This Supplement contains information in relation to Xtrackers S&P 500 Scored & Screened UCITS ETF (the “Fund“), a sub-fund of Xtrackers (IE) plc (the “Company“) an umbrella type open-ended investment company with segregated liability between sub-funds and with variable capital governed by the laws of Ireland and authorised by the Central Bank of Ireland (the “Central Bank“).
This Supplement forms part of, may not be distributed unless accompanied by (other than to prior recipients of the prospectus of the Company dated 15 June 2023 (the “Prospectus”)) and the first addendum to the Prospectus dated 1 December 2023 (the “Addendum”), and must be read in conjunction with, the Prospectus and the Addendum.
The Fund is an ETF. The Shares of this Fund are fully transferable to investors and will be listed for trading on one or more stock exchanges.
The investment objective of the Fund is to track the performance before fees and expenses of an index which is designed to reflect the performance of the shares of large-capitalisation companies representing all major US industries and which meet certain, environmental, social and governance (“ESG“) criteria.
In order to seek to achieve the investment objective, the Fund will adopt a Direct Investment Policy and will aim to replicate or track, before fees and expenses, the performance of the S&P 500 Scored & Screened Index (the “Reference Index“), by holding a portfolio of equity securities that comprises all, or a substantial number of, the securities comprised in the Reference Index (the “Underlying Securities“). Further information on the Reference Index is contained under “General Description of the Underlying Asset”. The Investment Manager reserves the right to exclude from the portfolio of the Fund any securities from the Reference Index that do not comply with the Investment Manager’s policies or standards (examples of which are described in the Prospectus under the heading “Direct Investment Funds following a passive approach“).
The Fund is managed according to a passive approach and is a Full Replication Fund (as described in the Prospectus under the heading “Direct Investment Funds following a passive approach“). Full disclosure on the composition of the Fund’s portfolio will be available on a daily basis at www.Xtrackers.com.
There is no assurance that the investment objective of the Fund will actually be achieved.
The Underlying Securities are listed or traded on markets and exchanges which are set out at Appendix I of the Prospectus, with the Underlying Securities being bought by the Fund from any broker or counterparty who trades on the markets and exchanges listed at Appendix I of the Prospectus.
As further described in the ‘Efficient Portfolio Management and Financial Derivative Instruments’ section below and in the Prospectus, the Fund may also invest in securities which are not constituents of the Reference Index and/or financial derivative instruments (“FDIs”) related to a constituent or constituents of the Reference Index, for efficient portfolio management purposes, where such securities and/or FDIs would achieve a risk and return profile similar to that of the Reference Index, a constituent of the Reference Index or a sub-set of constituents of the Reference Index.
The Fund may invest in ancillary liquid assets which will include secured and/or unsecured deposits, and/or units or shares of other UCITS or other collective investment schemes which pursue a money market/cash strategy or which are related to the Reference Index or constituents of the Reference Index.
The investments and liquid assets the Fund may hold on an ancillary basis will, together with any fees and expenses, be valued by the Administrator on each Valuation Day in order to determine the Net Asset Value of the Fund in accordance with the rules set out in the Prospectus.
The value of the Fund’s Shares is linked to the Reference Index (and, for Currency Hedged Share Classes, the relevant hedging arrangement, as described under “Share Class Currency Hedging Methodology“), the performance of which may rise or fall. Hence, investors should note that the value of their investment could fall as well as rise and they should accept that there is no guarantee that they will recover their initial investment. The return that the Shareholder may receive will be dependent on the performance of the Reference Index.
The Fund will have no Final Repurchase Date. However, the Directors may decide to terminate the Fund in accordance with the terms set out in the Prospectus and/or the Articles of Association.
Share Class Hedging
The “2C – EUR Hedged” Share Class (“Currency Hedged Share Class“, as indicated under Description of the Shares below) is subject to currency hedging.
The Fund will seek to hedge against the currency exposures of the Underlying Securities in the portfolio which differ from the currency of the respective Currency Hedged Share Class in accordance with the “Currency Hedging Methodology” set out in the Prospectus.
Investors should note that the Currency Hedged Share Classes will not completely eliminate currency risk, or provide a precise hedge, and as such, investors may have exposures to currencies other than the currency of the Currency Hedged Share Class.
Efficient Portfolio Management and Financial Derivative Instruments
The Fund may employ techniques and instruments relating to transferable securities under the conditions and within the limits laid down by the Central Bank from time to time and the conditions set out in the Prospectus and this Supplement for efficient portfolio management purposes.
