Risk Disclosures

Risk Factors

General

The purchase of the Notes involves substantial risks. Each prospective purchaser of the Notes should be familiar with instruments having characteristics similar to the Notes and should fully understand the terms of the Notes and the nature and extent of its exposure to risk of loss.
Before making an investment decision, prospective purchasers of the Notes should conduct such independent investigation and analysis regarding the Issuer, the Portfolio Manager, the Charged Assets, the Notes and all other relevant persons and such market and economic factors as they deem appropriate to evaluate the merits and risks of an investment in the Notes.

Investment in the Notes is only suitable for investors who have the knowledge and experience in financial and business matters necessary to enable them to evaluate the merits and risks of an investment in the Notes in the context of the investor’s own financial circumstances and investment objectives.

Investment in the Notes (or a participation therein) is only suitable for investors who:

1. Are capable of bearing the economic risk of an investment in the Notes (or a participation therein) for a period up to and until the redemption of the Notes;

2. Are acquiring an interest in the Notes (or a participation therein) for their own account for investment, not with a view to resale, distribution or other disposition of such interest (subject to any applicable law requiring that the disposition of the investor’s property be within its control); and

3. Recognise that it may not be possible to make any transfer of the Notes (or a participation therein) for a substantial period of time, if at all.

The Issuer in its discretion, disregard interest shown by a prospective investor even though that investor satisfies the foregoing suitability standards.

Each prospective investor should ensure that it fully understands the nature of the transaction into which it is entering and the nature and extent of its exposure to the risk of loss of all or a substantial part of its investment.

Risks relating to the Issuer and Transaction Parties

Special purpose company

The Issuer is a special purpose company and has been established for the purpose of issuing multiple series of secured notes under the CIX Programme. Should any unforeseen expenses or liabilities (which have not been provided for) arise, the Issuer may be unable to meet them, leading to an Event of Default under the Notes.

There is no certainty that Noteholders will recover any amounts payable under the Notes. Due to the limited recourse nature of the Notes (see ‘Limited recourse’ below), claims in respect of the Notes are limited to the proceeds of enforcement of the Mortgaged Property subject to the prior security interests of the Custodian and Securities Account Provider and after the deduction of any applicable expenses. In addition, if a claim is brought against the Issuer (whether under statute, common law or otherwise) which is not subject to such contractual limited recourse provisions, the only assets available to meet such claim would be the proceeds of the issuance of the Issuer’s ordinary shares and any transaction fees (see ‘Fees’ below), to the extent any remain as at the date of such claim and are available to meet such claim. The only other assets of the Issuer will be the assets on which each series of secured notes under the CIX Programme is secured, which will be subject to the prior security interests of the relevant Noteholders, any other secured parties under that Series and the prior security interests of the Custodian and the Securities Account Provider.

Limited recourse

The Notes will be limited recourse obligations of the Issuer secured on the Charged Assets and are not or will not (as the case may be) be obligations or responsibilities of, or guaranteed by, any other person or entity. For the avoidance of doubt, none of the Trustee, the Arranger, the Portfolio Manager, any other Agent appointed by the Issuer or any other person has any obligation to any Noteholder for payment of any amount by the Issuer in respect of the Notes. There is no person that guarantees to Noteholders that they will recover any amounts payable under the Notes.

The ability of the Issuer to meet its obligations in respect of the Notes will be dependent on the receipt by the Issuer of moneys due to it under the Charged Assets. The Noteholders shall have no recourse to the Issuer beyond the moneys derived by or on behalf of the Issuer in respect of the Charged Assets. To the extent that investment by the Issuer in the Charged Assets held by the Issuer results in such investment being less than the obligations of the Issuer under the Notes, the Issuer will have insufficient funds available to meet its obligations in respect of the Notes. In such event, any shortfall would be borne by the Noteholders in accordance with the priorities specified in the Conditions.
For the avoidance of doubt, Notes are not, and do not represent or convey any interest in the Charged Assets nor do they confer on the Noteholder any right (whether in respect of voting, dividend or other distribution) which a holder of any Charged Assets may have had. The Issuer is not an agent of the Noteholder for any purpose.

