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Transcript
THE DIRECTORS OF ACTIVE RETURN CAPITAL SICAV P.L.C (THE “COMPANY”) WHOSE NAMES APPEAR IN THE DIRECTORY ANNEXED TO THIS OFFERING SUPPLEMENT HAVE APPROVED THE CONTENTS OF THIS OFFERING SUPPLEMENT AND THUS ACCORDINGLY ACCEPT RESPONSIBILITY FOR THE INFORMATION CONTAINED HEREIN. TO THE BEST OF THE KNOWLEDGE AND BELIEF OF THE DIRECTORS (WHO HAVE TAKEN ALL REASONABLE CARE TO ENSURE THAT SUCH IS THE CASE) THE INFORMATION CONTAINED IN THIS OFFERING SUPPLEMENT IS IN ACCORDANCE WITH THE FACTS AND DOES NOT OMIT ANYTHING LIKELY TO AFFECT THE IMPORT OF SUCH INFORMATION. THE DIRECTORS ACCEPT RESPONSIBILITY ACCORDINGLY. THIS OFFERING SUPPLEMENT IS TO BE READ IN CONJUNCTION WITH THE OFFERING MEMORANDUM, THE LATEST VERSION OF WHICH IS AVAILABLE FROM THE COMPANY AND THE ADMINISTRATOR. Active Return Capital SICAV PLC IS LICENSED BY THE MALTA FINANCIAL SERVICES AUTHORITY (“MFSA”) AS A PROFESSIONAL INVESTOR FUND WITH LICENSE NUMBER PIF 393A WHICH IS AVAILABLE TO ELIGIBLE INVESTORS. PROFESSIONAL INVESTOR FUNDS ARE NON-RETAIL COLLECTIVE INVESTMENT SCHEMES. THEREFORE, THE PROTECTION NORMALLY ARISING AS A RESULT OF THE IMPOSITION OF THE MFSA’S INVESTMENT AND BORROWING RESTRICTIONS AND OTHER REQUIREMENTS FOR RETAIL SCHEMES DO NOT APPLY. SHARES IN FUND MAY ONLY BE SOLD TO QUALIFYING INVESTORS AS DEFINED IN THE OFFERING MEMORANDUM. INVESTORS IN PROFESSIONAL INVESTOR FUNDS ARE NOT PROTECTED BY ANY STATUTORY COMPENSATION ARRANGEMENTS IN THE EVENT OF THE COMPANY’S FAILURE. THE MFSA HAS MADE NO ASSESSMENT OR VALUE JUDGEMENT ON THE SOUNDNESS OF THE COMPANY OR ON THE ACCURACY OR COMPLETENESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO IT. OFFERING SUPPLEMENT Issued as a supplement to the Offering Memorandum of the Company dated the 15th June 2016 for the Class of Investor Shares established in respect of the following Sub-Fund: ACTIVE RETURN CAPITAL A de-minimis Sub-Fund of Active Return Capital SICAV plc Private Offering of Investor Shares Base Currency: GBP The securities described in this confidential Offering Supplement have not been approved for offer or sale in the public under the securities laws of any country or jurisdiction. Dated: 16th September 2016 1 TABLE OF CONTENTS Contents OFFERING SUPPLEMENT ................................................................................................................. 1 1. PRINCIPAL FEATURES OF THE OFFER ............................................................................ 6 Reference and Construction ......................................................................................................... 6 Name of the Sub-Fund.................................................................................................................. 6 Structure ....................................................................................................................................... 6 Strategy and Restrictions in Short ................................................................................................ 6 Term of the Sub-Fund ................................................................................................................... 6 The Brokers .................................................................................................................................. 6 Banker........................................................................................................................................... 6 Administrator ................................................................................................................................. 7 Base Currency .............................................................................................................................. 7 Class of Shares............................................................................................................................. 7 Eligible Investors ........................................................................................................................... 7 Minimum Investment ..................................................................................................................... 7 Minimum Additional Subscription Amount .................................................................................... 7 Minimum Redemption Amount ...................................................................................................... 7 No Dividend Payments ................................................................................................................. 8 Valuation Day................................................................................................................................ 8 Subscription and Redemption ....................................................................................................... 8 Dealing Day .................................................................................................................................. 8 Initial Offer Price ........................................................................................................................... 8 2. INVESTMENT OBJECTIVE AND RESTRICTIONS .............................................................. 9 2 Investment Objective .................................................................................................................... 9 Investment Strategy and Policy .................................................................................................... 9 Investment Restrictions............................................................................................................... 10 3. RISK FACTORS SPECIFIC TO THE SUB-FUND .............................................................. 11 The Shares Lack Liquidity and Marketability .............................................................................. 11 Risk of Market Fluctuation .......................................................................................................... 11 Volatility of Underlying Investments ............................................................................................ 11 Risk Arising in Written Option Contracts ..................................................................................... 11 Risk Arising in Purchasing Option Contracts - the Option Premium .......................................... 12 Risks related to Investments in other Undertakings for Collective Investment ........................... 12 Risk arising in Cross Currency trading ........................................................................................ 12 Systems of Underlying Funds ..................................................................................................... 12 Risks Associated with Investments in Managed Accounts ......................................................... 12 Risks of Suspension of Net Asset Valuation Determination by Investment Funds ..................... 13 Payment of Redemption Proceeds ............................................................................................. 13 Gating ......................................................................................................................................... 13 Special Situation Events ............................................................................................................. 13 Risks Arising from the Existence of Performance Fees .............................................................. 14 4. FUNCTIONARIES AND OFFICIALS .................................................................................. 15 5. VALUATION PROCEDURES ............................................................................................. 18 Calculation of NAV ...................................................................................................................... 18 NAV Per Share ........................................................................................................................... 19 Valuation Errors .......................................................................................................................... 19 6. FEES, CHARGES AND EXPENSES .................................................................................. 20 Management Fees ...................................................................................................................... 20 3 Administration Fee ...................................................................................................................... 20 Risk Management Fee ................................................................................................................ 21 Brokerage and Transactions Fee................................................................................................ 21 Application Fee ........................................................................................................................... 21 Annual License Fee .................................................................................................................... 21 FATCA & CRS Reporting Compliance Fees ............................................................................... 21 Subscription Fee ......................................................................................................................... 21 Redemption Fee ......................................................................................................................... 22 Switching Fee ............................................................................................................................. 22 Bankers Fees .............................................................................................................................. 22 Other Fees and Expenses .......................................................................................................... 22 Variation of Fees ......................................................................................................................... 22 Waiver of Fees ............................................................................................................................ 22 7. THE OFFERING .................................................................................................................. 22 Share Offer ................................................................................................................................. 22 Pricing ......................................................................................................................................... 22 Purchase of Investor Shares during the Initial Offering Period ................................................... 