vontobel funds

							                                                               Sales Prospectus
                                               Vontobel Swiss Small Companies


Vontobel Asset Management & Investment Funds                     October 2007
         SALES PROSPECTUS




Part I   Prospectus

         This prospectus, together with the fund contract which forms an integral part thereof, the
         simplified prospectus and the latest annual or semi-annual report (if published after the lat-
         est annual report), serve as the basis for all subscriptions of fund units.
            Only the information contained in the prospectus, the fund contract or in one of the doc-
         uments referred to therein shall be deemed to be valid.

    1    Information on the investment fund

         1.1 General information on the investment fund
         Vontobel Swiss Small Companies (hereinafter referred to as «the fund» or «the investment
         fund») is an investment fund of the «securities fund» type as defined by the Swiss law
         established under the Federal Collective Investment Schemes Act of 23 June 2006. The
         fund contract was drawn up by Vontobel Fonds Services AG as management company
         and with the approval of Bank Vontobel AG as custodian bank was submitted to the
         Swiss Federal Banking Commission which approved it for the first time on 16 December
         1991.
            The fund is based upon a collective investment contract (fund contract) under which the
         management company is obliged to provide the investor with a participation in an invest-
         ment fund in proportion to the fund units acquired by him 1 and to manage this fund inde-
         pendently and under its own name in accordance with the provisions of the fund contract
         and the law. The custodian bank is party to the fund contract, in accordance with the tasks
         conferred upon it by the law and the fund contract.
            Under the terms of the fund contract, the management company is entitled with the con-
         sent of the custodian bank and the approval of the supervisory authority to create, cancel or
         merge further classes of unit at any time.
            The investment fund is not subdivided into unit classes.
            Under § 3.6 of the fund contract, the management company may administer all or part of
         the assets of several investment funds together under a pooling arrangement.

         1.2 Investment objectives and investment policy of the fund
         The investment objective of this fund is primarily to generate the highest possible capital
         growth by investing in the securities of small Swiss companies.
            This investment fund invests primarily in equity investments and participation rights of
         small companies that have their headquarters or conduct a large majority of their business
         activities in Switzerland. «Small companies» («small caps») are defined as companies
         whose market capitalization does not exceed 0.2% of the total market capitalization of all
         Swiss companies listed in Switzerland. A company’s market capitalization is calculated on
         the basis of all company securities with dividend rights.
            The key risks of the fund consist in the fact that the value of the investments is governed
         by their market value at any given time. Depending on the prevailing stock market trend
         and the performance of the stocks held in the fund’s portfolio, the net asset value can fluctu-
         ate considerably. The possibility of a depreciation in value over longer periods cannot be
         ruled out. Small-cap stocks generally react more quickly and strongly to market movements
         than blue chips. Prices of small caps usually outperform the market during economic up-
         swings and underperform during times of recession. There is no guarantee that investors
         will receive a certain return or that they will be able to return their units to the management
         company for redemption at a certain price. The value of the investments can go down as
         well as up and it is even possible that investors may not get back the amount invested.


         1)
              In the interests of readability, this document does not differentiate between masculine and feminine word forms
              (e.g. he or she, his or her etc.). Any gender-specific word forms shall be deemed to refer to both sexes.


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   The management company may invest up to one third of the fund’s assets in securities or
money market instruments of the same issuer, provided these are issued or guaranteed by a
state or public-law entity of the OECD or by international organizations with public law
characteristics to which Switzerland or a member state of the European Union belongs.
   The management company uses derivatives for the efficient management of the fund’s as-
sets. However, even under extraordinary market conditions the use of such instruments
must not lead to a divergence from the investment goal or to a change in the investment
characteristics of the fund. Based on the envisaged use of derivatives, this fund qualifies as a
«simple securities fund». Risk is measured with the aid of Commitment Approach II (ex-
tended procedure).
   Derivatives form part of the investment strategy and are not used merely to hedge invest-
ment positions.
   The fund is permitted to use both basic forms of derivatives and exotic derivatives, as de-
scribed in greater detail in the fund contract (see § 12), provided that their underlying in-
struments are permissible under the investment policy. The derivatives may be traded on a
stock exchange or on some other regulated market open to the public, or transactions may
be conducted over-the-counter (OTC). Derivatives are subject not only to market risk, but
also to counterparty risk, i.e. the risk that the other contracting party could be unable to
meet its obligations and as a result could cause financial losses.
   In addition to Credit Default Swaps (CDS), all other types of credit derivatives (e.g. Total
Return Swaps [TRS], Credit Spread Options [CSO], Credit Linked Notes [CLN]) may be
purchased by means of which credit risks can be transferred to third parties, known as «risk
buyers». The risk buyers receive a premium to compensate for this. The amount of this pre-
mium depends among other factors on the likelihood of the loss occurring and on the maxi-
mum scale of the loss; both factors are generally difficult to assess, which increases the risk
associated with credit derivatives. The investment fund may act both as a risk seller and as a
risk buyer.
   The use of derivatives must neither exert a leverage effect on the fund’s assets nor may it
constitute short selling. At the same time, the total exposure to derivatives may amount to a
maximum of 100% of the fund’s net asset value and the total exposure of the fund may
therefore amount to a maximum of 200% of its net asset value.

   Detailed information on the fund’s investment policy and applicable restrictions, as well
as the authorized investment techniques and instruments (in particular derivative financial
instruments and their scope) can be found in the fund contract.

1.3 Profile of the typical investor
The fund is suitable for investors with a long-term investment horizon who are primarily
seeking growth in their invested capital. Investors are able to accept stronger fluctuations
and a more protracted decline in the net asset value of the fund’s units. They are aware of
the main risks involved in equity investments.

1.4 Tax regulations relevant for investment funds
Investment funds are not legal entities in Switzerland. They are subject to neither income
tax nor capital gains tax.
   The management company may apply for a refund of all Swiss federal withholding tax
levied on the investment fund’s domestic income.
   Income and capital gains realized abroad may be subject to the relevant withholding tax
deductions imposed by the country of investment. These taxes will, as far as possible, be re-
claimed by the fund management company on behalf of investors resident in Switzerland
under the terms of double taxation treaties or other such agreements.
   Distributions of income made by the fund to investors domiciled in Switzerland are sub-
ject to Swiss federal withholding tax (source tax) at 35%. Capital gains are not subject to
withholding tax provided they are paid on a separate coupon.

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       Investors resident in Switzerland may reclaim Swiss withholding tax by declaring it in
    their tax returns, or by submitting a separate refund application to the Swiss tax authori-
    ties.
       Distributions of income to investors domiciled outside Switzerland are made free of
    Swiss withholding tax, provided that at least 80% of the investment fund’s income is de-
    rived from foreign sources. For this to be possible, a bank must confirm (by means of a dec-
    laration of domicile or affidavit) that the units in question are held at the bank in the safe-
    keeping account of an investor domiciled outside Switzerland and that the distributions are
    credited to the account of that investor. No guarantee can be made that at least 80% of the
    investment fund's income will arise from foreign sources.
       If withholding tax is charged to an investor resident outside Switzerland due to his failure
    to present a domicile declaration, he may submit a claim for reimbursement under Swiss
    law directly to the Swiss Federal Tax Administration in Berne.
       In Switzerland, the distributed income and/or the interest realized on sale or redemption
    may be subject to European taxation of interest.
       Under the provisions of the EU Council Directive on the taxation of savings income in
    the form of interest payments and the agreement concluded as part of the bilateral negotia-
    tions between Switzerland and the EU, Switzerland is also obliged to apply a tax retention
    to certain interest payments made by investment funds to natural persons domiciled for tax
    purposes in an EU member state. This applies both to distributions and to the sale or re-
    demption of fund units. The tax retention amounts to 15% (20% from 2008 and 35% from
    2011). On the explicit instructions of the interest recipient, the tax retention may be re-
    placed by a voluntary report to the tax authorities of the recipient's tax domicile.

      The tax information stated above is based on the current legal situation and practice. The
    management company expressly reserves the right to amend this information in the event of
    changes to legislation, legal or fiscal practice.

      The taxation and other tax implications for investors who hold, buy or sell fund units are
    defined by the taxation laws and regulations in the investor's place of residence.

