CFB Convertibles Fund plc

INVESTMENT OBJECTIVE

The investment objective of the Fund is to maximise capital growth and income by investing primarily in a portfolio including but not restricted to bonds and equities, convertible bonds, bonds with warrants and similar securities.

In addition, the objective of each Sub-fund will be to maximise returns in US Dollar terms, as a substantial amount of the type of securities to be invested in are denominated in US Dollars.

Convertible and similar securities generally offer fixed rates of interest, fixed repayment terms for the principal amount invested and the right to convert the principal amount invested into shares of a listed company related to the company issuing the convertible securities at a fixed price. Accordingly investing in convertible securities generally offers a lower level of risk than would normally be associated with direct investment in the more volatile stock exchange listed shares in these countries.

The main reasons for investing in convertible securities in the Far East region are as follows:-

Equity Profit Potential

Convertible and similar securities generally offer equity profit potential arising from the right to convert into the related shares if the share price of the relevant shares rises above the fixed conversion price;

Satisfactory yield

The Sub-fund currently can offer satisfactory yields higher than interest rates currently prevailing on US Dollar deposits irrespective of stock market performance; and   

Security of fixed terms of repayment

Convertible and similar securities generally offer the security of fixed terms of repayment irrespective of the performance of the related shares of the issuing companies on the relevant stock markets. Accordingly if a convertible security is held to maturity the investor should at least receive both the interest each year and the return of principal.  Normally the convertible securities in which each of the Sub-funds would usually invest would have a period to maturity on issue of at least 5 years.

Accordingly, investors in Participating Shares may obtain exposure to stock markets in the Far East region where the average rate of economic growth has in recent years proven to be substantially higher than in Europe and North America whilst retaining the security of the repayment of the interest and principal of their investment over a fixed term.  Investors who would like exposure to the stock markets of the Far East region but view such direct equity investments as too volatile should consider investing in such convertible securities as a generally safer alternative.

Whilst it is the policy of the Directors that the assets of each Sub-fund should be kept invested in pursuit of its objectives, cash reserves may be held from time to time to meet investment opportunities and redemptions of Participating Shares as they arise.  In addition, general market conditions may make it advisable for each Sub-fund to maintain significant liquidity pending reinvestment in the securities described above; during such times investments may be made in any listed securities, cash deposits and monetary instruments considered suitable by the Directors.

FAR EAST INVESTMENT STRATEGY

The directors intend that this Sub-fund may be invested primarily in a portfolio including but not restricted to bonds and equities, convertible bonds, bonds with warrants and similar securities from issuers within the Far East region or issuers from outside this region but which are related to this region. Investment will be concentrated in countries in the Far East region with above average economic growth or where market conditions are considered attractive. Investments in securities of one issuer will be limited to not more than 15% of the Net Asset Value of the Sub-fund at the time of investment.

HONG KONG INVESTMENT STRATEGY

The directors intend that this Sub-fund may be invested primarily in a portfolio including but not restricted to bonds and equities, convertible bonds, bonds with warrants and similar securities from issuers within the Hong Kong region or issuers from outside this region but which are related to this region. Investment will be concentrated in countries in the Hong Kong region with above average economic growth or where market conditions are considered attractive. Investments in securities of one issuer will be limited to not more than 15% of the Net Asset Value of the Sub-fund at the time of investment.

THAILAND INVESTMENT STRATEGY

The directors intend that this Sub-fund may be invested primarily in a portfolio including but not restricted to bonds and equities, convertible bonds, bonds with warrants and similar securities from issuers within the Thailand region or issuers from outside this region but which are related to this region. Investment will be concentrated in countries in the Thailand region with above average economic growth or where market conditions are considered attractive. Investments in securities of one issuer will be limited to not more than 15% of the Net Asset Value of the Sub-fund at the time of investment.

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