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THIS WEBSITE IS AIMED AT PROFESSIONAL INVESTORS IN THE NETHERLANDS

This website is published by Lyxor International Asset Management (LIAM), a French asset management company approved by the Autorité des Marchés Financiers (the French Financial Markets Authority) (AMF) (17 place de la Bourse 75082 Paris Cedex 02) under the UCITS (2009/65/EC) and AIFM (2011/31/EU) directives. LIAM is registered in the Netherlands in the public register of the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) as a manager (beheerder) of a UCITS.

The website is hosted on Microsoft Azure servers.

This website is subject to French and Dutch law.

 

A professional investor is a professional investor (professionele belegger) within the meaning of the Act on the Financial Supervision (Wet op het financieel toezicht) (AFS).

A professional investor within the meaning of the AFS is one of the following:

  • a bank
  • a collective investment scheme (UCITS or AIF) and a management company of such scheme
  • a pension fund and management company of such fund
  • an investment firm
  • a national or regional governments, public bodies, central bank, international or supranational financial organisation or other type of international organisation
  • a market maker
  • a local: party trading only for its own account or providing quotes for trades in derivatives
  • an insurance company
  • a financial institution
  • commodity and commodity derivatives dealers
  • institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions
  • large undertakings meeting two of the following size requirements on a company basis (a) balance sheet total of EUR 20,000,000, (b) net turnover of EUR 40,000,000 and (c) own funds of € 2,000,000

 

Please note that the above summary is provided for information purposes only. If you are uncertain as to whether you can be classified as a professional investor within the meaning of the AFS then you should seek independent advice.

 

Marketing Restrictions and Implications

 

Lyxor UCITS compliant Exchange Traded Funds (Lyxor UCITS ETFs) referred to on this website are open ended mutual investment funds (i) established under the French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under the Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Supervisory Committee). Most, if not all, of the protections provided by the Dutch regulatory system generally and for funds authorised in the Netherlands do not apply to these exchange traded funds (ETFs). In particular, investors should note that holdings in this product will not be covered by the provisions of the UK Financial Services Compensation Scheme, the Dutch Investor Compensation Scheme (beleggerscompensatiestelsel) or by any similar scheme.

 

This website is exclusively intended for persons who are not "US persons", as such term is defined in Regulation S or the US Securities Act 1933, as amended, and who are not physically present in the US. This website does not constitute an offer or an invitation to purchase any securities in the United States or in any other jurisdiction in which such offer or invitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Potential users of this website are requested to inform themselves about and to observe any such restrictions.

 

Index Replication Process

 

Lyxor UCITS ETFs follow both physical and synthetic index replication process.

 

However, most Lyxor UCITS ETFs follow synthetic replication process. This consists of entering into a derivative transaction (a ‘Performance Swap’, as defined below) with a counterparty that provides complete and effective exposure to its benchmark index. Lyxor has adopted this methodology in order to minimise tracking error, optimise transaction costs and reduce operational risks.

 

A Performance Swap is a contractual agreement which is negotiated over-the-counter (OTC) between two parties: the Lyxor UCITS ETF and its counterparty. From a risk perspective, each Performance Swap ranks equally with other senior unsecured obligations of the counterparty, such as common bonds (i.e., same rights to payments). In the Performance Swap, the counterparty of the Lyxor UCITS ETF commits to pay the Lyxor UCITS ETF a variable return based on a pre-determined benchmark index, instead of a fixed stream of income (as in bonds). At the same time, the counterparty will receive from the Lyxor UCITS ETF the performance and any related revenues generated by the basket's assets (excluding the value of the Performance Swap) held by the Lyxor UCITS ETF. Information provided on individual ETFs includes data on the basket relating to the ETF and the percentage value of the basket represented by each asset. The information is relevant to the closing values on the date given. 

 

Investment Risks

 

The Lyxor UCITS ETFs described on this website are not suitable for everyone. Investors' capital is at risk. Investors should not deal in this product unless they understand, having obtained independent professional advice where necessary, its nature, terms and conditions, and the extent of their exposure to risk. The value of the product can go down as well as up and can be subject to volatility due to factors such as price changes in the underlying instrument and interest rates. If a fund is quoted in a different currency to the index, currency risks exist.