2   Information on the management company

    2.1 General information on the management company
    Vontobel Fonds Services AG, Zurich, is responsible for the management of the fund.
       The management company has been active in the fund business since its formation as a
    limited company in Zurich in 1990.
       As of 31 December 2006, the subscribed share capital of the management company
    amounts to CHF 4 million. The share capital consists of registered shares and is fully paid
    up. Vontobel Fonds Services AG is a wholly-owned subsidiary of Vontobel Holding AG,
    Zurich.

    Board of Directors:
    Christoph Ledergerber, Member of the Executive Board of the Vontobel Group, Vontobel
    Asset Management AG
    Werner Bollier, Senior Vice President, Vontobel Asset Management AG
    Serdar Aktasli, Senior Vice President, Bank Vontobel AG

    Fund management:
    Martin de Quervain, Senior Vice President, CEO Vontobel Fonds Services AG
    Deputy: Richard Diserens, First Vice President, Vontobel Fonds Services AG




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       The management company manages a total of 11 investment funds and 25 segments
    in Switzerland and as of 31 December 2006 it had assets under management totaling
    CHF 3,860 million.
       As of 31 December 2006, the management company is not providing any other services
    apart from its fund management activities.
       The address of the management company is: Vontobel Fonds Services AG, Dianastrasse 9,
    8022 Zurich. The Internet address of the Vontobel Group is: www.vontobel.ch.

    2.2 Delegation of investment decisions
    Investment decisions relating to the investment fund have been delegated to Vontobel Asset
    Management AG, a wholly owned subsidiary of Vontobel Holding AG. Vontobel Asset
    Management AG has many years of experience in managing the assets of institutional
    clients and is focused on Swiss equities. The precise details of the investment advisor’s remit
    are set out in an asset management agreement between Vontobel Fonds Services AG and
    Vontobel Asset Management AG.

    2.3 Exercising of creditor and membership rights
    The management company exercises the membership and creditor rights associated with the
    investments of the funds managed independently and exclusively in the interests of the in-
    vestors. On request, the investors may receive information from the management company
    on the exercising of the membership and creditor rights.
       In the case of routine business, the management company is at liberty to exercise the
    membership and creditor rights itself or delegate the exercising of such rights to the custodi-
    an bank or third parties.
       In the case of all other agenda items which could have a substantial impact on investors’
    interests, including in particular the exercising of membership and creditor rights to which
    the management company is entitled in its capacity as a shareholder or creditor of the cus-
    todian bank or other legal entities closely associated with it, the management company shall
    exercise the voting right itself or issue explicit instructions. In doing so, it may act on the
    basis of information received from the custodian bank, the portfolio manager, the company
    or third parties or found in the press.
       The management company shall be at liberty to decide not to exercise the membership
    and creditor rights.

3   Information on the custodian bank
    Bank Vontobel AG, Zurich, acts as custodian bank. The bank was established in 1924 as a
    limited partnership based in Zurich. In 1984, the bank changed its legal form to that of a
    public limited company. Equity after distribution of earnings amounted to CHF 311.8 mil-
    lion at the end of December 2006. Bank Vontobel AG is a wholly owned subsidiary of Von-
    tobel Holding AG, Zurich. The main activities of Bank Vontobel AG are private banking
    (asset management and investment counseling), brokerage (trading, derivatives, investment
    research) and investment banking.
       The custodian bank may delegate the safekeeping of the assets to third-party and collec-
    tive custodians in Switzerland and abroad In doing so it shall be liable for exercising due
    care in selecting and instructing such parties and in monitoring continuous compliance with
    the selection criteria.
       As a consequence of third-party and collective custody, the management company no
    longer has sole ownership of the deposited securities, but merely co-ownership.




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4   Third parties

    4.1 Paying agent
    The following bank has been appointed as paying agent:
    – Bank Vontobel AG, Zurich

    4.2 Selling agent
    The following institution has been appointed as selling agent for the fund:
    – Bank Vontobel AG, Zurich

    4.3 Auditors
    The fund’s assets will be audited by Ernst & Young AG, Zurich.

5   Further information

    5.1 Key data
    Security identification number       279 572
    Stock exchange listing               Zurich
    Financial year                       1 April to 31 March
    Unit of account                      Swiss Franc
    Units                                Bearer units, no certification
    Allocation of earnings               Earnings distributed each May

    5.2 Issue and redemption terms
    Fund units may be issued or redeemed on any bank working day (Monday to Friday). No
    issue or redemption will take place on Swiss and Zurich public holidays (Easter, Whitsun,
    Christmas, New Year, Swiss National Day [1 August], Ascension Day, May Day, Sechse-
    läuten and Knabenschiessen) or on days when the stock exchanges or markets of the fund’s
    principal investment countries are closed, or under the exceptional circumstances defined
    under § 17.4 of the fund contract.
       Issue and redemption orders received by the custodian bank by 4 pm at the latest on a
    bank working day (order day) will be settled on the following bank working day (valuation
    day) on the basis of the net asset value calculated on this date. The net asset value taken as
    the basis for the settlement of the order is therefore not known when the order is placed
    (forward pricing). It is calculated on the valuation day on the basis of the closing prices on
    the order day.
       The net asset value of a unit is the market value of the fund’s assets, less all the fund’s lia-
    bilities, divided by the number of units in circulation. It will be rounded up or down to the
    nearest centime.
       The issue price corresponds to the net asset value calculated on the valuation day, plus
    the issuing commission. The issuing commission is defined under point 5.3 below. The re-
    demption price is determined on the basis of the net asset value calculated on the valuation
    day. No redemption commissions or other commissions are charged.
       Additional expenses relating to the purchase and sale of investments (standard market
    brokerage charges, commission, taxes etc.) incurred in connection with the investment of
    the amount paid in, or with the sale of a redeemed portion of investments corresponding to
    the unit, will be charged to the fund’s assets.
       Issue and redemption prices are rounded up or down to the nearest centime. Payment
    will be made three bank working days after the valuation date.
       Units shall not take the form of actual certificates but shall exist purely as book entries.
       If unit certificates have been issued, they must be returned when the investor submits a
    redemption application.




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5.3 Remunerations and incidental costs

5.3.1 Remuneration and incidental costs payable by the investors
      (under § 18 of the fund contract)
Issuing commission accruing to the management company,
custodian bank and/or selling agents in Switzerland and abroad:    maximum 5%
Redemption commission accruing to the management company,
custodian bank and/or selling agents in Switzerland and abroad:    none.

5.3.2 Remuneration and incidental costs charged to the fund’s assets
      (under § 19 of the fund contract)
Management fee charged by the management company
for the asset management and distribution of the fund              max. 1.5% p.a.
Management company’s fee for the management of the fund:           max. 0.25% p.a.
Custodian bank’s fee:                                              max. 0.15% p.a.
Custodian bank’s fee for distribution of the annual income
as a percentage of the gross sum of the distribution:              max. 0.25%
Custodian bank’s fee for distribution of liquidation
proceeds in the event of the fund’s dissolution:                   max. 0.5%

Furthermore, the additional remunerations and incidental costs listed under § 19 of the
fund contract may also be charged to the fund.
   Information on the rates actually charged can be found in the annual and semi-annual
reports.

The management company may pay reimbursements from the distribution component to
the following institutional investors who from an economic perspective are holding the
fund units for third parties:
– Life insurance companies;
– Pension funds and other retirement plans;
– Investment foundations;
– Swiss fund management companies;
– Foreign fund management companies;
– Investment companies.

The management company may also pay trailer fees to the following distributors and sales
partners:
– Authorized selling agents;
– Fund management companies, banks, securities traders, Swiss Post and insurance compa-
nies;
– Distribution partners which place fund units exclusively with institutional investors with
professional treasury operations;
– Asset managers.

Total Expense Ratio and Portfolio Turnover Rate
The coefficient of the total costs continuously charged to the fund’s assets (Total Expense
Ratio, TER) amounted to:
2006/2007:         1.65%

The Portfolio Turnover Rate (PTR) amounted to:
2006/2007:        11.79%




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Investments in affiliated collective capital investments
In the case of investments in collective investments managed directly or indirectly by the
management company itself, or by a company with which it is linked by way of common
management or control or by way of a direct or indirect stake of more than 10% of the cap-
ital or votes, no issuing or redemption commissions may be charged and only a reduced
management fee may be charged in accordance with § 19.6 of the fund contract.

Fee-sharing agreements and pecuniary benefits («soft commissions»):
The management company has not concluded any fee sharing agreements.
The management company has not concluded any agreements in respect of so-called soft
commissions.

