addendum dated March 2008
PROSPECTUS
September 2007
VISA 2008135483-1 681-0-PC L'apposition du visa ne peut en aucun ca &argument d e publicite Luxembourg. le 19/03/2008 Commission de
Y
NOT FOR USE BY OR DISTRIBUTION TO US PERSONS
JPMORGAN INVESTMENT FUNDS (thc "Pund") has been autlioriscd under part I of' the Luxembourg law of 20 December 2002 relating to collective investment undertakings ("loi relulive a m orgunismes de placemenl collectiy', the "Luxembourg I.aw'*) and qualifies as an Undertaking for Collective Investments in Transferable Securities ("UClTS") under the amended EC Directive 85/61 1 o f 2 0 December 19x5, and may therefore be offered for sale in European IJnion ("EIJ") Member States (subject to registration in countries other than Luxembourg). In addition, applications to register the Fund may be made in other countries.
None of'the Shares have been or will be registered under the CJnited States Securities Act of 1933, as amended (the "1933 Act"), or under the securities laws ol'any state or political subdivision o f the United States of America or any of its territories. possessions or other areas subject to its jurisdiction including the Commonwealth of Puerto Rico (the "United States"). The Fund has not bcen and will not be registered under the United States Investment Companv Act of' 1940. as amended, nor under any other IJS kdcral laws. Accordingly, except as provided for below, no Shares are being offered to US Persons or persons who are in the United States at the time the Shares are offered or sold. For the purposes of this Prospectus, a US Person includes, but is nut limited to, a person (including a partnership, corporation, limited liability company or similar entity) that is a citizcn or a resident of the United States of America or is organised or incorporated under the laws of the United States of America. Shares will only be offered to a US Person at the sole discrction of either the Directors or the Managcmcnt Company. Certain restrictions also apply to any subsequent transfer of Shares in the United States or to US Persons (please see the compulsory redemption provisions under the section "The Shares - Redemption of Shares" below). Should a Shareholder become a IJS Person, they may be sub.ject to US withholding taxes and tax reporting.
If you are in any doubt as to your status, you should consult your financial or other professional adviser.
The distribution of this Prospectus in other jurisdictions may also be restricted; persons into whose possession this Prospectus comes are required to inform themselves about and to observe any such restrictions. This Prospectus does not constitute an oll'cr by anyone in any jurisdiction in which such offer is not authoriwd or to any person to whom it is unlawfiil to make such offer.
Prospective investors should review this Prospectus carefully and in its entirety and consult with their Icgal. tax and financial advisers in relation to (i) the legal and regulatory requirements within their ciwn countries for the subscribing, purchasing, holding, converting, redeeming or disposing of Shares; (ii) any foreign exchange restrictions to which they are subject in their own countrius in relation to the subscribing, purchasing, holding. converting, redeeming or disposing of Shares; (iii) the legal, tax, financial or other consequences of subscribing for, purchasing, holding, converting. redeeming or disposing of Shares: and (iv) any other consequences of such activities.
Before consent to distribute this Prospectus is granted, certain jurisdictions require that it be translated into an appropriate languagc. Unless contrary to local law in the .jurisdiction concerned, in the event of any inconsistency or ambiguity in relation to the meaning of any word or phrase in any translation, the English version shall always prevail.
Any information or representation given or made by any person which is not contained herein or in any other document which may be available for inspection by the public should be regarded as unauthorised and should accordingly not be relied upon. Neither the delivery of this Prospectus nor the offer, issue or sale of Shares in the Fund shall under any circumstances constitute a representation that the information given in this Prospectus is correct as at any time subsequent to the date hereof.
Certain Shares of tlic Fund are or will on issue be listed on the Luxembourg Stock Exchange as described more particularly herein.
The most recent annual report and the latest semi-annual report, if published thereafter form an integral part of'this Prospectus. These documents and the Simplified Prospectus(es) published by the Fund are available at the registered o f i ce of the Fund and from its local sales agents listed in Appendix I.
Thc Managcmcnt Company or JPMorgan Chase & Co. may use telephone recording procedures to record, inter alia, transaction orders or instructions. By giving such instructions or orders by telephone: the counterparty to such transactions is deemed to consent to the tape-recording of conversations between such counterparty and the Management Company or JPMorgan Chase & Co. and to the use of such tape recordings by the Management Company and/or JPMorgan Chaw & Co. i n legal proceedings or otherwise at their discretion.
C O N T E N T S
Principal Features and Glossary .................................................................................................................................................................... 5 Board of Directors ........................................................................................................................................................................................ 10 Management and Administration ................................................................................................................................................................ i i investment Policies ........................................................................................................................................................................................ i2
I . Spccitic Investment Policy of each Sub-Fund ............................................................................................ 12 2 . Securitics Lcnding ...................................................................................................................................... 12 3 . Pooling ........................................................................................................................................................ 12 4 . Investment Considerations .......................................................................................................................... 12
The Shares ..................................................................................................................................................................................................... 13 I . Subscription for Shares ............................................................................................................................... 14 2 . Minimurn Subscription and Holding Amounts and Eligibility for Shares ................................................. 15 3 . Listing of Shares ......................................................................................................................................... 16 4 . Redemption of Shares ................................................................................................................................. 16 5 . Conversion of Shares .................................................................................................................................. 17 6 . Transfer of Shares ....................................................................................................................................... 17 7 . Restrictions on subscriptions and conversions into certain Sub-Funds ...................................................... 18
General lnformation ..................................................................................................................................................................................... 18
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1 . 2 . 3 . 4 . 5 . 6 . 7 . x . 9 . I0 . 1 1 . 12 . 13 .
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I . 2 . 3 . 4 . 5 . 6 .
1 . 2 . 3 . 4 . 5 . 6 . 7 .
Board of Directors ...................................................................................................................................... 24 Management Company and Domiciliary Agent ......................................................................................... 24 Invcstmcnt Managcrs .................................................................................................................................. 25 Custodian. Corporate arid Administrative Agcnt ........................................................................................ 25 Commission Sharing Arrangements ........................................................................................................... 26 Brokerage Arrangements ............................................................................................................................ 26
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1 . The Fund ..................................................................................................................................................... 29 2 . Shareholders ............................................................................................................................................... 29 3 . European IJnion Tax Considerations .......................................................................................................... 29
Appendix I - Information for lnvestors in Certain Countries ................................................................................................................... 31 I . Austria ......................................................................................................................................................... 31 2 . France ......................................................................................................................................................... 31 3 . Kepublic of Ireland ..................................................................................................................................... 31 4 . Italy ............................................................................................................................................................. 33
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. 5 . Thc Netherlands .......................................................................................................................................... 33 6 . Spain ........................................................................................................................................................... 33 7 . United Kingdom ......................................................................................................................................... 33
Appendix 11 - Investment Restrictions and Powers ................................................................................................................................... 35 I’inaiicial Derivative Instrun~cnts ........................................................................................................................ 40
Appendix 111 - Sub-Fund Details ................................................................................................................................................................. 46 1 . Classes of Shares ........................................................................................................................................ 46
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2 . Risk Manageinelit Process .................................. ........................................................................
