XSER.L Regulatory News (XSER)

24 Feb 2023 09:34

Xtrackers

Investment Company with Variable Capital

Registered office: 49, avenue J.F. Kennedy, L-1855 Luxembourg

R.C.S. Luxembourg B-119.899

(the “Company”)

IMPORTANT NOTICE TO SHAREHOLDERS OF:

Xtrackers MSCI Europe Energy ESG Screened UCITS ETF

ISIN: LU0292101796

(the “Terminating Sub-Fund”)

24 February 2023

Dear Shareholder,

This notice is to inform you on behalf of the board of directors of the Company (the “Board of Directors”) about recent developments in respect of the Terminating Sub-Fund in which you hold Shares.

Capitalised terms used in this notice shall have the same meaning ascribed to them in the latest version of the prospectus of the Company (the “Prospectus”), unless the context otherwise requires.

We refer to the Terminating Sub-Fund which aims to reflect the performance of the MSCI Europe Energy ESG Screened 20-35 Select Index (the "Reference Index") which is based on the MSCI Europe Energy Index (the “Parent Index”) and comprises securities from developed European markets that are classified as members of the Global Industry Classification Standard (GICS®) energy sector and which meet certain minimum Environmental, Social and Governance ("ESG") standards.

The Board of Directors deems it appropriate to terminate the Terminating Sub-Fund in-light of a recent announcement by, and subsequent interaction with, MSCI Limited, in its capacity as Index Administrator of the Reference Index. The interaction concerns certain upcoming changes to the features of MSCI ESG Screened indices, including the Reference Index. MSCI has confirmed that on 01 March 2023 (the “Index Rebalancing Date”), the Reference Index shall undergo methodology changes which will result in the additional exclusion of certain eligible constituents from the selection universe. This is due to the addition of the following, amongst others, (i) new environmental, social, and governance (“ESG”) driven revenue screens, (ii) additional exclusion criteria on environmental controversies, and (iii) the addition of an overall Greenhouse Gas intensity reduction target of the Reference Index compared to the Parent Index (the “Reference Index Changes”).

While the Board of Directors are supportive of changes which enhance the sustainability features of ESG indices in general, in this situation the implementation at the level of the Reference Index would result in the majority of current constituents, which are closely associated with the European energy market, being removed, thereby leaving the Reference Index with an extremely small number of constituents. As of the Index Rebalancing Date, the Board of Directors consider that the benchmark will no longer represent an adequate benchmark for the market to which it refers as required under UCITS requirements and would not consider it to be in the best interests of Shareholders to continue to reflect its composition.

In consideration of the aforementioned, and as there is no suitable alternative reference index, the Board of Directors deems it appropriate to terminate the Terminating Sub-Fund as soon as possible.

Consequently, the Board of Directors has resolved to terminate the Terminating Sub-Fund as further described below with effect from 14 March 2023 (the “Termination Date”) and to proceed with the compulsory redemption of all outstanding Shares of the Terminating Sub-Fund in accordance with article 21 of the Articles of Incorporation and paragraph “II.d: Termination of Sub-Funds” of the Prospectus (the “Termination”). The last Net Asset Value of the Terminating Sub-Fund will be calculated as of the Termination Date (the “NAV Date”).

In order for Shareholders to not be exposed to an inadequate benchmark and to avoid Shareholders incurring the transaction costs associated with rebalancing the portfolio of the Terminating Sub-Fund to align with the new composition of the Reference Index, the Board deems it in the best interests of Shareholders to temporarily deviate from the Investment Objective of the Terminating Sub-Fund for the period between the Index Rebalancing Date and the Termination Date. For the avoidance of doubt, this will involve maintaining, as far as possible, the portfolio composition of the Terminating Sub-Fund in line with the portfolio composition of the Terminating Sub-Fund prior to the Index Rebalancing Date, thereby not reflecting the Reference Index Changes at the portfolio level.

Trading on all relevant stock exchanges will cease with effect from close of trading on 10 March 2023 (the "Last Trading Day"). Therefore, sale or purchase of Shares in the Terminating Sub-Fund in the secondary market may only be made until close of trading on the relevant stock exchange on the Last Trading Day. For the avoidance of doubt, the secondary market includes both trades on the relevant stock exchanges and any over-the-counter trades. The Terminating Sub-Fund is listed on the United Kingdom Financial Conduct Authority’s Official List and as a result of the Termination, the Terminating Sub-Fund will be removed from the Official List with effect from 8.00am on 15 March 2023.

Requests for redemption or subscription for Shares in the Terminating Sub-Fund in the primary market, where applicable, may be made in the usual manner for processing in accordance with the Prospectus until the applicable Cut-off Time as set out in the table below. However, the liquidation costs, if any, will be taken into account in the Redemption Price and will be provisioned as from the date of the Board of Directors’ decision to terminate the Terminating Sub-Fund. After the applicable Cut-off Time set out below, no further redemptions or subscriptions will be accepted.

Please see below for a summary of the information above:

The following terms and conditions of the compulsory redemption have been determined in accordance with article 21 of the Articles of Incorporation and shall apply as of the Termination Date:

1. The Terminating Sub-Fund shall be liquidated and the Redemption Price for the Terminating Sub-Fund will be determined by reference to the Net Asset Value of the Class of Shares of the Terminating Sub-Fund as of the Termination Date (the “Reference NAV”). The Reference NAV will take into account, amongst other expenses, all costs resulting from the realisation and liquidation of the remaining investments of the Terminating Sub-Fund (as applicable);

2. No Redemption Charge will be applied;

3. The Redemption Proceeds will be paid in the relevant Reference Currency to the International Central Securities Depositaries (“ICSDs”);

4. The payment of the Redemption Proceeds to the ICSDs, resulting from the compulsory redemption, will take place at the latest 10 Luxembourg Business Days after the Termination Date (the “Payment Date”). It should be noted that payment of the Redemption Proceeds to Shareholders who hold Shares via intermediaries may take longer than 10 Luxembourg Business Days; and

5. The Redemption Proceeds relating to Shares for which payment to Shareholders could not be made, will be deposited with the Caisse de Consignation in Luxembourg on behalf of the persons entitled thereto as soon as possible after the Payment Date and in any event before the closure of the liquidation procedure.

Shareholders who subscribe for Shares in the Terminating Sub-Fund on the primary market, where applicable, are entitled to redeem their Shares in the Terminating Sub-Fund in accordance with the Prospectus. Such redemptions shall be free of any Redemption Charge from the date of this notice until the applicable Cut-off Time and Date (as set out in the table above). Please note that the Company does not charge any redemption fee for the sale of Shares in the secondary market. Orders to sell Shares through a stock exchange can be placed via an authorised intermediary or stockbroker. Shareholders should note that orders in the secondary market may incur costs over which the Company has no control and to which the above exemption on redemption charges does not apply.

Further information in relation to the Termination may be obtained from the legal entities mentioned under Contact information below, the offices of foreign representatives or by sending an email to Xtrackers@dws.com.

Shareholders who have any queries or to whom any of the above is not clear should seek advice from their stockbroker, bank manager, legal advisor, accountant or other independent financial advisor.

All Shareholders are strongly advised to: consult their tax advisor to assess the impact of the Termination and any potential tax consequences thereof under the laws of the countries of their nationality, residence, domicile or incorporation.

Neither the contents of the Company’s website nor the contents of any other website accessible from hyperlinks on the Company’s website is incorporated into, or forms part of, this announcement.

Xtrackers

The Board of Directors

Contact information

Xtrackers49, avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg

DWS Investment S.A.2, boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg

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