The Fund may also invest in FDIs subject to the conditions and limits laid down by the Central Bank for efficient portfolio management purposes and as described in the Prospectus. For details of any FDIs the Fund may use, please refer to the section entitled “Use of Derivatives by Direct Investment Funds” set out in the Prospectus.
The Company employs a risk management process which enables it to accurately measure, monitor and manage at any time the risks attached to the Fund’s FDI positions and their contribution to the overall risk profile of the portfolio of assets of a Fund. The Company will, on request, provide supplementary information to Shareholders relating to the risk management methods employed, including the quantitative limits that are applied and any recent developments in the risk and yield characteristics of the main categories of investments in respect of the relevant Fund.
Calculation of Global Exposure
The Fund will employ the commitment approach to assess the Fund’s global exposure and to ensure that the Fund’s use of derivative instruments is within the limits specified by the Central Bank. Global exposure will be calculated daily. While the Fund may be leveraged through the use of the FDIs, any such leverage will not be in excess of 100% of the Fund’s Net Asset Value.
Investment Restrictions
The general investment restrictions set out under “Investment Restrictions” in the Prospectus apply to the Fund.
Owing to the concentrated nature of the Reference Index, in exceptional market circumstances, the Fund intends to make use of the increased risk diversification limit of 35% for a single issuer permitted by the Central Bank, as further set out in sections “Index Tracking UCITS” and “Financial Derivative Instruments (FDIs)” of the Prospectus and “Concentration of the Reference Index” below.
The Directors may from time to time impose such further investment restrictions as shall be compatible with or in the interests of Shareholders, in order to comply with the laws and regulations of the countries where Shareholders are located. Such investment restrictions will be included in an updated Supplement.
The Fund will not invest more than 10% of its assets in units or shares of other UCITS or other collective investment schemes in order to be eligible for investment by UCITS governed by the UCITS directive.
Borrowing
The Company may only borrow, for the account of the Fund, up to 10% of the Net Asset Value of the Fund provided that such borrowing is for temporary purposes. The assets of the Fund may be charged as security for any such borrowings.
Specific Risk Warning
Investors should note that the Fund is not capital protected or guaranteed and that the capital invested is not protected or guaranteed and investors in this Fund should be prepared and able to sustain losses up to the total capital invested.
Concentration of the Reference Index
The Reference Index is concentrated in securities from a single country. As a result, any country-specific political or economic changes may have an adverse impact on the performance of the Reference Index and the portfolio of transferable securities and eligible assets held by the Fund.
Currency Hedging Risk
In order to mitigate against the risk of movements in the currency of a Currency Hedged Share Class against the currency of the portfolio constituents (where they are different to that of the relevant Currency Hedged Share Class currency), Share Class specific derivative transactions will be entered into for the purposes of acquiring currency hedges for each Currency Hedged Share Class. The return of the Share Class specific derivative transactions may not perfectly offset the actual fluctuations between the Currency Hedged Share Class currency and currency exposures of the securities that constitute the portion of the portfolio referable to the Currency Hedged Share Classes. No assurance can be given that such hedging activities will be entirely effective in achieving the purpose for which they have been entered into. While currency hedging reduces risks and losses in adverse market circumstances, it can also reduce and may completely offset gains in market circumstances that would otherwise have been beneficial had the position not been hedged. Consequently, the performance of a Currency Hedged Share Class may differ from that of the Underlying Asset as a result of the foreign exchange hedging transactions.
Environmental, Social and Governance Standards
The Reference Index’s environmental, social and governance standards limit the number of securities eligible for inclusion in the Reference Index. As a result, the Reference Index, and as such the Fund, may be more heavily weighted in securities, industry sectors or countries that underperform the market as a whole or underperform other funds screened for environmental, social and governance standards, or which do not screen for such standards.
Investors should note that the determination that the Fund is subject to the disclosure requirements of a financial product under Article 8(1) of SFDR is made solely on the basis that the Reference Index promotes environmental and social characteristics. The Company is relying on the activities conducted by and information provided by the Index Administrator or other data providers (as further described under the heading “General Description of the Underlying Asset”, where applicable) to make this determination. Neither the Company, nor any of its service providers, makes any representation or otherwise as to the suitability of the Reference Index and the Fund in meeting an investor’s criteria on minimum ESG standards or otherwise. Investors are advised to carry out their own review as to whether the Reference Index and the Fund accords with their own ESG criteria. Information on how the Reference Index is consistent with environmental, social and governance characteristics is contained under “General Description of the Underlying Asset”.
