Terms and Conditions - Welcome to MountRock Fund …... · Terms and Conditions In the case of communications sent by us to you by secure electronic message: 6. Such communications

www.capitalplatforms.com

Terms and Conditions

Terms & Conditions Of Use And Access To The Internet Website

The use and access to pages of the www.capitalplatforms.com Internet Website of Capital Advisory Group (UK) Ltd (the “Internet Website”) is subject to the Terms and Conditions set out below. Please take a moment to read these terms and conditions carefully. By using or accessing any part of the Internet Website, you agree to be bound by these Terms and Conditions. The copyright and material on the Internet Website is owned by Capital Advisory Group (UK) Ltd and is protected by the copyright laws of UK.

Capital Advisory Group (UK) Ltd is a company incorporated in United Kingdom. Capital Advisory Group (UK) Ltd is an appointed representative of Financial Ltd, which is authorised and regulated by the Financial Services Authority, UK. Capital Advisory Group (UK) Ltd and Financial Ltd’s FSA registration numbers are 435965 and 188153, respectively. You can check this on the FSA’s Register by visiting the FSA’s website, www.fsa.gov.uk/register or by contacting the FSA on (+44) (0)845 6061234.

By becoming a Capital Advisory Group (UK) Ltd member you acknowledge that you have read understood and agreed to these Terms and Conditions and understand that they together with the Account Opening Form and any terms, conditions and disclaimers provided within the pages of the Internet Website form a legally binding agreement between you and us. The information, material and content provided in the pages of the Internet Website may be changed at any time without notice. Changes may be made to the Terms and Conditions regularly and your continued access to or use of the Internet Website will mean that you agree to any changes.

A. PROVISION OF SERVICEOur service enables you to purchase Mutual Funds and Investment Products via the internet and is provided on an execution-only basis, which means we will not give you any form of investment advice or tax advice, or advise you about the merits of a particular transaction. You must be aged 18 or over to use our service.

The Mutual Funds, Investments and services offered by the Internet Website may not be suitable for all investors. Investors with any doubts as to the merits of an investment should seek advice from a suitably qualified professional.

You understand that investing in securities involves risks and that many variables, including, but not limited to market and economic fluctuations, may have a substantial negative effect on the value of your securities positions. Furthermore, you represent to us that you are willing to assume these risks and that you are in fact financially able to bear these risks. You agree to notify us in writing should your financial conditions materially change, or should your investment objective change from the one shown on the Account Opening Form.

As a consequence of using our service, you may alter your personal tax position. The levels of and bases of taxation can change. You should consult your own tax adviser in order to understand any applicable tax consequence that might arise.

We will only execute your instructions. Insofar as the Internet Website provides you with information by way of analysis and reports on certain Mutual Funds, you understand that such information does not form part of an investment advice but is meant to help you make your independent investment decisions.

You agree to obtain and read from the Internet Website the current offering documents (“Fund Prospectus”) which fully describe each Mutual Fund investment, including potential risks and costs, prior to purchasing an interest in any Mutual Fund (or unit linked products).

www.capitalplatforms.com www.capitalplatforms.com


You understand that by virtue of becoming a Capital Advisory Group (UK) Ltd member you will also open a Cash Account and a Settlement Account which will be maintained in custody, on an omnibus basis, with Moventum S.C.A.’s (“Moventum”). Settlement of Mutual Fund transactions are undertaken using a platform provided by Moventum, a Luxembourg registered company. You agree to be bound by the terms and conditions of your Moventum account.

B. FORM OF COMMUNICATIONYou appoint the Internet Website as your representative (referred to as “attorney”) for purposes of communicating instructions to Moventum. Orders to purchase or redeem Mutual Funds are placed by you through the Internet Website. This information is relayed to Moventum by the Internet Website electronically. Moventum shall act upon this instruction as if these instructions were given by you, provided however that Moventum may, in its absolute discretion, if it considers this appropriate, ask for confirmation of the relevant instructions from you. Moventum is entitled to request a written confirmation of the order from you before carrying it out, if Moventum has objective reason to doubt the integrity of the instruction.

You assume all risks, particularly those arising from errors in communication or comprehension including errors as to the identity of you, resulting from the use of such means of communication and relieves the Internet Website of any and all responsibility in this respect.

Upon placing your order to purchase Mutual Funds through the Internet Website, you are required to send investment monies corresponding to the monetary value of the purchase order to your Moventum Cash Account.

Please note that we will not handle your cash or property. Moventum will act as the custodian for the receipt of your investment monies and will provide the service and system to execute and settle Mutual Fund trades and hold the corresponding positions in safe custody.

We may rely on any communication in any form which purports to have been made, and which we reasonably believe to have been made, by you or on your behalf. You will be bound by any agreement entered into or expense incurred on your behalf upon reliance on such a communication.

Where an account is in joint names we will accept instructions from either of you, except where the instructions relate to:

1. The transfer of an account; or2. The closure of an account.

In these cases, we will require instructions from both of you.

Except as otherwise expressly provided in these Terms and Conditions, any communication in writing may be given by post, secure electronic message, or email to the address or email address last notified by the recipient. You should note that we do not consider email to be a secure method of communication and therefore orders and instructions concerning your Moventum account will not be accepted via this method.

Communications sent to us will be deemed received only if actually received by us. Communications sent by us to you:

3. By post will be deemed delivered and received by you seven working days after posting; 4. By fax will be deemed delivered and received immediately upon sending, and 5. By email will be deemed delivered and received immediately upon sending.



In the case of communications sent by us to you by secure electronic message: 6. Such communications will be deemed delivered to you upon us sending such communications; 7. We will not be obliged to seek any acknowledgement of receipt from you in respect of communications

so sent, and 8. We will not be liable to you for any delay or failure of delivery (for whatever reason) of any communication

so sent.

We may record telephone conversations on our telephone lines with or without use of an automatic tone warning device. We may use such recordings and transcripts for any purpose which it deems desirable including use as evidence by us in any dispute between us and any other party.

C. FRONT END LOAD SALES COMMISSIONWe receive front end load commissions from your investment (in Mutual Funds) less an administration fee charged by Moventum for processing the transaction. Irrespective of what currency you make your investment in (Euro, US Dollars, British Pounds, or Swiss Francs) the Sales Commission is paid in the currency of investment unless otherwise specified.

By engaging the services of a Financial Intermediary, the front-end load commission received by us will be paid to your Intermediary net of our administrative fee. Distribution of that payment is at the discretion of the Intermediary.

Financial Intermediaries will receive details of commissions paid and distribute this information in accordance to any arrangement entered into between client and Intermediary.

Fees and charges taken by Moventum are set out in the appropriate valid Moventum Price List. If you make use of a service listed therein, fees and charges in the current Moventum Price List are applicable. For any services not stated therein, which are provided following your instructions, or which are believed to be in your interest and which can only be expected to be provided against remuneration, Moventum may at its reasonable discretion determine the charges. These fees and charges are subject to change at the reasonable discretion of Moventum. You will be notified of these charges and any changes by us or through information provided with your periodic statements. You will bear all expenses incurred, if the custodian acts on your behalf or in your implied interest (in particular communication expenses such as telephone and postage) including charges imposed by third parties, specifically but not limited to the transfer of securities and cash or any related operations. It is your right to terminate your account relationship with the Internet Website within a time period of four weeks after having been informed of fee increases otherwise the new fees will considered as accepted by you and will apply automatically. If you terminate your relationship with the Internet website due to such fee increases, such increased fees will not be applied to services rendered to you during the time until your termination becomes effective.

D. MONEY TRANSFERYou are required to make payments and cash transfers to your Moventum Cash Account by bank telegraphic transfer only unless Moventum directs you otherwise, in writing. Do not make payments to Capital Advisory Group (UK) Ltd for purchases on your Moventum Cash Account.

You agree that in making all cash transfers to your Moventum Cash Account that the costs of the transfer such as bank charges or administration fees will be borne by you (your remitting bank).

In the event that we provide other services in the future, we may require you to enter into a separate agreement in respect of these prior to these services being made available to you.



E. COMPLAINTSComplaints in respect of the Internet Website’s products or services should be addressed to the Compliance Officer, c/o Capital Platforms, 1 Magazine Road, #03-10A/11, Singapore, 059567 or e-mail [email protected]

F. YOUR RESPONSIBILITIESBefore you begin using our service it is important that you consider the confirmations set out below. You should only continue to operate your Capital Advisory Group (UK) Ltd account and your Moventum Cash and Settlement Accounts if all of these are correct not only as of the dates that you open your Capital Advisory Group (UK) Ltd account and your Moventum Cash and Settlement Accounts but also on the date you enter into any additional agreement with us and as of the date of each transaction.

By agreeing to these Terms and Conditions you agree and confirm to us that the confirmations are and will be true at all such times.

1. You warrant that you are acting as principal unless you inform us to the contrary; 2. You have agreed to be bound by, and you have all requisite power, authority and approvals to enter into

and perform your obligations under these Terms and Conditions; 3. You have, and any person designated by you will at all times have due authorisation to act in all respects

in relation to these Terms and Conditions and each transaction hereunder; 4. These Terms and Conditions and each transaction hereunder are your valid and legally binding

obligations, enforceable against you in accordance with their terms except for the effect of bankruptcy, insolvency, reorganisation, moratorium and other similar laws relating to or affecting creditors’ rights generally and to general equitable principles;

5. Your execution, delivery and performance of these Terms and Conditions and each transaction hereunder does not and will not violate, contravene, conflict with or constitute a default under any law, regulation, rule, decree, order, judgment or charge, contract, trust deed or other instrument binding on you or any of your assets;

6. In accepting these Terms and Conditions, we have not made, and you are not relying upon, any statements, representations, promises or undertakings whatsoever that are not detailed herein;

7. You will provide us promptly on request with a copy of any documents as we may reasonably require from time to time;

8. You will not use our service or the Internet Website for any purpose which is unlawful, abusive, libellous, obscene or threatening;

9. You will observe a standard of behaviour reasonably expected of persons in your position and will not take any step which would cause us to fail to observe the standards of behaviour reasonably expected of persons in our position; and

10. You will ensure that all assets deposited with us are free of any lien or undertaking.

You accept full responsibility for the monitoring of your Internet Website account. You agree to notify us immediately if you become aware of any of the following:

1. Loss, theft or unauthorised use of your Password or account number; 2. Failure by you to receive a message from us indicating that an instruction or order was received and/

or executed; 3. Failure by you to receive an accurate contract note in respect of a transaction; 4. Receipt by you of a contract note or confirmation of an instruction, order or transaction which you did

not place; and/or 5. Any inaccurate information in your account balances, assets held or transaction history or personal

data.



For the purposes of UK laws and regulations, we will treat you as a private customer. If you are acting as agent for someone else, we will treat you alone as our customer for the purposes of the UK laws and regulations and you will be liable in addition to that person in respect of your transactions.

When you become a Capital Advisory Group (UK) Ltd member we will issue you with a www.capitalplatforms.com account number (user ID) and a separate password created on-line by you which together will provide access to your Internet Website account. You acknowledge and agree that when you are acting as a principal:

1. You are the sole and exclusive owner of any account number allocated to you by the Internet Website; 2. You will be responsible for the confidentiality and use of your www.capitalplatforms.com account

number and Password; and 3. We may rely on all orders and secure message instructions using your account number and Password

and you will be bound by any agreement entered into or expenses incurred on your behalf in reliance on such orders and secure message instructions.

H. TERMINATIONYou may at any time, without notice, terminate the business relationship. If a term or a diverging termination provision has been agreed for a particular business relationship, such relationship may only be terminated without notice if there is reasonable cause therefore which makes it unacceptable to you to continue the business relationship, after having given due consideration to the legitimate concerns of Capital Advisory Group (UK) Ltd.

Upon observing an adequate notice period, Capital Advisory Group (UK) Ltd may at any time terminate the business relationship. In determining the notice period, we will take into account your legitimate concerns. The minimum termination notice period is one month.

Termination of the business relationship without notice is permitted if there is reasonable cause which makes it unacceptable to Capital Advisory Group (UK) Ltd to continue the business relationship, after having given due consideration to your legitimate concerns. Such cause is given in particular if you have made incorrect statements as to your financial status, provided such statements were of significant importance for Capital Advisory Group (UK) Ltd’s decision to approve your account opening application or if a substantial deterioration occurs or threatens to occur in your financial status, jeopardizing the discharge of obligations towards Capital Advisory Group (UK) Ltd.

H. LINKS TO OTHER WEBSITESThe provision by the Internet Website of a link to another Website does not constitute any authorisation by the Internet Website to you to access material held at that location, nor is it evidence of any endorsement by the Internet Website of the material held there. The Internet Website accepts no responsibility or liability for the privacy of your personal information on such Websites, as these are beyond our control. We will accept no responsibility or liability in respect of any materials on any Website which is not under our control.

I. PRIVACY POLICYThe Internet Website may keep your personal details, given to us by you or others during your relationship with us and other companies in the Capital Advisory Group (UK) Ltd. These include:

1. Details you give us on application forms; 2. Details you give us so that we can provide you with our services; 3. Details we receive from credit reference and fraud detection agencies.



You agree that we and other companies in the Capital Advisory Group (UK) Ltd may use and update this centrally held information:

4. For credit and credit related services and to manage your accounts;5. To provide you with other services;6. To identify other products and services that might be suitable for you and send you information

about them;7. To prevent and detect fraud;8. To update our records about you;9. To prevent money laundering; and10. To check your identity.

We may also use your information for research and statistical analysis with the aim of improving our services.

The information we hold about you is confidential. We will only disclose it outside the Capital Advisory Group (UK) Ltd when:

11. You give us your consent;12. It is needed by certain reputable third parties involved in running accounts and/or providing services

for you (for example, credit reference agencies who do credit checks for us, Financial Intermediaries engaged by yourselves);

13. In order to obtain professional advice;14. We or others need to investigate or prevent crime (e.g. to fraud prevention agencies);15. The law permits or requires it, or any regulatory or governmental body requests or requires it, even

without your consent, or;16. There is a duty to the public to reveal the information.

This website uses cookies. Cookies collect information about your use of the website, including things like your connection speed, details of your operating system, the time and duration of your visit and your IP address. The information collected by cookies enables us to understand the use of our site, including the number of visitors we have, the pages viewed per session, time exposed to particular pages etc. This in turn helps us to provide you with a better experience, since we can evaluate the level of interest in the content of our website and tailor it accordingly. We will not attempt to personally identify you from your IP address unless required to as a matter of law or regulation or in order to protect our or our other customers’, rights.

Most browsers automatically accept cookies. You can set your browser options so that you will not receive cookies and you can also delete existing cookies from your browser. However you may find that some parts of the site will not function properly if you refuse cookies.

Monitoring: We may monitor, record, store and use any telephone, e-mail or other electronic communications with you for training purposes, so that we can check any instructions given to us and to improve the quality of our customer service. We will monitor network traffic from time to time for the purposes of backup and problem solving and in order to ensure that you are not misusing any of the services provided to you.

Protecting your privacy: To the extent that sensitive personal data is processed about you, we will employ appropriate security measures. However, you recognize that your use of the Internet Website is entirely at your own risk. We have tried to create a secure and reliable website for our users. However, we have no responsibility or liability for the security of personal information transmitted via the internet.



You are responsible for informing us that your personal details have changed, for example a change of address or to your title. You confirm that you will inform us, by writing to us, of any change to your personal information as soon as is reasonably practicable in order that we may update our records. Please note that notification of any change to your personal information must be in writing, and should include your Capital Advisory Group (UK) Ltd account number with us.

Security: You must not use any computers, computer equipment, network resources or any services provided by us for any illegal purpose, or for accessing, receiving or transmitting any material deemed illegal, indecent, offensive or otherwise unacceptable under UK law. All Passwords and usernames allocated to you must be kept secret and must not be disclosed to anyone without our prior written authorisation. You must not use any false identity in email or other network communications. You must not attempt or participate in, the unauthorised entry or viewing of another user’s account or into another system. You must not use the services and/or network systems or any part thereof for fraudulent activities, or to breach another organisation’s security (cross-network hacking). This is an illegal act and prosecution under criminal law may result.

J. CHANGES TO PRIVACY POLICYPlease note that this policy will be reviewed, and may change, from time to time. The revised policy will be posted to this page so that you are always aware of the information we collect, how we use it and under what circumstances we disclose it.

K. LIABILITY AND INDEMNITYNeither Capital Advisory Group (UK) Ltd, nor any of our subsidiary or associated companies, agents, licensors or delegates or our or their directors, officers or employees (each a “Relevant Person”) will be liable for any losses, costs, liabilities or expenses (including, without limitation, loss of profit) incurred by you in connection with these Terms and Conditions (including, without limitation, any service performed under them, your access to our services in connection with any transactions and the giving of instructions to third parties in connection with any transaction entered or to be entered by you or on your behalf), or in connection with any agreement which we enter into on your behalf. This exclusion does not apply to any Relevant Person insofar as such losses, costs, liabilities and expenses result directly from the wilful default or fraud of such Relevant Person.

Where an account is in joint names, the liability of each of you under these Terms and Conditions shall be joint and several and upon the death of one of you, we will treat the survivor as the sole owner of money and investments held in the account.

