Common use of Derivative Financial Instruments Clause in Contracts

Derivative Financial Instruments. The use of derivative financial instruments for hedging purposes can alter the general risk profile by reducing opportunities and risks. The use of derivative financial instruments for investment and speculative purposes can influence the general risk profile by creating additional, moderate to very strong opportunities and risks. Derivative financial instruments are not stand-alone investment instruments but rights whose value is essentially derived from the price, price fluctuations and price expectations of an un- derlying instrument. Investments in derivatives are subject to general market risk, management risk, credit risk and liquidity risk. Depending on the specific features of particular derivative financial instruments, however, the above risks may take on different characteristics and may sometimes be greater than the risks associated with investments in the underlying instruments. The use of derivatives therefore requires not only an understanding of the underlying, but also in-depth knowledge of the derivatives themselves. Derivative financial instruments also involve the risk that the AIF will suffer a loss because an- other party to the derivative transaction (usually a counterparty) fails to meet its obligations. The credit risk associated with exchange-traded derivatives is generally smaller than for OTC derivatives because the clearing house that acts as the issuer or counterparty to every deriva- tives contract traded on the exchange also guarantees that the transaction will be processed. To reduce the overall default risks, this guarantee is backed up by a daily payment system maintained by the clearing house under which the assets required as cover are calculated every day. For OTC derivatives there is nothing comparable to this clearing house guarantee, and the AIF must factor the creditworthiness of every OTC derivative counterparty into its assessment of the potential credit risk. Derivatives can also present liquidity risks, because certain instruments may be difficult to buy or sell. If a derivatives transaction is especially large or the market in question is not liquid (as may be the case for OTC derivatives), in certain circumstances it may prove impossible to exe- cute in full or liquidation of the position may be possible only at extra cost. Other risks that the use of derivatives may present relate to the inaccurate pricing or valuation of derivatives. There is also the risk that derivatives will not correlate exactly with the underlying assets, interest rates and indices. Many derivatives are complex and they are often valued sub- jectively. Inappropriate valuations can result in greater claims for cash payment by counterpar- ties or to a loss of value for the AIF. Derivatives do not always correlate directly or in parallel with the value of the assets, interest rates or indices from which they are derived. Therefore the use of derivatives by the AIF will not always be an effective means of achieving the AIF's in- vestment objective and on occasion may even prove counterproductive.

Derivative Financial Instruments. The use of derivative financial instruments for hedging purposes can alter the general risk profile by reducing opportunities and risks. The use of derivative financial instruments for investment and speculative purposes can influence the general risk profile by creating additional, moderate to very strong opportunities and risks. Derivative financial instruments are not stand-alone investment instruments but rights whose value is essentially derived from the price, price fluctuations and price expectations of an un- derlying underlying instrument. Investments in derivatives are subject to general market risk, management risk, credit risk and liquidity risk. Depending on the specific features of particular derivative financial instruments, however, the above risks may take on different characteristics and may sometimes be greater than the risks associated with investments in the underlying instruments. The use of derivatives therefore requires not only an understanding of the underlying, but also in-depth knowledge of the derivatives themselves. Derivative financial instruments also involve the risk that the AIF will suffer a loss because an- other another party to the derivative transaction (usually a counterparty) fails to meet its obligations. The credit risk associated with exchange-traded derivatives is generally smaller than for OTC derivatives because the clearing house that acts as the issuer or counterparty to every deriva- tives derivatives contract traded on the exchange also guarantees that the transaction will be processed. To reduce the overall default risks, this guarantee is backed up by a daily payment system maintained by the clearing house under which the assets required as cover are calculated every day. For OTC derivatives there is nothing comparable to this clearing house guarantee, and the AIF must factor the creditworthiness of every OTC derivative counterparty into its assessment of the potential credit risk. Derivatives can also present liquidity risks, because certain instruments may be difficult to buy or sell. If a derivatives transaction is especially large or the market in question is not liquid (as may be the case for OTC derivatives), in certain circumstances it may prove impossible to exe- cute execute in full or liquidation of the position may be possible only at extra cost. Other risks that the use of derivatives may present relate to the inaccurate pricing or valuation of derivatives. There is also the risk that derivatives will not correlate exactly with the underlying assets, interest rates and indices. Many derivatives are complex and they are often valued sub- jectivelysubjectively. Inappropriate valuations can result in greater claims for cash payment by counterpar- ties counterparties or to a loss of value for the AIF. Derivatives do not always correlate directly or in parallel with the value of the assets, interest rates or indices from which they are derived. Therefore the use of derivatives by the AIF will not always be an effective means of achieving the AIF's in- vestment investment objective and on occasion may even prove counterproductive.