22 Following the Initial Offering Period ............................................................................................ 23 Frequency of NAV Calculation .................................................................................................... 23 Minimum Investment and Holding ............................................................................................... 23 Redemption of Investor Shares .................................................................................................. 23 Switching..................................................................................................................................... 24 8. GENERAL INFORMATION ................................................................................................. 24 The Rights of Shareholders ........................................................................................................ 24 4 Share Capital and Accounts ....................................................................................................... 24 Fractional Shares ........................................................................................................................ 24 Shares in Issue ........................................................................................................................... 24 Capitalisation Participating Shares ............................................................................................. 24 Taxation ...................................................................................................................................... 24 Documents for Inspection ........................................................................................................... 24 Appendix I – APPLICATION FORM .......................................................................................... 25 Appendix II – Administration Fee ............................................................................................ 26 DIRECTORY ............................................................................................................................... 27 5 1. PRINCIPAL FEATURES OF THE OFFER Reference and Construction This Offering Supplement is an integral part of the Offering Memorandum of the Active Return Capital SICAV PLC (the "Company"). Except as otherwise indicated in this Offering Supplement, terms capitalized herein shall have the meaning ascribed to them in the Offering Memorandum. Name of the Sub-Fund Active Return Capital holding license number PIF 393A. The LEI (Legal Entity Identification) of the Sub-Fund is 21380096JGNNHNSSRY61. Structure The Sub-Fund is an open-ended collective investment scheme structured as a Sub-Fund which takes the form of a Professional Investor Fund targeting Qualifying Investors as defined in the Offering Memorandum. Strategy and Restrictions in Short The investment objective of the Sub-Fund is to achieve long-term capital appreciation through an absolute return strategy. The aim of the investment strategy is to try and achieve net positive returns that are uncorrelated to conventional financial markets’ returns. The strategies and the investment restrictions are further described in the relevant Section below. Term of the Sub-Fund The term of the Sub-Fund is indefinite. The Brokers The below companies have been appointed to act as Brokers to the Sub-Fund: LMAX Limited Cornhill Capital Limited Velocity Trade International Limited Invast Financial Services PTY Ltd In order to reduce the counterparty risk exposure, the Sub-Fund may open accounts with any of the above brokers, however the Sub-Fund may be using one or more of the above brokers for trading at any point in time. Safekeeping Arrangements The Sub-Fund elects not to appoint a custodian for the safe-keeping of the Sub-Fund’s investments. Due to the nature of the assets to be acquired by the Sub-Fund, the Brokers, mentioned in the paragraph immediately above this, shall, as part of their execution services, provide safekeeping and administration of the Sub-Fund’s assets. Clients’ funds entrusted to the Brokers are held within segregated client money bank accounts. Banker Sparkasse Bank Malta p.l.c. having its registered office at 101 Town Square, Ix-Xatt Ta’ Qui-Si-Sana, Sliema SLM3112, Malta, has been appointed to act as Banker to the Sub Fund. 6 Administrator Apex Fund Services (Malta) Limited having its registered office situated at Central North Business Centre, Level 1, Sqaq Il-Fawwara Sliema, SLM 1670, Malta has been appointed to act as Administrator to the Company. The corporate organization and the experience of the Administrator are described in the Offering Memorandum Base Currency The Base Currency of the Sub-Fund is the GBP. Class of Shares The Board of Directors of the Sub-Fund has caused the Sub-Fund to issue one Class of Investor Shares (hereinafter referred to as “Capitalisation Participating Shares”). The ISIN number of the share class isMT7000015855. . Eligible Investors Investor Shares are only open to Qualifying Investors. The Company can reject any demand for subscription. Before investing in the Sub-Fund, Qualifying Investors must sign the declaration referred to in the Qualifying Investor Declaration Form found as an Appendix to the Offering Supplement stating that they qualify as “Qualifying Investors” and that they have read and understood the risk warnings in the Offering Memorandum and in this Offering Supplement. In the case of joint holders, all holders should individually qualify as “Qualifying Investors.” The Subscriber acknowledges that the Sub-Fund may rely upon the Qualifying Investor Declaration Form provided by the investor in the absence of information to the contrary. Investors are here directed to the ‘Important Notices’ Section of the Offering Memorandum where within the clause ‘Right to Refuse Any Subscription’ the Company informs potential investors that it may refuse to process certain Application Forms for the purchase of Investor Shares, at its absolute discretion and without giving any reasons therefor. The Scheme or the Administrator on its behalf shall only create units if amongst any other requirements imposed upon such subscription in terms of the Offering Memorandum or this Offering Supplement, if it is in receipt of all documentation required by the Offering Memorandum and the Offering Supplement. Investors are urged to make reference to Section 10 of the Offering Memorandum and Section 7 of this Offering Supplement in regard to the documents which need to be provided. Minimum Investment Seventy Thousand Great Britain Pounds (GBP 70,000) for the Capitalisation Participating Shares, or the equivalent in another currency. If the equivalent of Seventy Thousand Great Britain Pounds (GBP 70,000) is less than Seventy Five Thousand Euros (EUR75,000) then the equivalent in Great Britain Pounds or the equivalent in another currency will become the permissible minimum investment. Minimum Holding Seventy Thousand Great Britain Pounds (GBP 70,000) for the Capitalisation Participating Shares, or the equivalent in another currency. If the equivalent of Seventy Thousand Great Britain Pounds (GBP 70,000) is less than Seventy Five Thousand Euros (EUR75,000) then the equivalent in Great Britain Pounds or the equivalent in another currency will become the permissible minimum holding. Minimum Additional Subscription Amount Ten Thousand Great Britain Pounds (GBP 10,000) for Common Capitalisation Participating Shares, or the equivalent in another currency. The said minimum additional subscription amount may be waived and/or reduced at the sole discretion of the Directors of the Company. Minimum Redemption Amount One Thousand Great Britain Pounds (GBP 1,000) for Capitalisation Participating Shares, or the equivalent in an another currency. The said minimum additional subscription amount may be waived and/or reduced at the sole discretion of the Directors of the 7 Company. No Dividend Payments The Capitalisation Participating Shares do not give right to the payment of dividends. Valuation Day The Net Asset Valuation will be performed on monthly basis, or on any such other day as the Directors may decide through a written resolution, and shall be calculated on the basis of the closing prices of the assets held by the Sub-Fund on the last Business day of each month. Valuations shall be expressed in the GBP, the Base Currency of the Sub-Fund. Subscription and Redemption The Investor Shares will be available for subscription and redemption on each Dealing Day at the prevailing Offer Price. Investors should be aware that If redemption requests on any Dealing Day equal or exceed ten percent (10%) of the outstanding Shares in issue, the Board of Directors of the Sub-Fund may elect to restrict the total number of Shares to be redeemed to ten percent (10%) of outstanding Shares in issue on that Dealing Day, in which case all redemption requests will be scaled down pro rata to the size of the request. The balance of the Shares in respect of which redemption requests have been received will be redeemed on the next succeeding Dealing Day in priority to any requests received thereafter, subject to the same restriction. Dealing Day A Dealing Day is the first Business Day of each month and such other day or days as the Directors may from time to time determine, on which Shares can be subscribed, exchanged or redeemed. Investor Shares will be valued for subscription, redemption or exchange on the Valuation Day immediately preceding the Dealing Day. Initial Offer Price The Initial Offer Price shall be one hundred Great Britain Pounds (GBP 100) per Capitalisation Participating Share during the Initial th th Offering Period. The Initial Offering Period shall commence on the 15 February 2016 and shall end on the 4 March 2016. Changes to the Investment Objective, Strategy and Restrictions of the Sub-Fund The Sub-Fund’s investment objective, policies and/or restrictions may be changed by the Directors from time to time. Any alteration to the investment objective shall be notified to Shareholders by mail at least thirty (30) Business Days before such alterations to the investment objective are to come into effect. These changes will only become effective after all redemption requests received during such notice period have been satisfied and any applicable redemption fee shall be waived accordingly. Any material alterations to the investment policies and restrictions of the Sub-Fund shall be notified to the Shareholders before such material alterations are to come into effect. 