Common use of Collateral Management Clause in Contracts

Collateral Management. If the UCITS or the sub-fund conducts OTC transactions, then this may expose it to risks in conjunction with the credit- worthiness of the OTC counterparties: when concluding futures contracts, options and swap transactions, or using other derivative methods, the UCITS or the sub-fund is subject to the risk of an OTC counterparty failing (or being unable) to fulfil its obligations arising out of a specific contract or several contracts. The counterparty risk may be reduced by the deposition of a security. If the UCITS or the sub-fund owes a security in accordance with applicable agreements, then this shall be held for safekeeping by the or for the custodian on behalf of the respective sub-fund. Incidents of bankrupt- cy and insolvency or other credit default events at the custodian or within its sub-custodians or network of correspond- ence banks may cause the rights of the UCITS in conjunction with the security to be shifted or limited in another manner. If the UCITS or the sub-fund owes the OTC counterparty a security in accordance with the applicable agreements, then a security of this nature must be assigned, as agreed between the UCITS and the OTC counterparty, to the OTC counter- party. Cases of bankruptcy and insolvency or other credit default events affecting the OTC counterparty, the custodian or within its network of sub-custodians or correspondence banks may cause the rights or the recognition of the UCITS to be delayed, restricted or even excluded in respect of the security, thus obliging the UCITS to fulfil its obligations within the framework of the OTC transaction irrespective of any possible securities which were provided to cover an obligation of this nature. The deterioration in the solvency or indeed the bankruptcy of an issuer may result in at least a partial loss for the assets. The risk consists of the fact that the fulfilment of transactions which are concluded for the account of the assets are jeop- ardised by liquidity difficulties or the bankruptcy of the corresponding counterparty. Inflation can reduce the value of the investments of the assets. The purchasing power of the invested capital sinks if the inflation rate is higher than the returns generated by the investments. This is the risk of price losses brought about by a failure to take proper or correct account of economic developments at the time of the investment decision, resulting in investments being made in securities at the wrong time, or in securities being held during an unfavourable economic phase. Country risk refers to circumstances when a non-domestic debtor is unable to render his performances within a deadline or not at all, despite being solvent, on account of his domiciliary country being unwilling or unable to perform the transfer (e.g. on the grounds of currency restrictions, transfer risks, moratoriums or embargoes). This means, e.g. that payments to which the sub-fund is entitled may remain unpaid, or may be performed in a currency that is no longer transferable on account of currency restrictions. Investments in unlisted securities, in particular, entail the risk of the settlement being executed by a transfer system in a manner contrary to expectations on account of a payment or delivery being delayed or performed in a manner other than that which had been agreed.

Collateral Management. If the UCITS or the sub-fund conducts OTC transactions, then this may expose it to risks in conjunction with the credit- worthiness creditworthi- ness of the OTC counterparties: when concluding futures contracts, options and swap transactions, or using other derivative deriv- ative methods, the UCITS or the sub-fund is subject to the risk of an OTC counterparty failing (or being unable) to fulfil its obligations arising out of a specific contract or several contracts. The counterparty risk may be reduced by the deposition of a security. If the UCITS or the sub-fund owes a security in accordance with applicable agreements, then this shall be held for safekeeping by the or for the custodian Custodian on behalf of the respective sub-fund. Incidents of bankrupt- cy bankruptcy and insolvency or other credit default events at the custodian Custodian or within its sub-custodians or network of correspond- ence correspondence banks may cause the rights of the UCITS in conjunction with the security to be shifted or limited in another manner. If the UCITS or the sub-fund owes the OTC counterparty a security in accordance with the applicable agreements, then a security of this nature na- ture must be assigned, as agreed between the UCITS and the OTC counterparty, to the OTC counter- partycounterparty. Cases of bankruptcy and insolvency or other credit default events affecting the OTC counterparty, the custodian Custodian or within its network net- work of sub-custodians or correspondence banks may cause the rights or the recognition of the UCITS to be delayed, restricted or even excluded in respect of the security, thus obliging the UCITS to fulfil its obligations within the framework of the OTC transaction irrespective of any possible securities which that were provided to cover an obligation of this nature. The deterioration in the solvency or indeed the bankruptcy of an issuer may result in at least a partial loss for the assets. The risk consists of the fact that the fulfilment of transactions which that are concluded for the account of the assets are jeop- ardised by liquidity difficulties or the bankruptcy of the corresponding counterparty. Inflation can reduce the value of the investments of the assets. The purchasing power of the invested capital sinks if the inflation rate is higher than the returns generated by the investments. This is the risk of price losses brought about by a failure to take proper or correct account of economic developments at the time of the investment decision, resulting in investments being made in securities at the wrong time, or in securities being held during an unfavourable economic phase. Country risk refers to circumstances when a non-domestic debtor is unable to render his performances within a deadline the dead- line or not at all, despite being solvent, on account of his domiciliary country being unwilling or unable to perform the transfer (e.g. on the grounds of currency restrictions, transfer risks, moratoriums or embargoes). This means, e.g. that payments to which the sub-fund is entitled may remain unpaid, or may be performed in a currency that is no longer transferable trans- ferable on account of currency restrictions. Investments in unlisted securities, in particular, entail the risk of the settlement being executed by a transfer system in a manner contrary to expectations on account of a payment or delivery being delayed or performed in a manner other than that which had been agreed.