Investors should note that whilst the Fund and the Reference Index seek to ensure compliance with the criteria outlined under “General Description of the Underlying Asset” at each rebalance or review date, between these reviews or rebalances, securities which no longer meet these criteria may remain included in (i) the Reference Index until they are removed at the subsequent rebalance or review or, (ii) the portfolio of the Fund until it is possible and practicable to divest such positions.
Sustainability Data Risks
Investors should note that the Reference Index solely relies on analysis from the Index Administrator or other data providers (as applicable) in relation to sustainability considerations. Neither the Company, nor any of its service providers, makes any representation with respect to the accuracy, reliability, correctness of the sustainability related data or the way that these are implemented.
It should also be noted that analysis of companies’ ESG performance may be based on models, estimates and assumptions. This analysis should not be taken as an indication or guarantee of current or future performance.
ESG information from third-party data providers may be incomplete, inaccurate or unavailable. As a result, there is a risk that the Index Administrator or other data providers (as applicable) may incorrectly assess a security or issuer, resulting in the incorrect inclusion or exclusion of a security in the Reference Index and therefore the portfolio of the Fund.
Investors will also bear some other risks as described under the section “Risk Factors” in the Prospectus.
Profile of a Typical Investor
Prospective investors in the Fund should ensure that they understand fully the nature of the Fund, as well as the extent of their exposure to risks associated with an investment in the Fund and should consider the suitability of an investment in the Fund.
Investment in the Fund may be appropriate for investors who have knowledge of, and investment experience in this type of financial product and understand and can evaluate the strategy and characteristics in order to make an informed investment decision. Further, they may have free and available cash for investment purposes and are looking to gain exposure to the securities making up the Reference Index. As the Net Asset Value per Share of the Fund will fluctuate and may fall in value, investment in the Fund should be viewed as suitable for investors who seek a return over the medium to long term. However, prospective investors should be prepared and able to sustain losses up to the total amount of capital invested.
The Prospectus sets out statements on taxation regarding the law and practice in force in the relevant jurisdiction at the date of the Prospectus. The statements are by way of a general guide to potential investors and Shareholders only and do not constitute legal or tax advice to Shareholders or potential investors. Shareholders and potential investors are therefore advised to consult their professional advisers concerning any investment in the Fund particularly as the tax position of an investor and the rates of tax may change over time.
Dividend Policy
The Fund does not intend to make dividend payments on the “1C” and “2C – EUR Hedged” Shares.
General Information Relating to the Fund
Base Currency USD
Cut-off Time Means 2:30 p.m. Dublin time on the relevant Transaction Day.
Initial Offer Period The Initial Offer Period in respect of the “2C – EUR Hedged” Shares shall be from 9:00 a.m. on 11 February 2025 to 2:30 p.m. (Dublin time) on 8 August 2025 or such earlier or later date as the Directors may determine and notify in advance to the Central Bank.
Fund Classification (InvStG) Equity Fund, target minimum percentage of 70%.
Minimum Fund Size USD 50,000,000
Settlement Date Means up to nine Settlement Days following the Transaction Day [1].
Transparency under SFDR The Fund promotes, among other characteristics, environmental and social characteristics and is subject to the disclosure requirements of a financial product under Article 8(1) of SFDR. Information on how the Reference Index is consistent with environmental, social and governance characteristics is contained under “General Description of the Reference Index”. Please also refer to “Environmental, Social and Governance standards” under “Specific Risk Warning” above, to the section entitled “Sustainability-related disclosures under SFDR and EU Taxonomy Regulation” set out in the Prospectus and the annex to this Supplement.
Securities Lending No
Significant Market Means a Direct Replication Significant Market.