8 2. INVESTMENT OBJECTIVE AND RESTRICTIONS Investment Objective The overall investment objective of the Sub-Fund's investment strategy is to generate long term positive investor’s investment return by investing primarily in the major currency markets, listed equity markets and international bond markets, whilst accepting a level of risk that is commensurate with such investment strategies. The Fund will undertake systematic and discretionary trading strategies that will look to maximise the returns from the investment opportunities arising in these markets whilst attempting to minimise volatility and limit the possibility of any major drawdown, and achieve net positive returns that are uncorrelated to returns arising in the more conventional equity, fixed income and money markets. The investment in the Shares of this Sub-Fund is likely to be optimized and more profitable should the investors remain invested for a minimum period of at least three (3) to five (5) years. There is no guarantee that the investment objective of the Sub-Fund will be achieved and investment results may vary substantially over time Investment Strategy and Policy The Sub-Fund will aim to achieve its objective by investing in • • • • • Listed derivatives such as futures, options, warrants and contracts-for-differences on various underlying securities, but predominantly on currency crosses, single equity securities and equity indices, specific bonds and major bond indices and generic market references such as, but not limited to, swap spreads, corporate and government spreads, and historic and implied volatility. The Sub-Fund will invest in currency forwards, which the Sub-Fund might undertake in the event it needs to hedge its currency exposures, inter alia. Listed currency futures contracts are very standardised and specific and their use in hedging may not always be the optimal hedging tool for the dynamic needs of the Sub-Fund, hence the need to hedge through the unlisted forward contract markets. Equity securities traded on International Recognised Exchanges or equity securities the terms of issue of which include an undertaking that application will be made for admission to official listing on an International Recognised Exchange. The Sub-Fund will not specifically target any one particular recognised exchanges and the investments in equity securities made will not be required to have a particular market capitalisation; Listed debt securities issued by governments, credit institutions and other corporate companies rated BBB or higher as determined by Standard and Poor’s, or if not rated by the latter, an equivalent rating as determined by an equivalent rating agent or, if unrated, estimated by the Directors to be of comparable quality. It is also envisaged that some of these listed debt securities could also carry embedded derivatives; Conventional Collective Investment Schemes which invest in conventional equity and fixed income markets licensed or regulated in recognised jurisdictions including but not exclusively limited to inter alia, UK, Switzerland, Luxembourg, Cyprus, Gibraltar, Ireland, Jersey, Guernsey, Isle of Man, Malta, Bermuda, Cayman Islands. Other Collective Investment Schemes licensed or regulated in recognised jurisdictions including but not exclusively limited to inter alia, UK, Switzerland, Luxembourg, Cyprus, Gibraltar, Ireland, Jersey, Guernsey, Isle of Man, Malta, Bermuda, Cayman Islands whose investment objective is to achieve uncorrelated returns to the conventional equity and fixed income markets, consistent with that of the Sub-Fund. Treasury bills, other regulated and listed money market instruments, and deposits with licensed Credit Institutions The Sub-fund may also employ third party asset managers, who are authorised to carry out investment management services in an equivalent recognised jurisdiction, that can provide the Sub-fund with dedicated managed accounts whose investment objective is to achieve uncorrelated returns to the conventional equity and fixed income markets, consistent with that of the Sub-Fund. All potential asset managers will be screened by the Investment Committee and the Directors and assessed of documented investment skills, risk control and operational infrastructure. Consideration will also be given to, amongst other things, experience, background, assets under management, track record and reputation of the asset a manager as well on the safe keeping or custody being provided within the managed account agreement. The Sub-Fund intends to achieve its objective by adopting systematic including both algorithmic (automated) and discretionary trading based strategies and conventional non-automated, human driven investment trading strategies. Systematic Automated Trading Strategies The Sub-Fund, through its Portfolio Manager, will have access to a proprietary risk-based automated trading system which will execute trades directly with its Brokers based on predefined parameters (agreed to and imposed on the Portfolio Manager by the Investment Committee) which aim to maximise returns while maintaining an acceptable level of risk. 9 Systematic Discretionary Trading Strategies The Sub-Fund, through its Portfolio Manager, will have access to a proprietary risk-based signal generating trading system based on predefined parameters (agreed to and imposed on the portfolio manager by the Investment Committee) which aim to maximise returns while maintaining an acceptable level of risk. However, these kind of strategies will not execute automatically any direct trades with the Sub-Fund's Brokers. The Execution of these trades will be manually executed at the discretion of the Portfolio Manager. Conventional Non-Automated, Human Driven Investment Trading Strategies. The Investment Committee will have the necessary flexibility to exploit its permissible range of investment opportunities as they arise, each of which shall be examined separately. It will research the markets in which the Sub-Fund will be investing to identify investment opportunities, evaluate risks and eventually make the necessary discretionary investments decisions. The Investment Committee will use both qualitative and quantitative means to develop asset allocation and stock picking strategies that it believes will best reflect the investment objective and policies of the Sub-Fund, and will be consistent with any applicable regulatory and self-imposed restrictions. When investing in other collective investment schemes and managed accounts, typically, the due diligence analysis undertaken in respect of the manager(s) of the respective underlying collective investment scheme and / or managed account will also focus on the underlying manager's qualitative and quantitative strengths. The qualitative part focuses primarily on the manager's strategy, experience and risk-management process, while the quantitative side focuses on statistical analysis related to volatility, draw down and correlation with other strategies and market indices. The Sub-Fund does not intend to have any specific asset allocation parameters and shall not target any specific sector or geographic area. The Investment Committee will be engaged to seek the optimal allocation between the various potential investment strategies to deploy and asset classes where to invest in its endeavour to achieve its main objective to generate absolute positive returns with low correlation to general market movements. In fact, whilst the intention of the Investment Committee will always be to ensure that the portfolio of the Sub-Fund is well diversified across various investment strategies and asset classes, market circumstances might dictate that portfolio will be allocated to one single investment strategy and asset class. Investment Restrictions The investments of the Sub-Fund will not be restricted to any particular asset class but attempts will be made to detect the most attractive areas for investment growth potential. The Sub-Fund also intends to leverage its investment positions; however it may only be leveraged up to a maximum of 300 times its own NAV. This total leverage level includes all possible borrowing undertaken by the Sub-Fund including borrowing from banks to finance potential redemptions and new investments, and all potential leverage embedded within the Sub-Fund's derivative trading. If the Sub-Fund intends to invest in other sub-funds of the Company it must limit its investment to 50% of the assets of the Sub-Fund and the target sub-fund must not itself invest in the Sub-Fund. The Sub-Fund’s investment objective, policies and/or restrictions may be changed by the Directors from time to time. Any alteration to the investment objective shall be notified to Shareholders by mail at least thirty (30) Business Days before such alterations to the investment objective are to come into effect. These changes will only become effective after all redemption requests received during such notice period have been satisfied and any applicable redemption fee shall be waived accordingly. Any material alterations to the investment policies and restrictions of the Sub-Fund shall be notified to the Shareholders before such material alterations are to come into effect. 10 3. RISK FACTORS SPECIFIC TO THE SUB-FUND AN INVESTMENT IN THE SUB-FUND INVOLVES CERTAIN RISKS INCLUDING, BUT WITHOUT LIMITATION TO, THE RISKS DESCRIBED BELOW. PROSPECTIVE INVESTORS SHOULD READ THIS OFFERING SUPPLEMENT AND THE OFFERING MEMORANDUM IN ITS ENTIRETY AND SHOULD CONSULT THEIR OWN FINANCIAL, LEGAL AND TAX ADVISORS PRIOR TO PURCHASING ANY SHARES IN THE SUB-FUND. IN ADDITION TO THE GENERAL RISK FACTORS DESCRIBED IN THE OFFERING MEMORANDUM, THE ATTENTION OF PROSPECTIVE INVESTORS IS ALSO DRAWN TO THE FOLLOWING ADDITIONAL RISKS: The Shares Lack Liquidity and Marketability There will be no public trading market for the Shares. Consequently, investors cannot freely sell or transfer their Shares in the SubFund. Investment in the Sub-Fund may therefore only be suitable for investors who are able to make a long term commitment of capital. Reliance on the Investment Committee and the Portfolio Manager The Sub-Fund’s ability to achieve its investment objectives depends upon the Investment Committee’s and the Portfolio Manager’s ability to identify and invest in securities and financial instruments that will perform and provide a return on investment. Investors will have no opportunity to evaluate the suitability of any of the financial instruments in which the Sub-Fund invests. Investors must rely entirely on the judgment of the Investment Committee and the Portfolio Manager in investing the proceeds of the Sub-Fund. Economic Conditions The success of any investment activity may be affected by general economic conditions, which may affect the level and volatility of interest rates and the extent and timing of investors‟ participation in the markets for interest sensitive instruments. Market periods characterized by illiquidity or flattened volatility could impair the Portfolio Manager’s ability to trade