5.4 Publications of official notices
Further information on the fund may be found in the latest annual or semi-annual report.
The latest information can also be found on the Internet at www.vontobel.ch.
   The prospectus, complete with the fund contract, the simplified prospectus and the annu-
al or semi-annual reports may be obtained free of charge from the management company,
the custodian bank and all selling agents.
   Notification of changes to fund contract, a change of management company or custodian
bank, or of the liquidation of the investment fund shall be published by the management
company in the Swiss Commercial Gazette (Schweizerisches Handelsamtsblatt) and the
Neue Zürcher Zeitung.
   The prices of the fund’s units shall be published for each day that units are issued or re-
deemed, but at least twice a month (on the first and third Monday of the month) in the
Neue Zürcher Zeitung.

5.5 Sales restrictions
Issuing or redemption of units of this investment fund abroad is subject to the laws applica-
ble in the country concerned.
   Units in this fund may not be offered, sold or distributed within the United States of
America.

5.6 Detailed regulations
Further details on the fund, such as the valuation of the fund’s assets, a complete list of fees
charged to the investor and the fund and the application of net income, can be found in the
fund contract.




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Part II   Fund contract

     I.   Basis

          § 1 Name of fund; name and registered office of management company and custodian bank
          1. Under the name of Vontobel Swiss Small Companies (hereinafter referred to as «the
          fund» and «the investment fund»), a contractual investment fund of the securities fund cat-
          egory has been established in accordance with the definition laid down in Art. 25 ff. in con-
          junction with Art. 53 ff. of the Federal Act on Collective Investment Schemes of 23 June
          2006 (CISA).
          2. The management company is Vontobel Fonds Services AG, Zurich.
          3. The custodian bank is Bank Vontobel AG, Zurich.

    II.   Rights and obligations of parties to the contract

          § 2 The fund contract
          The legal relationship between the investors 2 on the one side and the management company
          and custodian bank on the other side shall be governed by the present fund contract and the
          applicable provisions of legislation on collective investments.

          § 3 The management company
          1. The management company manages the fund independently and in its own name but for
          the account of the investors. In particular, it takes all decisions relating to the issuing of
          units, the investments and their valuation. It calculates the net asset value as well as the
          issue price and redemption price of units and also determines the annual distribution. The
          management company exercises all rights associated with the fund.
          2. The management company and its representatives are subject to fiduciary, due diligence
          and disclosure duties. They shall act independently and exclusively in the interests of the in-
          vestors. They shall take such organizational measures as are necessary for the proper con-
          duct of business. They shall ensure transparent financial statements and provide appropri-
          ate information on these investment funds.
          3. The management company may delegate investment decisions as well as specific tasks,
          provided that this is in the interests of efficient management. It delegates exclusively to per-
          sons qualified to perform the task properly and ensures that instructions are given on the
          execution of the task, as well as assuring supervision and monitoring.
             It is liable for the actions of its representatives as if they were its own actions.
          4. With the approval of the custodian bank, the management company may submit an
          amendment to the fund contract to the supervisory authority for approval (see § 27).
          5. The management company may merge the fund with other investment funds in accordance
          with the provisions of § 26 or liquidate the fund in accordance with the provisions of § 25.
          6. The management company may administer all or part of the assets of several investment
          funds together under a pooling arrangement, if these investment funds are administered by
          the same management company and the assets are held with the same custodian bank. This
          must not result in any additional costs for the investors. The pooling arrangement does not
          give rise to any liabilities between the investment funds concerned. The management com-
          pany must be able at any time to allocate the investments that are held in the pool to the in-
          dividual investment funds concerned. The pool does not constitute a separate in-house
          fund.
          7. The management company is entitled to receive the payments stipulated in § 18 and
          § 19. It is further entitled to be released from the liabilities assumed in the proper execution
          of its tasks and to receive refunds for expenses defrayed in connection with such liabilities.

          2)
               In the interests of readability, this document does not differentiate between masculine and feminine word forms
               (e.g. he or she, his or her etc.). Any gender-specific word forms shall be deemed to refer to both sexes.


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§ 4 The custodian bank:
1. The custodian bank holds the fund’s assets in safe custody. It handles the issuance and
redemption of fund units as well as payments on behalf of the investment fund.
2. The custodian bank and its representatives are subject to fiduciary, due diligence and dis-
closure duties. They shall act independently and exclusively in the interests of the investors.
They shall take such organizational measures as are necessary for the proper conduct of
business. They shall ensure transparent financial statements and provide appropriate infor-
mation on these investment funds.
3. The custodian bank may delegate the safekeeping of the assets to third-party and collec-
tive custodians in Switzerland or abroad. It shall be liable for exercising due care in select-
ing and instructing such third parties and in monitoring continuous compliance with the se-
lection criteria. The prospectus contains statements on the risks entailed in this.
4. The custodian bank ensures that the management company complies with the law and
the fund contract. It verifies whether the calculation of the net asset value and the issuing
and redemption prices of the units and the investment decisions comply with the law and
the fund contract and whether net income is applied in accordance with the fund contract.
The custodian bank is not responsible for the choice of investments, which the management
company makes within the provisions of the investment regulations.
5. The custodian bank is entitled to receive the commission payments stipulated in § 18
and § 19. It is further entitled to be released from the liabilities assumed in the proper exe-
cution of the collective investment contract and to receive refunds for expenses defrayed in
connection with such liabilities.
6. The custodian bank is not responsible for the safekeeping of the assets of the Target
Funds in which this fund invests unless it has been assigned this task.

§ 5 The investors
1. In signing the contract and remitting a cash payment, the investors acquire a claim
against the management company for a proportion of the fund’s assets and income. The in-
vestors’ claim is constituted in units.
2. The investors are only obliged to pay into the fund the share subscribed by them. Their
personal responsibility for liabilities of the fund is excluded.
3. Investors may ask the management company to supply them at any time with informa-
tion regarding the basis on which the net asset value per unit is calculated. If the investors
express an interest in more detailed information on individual transactions of the manage-
ment company, such as the exercising of membership and creditor rights, the management
company must supply such information all times. Investors may apply to the court at the
registered office of the management company to have the auditors or some other competent
person examine the matters requiring clarification and report back to them on their find-
ings.
4. The investors may withdraw from the fund contract at any time by requesting that their
share in the fund be redeemed in cash.
5. On request, the investors are obliged to provide the management company, the custodi-
an bank and its representatives with evidence to show that they meet or continue to meet
the requirements for participation in the investment fund laid down by the law or the fund
contract. In addition, they are obliged to inform the management company, the custodian
bank and their representatives without delay as soon as they cease to meet these require-
ments.
6. The management company, acting in cooperation with the custodian bank, must pro-
ceed with the compulsory redemption of an investor’s units at the current redemption price
in the following cases:
   a) If this is necessary in order to safeguard the reputation of the financial centre, particu-
      larly with a view to combating money laundering;
   b) If the investor ceases to meet the conditions for participation in this investment fund
       laid down by the law or the contract.

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       7. In addition, the management company, acting in cooperation with the custodian bank,
       may proceed with the compulsory redemption of an investor’s units at the current redemp-
       tion price in the following cases:
          a) If the investor’s participation in the investment fund is liable to significantly impair
             the economic interests of the other investors, particularly if the investor’s participa-
             tion could have tax disadvantages for the investment fund in Switzerland or abroad;
          b) If investors have acquired their units in breach of provisions of a Swiss or foreign law
             applicable to them, or in breach of provisions of this fund contract or the prospectus;
          c) If investors’ economic interests are impaired, particularly in cases in which individual
             investors attempt to gain advantage through systematic subscriptions followed imme-
             diately by redemptions designed to exploit timing differences between the setting of
             closing prices and the valuation of the fund assets (market timing).

       § 6 Units and categories of units
       1. With the consent of the custodian bank and the approval of the supervisory authority,
       the management company may create, cancel or merge multiple classes of units at any time.
       All unit classes shall entitle the holder to a share in the undivided fund assets, which in turn
       are not divided into segments. This share may vary owing to class-specific costs, distribu-
       tions or class-specific income and the net asset value per unit may thus vary from one class
       to another. The assets of the investment fund as a whole serve as collateral for class-specific
       costs.
       2. The creation, cancellation or merger of unit classes will be announced in the official pub-
       lications. Only a merger is regarded as a change to the fund contract within the meaning
       of § 27.
       3. The various unit classes may differ notably in terms of cost structure, reference currency,
       currency hedging, distribution or reinvestment of income, minimum investments and in-
       vestor base.
          Payments and costs will only be debited to the unit class which receives a given service.
       Payments and costs which cannot be clearly allocated to one particular unit class will be
       charged to the individual unit classes in proportion to their assets.
       4. The investment fund is not subdivided into unit classes.
       5. Units shall not take the form of actual certificates but shall exist purely as book entries.
       Investors are not entitled to demand the issuing of a unit certificate.