.Jl’h.lorgan investment Funds - Global Select Equity Fund ...................................................................................................................... 63 JPMorgan Investment Funds - Global Teletech Fund ............................................................................................................................... 65
JPMorgan Investment Funds - . lapan SO Equity Fund ............................................................................................................................. 68
JPMorgan Investment Funds - . Japan Select Equity Fund ........................................................................................................................ 72 JPMorgan Investment Funds - L‘S SO Equity Fund ................................................................................................................................... 74 JPMorgan Investment Furids - U S Disciplined Equity Fund .................................................................................................................... 76
.JP h.iorg.in investment Funds - U S Dynamic Small Cap Fund .................................................................................................................. 80
. 1PMorg.in investment Funds - U S Equity Fund ........................................................................................................................................ 82
. IPMorgan investment Funds - US Market Neutral Fund ........................................................................................................................ 84 JPMorgan Investment Funds - L S Select Equity Fund ............................................................................................................................. 86
Total Return Sub-Funds .............................................................................................................................. 88 JPMorgan Investment Funds - Emerging Markets Total Return Fund (EUR) ...................................................................................... 89 JPMorgan Investment Funds - Europe Total Return Fund ...................................................................................................................... 91 JPhlorgan Investment Funds - Global Total Return Fund (EUR) ........................................................................................................... 93 JPMorgan Investment Funds -Global Total Return Fund (USD) ........................................................................................................... 95
5 . Balanced Sub-Funds ....... ..................................................................................................................... 97 JPJlorgan Investment Funds - Blue and Green Fund ............................................................................................................................... 97 JPMorgan Investment Funds -Global Balanced Fund (Et!R) ................................................................................................................. 99
JPMorgan Investment Funds - Highhridge Statistical Market Neutral Fund ......................................................................................... 66
JPMorgan Investment Funds - . lapan Brhavioural Finance Equity Fund ............................................................................................... 70
JPMorgan investment Funds - 1:s Dividend Fund .................................................................................................................................... 78
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JPYlorgan Investment Funds - Global Balanced Fund (r!Su) ................................................................................................................ 101 JPMorgan Investment Funds -Global Capital Appreciation Fund ....................................................................................................... 103 JPMorgan Investment Funds - Global Capital Preservation Fund (EUR) ............................................................................................ 105 JPMorgan Investment Funds - Global Capital Preservation Fund (USD) ............................................................................................ 107
Convcrtibles Sub-l;uiids ............................................................................................................................ 109 JPRlorgan Investment Funds - Global Convertibles Fund (uSD) .......................................................................................................... 109
Bond Sub-Funds ....................................................................................................................................... 110 JPMorgan Investment Funds - Asset-Barked Fund (EIIR) .................................................................................................................... 110
JPMorgan Investment Funds - Europe Corporate Bond Fund .............................................................................................................. 114 JPMorgan Investment Funds - Europe Short Duration Fund ................................................................................................................ 116 . JPMorgan Investment Funds - Flexible Bond Fund (EUR) .................................................................................................................... 118
JPMorgan Investment Funds - Glotial Bond Fund (USD) ...................................................................................................................... 122 JPMorgan Investment Funds - Global Enhanced Bond Fund ................................................................................................................ 124
JPMorgan Investment Funds - Global High Yield Bond Fund .............................................................................................................. 128 JPhlorgan Investment Funds - Global Short Duration Fund ................................................................................................................. 130
JPMorgan Investment Funds - Inflation Plus Fund (EUR) .................................................................................................................... 136 JPMorgan Investment Funds - U S Bond Fund ........................................................................................................................................ 138
Moiicy Market Sub-1-unds ........................................................................................................................ 142 JPMorgan Investment Funds - Euro Liquid Market Fund ..................................................................................................................... 142
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JPMorgan Investment Funds - Global Bond Fund (EUR) ...................................................................................................................... 120
JPMorgan Investment Funds - Global ex-US Bond Fund ....................................................................................................................... 126
JPhlorgan Investment Funds - Highhridge Income Opportunity Fund ................................................................................................ 132 JPMorgan Investment Funds - ilighbridge income Opportunity Plus Fund ........................................................................................ 134
JPMorgan Investment Funds - IJS Dollar Enhanced Yield Fund ........................................................................................................... 130 8 .
Appendix IV - Risk Fartors ....................................................................................................................................................................... 144
. . Derivative Kisks ................................................................................................................................................ I45
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Principal Features and Glossary
‘l’he following summary is qualified in its entirety by reference to the more detailed information included elsewhere in this Prospectus.
Articles
Directors
The Articles of Incorporation ofthe Fund as amended from time to time.
The benchmark where listed in section 4 of Appendix 111 for cach Sub-Fund is a point of reference against which the performance of the Sub-Fund may be measured, unless othenvise stated. The degrcc of coi-relation with the benchmark may vary from Sub- Fund to Sub-Fund, depending on factors such as the risk profile. invcstmcnt objective and investment restrictions of tlic Sub-Fund, and the concentration of constituents in the benchmark. Where a Sub-Fund’s benchmark is part of the investment policy, this is stated in the investment objcctivc and policy of the Sub-Fund in Appendix 111 and the Sub-Fund will be seeking to outperform such benchmark. Benchmarks uscd in the calculation of the performance fees are stated under the section “Management and Fund Charges” and where Sub-Funds’ currency cxposurc is managed with reference to a benchmark, the benchmarks are stated in Appendix 111. Where ‘*Not yet determined” appears in place of the benchmark in Appendix 111. the Sub-Fund has not yet bccn launched.
The description ‘Total Return Net’ is applied to a benchmark whcn thc return is quoted net of tax on dividends, “lbtal Keturn Gross‘ is applied to a benchmark when the return quoted is gross of tax on dividends, and ‘Price Index’ is applied when the return cxcludcs dividend income.
Shares of cach Class arc issued at the Offer I’rice of such Class determined on the applicable Valuation Day in accordance with the relevant provisions under ”Calculation of Bid and Offer Prices”.
Subject to certain restrictions specified herein, Shareholders may at any time request redemptions of their Shares at the Bid Price of the relevant Class determined on the applicable Valuation Day in accordance with the relevant provisions under “Calculation of Bid and Offer Prices“.
A week day other than New Year’s Eve: New Year’s Day, Easter Monday, Christmas Day, thc day prior to and following Christmas Day, or, if these days do not fall on week days, holidays in lieu ofthcse days.
As more fully described under “‘l’he Shares - Conversion of Shares” below, unless specifically indicated to the contrary in the relevant section of Appendix 111, and subject to compliance with any conditions (including any minimum subscription amount) of the Class into which conversion is to be effected, Shareholders may at any time request conversion of their Shares into Shares of another existing Class of that or another Sub-Fund, or to Shares of any other UCITS or other UCls managed by a member of JPMorgan Chase & Co., on the basis of the Bid Pricc of the original Class and thu net asset value of tlie other Class. A conversion charge may be applicable, as more fully described under ”The Shares - Conversion of Shares“ below.
Commission de Surveillance du Secteur Financier . The regulatory and supervisory authority of the Fund in Luxembourg.
The assets of the Fund are held under the custody or control of J.P. Morgan Bank Luxembourg SA.
Forward pricing (a forward price is a price calculated at the valuation point following tlie Fund’s deal cut off time).
The Board of Directors of the Fund (the ‘.Hoard”, the “Directors” or the “Hoard of Directors”).
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Distributor
Dividends
The person or entity duly appointed from time to time by the Management Company to distribute or arrange for the distribution of Shares.
Distribution of net income attributable to Share Classes of the Fund. as set out in the Prospectus under "Dividend Policy".
Documents of the Fund The Articles, Prospectus, Simplified Prospectus(es), supplementary documents and financial reports.
Eligible State Any F,U Member State, any member state of the Organisation for Economic Co-operation and Development ("OECD"), and any other state which the Directors deem appropriate with regard to the investment objectives of each Sub-Fund. Eligible States in this category include countries in Africa, the Americas, Asia, Australasia and Europe.
EU Member State A member state of the European Union.
EU NEuro
FAT F
Financial Year
Fund
The ollicial single European currency adopted by a number of EU Membor States participating in the Economic and Monetary Union (as defined in European Union legislation).
Financial Action Task Force (also referred to as Groupe d'Action Financiere Internationale "GAFI"). The FATF includes 33 members: 3 1 countries and .jurisdictions (1 5 of the EU Member States; Argentina: Australia; Brazil; Canada; Hong KondChina; Iceland; Japan; Mexico; New Zealand: Norway; Russian Federation; Singapore: South Africa; Swit7erland; Turkey and the United States ofAmerica); and two international organisations (the European Commission and the Gulf Co-operation Council).
The financial year of the Fund ends on 3 1 December each year.
The Fund is an investment company organised under Luxembourg Law as a societe anonyine qualifying as a societe d'investissement a capital variable ("SICAV"). The Fund comprises several Sub-Funds. Each Sub-Fund may have one or more classes of Shares. The Fund is authorised under Part I of the Luxembourg law of 20 December 2002. relating to collective investment undertakings and qualifies as an Undertaking for Collective Invest- meim in Transferable Securities ("UCITS") under the amended EC Directive 85/61 1 of 20 December 1985.
GBP United Kingdom pounds sterling.
Hedged Sliarc Classes Where a Class of Shares is described as hedged (a "Hedged Share Class"), a substantial part of the assets of the Sub-Fund attributable to that Class of Shares will be dcnomiiiated in or hedged into the currency of that Class of Shares. In the case of a net flow to or from a Hedged Share Class. the hedging may not be adjusted and reflected in the Net Asset Value of the Hedged Share Class until one or more business days following the Valuation Day on which the instruction was accepted. This may have a positive or negative impact on the value of Shares in that Hedged Share Class depending on the movement of the relevant exchange rates.