successfully. The liquidity and market value of the investments invested in may be impacted in the event of a liquidity crisis. Political and/or Regulatory Risks The NAV may be affected by uncertainties such as international political developments, changes in government policies, taxation, currency fluctuations and other developments in laws and regulations that could have a bearing on prime materials, their prices and their markets. Risk of Market Fluctuation As a strategic investment fund, the Sub-Fund’s business is materially affected by conditions in the financial markets and economic conditions around the world. In the event of a market downturn, the Sub-Fund’s business could be adversely affected in many ways. The Sub-Fund’s revenues may decline in such circumstances and, if the Sub-Fund were unable to reduce expenses at the same pace, its profit margins would erode. Volatility of Underlying Investments The Sub-Fund will invest in securities subject to a high degree of volatility. Where there is a high degree of exposure on a concentrated basis, the risk that these investments may be subject to unexpected and substantial price movements, leading to substantial fluctuations in the Net Asset Value per Share within a short period of time, is increased. Risk Arising in Written Option Contracts A writer of an option is obliged (as opposed to entitled) to deliver the underlying instrument (writer of a call option) or to buy it (writer of a put option) at the agreed price. Option writers receive a premium for accepting this duty to deliver or to receive. A difference is made between covered and naked writing options. Covered writing is understood to mean writing a call option on an underlying instrument that the writer owns (the client is able to deliver). In the case of naked writing, the writer does not own these instruments, but must deliver them at the currently applicable price. Writing put options is also considered naked (since the writer is obliged to buy the underlying instrument if the buyer of the option wants to use his/her right). Writers must keep a certain amount of cash in a margin account to ensure that they can meet their obligations. The writer of an option can incur unlimited losses. A distinction should be made here between covered and naked writing options. Writing covered call options could for instance protect the portfolio against a decrease in value of the portfolio. On the other hand losses on naked writing options could in principle be unlimited. 11 Risk Arising in Purchasing Option Contracts - the Option Premium The Sub-Fund will pay option premiums in order to acquire options contracts. The price paid for the premium will be primarily affected by the difference between the stock price and the strike price, the time remaining for the option to be exercised, and the volatility of the underlying stock. Depending on market conditions, the Sub-Fund may not necessarily exercise any put or call option it holds. In such case, the Sub-Fund would lose the amount paid for the option premium. Risk Arising in Future Contracts Trading A principal risk in trading futures contracts is the traditional volatility (rapid fluctuation) in market prices. Because of the low margin deposits typically required in futures contract trading, a relatively small movement in the market price of a futures contract may result in a disproportionately large profit or loss. Risk Arising in Contracts-for-Difference Trading Contracts-for-Difference basically pay the difference between the opening price and the closing price of their underlying asset. Contracts-for-Difference are traded on margin, and the leveraging effect of this increases the trading risk in these securities significantly. Margin rates are typically small and therefore a small amount of money can be used to hold a large position. If prices move against open Contracts-for-Difference position additional variation margin is required to maintain the margin level. The Contracts-for-Difference provider may call upon the party to deposit additional sums to cover this, and in fast moving markets this may be at short notice. If funds are not provided in time, the Contracts-for-Difference provider may close/liquidate the positions at a loss for which the other party is liable. Risks related to Investments in other Undertakings for Collective Investment The investment by the Sub-Fund in underlying collective investment schemes may result in a duplication of some costs and expenses which will be charged to the Sub-Fund, i.e. setting up, filing and domiciliation costs, subscription, redemption or conversion fees, management fees, custodian bank fees, auditing and other related costs. The accumulation of these costs may cause higher costs and expenses than the costs and expenses that would have been charged to the Sub-Fund if the latter had invested directly. Risk arising in Cross Currency trading Currency trading is volatile, highly leveraged and may be illiquid. Currency spot, forward and option prices are highly volatile. Such prices are influenced by, among other things: changing supply and demand relationships; government trade, fiscal, monetary and exchange control programs and policies; national and international political and economic events; and changes in interest rates. In addition, governments, from time to time, intervene directly and by regulation in these markets with the specific intention of influencing such prices. Furthermore, as an added risk in these volatile and highly leveraged markets, it is not always possible to liquidate positions to prevent further losses or recognize unrealized gains. Principals in the interbank currency markets have no obligation to continue to make markets in the currencies traded. There have been periods during which certain banks and dealers have refused to quote prices for currencies or have quoted prices with an unusually wide spread between the price at which they are prepared to buy and that at which they are prepared to sell. The inability to liquidate currency positions creates the possibility of the Sub-Fund being unable to control its losses. Systems of Underlying Funds The underlying investment fund may employ complex trading systems / programs or rely on analytical models to trade sophisticated financial instruments. Such trading systems / programs and analytical models may be fallible, which could result in losses. Furthermore, the markets in which the underlying managers trade may be disrupted or become illiquid, resulting in losses. Risks Associated with Investments in Managed Accounts The Sub-Fund may allocate part of its portfolio to managed accounts in the manner stipulated in this Offering Supplement. Since managed accounts are usually subject only to the relevant negotiations that take place between the individual investor and the manager in question, managed accounts may be tailed to the particular investor’s needs and hence may offer a wide variety of benefits including, but without limitation to, the following: • • The investor may retain a degree of control over the managed account; The investor may have complete control over trading in the account and disbursements from the account; 12 • • • • The manager shall only be authorized to trade in the account in accordance with specific investment guidelines; Managed accounts provide the opportunity for investors to negotiate fees with the manager on an individual basis, and to decide whether or not to incur additional costs. The investors may also have greater control over their individual taxes; The investor shall be entitled to transparency with respect to the account’s underlying holdings; Generally, though subject to negotiation with the manager in question, the owner of a managed account has generous liquidity rights with respect to the assets of the account. These rights allow the investor the possibility to take corrective actions at an earlier stage if a risk violation occurs, and to minimize the negative effects of such a violation. While managed accounts offer unique benefits to investors, they are comparatively and significantly more complicated for investors to open and to operate. Investors should also be informed that there are various risks associated with investments in managed accounts. These include, but are not limited to, the following: • • • • The success of investments in managed accounts, to a high extent, depends on the competence of the manager managing these accounts; The costs associated with opening a managed account will often be borne wholly and directly by the investor in question. This could therefore lead to reductions in the overall returns that would be received by the investor; Managers of managed accounts who may be required to perform reporting and risk assessment functions on a daily basis may be required to retain additional staff in order to perform such functions. This may lead to greater fees for the investor. Alternatively, if these functions are performed directly by the manager in question, such a manager may have less time to devote to trading and research, which could have a detrimental impact on the performance of the managed account; Certain managed accounts may not be well-capitalised and may therefore not be able to satisfy the minimum capital requirements necessary to participate in certain investments. Furthermore, managed accounts may be subject to reduced inefficiencies inherent in managed accounts which may have an adverse impact on its performance. Risks of Suspension of Net Asset Valuation Determination by Investment Funds The underlying collective investment funds in which the Sub-Fund invests may be subject to temporary suspensions in the determination of the net asset values of such investment funds. In such event, a Sub-Fund may be unable to redeem its interests in such investment funds when it would otherwise be advantageous to do so. The delay in the disposal of the Sub-Fund’s investments may adversely affect both the value of the investment being disposed of, and the value and liquidity of the Shares of the relevant Sub-Fund. The lack of liquidity resulting from a suspension of the calculation of the net asset value of underlying investment funds could require the Board to suspend accepting subscriptions and redemptions of Shares. Holders of Shares in any Sub-Fund investing primarily in other investment funds should recognize that they will be subject to an above-average liquidity risk. Payment of Redemption Proceeds Investors should note that the Redemption Proceeds will be paid by no later than thirty (30) calendar days from the applicable Dealing Day. Accordingly, investors should take the redemption period into account before making any commitment on the Redemption Proceeds. Payment on redemption may be delayed in the case of extraordinary circumstances, including without limitation the default or delay in payments due to the Sub-Fund from banks or other persons or the unavailability of the NAV. Gating If redemption requests on any Dealing Day equal or exceed ten percent (10%) of the outstanding Shares in issue, the Board of Directors of the Sub-Fund may elect to restrict the total number of Shares to be redeemed to ten percent (10%) of outstanding Shares in issue on that Dealing Day, in which case all redemption requests will be scaled down pro rata to the size of the request. The balance of the Shares in respect of which redemption requests have been received will be redeemed on the next succeeding Dealing Day in priority to any requests received thereafter, subject to the same restriction. Special Situation Events On the occurrence of a Special Situation Event as defined in the Offering Memorandum, the holders of Investor Shares in a SubFund or a particular Class or Series of Investor Shares therein, may receive Special Situation Shares. Such Special Situation Shares have an attendant lack of liquidity for an indeterminate period of time, during which the affected investors shall not be able to redeem their Special Situation Shares and the Sub-Fund’s performance could be negatively impacted. Furthermore, investors should be aware of the increased difficulty in the valuation of Special Situation Shares and the restrictions associated with the realisation of interest from such Shares. 