Risks relating to the Notes

These Notes are not principal protected and are a high-risk investment in the form of a debt instrument. The Noteholders are neither assured of repayment of the capital invested nor are they assured of payment of a stated rate of interest or of any interest at all. The Notes give Noteholders exposure to certain securities and other financial assets that the Issuer may invest in acting through the Portfolio Manager.

Any payments to be made on the Notes depend on the value of the Charged Assets held by the Issuer, which is the value of the amounts received by the Issuer in respect of the Charged Assets. Should the Charged Assets decrease in value, Noteholders will incur a partial or total loss of their investment. Even if the Charged Assets increase in value, Noteholders may incur a partial or total loss of their investment to the extent that the appreciation of the Charged Assets is not sufficient to account for fees, costs and expenses of the Issuer.

In certain circumstances the Notes will be redeemed early pursuant to a Mandatory Redemption Event or an Additional Mandatory Redemption Event or Optional Redemption and Noteholders shall be entitled to receive only such amount as is available following the sale, redemption or other means of realisation of the Charged Assets, subject to the provisions of the Notes described under ‘Limited recourse’ above.
In general, redemption payments to be made on the Notes are calculated with reference to the value of the Charged Assets. However, if and to the extent that the amount payable by the Issuer in accordance with the Notes to the Noteholders is greater than the amount received by the Issuer in respect of the redemption of the Charged Assets, the Noteholder shall be entitled to receive only its pro rata share of such amount as is received by the Issuer under the Charged Assets after deduction of any applicable costs and expenses.

Change of law, tax and administrative practice

The structure of the transaction and, inter alia, the issue of the Notes are based on law, tax and administrative practice in effect at the date of issuance, and having due regard to the expected tax treatment of all relevant entities under such law and practice. No assurance can be given that law, tax or administrative practice will not change after the Issue Date or that such change will not adversely impact the structure of the transaction and the treatment of the Notes.

Fees

In addition to the fees due to the Trustee and any Agents, and any other transaction related fees incurred by the Issuer in respect of the issuance of the Notes, the amounts payable under the Notes are based on the performance of the Charged Assets after deduction of certain fees. The fees will be applied in calculating the value of the Portfolio and therefore will result in a reduction in the value of the Notes.

Foreign exchange risk

The Charged Assets may be denominated in US dollars, euro, or any other currencies. The Issuer will effect foreign exchange transactions to convert amounts received in respect of the Charged Assets into the denomination of the Notes in order to meet its payment obligations under the Notes. In order to mitigate the foreign exchange risk, the Portfolio Manager may on behalf of the Issuer enter into foreign exchange hedging transactions. Hedging transactions, if any, may not exclude these risks. Accordingly, the Issuer and the Noteholders may be exposed to credit risk of such counterparties providing foreign exchange hedging to the Issuer.

Restrictions on Transfer

The Notes are subject to restrictions on transfer. In particular, the Notes have not been registered under the Securities Act, under any US state securities or ‘Blue Sky’ laws or under the securities laws of any other jurisdiction and are being issued and sold in reliance upon exemptions from registration provided by such laws. No Note may be sold, assigned, participated, pledged or transferred unless such sale, assignment, participation, pledge or transfer (a) is exempt from the registration requirements of the Securities Act (for example, the exemption provided by Rule 144A under the Securities Act or the exemption provided by Regulation S under the Securities Act and applicable state securities laws) and (b) is in compliance with the transfer restrictions and certification requirements described in the “Subscription and Sale” section of the Programme Memorandum and the “Selling Restrictions” section of the Series Memorandum.