I t is generally intendcd to hedge the currency exposure of the underlying holdings into the currency of the Hedged Share Classes through the utilisatioii of various techniques, including entering into Over The Counter ("OTC") currency forward contracts and foreign exchange swap agreements. In cases where the underlying currency is not liquid, or where the underlying currency is closely linked to another currency, proxy hedging may be used. The costs and expenses incurred in connection with any currency transactions entered into to hedge currency exchange risks associated with Hedged Share Classes, will be borne exclusively by such Hedgcd Share Classes and may be aggregated across any Hedged Share Classes denominated in the same currency in the same Sub-Fund.
Historical Performance Past performance information for each Sub-Fund is contained in that Sub-Fund's
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Simplified Prospectus, which is available at the registered oflice ol‘thc Fund.
Institutional Invcstor(s) An investor, within the meaning of Article 129 ofthe Luxcmbourg Law of December 2002. which currently includes insurance companies, pension funds, credit establishments and other professionals in the financial sector investing either on their own behalf or on behalf of their clients who are also investors within the meaning of this definition or under discretionary management, undertakings for collcctivc investment and qualified holding companies. Further description of an Institutional Investor can be found within thc Management and Fund Charges section.
Investment Manager
ISDA
The Managcnient Company has delegated investment management and advisory functions for each Sub-Fund to one of the Investment Managers listed in the Management and Administration section below and as further specified in respect of each Sub-Fund in Appendix 111.
Thc International Swaps and Derivatives Association is the global trade association representing participants in the privately negotiated derivatives industry.
JPMorgan Chase & Co. The Management Company’s ultimate holding company, whose principal office is located at 270 Park Avenue, New York, N.Y. 10017-2070. USA and that company’s direct and indirect subsidiaries and afliliates worldwide.
JPY Japanese Yen.
LlBlD
LlHOH
(London Interbank Bid Ratc). The bid rate that a bank is willing to pay to attract a deposit from another bank in the London interbank market.
(London Interbank Offered Rate). The rate of interest at which hanks borrow funds. in marketable size, from other banks in the London interbank market.
Listing of Shares The Shares of each Class of each Sub-Fund (except Class X Shares) are, or will on issue, be listed on the Luxembourg Stock Exchange unless stated to the contrary in the relevant section ofAppendix Ill.
Management Company JPMorgan Asset Management (Europe) S.a r.1. has been designated by the Directors of the Fund as Management Company to provide investment management, administration and marketing functions to the Fund with the possibility to delegate part of such functions to third parties.
Minimum Investment The minimum invcstment levels for initial and subsequent investments are specified under “The Shares - Minimum Subscription and I lolding Amounts and Eligibility for Shares” below.
Mortgage-backed security (MBS)
A security representing an interest in a pool of loans secured by mortgages. Principal and interest payments on the underlying mortgages are used to pay principal and interest on the security.
Net Asset Value per In relation to any Shares of any class, the value per Share determined in accordance with Share the relevant provisions described under the heading ”Determination of the Net Asset Value
of Shares” as set out in the section “General Information”.
Reference Currency The reference currency of a Sub-Fund (or a Class thereof, if applicable) which, however, does not necessarily correspond to the currency in which the Sub-Fund’s assets are invested at any point in time. Where currency is used in the name of a Sub-Fund. this merely refers to the reference currency of the Sub-Fund and does not indicate a currency bias within the portfolio. Individual Share Classes may have different currency denominations which denote the currency in which the Net Assct Value pcr Share is expressed. These differ from I ledged Share Classes which are described above.
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Regulated Market The market defined in item 13 of Article 1 of the Council Directive 93/22/EEC of 10 May 1993 on investment services in the transferable securities field, as amended, as well as any other market in an Eligible State which is regulated, operates regularly and is recognised and open to the public.
Risk Considerations As more fully described under Appendix IV, investors should note that the value of an investment in the Shares may fluctuate and the value of Shares subscribed by an investor is not guaranteed.
Shares Shares of each Sub-Fund will be ofrered in registered form. All Shares must be fully paid for and frsctions will be issued up to 3 decimal places. Registered Shares will be issued and confirmed by means of a contract note dispatched to the investor, following the issue of the Shares. No Share certificates will be issued. Shares may also be held and transferred through accounts maintained with clearing systems.
Share C: lass( es)/ Class(es) of Shares
l'ursuant to the Articles of the Fund, the Board of Directors may decide to issue, within each Sub-Fund, separate classes of Shares (hereinafter referred to as a "Sharc Class" or "Class of Shares", as appropriate) whose assets will be coinmonly invested but where a specific initial or redemption charge structure, fee structure, minimum subscription amount, currcncy or dividend policy may be applied. I f different Classes are issued within a Sub-Fund: the details of each Class are described in the relevant section ofAppcndix Ill.
Share Dealing
Valuation Day
Shares are available for subscription, conversion and redemption on each Valuation Day for the relevant Sub-Fund or Sub-Funds, subject to the limitations and charges set out in the section "The Shares".
A holder of Shares.
In accordance with the requirements of the Luxembourg Law and applicable CSSF circulars, the Fund publishes. in addition to this Prospectus, a Simplified Prospectus for each Sub-Fund which contains the information required by Schedule C ofAnnexe I to the aforesaid law. The Simplified Prospectus includes amongst others, information on the past performance of each Sub-Fund, which will be updated on an annual basis.
A specific portfolio of assets and liabilities within the Fund having its own nct asset value and represcntcd by B separate Class or Classes of Shares, which are distinguished Inainly by their specific investment policy and objective and/or by the currency in which they are denominated. The specifications of each Sub-Fund are described in the relevant section of Appendix I l l to this Prospectus. The Board may, at any time, decide to create additional Sub-Funds and, in such case: Appendix I11 KI this Prospectus will be updated.
A forward contract on a generic pool of mortgage-backed securities. The specific MRS pools are announced and allocated prior to delivery date.
An Undertaking for Collective Investment.
An Undertaking for Collective Investment in Transferable Securities governed by the amended EC Directive 85/61 1 of 20 December 1985.
United States dollars.
The Net Asset Value per Share of each Class is determined on tach day which is a valuation day for that Sub-Fund. Unless otherwise specificd in the relevant section of Appendix 111, a "Valuation t h y " is a Business Day other than a day on which any exchange or market on which a substantial portion of the relevant Sub-Fund's investments is traded, is closed or while dealings on any such exchange or market are restricted or suspended. Requests for issue, redemption. transfer and convcrsion of Shares of any Class are accepted by the Fund in 1,uxemboui-g on any Valuation Day of the relevant Sub-Fund. A list of expected non-valuation days is available from the Management Company on request.
Value at Risk (VaR) Value at Kisk (VaK) provides a measure of the potential loss that could arise over a given time interval under normal market conditions, and at a given confidence level.
All references herein to time are to Luxembourg time unless otherwise indicated.
Words importing the singular shall, where the context permits, include the plural and \ w e * versa.
JPMORGAN INVESTMENT FUNDS Societe d'lnvestissement a Capital Variable
Registered office: 6, route de 'li-eves, 1 ,-2633 Sunningerberg, Grand Duchy of Luxembourg R.C.S. Luxembourg B 49 663
Board of Directors
Chairman lain 0. S. Saunders: Banker. Duine, Ardfern, Argyll PA3 1 SQN, IJnitcd Kingdom
Directors AndrC Elvinger. Partner, Elvinger, I loss and Prussen, 2, place Winston Churchill, L-2014 Luxembourg, Grand Duchy of Luxembourg
Jean Frijns, Professor, Finance and Investments, Antigonelaan 3, NL-563 1 L R Eindhoven, The Netherlands
Andrea L. HaLcn, Managing Director, JPMorgan Asset Management (UK) Limited: Finsbury Dials, 20 Finsbury Street. London. EC2Y 9AQ, United Kingdom
Pierre Jaans, Economist, 3, rue de Kahler, LA356 Garnich, Grand Duchy of Luxembourg
Herndt May, Vice President, JPMorgan Asset Management (Europe) S.a r.1.: Austrian Branch, Fuhrichgasse R. 101 0 Wien. Austria.
