Common use of Securities Financing Transactions and Total Return Swaps Clause in Contracts

Securities Financing Transactions and Total Return Swaps. Where specified in Annex A in respect of the relevant Sub-Fund, such Sub-Fund may use Securities Financing Transactions and / or Total Return Swaps in accordance with normal market practice and subject to the requirements of the SFTR and the requirements of the FMA. Securities Financing Transactions may be entered into for any purpose that is consistent with the investment objective and policy of the relevant Sub-Fund, including to generate income or profits in order to increase portfolio returns or to reduce portfolio expenses or risks. Where specified in Annex A in respect of the relevant Sub-Fund, Total Return Swaps may be entered into for any purpose that is consistent with the investment objective and policy of such Sub-Fund, including efficient portfolio management (such as hedging purposes or the reduction of portfolio expenses), speculative purposes (in order to increase income and profits for the portfolio), or to gain exposure to certain markets. The reference obligation of a Total Return Swap may be any security or other investment in which the relevant Sub-Fund is permitted to invest. A Sub-Fund may enter Total Return Swaps with banks or other financial counterparties which may take the form of swaps of any kind, including CFDs, portfolio swaps, index swaps, credit default swaps and variance and volatility swaps, any kind of option, warrant, forward and future transaction and any other kind of derivative in accordance with its investment objectives. The use of the techniques described above may expose a Sub-Fund to the risks disclosed under the heading “Risk Factors”. The Management Company on behalf of the UCITS will conduct appropriate due diligence in the selection of counterparties, including consideration of the legal status, country of origin, credit rating and minimum credit rating (where relevant). A Sub-Fund may invest in OTC derivatives in accordance with the requirements of the FMA and provided that the counterparties to the OTC derivatives are Eligible Counterparties. Where a Sub-Fund is permitted to use Securities Financing Transactions and/or Total Return Swaps, all types of assets which may be held by the relevant Sub-Fund in accordance with its investment objectives and policies may be subject to a Securities Financing Transaction and/or Total Return Swap. All revenues arising from Securities Financing Transactions and Total Return Swaps and any other efficient portfolio management techniques, net of direct and indirect operational costs and fees, shall be returned to the relevant Sub-Fund. Such direct and indirect operational costs and fees (which are all fully transparent) shall include fees and expenses payable to counterparties engaged by the Management Company on behalf of the UCITS from time to time and shall not include hidden revenue. Such fees and expenses of any counterparties engaged by the UCITS or Management Company on behalf of the UCITS, which will be at normal commercial rates together with VAT, if any, thereon, will be borne by the relevant Sub-Fund in respect of which the relevant party has been engaged. Information on the revenues generated under such transactions shall be disclosed in the annual report of the UCITS, along with entities to whom direct and indirect operational costs and fees relating to such transactions are paid. Such entities may include the Management Company the Depositary or entities related to the Management Company or Depositary.