Payments

Payments under the Notes will only be made after receipt of the Sale Proceeds by the Issuer. The date of payment of the redemption amount under the Notes is therefore not fixed. Payment of redemption amounts under the Notes depends on the realisation or liquidation of the Charged Assets. It may take a considerable period of time to redeem the Charged Assets, in particular in the case of a redemption pursuant to an Early Redemption. Noteholders may only receive payment of the relevant redemption amount under the Notes significantly later than the specified redemption date of the Notes.

Liquidity

No secondary market for the Notes currently exists. Prospective purchasers of the Notes should therefore recognise that they may not be able to liquidate their investment in the Notes. Investment in the Notes is therefore only suitable for investors who are capable of bearing the economic risk of an investment in the Notes for an indefinite period of time and are not acquiring the Notes with a view to a potential resale, distribution or other disposition at some future date. Even if the Notes are listed on an exchange, there is no assurance that a secondary trading market or liquidity will develop.

Market and legal risk

The Notes will constitute secured, limited recourse obligations of the Issuer, recourse in respect of which will, in effect, be limited to the proceeds of the Mortgaged Property (which principally comprises the Charged Assets) relating to the Notes and no other assets of the Issuer will be available to satisfy claims of Noteholders. The Issuer’s obligations to the Noteholders are solely funded by, and primarily secured on, the Charged Assets. Therefore, to the extent that the value of the Charged Assets falls, payment under the Charged Assets is not made, the Charged Assets cannot be sold or if the relevant security arrangements would not be enforceable, a loss of principal or interest or both under the Notes will result. Noteholders therefore assume the market and legal risk of the Charged Assets.

None of the Transaction Participants (as defined below but excluding the Portfolio Manager) nor any affiliate of any of them or other person on their behalf has made any investigation of, or makes any representation or warranty, express or implied, as to the standing or suitability of the Portfolio Manager or the financial or other condition of the Charged Assets.

None of the Issuer, the Arranger, the Trustee, the Principal Paying Agent, the Charged Assets Realisation Agent, the Calculation Agent, the Placing Agent, the Broker Dealer of Record, the Portfolio Manager or any other Agent, nor any affiliate of any of them (or any person on their behalf) assume any responsibility vis-à-vis the Noteholders for the economic success or lack of success of an investment in the Notes, or the performance, the value or terms of the Charged Assets. No Transaction Participant will have any responsibility or duty to make any such investigations, to keep any such matters under review, to provide the Noteholders, or prospective purchasers of the Notes, with any information in relation to such matters or to advise as to the attendant risks.

Legality of purchase

None of the Issuer, the Arranger, the Trustee, the Principal Paying Agent, the Charged Assets Realisation Agent, the Calculation Agent, the Placing Agent, the Broker Dealer of Record, the Portfolio Manager or any other Agent or any affiliate of any of them or other person on their behalf has or assumes responsibility for the lawfulness of the acquisition of the Notes by a prospective purchaser of the Notes, whether under the laws of the jurisdiction of its incorporation or the jurisdiction in which it operates (if different), or for compliance by that prospective purchaser with any law, regulation or regulatory policy applicable to it.

No reliance

None of the Issuer, the Arranger, the Trustee, the Principal Paying Agent, the Charged Assets Realisation Agent, the Calculation Agent, the Placing Agent, the Broker Dealer of Record, the Portfolio Manager or any other Agent and all affiliates of any of them disclaim any responsibility to advise purchasers of the Notes of the risks and investment considerations associated with the purchase of the Notes as they may exist.

Taxation

Each Noteholder will assume and be solely responsible for any and all taxes of any jurisdiction or governmental or regulatory authority, including, without limitation, any state or local taxes or other like assessment or charges that may be applicable to any payment to it in respect of the Notes. Neither the Issuer nor any other person will pay any additional amounts to the Noteholders to reimburse them for any tax, assessment or charge required to be withheld or deducted from payments in respect of the Notes by the Issuer or by the Principal Paying Agent (or any other Paying Agent).