Robert van der Meer, Professor of Finance, 9A, I.,ange Vijverberg. N L 2 5 13 AC The Hague. The Netherlands
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Management and Administration
Management Company and Domiciliary Agent JPMorgan Asset Management (Europe) S.a r.]., European Bank & Business Centre, 6, route de Tri-vcs, 1.-2633 Senningerberg, Grand Duchy of LUXcinbQurg
Investment Managers JPMorgan Asset Management (UK) Limited. having irs principal place ol‘busintss at Fillsbury Ilials, 20 Finsbury Street. London EC2Y 9AQ, United Kingdom (authorised and regulated by the Financial Services Authority (FSA))
J.P. Morgan Investment Management Inc., 245 Park Avenue. New York, NY 10 167, United States of Amcrica
J I’Morgan Asset Management (Japan) Limited, Tokyo Building, 7-3. Marunouchi 2-chomc Chiyoda-ku, I’okyo 100-6432. Japan
JF Asset Management Limited, 21 st tloor, Chatcr House. 8 Connaught Road, Central. Hong Kong
American Century Global Investment Management: Inc.. 666 Third Avcnuc, Ncw York, NY 1001 7, United States ofAmerica
Highbridge Capital Management. LLC, 9 West 57th Street, New York, NY 10019, United States ofAmerica.
or such other company as the Management Company ma)] appoint as investment adviser and manager to a specific Sub-Fund and which is identified as such in the relevant section ofAppendix 111 ofthis Prospectus.
Custodian, Corporate and Administrative Agent J.P. Morgan Bank Luxembourg S A . , European Bank & Business Centre. 6: route de ‘I’rkves, 1,-7633 Senningerberg Grand Duchy of Luxembourg
Auditors PricewaterhouscCoopcrs Si r.1.. 400, route d’Esch. E t ? 1443, Ll014 L,uxembourg, Grand Duchy of I.uxernbourg
Luxembourg Legal Advisers Elvinger, Hoss and Prussen, 2, place Winston Churchill. B.P. 425, L-20 14 Luxembourg, Grand Duchy of Luxembourg
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Investment Policies
1 . Specific Investment Policy of each Sub-Fund
The Board o f Directors has determined the investment policy and objective of each of the Sub-F'unds as dcscribcd in Appendix I l l to this Prospectus. There can be no assurance that the investment objective for any Sub-Fund will be attained. Pursuit of the investment policy and objective of any Sub-Fund must be in compliance with the limits and restrictions set forth in Appendix 1. "Investment Rcstrictions and Powers".
2. Secu r i t ies Lending
Each Sub-Fund may engage in securities lending in compliance with the limits and restrictions set forth in Appendix I . "Investment Restrictions and Powers".
In respect of third parties, including members of JPMorgan Chase &Co., orgariising or structuring securities lending arrangements or acting as agents in relation to securities lending transactions, the Fund may share with such third parties the revenues arising from the securities lending transactions as may be agreed behveen the Fund and such third parties from time to time. The Board of Directors will ensure that revenues arising from securities lending arrangements are in accordance with usual market practice and that the Fund retains an appropriate share thereof. The net revenues of the Fund arising from securities lending transactions are specified in the semi-annual and annual reports published by the Fund.
3. Pooling
Where the investment policies of the Sub-Funds (and applicable laws and regulations) so permit, and for the purpose of effective management, the Board of Directors, in accordance with the Articles, may pool the management of all or part of the assets of the Sub-Funds concerned so that each Sub-Fund will participate in the relevant pool of assets in proportion to the assets contributed thereto by the relevant Sub-Fund. For further details, see undur "General Information - Pooling".
4. Investment Considerations
Investing in 1e.w developed or emerging mnrkets
Investors should note that certain of thc Sub-Funds may invest in less developed or emerging markets as described in the relevant section of Appendix 1 1 1 for such Sub-Funds. These markets may be volatile and illiquid and the investments of the Sub-Funds in such markets ma)' be considered speculative and subject to significant delays in settlement. 'I'he risk of significant lluctuations in the net asset value and of the suspension of redemptions in those Sub-Funds may be higher than for Sub-Funds investing in major world markets. I n addition: there may be a higher than usual risk of political, economic, social and religious instability and adverse changes in govcrnmcnt regulations and laws in less developed or emerging markets. The assets of Sub-Funds investing in such markets: as well as the income derived from the Sub-Fund, may also be affected unfavourably by fluctuations in currency rates and exchange control and tax regulations and consequently the net asset value of Shares of these Sub-Funds may be subject to significant volatility. Somt ol'thesc markets may not be subject to accounting, auditing and financial reporting standards and practices comparable to those of more developed countries and the securities markets of such markets may be subject to unexpected closure. In addition, there may be less government supervision, legal regulation and less well defined tax laws and procedures than in countries with more developed securities markets.
Investors should consult a profcssional adviser as to the suitability for them of an investment in any Sub-Fund and in particular any Sub-Fund investing in less developed or emerging markets. Subscriptions to Sub-Funds investing in such markets should bc considered only by invcstors who are aware of, and able to bear, the risks related thereto and such investments should be made on a long-term basis.
Itrve.$ting in Equity Securities
Investing in equity securities may oRer a higher rate of return than those in short term and longer term debt securities. However, the risks associated with investments in equity securities may also be higher, because the investment performance of equity securities depends upon factors which are dificult to predict. Such factors include the possibility of sudden or prolonged market declines and risks associated with individual companies. I he fundamental risk associated with any equity portfolio is the risk that the value of the investments it holds might decrease in value. Equity security values may fluctuate in response to the activities of an individual company or in response to general market and/or economic conditions. Historically, equity securities have provided greater long-term returns and have entailed greater short-tern1 risks than other investment choices.
I2
Foreign Currency Evclrunge Trrmsrictions
Sub-Funds may buy and sell securities and receive interest and dividends in currencies other than the currency in which the rclevant Sub-Fund's Shares are denominated and accordingly such Sub-Funds may enter from time to time into currency exchange transactions either on a spot (i.e. cash) basis or by buying currency cxchangt. forward contracts.
Neither spot transactions nor forward currency exchange contracts eliminate fluctuations in the prices of a Sub-Fund's securities or in foreign exchange rates. or prevent loss if the prices of these securities should decline.
A Sub-Fund may cntcr into currency exchange transactions in an attempt to protect against changes in a country's currency exchange rates between the trade and settlement dates of specific securities transactions or anticipated securities transactions. A Sub-Fund rnay also enter into forward contracts to hedge against a change in such currency exchange rates that would cause a decline in the value of existing investments denominated or principally traded in a currency other than the reference currency of that Sub-Fund. To do this. the Sub-Fund would enter into a forward contract to sell the currency in which the investment is denominated or principally traded in exchange for the reference currency of the Sub-Fund.
Although these transactions are intended to minimise the risk of loss duc to a decline in the value of the hedged currency, at the same time they h i t any potential gain that might be realised should the value of the hedged currency increase. The precise matching of the forward contract amounts and the value of the securities involved will not generiilly he possible because the future value of'sucli securities will change as a consequence of market movements in the value of such securities bctwecn the date when the forward contract is entered into and the date when it matures. Therefore the successful execution o f a hedging s t ra tqy which matcher; exactly the profile of the investments of*any Sub-Fund cannot be assured.
Inve.sting iii fruEcr arid jloating rnie Debt Securities
Investment in fixed and floating rate debt securities is subject to interest rate, sector. securiv and credit risks. Information relating to the credit quality of the fiscd and floating rate debt securities o f a particular Sub-Fund is _given in Appendix I l l . 1,ower-rated securities will usually ofrer higher yields than higher-rated securities to compensate for the reduced creditworthiness and increased risk of default that these securities carry. Lower-rated securities generally tend to ieflect short-term corporate and market developments to a greater extent than higher-rated securities which react primarily to fluctuations in the general level of interest ratcs. There are fewer investors in lower-rated securities, and it may be harder to buy and sell securities at an optimum time.
Investors should note that credit ratings rnay not necessarily reflect the true risk of an investment and that the Investment Manager may use its own set ofcredit rating critcria to perform his credit analysis, which may differ from the criteria used by the credit rating agencics.