III.   Investment policy guidelines

       A Investment principles

       § 7 Compliance with investment regulations
       1. In selecting individual investments the management company must adhere to the princi-
       ple of balanced risk diversification and comply with the percentage limits defined below.
       These restrictions relate to fund assets at market value and must be complied with at all
       times.
       2. If the fund exceeds or falls short of these limits as a result of market-related changes, the
       investment must be reduced or increased to the authorized level within a reasonable period,
       bearing the investors’ interests in mind. If in conjunction with derivatives pursuant to § 12
       below restrictions are breached as a result of a change in the delta, the situation must be
       rectified within three bank working days at the latest while safeguarding investors’ inter-
       ests.

       § 8 Investment objective and policy
       1. The management company may invest the assets of this fund in the following invest-
       ments. The risks entailed in these investments must be disclosed in the prospectus:



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   a) Bulk issues of securities and uncertificated rights having the same function which are
   traded on an exchange or some other regulated market open to the public and which em-
   body a participation right or claim or the right to acquire such securities and uncertificat-
   ed rights by way of subscription or exchange (for example warrants);
      Securities originating from new issues are only permissible if the terms of the issue pro-
   vide for their listing on a stock exchange or some other regulated market open to the
   public. If one year after their acquisition they have still not yet been listed on a stock ex-
   change or some other market open to the public, the stocks must be sold within one
   month or included under the limitation as laid down under point 1(f).
   b) Derivatives, if (i) the underlying instruments on which they are based are securities
   pursuant to a), derivatives pursuant to b), units of collective investments pursuant to c),
   money market instruments pursuant to d), financial indices, interest rates, exchange rates
   or currencies and if (ii) the underlying instruments are permissible investments under the
   fund contract. Derivatives must be traded either on a stock exchange or some other regu-
   lated market open to the public, or over-the-counter.
      Investments in OTC derivatives (OTC transactions) are only permissible if (i) the
   counterparty is a supervised financial intermediary specializing in such business and if (ii)
   the OTC derivatives are tradable daily or can be returned to the issuer at any time. They
   must also be amenable to reliable and comprehensible valuation. Derivatives can be used
   in accordance with § 12.
   c) Units of other collective capital investments (target funds), provided that (i) their doc-
   uments limit investments in other target funds to a total of 10%; (ii) these target funds
   are subject to provisions equivalent to those pertaining to securities funds in respect of
   the object, organization, investment policy, investor protection, risk diversification, sepa-
   rate safekeeping of the fund assets, borrowing, lending, short selling of securities and
   money market instruments, issue and redemption of units and contents of the semi-annu-
   al and annual reports and (iii) these target funds are authorized as collective capital in-
   vestments in their country of domicile, where they are subject to investor protection
   which is equivalent to that in Switzerland and international legal assistance is assured.
   d) Money market instruments, provided these are liquid, can be readily valued and are
   traded on an exchange or some other regulated market open to the public; money market
   instruments which are not traded on an exchange or some other regulated market open
   to the public may only be acquired if the issue or the issuer is subject to creditor and in-
   vestor protection requirements and if the money market instruments have been issued or
   guaranteed by issuers pursuant to Art. 74 paragraph 2 of the Federal Ordinance on Col-
   lective Investment Schemes (CISO);
   e) Sight or demand deposits with a term to maturity not exceeding twelve months with
   banks domiciled in Switzerland or in a member state of the European Union or in anoth-
   er country provided that the bank is subject to supervision in that country which is equiv-
   alent to the standard of supervision in Switzerland.
   f) Instruments other than those specified in a) to e) above, in overall terms not exceeding
   10% of the fund’s assets; investments in (i) precious metals, precious metals certificates,
   commodities and commodities instruments and (ii) short selling of investments pursuant
   to a) to d) above are not permissible.
2. a) The management company invests at least two thirds of the fund’s assets, after deduc-
   tion of cash holdings, in:
       aa) Equities and similar instruments (shares, dividend-right certificates, shares in co-
            operatives, participation certificates, etc.) issued by small companies which are
            domiciled in or which carry out the bulk of their business activities in Switzer-
            land;
       ab) Derivatives (including warrants) on the above-mentioned investments;
       ac) Structured products denominated in freely convertible currencies based on the
            above-mentioned investments, including notably certificates of issuers world-
            wide.

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            «Small companies» («small caps») are defined as companies whose market capi-
            talization does not exceed 0.2% of the total market capitalization of all Swiss
            companies listed in Switzerland. A company’s market capitalization is calculated
            on the basis of all company securities with dividend rights.
   b) Subject to the provisions of c), the management company may also, after deduction of
   liquid assets, invest up to one third of the fund’s assets in:
       ba) Equities and similar instruments (shares, dividend-right certificates, shares in co-
            operatives, participation certificates, etc.) issued by companies which do not meet
            the requirements specified in point 2 aa) in terms of their size, domicile or busi-
            ness activities;
       bb) bonds, convertible bonds, convertible notes, warrant bonds and notes and other
            fixed or variable rate debt securities and rights of private and public borrowers
            worldwide denominated in a freely convertible currency;
       bc) Money market instruments of domestic and foreign issuers denominated in a
           freely convertible currency;
       bd) Derivatives (including warrants) on the above-mentioned investments;
       be) Bank deposits;
       bf) Units of other collective capital investments.
   c) In addition, the management company shall comply with the following investment re-
   striction, which refers to the fund’s assets after deduction of cash holdings:
       ca) Other securities funds and other collective capital investments in total not exceed-
           ing 10%;
3. Subject to § 19, the management company may acquire units of other target funds which
are managed directly or indirectly by the management company itself or by a company with
which it is linked by way of common management or control or by way of a direct or indi-
rect stake of more than 10% of the capital or votes.

§ 9 Liquid assets
The management company may also hold liquid assets in an appropriate amount in the unit
of account of the investment fund and in all currencies in which investments are made. Liq-
uid assets comprise bank credit balances and claims arising from repurchase agreements at
sight or on demand with maturities of up to twelve months.

B Investment techniques and instruments

§ 10 Securities lending
1. The management company may lend all types of securities which are traded on an ex-
change or some other regulated market open to the public. However, it may not lend securi-
ties taken over in a «reverse repo» transaction.
2. The management company may lend the securities to a borrower under its own name
and for its own account («principal transaction»), or may appoint an intermediary to make
the securities available to a borrower either indirectly in a fiduciary capacity («agent trans-
action») or directly («finder transaction»).
3. The management company shall enter into securities lending transactions only with first-
class borrowers or intermediaries specializing in transactions of this type, such as banks,
brokers and insurance companies, as well as recognized securities clearing organizations,
which can guarantee the proper execution of the securities lending transaction.
4. If the management company must observe a period of notice (which may not exceed 10
bank business days) before it may again legally repossess the securities lent, it may not lend
more than 50% of its holdings of a particular security eligible for lending. However, if the
borrower or the intermediary provides the management company with a contractual assur-
ance that the latter may legally repossess the securities lent on the same or next bank busi-
ness day, the management company may lend its entire holding of a particular security eligi-
ble for lending.

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5. The management company shall conclude an agreement with the borrower or intermedi-
ary whereby the latter shall pledge or transfer collateral in favor of the management compa-
ny in accordance with Art. 8 CISO-SFBC in order to secure the restitution of securities. The
value of the collateral must at all times amount to at least 105% of the market value of the
securities lent or at least 102%, if the collateral consists of (i) liquidity or (ii) fixed or vari-
able-interest securities with a current long-term rating of at least «AAA», «Aaa» or equiva-
lent from a rating agency recognized by the Swiss Federal Banking Commission (SFBC).
Moreover, the borrower or intermediary is responsible for ensuring the prompt, uncondi-
tional payment of any income accruing during the lending period, as well as for asserting
other economic rights and for the contractual restitution of securities of any type, quantity
and quality.
6. The custodian bank shall ensure that the securities lending transactions are conducted in
a secure manner and that the contractual terms are complied with. It shall in particular
monitor compliance with the requirements regarding collateral. For the duration of the
lending transactions it shall also be responsible for the administrative duties assigned to it
under the custody account regulations and for asserting all rights pertaining to the securities
lent, provided these have not been ceded under the terms of an applicable framework agree-
ment.