Conflict of interests

Any of the he Issuer, the Arranger, the Trustee, the Principal Paying Agent, the Charged Assets Realisation Agent, the Calculation Agent, the Placing Agent, the Broker Dealer of Record, the Portfolio Manager or any other Agent any affiliate of any of them or any other person acting on their behalf may from time to time, as principal or agent, have positions in, or may buy or sell, or make a market in any securities (including shares in a Transaction Participant), currencies, financial instruments or other assets owned by a Transaction Participant. Any trading and / or hedging activities of Transaction Participants or any affiliate of any of them or any other person acting on their behalf related to this transaction may have an impact on the price of the underlying assets.

Clearing systems

The Notes will be represented by one or more Temporary Global Notes and Permanent Global Notes. Such Global Notes will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. Except in the limited circumstances described in the relevant Global Note, investors will not be entitled to receive definitive Notes. Euroclear and Clearstream, Luxembourg will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to trade their beneficial interests only through Euroclear and Clearstream, Luxembourg.

While the Notes are represented by one or more Global Notes the Issuer will discharge its payment obligations under the Notes by making payments through the Principal Paying Agent to the common depositary for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes.

Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear and Clearstream, Luxembourg to appoint appropriate proxies.

Limitations of the ability to grant security over Notes while in global form

Because transactions in the Notes will be effected only through Euroclear or Clearstream, Luxembourg, direct or indirect participants in their respective book-entry-systems and certain banks, the ability of a Noteholder to pledge such interest to persons or entities that do not participate in the Euroclear or Clearstream systems, or otherwise to take actions in respect of such interests, may be limited due to the lack of physical security representing such interest.

Risks Relating to the Charged Assets

Securities Account

The Securities Account is a margin account to be used to invest in securities or other products on margin which involves the extension of credit to the Issuer from the Securities Account Provider. As a result, the Issuer’s financial exposure could exceed the value of securities or other products in the Securities Account. Any such credit will accrue interest at the agreed rates.

The Securities Account Provider may, whenever it deems it desirable or for the Securities Account Provider’s protection, sell any or all securities or related contracts in the Securities Account, or buy any securities or related contracts relating thereto, in order to close out in whole or in part any obligations of the Issuer pursuant to the Securities Account Agreement. Therefore, Securities or other Related Rights that the Issuer may hold in the Securities Account may be sold or bought at sub-optimal prices or times that are ill-suited to such trades being executed, and the value of the Notes may be adversely affected.

In return for the Securities Account Provider agreeing to the extension or maintenance of credit in connection with the Securities Account, the Issuer has agreed that the securities in the Securities Account, together with all attendant rights of ownership, may be the subject of securities lending transactions, whether to the Securities Account Provider or by the Securities Account Provider to third parties. In connection with such loans, the Securities Account Provider may receive and retain certain benefits to which the Issuer will not be entitled.

Further, there is a risk that substitute payments that the Issuer may be entitled to as a result of such securities loans may not be afforded the same tax treatment as actual interest, dividends and / or other distributions, that the Issuer may have been entitled to but for such securities loans, and the Issuer may incur additional tax liability for substitute payments that it receives. The Issuer would not be entitled to any compensation in connection with securities lent from the Securities Account or for additional taxes the Issuer may be required to pay as a result of any tax treatment differential between substitute payments and actual interest, dividends, and / or other distributions.

Charged Assets held in the Securities Account are subject to the security interests created pursuant to the Securities Account Agreement over the assets held in the Securities Account, that rank in priority to any security interests created by either the Trust Deed or the Charging Instrument. The Securities Account Provider takes such security interests as security for its fees, costs and expenses pursuant to the Securities Account Agreement, as well as all its reasonable costs and expenses incurred in the collection of any debit balance or unpaid deficiency in the Securities Account, including, but not limited to, attorneys’ fees. Therefore, the value of the Notes will be reduced by such fees, costs, expenses and charges.

