5th Mar 2025 16:31
Xtrackers MSCI World Value ESG UCITS ETF
Supplement to the Prospectus
This Supplement contains information in relation to Xtrackers MSCI World Value ESG 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.
Xtrackers (IE) plc
Dated 3 March 2025
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IMPORTANT INFORMATION
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.
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TERMS OF THE SHARES REPRESENTING INTERESTS IN THE FUND
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Investment Objective
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 large and mid-cap companies across developed markets that exhibit high value characteristics and which meet certain environmental, social and governance criteria.
Investment Policy
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 MSCI World Value Low Carbon SRI Screened Select 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 that 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 each Share Class is linked to the Reference Index, 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.
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 the 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.
Further, 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.
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.
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.
Factor Focus
The Reference Index is based on a broad Parent Index, and selects securities that exhibit, according to several measures, as further described in the “General description of the Reference Index”, stronger value characteristics.
Due to the "value" focus of the Reference Index, investors need to understand when market conditions would favour a value-driven approach or when investing in other strategies may be more appropriate.
Due to the "value" focus of the Reference Index, the performance and constituents of the Reference Index, and hence the Fund, may differ significantly from that of the Parent Index.
Concentration of the Reference Index
The market which the Reference Index seeks to represent has a high concentration to one or more countries. Therefore, investors should be aware that 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.
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 (“ESG”) 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 and carbon 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.
General Information Relating to the Fund
Base Currency USD
Cut-off Time Means 4.30 p.m. Dublin time on the Business Day before the relevant Transaction Day.
Fund Classification (InvStG) Equity Fund, target minimum percentage of 70%.
Minimum Fund Size USD 50,000,000.
Settlement Date Means up to nine Business Days following the Transaction Day1.
Securities Lending No.
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 Parent Index and 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.
Significant Market Means a Direct Replication Significant Market.
Description of the Shares
Class | "1C" |
ISIN Code | IE000LAUZQT6 |
German Security Identification Number (WKN) | DBX0TT |
Currency | USD |
Launch Date | 5 July 2023 |
Minimum Initial Investment Amount | USD 50,000 |
Minimum Additional Investment Amount | USD 50,000 |
Minimum Redemption Amount | USD 50,000 |
Currency Hedged Share Class | No |
Fees and Expenses
Class | "1C" |
Management Company Fee | Up to 0.15% per annum |
Platform Fee | Up to 0.10% per annum |
All-in Fee | Up to 0.25% per annum |
Primary Market Transaction Costs | Applicable |
Transaction Costs | Applicable |
Anticipated Level of Tracking Error | 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.
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GENERAL DESCRIPTION OF THE UNDERLYING ASSET
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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 Parent Index and the Reference Index
The Reference Index is based on the MSCI World Index (the “Parent Index”), which is administered by MSCI Limited (the "Index Administrator"). The Parent Index reflects the performance of large and medium capitalisation listed companies in developed markets. The Reference Index excludes companies from the Parent Index which do not fulfil certain ESG criteria, as described below.
ESG Exclusions
All of the companies from the Parent Index which breach the following ESG criteria are excluded:
are unrated or missing coverage by MSCI ESG Research;are assigned an MSCI ESG Rating of BB or below;have any involvement in controversial weapons;are classified by MSCI in their Business Involvement Screening Research or Climate Change Metrics as breaching certain revenue thresholds in controversial activities, including, but not limited to, civilian firearms, nuclear weapons, tobacco, adult entertainment, alcohol, conventional weapons, gambling, genetically modified organisms, nuclear power, fossil fuel reserves ownership, fossil fuel extraction, oil & gas, and power generation; andfail to comply with the United Nations Global Compact principles, have a MSCI Controversies Score of 0, or have an insufficient MSCI ESG Controversies Score related to certain environmental controversies.Such exclusions comprise the requirements as laid out in Article 12(1)(a) to (g) of the Commission Delegated Regulation (EU) 2020/1818 (“PAB Exclusions”).
The Reference Index utilises data from MSCI ESG Research LLC to apply certain ESG criteria using the following products: MSCI ESG Ratings, MSCI ESG Controversies Score, MSCI ESG Business Involvement Screening Research and MSCI Climate Change Metrics.
MSCI ESG Ratings
MSCI ESG Ratings provide research, data, analysis and ratings of how well companies manage environmental, social and governance risks and opportunities. MSCI ESG Ratings provides an overall company ESG rating. For more details on MSCI ESG Ratings, please refer to: https://www.msci.com/our-solutions/esg-investing/esg-ratings
MSCI ESG Controversies
MSCI ESG Controversies provides assessments of controversies concerning the negative environmental, social, and/or governance impact of company operations, products and services. For more details on MSCI ESG Controversies Score, please refer to: https://www.msci.com/documents/1296102/1636401/ESG_Controversies_Factsheet.pdf/4dfb3240-b5ed-0770-62c8-159c2ff785a0
MSCI ESG Business Involvement Screening Research
MSCI ESG Business Involvement Screening Research (BISR) aims to enable institutional investors to manage ESG standards and restrictions. For more details on MSCI ESG Business Involvement Screening Research, please refer to: http://www.msci.com/resources/factsheets/MSCI_ESG_BISR.pdf
MSCI Climate Change Metrics
MSCI Climate Change Metrics provides climate data & tools to support institutional investors seeking to integrate climate risk & opportunities into their investment strategy and processes. For more details on MSCI Climate Change Metrics, please refer to: https://www.msci.com/our-solutions/esg-investing/climate-solutions/climate-data-metrics
Factor Scoring
The Reference Index includes certain selection and weighting constraints (as described below) relative to the MSCI World Enhanced Value Index (the “Factor Parent Index”). The Factor Parent Index incorporates a value factor scoring methodology which considers various value characteristics of the shares and compares those results to peer companies. The characteristics focus on Price-to-Book-Value (price of shares relative to their book value), Price-to-Forward Earnings (price of shares relative to their expected future earnings), and Enterprise Value-to-Cash Flow from Operations (which measures the value of the company relative to the cash it generates).