§ 11 Securities repurchase agreements
1. The management company may enter into securities repurchase agreements («repos»)
for the fund’s account. Securities repurchase agreements can be concluded as either «repos»
or «reverse repos».
   A «repo» is a legal transaction whereby one party (borrower) temporarily transfers own-
ership of securities to another party (lender) who undertakes to return securities of the same
type, quantity and quality to the borrower on the due date and to reimburse income accru-
ing during the period of the repurchase operation. The borrower bears the price risk of the
securities during the period of the repurchase operation.
   From the perspective of the counterparty (lender), a «repo» is a «reverse repo». «Reverse
repos» are an instrument used by the management company to invest cash, whereby it buys
securities and at the same time agrees to return securities of the same type, amount and
quality along with the income accruing during the period of the repurchase operation.
2. The management company may conclude repo transactions with a counterparty under
its own name and for its own account («principal transaction»), or may instruct an interme-
diary to conclude «repo» transactions with a counterparty either indirectly in a fiduciary
capacity («agent transaction») or directly («finder transaction»).
3. The management company shall conclude «repo» transactions only with first-class
counterparties and intermediaries specializing in transactions of this type, such as banks,
brokers and insurance companies or recognized securities clearing organizations which can
ensure the proper execution of the «repo» transaction.
4. The custodian bank shall ensure that the repo transactions are conducted in a secure
manner and that the contractual terms are complied with. It shall ensure that fluctuations in
the value of the securities used in the «repo» transactions are compensated in cash or securi-
ties (mark to market). For the duration of the repo transaction it is also responsible for the
administrative duties assigned to it under the custody account regulations and for asserting
all rights pertaining to the securities used in the repo transactions, provided these have not
been ceded under an applicable framework agreement.
5. The management company may use for «repos» all types of securities which are traded
on an exchange or some other regulated market open to the public. Securities taken over in
«reverse repo transactions» may not be used for «repo» transactions.
6. If the management company must observe a period of notice (which may not exceed
10 bank business days) before it may again legally repossess the securities used in a
repo» transaction, it may not use for «repo» transactions more than 50% of its holdings of
a particular security eligible for use such transactions. However, if the counterparty or the

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intermediary provides the management company with a contractual assurance that the lat-
ter may legally repossess the securities used in the «repo» transaction on the same or next
bank business day, the management company may use its entire holdings of a particular se-
curity eligible for «repo» transactions.
7. «Repos» are deemed to be borrowings in accordance with § 13, unless the funds so re-
ceived are used to acquire securities of the same type, number, credit rating and maturity in
conjunction with a «reverse repo» transaction.
8. With regard to «reverse repos», the management company may only acquire fixed or
variable-interest securities issued or guaranteed by the Swiss Confederation and by Swiss
cantons and municipalities, or by issuers which have the minimum credit ratings required
by the supervisory authority.
9. Claims arising from «reverse repos» are deemed to be liquid assets pursuant to § 9,
rather than constituting the extension of a loan pursuant to § 13.

§ 12 Derivative financial instruments
1. The management company may use derivatives for the efficient management of the
fund’s assets. It will ensure that even under extraordinary market conditions the economic
impact of using derivatives does not lead to any divergence from the investment goals re-
ferred to in this fund contract, the prospectus and the simplified prospectus, or to any
change in the investment characteristics of the fund. In addition, the securities underlying
the derivatives must be permissible investments under this fund contract.
   The legislation on collective investments envisages three risk measurement procedures
for the use of derivatives: Commitment Approaches I and II for «simple securities funds»
and the model-based approach combined with stress tests for «complex securities funds».
   Commitment Approach I is a simplified procedure whose characteristic feature is that the
use of derivatives neither exerts a leverage effect on the fund assets nor corresponds to short
selling. Commitment Approach II is an extended procedure. A leverage effect is permissible,
as is short selling. In this context, total exposure may amount to up to 200% of a fund’s net
asset value (or even as much as 210% taking account of borrowing). In the case of the model-
based approach, risk is measured daily as value-at-risk (VaR) with a confidence interval of
99% and a holding period of 20 trading days; it must not exceed twice the VaR of a deriva-
tive-free reference portfolio. Periodic stress tests must also be carried out.
2. Based on the envisaged use of derivatives, this investment fund qualifies as a «simple se-
curities fund». Risk is measured with the aid of Commitment Approach II. This investment
fund’s total derivative-related exposure must therefore not exceed 100% of its net asset value
and its total exposure must therefore not exceed a total of 200% of its net asset value.
Allowing for the possibility of temporarily borrowing up to 10% of the net asset value of
the fund in accordance with § 13.2, the fund’s total exposure may amount to up to 210% of
its net asset value.
   The management company must be able to meet the delivery and payment obligations as-
sociated with derivatives from the fund’s assets at all times as required by the legislation on
collective investments.
3. The management company may in particular use basic forms of derivatives, such as call
or put options whose value on maturity has a linear dependency on the positive or negative
difference between the market value of the underlying instrument and the strike price and
falls to zero if the difference is preceded by the opposite sign («+» or «-» sign), Credit De-
fault Swaps (CDS), swaps whose payments have a linear and non-path-dependent depen-
dency on the value of the underlying instrument or an absolute amount, such as futures and
forward transactions whose value has a linear dependency on the value of the underlying
instrument. In addition, it may use combinations of basic derivatives and derivatives whose
economic effect cannot be equated either with that of one of the basic forms of derivatives
or with a combination of basic forms of derivatives (exotic derivatives).




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4. a) The management company subdivides derivatives into the three risk categories mar-
   ket, credit and currency risk. If a derivative entails different risk categories, it must be
   taken into account with its corresponding underlying instrument in each of the relevant
   risk categories. In the case of futures, forwards and swaps the corresponding underlying
   instrument is calculated with the product from the number of contracts and the contract
   value, in the case of options with the product from the number of contracts, the contract
   value and the delta (if a delta is calculated).
   b) Contrary positions in derivatives of the same underlying instrument and in invest-
   ments in that underlying instrument may be offset against each other (netting).
   c) Contrary positions of various underlyings may only be offset against each other, if
   their risks, such as market, credit and currency risks, are similar and show high correla-
   tions.
   d) Sold call options and purchased put options may only be included in the netting if
   their delta is calculated.
   e) Subject to netting in accordance with b) to d), the absolute amounts of the derivatives’
   corresponding underlyings are to be added together for each risk category. The sum of
   the corresponding underlyings may not exceed the fund’s net asset value in any of the
   three risk categories.
   f) Under legislation on collective investments, payment obligations arising from deriva-
   tives must be permanently covered by cash equivalents, debt securities and rights or equi-
   ties traded on an exchange or some other regulated market open to the public. Such cash
   equivalents and investments may be used as cover for several derivatives at the same
   time, provided these are subject to a market or currency risk and are based on the same
   underlyings.
   g) Physical delivery obligations arising from derivatives must be permanently covered by
   the corresponding underlyings or by other investments if their risks, such as market, cur-
   rency and interest rate risk, are similar to those of the underlyings to be delivered, if the
   investments and underlyings show high correlations and if the underlyings are highly liq-
   uid and can be bought or sold at any time should delivery be required. Underlyings may
   be used to cover several derivative positions at the same time if they are subject to a mar-
   ket risk, credit risk or currency risk and are based on the same underlyings.
5. The management company may use standardized and non-standardized derivatives. It
may conduct transactions in derivatives on an exchange, some other regulated market open
to the public or in OTC (over-the-counter) trading.
6. a) The management company may only conclude OTC transactions with supervised fi-
   nancial intermediaries specializing in these types of transactions and which can guaran-
   tee the proper execution of such transactions. If the counterparty is not the custodian
   bank, it or the guarantor must have at least the minimum credit rating required by the
   legislation on collective investments under Art 33 CISO-SFBC.
   b) An OTC derivative must be subject to daily, reliable and verifiable valuation and it
   must be possible at all times to sell or liquidate the derivative in question or close it out
   by way of a countertransaction.
   c) If no market prices are available for an OTC-traded derivative, there must be a trans-
   parent means of determining the price at all times using recognized and appropriate valu-
   ation models on the basis of the market value of the underlying securities. Moreover, be-
   fore concluding such transactions, the management company must obtain specific offers
   from at least two potential counterparties and must accept the most favorable offer, tak-
   ing into account the price, credit rating, risk distribution and the range of services offered
   by the counterparties. The conclusion of the transaction and the setting of the price are to
   be documented.
7. In complying with the limits prescribed by law and the contractual investment restric-
tions (maximum and minimum limits), derivatives must be taken into account in accor-
dance with legislation on collective investments:



15
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8. The prospectus contains further information:
   – on the significance of derivatives in the context of the investment strategy;
   – on the impact of the use of derivatives on the risk profile of the investment fund;
   – on the counterparty risks of derivatives;
   – on the increased volatility resulting from the use of derivatives and the increased total
     exposure (leverage effect);
   – on credit derivatives.

