Download GrowthProspectus - Fortress Fund Managers

TABLE OF CONTENTS
DEFINITIONS
3
Key Information
4
Directors, Investment Manager and Advisers
5
Introduction
6
Political and Economic Background
6
Countries in the Caribbean
8
The Caribbean Stock Markets
9
Investment Policy
11
Past Investment Performance
11
Risk Factors
11
Directors, Management and Administration
12
Fees and Expenses
13
Dividend Policy
13
Taxation and Exchange Control
14
Dealing in the Fund’s Shares
15
Ways to Invest
17
General Information
17
Potential investors should note that investing in equity and debt securities may involve a high degree of risk and investment in the shares offered
herein is therefore only suitable for investors who understand the risks inherent in participating in financial markets involved. Your particular
attention is drawn to the section headed ”Risk Factors” in Section (1).
PROSPECTUS & INFORMATION CIRCULAR
Fortress Caribbean Growth Fund Prospectus and information circular for the issue of an unlimited number of class ‘A’
redeemable mutual fund shares at a price equal to the net asset value per share. The holders from time to time of such
shares shall collectively and exclusively constitute the fund shareholders.
A copy of this document has been registered with the Registrar of Companies in Barbados in accordance with the
provisions of the Companies Act Cap 308 of the laws of Barbados and has also been filed with the Securities Exchange
of Barbados and it is an authorized mutual fund licensed under the Mutual Funds Act, 1998-45. The Registrar of
Companies and The Securities Exchange of Barbados take no responsibility as to the validity or the veracity of the
contents of this prospectus and have neither approved nor disapproved the issue of any of the securities herein
mentioned.
It is not the intention of the offeror to file a copy of this document or to register any of the securities herein mentioned
with any regulatory authority or agency in any territory outside of Barbados.
No person receiving a copy of this document in any territory may treat this document as constituting an invitation to
him or her to purchase or subscribe for any shares nor should he in any event purchase or subscribe for any shares
unless in the relevant territory such an invitation could lawfully be made to him or her without the offeror compliance
with any registration or other legal requirements. Any person wishing to subscribe for shares should satisfy himself
that, in doing so, he or she complies with the laws of any relevant territory, and that he or she obtains any requisite
governmental or other consents and observes any other applicable formalities.
2
DEFINITIONS
In this document, where the context permits, the expressions set out below bear the following meanings:
“THE COMPANY
Fortress Mutual Fund Limited
“THE FUND”
Fortress Caribbean Growth Fund./ The net subscription
proceeds of the subscriptions made by Fund Shareholders.
“FUND SHARES”
“Class ‘A’ redeemable mutual Fund shares” of the company
“FUND SHAREHOLDERS”
Holders of the “Class ‘A’ redeemable mutual fund
shares” of the company
“THE DIRECTORS”
The Directors of the Company
“THE MANAGER”
Fortress Fund Managers Limited
“PERPETUAL”
Perpetual Unit Trust Management Limited
“SEB”
The Securities Exchange of Barbados
“TSE”
Trinidad & Tobago Stock Exchange
“JSE”
Jamaica Stock Exchange
“BDS$”
The currency of Barbados
“TT$”
The currency of the Republic of Trinidad & Tobago
“JAM$”
The currency of Jamaica
“US$”
The currency of the United States of America
“GDP”
Gross Domestic Product
“NASDAQ”
National Association of Securities Dealers Inc.-Stock Market
“IFC”
International Finance Corporation - Lessons of Experience
Report - Series 2.
“SHARES”
Class ‘A’ redeemable mutual fund shares of the company
3
KEY INFORMATION
The following information summarises various matters which are described more fully in the rest of this document.
FORTRESS MUTUAL FUND LIMITED
Fortress Mutual Fund Limited is a Barbados based mutual fund company which provides an avenue for portfolio
investment in domestic, regional and international markets. The objective of the Fund is to achieve long-term capital
appreciation. The fund is authorised to invest in equity and debt securities of both quoted and unquoted securities.
MANAGER
The Manager of the Fund is Fortress Fund Managers Limited, a Barbados based investment management company.
DEALINGS & SETTLEMENT
The shares of the Fund are not listed on any stock exchange. Settlements will take place through Fortress Fund
Managers Limited. Settlement is made in Barbados currency.
CALCULATION AND PUBLICATION OF NET ASSET VALUE
The net asset value per share of the Fund is calculated weekly at the close of business on Fridays and is published in
both Barbados newspapers, and on the internet @fortressfund.com and the Lipper Overseas Fund Table.