13 Risks Arising from the Existence of Performance Fees The existence of Performance Fee arrangements may potentially encourage the undertaking of investment strategies or direct investments that are riskier or more speculative than would be the case in the absence of Performance Fees. Investors should be aware that the amount of Performance Fees that may be payable as aforesaid are not subject to any cap or maximum amount. Investors should be aware that where the calculation of Performance Fees are tied to the increase in the NAV, such increase may involve both realised and unrealised gains at the end of the calculation period. Consequently, the Performance Fees may be paid on unrealised gains which may subsequently never be realised by the Sub-Fund. Additionally, the Company does not operate an equalisation account or any other method to ensure the equal treatment for the payment of Performance Fees irrespective of the timing of the application for or redemption of Shares of the Company. When purchasing and / or redeeming Shares in the Company, Shareholders may accordingly indirectly underpay or overpay an underperformance accrual or an over-performance accrual as the case may be. THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE ENUMERATION OF THE RISKS INVOLVED IN AN INVESTMENT IN ANY CLASS OR SERIES OF PARTICIPATING SHARES. PROSPECTIVE INVESTORS SHOULD READ THIS MEMORANDUM IN ITS ENTIRETY AND CONSULT WITH THEIR OWN ADVISERS BEFORE DECIDING TO SUBSCRIBE FOR PARTICIPATING SHARES. 14 4. FUNCTIONARIES AND OFFICIALS The Directors Information on the Company’s Board of Directors is found under the section 7 Organisation of the Company of the Offering Memorandum. The Company Secretary Information on the Company’s Secretary is found under the section 7 Organisation of the Company of the Offering Memorandum. The Investment Committee The Investment Committee of the Sub-Fund is composed of three members these being Mr Raymondip Bedi, Mr Aon Hassan and Mr. Steven Tedesco. Mr. Raymondip Bedi Raymondip Bedi started his career as an independent spot forex trader in 2007 trading currencies and futures, predominately index futures which were used to diversify FX risk. Mr. Bedi joined PIMCO in 2010 as an MBS analyst and during this period he was exposed to various asset classes including MBS, RMBS, and CDS. Over the years, Mr. Bedi developed a very keen interest in systems trading and was involved in projects to develop automated trading systems. In 2011, Mr. Bedi also commenced employment as a senior analyst with OneTwoTrade, an online trading platform. During his time at OneTwoTrade, Mr. Bedi’s primary mandate was to create and build the high net worth client group, clients investing more than £50,000. In 2012 Mr. Bedi was promoted to Chief Analyst heading a team of analysts. Mr. Bedi. In 2013 Mr. Bedi moved to CWMFX and occupied the position of Chief Market Analyst in which role he acted as head of market analysis and FX Trading. Over the last 4 years, Mr. Bedi was involved in teams commissioned to build automated systems, and has since consistently generated high returns on investment with minimal risk. Mr. Bedi’s success has been noted by the directors of the Fund who have, as a result of his particular expertise, appointed him in the roles of Investment Committee Member and assistant to the Portfolio Manager of the Sub-Fund. Mr. Aon Hassan Aon Hassan started his career as a Programmer in Web Technologies Ltd in 2001, after completing his BSc in Software Engineering. He moved to London in 2003 and started working for Focusync UK Ltd and was shortly after appointed director. In 2010 he started Asset Plus Portfolio Solutions providing software consultancy. During his career he has developed and implemented software for different banks and financial institutions including modules for risk management, portfolio management, regulatory reporting and stress testing. Meanwhile, as a result of his profound interest in finance which Aon mainly developed while advising and working for financial institutions, Aon also enrolled for an MSc qualification at the London School of Economics, which he acquired in 2009. Aon merged his two areas of interest and expertise and now develops automated strategies in FX and other financial markets. Mr. Hassan has been appointed by the Sub-Fund in the roles of Director, Portfolio Manager and Investment Committee Member. Mr. Steven Tedesco Steven Tedesco is a Member of the Chartered Institute for Securities & Investment. He started his banking career in 1995 with MidMed Bank plc and was Deputy Chief Investment Officer (2000 - 2005) and Chief Investment Officer (2005 - 2007) at HSBC Fund Management (Malta) Ltd, as well as Director, Deputy Head and Chief Investment Officer (2007-2009) at HSBC Global Asset Management (Malta) Ltd. During his tenure at HSBC Fund Management (Malta) Ltd and HSBC Global Asset Management Malta Ltd Steve managed a number of open-ended funds, which funds ranged across all asset classes, both local and international, including bonds, equities, money market and property. He has throughout his career managed assets which exceeded the EUR1 billion mark. He also engineered and designed various other capital protected funds in Maltese Lira, Euro and Sterling and eventually introduced in Malta the concept of wrapping capital protected structures round Medium Term Notes. In 2008 he engineered the first ever local, retail, Hedge Fund linked, full capital protected, structure sold in Malta. He left HSBC to join Nemea Bank (2009 - 2011), a new dynamic start up bank, as Head of Treasury and Asset Management. Here, he was entrusted to set up the bank's Treasury division and proprietary desk, along with its Asset Management business. 15 Steven left Nemea Bank at the end of 2011 and currently sits on a number of investment committees and boards of various financial institutions and runs his own consultancy business. The Portfolio Manager The Investment Committee has also appointed Mr Aon Hassan to act as the Portfolio Manager. The Portfolio Manager will be responsible for the day-to-day administration functions, including all trade executions, of the Sub-Fund. Mr. Raymondip Bedi shall be assisting the Portfolio Manager in his day to day functions. Risk Management The Company employs a risk management process that enables it to accurately measure, monitor and manage the various risks associated with the investment strategy and techniques it adopts. Mr. Abbas Merchant shall be responsible for the day to day risk management function and his role shall be overseen by Mr. Adam de Domenico, who is seconded by Cordium Malta Limited, in his capacity as Risk Oversight Manager Monthly, who shall provide oversight and monitoring of the day to day risk management function and assist in the preparation of quarterly risk management reports to the Board of Directors and to the competent authorities, if necessary. The Administrator The Company has appointed Apex Fund Services (Malta) Limited having their registered address at Central North Business Centre, Level 1, Sqaq Il-Fawwara, Sliema, SLM 1670, Malta (the “Administrator”) as the Administrator of the Company pursuant to an agreement entered into between the parties (the “Administration Agreement”). The Administrator is a private limited liability company registered under the Laws of Malta, with registration number C 42646. It forms part, and is a wholly owned subsidiary of the Apex Fund Services Holdings Ltd, a company domiciled in Bermuda and having company registration number 43608. The Administrator is regulated by MFSA and is recognized to provide fund administration services by the MFSA in terms of the Investment Services Act, 1994. The Administrator acts as administrator to various other collective investment schemes licensed in Malta. The Brokers The Sub-Fund has appointed the following Brokers (the “Brokers”) to act as brokers of the Sub-Fund and also, as part of their execution services, to perform safekeeping and administration of assets acquired through them: LMAX Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) licence number 509778. It has its registered address at Yellow Building, 1A Nicholas Road, London, W11 4AN, United Kingdom. LMAX Limited operates a Multilateral Trading Facility (MTF). LMAX is permitted to arrange deals in investments, deal in investments as agent or principal and to make arrangements with a view to transactions in investments, each of the foregoing extending to any of the following investment instruments: • • • • Contract for Differences (excluding a spread bet and a rolling spot forex contract) Rights to or interests in investments (Contractually Based Investments) Rolling spot forex contract Spread Bet LMAX is further authorised to hold and control client money and to perform safekeeping of assets. Clients’ funds are held within segregated client money bank accounts. Cornhill Capital Limited, is authorised and regulated by the Financial Conduct Authority (“FCA”) under the UK Financial Services and Markets Act 2000 (“FSMA”), licence number 449720. Its Company Registration Number is 05267797 and has its registered th address at 4 Floor, St Swithins Lane, London EC4N 8AD, UK. Cornhill Capital Limited is permitted to arrange deals in investments, to arrange the safeguarding and administration of