In particular, and without prejudice to the generality of the above: 1. We will take reasonable security precautions to safeguard data and communications. However, we

disclaim any liability for interception of any such data or communications. The internet in particular may be subject to interruption, transmission blackout, delayed transmission due to internet traffic or incorrect data transmission due to the public nature of the internet. Neither we nor any of our associated companies nor any third party working for us to provide our service shall be responsible for any damages caused by line failure, unauthorised access, theft, systems failure, service interruption, computer virus and other occurrences beyond our control;

2. You should be aware that the internet is not a completely reliable transmission medium. Neither we nor any of our associated companies accept any liability for any losses, costs, liabilities or expenses (including, without limitation, loss of profit) which may arise directly or indirectly from your inability to access or use our service for any reason or for any delay in or failure of the transmission or the receipt of any instructions or notifications sent through the Internet Website;



3. The use and storage of any information, including your account number and Password and other information relating to Capital Advisory Group (UK) Ltd is your sole risk and responsibility, and

4. You are responsible for providing and maintaining the communications equipment (including personal computers and modems) required for accessing and using the Internet Website and for all communications services fees and charges incurred by you in accessing the Internet Website.

We shall not be liable to you for the non-performance of any of our obligations hereunder by reason of any cause beyond our reasonable control, including without limitation any breakdown or failure of transmission or any computer failure or communication, postal or other strikes or similar industrial action and/or failure of any relevant Exchange, Clearing House and/or Broker for any reason to perform its obligations.

Our rights and remedies, powers and privileges contained herein are cumulative and in addition to any rights or remedies provided by law. No failure to exercise or delay in exercising any such rights or remedies shall operate as a waiver nor shall any single or partial exercise preclude any other or further exercise.

We may employ agents selected by us on any terms we think appropriate.

Each provision of these Terms and Conditions is severable and if any provision is or becomes invalid or contravenes any applicable regulations, the remaining provisions will not be affected.

Where these Terms and Conditions create rights in favour of a third party (including, without limitation our associated companies) then we are entering into these Terms and Conditions as trustee for third parties as well as on our own behalf.

To the extent that any paragraph, sub-paragraph or sentence of the Terms and Conditions is void, voidable or unenforceable, that fact will not affect the operation of any other paragraph, sub-paragraph or sentence of the Terms and Conditions.

You agree to indemnify us, our associated companies, agents and delegates and our and their directors, officers and employees (each an “Indemnified Person”) against all losses, costs, liabilities or expenses (including, without limitation, loss of profit) incurred by us or them in connection with your agreement under these Terms and Conditions (including without limitation any service performed under them, your access to the Internet Website and the giving of instructions to third parties in connection with any transaction entered or to be entered by you or on your behalf), or in connection with any agreement which we enter into on your behalf. This indemnity does not apply to any Indemnified Person insofar as such losses, costs, liabilities and expenses result directly from the wilful default or fraud of such Indemnified Person.

These Terms and Conditions shall apply to designated investment business (as defined by UK law) undertaken with you by us. In particular:

1. All UK and applicable overseas laws and all orders and other delegated legislation made under it and any successor legislation;

2. Rules, statements of principle and directives of applicable authorities responsible for the regulation of designated investment business;

3. All statutory and other requirements relating to money laundering; 4. All rules, regulations and by-laws of any relevant exchange and/or clearing house; and 5. Applicable accepted market practice and custom (together referred to as applicable regulations).

In the event of any conflict between the Terms and Conditions and applicable regulations then the latter shall prevail.



L. WARRANTIESWhilst we have taken reasonable steps to ensure the accuracy, currency, availability correctness and completeness of the information contained on the Internet Website, information is provided on an “as is”, “as available” basis and we do not give or make any warranty or representation of any kind, whether express or implied. The use of the Internet Website is at your sole risk. We shall not be liable for any loss or damage whatsoever and howsoever arising as a result of your use of or reliance on the information contained on the Internet Website to the maximum extent permitted by UK law.

We do not represent or warrant that the Internet Website will be available and meet your requirements, that access will be uninterrupted, that there will be no delays, failures, errors or omissions or loss of transmitted information, that no viruses or other contaminating or destructive properties will be transmitted or that no damage will occur to your computer system. You have sole responsibility for adequate protection and back up of data and/or equipment and for undertaking reasonable and appropriate precautions to scan for computer viruses or other destructive properties.

We make no representations or warranties regarding the accuracy, functionality or performance of any third party software that may be used in connection with the Internet Website.

M. MORNINGSTAR SOURCED FUND INFORMATIONThe internet website sources information on Mutual Funds from Morningstar Deutschland GmbH. This information contained within the Internet Website:

1. Is proprietary to Morningstar; 2. May not be copied (save (i) as incidentally necessary in the course of viewing it on-line, and (ii) in the

course of printing off single copies of web pages on which it appears for the personal non-commercial use of those authorised to view it on-line), adapted or distributed; and is not warranted to be accurate, complete or timely.

This information must not be relied upon without appropriate verification by you the user and, wherever appropriate, a professional Consultant. Morningstar is not responsible for any damages or losses arising from any use of this information and you agree that the use of Morningstar-sourced information provided to you is at your own risk. Past performance is no guarantee of future results.

N. AMENDMENT OF THESE TERMS AND CONDITIONSWe may amend these Terms and Conditions and you will be informed accordingly by written notice. Any amendment which is made to reflect a change of applicable law or regulation may take effect immediately or otherwise as we may specify. Any other amendment will only take effect on such date as we will specify being at least 14 business days after dispatch of the notice or secure electronic message.

O. GOVERNING LAW AND JURISDICTIONThese Terms and Conditions are governed by UK Law. You agree that legal action relating to this agreement may only be dealt with by the Courts of UK. This agreement is also subject to any relevant law.


Intermediary Consultant/Client Agreement

This Agreement is between the Client and the registered Financial Intermediary registered to Capital Advisory Group (UK) Ltd (UK) Ltd.

Capital Advisory Group (UK) Ltd Ltd, a company incorporated in the United Kingdom authorised and regulated by the Financial Services Authority.

The Client, the Intermediary, and the Consultant are collectively referred to as the “Parties”.

WHERE AS:I The Client is a member of the Capital Advisory Group (UK) Ltd website www.capitalplatform.com.

II The Intermediary and the Consultant provide financial Consultancy services to the client.

III Capital Advisory Group (UK) Ltd is engaged in the business of owning and operating the www.capitalplatforms.com website and related intellectual property.

NOW THEREFORE, the Parties have agreed as follows:

1. SERVICES TO BE PROVIDEDThe Intermediary and the Consultant will provide financial Consultancy services to the Client in relation to the conduct and investment decisions of the Client under its Capital Advisory Group (UK) Ltd membership.

Capital Advisory Group (UK) Ltd will provide access and services to the Client in relation to the www.capitalplatforms.com website in accordance with and as agreed to by the Client in the terms and conditions included in the account opening documents when joining www.capitalplatforms.com.

2. FRONT END FEE AND ANNUAL RENEWAL COMMISSIONS.The Client agrees that net front end load commissions and net annual renewal commissions received by Capital Advisory Group (UK) Ltd that result from investments made by the Client through the Captal Advisory Group’s website(s) (less Capital Advisory Group (UK) Ltd Fee), will be paid to the Intermediary/Consultant and the Client will have no title to these commissions.

The Intermediary/Consultant agrees to disclose to the Client all front end load commission paid and annual renewal commission paid to it by Capital Advisory Group (UK) Ltd (if required by applicable laws). Disclosure must be made at the times and in the manner required by applicable Laws. This obligation extends to disclosing alterations in rates of commission or payments of commission in circumstances where it was not previously paid.

3. ACCESS AND SECURITY

The Client agrees and permits the Intermediary/Consultant to perform the following functions on the Capital Advisory Group (UK) Ltd website on their behalf:

The Intermediary/Consultant cannot make Purchase orders and cannot make Sell orders unless directed by their client(s).


The Client agrees to keep secure and safe its Capital Advisory Group (UK) Ltd (and associated website(s)) Password and not to disclose this to the Intermediary, Consultant or other persons.

The Intermediary/Consultant will have a Consultant ID and unique password which will allow access to the Client’s secure area in the www.capitalplatforms.com website.

The Parties acknowledge that Capital Advisory Group (UK) Ltd is not responsible or liable for the consequences of misuse of the Intermediary/Consultant ID and Password or the Client’s User ID and Password, respectively. This responsibility and liability lies solely with the Intermediary/Consultant and the Client.

4. FINANCIAL SERVICESThe Parties acknowledge that Capital Advisory Group (UK) Ltd do not provide financial advice.

The Intermediary and Consultant will indemnify and keep Capital Advisory Group (UK) Ltd and associated company(s) indemnified against all losses, costs, damages or claims incurred by Capital Advisory Group (UK) Ltd directly or indirectly as a result of the purchase or sale of Mutual Funds or any other products offered by www.capitalplatforms.com .

The Client will not hold Capital Advisory Group (UK) Ltd (and associated company(s)) liable for losses, costs, damages or claims incurred directly or indirectly as a result of the purchase or sale of Mutual Funds or any other products offered by www.capitalplatdorms.com .

5. DURATIONThis Agreement shall, become effective as of the date of the signature of the Client and shall remain in place for the duration of the Clients relationship with Capital Advisory Group (UK) Ltd unless terminated by either party or by Capital Advisory Group (UK) Ltd 9or associated company(s)) by giving to the other party not less than 1 months written notice.

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TERMS AND CONDITIONS

MOVENTUM S.C.A. (“Moventum”) performs on the basis of these terms and conditions brokering services for you in respect to the purchase and sale of securities. For this purpose, you may open a securities account and a cash account with Moventum. Please note that any securities and other assets, which are credited to your account, are deposited and administrated, on an omnibus account basis, at Moventum’s designated depositary bank. Moventum, therefore, forwards your orders in respect to your cash and securities account to its depositary bank, which executes

these orders. Moventum’s depositary bank is a fully licensed credit institution having its registered office within the European Union. Moventum uses independent financial advisers (each an „IFA”) to fulfil its investment brokering services. These Terms and Conditions are applicable to the entire legal relationship between you and Moventum. If with respect to certain special transactions or extraordinary services to be rendered to you by Moventum (e.g. portfolio management and Equity trading) the parties agree on special conditions, such conditions shall prevail.

A. INVESTMENT RISK DISCLOSURE

1. Risks Information Important information about the risks typically associated with different types of securities investments are available in the information brochure Basis Information for Securities Dealings (Basisinformationen für Wertpapiergeschäfte), which will be handed out to you when opening the account. You understand that investing in securities involves risks and that many variables, including, but not limited to market and economic fluctuations, may have a substantial negative effect on the value of your securities positions. Furthermore, you represent to Moventum that you are willing to assume these risks and that you are in fact financially able to bear these risks. You agree to notify Moventum in writing should your financial conditions materially change, or should your investment objective change from the one shown on the New Account Application.

2. "Execution only" You understand that Moventum acts as an intermediary and does not render any investment advice tailored to your personal investment objectives. Moventum will only execute your instructions or the instructions of your IFA on your behalf in respect to the purchase and sale of securities. Insofar as Moventum provides you with information such as comments on the market, charts, analyses etc., you understand that such information does not form part of an investment advice but is meant to help you make your independent investment decisions. As regards to investments in mutual funds you agree to obtain from your IFA current offering documents which fully describe each investment, including potential risks and costs, prior to purchasing an interest in any transferable securities, units of collective undertaking ("fund") and unit linked products. You understand that commissions charged on transactions and trailer fees received may be shared between MOVENTUM S.C.A. and your appointed IFA.

B. CONDITIONS FOR YOUR CASH ACCOUNT

1. Applicable Rules & Regulations All transactions in your account are subject to the rules, customs and usages of the exchanges, markets or clearing houses where the transactions are executed and to all applicable rules and regulations.

2. Account Credits Moventum credits to your account funds belonging to you such as dividends, interest, redemptions, and proceeds of corporate reorganizations on the day such funds are available to Moventum. Information regarding rules applied by Moventum with regard to value dates applied to operations on your account such as credits with funds due to you, when those funds are available to you, and/or when you begin earning interest on those funds is available upon request from Moventum. Operation dates and value dates applied to operations on your account are provided on your periodic statement.

3. Permission to Impose Fees Fees and charges are set out in the appropriate valid Moventum Price List. If you make use of a service listed therein, fees and charges in the current Moventum Price List are applicable. For any services not stated therein, which are provided following your instructions, or which are believed to be in your interest and which can only be expected to be provided against remuneration, Moventum may at its reasonable discretion determine the charges. These fees and charges are subject to change at the reasonable discretion of Moventum. You will be notified of these charges and any changes by your IFA or through information provided with your periodic statements. You will bear all expenses incurred, if the custodian acts on your behalf or in your implied interest (in particular communication expenses such as telephone and postage) including charges imposed by third parties, specifically but not limited to the transfer of securities and cash or any related operations. It is your right to terminate your account relationship with Moventum within a time period of four weeks after having been informed of fee increases otherwise the new fees will considered as accepted by you and will apply automatically. If you terminate the Agreement due to such fee increases, such increased fees will not be applied to services rendered to you during the time until your termination becomes effective.

4. Payment of Indebtedness upon Demand and Liability for Costs of Collection You shall at all times be liable for the payment upon demand of any debit balance or other obligations owing in any of your Moventum accounts and you shall be liable to Moventum for any deficiency remaining in any such accounts in the event of the liquidation thereof, in whole or in part, by Moventum or by you. When demanding such payments, Moventum will take into account your legitimate interests. The reasonable costs and expenses of collection of the debit balance, recovery of securities, and any unpaid deficiency in the accounts of the undersigned with Moventum, including, but not limited to, attorneys' fees, incurred and payable or paid by Moventum shall be payable to Moventum by you.

5. Interest rates and disbursements Interest shall accrue to the credit of your accounts according to Moventum's appropriate valid price list. In the event that Moventum elects to pay interest to you such interest shall be calculated using value dates. Debit interest will be charged to your account according to Moventum's price list for any debit balance. Such interest shall be calculated using value dates. Moventum is entitled to directly debit existing and future receivables from your account disbursements, fees, commissions, interests, duty or other charges, which are incurred for the management of your assets or for the execution of transactions at your direction or for your benefit. Moventum may set off fees and expenses against distributions on shares or any other payments to your account. They may also be covered by the sale of shares or fractional shares of investment funds (if any), as the case may be, by Moventum in a corresponding amount. You may only set off claims against those of Moventum, if your claims are undisputed or have beenconfirmed by a final court decision. Moventum reserves the right to invest the balance in your cash accounts into money market funds or overnight deposits.

6. Money transfers Please always make payments and cash transfers to your Moventum account by bank wires only unless Moventum directs you otherwise, in writing. Do not make payments to your IFA for purchases on your Moventum account.

C. CONDITIONS FOR YOUR SECURITIES ACCOUNT

1. Management of the securities account a) Purchase and sale orders ("Instructions")Under these terms and conditions you can require Moventum to invest any amounts paid by you to Moventum in securities specified by you provided however these securities in the case of mutual funds are on Moventum’s approved list of mutual funds. You acknowledge that Moventum reserves the right in its sole discretion, according to any applicable legal requirements and practices, to refuse or restrict your orders and that Moventum may re-assign your account to a different IFA or close your account by giving you written notice as set forth in article D.18. In such cases, Moventum will immediately inform you hereof.

b) Form of communicationInstructions can be communicated by telephone, fax, e-mail and post or by special courier. You appoint the IFA as representative (referred to as "attorney") for purposes of communicating instructions to Moventum. Moventum shall act upon instructions from your IFA as if these instructions were given by you, provided however that Moventum may, in its absolute discretion, if it considers this appropriate, ask for confirmation of the relevant instructions from you. Moventum is entitled to request a written confirmation of the order from you before carrying it out, if Moventum has objective reason to doubt the integrity of a telephone, oral, faxed or e-mailed instruction. If, upon your request, Moventum executes oral instructions, it is explicitly agreed that the account statements of Moventum conclusively prove that the transactions mentioned thereon have been fulfilled in accordance with your oral instructions. The same principle shall apply for instructions transmitted to Moventum by telefax, e-mail or similar means of communication other than an original written document. The Customer assumes all risks, particularly those arising from errors in communication or comprehension including errors as to the identity of the Customer, resulting from the use of such means of communication and relieves Moventum from any and all responsibility in this respect. To avoid any duplication, all written confirmations of previous oral instructions must clearly refer to those oral instructions. You specifically empower Moventum to tape record your telephone conversations with Moventum. The tape may be used in court or other legal proceedings with the same value in evidence as a written document.

2. Investment fund sales and purchases If a purchase order is clear and not ambiguous, Moventum will execute the instruction under the conditions indicated. Execution of transactions is subject to the legal provisions and business conditions (practices) for securities trading applicable at the place of execution. The execution price of the concerned investment fund is determined on the day at which the order was executed. To the extent that amounts paid in for the purchase of shares in an investment fund are below the issue price of any full share, Moventum reserves the right to credit to your account with a corresponding fraction of the share (calculated by up to four decimal digits) or to refuse these orders. Moventum will also abide by the minimum order amount specified by the individual mutual fund provider. Moventum will inform the IFA and you accordingly. For sales orders, the market price as of the date at which such order is executed will be applied. If Moventum receives an order by the daily closing time for acceptance of orders, the order will be executed at the day of receipt. If the day of receipt is not a trading day in Luxembourg or if an order is received after the closing time for the acceptance of orders, the order will be executed on the next trading day.