§ 13 Taking up and extending loans
1. The management company may not grant loans for the fund’s account. Securities lend-
ing transactions pursuant to § 10 and securities repurchase agreements as «reverse repos»
pursuant to § 11 are not deemed to be loans within the meaning of this paragraph.
2. The management company may temporarily borrow moneys equivalent to a maximum
of 10% of the fund’s net assets. Securities repurchase agreements as «repos» pursuant to
§ 11 are deemed to be loans within the meaning of this paragraph, unless the money
received is used to acquire securities of the same type, quality, credit rating and maturity in
conjunction with the conclusion of a «reverse repo».

§ 14 Encumbrance of the fund’s assets
1. The management company may not pledge or cede as collateral more than 25% of the
investment fund’s net assets.
2. The fund’s assets may not be encumbered with guarantees. An exposure-increasing cred-
it derivative is not deemed to be a guarantee within the meaning of this paragraph.

C Investment restrictions

§ 15 Risk diversification
1. The regulations on risk diversification pursuant to § 15 shall cover:
    a) Investments pursuant to § 8, with the exception of index-based derivatives, provided
       that the index is sufficiently diversified, representative of the market to which it re-
       lates and published in appropriate form;
    b) Liquid assets pursuant to § 9;
    c) Claims against counterparties arising from OTC transactions.
2. Companies that are deemed, on the basis of international accounting and reporting re-
quirements, to form a group of companies are regarded as a single issuer.
3. Including derivatives, the management company may not invest more than 10% of the
fund’s assets in securities and money market instruments from the same issuer. The total
value of securities and money market instruments in which more than 5% of the fund’s as-
sets are invested may not exceed 40% of the fund’s assets. The provisions of points 4 and 5
shall continue to apply.
4. The management company may invest up to 20% of the fund’s assets in sight and de-
mand deposits with the same bank. Both liquid assets pursuant to § 9 and investments in
bank deposits pursuant to § 8 shall be included in this limit.
5. The management company may invest up to 5% of the fund’s assets in OTC transactions
with the same counterparty. If the counterparty is a bank domiciled in Switzerland or in a
member state of the European Union or another country in which it is subject to supervi-
sion equivalent to that applied in Switzerland, this limit shall be increased to 10% of the
fund’s assets.
6. Investments, deposits and claims as per points 3 to 5 above and issued by the same
issuer/borrower must not in overall terms exceed 20% of the fund’s assets. The higher limit
pursuant to point 11 shall continue to apply.
7. Investments pursuant to point 3 above in the same group of companies must not exceed
a total of 20% of the fund’s assets. The higher limits pursuant to point 11 shall continue to
apply.

16
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      8. The management company may invest up to 20% of the fund’s assets in units of the
      same target fund.
      9. The management company may not acquire participation rights which in total represent
      more than 10% of the voting rights in a company or which would enable it to exert a mate-
      rial influence on the management of an issuing company subject to any exemptions granted
      by the supervisory authority.
      10. The management company may not acquire for the fund’s assets more than 10% of
      each of the non-voting equity and debt instruments and/or money market instruments of
      the same issuer and no more than 25% of the units of another collective capital investment.
         These limitations do not apply if at the time of acquisition the gross amount of debt
      instruments, money market instruments or units in other investment funds cannot be calcu-
      lated.
      11. The limitations defined in points 9 and 10 shall not apply to securities and money mar-
      ket instruments issued or guaranteed by a state or public-law entity of the OECD or by in-
      ternational organizations with public law characteristics to which Switzerland or a member
      state of the European Union belongs.
      12. The limit of 10% mentioned in point 3 is increased to one third if the securities or money
      market instruments are issued or guaranteed by a state or public-law entity of the OECD or
      by international organizations with public law characteristics to which Switzerland or a
      member state of the European Union belongs. The above-mentioned securities or money
      market instruments will be disregarded for purposes of applying the 40% limit pursuant
      to point 3. However, the individual limits pursuant to points 3 and 5 may not be applied
      cumulatively in conjunction with the present limit of 35%.

IV.   Calculation of the net asset value and issuing and redemption of units

      § 16 Calculation of the net asset value
      1. The net asset value of the fund is calculated in Swiss francs as of the end of the financial
      year as well as for each day on which units are issued or redeemed. The fund’s net asset value
      will not be calculated on days when the stock exchanges or markets in the fund’s main in-
      vestment countries are closed (e.g. bank and stock exchange holidays).
      2. Investments traded on a stock exchange or some other regulated market open to the
      public should be valued at current prices paid on the main market. Other investments, or
      investments for which no current market value is available shall be valued at the price
      which would probably be obtained in a diligent sale at the time of the valuation. In this
      case, the management company will ascertain the market value by applying appropriate
      valuation models and principles recognized in practice.
      3. Open-ended collective investments are valued at their redemption price / net asset value.
      If they are traded regularly on an exchange or some other regulated market open to the
      public, the management company may value such funds in accordance with point 2.
      4. The value of money market instruments which are not traded on an exchange or some
      other regulated market open to the public is determined as follows: starting from the net ac-
      quisition price and keeping the investment yield (calculated therefrom) constant, the valua-
      tion price of money market investments is gradually aligned with the redemption price. If
      there are significant changes in the market conditions, the valuation principles for the indi-
      vidual investments will be adjusted in line with the new market returns. If there is no cur-
      rent market price in such instances, the calculations are as a rule based on the valuation of
      money market instruments with the same characteristics (quality and domicile of the issuer,
      issuing currency, term to maturity).
      5. Bank deposits are valued on the basis of the amount due plus accrued interest. If there
      are significant changes in the market conditions or credit rating, the valuation principles for
      bank deposits on demand will be adjusted in line with the new conditions.




      17
     SALES PROSPECTUS




     6. The asset value of a unit is the market value of the fund’s assets, less all the fund’s liabili-
     ties, divided by the number of units in circulation. It will be rounded up or down to the
     nearest centime.

     § 17 Issue and redemption of units
     1. Subscription and redemption applications for units are accepted up to a certain cut-off
     time (specified in the prospectus) on the day the applications are placed. The decisive unit
     price for purposes of issuing and redemption will be calculated at the earliest on the bank
     business day following the order date (valuation day). This is referred to as «forward pric-
     ing». The detailed modalities are laid down in the prospectus.
     2. The issue and redemption price of units is based on the net asset value per unit calculat-
     ed on the valuation day as defined under § 16 on the basis of the previous day’s closing
     prices. When issuing and redeeming units, an issuing or redemption commission pursuant
     to § 18 may be added to or subtracted from the net asset value.
        Additional expenses relating to the purchase and sale of investments (standard market
     brokerage charges, commission, taxes etc.) incurred in connection with the investment of
     the amount paid in, or with the sale of a redeemed portion of investments corresponding to
     the unit, will be charged to the fund’s assets.
     3. The management company may stop issuing units at any time and may reject applica-
     tions to subscribe or exchange units.
     4. The management company may temporarily suspend the redemption of units in the in-
         terests of all investors under the following circumstances:
         a) If a market that serves as the basis for the valuation of a significant proportion of the
         fund’s assets is closed, or when trading on such a market is limited or suspended;
         b) In the event of political, economic, military, monetary or other emergencies;
         c) If the fund can no longer transact its business owing to exchange controls or restric-
         tions on other asset transfers;
         d) In the event of a large number of withdrawals of units which may significantly dam-
         age the interests of the other investors.
     5. The management company shall immediately notify the auditors and the supervisory au-
     thority of any decision to suspend redemptions. It shall also notify the investors in a suitable
     manner.
     6. No units shall be issued as long as the redemption of units is suspended for the reasons
     set out under point 4 letters a) to c).

