Verkaufsprospekt

factors, cause all of such markets to move rapidly in the
same direction because of, among other things, interest
rate fluctuations.
The use of FDI also involves certain special risks, including:-
(1) dependence on the ability to predict movements in
the prices of securities being hedged and movements in
interest rates, (2) imperfect correlation between the price
movements of the derivatives and price movements of
related investments, (3) the fact that skills needed to use
these instruments are different from those needed to select
the Sub-Fund’s securities, (4) the possible absence of a
liquid market for any particular instrument at any particular
time, (5) possible impediments to effective portfolio management
or the ability to meet redemptions, (6) possible
legal risks arising in relation to derivative contract documentation,
particularly issues arising relating to enforceability
of contracts and limitations thereto, (7) settlement
risk as when dealing with futures, forwards, swaps, contracts
for differences the Sub-Fund’s liability may be potentially
unlimited until the position is closed, and (8) counterparty
risk as the use of OTC derivatives, such as futures,
forward contracts, swap agreements and contracts for
differences will expose the Sub-Fund to credit risk with
respect to the counterparty involved.
Investment in the FDI outlined above by the Sub-Fund may
involve the assumption of obligations as well as rights and
assets. Assets deposited as margin with brokers may not
be held in segregated accounts by the brokers and may
therefore become available to the creditors of such brokers
in the event of their insolvency or bankruptcy.
The Sub-Fund may from time to time utilise both exchange-traded
and OTC credit derivatives as part of its
investment policy and for hedging purposes. These instruments
may be volatile, involve certain special risks and
expose investors to a high risk of loss. When used for
hedging purposes there may be an imperfect correlation
between these instruments and the underlying investments
or market sectors being hedged. Transactions in OTC
derivatives, such as credit derivatives, may involve additional
risk as there is no exchange market on which to
close out an open position.
Fixed Income Securities: Investment in fixed income
securities is subject to interest rate, sector, security and
credit risks. Lower-rated securities will usually offer higher
yields than higher-rated securities to compensate for the
reduced creditworthiness and increased risk of default that
these securities carry. Lower-rated securities generally
tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities
which respond primarily to fluctuations in the general level
of interest rates. There are fewer investors in lower-rated
securities and it may be harder to buy and sell such securities
at an optimum time.
The volume of transactions effected in certain international
bond markets may be appreciably below that of the world’s
largest markets, such as the United States. Accordingly,
the Sub-Fund’s investment in such markets may be less
liquid and their prices may be more volatile than comparable
investments in securities trading in markets with larger
trading volumes. Moreover, the settlement periods in cer-
PineBridge Global Emerging Markets Corporate Bond Fund
tain markets may be longer than in others which may affect
portfolio liquidity.
Investment grade securities may be subject to the risk of
being downgraded to a rating that is below investment
grade.
Unitholders should note that where investment grade securities
are downgraded to a rating that is below investment
grade after acquisition, there is no specific requirement to
sell such securities unless otherwise stated in the investment
policy outlined above in this Supplement. In the event
of such downgrading, the Manager or its delegates will
promptly analyse such securities and the financials of the
issuer of such securities to determine the action to be
taken (i.e. hold, reduce or buy).
Many fixed income securities especially those issued at
high interest rates provide that the issuer may repay them
early. Issuers often exercise this right when interest rates
decline. Accordingly, holders of securities that are pre-paid
may not benefit fully from the increase in value that other
fixed income securities experience when rates decline.
Furthermore, in such a scenario the Sub-Fund may reinvest
the proceeds of the pay-off at the then current
yields, which will be lower than those paid by the security
that was paid off. Pre-payments may cause losses on
securities purchased at a premium, and unscheduled prepayments,
which will be made at par, will cause the Sub-
Fund to experience loss equal to any unamortized premium.
An investment in sovereign debt securities, including, but
not limited to, those issued by sovereign / government
bodies of countries in the Eurozone, may be subject to
credit and / or default risks. Particularly high (or increasing)
levels of government fiscal deficit and / or high levels of
government debts, amongst other factors, may adversely
affect the credit rating of such sovereign debt securities
and may lead to market concerns of higher default risk. In
the unlikely event of downgrading or default, the value of
such securities may be adversely affected resulting in the
loss of some or all of the sums invested in such securities.
Credit Default Swaps: When the Sub-Fund is the buyer of
a credit default swap, it would be entitled to receive the
agreed-upon value (or par) of a referenced debt obligation
from the counterparty to the swap on the occurrence of
certain credit events in relation to the relevant reference
entity. As consideration, the Sub-Fund would pay to the
counterparty a periodic stream of fixed payments during
the life of the swap if no credit event has occurred, in
which case the Sub-Fund would receive no benefits under
the swap. In circumstances in which the Sub-Fund does
not own the debt securities that are deliverable under a
credit default swap, the Sub-Fund is exposed to the risk
that deliverable securities will not be available in the market,
or will be available only at unfavourable prices. In
certain instances of issuer defaults or restructurings, it has
been unclear under the standard industry documentation
for credit default swaps whether or not a "credit event"
triggering the seller's payment obligation had occurred. In
either of these cases, the Sub-Fund would not be able to
realize the full value of the credit default swap upon a
default by the reference entity. As a seller of credit default
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