MINIMUM INVESTMENT AMOUNT
The minimum initial investment is Bds$100. The minimum monthly investment is Bds$50.00
CHARGES
There is an initial charge of 2% of any amount being invested into the fund. Annual Management fee charges are
1.75% per annum of the net assets of the fund. Custodian and administrative charges do not exceed 0.175% per annum
of the net asset value of the fund.
4
DIRECTORS, INVESTMENT MANAGER & ADVISERS
BANKER
INDEPENDENT AUDITORS
Barclays Bank Plc.
Broad Street
Bridgetown
Barbados
PricewaterhouseCoopers
Chartered Accountants
The Financial Services Centre
Bishop’s Court Hill
St. Michael
Barbados
DIRECTORS
ATTORNEY-AT-LAW
Mr. Geoffrey Cave - Chairman
Mr. David Bynoe
Sen. Sir Fred Gollop
Mr. Roger Cave - Investment Manager
Mr. Ken Emery
SECRETARY
Corporate Services Limited
The Financial Services Centre
Bishop’s Court Hill
St.Michael
Barbados
REGISTERED OFFICE
1st Floor Carlisle House
Hincks Street
Bridgetown
Barbados
Sir Henry Forde, QC
Juris Chambers
Attorneys-at-law
Fidelity House
Wildey Business Park
St. Michael
Barbados
CUSTODIAN & ADMINISTRATOR
Barclays Bank Trustee Branch
Broad Street
Bridgetown
Barbados
FUND MANAGERS
Fortress Fund Managers Limited
1st Floor Carlisle House
Hincks Street
Bridgetown, Barbados
Tel no: 246-431-2198
Fax no: 246-431-0514
Internet: fortressfund.com
E-mail: [email protected]
5
INTRODUCTION
Fortress Mutual Fund Ltd. is a mutual fund investment company incorporated in Barbados and licensed under the
Mutual Funds Act. The Company has established one fund; The Fortress Caribbean Growth Fund which provides a
practical route for individuals to invest in domestic, regional and international portfolio investment in the Caribbean.
The objective of the Fund is to achieve long term capital appreciation through investment in a diversified portfolio of
shares listed on the main Caribbean Stock Exchanges, new issues and unlisted securities of Caribbean companies.
The Manager of the Fund is Fortress Fund Managers Limited, a Barbados-based investment management company of
which the shareholders are Cave Shepherd & Co Limited, Perpetual Plc, Barbados Shipping & Trading Co Ltd
(BS&T), The Nation Corporation, and Roger Cave.
POLITICAL & ECONOMIC
BACKGROUND
Barbados is an independent sovereign state, having gained independence from Great Britain in 1966. Barbados remains
a member of the Commonwealth and has the second oldest surviving parliament in the British Commonwealth.
The constitution of Barbados is based on the Westminster parliamentary model, which is a UK style representative
system. Queen Elizabeth II is head of State and is represented by a Governor-General. The Governor-General appoints
the person who commands the support of the majority of elected members of parliament to be Prime Minister.
The 21-member Senate is appointed by the Governor-General (12 members on the advice of the Prime Minister, two on
the advice of the leader of the opposition and seven by the governor-general in his own discretion.) The House of
Assembly consists of 28 members who are directly elected to represent single-member constituencies for terms of five
years. Judicial appointments are made by the Governor General on the recommendation of the Prime Minister after
consultation with the leader of the opposition. Final appeals rest with the Judicial Committee of the Privy Council in
the United Kingdom.
Barbados is a member of a number of regional and international organisations. These include Caricom, the United
Nations and its agencies, the International Monetary Fund (IMF) and the World Bank.
With the exception of Haiti and Cuba, almost all of the other Caribbean countries can be considered relatively stable
democracies with varying forms of parliamentary governments that hold free and fair elections.
The Caribbean consists of a number of small island economies which are in the early stages of development in terms of
their capital markets and portfolio foreign investments but are well advanced in terms of business, banking, legal and
political structures. Most of the Caribbean economies over the years have been characterised by closed, government
dominated, commodity based economies, which have relied in part on financial aid and support for export prices from
the major developed countries.
6
Over the last decade Caribbean countries have begun to transform their economies through diversification away from
the basic commodities of sugar and bananas to tourism, light manufacturing, offshore financial services and
informatics.
Over the last two to three years, Caribbean governments have committed themselves to a process of change towards
more open and market driven economies. The most significant changes have taken place in Jamaica, Guyana, Trinidad
and more recently in the OECS where exchange controls have been relaxed, currencies floated, and trade liberalisation
policies enacted with reduced duties, quotas and the downsizing of governments through major privatisation of
government controlled organisations. The result is that the refocused economies, and emphasis on the private sector has
put the Caribbean countries in a position to take advantage of renewed world-wide growth.