For the purpose of applying the credit rating to investment decisions, the Investment Manager considers that all securities within one category are equivalent. For example, a niinimuni credit requirement o f A means that all securities rated A or A complemented by any signs or numbers, regardless of the credit rating agency, would be considered equivalent.
In instances where two or more credit ratings are published by independent credit rating agencies for a specific security and differ, the higher of these ratings shall be adopted.
The volume of transactions effected in certain international bond markets may be appreciably below that of the world's largest markets. such as the United States. Accordingly, a Sub-Fund's investments in such markets may be less liquid and their prices may be more volatile than coinparable investments in securities trading in markets with larger trading voluinerj. Moreover, the suttlcmcnt periods in certain markets may be longer than in others which may affect portfolio liquidity.
The Shares
Subject to the restrictions described below: Shares of'cach Class of cach Sub-Fund are freely transfirablc and arc each entitled to participate equally in the profits and liquidation proceeds attributable to that Class. The rules governing such allocation are set forth below. The Shares, which are of no par value and which must be fully paid upon issue, carry no preferential or pre-emptive rights, and each one is entitled to one vote at all general meetings of Shareholders and at all meetings of the Sub-Fund in which Shares are held. Shares redeemed by the Fund become null and void.
The Board ofnirectors may restrict or prevent the ownership of its Shares by any person. firm or corporation, ifthe ownership is such that it may bo against the interests of the Fund or of the majority of its Shareholders or of any Sub-Fund or Class therein. Where it appears to the Board of Directors that a person who is precluded from holding Shares. either alonu or in conjunction with any other person, is a beneficial owner of Shares. the Fund may proceed to compulsory redemption of all Shares so owned.
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'l'he Management Company and/or JPMorgan Chase & Co. may, at their absolute discretion, delay the acceptance of any subscription for Shares of a Class restricted to Institutional Investors until such date as it has received sufficient evidence on the qualification of the investor as an Institutional Investor. If it appears at any time that a holder of Shares of a Class restricted to Institutional Investors is not an Institutional Investor. the Management Company will either redeem the relevant Shares in accordance with the provisions under "Redemption of Shares" below, or convert such Shares into Shares of a Class which is not restricted to Institutional Investors (provided there exists such a Class with similar characteristics) and notify the relevant Shareholder of such conversion.
IJnlcss otherwise specified in Appendix I l l for any Sub-Fund, applications for subscriptions, redemptions and conversions from or to any Sub-Fund will be dealt with on the Valuation Day on which they are received, provided they are received prior to 2.30 p.ni. I,uxembourg time on that Valuation Day. Applications received after such time will be accepted on the next Valuation Day. As a result ofthis, applications for the subscription, redemption and conversion of Shares shall be dealt with on an unknown net asset value basis before the determination oftlic net asset value for that day.
Specifically, the Fund does not permit market timing (as set out in CSSF circular 04/146) or related excessive, short-term trading practices. In order to protect the best interests of Shareholders: the Fund and/or the Management Company reserve the right to reject any application for the subscription or conversion of Sharcs from any investor engaging in such practices or suspected of engaging in such practices and to take such further action as they. in their discretion, may deem appropriate or necessary.
Further information in relation to the subscription, conversion and redemption of Shares is set out below.
1. Subscription for Sharcs
Subscriptions for Shares in each Sub-Fund can be made on any day that is a Valuation Day for the relevant Sub-Fund. Applications for Shares should be sent to one of the sales agents (hereinafter referred to as "Sales Agents") at the address given under "lnfoimation for Investors in Certain Countries" below or to the Management Company or, in either case, at the address given in the annual report.
The initial launch date or offering period for each newly created or activated Class or Sub-Fund will be disclosed in the application form and in the latest annual report of the Fund. The application form will be updated as new Classes or Sub-Funds become available. The Hoard of Ik-ectors may fix minimum subscription amounts for each Class which. if applicable, are detailed below under "The Shares - 2. Minimum Subscription and Holding Amounts and Eligibility for Shares". The Board of Directors has the discretion, from time to time: to waive any applicable minimum subscription amounts. The relevant minimum subscription amount shall not apply whew the Shat-es arc subscribed for by companies in JPMorgan Chase & Co. or by third party investment managers or distributors approved by JPMorgan Chase & Co. who are subscribing on behalf' of their clients.
Shares of each Class shall be allotted at the Ofher Price of such Class determined on the Valuation Day on which the application has been accepted.
A transaction charge may also apply to any subscription or redemption of Shares. Details of such charge, if any, are provided in Appendix 111. Shares are normally only issued on receipt of cleared funds. In the case of subscriptions from approved financial intermediaries or other investors authorised by the Management Company, the issue of Shares is conditional upon the receipt of settlement in cleared hinds within a previously agreed period not normally exceeding 3 Business Days ( 1 Business Day in the case of the US Dollar Enhanced Yield I (acc) USL) share class) after aCCepbdnce of the application for subscription.
If, on the settlement date, banks are not open for business, or an interbank settlement system is not operational, in the country of the currency of the relevant Class. then settlement will be on the next Business Day on which those banks and settlement systems are open. Payment for Shares must be received by the Custodian in the reference currency of the rclevant Class. Request for sub- scriptions in any other major freely convertible currency will only be accepted if so determined by the Board of Directors and on the basis of receipt of cleared funds by the Custodian. A currency exchange service for subscriptions is provided by the Management Company on behalf of, and at the cost of, the investors. Further information is available from the Management Company on request. Payment by cheque will not normally be accepted. The Board of Directors may from time to time accept subscriptions for Shares against contribution in kind of securities or other assets which could be acquired by the relevant Sub- Fund pursuant to its investment policy and rcstrictions. Any such contribution in kind will be valued in an auditor's report drawn up in accordance with the requirements of Luxembourg law. All supplemental costs associated with contributions in kind will not be borne by the Fund.
The Board of Directors reserves the right to accept or refuse any application in whole or in part and for any reason. The Fund may also limit the distribution of Shares o f a given Class or Sub-Fund to specific countries. The issue of Shares of a given Class
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shall be suspended whenever the determination of the Net Asset Valuc per Share of such Class is suspended by the Fund (see "General Information - Temporary Suspension of Issues: Redemptions and Conversions").
Pursuant to the Luxembourg law of 19 February 1973 (as amended). the law of S April 1993 (as amended) and to the law of 12 November 2004 and ar;sociated circulars of the Luxembourg supervisory authority, obligations have been outlined to prevent the use of undertakings f'or collective investment such as the Fund for money laundering purposes. Within this context a procedure for the identification of investors has been imposed: the application form of an investor must be accompanied by such documents set out in the current version of the application form. which can be obtained from the Management Company. Such idcntilication procedure may be waived by the Management Company in the following circumstances:
a) in the case of subscriptions through an intermediary of a financial sector resident in a country which imposes an identification obligation equivalent to that required under Luxembourg law for the prevention of money laundering;
b) in the case of subscription through an intermediary or nominee whose parent is subject to an identification obligation equivalent to that required by 1.uxembourg law and where the law applicable to the parent imposes an equivalent obligation on its subsidiaries or branches.
It is generally accepted that professionals of the financial sector resident in a country which has ratilicd the conclusions of the FATF are deemed to have an identification obligation equivalent to that required by Luxembourg law.
Confirmation of completed subscriptions will normally be despatched on the Business Day following the execution of the subscription instructions. Investors are advised to refer to the terms and conditions on the application form to inform themselves fully ofthe terms and conditions to which they are subscribing.
The Management Company may enter into agreements with certain Distributors (as defined hereafter) pursuant to which they agree to act as or appoint nominees for investors subscribing for Shares through their facilities. In such capacity the Distributor may effect subscriptions, conversions and redemptions of Shares in nominee name on behalf of individual investors and request the registration of such operations on the register of Shareholders of the Fund in such nominee name. The noininee/Distributor maintains its own records and provides the investor with individualised information as to its holdings of Shares in the Fund. Except where local law or custom proscribes the practice. investors may invest directly in the Fund and not avail thcmsclves o f a nominee service. Unless otherwise provided by local law. any Shareholder holding Shares in a nominee account with a Distributor has the right to claim, at any time, direct title to such Shares.
Regular Savings Plan
Regular Savings Plans are available in certain countries in which the Fund is authorised, the details ofwhich may be obtained at any time from the Management Company of the Fund upon request. Fees and commissions levied during the first year of the investor's Regular Savings Plan shall not be more than one third ofthe gross amount invested by the investor in that year.