assets, to deal in investments as agent or principal, to manage investments and to make arrangements with a view to transactions in investments, each of the foregoing extending to any of the following investment instruments: • • • • • • Certificates representing certain security Commodity Future Commodity option and option on commodity future Contract for Differences (excluding a spread bet and a rolling spot forex contract) Debenture Future (excluding a commodity future and a rolling spot forex contract) 16 • • • • • • • • • Government and public security Option (excluding a commodity option and an option on a commodity future) Rights to or interests in investments (Contractually Based Investments) Rights to or interests in investments (Security) Rolling spot forex contract Share Spread Bet Unit Warrant It is to be noted that Cornhill Capital Limited may delegate the safekeeping and administration of assets acquired through them to: a) Jarvis Investment Management Limited, a company authorised and regulated by the Financial Conduct Authority (“FCA”) under the UK Financial Services and Markets Act 2000 (“FSMA”), licence number 116413. Its Company Registration Number is 01844601 and has its registered address at 78, Mount Ephraim, Tunbridge Wells, Kent, TN48BS, United Kingdom. b) Saxo Capital Markets UK Limited, a company authorised and regulated by the Financial Conduct Authority (“FCA”) under the UK Financial Services and Markets ACT 2000 (“FSMA”), licence number 551422. Its Company Registration Number is 07413871 and has its registered address at 26th Floor 40 Bank Street London E14 5DA United Kingdom. Velocity Trade International Limited is authorised and regulated by the Financial Conduct Authority (“FCA”), licence number 497263. rd It has its registered address at 3 Floor, 80 Cannon St. London, EC4N 6HL, United Kingdom. Velocity Trade International Limited is permitted to arrange deals in investments, to arrange the safeguarding and administration of assets, to deal in investments as principal, to manage investments and to make arrangements with a view to transactions in investments, each of the foregoing extending to any of the following investment instruments: • • • • Contract for Differences (excluding a spread bet and a rolling spot forex contract) Rights to or interests in investments (Contractually Based Investments) Rolling spot forex contract Spread Bet Velocity Trade International Limited is further authorised to hold and control client money and to perform safekeeping of assets. Clients’ funds are held within segregated client money bank accounts. All the above-mentioned companies are privately owned and do not form part of a group structure. Invast Financial Services PTY Ltd., is authorised and regulated by the Australian Securities and Investments Commission (ASIC), licence number 438283. It has its registered address at Level 37, 1 Macquarie Place, SYDNEY NSW 2000, Australia. Invast Financial Services PTY Ltd is authorised to carry on a financial services business and therefore to provide financial product advice and to deal in financial products, each of the foregoing extending to derivatives, foreign exchange contracts and securities and also permitted to make markets for foreign exchange contracts and derivatives. Invast Financial Services PTY Ltd is further authorised to hold and control client money and to perform safekeeping of assets. Clients’ funds are held within segregated client money bank accounts. Invast Financial Services PTY Ltd is a wholly-owned subsidiary company of Invast Securities Co Ltd, a company listed on the Tokyo Stock Exchange in Japan. Each of the abovementioned brokers may be engaged to perform execution of trades with the Portfolio Manager. The Sub-Fund may at any point in time be using one or more of the above brokers concurrently. The appointment of the above-mentioned brokers does not mean that the Sub-Fund will be using each of these Brokers at any one point in time, and discretion is given to the Portfolio Manager to decide which of these Brokers to engage for purposes of execution of particular trades as he deems to be most optimal. It may be that despite a broker being appointed, the broker is not used by the Portfolio Manager, although he would have the option to do so. However, the Sub-Fund is prohibited from using any other broker not found within the list above. 17 Safekeeping Arrangements The Brokers shall provide safekeeping of the assets acquired by the Portfolio Manager solely as part of their execution services and that the safekeeping shall be effected through the relevant broker’s platform. In the terms agreed with each of the above mentioned brokers the Sub-Fund has agreed that they will not be liable for any loss arising in connection with the safekeeping of the Sub-Fund’s investments unless the loss arose out of the negligence, wilful misconduct or lack of good faith or other breach by the Brokers of the provisions of the terms or any other agreement entered into between the Sub-Fund and the Brokers. See Indemnities in the Offering Memorandum for more information. The Banker Sparkasse Bank Malta p.l.c. has been appointed to act as the Banker of the Sub-Fund, however the Sub-Fund maintains the discretion to appoint any other banker it deems fit. Sparkasse Bank Malta p.l.c. is a public limited liability company registered under the laws of Malta, with registration number C 27152 and with registered office at 101 Town Square, Ix-Xatt Ta’ Qui-Si-Sana, Sliema SLM3112, Malta. Sparkasse Bank Malta plc. forms part of a larger Austrian Banking network; its parent bank, Sparkasse Schwaz AG, which is a member of the Austrian Savings Bank Group. Sparkasse Bank Malta p.l.c. is licensed to carry on the business of banking as a credit institution in terms of the Banking Act (Chapter 371 of the Laws of Malta) The Auditor KPMG having its registered office situated at Portico Buildings, Marina Street, Pieta PTA 9044, Malta have been appointed to act as auditors of the SICAV. 5. VALUATION PROCEDURES Calculation of NAV The Net Asset Value of the Sub-Fund and the Net Asset Value per Investor Share shall be calculated by the Administrator as at close of business on the relevant Valuation Day or at such times as the Directors may determine. The Redemption Price will be available upon request from the Administrator. The value of the Sub-Fund’s assets shall be ascertained on the following basis: a) The value of any investment quoted, listed or normally dealt in on or under the rules of any stock exchange or other regulated market considered by the Directors to provide a satisfactory market for the securities in question (a "Regulated Market") shall be calculated by reference to the price appearing to the Directors to be the latest available dealing price or (if bid and offered quotations are made) the latest available middle market quotation on such Regulated Market provided that: i. If an investment is quoted, listed or normally dealt in on or under the rules of more than one (1) Regulated Market, the Directors shall adopt the price or, as the case may be, the last available dealing price or middle quotation on the Regulated Market which, in their opinion, provides the principal market for such investment; ii. In the case of any investment which is quoted, listed or normally dealt in on or under the rules of a Regulated Market but in respect of which, for any reason, prices on that Regulated Market may not be available at any relevant time, the value thereof shall be, the last traded price on any Regulated Market provided that such price is not more than thirty days old, in which case the value of the asset shall be determined by an Independent Valuer (defined below) shall be appointed by the Directors, in consultation with and approval of the Auditors. The Directors shall not be under any liability by reason of the fact that a value reasonably believed by them to be the latest available price or, as the case may be, middle quotation for the time being may be found not to be such; and An “independent valuer” , for the purposes of this clause shall refer to persons appointed from time to time by the Directors in liaison with the Auditors of the Company to act as the independent valuer of the assets of the Company which person must be independent of the Company, its Officers and any Service Provider, of good standing with recognised and relevant qualifications and authorised member of a recognised professional body in the jurisdiction of the assets in question, and shall, in terms of the applicable laws, consist of professionals duly authorised as required under the laws of that same jurisdiction. 18 iii. There shall be taken into account interest accrued on interest-bearing investments up to the date at which the valuation is made unless such interest is included in the price or quotation referred to above. b) The value of each unit or Share in any collective investment scheme which provides for the units or Shares therein to be realised at the option of the unit-holder or Shareholder out of the assets of that scheme shall be the last published Net Asset Value per unit or Share or (if bid and offer prices are published) at a price midway between the last published bid and offer prices applicable to the scheme; c) Derivative instruments shall be valued using quoted market prices for publicly traded derivatives or, in the absence of quoted market prices, the value thereof shall be, the last traded price, provided that the Directors shall determine that such valuation represents a true and fair value of the investment. The Directors may appoint persons to assist it in the estimation process and to make the necessary calculations. d) The value of any cash on hand or on deposits, bills, demand notes and accounts receivable, pre-paid expenses, cash dividends and interest declared or accrued and not yet received shall be deemed to be the full amount thereof, unless, in any case, the same is unlikely to be paid or received in full, in which case the value thereof shall be arrived at after making any reasonable reductions in order to reflect the fair value of such assets; Notwithstanding any of the foregoing sub-paragraphs, the Directors may adjust the value of any investment or permit some other method of valuation to be used if it considers that in the circumstances (including without limitation a material volume of subscription or redemption of Shares in any Sub-Fund; or the marketability of the investments; or such other circumstances as the Directors deem appropriate) such adjustment or other method of valuation should be adopted to reflect more fairly the value of such investment; Every Share allotted by the Company shall be deemed to be in issue and the relevant Sub-Fund shall be deemed to include the net amount of any cash