3. General a) AttorneyInstructions pursuant to these terms and conditions may be given by you or any duly authorized attorney or representative (referred to as "attorney") such as, but not limited to, your independent financial adviser if, and to the extent, referred to on the account opening form or duly appointed by you in subsequent communication with

Moventum. If the appropriate authorization has been made and communicated to Moventum, Moventum is entitled to accept instructions by such attorney as if such instructions were yours. You accept full responsibility for your attorney's instructions.

b) SignaturesSignatures and signature powers which are shown on the account opening document or which have been notified in writing to Moventum shall remain valid for all written instructions to operate the account with Moventum until receipt by Moventum of a written revocation regardless of any entry or modification in the registry of commerce or any other registry. In the limited number of cases where modifications in the commercial register have the legal effect that they are deemed publicly known, this clause shall have no effect. Moventum shall not be liable for the fraudulent use by a third party of your signature, whether such signature be authentic or forged. Should Moventum not identify the fraudulent use of the authentic or forged signature on documents, and effect transactions on the basis of such documents, it shall, except in cases of gross negligence in the verification of any such document, be released from its obligation to refund the assets deposited with Moventum which were disposed of by the fraudulent use of such documents. Moventum shall, in such circumstances, be considered as having made a valid payment, as if it had received proper instructions from you.

4. Distributions from investment funds / Dividend reinvestment To the extent that investment funds grant any distributions, such distributions, will be treated in the same manner as amounts paid for the purchase of investment funds and will be either automatically reinvested in shares of the relevant fund on the day that Moventum receives the money from such distribution, provided that Moventum receives notification in due time to process the reinvestments, or paid to your account in cash. Such instructions will be given to Moventum at the time of the transaction and will remain in effect until Moventum receives your written instructions to alter such instructions.

5. Execution of orders as regards transactions in investment funds a) Method of executionAccording to any applicable legal requirements and practices, Moventum reserves the right to determine the method of execution of purchase orders, subscription orders, redemption orders, periodic investments, payment orders or transfer orders received from you or your duly authorized attorney unless you or your attorney have given specific directions with regard to the method of execution.

b) Instruction regarding periodic paymentsYour instructions to Moventum to carry out periodic payments or make periodic investments or withdrawals or savings plans shall be executed until the end of the month in which Moventum has received a written revocation therefore.

c) Right to executeMoventum reserves the right not to execute a purchase order for investment funds until such time as the monies are available in your account to pay for the entire amount of the purchase order. At such time that monies are available, Moventum will process your purchase order in accordance with clause C.1 above. In addition, Moventum reserves the right not to execute a purchase order for investment funds with the proceeds of a sale of other securities until the entire proceeds of such sale have been received. In case of a securities transfer, Moventum reserves the right not to execute a sale order for investment funds until such investment funds have been delivered in their entirety.

6. Execution of orders as regards to transactions in other securities The purchase or sale as well as the safe custody of other securities, in particular equities, shall be governed by the "Special Conditions for Dealings in Securities" which form an integral part of these Terms and Conditions.


D. GENERAL TERMS APPLICABLE TO ALL ACCOUNTS

1. Account currency Your account will be opened with a base currency of Euro. You may hold cash or securities in other currencies provided that they are on the Moventum list of approved currencies.

2. Communications Communications may be sent to you at your current address, which is on file at Moventum's office, or at such other address as you may hereafter give Moventum in writing, and all communications, so sent, whether by mail, telegraph, messenger or otherwise, shall be deemed given to you personally, whether actually received or not.

3. Joint and Several Liabilities; Joint Account If more than one individual is establishing an account with Moventum, the obligations of all persons establishing such account under this Agreement shall be joint and several. If this is a joint account, each of you signing the New Account Application and Agreement (each a "joint owner") agrees that each joint owner shall have authority to (I) buy, sell, (including short sales, if the account is approved for short selling), and otherwise deal in, through Moventum as a broker, securities and/or other property or otherwise, (II) to receive confirmations, statements and communications of every kind related to the account, (III) to receive and dispose of money, securities and/or other property in the account, (IV) to make, terminate, or modify this Agreement and any other written agreement relating to the account or waive any of the provisions of such agreements, and (V) generally to deal with Moventum as if each of you alone was the sole owner of the account, all without notice to the other joint owner(s). Each of you agrees that notice to any joint owner shall be deemed to be notice to all joint owners. Moventum may follow the instructions of any of the joint owners concerning the account and make delivery to any of the joint owners of any and all securities and/or other property in the account, and make payments to any of the joint owners, of any or all moneys in the account as any of the joint owners may order and direct, even if such deliveries and/or payments shall be made to one of the joint owners personally. Moventum shall be under no obligation to inquire into the purpose of any such demand for such deliveries and/or payments. In the event of the death of any of the joint owners, the surviving joint owner(s) shall immediately give Moventum written notice thereof. The estate of any deceased joint owner shall be liable and each survivor will be liable, jointly and severally, to Moventum for any debt or loss in the account resulting from the completion of transactions initiated prior to Moventum's receipt of a written notice of such death or debt or loss incurred in the liquidation of the account or the adjustment of the interests of the joint owners. Moventum reserves the right to require written instructions from all account holders, at its discretion.

4. Liability Moventum will, in the performance of its duties, be liable for any fault of its employees and of those persons appointed as agents in the performance of its duties. If through negligent conduct your have contributed to the occurrence of any damage, the extent of the damage to be borne by Moventum and yourself, respectively, will be determined in accordance with the principles of contributory negligence. If the contents of an order are such that Moventum typically entrusts a third party with its further execution, Moventum performs the order by passing it on to the third party in its own name. In such cases, the liability of Moventum shall be limited to the careful selection and inspection of the third party. Moventum shall not be liable for loss caused and detriments, directly or indirectly, by government restrictions, exchange or market rulings, suspension of trading, war, strikes, force majeure, civil commotion, revolution, natural phenomenon, lockout, boycott, traffic congestion, breakdown of telecommunication systems, or other conditions beyond Moventum's control. Moventum is particularly not obliged to inform you about potential losses which are caused by market conditions which may have an impact on the actual value of your assets or debts.

5. Change of name, address or power of attorney / Clarity of orders In order to fulfil your cooperation duties for the due settlement of business transactions you are required to inform Moventum without delay and in writing of any changes of your name, address and the termination or change of any power of representation communicated to Moventum. This information requirement applies regardless of the fact whether the power of representation is entered in a public register. The contents of orders of any kind have to be identifiable beyond doubt. Orders of ambiguous contents may result in inquiries, which in turn may cause delays. In particular you have to take due care as to the accuracy and completeness of the specified number of the securities account in the case of payments, orders and disposals. Changes, confirmation or repeat orders have to be identified as such.

6. Separability If any provision or condition of this agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision or condition. The validity of the remaining provisions and conditions shall not be affected thereby and this agreement shall be carried out as if any such invalid or unenforceable provision or condition were not contained herein.

7. Headings are Descriptive The heading of each provision hereof is for descriptive purposes only and shall not be deemed to modify or qualify any of the rights or obligations set forth in each such provision.

8. Delivery of Account Information To the extent permissible by the applicable law, Moventum may elect to deliver account information to you electronically.

9. Reports You will receive a confirmation for each purchase and sale transaction in securities executed. As regards to savings plans, Moventum will not issue any individual confirmation on amounts paid in on a regular basis. In this case you will at year-end receive a statement, if required, of all movements that have occurred during the calendar year. You will also receive account statements containing account value and cash and security transaction. Account statements will be issued on an annual basis. To the extent your consent is given on the account opening form, Moventum may communicate your personal data contained in confirmation statements and account statements to your IFA, his/her assistant(s) or employee(s) as necessary either in written or electronic form to assist in the management of your account. To the extent your consent is given on the account opening form and in the case your IFA is member of a Distribution Network (“Broker Pool”), Moventum may communicate your personal data contained in confirmation statements and account statements to your IFA Pool Manager and the employees of the Pool.Reports of the execution of orders (confirmations) and statements of your accounts shall be conclusive and will be considered as accepted if not objected to in writing no later than four weeks following their receipt. If the objections are made in writing, it is sufficient to dispatch these within the period of four weeks. Failure to make objections in due time will be considered approval. A directly or indirectly appeal against those reports of execution and statements is therefore not possible. The rule is applicable for all transactions, in particular for cash wires and investment of assets, subscription and redemptions of securities. Moventum is authorised to adjust factual errors that had been produced by Moventum without notice by simple rebooking. This is also applicable for duplicate orders that had been entered in error on the basis of the condictio indebiti principle. If you have not received your annual statement by the end of the month following the close of the quarter, Moventum has to be informed without delay. This information requirement also applies in the absence of any other expected notifications (in particular confirmations on the execution of orders).

10. Disposal You may in whole or in part, dispose of your securities by way of written order. As regards to investment funds, a delivery may only be executed with respect to integral shares. As regards to fractional share of investment funds, there is only an entitlement to receive payment of the equivalent amount.

11. Right of disposal upon the customer's death In case of customers death or incapability of acting the authorised people that are entitled as the legal heirs or legal representative (in particular the executor, the heirs or the legal guardian) will take over the customers representation for the relationship with Moventum after presenting of the relevant documents that certify their rights, if there is not a joint account or another counter instruction. Documents in foreign languages have to be presented in English, French or German and certified to Moventum.

Moventum is not liable for execution of orders or instructions that had been forwarded by an authorised representative, until the information of the customer’s death or the incapability of acting had been forwarded in written to Moventum.

12. Custodian Any securities and assets on the account opened hereunder will be maintained in custody, on an omnibus basis, with Moventum's designated depositary bank. The name of the custodian and the place of deposit will be specified in the confirmation you will receive for each security transaction executed. Moventum will notify the customer of any replacement of the depositary bank.

13. Lien You herewith pledge in favour of Moventum all securities in indirect possession now and in the future of Moventum, as well as all cash claims that you may have now or in the future in favour of Moventum on the balance from time to time on your account, in whatever currency, in order to secure any present and future payment obligations of yours vis-à-vis Moventum whether in principal, interest, fees or costs. With respect to securities being deposited with Banque de Luxembourg S.C.A. you herewith explicitly grant power of attorney to Moventum to notify Banque de Luxembourg S.C.A. to hold the pledged securities for Moventum. With respect to assets being deposited with Banque de Luxembourg S.C.A. you herewith explicitly grant power of attorney to Moventum to notify Banque de Luxembourg S.C.A. that these assets have been pledged to Moventum. Insofar as claims pledged under this agreement are book claims you are obligated to enter the scope and date of the pledge in your books. In addition, the pledged fungible securities will be designated in the books of Moventum as being pledged in its favour, without there being a need to mention such pledge on the account statements produced by Moventum and made available to you. If securities or cash come into the power of disposal of Moventum under the reservation that they may only be used for a specified purpose (e.g. deposit of cash for payment of a bill of exchange), Moventum's pledge does not extend to these assets. Moventum can assert the claim of dispatch or enhancement of securities until the realised value of all securities equals the realisable value of all securities claims in relation of the business relationship (cover limit). If the realisable value of all securities and cash pledged in favour of Moventum exceeds the total amount of all claims arising from the business relationship (the "Cover Limit") on a more than temporary basis, Moventum shall, at your request, release securities or cash as it may choose in the amount exceeding the Cover Limit; when selecting the security items to be released, Moventum will take into account your legitimate concerns and the concerns of any third party having provided security for your obligations. To this extent, Moventum shall also execute orders for you relating to the assets pledged in favour of Moventum (e.g. sale of securities). If you do not honour, by due date, any payment obligation towards Moventum and shall not have fully complied therewith 5 (five) banking business days from the dispatch of a written notice of summons to pay, Moventum shall be authorised to acquire, sell or auction the securities in accordance with applicable legal provisions and to offset your cash claims against secured claims of Moventum. The above notice may be made by mail or fax. The transmission report (in the case of faxes) shall constitute conclusive evidence of the dispatch of the notice. If Moventum realises the security, it may choose between several assets. When selecting the assets in order to enforce the pledge, Moventum will take into account the legitimate concerns of you and any third party who may have provided security for the obligations of you. Moventum is not liable for disadvantages that may arise due to the use of the suffrage. Moventum is authorised, at any time, to make a currency conversion for the purposes of the enforcement of the pledge and the satisfaction of its claims.

14. Refusal to Accept Orders Moventum shall not be liable for refusing to obey any orders given by you with respect to an account(s), which has or have been the subject of attachment or sequestration in any legal proceeding against you, and Moventum shall be under no obligation to contest the validity of any such attachment or sequestration.

15. Complaints Kindly direct any complaints regarding the handling of your account to Moventum. Moventum will respond to you as promptly as possible. The address of Moventum is as follows:

Moventum S.C.A. 12 rue Eugène Ruppert L-2453 Luxembourg Phone: (+352) 26 15 4200 Fax: (+352) 26 35 22 39 www.moventum.net

16. Modification of these terms Any modification of these general terms and conditions will be notified to you in writing. They will be deemed accepted unless objected to in writing. Moventum will in particular point out this effect to you in any such notification. You have to mail to Moventum any objection within six weeks upon notification of such modifications.

17. Your Termination rights You may at any time, without notice, terminate the business relationship. If a term or a diverging termination provision has been agreed for a particular business relationship, such relationship may only be terminated without notice if there is reasonable cause therefore which makes it unacceptable to you to continue the business relationship, after having given due consideration to the legitimate concerns of Moventum.

18. Termination rights of Moventum Upon observing an adequate notice period, Moventum may at any time terminate the business relationship. In determining the notice period, Moventum will take into account your legitimate concerns. The minimum termination notice for the keeping of current accounts and securities accounts is one month. Termination of the business relationship without notice is permitted if there is reasonable cause which makes it unacceptable to Moventum to continue the business relationship, after having given due consideration to your legitimate concerns. Such cause is given in particular if you have made incorrect statements as to your financial status, provided such statements were of significant importance for Moventum's decision concerning the granting of credit or other operations involving risks for Moventum, or if a substantial deterioration occurs or threatens to occur in your financial status, jeopardizing the discharge of obligations towards Moventum.

19. Deposit protection and investor compensation Moventum is member of the Deposit Guarantee Association in Luxembourg (AGDL). AGDL reimburses the depositors subject to a maximum fixed as the equivalent value in all currencies of € 20,000 per cash deposit. AGDL further compensates investors in respect to possible claims against Moventum in connection with securities transactions subject to a maximum fixed as the equivalent value in all currencies € 20,000 per claim arising out of investment transactions other than those concerning a cash deposit. The cash deposits or claims in connection with securities that are held on the omnibus account at Moventum's designated depositary bank are protected subject to a maximum fixed at the equivalent value in all currencies of € 20,000 per each customer’s cash deposit or per each customer’s claim. In respect to further details of the scope of protection, please refer to Articles 6 and 7 of the statutes of AGDL, which will be provided on demand.

20. Governing Law The luxemburgish law is applicable for the business relationship between you and Moventum, unless otherwise agreed. The registered office of Moventum is the exclusive place of fulfilment for transactions, contracts, other agreements, consulting services, request of information and services. Moventum could take you to the Moventum’s responsible court or could be sued at another responsible court of justice.


E. Special Conditions for Dealings in Securities

These Special Conditions shall govern the purchase or sale as well as the safe custody of securities, although, the corresponding rights are not represented by certificates (hereafter: "securities"). Moventum shall execute customer orders for the purchase or sale of securities in the capacity of a commission agent.

COMMISSION TRANSACTIONS

1. Execution of commission orders a) Execution transaction/engagement of an intermediate commission agentMoventum shall execute orders by its customers for the purchase or sale of securities in Luxembourg and abroad in the capacity of a commission agent. For this purpose Moventum shall conclude for the customer's account a purchase or sale transaction with another market participant (execution transaction) or it shall engage another commission agent (intermediate commission agent) to conclude an execution transaction.

b) Applicable legal provisions/practices/business conditionsThe execution transaction shall be subject to the legal provisions and business conditions (practices) for securities trading applicable at the place of execution; in addition, the General Business Conditions of Moventum's contracting party shall apply.

c) Price of the execution transaction/remuneration/ expensesMoventum shall charge the customer with the price of the execution transaction; it shall be entitled to charge its remuneration and expenses including third-party costs.

2. Place of execution/mode of execution a) Customer's instructionsThe Customer may determine the place and mode of execution for an individual transaction or generally. To the extent that the customer fails to give instructions, the following subparagraphs b. to f. shall apply.

b) Execution in Luxembourg or abroadIf securities of domestic issuers (domestic securities) are traded on a domestic exchange, the customer's orders shall be executed in Luxembourg. Otherwise Moventum shall determine in the proper exercise of its discretion whether the order shall be executed in Luxembourg or abroad. If securities of foreign issuer (foreign securities) are admitted to official quotation or to the regulated market on a domestic exchange, the customer's order shall be executed in Luxembourg. This shall also apply if the securities are included in the over-the counter-market of a domestic exchange, unless the customer's interests call for execution abroad. If foreign securities are not traded on a domestic exchange, Moventum shall determine in the proper exercise of its discretion whether the order shall be executed in Luxembourg or abroad.

c) Execution of orders on or off-exchangeOrders shall be executed by way of exchange trading if the securities are traded on a domestic exchange. Orders in securities traded over the counter on an exchange may also be executed by way of trading on a foreign exchange if called for by the customer's interests. Orders in interest-bearing bonds from an issue whose par value in each case is less than Euro 1 billion may also be executed off-exchange.

d) Place of exchangeIn the case of execution on an exchange, Moventum shall determine the place of such exchange with due regard to the customer's interests.

e) Electronic tradingMoventum shall execute the order by way of electronic trading.

f) InformationMoventum shall advise the customer without undue delay of the place and mode of execution.