2. Minimum Subscription arid Holding Amounts and Eligibility for Shares
'l'he minimum subscription amount and minimum holding requirement for each Class of Sharcs of each Sub-Fund are shown in Appendix I I I .
The Hoard of Directors has the discretion: from time to time, to waive or reduce any applicable mininium subscription amounts. The relevant minimum subscription amount shall not apply where the Shares are subscribed for by companies in JPMorgan Chase Clr Co. or by third party investment managers or distributors approved by JPMorgan Chase & Co. who arc subscribing on behalf oftheir clients.
Where the Shareholder of a given Class within a Sub-Fund accumulates a holding of suficicnt sire to satis@ the minimum subscription requirements of a 'parallel Share Class' within that Sub-Fund with lower fees and expenses. the Board of Directors may. in its absolute discretion. convert the Shareholder's Shares into Shares in the 'parallel Share Class' with the lower fees and expenses. A 'parallel Share Class' within a Sub-Fund is one that is identical in all material respects (including investment and dividend policy) save for the minimum subscription amount and expenses applicable to it.
The Hoard of Directors may, at any time, decide to compulsorily ~-cdcem all Shares from Shareholders whose holding is less than the minimum subscription amount specified in the table in Appendix 111 or who fail to satisfy any other applicable eligibility requirements set out above or stated in the relevant section of Appendix I l l . In such case. the Shareholder concerned will receive one monih's prior notice so as to be able to increase his holding above such amount or otherwise satisfy the eligibility requirements.
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3. Listing of Shares
Except for Class X Shares: the Shares of each Class of the Sub-Funds arc, or will be on issue, where appropriate, listed on thc 1,uxembourg Stock Exchange unless there is a statement to the contrary in the relevant section of Appendix 111. If the Directors decide to create additional Sub-Funds or Classes they may, if they think appropriate, apply for the Shares in those Sub-Funds to be listed on the I.uxenibourg Stock Exchange. For so long as the Shares of any Sub-Fund are listed on the I.uxt.inbourg Stock Exchange, the Fund shall comply with the requirements of the Luxembourg Stock Exchange relating to those Shares.
4. Rcdernption of Sliarcs
Any Shareholder may apply for redemption of his Shares in part or in whole on any Valuation Day. Kedemption applications should be sent to the Management Company at its address at 6 , route de Trkves. L-2633 Senningerberg, Grand Duchy of 1,usembourg or, if appropriate, to the address of the relevant Sales Agent (if one has been appointed to deal with such redemptions) as indicated under "Information for Investors in Certain Countries" below.
Redemptions shall be erected at the Bid Price of the relevant Class determined on the Valuation Day on which the redemption application has been accepted. Kedemption applications will, at the discretion of the Board of Directors, only be executed where the subscription proceeds for the relevant Shares will have been received by the Fund.
The Management Company may at its option carry out any authentication procedures that it considers appropriate to verify, confirm or clarify Shareholder payment instructions relating to a redemption application. This aims to mitigate the risk of error and fraud for the Fund, its agents or Sharelioldcrs. Where it has not been possible to complete any authentication procedures to its satisfaction. tlie Management Company may, delay the processing of payment instructions to a date later than the cnvisagcd payment datc for rtdemptions set out in this section, until authentication procedures have been satisfied. This shall not affect the Valuation Day on which the redemption application is accepted and shall not affect the fact that the Bid Price for any redemption shall be determined on the Valuation Day on which the redemption application is accepted.
If the Managcnicnt Company is not satisfied with any verilication or confirmation, it may decline to execute the relevant redemption instruction until satisfaction is obtained. Neither the Management Company nor the Fund shall be held responsible to the Shareholder or anyone if it delays execution or declines to execute redemption instructions in these circumstanccs.
Redemption payments will normally be made i n the Reference Currency of the relevant Class and the Custodian will issue payment instructions therefore to its correspondent bank for payment within a previously agreed period not noiinally cxcccding 3 Business Days ( 1 Business Day in the case of the IJS Dollar h h a n c e d Yield I (acc) USD share class) after acceptance of the redemption application (unless otherwise specified in Appendix 111).
If, in exceptional circumstances, redemption proceeds cannot be paid within three Business Days (up to live Business Days for deals placed through certain Distributors, such as JF Funds Limited in Hong Kong) from the relevant Valuation Day, for example when the liquidity of the relevant Fund does not permit. payment will be made as soon as reasonably practicable thereafter (not exceeding, however, ten Business Days from the relevant Valuation Day) at the Bid Price calculated on the relevant Valuation Day.
If: on the settlement date, banks are not open for business, or an interbank settlement system is not operational, in the country of thc currency of the relevant Class, then settlement will be on the next Business Day on which those banks and settlement systems are open. On request, redemption proceeds paid by bank transfer may be paid in most other currencies, at the cost of the Shareholdor. I n oxccptional circumstances the Board of Directors may request that a Shareholder accepts 'redemption in kind' i.e. receives a portlblio of stock from the Share Class of equivalent value to tlie appropriate cash redemption payment. In such circumstances the investor is free to refuse the redemption in kind and to insist upon cash redemption payment in the reference currency of' the relevant Class. Where the investor agrees to accept redemption in kind he will, as far as possible. receive a representative selection of the Share Class' holdings pro rata to the number of Shares redeemed. The value of the redemption in kind will be certified by an auditor's certificate drawn up in accordance with the requirements of Luxembourg Law. All supplemental costs associated with redemptions in kind will not be borne by the Fund.
Unless waived by the Management Company, if; as a result of any conversion or redemption request, the amount invested by any Shareholder in a Class of Shares in any one Sub-Fund falls below the minimum holding for that Class of Shares, it will be treated as an instruction to redccm or convert, as appropriate, the Shareholder's total holding in the relevant Class of Shares.
The application form may provide that the Shares of one or more Sub-Funds may not be offered to, subscribed or owned, directly or indirectly. by any US Person (as this term is defined on page 1 of this Prospectus) or may be owned only by certain categories of US Persons specified therein. Shareholders are required to notify the Management Company
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immediately in the event that they are or become US Persons or hold Shsres for the account or benefit of US Persons or hold Shares in breach of any law or regulation or otherwise in circumstances having, or which may have, adverse regulatory, tax or fiscal consequences for thc Fund or the Shareholders or otherwise be detrimental to the interests of the Fund. If the Directors or the Management Company become aware that a Shareholder is holding Shares in breach of any law or regulation or othcrwisc in circumstances having, or which may have, adverse regulatory. tax or fiscal consequences for the Fund or the Shareholders or othcrwise be detrimental to the interests of the Fund or the Shareholder has become or is a US Person. the Directors or the Management Company may. in their sole discretion, redeem the Shares of the Shareholder in accordance with the provisions of the Articles. Should a Shareholder become a US Person they may be subject to US withholding taxes and tax repoiting.
Additionally, if requests for the redemption of more than 10 YO of the total number of Shares in issuc of any Sub-Fund are received on any Valuation Day? the Hoard of Directors may decide that redemption requests in excess of 10% shall be postponed until the next Valuation Day following that on which the relevant redemption requests wcrc rcctivcd. Redemption requests which have 1101 been dcalt with because of such postponement must be given priority to later requests made on the next following Valuation Day or Valuation Days until completion of the original rcqucsts.
Redemption of Shares of a given Sub-Fund shall be suspended whenever the determination of the Net Asset Value per Share of such Sub-Fund is suspended by the Fund (see "General Information - Temporary Suspension of Issues, Redemptions and Conversions").
A Shareholder may not withdraw his request for redemption of Shares of any one Class except in the event of a suspension of the detennination of the net asset value of the Class and, in such event, a withdrawal will be effective only if written notification is received by the Managemunt Company before the tennination of the period of suspension. If the redemption request is not with- d r a w , the Fund shall proceed to redeem on the tjrst applicable Valuation Day fbllowing the end of the suspension of the determination ofthe net asset value of the Shares of the relevant Sub-Fund.
From time to time it may be necessary for the Fund to borrow on a tcmporary basis to fund redemptions. For restrictions applicable to the Fund's ability to borrow, see "Investment Restrictions and Powers" below.