V.   Remunerations and incidental costs

     § 18 Remuneration and incidental costs payable by the investors
     1. When units are issued investors may be charged an issuing commission payable to the
     management company, the custodian bank and/or selling agents within Switzerland or
     abroad. The combined value of this commission may not exceed 5% of the net asset value.
     The maximum rate currently applicable can be found in the prospectus and in the simplified
     prospectus.
     2. Investors are not charged commission on the redemption of units.

     § 19 Remuneration and incidental costs charged to the fund’s assets
     1. For the administration, management and distribution of the fund, the management com-
     pany shall charge the fund an annual management fee of no more than 1.75% of the net as-
     set value of the investment fund, to be debited to the fund’s assets on a pro rata basis each
     time the net asset value is calculated and paid out at the end of the quarter in question.
        The management company discloses the intended use of the management commission in
     the prospectus. It also discloses the instances in which it grants refunds to investors and/or
     sales remuneration.
        The rate of management fee actually charged is stated in the annual and semi-annual reports.

     18
      SALES PROSPECTUS




      2. For the safekeeping of the fund’s assets, the handling of the fund’s payment transactions
      and the performance of other tasks of the custodian bank as laid down in § 4, the custodian
      bank shall charge the fund an annual commission of up to 0.15% of the net asset value of
      the fund, to be debited to the fund’s assets on a pro rata basis each time the net asset value is
      calculated and to be paid out at the end of the quarter in question (safe custody fee).
         The rate of safe custody fee actually charged is stated in the annual and semi-annual
      reports.
      3. For the distribution of annual income to the investors the custodian bank shall charge the
      fund a maximum commission of 0.25% of the gross amount of the distribution. For the distri-
      bution of liquidation proceeds in the event of the fund’s dissolution, the custodian bank shall
      charge the fund commission amounting to 0.5% of the net asset value of the fund’s assets.
      4. Furthermore, the management company and the custodian bank shall be entitled to receive
      reimbursement of the following costs incurred in the course of executing the fund contract:
          – Annual fees for the supervision of the fund in Switzerland;
          – Printing the fund contracts, the prospectuses and simplified prospectuses and the an-
             nual and semi-annual reports;
          – Publishing prices and notices to investors;
          – Fees charged by the auditors for regular auditing of the fund;
          – Costs incurred for extraordinary actions undertaken in the interests of the investors.
      5. The fund shall also bear all transaction costs for the purchase and sale of investments
      (standard brokerage fees, commissions, taxes etc.) incurred in the management of the fund’s
      assets. These costs will be charged directly on the acquisition or selling price of the respec-
      tive investments.
      6. If the management company acquires units of other collective capital investments which
      are directly or indirectly managed by itself or by another company with which it is linked by
      way of joint management or control or through a direct or indirect equity interest of more
      than 10% of the capital or votes, («associated target funds») only a reduced management
      fee of no more than 0.25% may be charged to the fund’s assets. Moreover, the management
      company may not charge the fund any issuing or redemption commissions in relation to the
      associated target funds.
         If the management company invests in units of an associated target fund as per the above
      paragraph which has a lower actual (all-in) management fee than the actual management
      fee as per point 1, the management company may – instead of charging the aforementioned
      reduced all-in management fee on the assets invested in such associated target funds –
      charge the difference between the actual all-in management fee for the investing fund and
      the actual (all-in) management fee of the associated target fund.

VI.   Financial statements and audit

      § 20 Financial statements
      1. The financial year shall run from 1 April to 31 March.
      2. The fund’s unit of account is the Swiss franc.
      3. The management company shall publish a revised annual report for the fund within four
      months of the close of the financial year.
      4. The management company shall publish a semi-annual report for the fund within two
      months of the close of the first half of the financial year.
      5. The investor’s right to obtain information under § 5.4 is reserved.

      § 21 Audit
      The auditors will examine whether the management company and the custodian bank have
      acted in compliance with the regulations of the fund contract, the Federal Act on Collective
      Investment Schemes (CISA) and the Code of Conduct of the Swiss Funds Association (SFA).
      The annual report shall contain a short report by the auditors on the published annual
      statements.

      19
        SALES PROSPECTUS




VII.    Application of net income

        § 22
        1. The net investment income of the fund will be distributed to investors in the fund’s cur-
        rency of account, the Swiss franc, each year within four months of the end of the accounting
        year.
           The management company may make additional interim distributions from the income.
        Up to 20% of the net investment income of the fund may be carried forward to the follow-
        ing year.
        2. Realized capital gains from the sale of assets and rights may be distributed by the man-
        agement company or retained for reinvestment.

VIII.   Locations where the prospectus, the fund contract, the simplified prospectus and the
        annual and semi-annual reports are kept available for inspection

        § 23
        The prospectus, including the fund contract which form an integral part thereof, the simpli-
        fied prospectus and the current annual and semi-annual reports may be obtained free of
        charge from the management company, the custodian bank and from all selling agents.

 IX.    Publications of official notices

        § 24
        1. Official notices regarding the fund shall be published in the print or electronic media
        mentioned in the prospectus. Any change in the media used for publications must be an-
        nounced in the media in question.
        2. Announcements in the above publications will include in particular summaries of key
        changes to the fund contract (specifying where the full text of the changes can be obtained
        free of charge), notices concerning a change of management company and/or custodian
        bank, notices concerning the creation, cancellation or merger of unit classes and notices
        concerning the dissolution of the investment fund. With the approval of the supervisory au-
        thority, changes required by law which do not affect investors’ rights, or which are purely
        formal in nature, may be exempted from the disclosure obligation.
        3. Each time units are issued or redeemed, the management company shall publish the issue
        and redemption prices or the net asset value with the note «excluding commissions» in the
        Neue Zürcher Zeitung. The prices will be published at least twice per month. The weeks
        and weekdays on which publication takes place are laid down in the prospectus.

  X.    Restructuring and liquidation

        § 25 Life of the fund and liquidation
        1. The fund has been established for an indefinite period.
        2. The management company or the custodian bank may bring about the fund’s liquidation
        by terminating the fund contract.
        3. The investment fund may be liquidated by decree of the supervisory authority. This will
        be possible in particular if at the latest one year after expiry of the subscription period
        (launch), or after a longer period set by the supervisory authority at the request of the cus-
        todian bank and the management company, it does not have net assets amounting to at least
        5 million Swiss francs (or equivalent).
        4. The management company shall notify the supervisory authority of the fact without de-
        lay and shall announce the liquidation in the customary publications.
        5. Once the fund contract has been terminated, the management company may liquidate
        the fund forthwith. If the supervisory authority has ordered the liquidation of the fund, liq-
        uidation must take place without delay. The custodian bank is responsible for the payment

        20
SALES PROSPECTUS




of liquidation proceeds to the investors. If the liquidation proceedings are protracted, pay-
ment may be made in installments. Prior to final payment, the management company must
obtain the supervisory authority’s approval.

§ 26 Merger
1. Subject to the agreement of the custodian bank, the management company can merge
funds by transferring the assets and liabilities of the fund(s) being acquired to the acquiring
fund. The investors of the fund(s) being acquired shall receive the corresponding number of
units in the acquiring fund. The fund being acquired is terminated without liquidation when
the merger takes place and the fund contract of the acquiring fund shall also apply to the
fund being acquired.
2. Funds may only be merged provided that:
    a) the relevant fund contracts provide for a merger;
    b) they are managed by the same management company;
    c) the relevant fund contracts are basically identical with regard to the following
    provisions:
        – investment policy, risk diversification and risks associated with the investment
        – appropriation of net income and capital gains
        – the type, amount and calculation of all payments, issuing and redemption commis-
          sions and additional expenses incurred in the acquisition and disposal of invest-
          ments (brokerage fees, commissions, taxes, etc.) which may be charged to the
          fund’s assets or the investor;
        – redemption conditions;
        – duration of the contract and preconditions for liquidation;
    d) the valuation of the fund assets, the calculation of the exchange ratio and the transfer
    of the fund assets and liabilities take place on the same day;
    e) the merger does not give rise to any costs either for the investment funds or for in-
    vestors.
3. If the merger is likely to take more than one day, the supervisory authority may approve
a limited postponement of the redemption of units of the investment funds concerned.
4. The management company must submit the proposed merger together with the merger
schedule to the supervisory authority for review at least one month before the planned pub-
lication of the intended changes to the fund contract. The merger schedule must contain in-
formation on the reasons for the merger, the investment policies of the funds involved and
any differences between the acquiring fund and the fund(s) being acquired, the calculation
of the exchange ratio, any differences with regard to remunerations and any tax implica-
tions for the funds, as well as a statement from the statutory auditors.
5. The management company must publish a notice of the proposed change to the fund
contract pursuant to § 23.2 and the proposed merger together with the merger schedule at
least two months before the planned date of merger in the official publications of the funds
in question. In this notice the management company must inform the investors that they
may lodge objections to the intended changes to the fund contract with the supervisory au-
thority within 30 days of the final publication or request redemption of their units.
6. The auditors must check directly that the merger is being carried out correctly and shall
submit a report containing their comments in this regard to the management company and
the supervisory authority.
7. The management company shall report the conclusion of the merger to the supervisory
authority and shall publish the completion of the merger, the confirmation of the auditors
regarding the proper execution of the merger and the exchange ratio without delay in the
official publications of the funds involved.
8. The management company must make reference to the merger in the next annual report
of the acquiring fund and in the semi-annual report if published prior to the annual report.
Unless the merger falls on the final day of the normal financial year, a revised closing state-
ment must be produced for the fund(s) being acquired.

