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AUM Growth – % AUM Growth 2003 – 2011

*UCITS domiciled in Ireland and Luxembourg used as proxy for International UCITS

While US mutual funds’ AUM increased over the past eight years, the growth was substantially less than that achieved internationally. International UCITS AUM increased by 123% while US mutual fund AUM growth was 49%. The US share of global mutual fund AUM declined from 53% to 43% during the period.

Distribution – UCITS are distributed in over 70 countries worldwide

UCITS are sold in over 70 countries worldwide. This global reach allows managers the scope to raise assets outside of their domestic markets with a globally known brand. As institutional investors worldwide seek to minimise non market risk, UCITS are seen by many as the solution.

Establishing a UCITS Fund in Ireland

A UCITS fund can be established in a twelve week period. The key tasks which need to be completed are as follows:

1. Determination of investment and distribution strategies

It is important to have a clear idea not just as to investment strategy but also as to who you wish to sell to and how you intend to execute the sales

2. Determination of legal structure

Unit trust, investment company and common contractual fund structures are all available

3. Selection and appointment of service providers

An administrator, custodian, legal advisor and auditor must be appointed. The administrator and custodian must be Irish based and regulated by the Central Bank of Ireland (the “Central Bank”). Two Irish resident directors and a Money Laundering Reporting Officer are also required to be appointed

4. Central Bank approval of promoter and investment manager

The Central Bank must be satisfied with the promoter and investment manager. A minimum capital requirement of €635,000 is imposed for the promoter

5. Preparation of UCITS business plan

A UCITS is required to file a business plan with the Central Bank, which demonstrates how the directors will manage the ten management functions – Decision taking, Monitoring of compliance, Risk management, Monitoring of investment policy, investment strategies and performance, Financial control, Monitoring of capital, Internal audit, Supervision of delegates, Complaints handling and Accounting policies and procedures

6. Preparation of Risk Management Process document

A RMP document must be submitted to the Central Bank if a UCITS intends to use derivatives, even where they are used solely for hedging purposes. The RMP outlines the staff, procedures and systems utilised by the investment manager to manage the risks associated with the use of derivatives

7. Compilation of legal documentation

A prospectus, Key Investor Information Document, constitutive documents and custodian/ administration/investment management/distribution (if applicable) agreements must be filed with the Central Bank

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