Custody Account

The Charged Assets are held in the Custody Account, and are subject to a lien and right of set-off retained by the Custodian over the assets held in the Custody Account, which in each case rank in priority to any security interests created by the Trust Deed or Charging Instrument in favour of the Trustee. The Custodian takes such lien and set off rights as security for its fees, costs and expenses pursuant to the Custody Agreement, as well as all its reasonable costs and expenses incurred in the collection of any debit balance or unpaid deficiency in the Custody Account, including, but not limited to, attorneys’ fees. Therefore, the value of the Notes will be reduced by such fees, costs, expenses and charges.

As the ability of the Issuer to make payments under the Notes is contingent on the performance of the Portfolio held in the Custody Account, the interests of the Noteholders may be negatively affected by an insolvency or winding up of the Custodian, or should any administrative or regulatory sanctions be imposed on the Custodian.

Noteholders should be aware that the Custodian may, pursuant to the Custody Agreement, hold Charged Assets with sub-custodians selected by it (and not subject to prior approval of the Issuer or Trustee). Therefore, the Noteholders may be negatively affected by an insolvency or winding up of any sub-custodian holding Charged Assets, or should any administrative or regulatory sanctions be imposed on any relevant sub-custodian. The liability of the Custodian for Charged Assets held by certain sub-custodians may be lower than its liability were it to hold the Charged Assets directly.

The Charged Assets may be held by the Custodian (or sub-custodian) in omnibus accounts such that the Charged Assets are not segregated from other assets held in such accounts. In the case of any shortfall of securities held in such accounts (i.e. there are not enough securities to meet the claims of all custody clients) the Issuer (and therefore Noteholders) may be negatively affected by such shortfall.

Investment in Securities by the Portfolio Manager

The Portfolio Manager may invest in Securities that meet the Management Criteria. The Management Criteria are very wide and allow the Portfolio Manager a wide discretion in selecting the Securities that it wishes to invest in.

Potential investors should be aware that an investment in Securities involves a high degree of risk. Typically, the success of any investment in Securities depends on the ability of the Portfolio Manager to choose, develop and realise appropriate investments, and there will be no guarantee that the Portfolio Manager will be able to choose, make and realise investments in any particular company or portfolio of companies.

An investor in the Notes should ensure that they have considered the operational history of the Portfolio Manager and whether the Portfolio Manager has a proven track record, to the satisfaction of the investor in the Notes. Subject to the Management Criteria, the Portfolio Manager may invest in less established companies with lower capitalisations, fewer resources and little or no performance record. As the investments in Securities are likely to be minority interests, it cannot be certain that investors’ interests will be effectively protected. There can be no assurance that the investments in the Securities will produce gains. Some or all of the investment in any Securities may be lost which could have a negative impact on the value of the Notes.

The Portfolio Manager’s investments may be exposed, directly or indirectly, to the performance of companies which may be highly leveraged and therefore may be more sensitive to adverse business or financial developments or economic factors. Such companies may face intense competition, changing business or economic conditions or other developments that may adversely affect their performance.

The activity of identifying, completing and realising attractive investments is highly competitive, and involves a significant degree of uncertainty. Other investors such as funds and vehicles with similar investment objectives to the Issuer may be formed in the future by other unrelated parties and further consolidation may occur. There is no assurance that the Portfolio Manager will be able to locate, complete and exit investments that satisfy the Investment Objectives, or realise the value of such investments, or that it will be able to invest fully the amount committed.

Investments may not be liquidated for a number of years after the initial investment and may require a substantial length of time to liquidate. As a result, there is a risk that the Portfolio Manager may be unable to realise the Investment Objectives by sale or other disposition at attractive prices or will otherwise be unable to complete any exit strategy.

In respect of the Custody Account and Securities Account, the Issuer (and, accordingly, the Noteholders also) is exposed to a fall in the prices of the Securities in the Portfolio.