The Caribbean islands have a wide range of real economic growth rates, which can vary significantly from island to
island in any given year and typically will lag the cycles of the US and other economies.
Many of the islands have recorded renewed growth rates during the last 3 years due to increasing tourist arrivals, freer
trade and world-wide economic growth. Inflation rates also vary significantly across the region from being relatively
stable, 2% to 7% in the Eastern Caribbean to double digit figures in the Dominican Republic and Cuba.
The Caribbean can be considered as a classical ’Emerging Capital Market’ with five stock exchanges. With the
exception of Jamaica, the activity on the exchanges has been very limited, and is typical of immature stock markets in
developing countries. Both the supply and demand have been inhibited by factors such as fear of loss of family control,
lack of tradition and understanding of equity investment and over-reliance on bank overdraft financing.
This low level of market activity results in relatively inefficient markets, which are characterised by comparatively low
P/ E ratios and buy and hold strategies by most investors who trade on a yield basis. It is these characteristics, which
provide the investment opportunity now as these markets begin to develop and become more efficient. The ability to
invest across the region offers attractive opportunities for equity risk management through portfolio diversification of
investments in the various countries.
The countries in which Fortress Caribbean Growth Fund invests are listed on the table that follows. The main focus is
on Barbados, Jamaica and Trinidad where established stock markets currently exist. The Fund is also actively seeking
investment opportunities across the region and will continue to increase the diversification of the portfolio as other
Caribbean capital markets develop.
7
THE COUNTRIES OF THE CARIBBEAN
COUNTRY
Barbados
Size(sq km)
Population(000’s)
Currency
ExRateUS$(Dec 31st 2000)
432
264
Barbados $
BDS$2
11,424
2,486
Jamaican $
J$45.30
5,128
1,257
Trinidad $
TT$6.24
Antigua & Barbuda
442
64
East Caribb $
EC$2.70
Dominica
750
73
East Caribb $
EC$2.70
Grenada
345
97
East Caribb $
EC$2.70
Montserrat
102
10
East Caribb $
EC$2.70
St Kitts & Nevis
269
42
East Caribb $
EC$2.70
St Lucia
616
151
East Caribb $
EC$2.70
St.Vincent and the Grenadines
388
107
East Caribb $
EC$2.70
96
10
East Caribb $
EC$2.70
The Bahamas
13,942
270
Bahamian $
B$1
Belize
22,960
205
Belize $
Bz$1.98
150
17
United States $
US$1
Cayman Isl $
CI$1.207
Guyana $
G$1.81
Jamaica
Trinidad & Tobago
OECS COUNTRIES
OTHER COMMONWEALTH
Anguilla
British Virgin Islands
Cayman Islands
259
31
214,790
760
417
14
United States $
US$1
Aruba
200
70
Aruba Florin
G1.77
Curacao
102
11
Netherland Guilder
G1.77
86
55
French Franc
FF7.38
Guyana
Turks & Caicos
DUTCH WEST INDIES
St. Maarten
FRENCH WEST INDIES
Guadeloupe
Martinique
345
410
French Franc
FF7.38
1,100
360
French Franc
FF7.38
9,104
3,685
United States $
US$1
352
103
United States $
US$1
U.S. TERRITORIES
Puerto Rico
US Virgin Islands
OTHER COUNTRIES
Cuba
110,860
10,896
Cuban Peso
1CPeso
Dominican Republic
48,422
7,769
Dom Rep Peso
RD$16.10
Haiti
27,560
6,539
Gourdes
G23.50
163,265
404
Suriname Guilder
G987.6
Suriname
TOTAL
633,906
36,160
8
THE CARIBBEAN STOCK MARKETS
1999
1998
1997
1996
1995
44
28
22
44
28
20
49
28
18
50
27
18
51
27
16
94
92
95
95
96
54
117
12
56
198
34
129
135
23
125
103
6
290
137
3
182
288
287
234
430
2,511
4,367
2,007
2,128
3,966
2,412
1,920
3,116
1,141
1,888
1,401
770
1,275
1,135
494
8,885
8,506
6,177
4,059
2,904
21,893
6%
417
-4%
2,561
-8%
20,593
4%
436
24%
2,794
48%
19,847
19%
352
110%
1,893
51%
16,616
16%
167
12%
1,258
-3%
14,267
-14%
150
69%
1,298
-7%
7.23
4.64
1.16
10.58
4.16
0.18
6.91
2.01
0.63
5.32
2.39
1.04
7.68
1.85
1.14
12.64
4.47
1.92
14.67
3.27
2.29
17.37
3.46
2.35
9.52
5.02
1.40
10.40
5.15
1.76
13.09
3.50
0.98
15.76
1.76
1.83
10.90
4.52
1.27
13.63
5.54
0.77
9.42
5.26
0.78
41.42
-11%
6.30
-0%
2.00
0%
37.15
-4%
6.30
0%
2.00
0%
35.58
4%
6.30
0%
2.00
0%
37.02
-5%
6.28
-6%
2.00
0%
35.14
-67%
5.95
-1%
2.00
0%
NO. OF QUOTED COMPANIES
Jamaica
Trinidad
Barbados
ANNUAL TURNOVER (US$M)
Jamaica
Trinidad
Barbados
MARKET CAPITALISATION(US$M)
