Eligible Assets Checklist

A UCITS may invest in eligible assets. Core eligible assets include: Transferable securities admitted to or dealt in on a regulated market including structured financial instruments if they meet the transferable securities criteria Money market instruments Deposits Closed-ended funds Open-ended funds Financial derivative instruments of which the underlying consists of assets mentioned above together with interest rates, foreign exchange rates or currencies and financial indices. No more than 10% of net assets (sometimes referred to as the trash ratio) may be invested, as non-core investments, in transferable securities and MMIs which are not listed on a stock exchange or dealt in on another regulated market other than those detailed in this section.

A. Transferable securities and money market instruments (MMIs) for example, ordinary shares, bonds, treasury bills
To be transferable, the following criteria must be met: The potential loss on the investment is limited to the amount paid to acquire it The liquidity of the instrument must not compromise the ability of the UCITS to meet its repurchase obligations There must exist a reliable valuation for the investment Appropriate information on the investment must be available The instrument must be negotiable The acquisition of the investment must be consistent with the investment policy of the UCITS The risks associated with the investment must be adequately captured by the risk management process of the UCITS Money market instruments are eligible as core investments if they meet the following criteria: They are normally dealt in on the money market They are liquid They have a value that can be accurately determined at any time Either: They are listed on an official stock exchange or traded on a regulated market, or Their issue or issuer is regulated for the purpose of protecting investors and savings and one of the following criteria is met: They are issued or guaranteed by a state or local authority, or supranational issuer They are issued by an undertaking any securities of which are dealt in on a regulated market They are issued or guaranteed by an establishment subject to sufficient prudential supervision They are issued by a securitization vehicle which benefits from a secured banking liquidity line. A transferable security or money market instrument may embed a derivative, i.e., it is an instrument which contains a component fulfilling the following criteria: Some or all of the cash flows of the transferable security

or the money market instrument (host contract) can be modified according to a variable, and therefore vary in a way similar to a stand-alone derivative Its economic characteristics and risks are not closely related to the economic characteristics and risks of the host contract It has a significant impact on the risk profile and pricing of the transferable security or money market instrument For those transferable securities or money market instruments embedding a derivative, the underlying of the embedded derivative instrument must consist of eligible assets for a UCITS. For example, catastrophe bonds and delta one certificates may be eligible provided the above-mentioned criteria are met. However, leverage loans will not be eligible as they do not qualify as transferable securities.

B. Recently issued transferable securities and MMIs

Recently issued transferable securities and MMIs not yet listed or dealt in on a regulated market are permitted as core investments provided that the terms of issue include an undertaking that application will be made for admission to a regulated market and that such admission is secured within one year of issue.

C. Shares or units of other UCITS and other investment funds

Closed-ended undertakings for collective investment (UCIs) are eligible as core investments if they meet the transferable securities criteria mentioned above and if: They are subject to corporate governance mechanisms equivalent to those applied to companies They are managed by an entity subject to national regulation for the purpose of investor protection As an example closed-ended hedge funds may be eligible provided the above-mentioned criteria are met. Open-ended funds, including Exchange Traded Funds (ETFs), are eligible as core investments if: They are subject to supervision considered by the CSSF to be equivalent to that laid down in EU Law and the cooperation between authorities is sufficiently ensured The level of protection for shareholders or unitholders is equivalent to that provided for shareholders or unitholders of a UCITS (asset segregation, borrowings, lending, etc.) They produce semi-annual and annual reports They do not invest, according to their constitutional documents, more than 10% of their net assets in other UCITS or UCIs. Open-ended funds (including hedge funds, real estate funds and commodity funds) are only eligible as non-core investments if: They are regulated They are subject to supervision considered by the CSSF to be equivalent to that laid down in EU Law and the cooperation between authorities is sufficiently ensured They comply with the above transferable securities criteria (i.e., valuation, information, liquidity, etc.).

3. Investment, diversification, borrowing, risk management and valuation requirements

D. Deposits with credit institutions

Deposits are eligible as core investments if they meet the following criteria: They are with a credit institution that has its registered office in an EU Member State or, if located in a non-Member State, it is subject to equivalent prudential rules They are repayable on demand or have the right to be withdrawn Have a maturity of up to 12 months Deposits with credit institutions not fulfilling the criteria of the first bullet point above are only eligible as non-core investments.

E. Financial derivative instruments (FDIs)

For FDIs to be eligible as core investments, the underlying asset of the FDI must be an eligible asset a transferable security, deposit, money market instrument, closed and open-ended fund, financial index, interest rate, foreign exchange rate or currency. If the acquisition or use of a financial derivative instrument could result in the delivery or the transfer of non-eligible assets, the financial derivative instrument, regardless of its nature, is not eligible. Over-the-counter (OTC) FDIs must meet the following criteria: The counterparties must be subject to prudential supervision, approved by the CSSF They must be subject to daily, reliable and verifiable valuation They must be able to be sold, liquidated or closed by an offsetting transaction at any time at their fair value at the UCITS initiative Eligible financial derivative instruments include, but are not limited to, futures, options, swaps (interest rate swaps, currency swaps, total return swaps, credit default swaps, etc.), forwards, and contracts for differences.

F. Financial indices
To be eligible, financial indices must meet the following criteria: Be sufficiently diversified Represent adequate benchmark for the market it refers to Be published in an appropriate manner Based on the eligibility criteria mentioned above eligible indices may, amongst others, consist of commodity and metal indices, real estate indices, and private equity indices. Hedge fund indices may also be eligible providing that the following additional criteria are met: There exist pre-determined rules and objective criteria for selection and re-balancing of the components of the index No payments are accepted from potential index components The methodology relating to the index may not allow retrospective changes to previously published index values Exposure to hedge fund indices may also be obtained through the use of performance swaps or total return swaps.

G. Ancillary assets
Movable and immovable property may be acquired by an investment company if it is essential for its business. Precious metals or certificates representing them may not be acquired. Ancillary liquid assets may be held.