or other receivable in respect of each such Share; Where, in consequence of any notice or redemption request duly given, a reduction of any Sub-Fund by the cancellation of Shares has been or is to be effected but payment in respect of such reduction has not been completed, the Shares in question shall be deemed not to be in issue and any amount payable in cash or investments out of the Sub-Fund in pursuance of such reduction shall be deducted; Where any investment or other receivable has been agreed to be acquired or realised but such acquisition or disposal has not been completed, such investment or other receivable shall be included or excluded, as the case may be, and the gross acquisition or net disposal consideration excluded or included as the case may require as if such acquisition or disposal had been duly completed; There shall be included in the assets an amount equal to all such costs, charges, fees and expenses as the Directors may have determined to amortise less the amount thereof which has previously been or is then to be written off; Where an amount in one (1) currency is required to be converted into another currency conversion shall be made using the last available exchange rate at the relevant time except where otherwise specifically provided herein; There shall be deducted from the assets such sum in respect of tax (if any) as in the estimate of the Directors will become payable in respect of the current Accounting Period; Where the current price of an investment is quoted, ex dividend or interest, there shall be added to the assets a sum representing the amount of such dividend or interest receivable by the Company (on behalf of the relevant Sub-Fund) but not yet received. NAV Per Share Where there is one (1) Class of Investor Shares in a Sub-Fund, its NAV Per Share shall be determined by calculating the Net Asset Value divided by the number of Investor Shares outstanding. Otherwise, the NAV of each Share in a Sub-Fund shall be determined by calculating the Net Asset Value attributable to the Class and Series of Investor Shares of which that Share forms part divided by the number of Investor Shares outstanding in that Class and Series as at the time that the calculation is made. The NAV Per Share shall be rounded to two (2) decimal places, and shall be expressed in the Base Currency of the Investor Share concerned. Valuation Errors The Company or the Administrator shall not be responsible for any error in calculating the value of assets if the Company or the Administrator, as the case may be, has acted in good faith when making such calculations, and no adjustment shall be made to the values of any assets unless the valuation error exceeds half a percentage point (0.5%) of the NAV, in which case it shall be 19 adjusted. 6. FEES, CHARGES AND EXPENSES Management Fees The Sub-Fund will be subject to an annual Management Fee equivalent to one percent (1%) of its average Net Asset Value, calculated as the aggregate of each monthly Net Asset Value divided by twelve. The Management Fee shall be accrued on a monthly basis and paid monthly to the holders of the Founder Shares who are also members of the Investment Committee. The Management Fee is payable in arrears. Management Fees may be paid in the form of dividends to the Founder Shareholder (in respect of members of the Investment Committee who are also the ultimate beneficial owners of the Founder Shares). Performance Fee A Performance Fee will be paid to the holders of the Founder Shares who are also members of the Investment Committee out of the assets of the Sub-Fund as described below. Performance Fees may be paid in the form of dividends to the Founder Shareholder (in respect of members of the Investment Committee who are also the ultimate beneficial owners of the Founder Shares). The Performance Fee shall amount to thirty percent (30%) on the net return rendered by the Sub-Fund on each Valuation Day, that is, the rise-in-value of the Net Asset Value of the Sub-Fund assessed and calculated on the cumulative profit and high ‘water-mark’ (the “High Water Mark”) per Share basis. The term “High Water Mark” shall mean the Net Asset Value at the end of the most recent quarter for which a Performance Fee was paid or payable to the Company, or if no Performance Fee has been paid since the inception of the Share Class or Series, then the initial Net Asset Value of such Shares. The Performance Fee (if any) shall become payable by the Sub-Fund to the Company on monthly basis, in arrears. Such a Performance Fee shall only be payable on the net increase of the Net Asset Value and excluding the Performance Fee accrual of the Sub-Fund. Performance Fees will also become payable on redemptions from the Sub-Fund on a pro rata basis if at the time of the redemption, the Sub-Fund’s Net Asset Value Per Share has increased from the previous High Water Mark and the cumulative gain is greater than zero from the previous crystallization period. Series Accounting A new series of shares will be issued each date that shares of Capitalisation Participating Shares are purchased in order to permit the Performance Fee payable to the holders of Founder Shares to be calculated separately with respect to each series. Accordingly, each series will have different Net Asset Value per Share. At the end of each calendar year and any other date designated at the sole discretion of the Directors, each series (Other than the issued before the introduction of series accounting (the ‘Initial Shares”) will be redisignated and converted to the Initial Shares. Such conversion will be effected at the prevailing NAV per Share of the Initial Shares; provided, however, that no re-designation and conversion shall occur with respect to series of shares if no performance is payable in relation to such series or the initial series. Administration Fee The Sub-Fund shall pay the Administrator an administration fee based on the value of the assets of the Sub-Fund for the performance of its services under the Administration Agreement. Details on the Administration Fee can be found in Appendix II. The Administration Fee will accrue on every Dealing Day of the Sub-Fund and shall be payable by the Sub-Fund on a monthly basis in arrears. The Administrator will also be reimbursed out of the assets of the Sub-Fund for all properly incurred and approved out-ofpocket expenses. The administration fee is calculated before accruals for any Management and Performance Fees which may be due. 20 Risk Management Fee The Sub-Fund shall incur an annual fee for the risk management and oversight activities provided by the external Risk Oversight Manager of seven thousand Euro (EUR 7,000). Investors’ attention is brought to the fact that the risk manager may need to prepare additional risk reports depending on the exigencies of the Sub-Fund, for which an extra fee will be paid to the Risk Oversight Manager. Brokerage and Transactions Fee The Sub-Fund will pay brokerage and transactions fees (the “Brokerage and Transactions Fees”) for each trade or investment at customary rates. The Brokerage and Transaction Fees may change from time to time. The Brokerage and Transaction Fees of LMAX Limited are USD$25.00 per $1,000,000 traded The Brokerage and Transaction Fees of Cornhill Capital Limited are 0.5% 50 basis points per transaction The Brokerage and Transaction Fees of Velocity Trade International Limited $20 per $1,000,000 traded. The Brokerage and Transaction Fees of Invast Financial Services PTY Ltd are 3.00 GBP per $100,000 traded – MT4 - and €21.50 per $1,000,000 traded - Flex Trade. Application Fee The Sub-Fund shall incur an application fee for a Professional Investor Fund license of one thousand Euros (EUR 1,000) payable to the MFSA. Annual License Fee The Sub-Fund shall incur an annual license fee of six hundred Euros (EUR 600) payable to the MFSA upon the launch of the SubFund and upon the anniversary thereof thereafter. FATCA & CRS Reporting Compliance Fees The Sub-Fund shall incur a registration fee of five hundred Euros (EUR 500) for registration for a Global Intermediary Identification Number (GIIN) required under FATCA. The Sub-Fund shall incur an on-going annual fee for FATCA and CRS reporting and compliance as follows: i) In the case that the Sub-Fund counts with ten (10) or more investors: The Administrator will charge three thousand eight hundred Euros (EUR3,800) to the Sub-Fund and sixty Euros (EUR 60) per investor to maintain up to date information on existing and new investors under CRS and US FATCA, prepare the FATCA and CRS XML reporting schemas and submit the reports to the relevant local tax authority based on account information as at the 31st December each year. ii). In the event that the Sub-Fund does not reach ten (10) investors: The Administrator will charge one thousand nine hundred Euros (EUR1,900) to the Sub-Fund and thirty Euros (EUR30) per investor to maintain up to date information on existing and new investors under CRS and US FATCA, prepare the US and CRS XML reporting schemas and submit the reports to the relevant local tax authority based on account information as at the 31st December each year. Subscription Fee No subscription fee shall apply 21 Redemption Fee No redemption fee shall apply. Switching Fee No switching fee shall apply. Bankers Fees The Sub-Fund shall pay Sparkasse Bank Malta plc a fee based on the value of the assets of the Sub-Fund for the performance of its services. Other Fees and Expenses Details of other expenses incurred by the Sub-Fund are listed in the Offering Memorandum under the Section entitled “Fees, Charges and Expenses.” The Sub-Fund will not bear any costs incurred in the offering of Shares in any other Sub-Fund of the Company. Variation of Fees The Board of Directors may, from time to time, agree to a variation of the Investment Management Fee, Performance Fee, Administration Fee, Brokerage and Transactions Fee and of any other fee provided for in this Offering Supplement in which case all existing Shareholders affected by such variation shall be notified at least thirty (30) days in advance accordingly. Waiver of Fees a) Cross Sub-Fund Investments In the case where the Sub-Fund’s assets are invested in other sub-funds of the Company, or in the case where other sub-funds of the Company are investing their assets in this Sub-Fund there will be only one set of Management Fees, Subscription Fees and Redemption Fees to be charged. b) Investments in other sub-funds having common directors or investment committee members In the case where the Sub-Fund’s assets are invested in other sub-funds which have the same one or more members of the Board of Directors or the Investment Committee, or in the case where other sub-funds which have the same one or more members of the Board of Directors or the Investment