Collateral Management. If the UCITS or the sub-fund conducts OTC transactions, then this may expose it to risks in conjunction with the credit- worthiness creditworthiness of the OTC counterparties: when concluding futures contracts, options and swap transactions, or using other derivative methodsmeth- ods, the UCITS or the sub-fund is subject to the risk of an OTC counterparty failing (or being unable) to fulfil its obligations arising out of a specific contract or several contracts. The counterparty risk may be reduced by the deposition of a security. If the UCITS or the sub-fund owes a security is owed collateral in accordance with applicable agreements, then this shall be held for safekeeping by the or for the custodian Custodian on behalf of the respective sub-fundUCITS. Incidents of bankrupt- cy bankruptcy and insolvency or other credit default events at the custodian Custo- ▇▇▇▇ or within its sub-custodians or network of correspond- ence correspondence banks may cause the rights of the UCITS in conjunction with the security to be shifted or limited in another manner. If the UCITS or the sub-fund owes the OTC counterparty a security in accordance accord- ance with the applicable agreements, then a security of this nature must be assigned, as agreed between the UCITS and the OTC counterparty, to the OTC counter- partycounterparty. Cases of bankruptcy and insolvency or other credit default events affecting affect- ing the OTC counterparty, the custodian Custodian or within its network of sub-custodians or correspondence banks may cause the rights or the recognition of the UCITS to be delayed, restricted or even excluded in respect of the security, thus obliging the UCITS to fulfil its obligations within the framework of the OTC transaction irrespective of any possible securities which that were provided to cover an obligation of this nature. The deterioration in the solvency or indeed the bankruptcy of an issuer may result in at least a partial loss for the assets. The risk consists of the fact that the fulfilment of transactions which that are concluded for the account of the assets are jeop- ardised by liquidity difficulties or the bankruptcy of the corresponding counterparty. Inflation can reduce the value of the investments of the assets. The purchasing power of the invested capital sinks if the inflation rate is higher than the returns generated by the investments. This is the risk of price losses brought about by a failure to take proper or correct account of economic developments at the time of the investment decision, resulting in investments being made in securities at the wrong time, or in securities being held during an unfavourable economic phase. Country risk refers to circumstances when a non-domestic debtor is unable to render his performances within a deadline the dead- line or not at all, despite being solvent, on account of his domiciliary country being unwilling or unable to perform the transfer (e.g. on the grounds of currency restrictions, transfer risks, moratoriums or embargoes). This means, e.g. that payments to which the sub-fund UCITS is entitled may remain unpaid, or may be performed in a currency that is no longer transferable trans- ferable on account of currency restrictions. Investments in unlisted securities, in particular, entail the risk of the settlement being executed by a transfer system in a manner contrary to expectations on account of a payment or delivery being delayed or performed in a manner other than that which had been agreed. For the UCITS, assets may also be acquired that are not licensed on a stock exchange or included in another organised market. The acquisition of such assets entails the risk that problems may arise in particular when reselling the assets to third parties. In the case of stocks of smaller companies (small caps), there is a risk of the market not being liquid during certain phases. A possible consequence of this may be that the stock cannot be traded at the desired time and/or not in the de- sired quantity and/or not at the expected price. Taking account of the investment principles and investment limits stipulated by the UCITSG and the Trust Agreement, which specify a very broad scope for the UCITS, the actual investment policy may also aim to acquire predominantly specific types of assets, e.g. in only a small number of sectors, markets or regions/countries. This concentration on a small number of specific investment sectors may generate special opportunities, although these will also be offset by corresponding risks (e.g. market constraints, high fluctuation bands within specific economic cycles). The annual report provides retrospective information about the investment policy for the past financial year. Further risks may be caused by the fact that the investments are concentrated in specific assets or markets. In this case the UCITS may be particularly heavily dependent upon the performance of these assets or markets. This is