Derivative Financial Instruments. The UCITS or the sub-fund respectively may deploy derivative financial instruments. These may be used not only for hedging purposes, but may also represent part of the investment strategy. The use of derivative financial instruments for hedging purposes can may alter the general risk profile by reducing correspondingly lowering the opportunities and risks. The use of derivative financial instruments for investment and speculative purposes can influence may alter the general risk profile by creating additional, moderate to very strong opportunities generating additional oppor- tunities and risks. Derivative financial instruments are not stand-alone independent investment instruments but instruments. Instead, they constitute rights whose value is essentially derived valua- tion derive primarily from the price, price and the price fluctuations and price expectations of an un- derlying underlying instrument. Investments Invest- ments in derivatives are subject to the general market risk, the management risk, the credit risk and the liquidity risk. Depending on On account of the specific particular features of particular the derivative financial instruments, however, the above aforementioned risks may take on however mani- fest themselves in different characteristics ways and may sometimes on occasion be greater higher than the risks associated with investments of an investment in the underlying instrumentsin- struments. The use For this reason the deployment of derivatives therefore requires not only merely an understanding of the underlyingunderlying instrument, but also in-depth thorough knowledge of the derivatives themselvesderivative itself. Derivative financial instruments also involve entail the risk that the AIF will UCITS or the sub-fund respectively may suffer a loss because an- other if anoth- er party to the derivative transaction financial instrument (usually as a rule a "counterparty”) fails to meet its fulfil their obligations. The In general, the credit risk associated with exchange-for derivatives which are traded derivatives on a stock market is generally smaller lower than the risk for OTC derivatives because derivatives, as the clearing house that acts office acting as the issuer or counterparty to every deriva- tives contract of each derivatives traded on the stock exchange also guarantees that the transaction will be processedassumes a set- tlement guarantee. To In order to reduce the overall default risksrisk, this guarantee is backed up supported by a daily payment system maintained by the clearing house under office, which calculates the assets required as cover are calculated every dayto provide this cover. For OTC In the case of derivatives there is nothing traded OTC, no comparable to this clearing house guaranteeoffice guarantee exists, and the AIF must factor UCITS needs to take account of the creditworthiness creditworthi- ness of every counterparty of derivatives traded OTC derivative counterparty into its assessment of when evaluating the potential credit risk. Derivatives can In addition, liquidation risks also present liquidity risksexist, because certain as specific instruments may be difficult to buy or to sell. If a derivatives transaction is especially large transactions are particularly large, or if the corresponding market in question is not liquid (as may can be the case for OTC derivativesderivatives traded OTC), in it may not be possible at all times to perform transactions comprehensively, or under certain circumstances it may prove impossible to exe- cute in full or the liquidation of the a position may be possible only at extra costentail increased costs. Other Further risks that in conjunction with the use deployment of derivatives may present relate to constitute the inaccurate pricing incorrect price determination or valuation of derivatives. There In addition, it is also the risk possible that derivatives will do not fully correlate exactly with the underlying assets, interest rates and indices. Many derivatives are complex complex, and they are often valued sub- jectivelysubjectively valued. Inappropriate Improper valuations can result in greater may lead to in- creased payment claims for cash payment by counterpar- ties from counterparties or to a loss of in value for the AIFrespective sub-fund. Derivatives do not always correlate directly have a direct or in parallel relationship with the value of the assets, interest rates or indices from which they are derived. Therefore For this reason the use of derivatives by the AIF will respective sub-fund does not always be represent an effective means of achieving the AIF's in- vestment invest- ment objective and on occasion may of the respective sub-fund, but can instead can even prove counterproductivehave the reverse effect.