Jamaica
Trinidad
Barbados
MARKET INDEX (LOCAL CURRENCY)
Jamaica
% Change
Trinidad
% Change
Barbados
% Change
AVERAGE TRADING VALUES - DEC 31ST
Jamaica
Average P/E Ratio
Average Yield
Average Price/Book
Trinidad
Average P/E Ratio
Average Yield
Average Price/Book
Barbados
Average P/E Ratio
Average Yield
Average Price/Book
EXCHANGE RATE TO 1 US$
Jamaica (JA$/US$)
% Change
Trinidad (TT$/US$)
% Change
Barbados (BDS$/US$)
% Change
(Source - Caribbean Stock Exchanges- Data at December 31st)
9
The Caribbean capital markets consist of five small country exchanges in Jamaica, Trinidad, Barbados, the Dominican Republic, the
Bahamas and a call exchange in Guyana. The stock exchange in the Dominican Republic has very few listed equities and the trading is
primarily in debt securities. Private sector debt markets and commercial paper have begun to develop in Jamaica and Trinidad and the
remainder is characterised by the issuance of government paper and bonds by island governments primarily to state pension schemes
and institutional investors with little secondary market activity.
The statistics on the three main stock exchanges show a combined market of just under 100 listed companies with an annual trading
value of approximately US$300m per annum. The majority of this activity is concentrated in Jamaica and Trinidad, with Barbados
being a thin market with few listed companies or market participants. Barbados, Trinidad and Jamaica have all benefited from having
increased institutional activity from local and regional mutual funds and from some foreign direct portfolio investment.
Despite the variance in the economies and the variance in performance returns from the various exchanges, there has been very little
cross border trading activity between the three exchanges although some appropriate mechanism exists. As recent as 1997, the
Trinidad exchange increased by 110% and was the fifth best performer of the stock markets in the world and yet few Jamaicans or
Barbadians participated in these gains. There is little diversification by Caribbean investors who are simply riding the ups and downs
of their particular island economies.
During 1995, the Inter-American Development Bank (IADB) commenced funding for a project to harmonise the Caribbean Stock
Exchanges. It was implemented by consultants from NASDAQ and the objective is to link the five main stock exchanges in the
Caribbean with electronic trading and a central depository system for settlement. The countries involved are Jamaica, Trinidad,
Barbados, Bahamas and the Dominican Republic. So far Jamaica and Barbados have commenced electronic trading, with settlements
taking place through Central Securities Depository providing for settlement on a delivery vs. payment basis. Trinidad is expected to
implement a similar system in 2001 and the countries in the Organization of East Caribbean States (OECS) are expected to launch an
electronic over-the-counter stock exchange in the same year.
The Caribbean countries are likely to soon follow recent trends of merging their Stock Exchanges now happening around the world,
thereby creating more active, dynamic and efficient stock exchanges.
The Directors believe that the expansion of the regional economies, the need for fresh capital investment particularly in the services
and tourism sectors and the several incentives that are being provided by Governments, will increase the listings in the local markets.
The creation of a final withholding tax of 12.5% for dividend income for Barbadians and the taxation of dividends at zero percent for
Caricom territories who have signed the Caricom Treaty is likely to further the demand for equities. The reduction of the corporation
tax rate in Trinidad to 35% and the planned inclusion of the Trinidad and Jamaican Stock Exchanges in the IFC Emerging Markets
index should all combine to increase the demand for Caribbean equities.
10
INVESTMENT POLICY
The objective of the Fund is to achieve long-term capital appreciation of its assets through investment in shares of both quoted and
unquoted Caribbean companies. The Fund will also pursue the concept of local investors swapping shares held in public companies
for the more diversified portfolio of the Fund.