3. Fixing of price limits The customer may, when placing orders for the purchase or sale of securities, stipulate to Moventum price limits for the execution transaction (orders with price limits).

4. Period of validity of customer orders unlimited in time a) Orders without price limitsAn order without price limits for the purchase or sale of securities shall be valid for one trading day only; if the order for same-day execution is not received in time to allow it to be dealt with in the normal course of business, it shall be valid for the next trading day. If the order is not executed, Moventum shall advise the customer thereof without undue delay.

b) Orders with price limits/revocationAn order with price limits for the purchase or sale of securities shall be valid until the last trading day of the current month (month-end). An order received on the last trading day of a particular month shall, unless it is executed on the same day, be valid for the next month. Moventum shall advise the customer without undue delay of the period of validity of the customer's order. An order cannot be revoked if Moventum has issued a binding order or if the transaction has already been executed.

5. Period of validity of orders for the purchase or sale of subscription rights Orders without price limits for the purchase or sale of subscription rights shall be valid for the duration of trading in such subscription rights. Orders with price limits for the purchase or sale of subscription rights shall become void upon expiry of the penultimate day of trading in such subscription rights. The period of validity of orders for the purchase or sale of foreign subscription rights shall be determined according to the relevant foreign practices. The handling of subscription rights belonging to the customer's securities holding the last day of trading in subscription rights shall be governed by below section (i.e. 2. a).

6. Suspension of the quotation In the event that price fixing does no take place on an Luxembourg exchange at the instigation of the exchange management due to special circumstances in the sphere of the issuer (suspension of the quotation), all customer orders in the securities concerned for execution on this exchange shall become void; Moventum shall advise the customer thereof without undue delay. The execution of customer orders on foreign exchanges shall be governed in this respect by the practices of the foreign exchange.

7. Requirement of an adequate credit balance/securities holding Moventum shall be required to execute orders for the purchase or sale of securities or to exercise subscription rights only to the extent that the customer's credit balance, a loan available for securities trading, or the customer's securities holding are adequate for execution. If Moventum does not execute all or part of the order, it shall advise the customer thereof without undue delay.

8. Liability of Moventum in commission transactions Moventum shall be liable for the proper settlement of the execution transaction by its contracting party or the contracting party of the intermediate commission agent. If Moventum engages an intermediate commission agent, it shall be liable, until the conclusion of an execution transaction, only for the exercise of due care in the selection and instruction of such agent.

SETTLEMENT OF SECURITIES TRANSACTIONS

1. Order transmission Moventum shall forward orders for the purchase or sale of securities to its designated broker dealer, a fully licensed credit institution/financial services institution, having its registered seat within the European Union, which shall execute these orders. Any securities and other assets shall be deposited and administrated, on an omnibus account basis, at Moventum's designated depository bank, a fully licensed credit institution, having its registered seat within the European Union.

2. Treatment of subscription rights/warrants/ convertible bonds

a) Subscription rightsMoventum shall notify the customer of the granting of subscription rights as soon as the information is made available to Moventum by the depository bank. Provided Moventum has not received any other instructions from the customer by expiry of the penultimate day of trading in such subscription rights, it shall sell at best all domestic subscription rights belonging to the customer's securities holding; Moventum may arrange for foreign subscription rights to be realised at best in accordance with the practices applying abroad.

b) Option and conversion rightsMoventum shall notify the customer of the expiry of rights deriving from warrants or of conversion rights deriving from convertible bonds, requesting instructions, if the expiry date has made available to Moventum by the depository bank.

3. Communication of Information If information concerning the customer's securities is made available to Moventum by the issuer or by its designated depository bank/intermediate depository, Moventum shall inform the customer thereof, to the extent that such information may materially affect the customer's legal position and notification of the customer is necessary in order to safeguard the customer's interests. Thus, Moventum shall in particular make known information on - statutory compensation and exchange offers, - voluntary purchase and exchange offers, - reconstructions. The customer need not to be notified if Moventum does not receive the information in time or the measures to be taken by the customers are financially unreasonable because the costs incurred are out of proportion to the customer's possible claims.

4. Exchange, removal and destruction of certificates a) Exchange of certificatesMoventum may, without prior notice to the customer, comply with a call for surrender of securities certificates as soon as notified by the depositary bank, provided such surrender is manifestly in the customer's interests and does not involve an investment decision (e.g. following the merger of the issuer with another company or if the securities certificates are incorrect in content). The customer shall be advised thereof.

b) Removal and destruction following loss of securities statusIf the securities certificates held in safe custody for the customer lose their status as securities following extinction of the rights they represent, they may be removed from the customer's securities account for destruction. Certificates held in safe custody in Luxembourg shall, where possible, be placed at the customer's disposal, if so requested. The customer shall be advised of the removal, possible delivery and possible destruction of the certificates. If the customer fails to give any instructions, Moventum may destroy the certificates after expiry of a period of two months after dispatch of such advice to the customer.

5. No exercise of voting rights for deposited shares at shareholders'meetings If voting shares are held in safe custody with Moventum's designated depositary bank, the customer may empower a third party to exercise his voting right at the stockholders' meeting. Neither Moventum nor the designated depositary bank shall exercise the customer's voting rights at the shareholders' meeting.

6. Miscellaneous a) Requests for Information by foreign stock corporations Foreign shares which a customer entrusts to Moventum for safe custody at Moventum's designated depositary bank are subject to the laws of the country in which the stock corporation is domiciled. The rights and duties of the shareholders are therefore determined by these laws. Under such laws, the stock corporation is frequently entitled or even required to obtain information about its shareholders. If Moventum is required under such laws in an individual case to furnish information, disclosing the name of the customer, it shall advise the customer. The same may apply to other securities, particularly to convertible bonds and bonds with warrants.

b) Lodgement/transferThese Special Conditions shall also apply if the customer arranges to have securities account credit balances transferred from another depository to Moventum's account with the designated depositary bank. A physical lodge of domestic or foreign securities with Moventum for safe custody is not possible.

Deposit guarantee scheme

Moventum is a member of the Association pour la Garantie des Depots Luxembourg ("AGDL”). The aim of the AGDL is to provide customers of Luxembourg banks and securities firms such as Moventum that are members of the AGDL a guarantee scheme to cover cash deposits and claims from securities transactions.

In the event of the insolvency of a member institution, the AGDL protects all cash depositors, guaranteeing compensation for their deposits up to the equivalent of EUR 100,000. In that event, the AGDL also protects all investors, guaranteeing compensation for their securities transaction claims up to the equivalent of EUR 20,000. Legal persons will benefit only under certain conditions from the AGDL guarantee scheme. Upon request, Moventum will provide the customer more information on the deposit guarantee scheme. For more information, customers can also consult the website at www.agdl.lu.

Customer - Moventum relationship

The customer - Moventum relationship is a legal, contractual relationship, the basis of which is the opening of a customer account at Moventum. In the framework of this, Moventum ensures that the assets of customers in Moventum’s accounts are entered separately from Moventum’s assets and those of the other customers. Customer deposits and financial instruments acquired therewith are primarily held in custody in a Moventum omnibus account at the Banque de Luxembourg (the "Bank"). With respect to cash holdings, the customer has a contractual claim against Moventum. The customer has a right in rem in terms of the financial instruments held in custody. Customer deposits are held in custody separately from Moventum’s own assets and under no circumstances will Moventum use those deposits to settle claims by creditors of Moventum (separate assets). Conversely, creditors of Moventum have no claims against customer assets. Moventum has, however, according to the General Terms and Conditions, a general right to lien on the assets of the customer and a right to offset their claims against the assets of the customer.

Insolvency

If Moventum should become insolvent, the customer is always fully protected. To wit, the law provides that in case of insolvency of an investment company, all assets, i.e. cash deposits and financial instruments, which the securities company holds in custody for its customers at a bank, are not part of the liquidation assets of the securities company. The bankruptcy administrator cannot, in this respect, access the corresponding assets, but in consultation with the customer and in his name, must exercise the rights of customers vis-à-vis the bank with regard to the cash deposits and financial instruments, and subsequently to transfer the cash amounts to the account indicated by the customer or to transfer the financial instruments to the securities account indicated by the customer.

If the customer agrees to the disclosure of his personal data and account information to the bank, the liquidator may, in his name, enforce this claim vis-à-vis the bank in such a way that the bank transfers the cash amounts directly into the account indicated by the customer, or transfers the financial instruments into the securities account indicated by the customer. While the enforcement of the claims mentioned above requires a certain amount of time, the customer can also decide to enforce his claim in the amount of up to EUR 100,000 in cash deposits and up to EUR 20,000 in securities accounts vis-à-vis the AGDL guarantee

scheme, on which these amounts are then paid to customers. In return, the customer must relinquish his claim on the AGDL deposit guarantee fund in the corresponding amount. The remaining amount due to the customer, divided into cash deposits and financial instruments, is to be claimed as described above.

If in the framework of the insolvency proceedings, but in relation to a specific financial instrument held in custody by Moventum for its customers at the bank, on an exceptional basis there are not enough financial instruments available to satisfy the claims of all these customers, then these customers bear the loss in proportion to their respective number of financial instruments held in custody, unless the loss can be covered by financial instruments of the same type belonging to Moventum. The same applies if on an exceptional basis, insufficient cash deposits held in custody at the bank by Moventum for its customers are available to satisfy the claims of all customers. Furthermore, in this case the AGDL guarantee scheme comes into effect.

If the bank should become insolvent, the customer is also protected because the customer’s claim vis-à-vis Moventum with regard to the cash deposits and financial instruments is not affected and will remain valid. However, if in relation to a specific financial instrument held in custody by Moventum for its customers at the bank, on an exceptional basis Moventum only requests the return of a number of financial instruments that is insufficient to satisfy the claims of all these customers, then these customers bear the loss in proportion to their respective number of financial instruments held in custody. Customers cannot enforce their claims to the financial instruments vis-à-vis the bank. The same applies if on an exceptional basis, insufficient cash deposits held in custody at the bank by Moventum for its customers are available to satisfy the claims of all customers.

In the event of insolvency, a differentiation is to be made between Moventum and the bank: With regard to the financial instruments, the customer has a right of segregation, which protects the customer to that extent. If in the framework of the insolvency proceedings on the part of the bank, but in relation to a specific financial instrument held in custody by Moventum for its customers at the bank, on an exceptional basis there are not enough financial instruments available to satisfy the claims of all these customers, then these customers bear the loss in proportion to their respective number of financial instruments held in custody, unless the loss can be covered by financial instruments of the same type belonging to the bank. With reference to the cash deposits, the above does apply to the insolvency of Moventum, i.e. the cash deposits of the customer are not included in the liquidation assets of Moventum. With regard to the combination of the insolvency of Moventum with the insolvency of the bank, however, there is the risk that the cash deposits cannot be separated from the liquidation assets of the bank. The deposit protection of AGDL can also apply here, because the bank is also a member of the AGDL.

Information on the Protection of Customer Assets

Intermediary Fee Schedule

Platform Processing Fee

Platform - A processing fee of ______ % will be levied on all incoming cash amounts. This will be deducted from the client’s cash account.

Intermediary - A of ______ % will be levied on all incoming cash amounts and paid to your Intermediary. This will be deducted from the client’s cash account. In accordance with its legal obligations, MOVENTUM S.C.A. must identify the beneficial owner(s) of the assets of the account.

Annual Account Fee

This fee is levied to cover the cost of administering the client/s account. It is a fixed cost of _________ EUR per annum. This is deducted from the clients cash account within 28 working days of receipt of incoming client monies and/or at the start of the following year.

This cost is remunerated to Moventum at 36 Euro per annum and Capital Advisory Group (UK) Ltd at ________ EUR per annum.

Annual Service Fee

______% p.a. is charged to the client’s cash account per annum. This is charged quarterly by Capital Advisory Group (UK) Ltd. Please note that this fee is waived for the first 12 months following initial cash transfer.

______% p.a. is charged to the client’s cash account per annum. This is charged by the intermediary.

Above fees are calculated using a monthly AUM average, on a pro rata basis at the end of each quarter.

Initial Fee

Published rate as determined by Fund House. This fee is only applicable to Mutual Funds.

Exit Fee

Ticket Fees

0.2% per transaction (Euro 5 minimum and 25 Euro cap or currency equivalent). This fee is only applicable to Mutual Funds0.2% is levied upon per transaction for purchases of structured products. 0.75% is levied per transaction for direct equities.0.3% is levied per transaction for ETF products.

Custodian Fees

0.1% per annum. This is taken quarterly at 0.025% per quarter. This fee is only applicable to structured products and other applicable products as determined by Moventum Ltd.

Minimum Cash Balance

All applicable Fees to the Account can only be deducted if the account has sufficient cash balance available, for this reason a default ______ % cash balance is retained within your account.

All of the above described fees and commissions are paid directly to the Capital Advisory Group (UK) Ltd except the Ticket and Custodian Fees.

Signature First Account Holder Signature Second Account Holder Place and Date (dd/mm/yyyy)

Customer Signature

7

0.1% charged by Capital Advisory Group (UK) on Exit Fee subject to a minimum of 50 Euro’s levied on cash withdrawals from the Investment Platform ______ % in the first year declining by ______ % per _______ years.

Conflict of Interest Policy eng September 2007

INFORMATION ON HANDLING CONFLICTS OF INTERESTS

(Conflict of Interest Policy)

Conflicts of interest cannot always be excluded, particularly in a company, which provides, among others, numerous investment services. According to the specifications of the financial market directives MiFID we therefore inform you in the following about our extensive provisions in connection with handling these conflicts of interest.

Conflicts of interest may arise between Moventum S.C.A., our executive management, our staff, our providers of services or other persons affiliated with us and our clients, or between our clients in the case of the following investment or ancillary services:

Investment brokerage (brokering of business transactions involving the acquisition and sale of financial instruments),

portfolio management (administration of individual or several portfolios of financial instruments for others on a discretionary basis),

Investment advice (giving personal recommendations to clients or their representatives which refer to transactions with certain financial instruments, provided the recommendation is supported by an analysis of the personal situation of the investors or is presented as being suitable for the latter and is not exclusively issued through distribution channels or made available to the public).

To avoid irrelevant interests to have an influence on the execution of the order, for instance, we and our staff have committed ourselves to high ethic standards. We expect great care and fairness, correct and professional action, the adherence to market standards and particularly the consideration to the client's interests - at all times. Irrespective thereof, we have arranged a Compliance Organisation under the direct responsibility of executive management which governs identification, prevention and management of conflicts of interests. Among others and in detail, the following measures are coped with: all members of staff with whom a conflict of interest may arise in the scope of their activities, are committed to disclose all their transactions in financial instruments. All the transactions of respective staff made in our offices are under constant control. Moventum has strict regulations governing the acceptance of gifts and other benefits, particularly with regard to the staff members involved in drawing up financial analyses.

We would like to draw your attention particularly to the following points:

If, as an exception, conflicts of interest cannot be avoided by the above method of task assignment or by our Compliance Organisation, we will draw the attention of our clients to the relevant fact in correspondence with this policy. In these cases we will, if need be, refrain from giving our clients an assessment, advice or recommendation in connection with the respective financial instrument.

When distributing securities we, as a rule, receive inducements from investment companies and securities issuing houses. These include subsequent sales-dependant brokerage commissions which we are paid by the investment companies from the administration payments which they receive. The above payments furthermore include selling commissions which are provided by issuers of securities in the form of placement commissions, corresponding discounts on the issue price (Discount) and trail commissions. In addition, we receive initial sales charges ourselves provided we charge them when selling investment shares or other securities. The reason for the receipt of these inducements, or other incentives respectively, is to provide efficient and high-quality infrastructures for the acquisition and sale of financial instruments. The receipt or the granting of inducements are revealed to our clients. We are glad to inform you of the details upon request.

We grant independent brokers who supply us, with or without reference to a concrete transaction, clients or individual transaction businesses, the commissions revealed above in full or in part for their brokering activities. In exceptional cases performance related commissions are paid. Furthermore, brokers may also receive, in addition to the commissions forwarded by us, direct payment from third parties, particularly investment companies and issuing houses.

In connection with the service of portfolio management, you as client have delegated the administration and thus the decision to buy or sell financial instruments to your portfolio manager. We therefore, in the scope of the investment directives agreed upon with you, make the decisions regarding the acquisition and sales without having to obtain your agreement in the respective individual case. This constellation may increase an existing conflict of interests. We fend off the resulting risks using suitable organisation measures, particularly by an investment selection process focused on the client's interests.


General Information for Clients Regarding Inducements

The following information contains a summary of the inducements which Moventum S.C.A. (“Moventum”)receives from third parties (Inducements). We shall be happy to inform you in detail regarding Induce-ments upon further request.

Moventum offers a high-quality solution for your investment in mutual funds and other financial instru-ments. Together with your financial advisor we support you when making your investment decisions. It goes without saying that this support is given while considering your experience and know how in transac-tions with financial instruments, your financial standing, your investment targets, the extent to which you are willing to take a risk in respect of the investment.