 

Prior to any investment in any Lyxor UCITS ETF, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us. We recommend that you consult your own independent professional advisors (including legal, tax, financial or accounting advisors, as appropriate).

 

Specific Risks

 

·         Capital at Risk. ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Benchmark Index. Investors’ capital is fully at risk and investors may not get back the amount originally invested. Investments are not covered by the provisions of the UK Financial Services Compensation Scheme, the Dutch Investor Compensation Scheme (beleggerscompensatiestelsel) or by any similar scheme.

·         Counterparty Risk. Investors may be exposed to risks resulting from the use of an OTC Swap with Societe Generale. Physical ETFs may have Counterparty Risk resulting from the use of a Securities Lending Programme.

·         Currency Risk. ETFs may be exposed to currency risk if the ETF or Benchmark Index holdings are denominated in a currency different to that of the Benchmark Index they are tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.

·         Replication Risk. ETFs are designed to replicate the performance of the Benchmark Index. Unexpected events relating to the constituents of the Benchmark Index may impact the Index provider’s ability to calculate the Benchmark Index, which may affect the ETF’s ability to replicate the Benchmark Index efficiently. This may create Tracking Error in the ETF.

·         Underlying Risk. The Benchmark Index of a Lyxor ETF may be complex and volatile. When investing in commodities, the Benchmark Index is calculated with reference to commodity futures contracts which can expose investors to risks related to the cost of carry and transportation. ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.

·         Liquidity Risk. On-exchange liquidity may be limited as a result of a suspension in the underlying market represented by the Benchmark Index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, Societe Generale or other Market Maker systems; or an abnormal trading situation or event. 

The securities can be neither offered in nor transferred to the United States.

 

Tax

 

Any statement in relation to tax, where made, is generic and non-exhaustive and is based on our understanding of the laws and practice in force as of the date of this document and is subject to any changes in law and practice and the interpretation and application thereof, which changes could be made with retroactive effect. Any such statement must not be construed as tax advice and must not be relied upon. The tax treatment of investments will, inter alia, depend on an individual’s circumstances. Investors must consult with an appropriate professional tax adviser to ascertain for themselves the taxation consequences of acquiring, holding and/or disposing of any investments mentioned on this website. 

Further information on the risk factors are available in the [Risk Warning – link to risk page] section of the website.

 

Any fund prospectus and supplements are available at www.lyxoretf.nl. Information given about the past performance of the funds is no guarantee of future performance. No investment decision should be taken without reading the fund prospectus and any fund supplement of the fund concerned.

 

Although the content of the website is based upon information that LIAM consider reliable or comes from sources that LIAM consider reliable, LIAM have not verified such information. Lyxor make no representation or warranty as to the accuracy, completeness or adequacy of any information.  Any reproduction, disclosure or dissemination of the materials available on the website is prohibited.

 

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17 Aug 2017

Tap into the benefits of water investing 

 

Around 1 billion1 people around the globe still don’t have ready access to good, clean water. The global water supply is under unprecedented pressure as the climate changes, the population grows and infrastructure ages. Solutions are needed urgently.

Thankfully, innovative ways to tackle the problems of demand, waste and quality are emerging. And they are creating opportunities to invest in a long-term structural growth theme with real world benefits. The six main market drivers are:  

1. Emerging market growth: Improved living standards in developing countries have resulted in higher per capita water consumption. Greater urbanisation means greater need for additional sanitation and waste.

2. Rising demand: Water consumption growth has even outstripped population growth and the problem is only expected to get worse. Global demand is expected to rise by 40%2 by 2030.

3. Tackling inefficiency: Developed economies are still, in many cases, extremely inefficient in how they look after their water. In the UK, for example, 3,123m litres leak from water pipes each day3. Montreal is thought to lose around 40% of its water because of poor infrastructure4.

4. Water quality: Ageing infrastructure can create contamination problems, as we’ve seen in various high profile cases. The UN says severe pathogen pollution already affects around one-third of all river stretches in Latin America, Africa and Asia5.

5. Policy change: Measures and targets are being put in place to improve water quality. In China, for example, the most recent five-year plan included measures on air quality, water quality and soil. Water was a key part of the 2030 Agenda for Sustainable Development. There are also clear economic benefits from investing in water and sanitation: they include an overall estimated gain of 1.5% of global GDP and a US$4.3 return for every dollar invested in water and sanitation services6.