The companies in which the Fund will invest are expected to have at least one of the following characteristics;
(a)
(b)
(c)
(d)
(e)
The company’s product(s) must be well established in the local and or regional markets.
The price of the company’s shares are attractively priced as measured by their Price to Earnings & Price to Book Value
Ratios compared with Industry Averages.
The company is recording high rates of growth in revenues and profits.
The company is in a solid position of sustainable export earnings.
The company’s shares are depressed following a period of unusual or temporarily poor results.
The length of the investment period will depend on the growth in the Fund’s assets and the growth in the activity in the regional
markets. In the absence of availability of suitable equity investments, the Fund will invest either in short term debt securities and
commercial paper of regional companies and governments or in International Funds or both depending on the availability of foreign
exchange.
The stock markets of the Caribbean lack liquidity, therefore the Fund Manager will invest a larger than normal percentage (maximum
25%) of the Fund’s assets into investments that can be liquidated at any time. The objective of the Fund is growth and long-term
capital appreciation, therefore, investments may be made from time to time in international equity funds which will allow for easy
liquidation at any time to meet any foreign currency redemptions.
Since most of the Caribbean companies are quite small by international standards, the Fund could easily become a significant
shareholder. It will not however acquire more than 10 % of the voting shares of any one company, and it will not invest more than
10% of the fund’s assets in any one security. The Fund will not invest in the shares or fixed income securities of Cave Shepherd & Co
Limited.
The Fund will act strictly as a portfolio investor and will not take legal and or management control or seek directorships in any of the
companies in which it invests.
The Fund has had an excellent track record with a 93% return after the first four years. (from inception December 9, 1996 to
November 30th, 2000)
RISK FACTORS
Emerging markets tend to have a greater level of risk and volatility associated with them than more established markets. The small
sizes of the Caribbean stock markets will tend to make them volatile and relatively not very liquid.
Currency fluctuations, exchange controls, tax and or other regulations currently applicable or which may be introduced in the future
may affect the value and marketability of the Fund’s investments and income derived therefrom. The passing of the mutual funds Act
in Barbados in 1998 has strengthened the supervision and regulation of the local securities industry but it is still at a less developed
stage than in the USA, Canada, UK, Europe and other developed stock markets.
While some of the Caribbean countries have implemented Central Securities Depositories for the recording of securities and trading,
this has not occurred in all of the islands which increases the risk of settlement of transactions in these markets.
11
DIRECTORS, MANAGEMENT AND ADMINISTRATION
MANAGER
Fortress Fund Managers Limited (“ the Manager) has been appointed to manage the fund
The Manager is a privately incorporated Barbados company that is owned and controlled by the shareholders and directors of the
company, the representatives of the Manager’s shareholders serve as Directors of the fund.
MANAGER SHAREHOLDERS & FUND DIRECTORS
The shareholders of the Manager and their representatives who serve as Directors of the Fund are as follows
Shareholders
Fund Director
Cave Shepherd & Co Ltd
Mr. Geoffrey Cave
Barbados Shipping & Trading Co Ltd
Mr. David Bynoe
The Nation Corporation
Senator Sir Fred Gollop
Mr. Roger Cave
Mr. Roger Cave
Perpetual PLC
-
-
Mr. Ken Emery
CAVE SHEPHERD & COMPANY LIMITED – is a family controlled, public company listed on the SEB. Its principal business is
that of retail, being the leading department store in Barbados. Mr. Geoffrey Cave is the chairman and managing director of Cave
Shepherd & Co. Limited. He also sits on the boards of several of the island’s leading companies.
BARBADOS SHIPPING & TRADING CO LTD. (BS&T) – is the largest public company in Barbados and is listed on the
Barbados Stock Exchange. BS&T employs over 2,000 people and is involved in a range of business activities ranging from retail and
distribution to manufacturing, tourism and financial services. BS&T through its Chairman, Mr. David Bynoe, will bring to the Fund
tremendous knowledge of local and regional investment opportunities.
THE NATION CORPORATION– is the largest news and media company in Barbados. Its principal subsidiary, the Nation
Publishing Co. Limited publishes the leading daily newspaper. Another subsidiary, Starcom Network Inc., operates three radio
stations, including the Voice of Barbados. The Corporation’s chairman, Senator Sir Fred Gollop, is an Attorney-at-Law with extensive
experience in the public and private sectors. His knowledge of the media business will be extremely helpful in guiding the marketing
and promotion policies of the Fund.
