This Share Class is designed as a hedging solution and exclusively reserved for selected feeder funds established in Brazil. The shares will be denominated in US Dollar (USD), the Fund's base currency. The Share Class will aim to provide exposure to Brazilian Real (“BRL”) by converting the net asset value of the Share Class into BRL using financial derivative instruments. As a result, the net asset value is expected to fluctuate in line with the exchange rate between BRL and USD. This fluctuation will be reflected in the performance of the Share Class, and therefore such performance may differ significantly from the performance of the other share classes of the Fund. Additionally, the Share Class will not protect against a decline in the values of the currencies of the underlying investments. There can be no assurance that the hedging solution will be successful, nor will it offer a perfect hedge for a Brazilian feeder fund.
For Inc-2 and Inc-3 shares classes, expenses are charged to the capital account rather than to income, so capital will be reduced. This could constrain future capital and income growth. Income may be taxable.
The portfolio invests in a relatively small number of individual holdings. This may mean wider fluctuations in value than more broadly invested portfolios.
Changes in the relative values of different currencies may adversely affect the value of investments and any related income.
The use of derivatives is not intended to increase the overall level of risk. However, the use of derivatives may still lead to large changes in value and includes the potential for large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss.
These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.
The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. insolvency), the owners of their equity rank last in terms of any financial payment from that company.
Reference currency hedging aims to protect investors from a decline in the value of the reference currency only (the currency in which accounts are reported) and will not protect against a decline in the values of the currencies of the underlying investments, where these are different from the reference currency. In addition, where the currencies of the underlying investments are different from the reference currency, investors may suffer a loss when the value of the reference currency increases against the value of the share class currency. There can be no assurance that hedging strategies will be successful and such hedging can positively or negatively impact investors by inaccuracies in the operation of the hedge.