Risks Related to the Valuation of the Charged Assets
Valuation of the investments
The valuation of investments made by the Issuer may not always be independently verifiable due to lack of available pricing information. To the extent that any such valuation is incorrect, the Net Asset Value of the Portfolio and the price at which investors subscribe for the Notes or redeem Notes may be greater or less than the actual New Asset Value per Note. The Issuer will also pay frees to a number of service providers which such fees are expensed as a percentage of the Net Asset Value of the Portfolio and, should the Newt Asset Value of the Portfolio be overstated or understated this may result in over or underpayment to such service providers. Provided that any price or valuation is used in good faith when determining the Net Asset Value, no party shall incur any liability should such price or valuation later prove to be incorrect. Further, save in the absence of manifest error, there shall be no retroactive adjustment of the Net Asset Value of the Portfolio in the event of subsequent discovery that an incorrect or inaccurate price or valuation was used to calculate the Net Asset Value of the Portfolio.
Valuation
The calculation of the Net Asset Value of the Portfolio will be based largely on the valuation received from the investments made by the Issuer. In particular, where the underlying investments are not actively traded, it may not be possible to objectively ascertain the value of such underlying investments. To the extent that any net asset value calculation provided by the underlying investments is incorrect or inaccurate, the Net Asset Value per Note may be erroneously high or low and this may mean that an investor subscribes for a Note at a higher price than the correct Net Asset Value per Notes or redeems a Note at a lower price than the correct Net Asset Value per Notes. To the extent that an underlying investment revises a net asset value calculation this may require an adjustment to the calculation of the Net Asset Value of the Portfolio for the relevant period.
Assignment of Estimated Value

The Issuer may hold a significant number of investments which are not actively traded or which may not be traded at all. This may make it difficult or impossible to obtain accurate prices for the purpose of valuing such investments. This may necessitate using financial modelling or other valuation techniques to obtain fair value for the investments. Nevertheless, to the extent that estimates and assumptions are used to value investments there may be alternations in circumstances or market conditions that may lead to the revaluation of certain assets, which may result in material increase or decrease in the Net Asset Value of the Portfolio. There may also be significant discrepancies between valuations and sale prices obtained by the Issuer, due in part to the fact that purchases of assets are using different information or methodologies to value the assets, In particular where the Issuer is required to dispose of investments hastily, e.g. to fund redemption requests or in adverse market conditions, this may have a deleterious effect on the sale price realised by the Issuer.

In determining the Net Asset Value the Calculation Agent may assign an estimated value based on comparable and internally designed assumptions for illiquid securities that do not have a tradeable market and for which a valuation report (or other means of valuation as contemplated above) is not available.

Use of Valuation and Appraisals
Valuations or appraisals are intended to be an estimate of value rather than a precise indication at the price an asset may be sold by the Issuer. Generally, appraisals will consider the financial aspects of a real estate asset, market transactions and the relative yield for an asset measured against alternative investments and be supported by a number of assumptions and subject to a number of qualifications.
Capital Statement Report Time Lag
For illiquid alternative investments for which the Calculation Agent relies on a capital statement in order to calculate Net Asset Value, there is a time lag between the value that is being reported in the price of the Notes and the timing of publishing. Therefore, the published NAV of the Note may reflect a value of the Charged Assets that is historic (by up to several weeks) rather than current.

Security of the Notes

Security may be declared invalid

The Issuer will grant security interests in favour of the Trustee for itself and for the benefit of the Noteholders in the Mortgaged Property pursuant to the Trust Deed and the Charging Instrument (as defined below). However, if the security interest of the Trustee in the Mortgaged Property was determined to be invalid or unperfected, Noteholders would be unsecured creditors and would rank on a pari passu basis with other unsecured creditors (if any) of the Issuer. Each of the foregoing factors may delay or reduce investors’ return on their Notes and investors may suffer a loss (including a total loss) on their investment.

Not a bank deposit

Any investment in the Notes does not have the status of a bank deposit in Ireland and is not within the scope of the deposit protection scheme operated by the Central Bank of Ireland. The Issuer is not regulated by the Central Bank of Ireland by virtue of the issue of the Notes.