PERPETUAL plc – is a public investment management company based in the U.K. Perpetual offers a wide range of national and
international unit trusts and has an outstanding long term investment performance record both in the U.K.
and internationally.
MR. KEN EMERY is an independent consultant and advisor specializing in the development of mutual funds and related investment
products. Mr. Emery retired as Technical Director of the Save & Prosper Securities Ltd. In the U.K. where he worked for 26 years.
He was actively involved in the creation of several new investment products during his distinguished career along with setting up
several funds in many countries around the world. Mr. Emery worked extensively on setting up of the Fortress Caribbean Growth
Fund as a consultant and he subsequently joined the Board of Directors, of the Manager and the Fund.
ROGER CAVE C.A., C.F.A Investment Manager is a Chartered Financial Analyst (CFA) and Chartered Accountant (CA) with four
years of professional accounting experience with Coopers & Lybrand in Canada and Price Waterhouse in Barbados. Roger completed
a two year contract with the Commonwealth Development Corporation as an Executive in their East Caribbean office before joining
Cave Shepherd in 1994. Roger is one of the lead promoters and founding shareholders of the Management Company and the Fund in
1996.
12
MANAGEMENT CONTRACT
The current Manager’s contract has been in existence since the Fund’s inception, and continues automatically thereafter unless
determined by six months’ written notice by the Company or twelve months’ written notice by the Manager. The Manager will receive
a weekly management fee in arrears from the Fund as described below.
ADMINSTRATION & CUSTODIAN
Barclays Bank Plc (Barclays) is the administrator and custodian of the Fund. Barclays is responsible for the recording and holding of
all securities of the Fund. Barclays is also responsible for the settlement of all transactions.
REGISTRAR
Fortress Fund Managers Limited is the registrar of the Fund and all transactions are settled and reported to the Administrator on a
weekly basis.
FEES AND EXPENSES
THE MANAGER
INITIAL CHARGE
There is an initial charge of 2% of all amounts invested into the Fund by investors.
ANNUAL CHARGE
The Manager is paid a fee that is calculated on the net asset value of the Fund (“NAV”). This fee is equivalent to 1.75 % per annum of
the NAV of the Fund. The fee is calculated on the closing prices of the Fund’s assets on the dealing day at the end of each week. The
fee is paid to the Manager within one week of calculation.
CUSTODIAN & ADMINISTRATOR
Custodian and administrative fees payable to Barclays Bank Plc amount to a maximum fee of 0.175 % of NAV and will reduce on a
sliding scale to 0.020 % on assets in excess of BDS $ 200 million. These charges are calculated on the same basis as the management
fees and are paid within one week of calculation.
BROKERAGE
The buying and selling of securities in Barbados are handled by Cave Shepherd Investments Limited (CSI), which holds a seat on the
SEB. CSI trades for the account of Fortress Fund Managers Limited and only charges the Fund out of pocket expenses for trades on
the SEB. There are no actual brokerage costs. Trades on the Jamaica and Trinidad stock exchanges and in the other territories are
handled by other brokers and the fund incurs market brokerage costs. The settlement of all trades are done by the Administrator.
OTHER EXPENSES
The Fund bears the cost of other expenses of the Fund including administration, audit, legal, printing and stationery costs. The
organisation and set up costs are being amortised over a period of five years and the total percentage of other costs does not exceed
one tenth of one percent of the assets of the Fund in any one year.
DIVIDEND POLICY
The principal aim of the Fund is to provide shareholders with long term capital appreciation. The Fund is not expected to pay any
dividends and all income and capital gains are automatically reinvested in new investments for the Fund.
13
TAXATION & EXCHANGE CONTROL
TAXATION OF THE FUND
CORPORATION TAX
The Fund is licensed as an authorized mutual fund under the Mutual funds Act, 1998-45 of Barbados. In calculating the assessable
income of the Fund for tax purposes, the act provides for a deduction of up to a 100% of the income that is designated to be income of
the Fund shareholders. All of the profits of the Fund are designated to the Fund’s Class ‘A’ shareholders and consequently the Fund
will not be subject to corporation tax.
CAPITAL GAINS TAX
There is no capital gains tax in Barbados and therefore all capital gains earned by the Fund will not be subject to tax.
DIVIDENDS
Dividends received by the Fund from other resident companies registered in Barbados are not subject to the final 12.5% withholding
tax on dividends. For countries in the Caribbean Community (Caricom) which have signed the Caricom Double Taxation Agreement,
investment income originating from those countries is taxed at zero percent. The countries which have so far signed this agreement
include Antigua, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines
and Trinidad & Tobago.
