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Non UCITS Appendix 4 NU 1 Fund of Funds

By Joyce Weaver,2015-04-05 12:51
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Non UCITS Appendix 4 NU 1 Fund of Funds

    APPENDIX 4

    Fund of Funds Schemes (NU 1)

    A collective investment scheme, the principal object of which is investment in units of other

    collective investment schemes, including schemes which propose to invest in underlying CIS a

    percentage of NAV in excess of the limits set down in NU 13, is subject to the following rules in

    addition to the general rules for all collective investment scheme which are not disapplied here.

    Applicant

    Pg Par

     Applicant 1.0 Disclosure Requirements

     All Schemes - disclose

     1.1 The jurisdictions of the underlying CIS

     Applicant 1.2 Regulatory status of the underlying CIS

     1.3 Type of underlying CIS

    Financial 1.4 Whether underlying CIS may be leveraged and, if so Regulator disclose attendant risks

    1.5 Provide that the underlying CIS are open-ended

    1.5.1 If investment in closed-ended schemes is provided for confirm

     Appendix 2 is completed and attached (inserting a reference to

    closed-ended schemes)

1.6 Retail Scheme

    1.6.1 Confirm that only Category 1 and 2 are provided for (subject to

     permissible investment in unregulated schemes)

1.7 PIF

     Disclose: 1.7.1 The fact that the derogation has been granted, and

    1.7.2 A risk warning re investment in unregulated CIS which will

     not provide a level of investor protection equivalent to

    schemes authorised under Irish laws and subject to Irish

    regulations and conditions

    1.7.3 Confirm that a derogation has been sought in the letter of

     application from the requirements of NU 1 (1)

    1.7.4 Investment in Fund of Funds (subject to 10% of nav) a) Disclose any proposed investment into another fund of funds

     (disclosure should focus on the implications of this policy, in

    accordance with Guidance Note 1/01, regarding increased

    NON-UCITS 1 FEBRUARY 2007

    costs to investors (i.e. the fact that fees will arise at three

    levels the Irish scheme, the underlying fund of funds and the

    underlying funds in which the fund of funds invests (and the

    resultant lack of transparency in investments).

b) Confirm a derogation to invest up to 10% of NAV in other

     fund of funds has been sought in letter of application

1.7.5 Investment into a feeder fund

     Investment in a feeder fund is not permissible except in

    circumstances where the PIF proposes to invest in certain

    master/feeder arrangements where the feeder provides the

    only means of investing in the underlying CIS and the feeder

    and underlying CIS act, in effect, as a singular structure. The

    normal diversification requirements in relation to investment

    in any one CIS apply to investment in the feeder.

a) Include a statement to the effect that: The PIF will not invest

     in feeder schemes. However, access to certain alternative

    investment type funds, or hedge funds, is only permissible

    through a master/feeder structure and in this case the feeder

    prohibition will not apply

b) Describe the singular structure of the master/feeder

    Investment, i.e. both schemes have the same investment manager, administrator and custodian

c) Provide that there will be no double charging of

    investment management fees (including performance fees) and

     custody fees; indicate whether these will be borne at one level

    or divided between master and feeder fund

d) Provide details of the duplication of fees which will

    arise at both master and feeder fund, e.g. administration fees, legal fees, audit

1.8 PIF (if applicable)

    1.8.1 Investment in Underlying CIS with lock-up periods

    a) Disclose intention to invest in such CIS and focus on

    typical duration of lock-up periods and the amount of net assets which are likely to be invested in this type of scheme

b) Confirm the decision to invest in CIS with lock-up

    periods will not affect the redemption arrangements provided for in the prospectus

    NON-UCITS 2 FEBRUARY 2007

    2.0 Investment Restrictions

     Retail

    2.1 Disclose that Underlying Schemes are Regulated Schemes (as

     defined by the Financial Regulator)

    2.2 Provide that the scheme may not invest more than 10% of

    NAV

     in unregulated CIS

     ;

    2.2.1 ; If greater than 10% is provided for (i.e. NU 25 scheme),

    confirm

     ; Appendix 2 is completed and attached hereto

     ;

    2.3.1 ; Provide that the scheme may not invest more than 20% of

    NAV

     in the units of any one scheme

    2.3.2 Provide that this 20% limit can be increased to 30% for one of

     the underlying CIS in which the scheme invests (where the

    underlying CIS is a regulated scheme)

    2.3.2.1 If greater than 20/30 % proposed, confirm Appendix 5 is

     completed and attached

    2.4 Provide that the scheme may not invest in units of: a) another fund of funds scheme or b) of a feeder scheme

2.5 PIF

     ; Where asterisk (*) is provided ensure derogation is sought in

    letter of application from NU 1

    2.6 ; Provide that the scheme may not invest more than 20% of NAV

     ; in any one unregulated scheme*

     ;

    2.7 ; Provide that the scheme may not invest more than of 40% of

     NAV in the units of any one scheme*

    2.7.1 If greater than 40% proposed, confirm Appendix 5 is

     completed and attached hereto

    2.8 Provide that the scheme may not invest more than 10% of nav

     in units of other fund of funds scheme*

    2.9 Provide that the scheme may not invest in feeders (subject to

     1.7.5 above)

     ;

     ;

    3.0 Fees, Expenses & Commissions

    NON-UCITS 3 FEBRUARY 2007

     Provide: 3.1 Where the scheme invests in units of a collective investment

     scheme managed by the same management company or by an

    associated or related company, the manager of the scheme in

    which the investment is being made must waive the

    preliminary/initial/redemption charge which it would normally

    charge

    3.2 Where a commission is received by the manager of the scheme

     by virtue of an investment in the units of another collective

    investment scheme, this commission must be paid into the

    property of the scheme

    3.3 Disclose and quantify, to the extent possible, the types

     of charges and other costs relating to the underlying collective

    investment schemes which will be borne by the scheme e.g.

    describe typical fees and give typical amounts

    4.0 Settlement Period

     Provide:

    4.1 Retail

     Maximum period between submission of a redemption request

     and payment of settlement proceeds cannot exceed 30 days.

4.2 PIF

    a) Maximum period between submission of a redemption request

     and payment of settlement proceeds cannot exceed 95 days;

    and

    b) This includes PIF which provides for redeeming more

     frequently than quarterly

     Where this is applicable:

    i) include a prominent statement highlighting the fact that while

     the scheme redeems, for example, on a monthly basis there

    may be times when redemption proceeds are paid on a

    quarterly basis; and

    ii) It is permissible to provide for retention of up to 10% of

     redemption proceeds, where this reflects the redemption

    policy of the underlying CIS and until such time as the full

    redemption proceeds from the underlying CIS are received.

    5.0 Confirmations

     Retail

     Confirm the following confirmations are attached to this

     application: 5.1 Confirmation from the trustee as per Annex 2 of Guidance

     Note 1/01; and 5.2 Confirmation from the management company, directors/

     general partner as per Annex 2 of Guidance Note 1/01

    NON-UCITS 4 FEBRUARY 2007

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