Security Selection and Weighting
Securities from the Parent Index which pass the ESG Exclusions outlined above will constitute the eligible universe (the “Eligible Universe”). Securities from the Eligible Universe are selected and weighted following an optimisation-based approach subject to the following two objectives: (i) climate and ESG objectives and (ii) diversification and factor objectives.
Climate and ESG Objectives
Securities in the Eligible Universe are subject to climate and other ESG constraints including, but not limited to:
a minimum reduction in greenhouse gas intensity relative to the Parent Index;a minimum reduction in fossil fuel sector exposure relative to the Parent Index;a minimum control or reduction in water emissions intensity and hazardous waste intensity relative to the Parent Index;a minimum control or improvement in the weighted average ESG score and/or ESG trend score relative to the Parent Index; anda maximum weight in securities below a certain ESG score.Diversification and Factor Objectives
Securities in the Eligible Universe are also subject to diversification and factor selection constraints, including but not limited to:
a minimum control in the tracking error relative to the Factor Parent Index;a maximum security weight deviation relative to the Parent Index;a maximum sector weight and country weight deviation relative to the Factor Parent Index;a maximum deviation in the exposure to certain factors (excluding value) relative to the Parent Index, as determined by the Index Administrator. Further information on the Index Administrators factor assessment approach is available at https://www.msci.com/our-solutions/indexes/factor-indexing;a minimum number of constituents in the Reference Index; anda minimum constituent weight.The Reference Index is reviewed and rebalanced on at least a quarterly basis and may also be rebalanced at other times in order to reflect corporate activity such as mergers and acquisitions or based on certain changes to issuers’ ESG metrics.
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 net of applicable withholding tax.
The Reference Index is calculated in USD on an end of day basis.
Further Information
MSCI Limited has been granted authorisation by the UK FCA as a UK administrator for all MSCI equity indices under the UK's Benchmarks Regulation and is listed on the FCA's register for administrators.
Additional information on the Reference Index, ESG criteria, its composition, calculation and rules for periodic review and re-balancing and on the general methodology behind the MSCI indices can be found on www.msci.com. Index constituents can be viewed under https://www.msci.com/constituents.
IMPORTANT
XTRACKERS MSCI WORLD VALUE ESG UCITS ETF (AN “MSCI SUB-FUND”) IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC. AND ITS SUBSIDIARIES (WHICH INCLUDE MSCI LIMITED) ("MSCI"), ANY OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX (COLLECTIVELY, THE "MSCI PARTIES"). THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK(S) OF MSCI OR ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY DWS INVESTMENTS UK LIMITED. NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE ISSUER OR OWNERS OF AN MSCI SUB-FUND OR ANY OTHER PERSON OR ENTITY REGARDING THE ADVISABILITY OF INVESTING IN FUNDS GENERALLY OR IN AN MSCI SUB-FUND PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO AN MSCI SUB-FUND OR THE ISSUER OR OWNERS OF AN MSCI SUB-FUND OR ANY OTHER PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUER OR OWNERS OF AN MSCI SUB- FUND OR ANY OTHER PERSON OR ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF AN MSCI SUB-FUND TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY OR THE CONSIDERATION INTO WHICH AN MSCI SUB-FUND IS REDEEMABLE. FURTHER, NONE OF THE MSCI PARTIES HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF AN MSCI SUB- FUND OR ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR OFFERING OF AN MSCI SUB-FUND. ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY, ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER OF AN MSCI SUB-FUND, OWNERS OF AN MSCI SUB-FUND, OR ANY OTHER PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. NO PURCHASER, SELLER OR HOLDER OF THIS SECURITY, PRODUCT OR AN MSCI SUB-FUND, OR ANY OTHER PERSON OR ENTITY, SHOULD USE OR REFER TO ANY MSCI TRADE NAME, TRADEMARK OR SERVICE MARK TO SPONSOR, ENDORSE, MARKET OR PROMOTE THIS SECURITY WITHOUT FIRST CONTACTING MSCI TO DETERMINE WHETHER MSCI’S PERMISSION IS REQUIRED. UNDER NO CIRCUMSTANCES MAY ANY PERSON OR ENTITY CLAIM ANY AFFILIATION WITH MSCI WITHOUT THE PRIOR WRITTEN PERMISSION OF MSCI.
1 In the case that a Significant Market is closed for trading or settlement on any Business 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.
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