PROPERTY TRANSFER TAX & STAMP DUTY
In accordance with section 48 of the Mutual Funds Act, 1998-45, the Fund is exempt from all provisions of the Stamp Duty Act and
the Property Transfer Tax Act with respect to transactions concerning the ownership or transfer of shares in mutual funds.
TAXATION OF SHAREHOLDERS
Any dividends paid by the Fund to individual resident shareholders in Barbados will be subject to a final withholding tax of 12.5%.
Companies resident in Barbados are not subject to tax on dividends received from the Fund. However the Fund’s policy is to reinvest
all income into new investments of the fund. There is no capital gains tax in Barbados and therefore individuals resident in Barbados
will not be subject to capital gains tax on profits realized from investing in the Fund.
PERSONAL INCOME TAX
In accordance with the provisions of the Income Tax Act, individuals resident in Barbados may claim an annual deduction in respect
of investments made in authorized mutual funds licensed under the Mutual Funds Act,1998-45. The maximum annual amount which
may be deducted from income is BDS $10,000.00. Disposal of any such investments within five years will give rise to recapture of
the tax relief given. In accordance with section 9 (1) of the Income tax act, individuals resident in Barbados, where employers do not
offer them shares in lieu of bonus, may claim a reduction of the lower of 75% of their annual bonus or $7,500, if such a bonus is
invested in a mutual fund within four months from the date in which the annual bonus payment was made.
EXCHANGE CONTROL
Barbados has a regime of exchange control regulations administered by the Central Bank. These regulations require that residents
convert foreign currency receipts to Barbados dollars and purchase their foreign currency requirements for goods and services from
the commercial banks who have delegated authority to sell foreign exchange on behalf of the Central Bank. Since 1975, Barbados has
maintained a fixed exchange rate of BD$2.00:US$1.00.
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Capital transactions by non-residents involving the purchase of shares in Barbados corporations or the acquisition of real property and
the payment of dividends or interest or the repayment of foreign currency debt are subject to the prior approval of the Central Bank.
Similar requirements exist for residents of Barbados to invest abroad or borrow in foreign currency.
In order to facilitate the trading of shares of the Company, the Central Bank has agreed to grant the company permission regarding the
purchase and redemption of its shares. Consistent with the exchange control regulations for cross border trading, the company has
been advised that foreign shareholders of the Fortress Caribbean Growth Fund will be able to purchase and redeem up to BDS$ 2m
per transaction in shares of the Fund.
DEALING IN THE FUND’S SHARES
DESCRIPTION OF THE SHARES
The company is structured as an open-end Mutual Fund and is authorized to issue an unlimited number of Class ‘A’
Redeemable Mutual Fund Shares with the authority to issue fractional shares.
Each fund share is entitled to an equal share in the distribution of net income and net capital gains of the fund and
participates equally in all other respects.
Fund shareholders shall not be entitled to vote at meetings of shareholders of the Company save and except as
permitted under the Companies Act, CAP 308, for the following;
(1)
Disposal of the Assets of the Company.
(2)
Any change or abrogation of the rights of the shares
or Any variation affecting the rights of the shares
(3)
Any proposed amalgamation of the company with another company or any amalgamation of the Fund with
another Mutual Fund.
Upon a liquidation or winding-up of the Company the Fund Shareholders shall be entitled to the net proceeds, after
satisfying the cost of realization of the assets of the Fund but shall not be entitled to share in any surplus property of the
Company.
The Common shareholders of the Company shall not be entitled to participate or share in the distribution of any
property of the fund.
PRICE OF SHARES
The price per share is determined by calculating “the net asset value” of a share on valuation days. There is a 2% initial
fee on all purchases to cover the cost of initial administrative expenses.
“The net asset value” of a share is calculated at the close of business on Friday of each week (unless such is a bank
holiday, in which case the valuation day shall be the close of business on the proceeding day) by dividing the value of
net assets of the Fund (i.e., the value of the Fund’s assets less its liabilities) by the total number of shares.
CALCULATION OF NET ASSET VALUE
In determining the net asset value of the Fund, securities owned are valued at their market value. Under normal trading
conditions this will be determined by the closing price of the shares. In the event that there is limited or no trading in a
particular security then, at the discretion of the directors a price within the limits of the bid and offer prices for that day
will be used. In the event of unusual market conditions or in the event that a particular security value has become
impaired, as evidenced by no bids being quoted and offers below the previous trade price, the manager, in consultation
with the Custodian/Trustee and on the advice of an independent broker will make a reasonable estimate of a fair price.