Description of the Shares
“1C” |
“2C – EUR Hedged” |
|
ISIN Code |
IE0007ULOZS8 |
IE000WMJU0Q7 |
German Security Identification Number (WKN) |
DBX0S1 |
DBX0S2 |
Currency |
USD |
EUR |
Initial Issue Price |
N/A |
The Initial Issue Price will be calculated as corresponding to an appropriate fraction of the closing level of the Reference Index on the Launch Date. The Initial Issue Price is available from the Administrator. |
Launch Date |
6 December 2022 |
To be determined by the Board of Directors. The Launch Date will be available from the Administrator and via the website: www.Xtrackers.com |
Minimum Initial Investment Amount |
50,000 Shares |
50,000 Shares |
Minimum Additional Investment Amount |
50,000 Shares |
50,000 Shares |
Minimum Redemption Amount |
50,000 Shares |
50,000 Shares |
Currency Hedged Share Class |
No |
Yes |
Fees and Expenses
“1C” |
“2C – EUR Hedged” |
|
Management Company Fee |
Up to 0.01% per annum |
Up to 0.01% per annum |
Platform Fee |
Up to 0.07% per annum |
Up to 0.09% per annum |
All-in Fee |
Up to 0.08% per annum |
Up to 0.10% per annum |
Primary Market Transaction Costs |
Applicable |
Applicable |
Transaction Costs |
Applicable |
Applicable |
Anticipated Tracking Error [2] |
Up to 1.00% per annum |
Up to 1.00% per annum |
This section headed “Fees and Expenses” should be read in conjunction with the section headed “Fees and Expenses” in the Prospectus.
GENERAL DESCRIPTION OF THE UNDERLYING ASSET
This section is a brief overview of the Reference Index. It contains a summary of the principal features of the Reference Index and is not a complete description of the Reference Index. In case of inconsistency between the summary of the Reference Index in this section and the complete description of the Reference Index, the complete description of the Reference Index prevails. Information on the Reference Index appears on the website identified below in “Further Information”. Such information may change from time to time and details of the changes will appear on that website.
General description of the Reference Index
The Reference Index is based on the S&P 500 Index (the “Parent Index“), which is administered by S&P Dow Jones Indices LLC (the “Index Administrator“). The Parent Index is a free float-adjusted market capitalisation weighted index reflecting the performance of circa 500 large-cap common stocks of publicly held companies actively traded on regulated US equities’ exchanges. The Reference Index seeks to target 75% of the float-adjusted market capitalization of each Global Industry Classification Standard Industry Group (“GICS® Industry Group“) within the Parent Index, after applying the exclusion criteria as set out below.
The Reference Index excludes companies from the Parent Index which do not fulfil specific ESG criteria, including but not limited to (please see link to the Reference Index’s methodology under the heading “Further Information” for additional detail):
-
that do not have an S&P Global ESG Score, or with an S&P Global ESG Score that falls within the worst 25% of ESG scores from each GICS Industry Group, as calculated by S&P Global Sustainable1 (“Sustainable1“) using a company’s ‘Corporate Sustainability Assessment’ (“CSA“) which is derived using either company-provided data, publicly available information, or a combination thereof;
-
are classified by S&P Global Business Involvement Screens as breaching certain thresholds in controversial activities, including, but not limited to, tobacco, controversial weapons, and thermal coal; and/or
-
have a disqualifying United Nations Global Compact (“UNGC“) score (i.e. companies that do not act in accordance with the UNGC principles and their associated standards, conventions, and treaties as determined by Sustainalytics).
The Reference Index uses company ratings and research provided by Sustainable1, a business division of S&P Global which specialises in providing in-depth sustainability intelligence. In particular, the following two components are utilised:
S&P Global ESG Scores
S&P Global ESG Scores provide research and ratings measuring a company’s performance on and management of ESG risks and opportunities. S&P Global ESG Scores provide an overall company ESG rating. For more details on S&P Global ESG Scores, please refer to: Sustainable1 Solutions: ESG Scores | S&P Global (spglobal.com)
S&P Global Business Involvement Screens
S&P Global Business Involvement Screens aim to enable investors to align investment values with investment strategy by providing detailed assessments of common areas of concern pinpointing the level of involvement. For more details on S&P Global Business Involvement Screens, please refer to: Sustainable1 Solutions: Business Involvement Screens | S&P Global (spglobal.com)
Sustainalytics, a Morningstar company, is a leading independent ESG and corporate governance research, ratings and analytics firm that supports investors around the world with the development and implementation of responsible investment strategies. Companies without Sustainalytics coverage are ineligible for index inclusion until they receive such coverage. Please refer to http://www.sustainalytics.com/ for more information.
In addition, the Reference Index uses RepRisk, a leading data science company, for daily filtering, screening, and analysis of ESG risk incidents and controversial activities related to the companies which may result in further exclusions of companies from the Reference Index as determined by the Index Administrator. Please refer to http://www.reprisk.com/ for more information.