5. Conversion of Shares
'lb the extent described in and permitted by Appendix 111 for certain Sub-Funds, and subject to any suspension of the determination of the net asset values concerned, Shareholders have tlic right to convert all or part oftheir Shares of any Class of a Sub-Fund into Shares of another existing Class of that or another Sub-Fund: or to Shares of any other UCITS or other UCls managed by a mcniber of JPMorgm Chase & Co., by applying for conversion in the same manner as for issue and redemption of Shares. I lowever? the right to convert Shares i s subject to compliance with any conditions (including any minimum subscription amounts and eligibility requirements) applicable to the Class into which conversion is to be effected. Therefore, if: as a result o f a conversion. the value o f a Shareholder's holding in the new Class would be less than the minimum subscription amount specified above, under "Minimum Subscription and Holding Amounts and Eligibility for Shares". or in Appendix Ill, where appropriate, the Board may decide not to accept the request for conversion of the Shares. I n addition. if; as a result of a conversion, the value of a Sharcholdur's holding in the original Class would become less than the relevant minimum Holding Amount, the Shareholder may be deemed (ifthe Board so decides) to have requested the conversion of all ofhis Shares.
The number of Shares issued upon conversion will be based upon the Bid Price oftlie original Class and the net asset value ofthe other Class, plus the applicable conversion fee, on the common Valuation Day on which the conversion request is accepted. If the conversion rcquest is received before 2.30 p.m. J,uxembourg time on a day which is not a common Valuation Day For the relevant Classes, the conversion will be made on the basis of' the prices calculated on the next following Valuation Day of each of the two Classes concerned (requests received after 2.30 p.m. 1,uxembourg time on any Valuation Day being deferred to the next Valuation Day in the same manner as for issue and redemption of Shares).
The Board of Directors may apply a conversion charge not exceeding 1 YO of the net asset value of the Shares in the new Class. Where a Shareholder requests a conversion into a Class with a higher initial charge, then the additional initial charge payable for that Class may be charged. The Management Company is entitled to any charges arising f?om convorsions and any rounding adjustment.
6. Transfer of Shares
The transl'cr of registered Shares may normally be efrectcd by delivery to the relevant Sales Agent or the Management Company of an instrument of transfer in appropriate form. On receipt of the transfer request, the relevant Sales Agent or the Management Company may: after reviewing the endorsement(s), require that the signature(s) be guaranteed by an approved bank, stock broker or public notary.
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Shareholders are advised to contact the relevant Sales Agent or the Management Company prior to requesting a transfer to ensure that they have all the correct documentation for the transaction.
7. Restrictions on subscriptions and conversions into certain Sub-Funds
A Sub-Fund may be closed to new subscriptions or conversions in (but not to redemptions or conversions out) if. in the opinion 01‘ the Management Company, this is necessary to protect the interests of existing Shareholders. One such circurnstance would be where the Sub-Fund has reached a size such that the capacity of the inarkct and/or the capacity of the Investment Manager has been reached, and where to permit further inflows would be detrimental to the performance of the Sub-Fund.
Any Sub-Fund which. in the opinion of the Management Company, is materially capacity constrained may be closed to new subscriptions or conversions without notice to Shareholders. Once closed to new subscriptions or conversions in, a Sub-Fund will not be re-opcncd until, i n the opinion of the Management Company, the circumstances which required closure no longer prevail and significant capacity is available within the Sub-Fund for new investment.
Where closures to new subscriptions or conversions occur, the website ~vww.inmorlranassetmana~cmcnt.com will be amended to indicate the change in status of the applicable Sub-Fund or Share Class. Investors should confirm with the Management Company or check the website for the current status of Sub-Funds or Share Classes.
General Information
1 . Organisation
The Fund is an investment company organised as a societe anonyme under the laws of the Grand-Duchy of Luxembourg and qualifies as a socikte d‘investissement h capital variable (SlCAVj. The Fund was incorporated in Luxembourg on 22 December 1994 for an unlimited period. Its Articles were published in the Memorial, Recueil des Societes et Associations C*Mkiiiorial”j on 10 February 1995. The Fund is registered with the Rcgistre de Commerce et des SociCtes, Luxembourg, under number B 49 663. Amendments to the Articles were published in the Memorial on 9 September 1996, 19 November 2001 and 7 October 2005.
Consolidated Articles and a notice in respect of the issue and redemption of the Shares by the Fund are on file with the Regi.we de Conimerce et des Sociktk.7 in Luxembourg.
The minimum capital requircnient of thc Fund is set out by Luxembourg Law.
The rights of Shareholders and of creditors concerning a Sub-Fund of the Fund or which have arisen in connection with the creation operation or liquidation of a Sub-Fund are exclusively limited to the assets of that Sub-Fund.
2. Meetings
rT‘he annual general meeting of Shareholders (the “Annual Meeting”) will be held at the registered office of the Fund in Luxembourg on the last Friday of the month of April annually at 12.00 noon or, if any such day is not a bank business day in. Luxembourg. on the ncxt following bank business day, Notices of all general meetings will be published in the Memorial, to the extent required by Luxembourg Law, in the D’ Wort and in such other newspaper as the Board of Directors shall determine and will be sent to the holders of registered Shares by post prior to the meeting at their addresses shown o n the register of‘ Shareholders. Such notices will include the agenda and will specifj/ the time and place of the meeting and the conditions of admission. They will also refer to the rules of quorum and majorities required by Luxembourg Law and laid down in Articles 67 and 67-1 of the Luxembourg law of 10 August 191 5 on commcrcial companics (as amended) and in the Articles ofthe Fund.
Each whole Share confers the right to one vote. The vote on the payment of a dividend (if any) on a particular Sub-Fund or Class requires a separate majority vote from the meeting of Shareholdcrs of the Sub-Fund or Class concerned. The Management Company will register registered Shares jointly in the names of not tnore than four Shareholders should they so require. In such case the rights attached to such a Share must be exercised jointly by ALL those parties in whose name it is registered except when (ij voting at an Annual Meeting where only the first named Shareholder may vote, (ii) the Shareholders have indicated their desire to have individual signatory powers. or (iiij unless one or more persons (such as an attorney or executor) islare appointed to do so. Any change in the Articles affecting the rights of a Sub-Fund or Class must be approved by a resolution of both the general meeting ofthe Fund and the Sharcholdw of the Sub-Fund or Class concerned.
3. Reports and Accounts
Audited annual reports shall be published within 4 months following the end of the accounting year and unaudited semi-annual reports shall be published within 2 months following the period to which they refer. An abridged version of the audited annual reports shall be sent to each registered Shareholder at the address s h o w on the register of Shareholders. This abridged version encloses a report of the Directors. a statement of the net assets of the Sub-Funds and statistical inlbrmation, a statement of operations and of changes in net assets of the Sub-Funds, notes to the tinancial statements and an auditor's report. The annual and semi-annual reports shall be made available at the registered ofices of the Fund and the Custodian during ordinary office hours. The Fund's accounting year ends on 3 I December each year.
Tlic reference currency of the Fund is US dollars. The aforesaid reports will comprise consolidated accounts of the Fund expressed in US dollars as well as individual information on each Sub-Fund expressed in the reference currency of each Sub- Fund.
4. Allocation of assets and liabilities among the Sub-Funds
'The assets and liabilities will be allocated among the Sub-Funds in the following manner:
(a) the proceeds from the issue of each Share of each Sub-Fund are to be applicd in the books of the Fund to the pool of assets established for that Sub-Fund and the assets and liabilities and income and expenditure attributable thereto are applied to such pool subject to the provisions set forth hereafter;
(b) where any asset is derived from another asset. such derivative asset is applied in the books of the Fund to the same pool as the asset from which it was derived and on each revaluation of an asset. the increase or diminution in value is applied to the relevant pool;
(c) where the Fund incurs a liability which relates to any asset of a particular pool or to any action taken in connection with an asset of a particular pool, such liability is allocatcd to the relevant pool:
(d) in the case where any asset or liability of the Fund cannot be considered as being attributable to a particular pool, such asset or liability is allocated to all the pools in equal parts or, if the amoiints so justi@, pro rata to the net asset values of the relevant Sub-Funds;
(e) upon the payment of dividends to the holders of Shares in any Sub-Fund, the net asset value of such Sub-Fund shall be reduced by the amount of such dividends.