Our service involves considerable input, both with regard to human resources and also organisation. In this connection we receive Inducements from our sales partners in the form of monetary payments or other monetary benefits. These funds are used to set up an efficient and high-quality infrastructure and thus to continue optimizing and maintaining the quality of our services in your favour.

Moventum receives the following payments for its services in the sector of investment sales based on the distribution agreements concluded with the investment companies:

Usually, when purchasing investment shares a front-end load is due. The amount depends on the type of investment fund and the issuing investment company. It may vary between 0 and 6 % of the sum to be invested.

In addition, Moventum receives trail commissions for the portfolios of its clients. The trail commission is settled by the administration fees for the investment fund and is granted for the period of holding the in-vestment shares. The amount of this commission depends on the respective arrangement of the distribu-tion agreement and the type of investment and may vary between 0 and 1.55 % p.a. (on average 0.5 % p.a.).

According to the sales contract concluded with your financial advisor, Moventum passes both front-end load as well as trail commissions in full or in part to your financial advisor or to the latter’s sales organisa-tion respectively, to settle the sales transaction activities.

Should you require further details on the above payments, please feel free to ask your financial advisor for this information.

Information on Inducements eng March 2010


PreambleThe following execution principles are applied if a client instructs Moventum S.C.A. (“Moventum”) to buy or sell financial instruments (securities and other financial instruments) or Moventum makes disposals particularly regarding the purchase and sale of financial instruments in the course of the service of portfolio management for a client portfolio within the scope of the investment directives to this depot.

1. best execution obligation1.1 In the scope of the general obligation of Moventum to protect the interests of the client, Moventum has made arrangements to ensure that the best possible result is obtained for the client when executing client orders and making disposals to a client portfolio in the course of the service of portfolio management.

1.2 The best possible result is primarily determined on the basis of the criteria of total consideration representing the price of the respective financial instrument and the costs of execution. Other factors, e.g. speed and likelihood of execution are taken into account, if they are instrumental in delivering the best possible result in terms of total consideration.

2. selected intermediaries2.1 In order to ensure the best possible results to the clients Moventum has selected the following intermediary to execute orders:

banque de luxembourg2.2 Orders to buy and sell financial instruments are executed by the respectively selected investment firm according to its own arrangements to obtain the best possible results.

3. Priority of instructions for the execution of ordersInstructions by clients concerning the execution of an order are always given priority. When executing an order to buy or sell financial instruments, Moventum will follow the instruction issued by a client in respect of the part or aspect of the order to which the client’s instruction relates and if necessary will instruct the intermediary to which it transmits the order for execution correspondingly.

note: It is expressly pointed out to the client that, when executing a client order according to the instruction issued by the client, Moventum is treated as having satisfied its best execution obligations in respect of the part or aspect of the order to which the client instruction relates.

4. issue and redemPtion of shares in investment fundsThe issue and redemption of the shares in investment funds will be executed exclusively via the fund company by the intermediary selected by Moventum. Contrary instructions might not be given. According to the applicable directives, the issue and redemption of shares in investment funds by the fund company are not subject to the best execution obligations.

5. review of the execution PrinciPlesThe selection of intermediaries made in line with these execution principles to which the client orders are transmitted for execution, or to which orders in connection with investment decisions are transmitted by Moventum in the course of the service of portfolio management respectively, is reviewed by Moventum on an annual basis. In addition, Moventum will carry out a review when there is any reason to believe that important criteria on which the selection is based with regard to a selected investment firm are no longer applicable. Moventum will inform the Client of any modifications regarding their selection.

Order Execution Principles

Information of risks on financial instruments

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RISK AWARENESS

Overview of the main characteristics and risks of financial instruments


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The purpose of the information contained in the present document is to give a brief outline of the main characteristics and risks associated to financial instruments in which you may invest or the Investment Company may invest on your behalf. Should you have any specific queries or if you are interested in particular financial instruments, we recommend that you contact your financial advisor if you need further information. This document does not deal with the tax or legal consequences pertaining to transactions in financial instruments. Therefore, we recommend that you request tailor-made advice on these issues from specialists before any investment.

I. Basic risks These risks apply to any type of investment. However, depending on the relevant financial instrument, one or several of the risks described herebelow may apply cumulatively, therefore entailing an overall increase in the level of risk incurred by the investor.

1) Economic risk Changes in the activity of a market economy always influence prices of financial instruments and exchange rates. Prices are fluctuating more or less according to the downward or growth trends of the economic activity. The duration and scope of the economic downward or growth trends are variable, as are the repercussions of those variations on the different sectors of the economy. In addition, the economic cycles may vary depending on the different countries. Failure to take these factors into account as well as a mistaken analysis of the development of the economy when taking an investment decision may lead to losses. In particular, one must take into account the impact of the economic trends on the evolution of investment prices. Depending, inter alia, of economic trends, good past performance of a financial instrument is no guarantee of good future performance of the same investment. Price losses, entailing losses to the investor, are always possible. Therefore, an investor must at all times ensure that his investments are appropriate in view of the economic situation and, if necessary, make necessary changes in his portfolio.

2) Risk of inflation Losses in value of a currency may cause financial damage to an investor in relation to investments made by the latter. In this context, such a loss in value may have an influence on the actual value of the existing patrimony of the investor as well as the actual yield that ought to be realized through this patrimony. One should thus take into account actual yields, i.e. the difference between the nominal interest rate and the inflation rate for fixed-rate products. Therefore, when the inflation rate exceeds the yield generated by the financial instruments (gains in capital and interests), this will lead to a loss in the value of the capital actually invested.


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3) Country risk and transfer risk It may happen that a foreign debtor, although solvent, be unable to pay interest or repay his debts upon maturity or even completely defaults on his debts due to the unavailability of the foreign currency or to currency exchange controls triggered, for instance, by economic, political or social instability in the relevant country. The ensuing unavailability of the foreign currency or currency exchange controls may indeed lead to defaults on payments for the investors. Concerning financial instruments issued in a foreign currency, the investor risks to receive payments in a currency which turns out not to be convertible anymore because of exchange controls. Moreover, even in the absence of any crisis, state intervention in some economic sectors (e.g. nationalisation) may have an influence on the value of investors’ assets. In certain extreme cases, investors’ assets can even be confiscated or frozen by local authorities or investors’ rights can be restricted. As a matter of principle, there is no means to hedge against such risks. However, country ratings published in the financial press can be a useful guide for investors from that point of view. Finally, more generally, instability in the political and/or economic and/or social situation of certain countries may lead to quick price fluctuations.

4) Exchange rate risk Since currency exchange rates fluctuate, there is an exchange rate risk whenever financial instruments are held in a foreign currency. Depending on exchange rates, the same investment may generate profits or entail losses. Moreover, since the activities of companies are, to a greater or lesser extent, related to exchange rates, fluctuations in these latter rates are likely to have an impact on the price of the financial instruments they issue. Material elements affecting the exchange rate of currencies are in particular the inflation rate of a country, the gap between domestic interest rates and foreign rates as well as between domestic and foreign productivities, the assessment of economic activity forecasts, the political situation in the world and the safety of investments in general. Additionally, psychological events, such as lack of confidence in political leaders, may weaken the exchange rate of a domestic currency.

5) Liquidity risk The possibility for an investor to sell financial instruments at any time at market prices is described as liquidity. Therefore, insufficient liquidity of the market may prevent an investor from selling off financial instruments at market prices. Fundamentally, a distinction has to be made between a lack of liquidity caused by market offer and demand and a lack of liquidity due to the characteristics of the financial instrument or market practices.


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A lack of liquidity due to market offer and demand arises when the offer or the demand for one financial instrument at a certain price is non-existent or extremely low. Under those circumstances, purchase or sell orders may either not be carried out immediately, and/or only partly (partial execution) and/or at unfavourable conditions. In addition, higher transaction costs may apply. A lack of liquidity due to the inherent characteristics of the financial instrument or to market practice may occur, for example, because of a lengthy transcription procedure for a transaction on registered shares, long performance delays because of market practices or other limitations of trade, short-term liquidity needs that cannot be covered quickly enough by the sale of the financial instruments or long lock-in periods before being entitled to execute a transaction, in particular for alternative investment funds.

6) Psychological risk Irrational factors may affect the overall evolution of prices, such as for example tendencies, opinions, rumours which may cause important drops in prices, although the financial situation and future perspectives of the relevant companies have not evolved unfavourably.

7) Credit risk Credit-financed purchases of financial instruments contain several additional risks. On the one hand, additional collateral may be required – sometimes at very short notice - in case the credit limit guaranteed is exceeded due to the evolution of the price of the collateral. If the investor turns out to be unable to provide such collateral, the Investment Company may be forced to sell deposited financial instruments at an unfavourable moment. On the other hand, the loss suffered due to an adverse evolution of the price of a financial instrument may exceed the initial investment amount. Fluctuations of prices of the financial instruments constituting the collateral may influence the capacity to repay loans in a negative way. One needs to be aware that, as a consequence of the leverage effect entailed by the purchase of credit-financed financial instruments, the sensitivity to price fluctuations of those investments will be proportionally more important with the consequence that chances of gains increase, as do the risks of losses. The risks entailed by such purchases rise according to the importance of the leverage.

8) Interest rate risk Generally speaking, fluctuations in interest rates, whether short-term or long-term rates, may have substantial adverse consequences on the prices of financial instruments.

9) Risk of insolvency of the issuer or of the clearing and settlement system In case of insolvency of the issuer of financial instruments or of the clearing and settlement system on which those instruments are negotiated, an investor may loss part or all the monies he has invested.


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10) Additional risks on emerging markets Emerging markets are the markets of the countries in which the percentage share of income per inhabitant is considered as average or low by the World Investment Company. More practically, this concept encompasses markets established in countries which are characterized by a certain degree of political instability, relatively unpredictable financial markets and economic growth patterns, a financial market which is still at the development stage and a weak economy. This concept of emerging markets encompasses a large number of markets established in South America, Eastern Europe and certain Asian countries. Generally speaking, on these markets, the risks identified above are enhanced. Indeed, political or economic changes (e.g. inflation, exchange rate) will have more influence on investments’ prices in emerging markets than in other countries. Likewise, emerging markets usually react more deeply and durably in case of natural disaster or war. Moreover, emerging markets often have less elaborated rules for clearance and settlement of transactions with the consequence that processing errors or default in delivery of instruments are more likely to occur. Finally, regulatory supervision over these markets and rules to protect investors are often weak.

11) Other basic risks

Information risk It is the risk of poor investment decisions arising from a lack of information, incomplete information or inaccurate information. This may be due in turn to the use by the investor of unreliable sources, the misinterpretation of originally accurate information by the latter or can be due to communication errors. Transmission risk When placing an order, the investor must provide certain details necessary for its execution by the Investment Company (financial instrument, type of order, volume, execution date, etc…). The more precise the order placed is, the smaller the risk of transmission error is. Risks pertaining to transaction costs The Investment Company as well as other domestic or foreign-based parties may be involved in the execution of an order (e.g. brokers), in which case the fees and commissions of these persons will be passed on to the investor. An investment becomes profitable only once all these costs have been covered.


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II. Specific investment risks A. Term deposits These are cash deposits remunerated at a fixed maturity date and rate, determined in advance.

(i) Characteristics: • Yield: payment of interests; • Duration: short-term (up to 4 years), medium-term (4-8 years) or long-term (more than 8

years); • Interests: interests depend on the terms and conditions of the deposit; e.g. fixed interest for

the entire duration or variable interest often linked to financial market rates (e.g. LIBOR or EURIBOR).

(ii) Advantages:

Depending on market conditions, these products may provide a higher return than other fixed-income products.

(iii) Risks: These products are mainly subject to the risks of inflation, exchange and interest rate and of insolvency of the counterparty, as described under I. above. B. Bonds A bond is a certificate or evidence of a debt on which the issuing company or governmental body promises to pay the bondholders a specified amount of interest for a specified length of time, and to repay the loan on the expiration date. A bond may be in bearer or registered form. At issuance, the par value of one bond represents a fraction of the total amount of the loan. The interest payments on bonds may be either fixed or variable. The duration of the loan as well as the terms and conditions of repayment are determined in advance. Certain structured products may take the form of a bond and, therefore, these products will be described under the chapter “structured products”. The purchaser of a bond (the creditor) has a claim against the issuer (the debtor).

(i) Characteristics:

• Yield: interest payments, possible increases in value (difference between the purchase/issuance price and the sale/redemption price);

• Duration: short-term (up to 4 years), medium-term (4-8 years) or long-term (more than 8

years);


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• Currency: national currency of the investor or foreign currency. It can be provided that repayment of capital and interest payments can be made in different currencies. In such a case, an option can be associated to the bond in order to limit the exchange rate risk;

• Form: individual documents with specific nominal values (which can be delivered to the investor) or collectively represented by a global certificate, which is deposited with a custodian Investment Company;

• Issue price: at par (100% of the nominal value), below par (the issue price is lower than the

nominal value) or above par (the issue price is higher than the nominal value); • Place of issuance: it can be the domestic market of the investor or also a foreign market; • Repayment:

- scheduled repayment: unless otherwise provided for or unless the issuer becomes insolvent, the loans are repaid either on the maturity date, or through annual instalments (generally after a lock-in period), or at different dates determined by drawing lots (generally after a lock-in period);

- unscheduled repayment: the issuer may reserve the right to repay at a date he will determine, at his own discretion, at a later stage;

• Interests: interests depend on the terms and conditions of the loan; e.g. fixed interest for the

entire duration or variable interest often linked to financial market rates (e.g. LIBOR or EURIBOR). In this latter case, a minimum and/or maximum rate can be provided;

• Particular features (e.g. relations between the issuer and the investor): set out in the terms

and conditions of issue of the relevant bond.

(ii) Advantages:

Depending on market conditions, these products may provide a higher return than other fixed-income products.

(iii) Risks:

1) Insolvency risk

The issuer risks to become temporarily or permanently insolvent, entailing his incapacity to pay back interests and/or the principal amount of the loan. The solvency of an issuer may change depending on the evolution of certain factors during the life of the bond. This may be due in particular to the general evolution of the economy, changes related to the company, the economic sector of the issuer and/or the relevant country as well as political changes entailing substantial economic consequences. This risk is more or less important depending on whether the bonds are issued by a governmental body or a private institution. This risk is also related to the nationality of the issuing governmental body or the type or sector of activity of the private institution which issued the bonds (credit institution, industrial undertaking, etc…) as well as, more generally, the creditworthiness of the latter.


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This risk is more limited if the bonds are collateralised. However, in such a case, the additional protection granted to the investor will have to be assessed on the basis of the status and creditworthiness of the guarantor. From that point of view, it should be noted that, as a matter of principle, bonds issued by entities which are considered as safe generally offer lower returns. However, the risk of total loss of the investment is correlatively lower. The deterioration of the issuer's creditworthiness does equally influence in a negative manner the price of the relevant financial instruments.

2) Interest rate risk The uncertainty concerning the evolution of interest rates entails that the purchaser of a fixed-rate financial instrument bears the risk of a decrease in the price of such financial instrument in case of a rise in interest rates. The sensitivity of the bonds to fluctuations in interest rates depends in particular on the period remaining until maturity of the bond and the level of nominal interest rates.

3) Anticipated refunding risk The issuer of a bond may include a provision allowing him to repay earlier the bondholder in case for instance of a decrease in interest rates in the markets. Such an early repayment can have an impact on the yield expected by the investor.

4) Risks specific to bonds redeemable by drawing lots The maturity date of bonds that are redeemable by lot is difficult to determine so that unexpected changes may take place in the yield of such bonds.

5) Risks related to the country of issue

If the bond is issued on a foreign market, it will in principle be governed by the law of the country of issue. The investor must thus inquire about the possible impact of the applicability of this foreign law on his rights.

6) Risks of specific kinds of bonds

Concerning some kinds of bonds, additional risks may exist: e.g. floating rate notes, reverse floating rate notes, zero coupon bonds, bonds in a foreign currency, convertible bonds, index or option-linked bonds, subordinated bonds etc… For those types of bonds, the investor should make inquiries about the risks described in the issuance prospectus and not purchase such financial instruments before being certain to master all risks. The developments herebelow only aim at providing a brief outline on the additional risks incurred by the investor in relation to specific bonds.


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Floating rate bonds Floating rate bonds can take several forms, such as for instance:

- floor floater bonds, which are variable-interest bonds which pay a minimum level of interest. Therefore, in the event that the sum of the reference rate and the spread falls below this level, the investor will receive payment of interests at least at the minimum rate determined in advance. Conversely, for cap floater bonds, the rate of interest paid to the investor is limited to a maximum amount determined in advance.

For these bonds, it is not possible to anticipate, as of their issue, the actual yield of the investment since the latter vary according to the fluctuations of market rates;

- for certain variable-interest bonds, it can be provided that the interest rate moves in

the opposite direction to market rates (i.e. reverse floating rate bonds). For these medium or long-term bonds, the interest rate payable to the investor is calculated according to the difference between a fixed rate of interest and a reference rate (e.g. 16% minus LIBOR). This means that the investor’s interest income rises when the reference rate falls. The price of these bonds is usually subject to higher market fluctuations than the fixed-rate bonds having the same maturity;

- there are also convertible floating rate bonds which give the investor or the issuer

(depending on the terms and conditions of the bonds) the right to convert the note into a normal fixed-interest bond. If the issuer reserves this right, the actual yield of the bond may be lower than that contemplated by the investor.