a general risk associated with all investments, consisting of the fact that the value of a specific investment may change in a manner contrary to the interests of the UCITS. Sentiment, opinions and rumour can trigger significant price falls, even though the profitability and the prospects of the companies in which investments have been made need not necessarily have undergone any lasting changes. Equities are particularly susceptible to psychological market risk. This is the loss risk of the UCITS resulting from the fact that a concluded transaction cannot be fulfilled as expected be- cause a counterparty has failed to pay or to deliver, or because losses can arise due to errors at the operational level within the framework of the settlement of a transaction. The buying, holding or sale of UCITS investments may be subject to statutory fiscal regulations (e.g. deduction of with- holding tax) outside the country of domicile of the UCITS. Furthermore, the legal and tax treatment of the UCITS may change in an unforeseen and uncontrollable manner. A change in incorrectly ascertained UCITS taxation principles for past financial years (e.g. on the basis of external tax audits) may, in the case of an essentially disadvantageous tax cor- rection for the investor, mean that the investor is required to bear the tax burden for past financial years arising out of the correction, even though he might not have even been invested in the UCITS at this time. On the other hand, it may be the case that the investor, in the event of an essentially beneficial tax correction for the current and for past financial years in which he had an interest in the UCITS, may no longer be able to benefit from the tax correction arising out of the redemption or alienation of the units before the implementation of the corresponding correction. In addition, a correction of tax data may mean that taxable earnings or taxable benefits may be assessed in an assessment period other than that in which they were actually attributed, which could have a negative impact on the individual investor. Investments in equities represent a direct participation in the economic success or failure of a company. In extreme cir- cumstances – e.g. bankruptcy – this may mean the complete loss of the value of the corresponding investment. If the UCITS holds assets that are denominated in a foreign currency or foreign currencies, these will be exposed to a direct currency risk (insofar as foreign currency positions have not been hedged). Falling exchange rates reduce the value of foreign currency assets. On the other hand, the currency market also offers opportunities for profits. In addition to direct currency risks, there are also indirect currency risks. Internationally-active companies are dependent, to a greater or lesser extent, on exchange rate developments. This can also have an indirect impact on the performance of investments. A change of the investment policy within the statutory and contractually permitted investment spectrum could change the content of the risk associated with the UCITS. The Management Company may change the investment policy of the UCITS within the applicable Trust Agreement by changing the Prospectus and the Trust Agreement including Appendix A at any time and to a significant extent. In the Trust Agreement the Management Company reserves the right to amend the trust conditions at any time. Further- more, pursuant to the Trust Agreement it may comprehensively dissolve the UCITS or merge it with another UCITS. This consequently means that for investors there is a risk that the holding period they had planned cannot be realised. It is essentially the case that investors may demand from the Management Company the redemption of their units in ac- cordance with the valuation interval of the UCITS. The Management Company may however temporarily suspend the redemption of the units in the event of exceptional circumstances, and may then redeem the units only at a later date and in accordance with the then valid price (also see in detail "Suspension of the calculation of the net asset value and the issue, the redemption and the conversion of units"). This price may be lower than that prior to the suspension of the re- demption. UCITSs whose investment result is very positive during a specific period also owe this success to the suitability of the acting persons and consequently the correct decisions of their management. The composition of the personnel of the fund management may however change. It is possible that new decision-makers may not act so successfully. Insofar as the UCITS invests in interest-bearing securities, it will be exposed to interest rate change risks. If the market interest rate rises, the market value of the interest-bearing securities can fall substantially. This applies in particular to the extent that the assets also include interest-bearing securities with longer residual maturities and low nominal interest re- turns.