Once constituents have been excluded, for each GICS® Industry Group, companies are selected in decreasing order of S&P Global ESG Score until 65% of the Parent Index’s cumulative float-adjusted market capitalization (“FMC“) is reached. Then for each GICS® Industry Group, existing constituents ranked between 65% and 85% of a GICS® Industry Group’s cumulative FMC are selected to get as close as possible to the target 75% of FMC. If the combined FMC of selected companies is not above the 75% FMC target, companies not already selected from the eligible universe may be added, in decreasing order by S&P Global ESG Score, to get as close as possible to the 75% FMC target. This process ends when the addition of the next eligible company would result in the total FMC of the relevant GICS® Industry Group moving further away from the 75% FMC target.
The Reference Index is a total return net index. A total return net index calculates the performance of the index constituents on the basis that any dividends or distributions are reinvested in the index net of applicable withholding taxes.
The Reference Index is calculated in US Dollars on a real-time basis.
The Reference Index is rebalanced on an annual basis and may also be rebalanced at other times in order to reflect corporate activity such as mergers and acquisitions. Changes to the Reference Index are made as needed with no annual or semi-annual reconstitution.
Further Information
Additional information on the Reference Index, its composition, calculation and rules for periodical review and rebalancing and on the general methodology behind the S&P indices can be found on https://www.spglobal.com/spdji/en/indices/esg/sp-500-esg-index/ and https://www.spglobal.com/spdji/en/supplemental-data/europe/
S&P Dow Jones Indices LLC has been granted authorisation as a benchmark administrator for the Reference Index and is included in the register of administrators and benchmarks maintained by ESMA pursuant to the Benchmark Regulations.
IMPORTANT
The “S&P 500 Scored & Screened Index” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI“), and has been licensed for use by Xtrackers S&P 500 Scored & Screened UCITS ETF. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P“); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones“) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Xtrackers S&P 500 Scored & Screened UCITS ETF. It is not possible to invest directly in an index. Xtrackers S&P 500 Scored & Screened UCITS ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices“). S&P Dow Jones Indices do not make any representation or warranty, express or implied, to the owners of Xtrackers S&P 500 Scored & Screened UCITS ETF or any member of the public regarding the advisability of investing in securities generally or in Xtrackers S&P 500 Scored & Screened UCITS ETF particularly or the ability of the S&P 500 Scored & Screened Index to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices’ only relationship to Xtrackers S&P 500 Scored & Screened UCITS ETF with respect to the S&P 500 Scored & Screened Index is the licensing of the index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P 500 Scored & Screened Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Xtrackers S&P 500 Scored & Screened UCITS ETF. S&P Dow Jones Indices have no obligation to take the needs of Xtrackers S&P 500 Scored & Screened UCITS ETF or the owners of Xtrackers S&P 500 Scored & Screened UCITS ETF into consideration in determining, composing or calculating the S&P 500 Scored & Screened Index. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, the value of Xtrackers S&P 500 Scored & Screened UCITS ETF or the timing of the issuance or sale of Xtrackers S&P 500 Scored & Screened UCITS ETF or in the determination or calculation of the equation by which Xtrackers S&P 500 Scored & Screened UCITS ETF is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of Xtrackers S&P 500 Scored & Screened UCITS ETF. There is no assurance that investment products based on the S&P 500 Scored & Screened Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment or tax advisor. A tax advisor should be consulted to evaluate the impact of any tax-exempt securities on portfolios and the tax consequences of making any particular investment decision. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 SCORED & SCREENED INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY XTRACKERS S&P 500 SCORED & SCREENED UCITS ETF, OWNERS OF XTRACKERS S&P 500 SCORED & SCREENED UCITS ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 SCORED & SCREENED INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND XTRACKERS S&P 500 SCORED & SCREENED UCITS ETF, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
[1] In the case that a Significant Market is closed for trading or settlement on any Settlement Day during the period between the relevant Transaction Day and the expected settlement date (inclusive), and/or settlement in the base currency of the Fund is not available on the expected settlement date, there may be corresponding delays to the settlement times indicated in this Supplement subject to the regulatory limit on settlement periods of 10 Business Days from the Cut-off Time. Earlier or later times may be determined by the Management Company at its discretion, whereby notice will be given on www.Xtrackers.com.
[2] The anticipated tracking error displayed represents the tracking error of the unhedged Share Classes against the Fund’s Reference Index (which is also unhedged).
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