Zero bonds Zero bonds do not have interest coupons attached. Instead of periodic payments of interests, the investor receives the difference between the redemption price and the issue price (in addition to the repayment of the principal amount). Such bonds are usually issued at a discount to their nominal value, and redeemed on maturity at par. The size of the discount granted to the investor depends on the maturity of the bond, the borrower's creditworthiness and prevailing market interest rates. Hence, such bonds offer investors a fixed lump-sum payment at a future date if the bond is held until maturity (which may have various tax implications depending on the countries). On the contrary, if the bond is sold before maturity, the investor will only receive payment of the sale price of the bonds. Therefore, if market interest rates increase, the price of these bonds falls more sharply than for other bonds with the same maturity and credit rating. Moreover, in case of foreign currency denominated zero bonds, there is also an increased exchange rate risk because interest payments are not made on a regular basis over the life of the bond but there is only payment of a lump sum at a future date determined in advance. Combined-interest bonds or step-up bonds For combined-interest bonds or step-up bonds, the investor does not receive interest payments at a single, fixed rate over the entire life of the bond. However, such bonds are similar to fixed-rate bonds in so far as the interest rate is determined in advance and does not depend on


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fluctuations in market rates. Instead, the rate of interest only changes during the term of the bond, following a pattern agreed at the time of issue. Indeed, with combined-interest bonds, it is agreed that there will be no coupon for the first years of the life of the bond but an above-average coupon will be paid to the investor for the remaining years. These bonds are usually issued and redeemed at par. With step-up bonds, a relatively low coupon is paid initially, and a very high one is paid to the investor for the following years. These bonds are usually issued and redeemed at par. Phased interest rate bonds These bonds are actually a hybrid of fixed and variable-interest notes. They usually have a maturity of 10 years, and pay a fixed coupon for the first years. Afterwards, during a period of several years, the investor will receive interests calculated on the basis of a variable interest rate in line with market rates. For the last years of the life of the bond, the bond reverts to paying a fixed rate of interest to the investor. Index-linked bonds For these bonds, the redemption amount and/or interest payments are determined on the basis of the level of an index or of a managed account determined in advance - at redemption or on the interest payment date – and thus are not fixed. These bonds are often zero bonds. Such bonds are usually issued in two "tranches": bull bonds (bonds which appreciate in value if the index rises) and bear bonds (bonds which appreciate in value if the index falls). The investor runs the risk of price losses if the value of the index falls (bull bonds) or if the value of the index rises (bear bonds). Subordinated bonds For these bonds, investors ought to inquire about the ranking of the debenture compared to other debentures of the issuer since, in case of a Investment Companyruptcy of the issuer, those bonds will only be reimbursed after repayment of all higher ranked creditors (preferential and pari passu bonds). However, generally, the better the position of the creditor in case of insolvency is, the lower the return of the bond will be. Convertible/warrant bonds In this case, the investor is granted the right to exchange the bonds, at a specific time or within a specific period, for shares in the issuer at a ratio determined in advance. There is usually a minimum lock-in period during which an investor cannot exercise his right of conversion. In case the right of conversion is not exercised, the bonds remain fixed-interest notes, repayable at par on maturity.


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Because they offer a conversion right, such bonds usually offer a lower interest rate than ordinary bonds. The price of these bonds is essentially determined by the price of the underlying shares. Indeed, if the price of the shares drops, the price of the bonds falls as well. Therefore, the risk of price losses is higher than for bonds without conversion rights (but usually lower than the risk of price losses associated to a direct investment in the relevant shares). There are also bonds which give the investor the right to subscribe for shares, in addition to the bond and not as an alternative. This subscription right is certificated by a warrant which is detachable from the bond. This warrant can be traded separately. The shares in the issuer can be purchased by the investor on surrender of the warrant, on terms agreed in advance. The investor continues, in addition hereto, to hold the bond until maturity. As for bonds with conversion rights, the periodic interest payments are usually relatively low. Moreover, the price of such bonds, with the warrant attached, will equally track the price of the underlying shares. If the bonds are without the warrant attached, they amount to traditional bonds and, therefore, their price is mainly determined by market rates. Certain special forms of the bonds described in the preceding paragraph give the holder of the warrant the right to buy or sell another bond determined in advance at a fixed price. C. Shares

A share is a certificate evidencing the rights of the shareholder, to whom it is granted, in a company. Share may take bearer or registered form. One share of stock represents a fraction of the share capital of a corporation.

(i) Characteristics: • Yield: dividend payments and increases in value of the financial instrument are possible; • Shareholder's rights: financial and ownership rights; those rights are determined by the law

and the articles of incorporation of the issuing company; • Transferability: unless otherwise provided by law, the transfer of bearer shares does not, as a

matter of principle, require any formalities, as opposed to the transfer of registered shares which is often subject to limitations

(ii) Advantages:

In principle, the investor has voting rights and shares the profits of the company. He may equally obtain higher returns than for investments in term deposits or bonds.

(iii) Risks:

1) Entrepreneurial risk A share purchaser is not a creditor of the company, but makes a capital contribution and, as such, becomes a co-owner of the corporation. Consequently, he is participating in the development of the company as well as in the related opportunities and risks, which may entail unexpected fluctuations in the value of such investment. An extreme situation would consist in


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the Investment Companyruptcy of the issuing company, which would have as a consequence the complete loss of the invested amount.


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2) Price fluctuation risk Share prices may undergo unforeseeable price fluctuations causing risks of losses. Increases and decreases in prices in the short, medium and long-term alternate without it being possible to determine the duration of those cycles. As a matter of principle, the general market risk must be distinguished from the specific risk attached to the company itself. Both risks influence the evolution of share prices.

3) Dividend risk The dividend of a share mainly depends on the profit realised by the issuing company. Therefore, in case of low profits or even losses, it may happen that dividend payments are reduced or that no payments are made. D. Bonus certificates

Bonus certificates represent patrimonial rights as defined in the terms and conditions of issue of those bonds.

(i) Characteristics: In general, they come in the form of par value debt instruments that entitle their holder to a part of the profit of the company. As a matter of principle, fixed or variable distribution bonus certificates must be distinguished from bonus certificates with option or conversion right.

(ii) Risks:

1) Absence of distribution or reduction of repayment In case of losses by the issuing company, interest payments may be halted if no minimal interest payment has been provided for. In addition, the repayment of the principal amount may be reduced.

2) Issuer risk The Investment Companyruptcy of the issuer entails the complete loss of the invested funds. E. Investment funds

An investment fund is a company or an organized joint ownership which is collecting funds from a certain number of investors and which is engaged in reinvesting those funds according to the principle of risk spreading and to make its stockholders or members benefit from the results of its asset management.


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Characteristics: • Open-ended funds: in an open-ended fund, the number of shares/units and, consequently, of

participants cannot, in principle, be determined. The mutual fund may issue new shares/units or redeem existing shares/units. Towards investors, the mutual fund is obliged to redeem shares/units, at its own expenses, at the agreed redemption price and in line with the contractual provisions;

• Closed-ended funds: in a closed-ended fund, the issue of shares/units is limited to a number

determined in advance. As opposed to open-ended funds, the redemption of the shares/units by the fund is not mandatory. Shares/units may only be sold to third parties or, in some cases, on the market. The price of the shares/units depends on market offer and demand.

(i) Advantages:

The holder of shares/units receives part of the income of the fund. As a result of the diversification of the underlying investments made by the fund, the chances of profits increase or, at least, the risks of losses are limited. For the investments made by the fund, the latter usually benefits from better market conditions (in particular for costs) than the conditions which would apply to the investor if he invested directly in the same products.

(ii) Risks:

1) Management risk

Since the yield of investments made by a fund depends, among other factors, on the capacities of the managers and on the quality of their decisions, errors in the management of the fund may lead to losses or loss of profits.

2) Risk of a drop in share/unit prices Investment fund shares/units bear the risk of a drop in their prices, this drop reflecting the decrease in value of the financial instruments or currencies that compose the asset portfolio of the fund, any other things remaining equal. The higher the diversification of the investments made by the fund is, the lower at least theoretically, the risks of losses are. Conversely, risks are more important if the fund makes more specialised and less diversified investments. It is therefore important to pay attention to the general and specific risks attached to financial instruments and currencies contained in the fund’s portfolio. The investor must inquire about the risks specific to each fund by consulting, among others, the relevant prospectus. F. Derivatives


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Derivatives are financial instruments the value of which varies according to the value of an underlying asset; the underlying asset may be the price of a share, a market index, an interest rate, a currency, the price of raw materials or even another derivative. Concerning derivatives, a distinction must be made in particular between: a) option transactions, which give to one of the parties the right, but not the obligation, to enter

into a transaction. One party (the seller of the option) is irrevocably bound to perform while the other one (the purchaser of the option) is free to exercise the option or not;

b) forward transactions, where the parties enter into a transaction which will have to be

performed at a specified date in the future. In a forward transaction, parties bind themselves irrevocably to perform the transaction concluded between them at the specified date.

Transactions on such products trigger higher risks of losses and can even lead to the total loss of the invested funds. Since such transactions can lead to margin calls over the life of the product, investors must ensure that they have sufficient liquid assets before entering into such transactions.

a) Option transactions Options are derivative instruments the value of which tracks the evolution of the value of the underlying asset. The purchaser of an option receives, after having paid a premium to his counterpart, the seller of the option, the right to purchase (call) or to sell (put) the underlying asset at maturity or during a certain period for a strike price determined in advance. The characteristics of the option can be standardised or defined on a case-by-case basis between the purchaser and the seller.

(i) Characteristics: • Duration: the duration of the option starts from the day of the subscription until the day of the

maturity of the option right; • Link between the option and the underlying asset: this link underlines the number of units of

the underlying asset that the holder of the option has the right to purchase (call) or to sell (put) by exercising his option right;

• Strike price: the strike price is equal to the price agreed upon earlier at which the holder of the

option may purchase or sell the underlying asset when he exercises his option right; • Strike date: options which can be exercised on any trading day up until the maturity date are

called “American style” options. Options which can be exercised only on their maturity date are called “European style” options. The latter can nonetheless be traded on the secondary market before their maturity if the market is liquid;

• Conditions of exercise: the option can be with physical settlement, in which case the buyer of

a call option can demand physical delivery of the underlying asset against payment of the strike price or the buyer of a put option can deliver to the seller of the option the underlying asset, against payment of the strike price by the seller. The option can also be with cash settlement, in which case the difference between the strike price and the market value of the underlying asset is due, provided nonetheless that the option is “in-the-money”;


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• Options “in-the-money”, “out-of-the-money”, “at-the-money”:

A call option is “in-the-money” if the market value of the underlying is higher than the strike price. Conversely, a call option is “out-of-the-money” if the current market value of the underlying asset is lower than the strike price. A put option is “in-the-money” if the market value of the underlying asset is lower than the strike price. Conversely, a put option is “out-of-the-money” if the current market value of the underlying asset is higher than the strike price. When the market value and the strike price are the same, the option is “at-the-money”;

• Price of the option: The price of an option depends on its intrinsic value as well as on a variety of factors (time value), in particular the remaining life of the option and the volatility of the underlying asset. The time value reflects the chance that the option will be “in-the-money”. Therefore, this latter value is higher for long duration options with a very volatile underlying asset.

• Margin: over the lifetime of an option, the seller must provide as collateral, either the corresponding amount of the underlying asset or another form of collateral. The margin is determined by the Investment Company. Markets stipulate a minimum margin for listed options. If the margin cover provided by the investor proves to be insufficient, the Investment Company is entitled to request additional collateral, sometimes at a very short notice;

• Form:

Option certificates (warrants, listed options): the rights and obligations associated to the relevant option are securitised. They are sometimes listed on the market. Traded options: these are standardised options for which the rights and obligations are not securitised and which are traded on certain specific markets. Over-the-counter (OTC) options: these are options traded outside a stock-exchange or agreed directly off-market between the parties. Their level of standardisation depends on market practices. They can also be tailor-made to meet investors’ needs. This type of option is not listed and rarely takes the form of a certificate;

• Leverage: every change in the price of the underlying asset entails a proportionally higher

change in the price of the option right; • Purchase of a call or a put: the buyer of a call option speculates on a rise of the price of the

underlying over the life of the option, which causes an increase in the value of his option right. Conversely, the buyer of a put option benefits from a drop in the price of the underlying;

• Sale of a call or a put: the seller of a call option anticipates price drops of the underlying asset

whereas the seller of a put profits from a rise in the value of the underlying asset. • Information notices


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In addition hereto, the attention of investors is specifically drawn to the information notices relating to option trading, issued by the markets on which such options are traded, and in particular the following documents: 1. “Characteristics and Risks of Standardized Options”, notice relating to options traded on the Chicago Board Options Exchange, available upon request at the Investment Company, and on the Internet website www.cboe.com; 2. The information notice relating to options traded on the Euronext MONEP market (market for the options traded in Paris), available upon request at the Investment Company, and on the Internet website www.euronext.com; 3. «Officieel bericht opties en futures» relating to options and futures traded on AEX, available upon request at the Investment Company. In signing this document the client recognises and accepts that the Investment Company may conclusively consider that when transmitting an order relating to options traded on such markets the client has beforehand taken due note of the information notices issued by such markets.

(ii) Advantages: Over the lifetime of the option, the beneficiary of the option is granted the right to purchase or sell certain assets. The chances of profits are important due to the leverage effect linked to the use of an underlying asset. For the counterparty, such a transaction mainly permits to increase the return on an existing position.

(iii) Risks:

1) Price risk Options may be traded on markets or over-the-counter (OTC) and follow the law of offer and demand. An important point for the determination of the price of an option consists, on the one hand in determining whether there is a sufficient liquidity of the market for the relevant option, and on the other hand in determining the actual or expected evolution of the price of the corresponding underlying asset. A call option loses value when the price of the underlying asset decreases, whereas the opposite is true for put options. The price of an option does not solely depend on the price fluctuations of the underlying asset but a series of other factors may come into play, such as for instance the duration of the option or the frequency and intensity of the fluctuations in the value of the underlying asset (volatility). Consequently, drops in the value of the option may appear although the price of the underlying asset remains unchanged.

2) Leverage risk Due to the leverage effect, price modifications of the value of the option are generally higher than the changes in the price of the underlying asset. Thus, during the lifetime of the option, chances of gains for the holder of an option as well as risks of losses are higher. The risk attached to the purchase of an option increases with the importance of the leverage effect of the relevant option.

3) Purchase of an option


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The purchase of an option represents a highly volatile investment and the likelihood that an option reaches maturity without any value is relatively high. In this case, the investor loses all the funds used for the payment of the initial premium as well as commissions. Pursuant to the purchase of an option, the investor can maintain his position till maturity, he can enter into an opposite transaction or, for "American-style" options, exercise the option before maturity. The exercise of the option may either entail the payment in cash of a differential amount or the purchase or the delivery of the underlying asset. In case the option's object consists in futures contracts, its exercise causes the taking of a position in futures, which supposes the acceptance of some obligations concerning security margins.

4) Sale of an option The sale of an option entails, generally speaking, higher risk-taking than its purchase. Indeed, even if the price obtained for an option is fixed, the losses that the seller may incur are potentially unlimited. If market prices of the underlying asset vary in an unfavourable way, the seller of the option will have to adapt his security margins in order to maintain his position. If the sold option is an "American-style" option, the seller may be required at any moment to settle the transaction in cash or to purchase or deliver the underlying asset. If the underlying of the option consists in futures contracts, the seller will take a position in futures and will have to respect obligations concerning security margins. The seller's risk exposure may be reduced by keeping a position on the underlying asset (financial instruments, index or other) corresponding to the sold option.

5) Purchase of the underlying asset in case of short sale The seller of an uncovered call option does not have a corresponding quantity of the underlying asset at his disposal upon the conclusion of the contract (short sale). In the case of options with physical settlement, the potential loss for the investor amounts to the difference between the strike price paid for the delivery of the underlying assets in case the option right is exercised and the price he will have to pay to acquire the relevant underlying asset. For options with cash settlement, the risk of loss for the investor amounts to the difference between the strike price and the market value of the underlying. Since the market value of the underlying can move well above the strike price when exercising the option, the risk of loss for the investor cannot be determined in advance and is, theoretically at least, unlimited. This risk is more important for “American-style” options which may be exercised at any time and thus at a highly unfavourable time for the seller of the option.


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Another risk for the investor selling the option is also to be unable to obtain the requested underlying when the option is exercised or to have the possibility to obtain it only at very unfavourable conditions (in particular for costs) due to the situation of the markets. In this context, it must be reminded that the potential loss can also be greater than the value of the margin cover provided by the investor.

6) Specific risks associated to options traded over-the-counter (OTC) A position arising from the purchase or the sale of an OTC option can only be closed with the approval of the counterparty.

7) Specific risks associated to combined options A combination consists in the conclusion of two or more option contracts based on the same underlying, which differ in the option type or the characteristics of the option. The number of possible combinations is important. Therefore, the risks involved by any particular combination cannot be described in the present document. Consequently, the investor must inquire about the specific risks associated to the contemplated combination. It can nonetheless be noted that for any combination, the cancellation, at a certain point, of one or more options may entail substantial changes in the risk position of the investor.