6. Changing weather patterns: Although the subject of climate change remains controversial, weather patterns are in flux. From flooding to rising sea levels, it requires good water infrastructure and better waste recycling.

 

Staying the course

An urgent problem requires robust and sustainable solutions; solutions which aren’t just based on charity but which also help developing countries address water availability through economic means. In our view, companies will play a vital part in providing them.

The market value of water sector companies is expected to reach $1 trillion by 2027. Water is already the largest sector in the global infrastructure market. It is also very diverse, combining stable, utility-type companies which supply and treat water, with higher growth infrastructure groups exposed to emerging markets. Three main areas of water development will keep the current strong:

  • Utilities: water suppliers and waste water post-treatment companies who operate facilities and networks to safeguard the global water economy.
  • Infrastructure: suppliers of pipes, pumps, valves and meters, as well as various consulting firms. Investments required to upgrade ageing infrastructure in developed nations is expected to drive growth in the sector.
  • Treatment: High growth potential for companies involved in wastewater and desalination as demand from developing countries is expected to rise. This includes suppliers of products and technology for the disinfection, filtration and desalination of water (pre-treatment).

Go with the flows

Water continues to rise up the legislative agenda and draw the attentions of investors and policymakers alike. Areas of structural growth are hard to find when a heavy government debt burden is depressing global growth. Inflows are increasing when net flows into conventional equity funds have stagnated. Water is starting to leave other asset classes in its wake. 

 

Help us turn the tide

At Lyxor, we recognise the scale of this opportunity, just as we do the importance of a future in which everyone has safe, clean water to drink. Together, we can tackle this challenge head on.

 

What you need to know

Access the water sector with the Lyxor World Water UCITS ETF

  • The Lyxor World Water UCITS ETF offers a simple, liquid, transparent way to access the water sector.

  • The Fund is based on the World Water Index. The index is drawn from the most liquid stocks of the S&P Global Total Stock Market Index. It comprises 20 companies which have the largest share of their revenues in the three water industries above – utilities, infrastructure or treatment.
  • It selects the largest five stocks from each activity, plus an additional five stocks based on their rank in percentage share of water revenues to bring the total number of components to 20..

  • The world water index has been live since October 2007.

  • The fund has assets under management of 579 million EUR (Lyxor ETF, as at 21 July2017).

Disclaimer

All sources are as at 21 July 2017.

1.Wateraid

2.Water Resources Group

3.http://www.discoverwater.co.uk/leaking-pipes

4.https://www.theguardian.com/sustainable-business/2015/mar/02/water-loss-eight-things-you-need-to-know-about-an-invisible-global-problem

5.http://www.unep.org/ecosystems/freshwater/resources/publications/water-quality-snapshot

6.http://www.who.int/water_sanitation_health/monitoring/en

This communication is for professional clients and qualified investors only.

This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets In Financial Instruments Directive 2004/39/EC.

This document is of a commercial nature and not of a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor International Asset Management or any of their respective affiliates or subsidiaries to purchase or sell the product referred to herein.

We recommend to investors who wish to obtain further information on their tax status that they seek assistance from their tax advisor. The attention of the investor is drawn to the fact that the net asset value stated in this document (as the case may be) cannot be used as a basis for subscriptions and/or redemptions. The market information displayed in this document is based on data at a given moment and may change from time to time. The figures relating to past performances refer or relate to past periods and are not a reliable indicator of future results. This also applies to historical market data. The potential return may be reduced by the effect of commissions, fees, taxes or other charges borne by the investor.

Lyxor International Asset Management (Lyxor ETF), société par actions simplifiée having its registered office at Tours Société Générale, 17 cours Valmy, 92800 Puteaux (France), 418 862 215 RCS Nanterre, is authorized and regulated by the Autorité des Marchés Financiers (AMF) under the UCITS Directive and the AIFM Directive (2011/31/EU). Lyxor ETF is represented in the UK by Lyxor Asset Management UK LLP, which is authorised and regulated by the Financial Conduct Authority in the UK under Registration Number 435658.

 

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