Under the Articles of the Fund, the Board of Directors may decide to create within each Sub-Fund one or more Classes whose assets will be commonly invested pursuant to the specific investment policy of the Sub-Fund concerned but where a specific initial or redemption charge structure. fee structure. minimum subscription amount, hedging policy or dividend policy may be applied to each Class. A separate net asset value, which will differ as a consequence of these variable factors. will be calculated Tor cach Class. If one or more Classes have been created within the same Sub-Fund, the allocation rules set out above shall apply, as appropriate, to such Classes.
5. Pooling
For the purpose of effective management, and subject to the provisions of the Articles and to applicable laws and regulations, the Board of Directors may invest and manage all or any part of the portfolio of assets established for two or more Sub-Funds (for the purposes hereof "Participating Sub-Funds") on a pooled basis. Any such asset pool shall be formed by hansfcrring to it cash or other assets (subject to such assets being appropriate with respect to the investment policy ofthe pool concerned) from each of the Participating Sub-Funds. 'lliereafter, the Board of Directors may from time to time make further transfers to each asset pool. Assets may also be transferred back to a Participating Sub-Fund up to the amount of the participation of the Class concerned. The Share of a Participating Sub-Fund in an asset pool shall be measured by reference to notional units of equal value in the asset pool. On formation of an asset pool, the Board of Directors shall, in their discretion, dctcnninc the initial value of notional units (which shall be expressed in such currency as the Hoard of Directors consider appropriate) and shall allocate to each Participating Sub-Fund units having an aggregate value equal to the amount of cash (or to the value of other assets) contributud. Thereafier, the value of the notional unit shall be determined by dividing the net ;isset value of the asset pool by the niimber of notional units subsisting.
When additional cash or assets are contributed to or withdrawn from an asset pool, the allocation of units of the Participating Sub-Fund concerned will hc increased or reduced, as the case may bel by a number of units determined by dividing the amount of cash or the value of assets contributed or withdrawn by the current value of a unit. Where a contribution is made in cash, it will be
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treated for the purpose of this calculation as reduced by an amount which the Board of Directors consider appropriate to reflect fiscal charges and dealing and purchase costs which may be incurred in investing the cash concerned; in the case of cash withdrawal, a corresponding addition will be made to reflect costs which may be incurred in realising securities or other assets of the assct pool.
Dividends, interest and other distributions of an income nature received in respect of the assets in an asset pool will be imincdiately credited to the Participating Sub-Funds in proportion to their respective participation in the asset pool at the time of receipt. Upon the dissolution ofthe Fund, the assets in an asset pool will be allocated to the Participating Sub- Funds in proportion to their respective participation in the asset pool.
6. Determination of the Net Asset Value of Shares
The net asset valuc of tlic Shares of each Class is determined in its reference currency on each Valuation Day by dividing the net assets attributable to each Class by the number of Shares of such Class then outstanding. The net assets of each Class are made up of the value of the assets attributable to such Class less the total liabilities attributable to such Class calculated at such time as the Board of Directors shall have set for such purpose.
The value ofthe assets ofthe Fund shall be determined as follows:
the value of any cash on hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash dividends and interest declared or accrued as aforesaid, and not yet received shall be deemed to be the full amount thereof, unless, however. the same is unlikely IO be paid or received in full, in which case the value thereof shall be determined after making such discount as the Board of Directors may consider appropriate in such case to reflect the true value thereof:
thc value of securities and/or financial derivative instruments which arc quoted or dealt in on any stock exchange shall be based on the latest available price on the rclevant stock exchange;
securities and/or financial derivative instruments dealt in on another regulated market are valued on the basis of the latest available price on such market;
'fhe financial derivative instruments which are not listed on any official stock exchange or traded on any other organised market will be valued in a reliable and verifiable inailner on a daily basis and in accordance with market practice;
for non-quoted securitics or securities not traded or dealt in on any stock exchange or othcr regulated market, as well as quoted or non-quoted securities on such other market for which no valuation price is available, or securities for which the quoted prices arc not representative of the fair market value, the value thereof shall be determined prudently and in good faith by the Hoard of Directors on the basis of foreseeable sales prices;
swaps arc v:ilued at their fair value based on the underlying securities (at close of busincss or intraday) as well as on the characteristics of the underlying commitments;
Shares or units in UCI-IS and other UCls shall bc valued at their last available net asset value as reported by such undertakings;
liquid assets and money market instruments may bc valued at nominal value plus any accrued interest or on an amortised cost basis. All other assets, where practice allows: may be valued in the same manner.
To the extent that the Directors consider that it is in the best interests of all Shareholders or potential Shareholders, given the prevailing market conditions and the level of subscriptions or redemptions requested by Shareholders or potential Shareholders in relation to the size of the relevant Sub-Fund, securities may be valued either at their bid or offer prices. The net asset value may also be adjusted for such suin as may represent the appropriate provision for dealing charges which may be incurred by the relevant Sub-Fund under such conditions, provided always that such sum shall not exceed 1% o f t h e net assct valuc of the Sub-Fund at such time.
Sub-Funds primarily invested in markets which are closed for business at the time the Sub-Fund is valued are normally valued using the prices at the previous close of business. Market volatility may result in the latest available prices not accurately reflecting the fair value of the Sub-Fund's investments. This situation could be exploited by investors who are aware of the direction of market movement, and who might deal to exploit the difference between the next published Net Asset Value and the fair value of the Sub-Fund's investments. By thcsc investors pay ins less than the fair value for Shares on issue, or receiving more than the fair value on redemption, other Shareholders may suffer a dilution in the value of their investment.
To prcvent this, the Fund may. during periods of market volatility, adjust the Net Asset Value per Share prior to publication to reflect more accurately the fair valuc o f the Sub-Fund’s investrnents. The adjustment will be based upon the percentage change in the benchmark index for the Sub-Fund since the previous close, provided that such change exceeds the threshold as determined by the Directors for the relevant Sub-Fund. If an ad-justrnent is made, it will be applied consistently to all Classes of Shares in the same Sub-Fund and at the level ofthe percentage change in the benchmark index.
The Directors are authorised to apply other appropriate valuation principles for the assets of the Fund a n d h the assets of a given Class if the aforesaid valuation methods appear impossible or inappropriate due to extraordinaiy circumstances or events.
Tlic value of assets denominated in a currency other than the reference currency of a Sub-Fund shall be determined by taking into account the rate of exchange prevailing at the timu ofthe determination of the net asset value.
The Net Asset Value per Share of each Class and the Hid and OtTer Prices thereof arc available at the registered otlice of the Fund.
7. Calculation of Bid arid Offer Prices
The Offer Price per Share of each Class is calculated by adding an initial charge, if any, to the Net Asset Value per Share. The initial charsc will be calculated as a percentage of the Net Asset Value per Share not exceeding the levels shown in Appendix 111.
The Bid Price per Share of each Class is calculated by deducting a redemption charge, if any, from the Net Asset Value per Share. The redemption charge will be calculated as a percentage of the Net Asset Value per Share, riot exceeding the levels shown in Appendix 1 1 1 .
For publication purposes the Bid and Offer prices will be rounded to the same number of decimal places as the Net Asset Value per Share of the relevant Sub-Fund.
8, Temporary Suspension of Issues, Redemptions and Conversinns
The detei-inination of thc nut asset value of Shares of one or more Classcs may be suspended during:
any period when any of the principal markets or stock exchanges on which a substantial portion of the investments of the Sub-Fund concerned is quoted or dealt in, is closed otherwise than for ordinary holidays, or during which dealings therein are restricted or suspended; or
the existence of any state ofalyairs which constitutes an emergency as a result ofwhich disposal or valuation of assets of the Sub-Fund concerned would be impracticable: or
any breakdown in the means of cotnmunication or computation noimally employed in determining the price or valuc of the assets of the Sub-Fund concerned or the current prices or values on any market or stock exchange: or
any period when the Fund is unable to repatriate funds for the purpose of making payments on the redemption of Shares or during which any transfer of funds involved in the realisation or acquisition of‘ investments or payments due on redemption of Shares cannot in the opinion of the Board of’ Directors be effected at normal rates of exchange; or
any other circumstance or circumstances where a failure to dn so might result in the Fund or its Shareholders incurring any liability to taxation or sufr’cring other pecuniary disadvantages or other detriment which the Fund or its Shareholders might not otherwise have suffered.
‘I’he Board of Directors has the power to suspend the issue. redemption and conversion of Shares in one or more Classes for an)’ period during which the determination