8) Specific risks associated to “exotic” options These options are subject to additional conditions or agreements. Their payment structures cannot be obtained by using a combination of transactions. They can take the form of tailor-made OTC options or warrants. The range of exotic options is unlimited so that it is impossible to describe the risks entailed by each “exotic” option in the present document. However, the most common “exotic” options entail the following additional risks compared to normal options. (α) Options depending on the overall evolution of the underlying It is not just on expiration or exercise date of the option that the market value of the underlying is important. The investor needs to take into account potential fluctuations in the market value of the underlying during all the life of the option in order to assess the chances of gains or risks of losses.

Barrier options The rights attached to such options arise (knock-in options) or expire (knock-out options) fully and irrevocably only when, during a period determined in advance, the market value of the underlying reaches a fixed threshold. Payout options


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Payout options grant a right to payment of a fixed amount, agreed in advance:

o Digital option Payment occurs only if, upon maturity, the market value of the underlying is above (digital call) or below (digital put) the strike price. In this case, if the option is “in-the-money”, the seller of the option must pay the amount initially agreed on.

o Lock-in option Payment occurs only if, during the life of the option or a specified time period during this lifetime, the market value of the underlying reaches a threshold determined in advance. Indeed, when the fixed threshold is reached, the seller of the option must pay the amount initially agreed on, irrespective of the subsequent evolution of the price of the underlying.

o Lock-out options

The fixed payment only occurs if during all the life of the option or a specified time period during this lifetime, the market value of the underlying never reaches a threshold or certain thresholds determined in advance. In such a case, whenever the fixed threshold or thresholds are reached, the option becomes invalid and thus loses its value, irrespective of the subsequent evolution of the price of the underlying.

Asian options For these options, an average value is derived from the market value of the underlying over a specified time period. This average is used to fix the underlying’s value which must be delivered (average-rate option) or the strike price which must be paid (average-strike option). The calculation of an average value for the underlying can result in:

- average-rate option: the value of the option on its maturity date being lower for the buyer and considerably higher for the seller than the difference between the strike price and the market value of the underlying upon maturity;

- average-strike option: the strike price of a call option being higher than the price originally agreed or the strike price of a put option, being lower than the price originally agreed.

Lookback options

The market value of the underlying is recorded periodically over a specified time period. For a strike lookback option, the lowest value (call option) or the highest value (put option) of the underlying becomes the strike price. For a price lookback option, the strike price remains unchanged but the highest value (call option) or the lowest value (put option) is used in calculating the value of the underlying. Therefore, the risk is that the calculated strike price or calculated value of the underlying varies considerably from the prevailing market prices on the maturity date. Consequently, in the above mentioned cases, the seller must be aware that upon calculation or exercise of the right, the most unfavourable strike price or market value will be applied. Contingent options


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Buyers of such options must only pay the premium if the market value of the underlying reaches or exceeds the strike price during the life of the option (“American-style” option) or on the maturity date (“European-style” option). The risk is thus to be compelled to pay the entire premium even if the option is only just “in-the-money” or “at-the-money”.


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Cliquet and ladder options

o Cliquet options: the strike price is periodically modified for the following period – in general at regular intervals - to bring it in line with the market value of the underlying. An intrinsic value is then, if applicable, calculated and accumulated over the lifetime of the option.

o Ladder options: in this case, the modifications take place periodically only when

the underlying reaches specified market prices. Normally, only the higher market value is taken into account.

On the maturity date, the seller of a cliquet option is required to pay all the accumulated lock-in market values in addition to any intrinsic value of the option and the seller of a ladder option must pay the highest lock-in market value. For the seller, the amount to be paid can thus be considerably higher than the option’s intrinsic value on the maturity date.

(β) Options on several underlyings

Spread and outperformance options

Both types of options are based on two underlyings. With a spread option, the absolute difference in movement between the value of the two underlyings forms the basis for calculating the option’s value. With an outperformance option, the relative difference, i.e. the percentage improvement of the value of one underlying over the other, is taken into account. The risk is that, despite a positive performance of the market value of both underlyings, the performance difference between the underlyings may be equal or even lower, thus having an impact on the value of the option. Compound options The underlyings of such options are options. Such products can consequently entail large leverage effects, which may trigger important financial obligations.

b) Forward transactions Futures are contracts traded on a market and standardised as regards the quantity of the underlying asset and as regards the maturity date of the transaction. Over-the-counter (OTC) or forward contracts are contracts that are not traded on a market and which may be standardised or individually negotiated between purchaser and seller.

(i) Characteristics: • Initial required margin: be it a future purchase or sale of an underlying asset, an initial margin

is fixed when the contract is concluded. This margin is generally expressed in percentage of the value of the contract;


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• Variation margin: during the entire life of the contract, a variation margin is periodically determined and required from the investor. It represents the accounting benefit or loss, derived from the modification of the contractual price or the price of the underlying asset. The variation margin may exceed the initial required margin by far. The computation method for the variation margin, be it during the life of the contract or at closing, depends on the stock-exchange rules and on the specific contractual provisions of each contract. The investor must immediately provide the Investment Company with variation margin upon request from the latter;

• Liquidation: in general, the investor may, at any time during the life of the contract, sell off or

liquidate the contract before maturity, either by selling the contract or by entering into an opposite contract as regards the delivery and reception obligations. In this latter case, the provisions of the opposite contract will be such as the delivery and reception obligations arising from both contracts cancel one another out.

The liquidation puts an end to the risk positions incurred: gains and losses accumulated until liquidation are realised;

• Settlement: contracts that have not been sold off until settlement must be performed by the

relevant parties. Contracts having as underlying tangible property assets may be performed by effective delivery of the assets as well as by cash settlement (although physical delivery settlement is more common) while contracts having as underlying reference rates (to the exception of currencies) cannot be performed by actual delivery of the underlying. In case of an effective delivery of the underlying, the contractual obligations need to be performed in full, whereas for cash settlement contracts, only the difference between the price agreed upon when concluding the contract and the market price upon performance of the contract is payable.

Therefore, investors need more available funds for contracts providing for the actual delivery of the underlying asset than for contracts providing for cash settlement.

(ii) Advantages:

Chances of gains are important depending on the market value of the underlying upon maturity, especially because the principal amount originally invested is low. Such products may also permit to secure existing positions.

(iii) Risks:

1) Modification of the value of the contract or the underlying asset The investor incurs a risk if the evolution of the actual value of the contract or of the underlying is not in line with the evolution forecasted by the investor when concluding the contract. Despite a rise in the price of the contract or the underlying, the forward seller will have to deliver the underlying asset at the initially agreed upon price, which may be far lower than the current price. For the seller, the risk is equal to the difference between the price agreed upon when concluding the contract and the market value on maturity date. As the market value may theoretically rise in an unlimited manner, the loss potential for the seller is unlimited and may considerably exceed the required margins.


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In case the value of the contract or the underlying asset decreases, the forward purchaser will still have to accept the underlying asset at the price agreed upon in the contract which can be potentially very much higher than the current market value. Therefore, the buyer's risk consists in the difference between the price agreed upon when concluding the contract and the market value on the maturity date. Thus, the maximum the purchaser may lose is the initially agreed upon price. This loss may however exceed by far the required margins. Transactions are regularly evaluated (mark-to-market) and the investor will need to have permanently at his disposal a sufficient margin cover. In case the margin becomes insufficient during the forward transaction, the investor will have to provide a variation margin at very short notice, failing which the transaction will be liquidated before due term, generally at loss.

2) Difficult or impossible sell off

In order to limit excessive price fluctuations, a stock-exchange may fix price limits for certain contracts. In such a case, the investor has to keep in mind that, whenever a price limit is reached, it may be very difficult if not momentarily impossible to sell off the contract. Thus, every investor should, before entering into a forward contract, make an inquiry concerning the existence of such limits. It will not always be possible (depending on the market and the terms and conditions of the transaction) to sell off contracts at any moment in order to avoid or to reduce the risks of a pending transaction. Stop-loss transactions, if they are possible, may only be performed during office hours of the Investment Company. They do not allow to limit losses to the indicated amount, but they will be performed once the threshold is reached in the market and they become at that time an order to perform such a transaction at the then current market price.

3) Purchase of the underlying in case of short sale To sell an underlying on a forward basis without owning it when concluding the contract (short sale) entails the risk that the seller will have to buy the underlying asset at an extremely unfavourable market price in order to be able, upon maturity, to perform his obligation to deliver effectively the underlying.

4) Specific risks associated to over-the-counter transactions (OTC) For standardised OTC transactions, the market is in general transparent and liquid. Therefore, the selling off of contracts can normally be done. However, no market exists for OTC transactions agreed individually between the purchaser and the seller. That is why the closing-out is only possible with the agreement of the other party.

5) Specific risks associated to forward exchange products A forward exchange transaction allows the selling or the purchase of a currency at a future date and at a price fixed when the contract is concluded.


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This type of investment permits to eliminate the exchange risk. Moreover, no premium has to be paid upon conclusion of the contract. The main risk for the investor is the loss of profit in the event the evolution of market rates is more favourable than the evolution of exchange rates anticipated when concluding the contract.

6) Specific risks associated to combined transactions The number of possible combinations is important. Therefore, the risks involved by any particular combination cannot be described in the present document. Consequently, the investor must inquire about the specific risks associated to the contemplated combination. It can nonetheless be noted that, generally, the risks associated to such combined transactions may vary when elements of this combination are sold off. G. Structured products or EMTN Structured products are combinations of two or more financial instruments, forming together a new investment product. At least one of them must be a derivative product. Structured products with capital protection are the most frequently traded. Such products can be traded either on the market or over-the-counter (OTC). Due to the important number of possible combinations, each structured product has its own risks since the risks associated to each of the elements of this combination can be reduced or even eliminated or enhanced due to such a combination. Consequently, the investor must inquire about the specific risks associated to the relevant structured product. Such information is available, for instance, in the commercial brochures or form sheets describing the product.

a) Structured products with capital protection (e.g. GROI, PIP, PEP, GRIP)

(i) Characteristics: • Two elements: such products consist generally of two elements: a fixed-income investment

(e.g. bond or money market investment) and an option or combination of options. This enables the investor to participate in the price movements of one or more underlying assets while at the same time limiting potential losses. The capital protection component may, if applicable, only cover a portion of the capital invested. Moreover, the participation and protection elements can be separated into two separate components in order to ensure the independency of the two components or even to permit to sell them separately;

• Capital: fully or partially secured (upon maturity). The capital protection component

determines how much of the nominal value of the structured product will be paid out to the investor, irrespective of any price movements in the option component;

• Yield: the option component or direct investment in a risky underlying asset determines how

and to what extent the investor can benefit from price movements in the underlying. Therefore, this component determines the potential return over and above the capital protection component;


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• Flexibility: these products can be tailored to suit the needs of each client and are adaptable to all types of underlyings.

(ii) Advantages:

Such products enable the investor to invest on a market while reducing the risk of losing capital which would exist if he invested directly on the same market. Returns may be higher than those of monetary or bond investments with an equivalent level of protection.

(iii) Risks:

1) Risks at the level of the capital protection component The capital protection is linked to the nominal value of the product rather than its issue price or purchase price on a secondary market. Therefore, the investor benefits from a guarantee only up to the nominal value of the product with the consequence that capital protection does not necessarily mean 100% repayment of the capital invested. Consequently, the protection will be reduced if the issue/purchase price is higher than the nominal value and, conversely, increases if the issue/purchase price is lower than the nominal value, in particular if the product has been purchased at a price which was different from par or after the original issue. The level of protection depends on the creditworthiness of the issuer. The capital is therefore protected only if the issuer of the protection can meet his obligations. The maximum loss is thus limited to the difference between the purchase price and the amount of the capital protection upon maturity. However, over the life of the product, its price can fall below the level of the capital protection amount, which increases the risk of loss in case of sale prior to expiration. Capital protection is only guaranteed for the investor if the latter holds on the product until maturity but is not ensured if early repayment is requested. Upon maturity, if the capital is not guaranteed up to 100%, the investor will not be repaid the full amount originally invested.

2) Risks at the level of the option/direct investment component Depending on the evolution of prices in financial markets, this component can expire without value. The risks associated to this component are the same as the risks associated to the relevant option or option combination or direct investment used. Due to the existence of a capital protection, the investor may obtain a lower return than the return he would have obtained if he had invested directly in the underlying.

3) Liquidity risk The liquidity of the investment is usually ensured only above a certain amount, subject most of the times to a bid/offer spread and/or a penalty in case the product is not held on until maturity.

b) Structured products without capital protection: convertible reverse or discount certificate



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• Term product: the investor receives a guaranteed coupon in a given currency but accepts a risk on his capital on maturity;

• Underlying assets: shares, indexes, baskets, etc…; • Capital: protected if the market value of the underlying is not lower than the strike price on

maturity; • Repayment: in cash or by delivery of the underlying, at a strike price determined in advance,

if this strike price has fallen or been exceeded. On the maturity date, if the price of the underlying asset is higher than the strike price, the investor receives the guaranteed coupon plus 100% of the capital initially invested (in cash). If the price of the underlying asset is lower than the strike price, the investor receives the guaranteed coupon plus the underlying asset at the strike price;

• Flexibility: such products can be adapted to all types of underlyings; • Discount certificate: in this case, the investor receives the coupon only upon maturity but

originally purchases this product at a discount.

(ii) Advantages: Incomes are higher than for investments in money market products. They are short term investments and thus it is easier to assess potential earnings.

(iii) Risks:

1) Risks at the level of the capital The capital protection is not guaranteed if the investor receives the underlying asset instead of the capital invested upon maturity. The capital risk is closely linked to the evolution of the price of the underlying asset.

2) Liquidity risk The liquidity of the investment is usually ensured only above a certain amount.

3) Exchange rate risk For the products denominated in currencies other than that of the underlying asset, the investor is exposed to an additional exchange risk.

c) Specific case of certain credit derivative instruments

Credit linked notes (“CLN”)



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An investment in a CLN can be compared to a direct investment in a floating rate note issued by the same entity.


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(ii) Risks:

1) Dual risk An investor in a CLN bears the credit risk of both the issuer of the CLN itself and of the underlying credit reference entity/ies. In case of a credit event, the investor receives either a debt instrument (i.e. a bond or a loan) issued or guaranteed by the relevant credit reference entity or a cash settlement amount linked to the market price of such debt instrument, calculated on the basis of the relevant credit event.

2) Risk enhanced by the scope of the notion of “credit event” The term credit event is defined in broad terms and encompasses more than simply a bond default of the relevant reference entity. Indeed, this concept encompasses, for example, an extension of the repayment date of a loan or a decrease in the rate of interest payable on such loan. Therefore, the holder of a CLN can suffer a loss due to a credit event even though a traditional bond default did not occur. In other words, the probability that a credit event occurs is higher than the probability that a bond default occurs.

3) Scope of the risk of loss A credit event might result in a CLN suffering a greater loss than the average loss suffered by bonds from that same reference entity since the issuer of the CLN generally has a wider choice of the debt instruments to be delivered on a default and could choose to deliver the lowest priced debt instrument. This risk is mitigated in some structures through pre-defined recovery rates, which determine in advance for instance the loss in case of a credit event. Moreover, a higher loss may occur as a result of a delivery of a bond or loan with a duration longer than the duration of the CLN itself or in case of a valuation using such a bond/loan. However, major rating agencies are aware of these two characteristics and incorporate them into their ratings of CLNs. Collateralised debt obligations (CDO)

(i) Characteristics: Collateralised debt obligations are also structured products based on an underlying basket or portfolio of debt instruments, which can be bonds, loans and/or credit default swaps. A CDO is usually divided into several tranches providing different levels of risk exposure for the basket of underlying debt instruments. Commonly, the most junior tranche is an “own funds” tranche and the tranches then go up in increasing seniority and correspondingly higher credit ratings.

(ii) Advantages: Through these synthetic structures the investor gains exposure to underlying credits which are not always available through direct bond investments.


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(iii) Risks: 1) Risks related to the system of tranches

Losses on the portfolio are borne firstly by the holders of the “own funds” tranche and subsequently by the holders of the various tranches in order of seniority. The holders of a senior tranche only incur a loss due to a relevant credit event if all the own funds and the capital of the more junior tranches have been lost. Therefore, tranches which are not “own funds” tranches have some degree of protection against losses whereas the “own funds” tranche and the more junior tranches represent a leveraged exposure to the fluctuations of the underlying portfolio. Credit events on a small portion of the underlying portfolio can lead to significant or total loss of the capital invested in the “own funds” tranche and the more junior tranches.

2) Risks related to the long-term nature of the product The value of any credit derivative can vary significantly before maturity depending on factors including, for instance, the occurrence of credit events and movements of credit spreads in the portfolio. Moreover, like any debt instrument, the initial rating of any credit derivative can be upgraded or downgraded. A credit rating of a particular instrument reflects the (long-term) default risk of that instrument until it matures, and not short-term market risk. Investors in a credit derivative should generally have a long-term investment perspective and the ability to hold the product until maturity.

3) Risk related to the low liquidity Such instruments are generally illiquid eventhough a secondary market may exist. H. Synthetic products Synthetic products - essentially covered options and certificates - are characterised by their identical or similar profit and loss structures when compared with specific traditional financial instruments (shares or bonds). They result from the combination of two or several financial instruments in the same product. Basket certificates, based on a specific number of selected shares, are one typical example. Synthetic products can be traded either on a market or over-the-counter (OTC). Due to the important number of possible combinations, each synthetic product has its own risks. However, generally, the risks associated to synthetic products are not always the same as the risks associated to the financial instruments they contain. Consequently, before an investment in such products, the investor must make thorough inquiries about these specific risks, for instance by consulting the product description.