Derivative Financial Instruments. The UCITS or the sub-fund respectively may deploy derivative financial instruments. These may be used not only for hedging purposes, but may also represent part of the investment strategy. The use of derivative financial instruments for hedging purposes can may alter the general risk profile by reducing correspondingly lowering the opportunities and risks. The use of derivative financial instruments for investment and speculative purposes can influence may alter the general risk profile by creating additional, moderate to very strong opportunities generating additional oppor- tunities and risks. Derivative financial instruments are not stand-alone independent investment instruments but instruments. Instead, they constitute rights whose value valua- tion is essentially derived primarily from the price, price and the price fluctuations and price expectations of an un- derlying underlying instrument. Investments In- vestments in derivatives are subject to the general market risk, the management risk, the credit risk and the liquidity risk. Depending on On account of the specific particular features of particular the derivative financial instruments, however, the above aforementioned risks may take on however mani- fest themselves in different characteristics ways and may sometimes on occasion be greater higher than the risks associated with investments of an investment in the underlying instrumentsinstru- ments. The use For this reason the deployment of derivatives therefore requires not only merely an understanding of the underlyingunderlying instrument, but also in-depth thorough knowledge of the derivatives themselvesderivative itself. Derivative financial instruments also involve entail the risk that the AIF will UCITS or the sub-fund respectively may suffer a loss because if an- other party to the derivative transaction financial instrument (usually as a rule a "counterparty”) fails to meet its fulfil their obligations. The In general, the credit risk associated with exchange-for derivatives that are traded derivatives on a stock market is generally smaller lower than the risk for OTC derivatives because derivatives, as the clearing house that acts office acting as the issuer or counterparty to every deriva- tives contract of each derivative traded on the stock exchange also guarantees that the transaction will be processedassumes a settle- ment guarantee. To In order to reduce the overall default risksrisk, this guarantee is backed up supported by a daily payment system maintained main- tained by the clearing house under office, which calculates the assets required as cover are calculated every dayto provide this cover. For OTC In the case of derivatives there is nothing traded OTC, no comparable to this clearing house guaranteeoffice guarantee exists, and the AIF must factor UCITS needs to take account of the creditworthiness of every counterparty of derivatives traded OTC derivative counterparty into its assessment of when evaluating the potential credit risk. Derivatives can In addition, liquidation risks also present liquidity risksexist, because certain as specific instruments may be difficult to buy or to sell. If a derivatives transaction is especially large transactions are particularly large, or if the corresponding market in question is not liquid (as may can be the case for OTC derivativesderivatives traded OTC), in it may not be possible at all times to perform transactions comprehensively, or under certain circumstances it may prove impossible to exe- cute in full or the liquidation of the a position may be possible only at extra costentail increased costs. Other Further risks that in conjunction with the use deployment of derivatives may present relate to constitute the inaccurate pricing incorrect price determination or valuation of derivatives. There In addition, it is also the risk possible that derivatives will do not fully correlate exactly with the underlying assets, interest rates and indices. Many derivatives are complex complex, and they are often valued sub- jectivelysubjectively valued. Inappropriate Improper valuations can result in greater may lead to increased payment claims for cash payment by counterpar- ties from counterparties or to a loss of in value for the AIFrespective sub-fund. Derivatives do not always correlate directly have a direct or in parallel relationship with the value of the assets, interest rates or indices from which they are derived. Therefore For this reason the use of derivatives by the AIF will respective sub-fund does not always be represent an effective means of achieving the AIF's in- vestment investment objective and on occasion may of the respective sub-fund, but can instead even prove counterproductivehave the reverse effect.