Islamic Global Real Estate Securities Fund SPC - National Bank of ...

Private Placement MemorandumVI. CERTAIN RISK FACTORSGeneralThe risks of an investment in the Fund arise from, but are not limited to, the following: (i) the risks associatedwith investments in portfolios that will be investing in real estate and real estate-related assets generally, (ii)the risks associated with investments in publicly-traded securities, (iii) the risks associated with achieving theinvestment objectives, (iv) the risks associated with investing in global markets including emerging economiesand (v) tax risks. Such risks include, but are not limited to, those discussed below.As a general risk, the NAV per Share is subject to pricing fluctuation that may result in shareholders losingmoney from their investment in the Fund. Also, investing in securities of companies of different nations anddenominated in different currencies involves a number of risks. The value of the Shares could be affectedby any fluctuation in currency exchange rates or by any changes to exchange control regulations, changes intax laws (including withholding taxes) and changes in governmental administration or policies. The marketsin some countries in which investments are made may be less liquid and more volatile. Investing in theequity of companies in developing countries involves exposure to economies that are generally less diverse andmature, and to political systems which can be expected to have less stability than those of developed countries.In addition, accounting and reporting standards vary among countries and there may be less informationavailable in developing countries than in developed countries. Historical experience indicates that the marketsof developing countries have been more volatile than the markets of developed countries.These risk factors and other risk factors are discussed below:A. Nature of Real Estate IndustryAn investment in the Shares of the Fund is subject to certain risks associated with an investment in the realestate industry in general. The value of the Fund’s investments, and consequently, the NAV of an investor’sShares, may be adversely affected by, among other things, declines in the value of real estate, the supplyand demand for real estate, risks related to general and local economic conditions, overbuilding, extendedvacancies of properties, increases in competition, changes in zoning law and interest rate risks that mayaffect the general real estate market.B. Investment in Real Estate SecuritiesSubstantially all of the assets of both portfolios of the Wafra-Pramerica Fund will be comprised of RealEstate Securities. Such securities are likely to be risky or volatile given their exposure to the public securitiesmarkets. The success of investing in public securities markets will largely depend on correctly assessingthe future course of price movements of stocks and other securities. There can be no assurance that theInvestment Advisor will be able to predict accurately these price movements, as such prices may fluctuatefor a variety of unpredictable reasons, including economic, political and issuer specific events.C. Risks Associated with Real Estate Development ProjectsSome investments by the Wafra-Pramerica Fund in Real Estate Securities may involve underlyinginvestments in real estate development projects that present their own risks. Investments in developmentprojects may require the approval of certain local governmental authorities and may, in some cases, requireconsents of third parties. There can be no assurance that any such approvals and consents will be obtainedon a timely basis, if at all. The need to obtain such approvals and consents and otherwise to complywith regulatory requirements may cause significant delays in the development or investment process,exacerbating the risk that changes in the local market will render an investment economically unattractive.In addition, regulatory enactments, including various permitting or licensing requirements, or changesin their interpretation by the competent authorities, may impact the Wafra-Pramerica Fund’s indirectinvestment in development projects.27