Redemption and transfer of the Charged Assets

Realisation of the Charged Assets may in certain circumstances be deferred in accordance with their relevant terms. The period of deferral may be significant. Therefore, in certain circumstances, including where the Security for the Notes (and any Further Notes) becomes enforceable, there may be a significant delay in payments under the Notes and / or it may be impossible to transfer the Charged Assets as a means of realising their value.

Summary of Principal Underlying Investment Risks

As with any investment, you could lose all or part of your investment in the Notes, and the Notes’ performance could trail that of other investments. The Notes are subject to one or more of the principal risks noted below (either directly or through its investments in underlying securities), any of which may adversely affect the Notes’ Net Asset Value, trading price, yield, total return and ability to meet its investment objective.

Asset Class Risk

Securities in an underlying portfolio may underperform in comparison to the general securities markets or other asset classes.

Commodity Risk

The value of commodities and commodity-linked derivative instruments typically is based upon the price movements of a physical commodity or an economic variable linked to such price movements. The prices of commodities and commodity-related investments may fluctuate quickly and dramatically and may not correlate to price movements in other asset classes. An active trading market may not exist for certain commodities. Each of these factors and events could have a significant negative impact on the Notes.

Concentration Risk

To the extent that the Notes’ underlying investments are concentrated in a particular issuer, region, country, market, industry or asset class, the Notes may be susceptible to loss due to adverse occurrences affecting that issuer, region, country, market, industry or asset class.

Counterparty Risk

The Issuer bears the risk that the counterparty to a derivative or other contract with a third party may default on its obligations or otherwise fail to honour its obligations. If a counterparty defaults on its payment obligations the Issuer will lose money and the value of an investment in the Notes may decrease.

Credit Risk

The financial condition of an issuer of Securities may cause it to default or become unable to pay interest or principal due or otherwise fail to perform. The Issuer cannot collect interest and principal payments on Securities if the issuer defaults. While the Issuer attempts to limit credit exposure in a manner consistent with its investment objective, the value of an investment in the Notes may change quickly and without warning in response to issuer defaults and changes in the credit ratings of the Issuer’s portfolio investments.

Emerging Markets Risk

Investing in emerging market assets involves certain risks and special considerations not typically associated with investing in other more established economies or securities markets. Such risks may include (i) the risk of nationalization or expropriation of assets or confiscatory taxation; (ii) social, economic and political uncertainty including war; (iii) dependence on exports and the corresponding importance of international trade; (iv) price fluctuations, less liquidity and smaller capitalization of securities markets; (v) currency exchange rate fluctuations; (vi) rates of inflation (including hyperinflation); (vii) controls on foreign investment and limitations on repatriation of invested capital and on the Issuer’s ability to exchange local currencies for U.S. dollars; (viii) governmental involvement in and control over the economies; (ix) governmental decisions to discontinue support of economic reform programs generally and to impose centrally planned economies; (x) differences in auditing and financial reporting standards which may result in the unavailability of material information about issuers; (xi) less extensive regulation of the securities markets; (xii) longer settlement periods for securities transactions in emerging markets; (xiii) less developed corporate laws regarding fiduciary duties of officers and directors and the protection of investors; (xiv) certain considerations regarding the maintenance of portfolio securities and cash with non-U.S. subcustodians and securities depositories; and (xv) overall greater volatility.

Portfolio Turnover Risk

The Issuer’s strategy may frequently involve buying and selling portfolio securities to rebalance the Portfolio’s exposure. Higher portfolio turnover may result in the Issuer paying higher levels of transaction costs. Portfolio turnover risk may cause the performance of the Notes to be less than you expect.

Short Sales Risk

The Issuer may engage in “short sale” transactions. The Notes will lose value if the security or instrument that is the subject of a short sale increases in value. The Issuer also may enter into a short derivative position through a futures contract, swap agreement, structured note, or short positions on currency forwards. If the price of the security or derivative that is the subject of a short sale increases, then the Notes will incur a loss equal to the increase in price from the time that the short sale was entered into plus any premiums and interest paid to a third party in connection with the short sale. Therefore, short sales involve the risk that losses may be exaggerated, potentially losing more money than the actual cost of the investment. Also, there is the risk that the third party to the short sale may fail to honor its contract terms, causing a loss to the holders of the Notes.

