securities in which the issuer invests. For example, the issuer may sell one or more credit default swaps, under which the issuer receive a flow of payments over the term of the swap contracts provided that no event of default has occurred with respect to the the referenced debt security on which the swap is based. In the event of default, the flow of payments may stop and the issuer would be obligated to pay the counterparty the par (or any other agreed value) of the referenced debt. This, in turn, would reduce the amount of income and capital that the Fund would receive. The Fund’s investments in these instruments are indirectly subject to the the risks associated with derivative instruments, including, among others, credit risk, risk of default or similar event, counterparty risk, interest interest rate risk, leverage risk and management risk. It is also expected that the titles will be exempt from registration under the 1933 Act.

TERMS OF EXCHANGE. The Fund may seek to improve returns or to hedge against a decline in the value of a currency by using currency futures or options thereon. Forward currency contracts are similar to forward foreign exchange transactions, except that forward contracts are standardized contracts traded on an exchange. See the subsection titled Futures. Forward currency contracts involve substantial currency risk, and also involve leverage risk.

CURRENCY OPTIONS. The Fund may seek to improve returns or to hedge against a decline in the value of a currency against the market. US dollar through the use of currency options. Currency options are similar to options on securities, but in exchange for an option premium the seller of a currency option is obliged to sell (in the case of a call option) or to buy (in the case of a put option) a specified amount of a specified currency on or before the expiration date for a specified amount of another currency. The Fund may carry out currency options transactions either on stock exchanges or over-the-counter markets. See Types of options and Additional risk Factors in OTC transactions; Limitations on the use of OTC derivatives in this ISC. Currency options involve a substantial currency risk, and may also involve credit, leverage or liquidity risk.

CUSTODY RECEIPTS. Bonds issued or guaranteed for principal and interest by the United States government, foreign governments or semi-government entities may be acquired by the Fund in the form of custodial receipts evidencing ownership of future interests payments, principal payments, or both on certain notes or bonds. Typically, custody receipts have their unmatured interest coupons separate (bare) by their holder. After having separated the interest coupons from the main underlying of government securities, the holder will resell the dismembered securities under deposit receipt programs with a number of different names, including Treasury revenue Growth Recipes (TIGR) and Certificate of Accumulation on Treasury Securities (CATS). Stripped coupons are sold separately from the main underlying, which is usually sold at a significant discount because the buyer only receives the right to receive a fixed forward contract payment on the security and receives no entitlement to periodic interest payments (in cash). CATS and TIGR are not taken into account
US Government Securities by SEC Staff. These notes and bonds are kept by a bank or a brokerage firm on behalf of the owners.

CYBERSECURITY RISK. With the increasing use of technology and computer systems in general and, in particular, the Internet to conduct necessary business functions, the Fund is sensitive to operational, information security and related risks. These risks, often collectively called cybersecurity risks, may include deliberate or malicious attacks, as well as events and occurrences. Cyber ​​security is broadly defined as the technology, operations, and related protocol surrounding and protecting computer hardware, network, systems and applications and the data transmitted and stored therewith. These measures ensure the the reliability of a user’s systems, as well as the security, availability, integrity and confidentiality of data assets.

Deliberate cyber attacks can include, but are not limited to, obtaining unauthorized access to computer systems in order to hijack and / or disclose sensitive or confidential information; delete, corrupt or modify data; and causing operational disruption. Cyber attacks can also be carried out in a way that does not require unauthorized access, for example by causing a denial of service
attacks on websites (to prevent access to computer networks). In addition to deliberate violations designed by external actors, Cyber ​​security risks may also arise from the conduct of malicious, exploited or negligent insiders, whose actions may result in the destruction, dissemination or disclosure of confidential or proprietary information stored on an organization’s systems.

Cybersecurity failures or breaches, whether deliberate or not, due to the Fund’s third-party service providers (for example, custodians, financial intermediaries, transfer agents), sub-advisor, use by shareholders of insecure systems to access personal accounts, as well as the failings suffered by the issuers of securities in which the Fund invests, may cause significant disruption in the business Fund operations. Potential impacts may include, but are not limited to, potential financial losses for the Fund and issuers. securities, the inability of shareholders to transact with the Fund, the inability of the Fund to calculate the net asset value and the information to be provided personal or confidential information of shareholders.

In addition to the direct impacts on the shareholders of the Fund, failures in cybersecurity of the Fund and / or its service providers and others may result in in regulatory investigations, regulatory proceedings, regulatory and / or legal and litigation costs of the Fund and reputational damage. the The Fund may incur reimbursements and other expenses, including litigation and dispute resolution costs and additional compliance. costs. The Fund may also incur considerable expenses for the improvement and upgrading of computer systems and system security as a result of a cybersecurity failure.

Source link

Comments are closed.