AXA WORLD FUNDS A LUXEMBOURG INVESTMENT FUND ...

- A total return swap “TRS” is a bilateral financial contract in which one counterparty receives the
underlying security performance and pays a money market performance adjusted of some hedging costs;
An “index swap” is an agreement to swap specific periodic payments for a certain amount of time. One
party makes payments based upon the total return of a specified reference index. The other makes
periodic fixed or floating payments. Both parties’ payments are based upon the same notional amount. As
a result, the index swap is a performance swap where the Sub-Fund exchanges a floating rate against
the underlying index (or sub-index) performance;
- Futures and forward contracts on a wide range of assets including equities, currencies, fixed
income securities and any specified commodity index or sub-index, either listed on any Regulated Market
(in the case of futures) or traded over the counter (in the case of forwards);
- Options on securities or a basket of equities, fixed income securities and currencies and on any
specified commodity index or sub-index futures listed or any Regulated Market or traded over the
counter;
- Transferable securities in the form of certificates and other structured products (including exchange
traded commodities) based on derivatives (mainly futures) relating to commodity indices and/or their subindices
which fulfill the eligibility criteria listed in article 44 of the Law of 2010, article 53 of the Directive
2009/65/EC of 13 July 2009 and the CESR’s guidelines concerning eligible assets for investment by
UCITS. The Sub-Fund would invest exclusively in certificates and other structured products issued (or
guaranteed) by financial institutions that specialise in such transactions and with sufficient liquidity,
transparent valuation and settlement in cash as prerequisites.
The Sub-Fund will only enter into OTC derivatives transactions with highly rated financial institutions
specialised in this type of transaction and only in accordance with the standard terms laid down by the
ISDA Master Agreement.
The choice between the various types of instruments will be carried out by considering factors that
include but are not limited to liquidity, cost, efficiency, capacity to trade quickly, size, maturity of the
investment, etc.
The Sub-Fund may also enter into repurchase or securities lending agreements for investment and/or
hedging purposes.
In seeking to attain the Sub-Fund’s investment objective, the Investment Manager aims to monitor the
Sub-Fund’s market risk by limiting the statistical maximum ex-ante loss experienced by the Sub-Fund
under a Value-at-Risk (VaR) computation at 5% of the Sub-Fund’s Net Asset Value, under normal market
conditions. The Value-at-Risk (VaR) is the percentage of Net Asset Value that a portfolio may lose on a
given time horizon, at a given confidence level.
The Value-at-Risk used by the Investment Manager will have a five Business Days horizon and 95%
confidence level parameters. This means that there is a probability of 5% that a loss experienced by the
Sub-Fund within the five (5) Business Days horizon may be higher than 5% of the Sub-Fund’s Net Asset
Value, under normal market conditions.
A Value-at-Risk of 5% with a five Business Days horizon and 95% confidence level parameters
corresponds to a Value-at-Risk of 14.16% with a twenty Business Days horizon and 99% confidence
level parameters, under Value-at-Risk normal distribution assumptions.
Furthermore, the Investment Manager expects that the level of leverage of the Sub-Fund will be between
0 and 1 and accordingly that the global risk associated with the investments of the Sub-Fund will amount
to between 100% and 200% of the Net Asset Value of the Sub-Fund (excluding temporary borrowings).
Depending on the investment strategies implemented and the volatility of the markets and/or sectors
and/or currencies and/or other financial instruments that are used by the Investment Manager in
managing the Sub-Fund, the level of leverage of the Sub-Fund may be higher than this expected level of
leverage from time to time. The Investment Manager expects that the level of leverage of the Sub-Fund
may amount to 3 under certain market conditions.
However, the attention of any investor in the Sub-Fund is drawn to the fact that the effective level of
leverage of the Sub-Fund may be higher or lower than the expected level of leverage set forth above
within the limits resulting from a Value-at-Risk of 5% with a five Business Days horizon and 95%
confidence level parameters.
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