant Fund if the companies that it invests in are delisted.
(vi) Technical risk: there is higher degree of uncertainty whether a company listed on the STAR Board and/or ChiNext is able to convert its technical innovations into physical products or services. When the industry is experiencing rapid technological developme nt and replacement, its products or services may be obsolete and may not survive in the market.
(vii) Concentration risk: STAR Board is a newly established board and may have a limited number of listed companies during the initial stage. Investments in China A Shares listed in the STAR Board may be concentrated in a small number of stocks and subject the r elevant Fund to higher concentration risk.
(viii) Risk disclosure statement: risks set out in this sub - section ( Risks associated with investment in ChiNext market and/or the Science and Technology Innovation Board ) are for reference only and not exhaustive. You are advised to refer to, in the case of STAR Board, the standard Risk Disclosure Statement in the Investor Eligibility Implementing Measure of STAR Market (in Chinese only), in the case of ChiNext market, th e Investor Eligibility Implementing Measure of ChiNext Market, which Mainland investors are required to acknowledge before trading on STAR market
51
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and/or ChiNext market, as the case may be.
Investments in China A Shares listed in the ChiNext market and/or STAR Board may result in significant losses
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