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PURCHASE OF SHARES
The purchase price for a share is equal to the net asset value which is calculated at the close of business on the
valuation day next following the receipt of an application for the purchase of shares. There is a front-end charge of 2%
on the purchase of shares in the fund. The minimum investment is $100. The minimum for additional investments is
$100. Investors may purchase shares of the Fund by completing an application form, which may be obtained from any
of the following persons:
(a)
Fortress Mutual Fund Ltd – 1st Floor Carlisle House, Hincks Street, Bridgetown
(b)
Any member of the Securities Exchange of Barbados
(c)
Any Barclays Bank branch
The Fund Manager may in his discretion reject any application to purchase shares, such decision must however be
made within three days after receipt of the application. If an application is rejected, all money received with the
application will be returned immediately.
If an application is received and approved and the necessary funds received before 3 p.m. on a valuation day, then the
purchase order will be processed that day using the net asset value for shares as of that valuation day. Orders received
after 3:00 p.m. or on a day which is not a valuation day, will be processed using the net asset value as determined on
the next valuation day. An investor who has satisfied the minimum investment requirement of $ 100 may continue to
invest through a periodic investment plan. This plan allows for deductions of a specific amount from the investor’s
bank account on a monthly basis and for investments in the Fund to be made until a predetermined objective is attained
or until further notice. The minimum periodic investment is $50.
REDEMPTION OF FUND SHARES
A Fund shareholder may cash in any or all of the shares of the Fund owned by such Fund shareholder in accordance
with the redemption policy of the Fund at any time by delivering a written request for redemption on the appropriate
form to the Fund Managers. Fund shares will be redeemed at their net asset value as determined at the valuation date
next following the day on which the Fund receives the redemption order. If a redemption request is received before
3:00 p.m. on a valuation day, the redemption will be processed on that valuation day. Redemption requests received
after 3:00 p.m. or on a day, which is not a valuation day, will be processed at the next valuation date.
Provided the investor has delivered all the documentation required, payment will be mailed to such investor within
three (3) business days of the redemption date. The investor may be asked to provide such reasonable documentation as
the Fund manager may require in order to complete the redemption request.
In the event of unusual circumstances and the Fund receives redemption requests, within any 30 consecutive days,
represents more then 20% of the Fund’s assets, the directors of the company reserve the right to suspend redemptions
and to hold a special meeting of the fund shareholders to determine the future of the Fund, including the liquidation of
the Fund’s assets.
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WAYS TO INVEST
There Are Four Easy Ways To Invest In The Fund.
(1) Open A Monthly Savings Investment Plan
You decide how much you can afford to invest each month (minimum Bds. $50) and complete our direct debit form and return it to us.
We will debit your bank on the 10th day of each month and purchase an equivalent amount of “Fund Shares” based on the value of the
Fund at the immediate proceeding valuation date.
(2) Regular Lump Sum Amount
You can invest whenever you have the available funds to do so (minimum $100).
(3) Shares Exchange Plan
If you are already a shareholder in one or more companies you may transfer your shares to the company in exchange for an equivalent
value of “Fund Shares” based on the current market value of the shares transferred net of any brokerage costs. Prices and shares are
subject to market conditions.
(4) Third Party Dividend Reinvestment Plan
If you own shares in a publicly traded company and you do not wish to sell those shares but you would like to reinvest any dividends
received, you can simply mandate your dividends (minimum BDS$100) to the company who will credit you with a number of “Fund
shares” purchased by the proceeds of such mandated dividends.
GENERAL INFORMATION
•
Save as disclosed there is no minimum subscription.
•
The extracts included in this prospectus from referenced sources were not prepared for specific inclusion in this prospectus.
•
Fractional shares of the company may be issued.
•
No share certificates in the usual format and style will be issued by the company, but the company shall issue to each Fund
shareholder a statement showing the number of Fund Shares held by each such person.
•
Barbados Shipping & Trading Co Ltd, Cave Shepherd & Co Ltd, Perpetual PLC, The Nation Corporation, Barclays Bank
Plc; Corporate Services Limited , PricewaterhouseCoopers, Fortress Fund Managers Limited, Sir Henry Forde QC, have all
given and have not withdrawn their written consent to the inclusion of their names in the prospectus in the form and context in
which it is included.
•
Save as disclosed there is no closing date for applications made pursuant to this prospectus, the purchase price for a share
shall be equal to the net asset value which is calculated at the close of business on the valuation day next following the receipt
of an application for the purchase of shares.
•
The company, upon the advice of the Manager, may from time to time, close the subscription list for new shares of the
company.
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