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Covered options (e.g. BLOC warrants, DOCUs, GOALs)

(i) Characteristics: • Limited loss: when purchasing a covered option, the investor purchases an underlying asset

(share, bond or currency) and, at the same time, writes a call option on that same asset. In return, the investor is paid a premium. The latter limits his loss in case the price of the underlying falls;

• Limited potential gain: the potential return from any increase in the underlying asset’s market

value is limited to gains up to the option’s strike price; • Collateral: for traditional covered options, the investor must lodge the underlying asset as

collateral, thus becoming a passive investor; • Synthetic covered options: this type of product is based on the idea of duplicating or

reproducing traditional covered options. But this duplication is achieved by means of a single transaction. Both the purchase of the underlying asset and the writing of the call option are carried out synthetically using derivatives. The purchase price of such a product is identical to that of the underlying minus the premium received for the sale of the call option. Hence, the synthetic product is sold more cheaply than its underlying;

• Settlement: either cash settlement or physical delivery of the underlying are possible upon

maturity: If the market value of the underlying is higher than the strike price, the investor is paid a specified cash amount as settlement. If, however, it is lower than the strike price, the investor receives physical delivery of the underlying asset.

(ii) Advantages:

By writing a call option (traditional covered option) or by the return from the sale of a call option included into the product price (synthetic covered option), any loss in the price of the underlying triggers a lower loss than that which could be suffered in case of a direct investment in the underlying asset.

(iii) Risks: Unlike structured products with capital protection, synthetic covered options do not contain a hedge against losses in the market value of the underlying. Therefore, if the price of the underlying increases and that, upon maturity, it is higher than the strike price of the option, the investor will receive the price originally agreed upon in the form of a cash payment. If the price of the underlying upon maturity is lower than the price contemplated by the investor when purchasing the product, the yield of such product may be lower than the return of an investment on the monetary market with the same maturity. If the price of the underlying, upon maturity, is equal or lower than the strike price of the option, the investor will receive the underlying. The potential loss that may be suffered by the investor is thus linked to a possible drop in the market value of the underlying until maturity. The risk of loss is therefore unlimited, as if the investor had invested directly in the underlying asset. However, the premium of the option mitigates the consequences of a potential loss of profit in relation to the underlying.


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Certificates/EMTN (e.g. PERLES)

(i) Characteristics: • Diversification: a certificate entitles an investor to purchase a right which is based on several

underlyings or has a value derived from several indicators; • Main types of certificates:

- index certificates: these reflect a whole market being based on an official index (e.g. DAX, CAC, etc…);

- region certificates: these are derived from a series of indexes or companies from a

certain region (e.g. Eastern Europe, Pacific area, etc…);

- basket certificates: these are derived from a selection of national or international companies active in the same sector (e.g. biotechnology, telecoms, etc..), indexes, bonds or other underlyings;

• Guarantee: these certificates are securitised; • Maturity and trading: the maturity of these certificates usually ranges between one to three

years. However, these certificates can be traded at any time; • Limited duration: they are incorporated in an instrument and thus these certificates have a

limited duration; • Investor’s rights: no voting right and no right to dividend/interests in relation to the underlying

assets; • Repayment: repayment occurs upon maturity and equals:

- a set amount per index point for an index certificate; - the difference between the market value upon maturity and the strike price for a

region or basket certificate.

(ii) Advantages: For a minimum of capital investment, the investor can achieve diversification over a broad range of instruments or risk factors and thus mitigate the latter. This type of product offers the same potential of gains or losses than a similar direct investment in the underlying assets but, due to the diversification of the index, it is possible to limit or even eliminate the risks specific to the companies composing this index and thus to limit the risk of loss of the full amount invested. They are usually low-cost products (in particular because they have no rights to dividends/interests or voting rights vested in them).


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(iii) Risks:

1) Transfer of risk Investments in index, region or basket certificates basically involve the same level of potential loss as direct investments in the corresponding shares themselves. However, they offer greater risk diversification. However, this does not mean the risks are eliminated - they may simply be transposed onto the market or sector on which the certificate is based.

2) Absence of rights In contrast to direct investments, certificates do not confer any voting rights nor do they entitle the investor to payments of dividends or interests in relation to the underlying assets. Therefore, a drop in the price of the certificate cannot be counterbalanced by payments of dividends or interests.

3) Issuer risk In addition to the risk of insolvency of the companies constituting the underlyings of the certificate, the investor is exposed to the issuer risk, that is to say the risk of insolvency of the credit institution issuing the certificate.

4) Leverage risk Due to the leverage effect, price modifications of the value of the certificate are generally higher than the changes in the price of the underlying assets. Thus, during the lifetime of the certificate, chances of gains as well as the risks of losses are higher. The risk attached to the purchase of a certificate increases with the importance of the leverage effect of the relevant certificate. Such certificates are usually more volatile instruments than normal certificates and can lose their entire value very quickly. I. "Alternative" investments and off shore funds

(i) Characteristics: • An "alternative investment" consists in an investment in a domestic or foreign investment

fund the style of which is completely different from traditional investments in shares and bonds due to the type of investments made by the relevant fund. Hedge funds are the most usual type of alternative investments. Their investment style is often based on short sales, leverage effects and derivatives.

Investments in private equity funds are also included in this category (venture capital, financing of acquisitions of companies).


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Within the context of alternative investments, assets may also be invested directly in financial instruments (shares, fixed or floating rate bonds, zero coupon bonds, convertible bonds or money-market instruments) or in financial instruments duplicating index performances. The choice of financial instruments is limited neither from an industrial, sectoral or geographical point of view, nor as regards the type of financial instruments or securities or as regards the currencies in which they are expressed. Generally, alternative investments do not compare their results with a benchmark or a price index: their aim is the absolute (positive) performance. Alternative investments rely on a wide range of investment strategies, which classification may partly be discretionary. Furthermore, many funds combine several investment strategies in their daily management or use management methods which include characteristics of more than one of the significant strategies as described herebelow. Each of these strategies implies its own yield, risk and market risk.

• Hedge Funds : Hedge funds can choose freely the products and markets (including

emerging markets) in which they want to invest and their trading methods. Such funds usually set high minimum investment requirements for investors. The remuneration of the managers of these funds is often linked to the performance of said fund.

Their basic strategy aims at mitigating the risks associated to a long term position in a portfolio of securities by selling short other financial instruments. As their exposure to market risks is reduced, they use leverage effects to increase the yield. They usually buy securities which are considered as under-valued (long position) and sell short securities which are considered as being over-valued (short position). The “short” part of the portfolio can also be composed of investments in indexes. More particularly, a distinction may be made between the following types of funds:

- long/short shares or bonds : the style of these investment funds is the most genuine style of alternative investment. The stock picking is the primary source of performance for this kind of funds. It is usually the result of an analysis of the fundamentals;

- funds focused on aggressive capital growth invest in shares which are viewed as having high growth potential. Therefore they frequently invest in small caps. Funds specialised in a particular line of business (technology, media, telecom) often belong to this category;

- value funds invest in securities which are seen as highly under-valued for various reasons in comparison with their intrinsic value;

- market neutral funds maintain a balance between long and short positions in order to mitigate the correlation with market trends. This strategy is based not only on a fundamental in depth analysis and stock picking but also especially on an in depth analysis of risks. The short positions usually consist in shares positions;

- short sellers : these funds only sell short. They look for securities considered to be over-valued and the value of which is expected to fall. The main selection criterion is the deterioration of the situation of the issuer.

• Event driven funds : they try to take advantage of specific events which arise in the life of

companies: restructuring, mergers, spin offs. This kind of strategy is usually barely affected by market trends.

- The opportunistic funds take advantage of IPOs, takeover bids, unexpected incomes or punctual events relating to the issuer;


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- The distressed securities funds invest in securities, mainly bonds and Investment Company debts highly under-valued due to the occurrence of Investment Companyruptcy proceedings or the existence of a rescue plan. This kind of strategy is mainly used in the United States., which legislation is favourable to this kind of investments.

• Arbitrage funds : they use the imperfections of the market to generate returns. They try to

identify price or yield differentials which are not justified by the economic situation of the issuer. They invest when they consider that there is a high probability that such anomalies are going to disappear. They are also called “relative value funds”. A distinction can be made between the following tendencies:

- Fixed income arbitrage: the funds use mispricings on bond markets; - Convertible bond arbitrage: arbitration is made between convertible bonds,

usually long positions and the shares, usually short positions; - Mortgage backed securities : the funds take advantage of anomalies on the

mortgage market (as well as in derivative financial instruments); - Merger arbitrage: the funds focus on takeover bids and mergers.

• Traders/CTA (commodity trading advisors): they use both short and long positions on the

markets (shares, bonds, futures, commodities, exchange…) with a high leverage effect. These funds do not usually invest in long-term positions. They try to catch excessive price variations on the short term or to follow trends (trend followers). Their correlation with the bond and stock markets is low. Thus :

- Systematic funds invest following a computer programme based and a quantitative pattern;

- Discretionary funds rely more on a fundamental analysis of the market. • Macro Players : these funds try to anticipate major macroeconomic trends. They follow an

opportunistic strategy. They rely on a fundamental macroeconomic analysis and on market reactions to changes in economic policies (interest rate, currencies movements…). They can invest in every kind of financial instruments and in all markets according to opportunities. They also take leveraged positions.

• Special situations funds : these funds take advantage of very specific situations and may

even sometimes create the event, for instance by forcing the manager of a company to change his strategy. They are also called niche players. They can for instance be :

- Opportunistic funds without any pre-determined strategy. They simply take advantage of opportunities they find;

- Funds of funds which are funds which invest in other alternative investment funds active in one or more segments as described hereabove. All these strategies may also be categorised geographically or sectorally alike for traditional funds.

• The word “off shore” funds points to investment funds located in offshore centres, like for

example the Bahamas, the Bermudas, the Cayman Islands, Panama or the Dutch West Indies.

Each fund has its own risks and therefore it is not possible to describe in details the risks associated to investments in such products in the present document but it is only possible to provide summary information. Consequently, the investor must inquire, on a case-by-case basis, before investing in such products, for instance by consulting the prospectus of the fund.

(ii) Advantages: The prospects of gains are usually attractive for the level of risk incurred (volatility risk).


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(iii) Risks:

1) Leverage risk

In this domain, investment strategies can entail high risks. For example, by using the leverage effects, a slight change of the market may lead to important gains but also losses. In some situations, the entire investment may be lost.

2) Lack of information

The net asset value of such investment instruments is usually not known at the time when the investor decides to invest or to redeem his investment. This is due to the fact that, in principle, a notice period is necessary before such a transaction can be performed. Consequently, the net asset value can only be calculated once the investment has been made or redeemed. Moreover, very often, investors in “alternative investments” only have very little information at their disposal. The sometimes very complex strategies of the investment funds frequently lack transparency for investors. Strategic changes, that may lead to a significant increase of the risks, often remain unclear or even completely underestimated by investors.

3) Potential lack of liquidity

Alternative investments may be more or less liquid. Sometimes, liquidity is very poor. Most of these investments are subject either to lock-in periods, or redemption penalties if investments are redeemable within a certain period of time. This is due to the relatively illiquid nature of the investments encompassed in such instruments, which tend to be made with a long-term investment view. Moreover, many of the investment techniques used in the alternative investment industry involve investments either in illiquid financial instruments, or in instruments which are subject to legal or other restrictions on transfer. Therefore selling an alternative investment position may only be possible periodically or on certain dates after a notice period of several weeks, for example four times a year, on specific dates. Due to bid/ask spreads, the payment of sales proceed may not amount to the net asset value of the instrument. Share redemption for hedge funds will only either be possible monthly, quarterly or annually. Concerning private equity funds, the lock-in period may last up to 10 years or more. Finally, due to the complexity of the underlying investments made by these funds, adjustments in the net asset value may be necessary after receipt of the revised annual accounts, As a consequence, certain alternative investment funds block part of the shares of the investor, if the latter decides to sell off 100% of his shares, until receipt of the revised annual accounts.

4) Minimal regulation

An important number of funds in this sector are located in offshore centres (“off shore” funds). Frequently, those offshore centres only impose minimal regulations on the funds. As a


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consequence, numerous problems or delays may appear during the carrying out of buy or sell orders for which the Investment Company cannot be held liable. The enforceability of the investor's rights is not systematically guaranteed. The investor interested in “alternative investments” and notably “off shore” funds needs to be aware of those risks. Before entering into a transaction, the actual investment products should be carefully examined.

5) Short sale

UCIs in which the Investment Company invests, on behalf of the client, may carry out short sales of securities which are likely to expose the assets of the UCI so invested to an unlimited risk, due to the absence of upper price limit for these securities. However, the losses will be limited to the amount invested in said UCI.

6) Valuation of UCIs

The net asset value by unit of the funds in which the investments have been made, is not audited to the exception of the value calculated at the end of the financial year. Therefore, for the valuation of such UCIs, the Investment Company mainly relies on non audited financial information provided by said funds, administrative agents and/or market makers. In case the financial information used by the funds to determine their own net asset value by unit is incomplete, inaccurate or if such net asset value does not reflect the value of the investments carried out by the funds, the valuation of these assets will be inaccurate.

7) Absence of depository Investment Company For some UCIs in which assets are invested, the depositary is a broker instead of a Investment Company. In some cases, these brokers do not benefit of the same credit rating as a Investment Company. Furthermore, unlike depositary Investment Companys which carry out their activities in a regulated environment, such brokers ensure the safeguarding of the assets but are not always subject to regulatory supervision.

8) Performance commission

Due to the specialised nature of these funds, quite a few, if not the largest number of these funds, may charge performance commissions.

9) Duplication of fees

Where the client invests in an investment fund rather than directly in the financial instruments in which the fund invests, this may trigger additional fees payable by the client.

10) Additional risks associated to private equity funds

Private equity investments typically carry the following additional risks: - No assurance of investor return:


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The risk for the investor is that he may not recoup the full invested amount, and may even lose it entirely. Past investment performance of these instruments is no guarantee of future investment performance, particularly as the nature of the investment environment is constantly changing (new geographic areas, new specialised areas, etc…). In particular, there is often strong competition to acquire portfolio companies during a cyclical upturn, whilst it may be difficult to withdraw from such investments during a cyclical downturn;

- Low liquidity:

These funds usually have a term of seven to fifteen years. There is no recognised secondary market in such private equity investments. As a result, ,the penalty to withdraw from a private equity fund (which will usually require payments over a number of years) can be extreme, up to and including complete forfeiture to any rights to monies already invested in such an investment. As regards the funds that an investor commits to pay to the fund, the investor must pay particular attention to the notice periods, usually very short ones (which may be as short as seven days,) and should make sure that he has sufficient liquid assets set aside to meet these calls for payments at a short notice.

J. Investments in real estate Real estate investments comprise investments into “real” assets, such as residential housing, office buildings, retail properties, etc…

(i) Characteristics: Such investments are generally made through investment funds or listed investment companies, thus providing a certain degree of diversification. Such diversification generally reduces portfolio volatility and serves as a hedge against inflation. Some real estate investments may have elements of private equity investments.

(ii) Risks:

1) Potentially limited liquidity Liquidity and tradability of investments linked to real estate can vary a great deal. Such investments are usually illiquid and it may not be always possible to realise profits in the short term. Listed investment companies and open-ended investment funds investing in real estate generally have a daily market. On the other hand, real estate investments such as closed- ended funds may provide liquidity only monthly, quarterly, or annually with compulsory holding periods of at least several years.

2) Leverage effect


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In case of leverage effect, movements in the market may generate major gains, but also high losses. K. Specific risks associated to securities lending When an investor lends financial instruments, the ownership of these instruments (including the related rights as well as potential claims arising from them) are transferred to the borrower. As a lender, the investor is granted a contractual right against the borrower to repayment in instruments of the same nature, quantity and quality. The investor is consequently exposed to the risk of Investment Companyruptcy, insolvency or reorganisation proceedings or any other similar proceedings of the borrower or of attachment or freezing measures affecting the borrower’s assets. The investor can dispose of the financial instruments lent only when these have been returned to him. There is thus a risk, until this restitution occurs, which may take several days, that he cannot sell these financial instruments at a moment when their market value increases. Moreover, the investor can have no guarantee that the restitution will tae place on a specific date, with the consequence that he may not be in a position to exercise his rights in due time (e.g. voting right associated to these financial instruments). It may happen that when he must return the financial instruments, the borrower is unable to purchase these instruments on the market. In such a case, the investor may receive a cash payment for an amount equal to the market value of the financial instruments he has lent instead of the financial instruments. If the borrower provides collateral in order to guarantee the repayment of the lent financial instruments, it cannot be excluded that the value of the assets, constituting the collateral, be lower than the value of the lent financial instruments when the collateral is enforced.

This document does not pretend to describe all risks inherent to investments in financial instruments. Its objective is rather to give basic information and to make clients aware of the existence of the risks inherent to all investments in financial instruments. The client should not enter into any investment transaction before being sure to master all the risks and having adapted his investments to his assets, needs and experience. Luxembourg, ____________________________ ___________________________ Client's signature