Strategy Risk

The Portfolio Manager cannot offer assurances that the Securities allocation model will maximize returns or minimize risk, or be appropriate for every investor seeking a particular risk profile.

Volatility Risk

The Notes and their underlying benchmark are designed to capture the long-term economic benefits of rising or declining market trends. Frequent or significant short-term price movements could adversely impact the performance of the benchmark and the Notes.
THE CONSIDERATIONS SET OUT ABOVE ARE NOT, AND ARE NOT INTENDED TO BE, A COMPREHENSIVE LIST OF ALL CONSIDERATIONS RELEVANT TO A DECISION TO PURCHASE OR HOLD ANY NOTES.
SELLING RESTRICTIONS
Ireland

The Notes may not be offered, sold, placed or underwritten in Ireland otherwise than in conformity with the provisions of:

(i) the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 and any rules issued by the Central Bank of Ireland under Section 51 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005 of Ireland (as amended) (the “2005 Act”);

(ii) the Irish Companies Acts 1963 to 2009;

(iii) the European Communities (Markets in Financial Instruments) Regulations 2007 (as amended) of Ireland and it will conduct itself in accordance with any rules or codes of conduct and any conditions or requirements, or any other enactment, imposed or approved by the Central Bank of Ireland; and

(iv) the Irish Market Abuse (Directive 2003/6/EC) Regulations 2005 and any rules issued by the Central Bank of Ireland under Section 34 of 2005 Act, and will assist the Issuer in complying with its obligations thereunder.

United States 

 

The Notes have not been and will not be registered under the U.S Securities Act of 1933, as amended, and may not at any time be directly or indirectly offered or sold in the United States or to or for the benefit of any U.S person.

Where:

“U.S person” means a “US person”, as the term is defined in Regulation S under the Securities Act of 1933 or the Investment Company Act of 1940 or the Internal Revenue Code (as each may be amended from time to time) and more particularly are references to: (i) any natural person that resides in the U.S or is a U.S citizen; (ii) any entity organised or incorporated under the laws of the U.S; (iii) any entity organised or incorporated outside the U.S the beneficial owners of which include U.S persons; (iv) any estate of which any executor or administrator is a US person ; (v) any trust of which any trustee is a U.S person; or (vi) any agency or branch of a foreign entity located in the U.S. For the purposes hereof, the term “U.S person” shall not include any discretionary or non-discretionary account (other than an estate or trust) held for the benefit or account of a non-U.S person by a dealer or other professional fiduciary organised or incorporated in the US. The term “U.S person” includes entities that are subject to the U.S Employee Retirement Income Securities Act of 1974, as amended, or other tax-exempt investors or entities in which substantially all of the ownership is held by U.S tax-exempt investors.

European Economic Area

 

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) the Notes will not be offered to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, be offered to the public in that Relevant Member State:

(A) at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(B) at any time to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or

(C) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive, including offering the Notes in minimum lots with a Principal Amount of EUR 100,000 or more and subject to a minimum consideration payable of at least EUR 100,000 per investor,
provided that no such offer of Notes referred to in (A) to (C) above shall require the Issuer, the Arranger or the Placing Agent to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

NO OFFER, SALE OR DELIVERY OF THE NOTES, OR DISTRIBUTION OR PUBLICATION OF ANYOFFERING MATERIAL RELATING TO THE NOTES, MAY BE MADE IN OR FROM ANY JURISDICTION EXCEPT IN CIRCUMSTANCES WHICH WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS. ANY OFFER OR SALE OF THE NOTES SHALLCOMPLY WITH THE SELLING RESTRICTIONS AS SET OUT IN THE ISSUER’S OFFERING DOCUMENTS AND ALL APPLICABLE LAWS AND REGULATIONS.