21
      SALES PROSPECTUS




X.    Amendment of the fund contract

      § 27
      If it is intended to change the existing fund contract or the management company or the
      custodian bank, investors may lodge objections with the supervisory authority within 30
      days of the last publication of the intended change. In the event of an amendment to the
      fund contract, the investors may furthermore request that their share in the fund be re-
      deemed in cash subject to compliance with the contractual time limit. This applies subject
      to the cases pursuant to § 23.2 which have been exempted from the disclosure obligation
      with the approval of the supervisory authority.

XI.   Applicable law, jurisdiction

      § 28
      1. The fund is subject to Swiss law, in particular the Federal Collective Investment
      Schemes Act of 23 June 2006, the Federal Ordinance on Collective Investment Schemes
      of 22 November 2006 and the SFBC Ordinance on Collective Investment Schemes of
      21 December 2006.

           The place of jurisdiction is the domicile of the management company’s registered office.

      2. The German version is binding for the interpretation of the fund contract.
      3. The present fund contract enters into force on 8 October 2007.
      4. The present fund contract replaces the fund regulations of 15 October 2004.
      This fund contract was approved by the Swiss Federal Banking Commission on 24 Septem-
      ber 2007.

      Zurich, 24 September 2007

      The management company: Vontobel Fonds Services AG, Zurich

      The custodian bank:            Bank Vontobel AG, Zurich




      22
Where to find us




Switzerland                     Vontobel Europe SA                 Vontobel Fund Advisory SA
Vontobel Holding AG             Niederlassung Wien                 1, Côte D’Eich
Gotthardstrasse 43              Kärntner Strasse 51                L-1450 Luxembourg
CH-8022 Zürich                  A-1010 Wien                        Telephone +352 34 17 19
Telephone +41 (0)58 283 59 00   Telephone +43 (0)1 513 76 40       Telefax +352 26 34 74 33
Telefax +41 (0)58 283 75 00     Telefax +43 (0)1 513 76 40 600
www.vontobel.com                                                   Vontobel Management SA
                                Germany                            1, Côte D’Eich
Bank Vontobel AG                Vontobel Europe SA                 L-1450 Luxembourg
Gotthardstrasse 43              Niederlassung Frankfurt am Main    Telephone +352 34 74 40
CH-8022 Zürich                  Kaiserstrasse 6                    Telefax +352 26 34 74 33
Telephone +41 (0)58 283 71 11   D-60311 Frankfurt am Main
Telefax +41 (0)58 283 76 50     Telephone +49 (0)69 297 208 0      Spain
                                Telefax +49 (0)69 297 208 33       Vontobel Europe SA
Bank Vontobel AG                                                   Sucursal en España
Geschäftsstelle Luzern          Vontobel Financial                 C/Serrano, 26-6a plta.
Schweizerhofquai 3a             Products GmbH                      E-28001 Madrid
Postfach 2265                   Kaiserstrasse 6                    Telephone +34 91 520 95 11
CH-6002 Luzern                  D-60311 Frankfurt am Main          Telefax +34 91 520 95 55
Telephone +41 (0)41 249 31 11   Telephone +49 (0)69 297 208 11
Telefax +41 (0)41 249 31 50     Telefax +49 (0)69 297 208 38       Canada
                                                                   Bank Vontobel AG
Banque Vontobel Genève SA       Bank Vontobel Österreich AG        Representative Office
Place de l’Université 6         Niederlassung München              Suite 1760
CH-1205 Genève                  Alter Hof 5                        999 West Hastings St.
Telephone +41 (0)22 809 90 90   D-80331 München                    Vancouver, BC V6C 2W2
Telefax +41 (0)22 809 90 91     Telephone +49 (0)89 411 890 0      Canada
                                Telefax +49 (0)89 411 890 30       Telephone +1 604 688 11 22
Vontobel Asset Management AG                                       Telefax +1 604 688 11 23
Dianastrasse 5/9                Vontobel Securities AG
CH-8022 Zürich                  WDR-Arkaden                        Cayman Islands
Telephone +41 (0)58 283 77 11   Auf der Ruhr 2                     Bank Vontobel Cayman
Telefax +41 (0)58 283 74 00     D-50667 Köln                       P.O. Box 32301
                                Telephone +49 (0)221 20 30 00      Grand Pavilion Commercial Centre
Vontobel Fonds Services AG      Telefax +49 (0)221 20 30 030       West Bay Road
Dianastrasse 9                                                     Grand Cayman, KY1-1209
CH-8022 Zürich                  Great Britain                      Cayman Islands
Telephone +41 (0)58 283 74 77   Vontobel Europe SA                 Telephone +1 345 945 92 00
Telefax +41 (0)58 283 53 05     London Branch                      Telefax +1 345 945 92 01
                                33 St James’s Square
Vontobel Securities AG          London SW1Y 4JS UK                 Vontobel Trust Company Cayman
Gotthardstrasse 43              Telephone +44 203 170 85 95        P.O. Box 30846
CH-8022 Zürich                  Telefax +44 203 170 85 96          Grand Pavilion Commercial Centre
Telephone +41 (0)58 283 71 11                                      West Bay Road
Telefax +41 (0)58 283 76 49     Italy                              Grand Cayman, KY1-1204
                                Vontobel Europe SA, Milan Branch   Cayman Islands
Harcourt Investment             Via Galileo Galilei, 5             Telephone +1 345 945 92 00
Consulting AG                   I-20124 Milano                     Telefax +1 345 945 92 01
Stampfenbachstrasse 48          Telephone +39 02 6367 3411
CH-8006 Zürich                  Telefax +39 02 6367 3422           USA
Telephone +41 (0)44 365 10 00                                      Vontobel Asset Management, Inc.
Telefax +41 (0)44 365 10 01     Liechtenstein                      1540 Broadway, 38th Floor
www.harcourt.ch                 Bank Vontobel (Liechtenstein) AG   New York, NY 10036, USA
                                Pflugstrasse 20                    Telephone +1 212 415 70 00
Austria                         FL-9490 Vaduz                      Telefax +1 212 415 70 87
Bank Vontobel Österreich AG     Telephone +423 236 41 11           www.vusa.com
Rathausplatz 4                  Telefax +423 236 41 12
A-5024 Salzburg                                                    Vontobel Securities, Inc.
Telephone +43 (0)662 8104 0     Vontobel Treuhand AG               New York Branch
Telefax +43 (0)662 8104 7       Pflugstrasse 20                    1540 Broadway, 38th Floor
                                FL-9490 Vaduz                      New York, NY 10036, USA
Bank Vontobel Österreich AG     Telephone +423 236 41 80           Telephone +1 212 415 70 00
Kärntner Strasse 51             Telefax +423 236 41 81             Telefax +1 212 415 70 87
A-1010 Wien                                                        vonsec@vusa.com
Telephone +43 (0)1 513 76 40    Luxembourg
Telefax +43 (0)1 513 76 402     Vontobel Europe SA
                                1, Côte D’Eich
                                L-1450 Luxembourg
                                Telephone +352 26 34 74 1
                                Telefax +352 26 34 74 33                              2007-11-30 EN
Vontobel Fonds Services AG
Dianastrasse 9
CH-8022 Zurich
Telephone +41 (0)58 283 53 50
Telefax +41 (0)58 283 53 05