Committee are investing their assets in this Sub-Fund, only one set of Management Fees, Subscription Fees and Redemption Fees are to be charged in order to avoid duplication of fees. 7. THE OFFERING Share Offer This Offering Supplement is supplemental to, and must be read together with, the Offering Memorandum. This Offering Supplement constitutes an offer of Investor Shares in the Sub-Fund which has fully segregated assets and liabilities from those of the Company. Pricing During the Initial Offering Period, Investor Shares in the Sub-Fund shall be offered at the Initial Offer Price being one hundred Great Britain Pounds (GBP 100) per Capitalisation Participating Share. The Initial Offering Period may be extended by the Directors of the Sub-Fund, provided that such extension has been approved by the MFSA. Following the Initial Offering Period, subscription for Shares in the Sub-Fund may be made on any Dealing Day at the prevailing Offer Price. Purchase of Investor Shares during the Initial Offering Period Purchases of Investor Shares can be made during the Initial Offering Period, at the Initial Offer Price by submission to the Company at the office of the Administrator by fax or by email (refer to Directory) of a properly executed (1) Application Form, (2) Qualifying 22 Investor Declaration Form and (3) bank transfer instructions letter (a “Subscription Application”), specimens of which may be found in the Appendices to this Offering Supplement. Following the Initial Offering Period Following the Initial Offering period, the Shares will be available for subscription on the first Business Day of each month. Subscription Applications for Shares must be received by the Administrator by fax or by email (refer to Directory) before 5 p.m. CET five (5) calendar days before the Dealing Day and the Subscription Application will be accepted at the then prevailing NAV (i.e. the Offer Price) as calculated at the most recent Valuation Day. Subscription Applications received by the Administrator after the aforementioned time will be accepted at the price corresponding to the next Valuation Day. Subscription monies must be received in cleared funds in the account indicated in the Application Form no later than 5 p.m. CET five (5) calendar days before the relevant Dealing Day. Capitalisation Participating Shares will be offered in Series at a price of one hundred Great Britain Pounds (GBP100), subject to the Minimum Investment requirements. The purpose to issue different Series of Share within the relevant Class is to ensure that each share bears the Performance Fee according to the actual performance of that share, a new series of shares of a relevant class being issued as of each new Valuation Day for which shares are subscribed. Full details of the application process appear in the Offering Memorandum. Frequency of NAV Calculation The calculation of the NAV of the Sub-Fund shall be effected by the Administrator on a monthly basis, on the last Business Day of each month. Minimum Investment and Holding The Sub-Fund is only available to Qualifying Investors as defined in the Offering Memorandum. The investors in the Sub-Fund are subject to a Minimum Investment requirement of seventy thousand Great Britain Pounds (GBP 70,000) for Capitalisation Participating Shares or the equivalent in another currency. If the equivalent of seventy Thousand Great Britain Pounds (GBP 70,000) is less than seventy five Thousand Euros (EUR75,000) then the equivalent in Great Britain Pounds or the equivalent in another currency will become the permissible minimum holding. Overall, the amount invested can never fall below these limits except in so far as this is due to a reduction in the Sub-Fund’s NAV. In the case of joint investors, each investor should individually satisfy the definition of a “Qualifying Investor”, unless such joint investors are spouses, in which case the spouse not qualifying as a “Qualifying Investor” must provide a written declaration granting their consent to the investment in the Sub-Fund. Once the Minimum Investment requirement is satisfied, investors can make additional investments in the Sub-Fund of an amount of not less than ten thousand Great Britain Pounds (GBP 10,000) for the Common Capitalisation Participating Shares or currency equivalent. Redemption of Investor Shares Shareholders may redeem their Investor Shares on any Dealing Day by submission to the Company at the office of the Administrator by fax or by email (see contact details in the Directory) of a complete Redemption Form by no later than 5 p.m. CET, five (5) calendar days before the Dealing Day. Shares shall be redeemed at the price corresponding to the Net Asset Value per Share on the Valuation Day corresponding to the relevant Dealing Day. Requests to redeem Shares received after the aforementioned date shall be redeemed at the price corresponding to the next Valuation Day. Payment of Redemption Proceeds will generally be made by wire transfer to the Shareholder’s account no later than thirty (30) calendar days from the applicable Dealing Day. Any bank transfer fees shall be borne by the Shareholder. Payment on redemption may be delayed in the case of extraordinary circumstances, including without limitation the default or delay in payments due to the Sub-Fund from banks or other persons. Payment shall ordinarily be effected in the Base Currency, or in any other freely convertible currency as may be agreed by the Administrator and the Investor. If payment is made in a currency other than the Base Currency, the necessary foreign exchange transaction will be arranged by the Administrator for the account of, and at the expense of, the share holder at the time the redemption payment is made. The Administrator will take no responsibility for the rate of exchange obtained. The Administrator shall be entitled to deduct therefrom all expenses incurred in the conversion. The minimum redemption amount is one thousand Great Britain Pounds (GBP1,000) for the Capitalisation Participating Shares or currency equivalent. However, investors should be aware that their holding in the Fund may never fall below seventy thousand Great Britain Pounds (GBP 70,000) or currency equivalent and any requested redemption that might propel the investor’s total shareholding in the Fund below seventy thousand Great Britain Pounds (GBP 70,000) or currency equivalent will be rejected. If the equivalent of seventy Thousand Great Britain Pounds (GBP 70,000) is less than seventy five Thousand Euros (EUR75,000) then 23 the equivalent in Great Britain Pounds or the equivalent in another currency will become the permissible minimum holding. The said minimum redemption amount may be waived and/or reduced at the sole discretion of the Directors of the Company. Investors should also be aware that if redemption requests on any Dealing Day equal or exceed ten percent (10%) of the outstanding Shares in issue, the Board of Directors of the Sub-Fund may elect to restrict the total number of Shares to be redeemed to ten percent (10%) of outstanding Shares in issue on that Dealing Day, in which case all redemption requests will be scaled down pro rata to the size of the request. The balance of the Shares in respect of which redemption requests have been received will be redeemed on the next succeeding Dealing Day in priority to any requests received thereafter, subject to the same restriction. The minimum redemption amount will not apply in such a scenario. Investors are directed to the Offering Memorandum where the procedures relating to the redemption of Shares and the conditions applicable thereto are described in further detail. Switching Holders of Shares in the Sub-Fund or a Class thereof may exchange their Shares for Shares of a different Class or for Shares in another Sub-Fund of the Company. Please refer to the Section on switching entitled “Purchase of Investor Shares” in the Offering Memorandum for more information. 8. GENERAL INFORMATION The Rights of Shareholders The rights of Shareholders are stated in the Articles of Association of the Company and in the Companies Act. The Investor Shares entitle Shareholders to participate in the movements, both positive and negative, in value of the assets of the Sub-Fund. It is not expected that the Company will declare any dividends and for a Shareholder to receive the benefits of any growth in the capital value of the Investor Shares, the Shareholder is entitled to request the redemption of the Investor Shares held by him at any time and Investor Shares will be repurchased by the Company on the next Dealing Day following such request. The Investor Shares are non-voting. Upon the winding up of the Sub-Fund, the holders of the Investor Shares shall be entitled to a pro rata share of the value of the assets of the Sub-Fund. Share Capital and Accounts All amounts received by the Company on the issue of Investor Shares, initially and subsequently, will be credited as share capital of the Company and will form part of the net assets of the Sub-Fund. Fractional Shares Fractional Shares will be issued up to three (3) decimal places. Shares in Issue The Board may decide to launch further Classes of Investor Shares upon a written resolution and subject to the prior approval of the MFSA. Such additional Classes of Investor Shares may be denominated in different currencies, provided that a Class of Investor Shares may only be denominated in a single currency. Additional Classes of Investor Shares shall not constitute a distinct Sub-Fund of assets. Capitalisation Participating Shares Capitalisation Participating Shares do not give the right to the distribution of dividends and do not carry any voting rights. All income generated by the underlying investments will be accumulated within the Investor Shares. Taxation The Sub-Fund has been classified as a non-prescribed fund. Documents for Inspection Copies of the following documents shall be available for inspection at the registered office of the Company or at the offices of the Administrator (see Directory on the last page hereof) during normal business hours: 24 • • • • • • • Articles of Association of the Company; Certificate of incorporation of the Company; Professional Investor Fund license; The latest version of the Offering Memorandum and Offering Supplements for all Sub-Funds; Audited financial statements of the Company, when available; The independent valuation reports relating to the Sub-Fund’s investments received or transferred by the Scheme in the event of subscriptions or redemptions in specie; and Such additional documents as may be specified in the Offering Supplement. Appendix I – APPLICATION FORM 25 Appendix II – Administration Fee Costs for Monthly Valuation The administration, registrar and transfer agency fee of the higher of EUR2,500 (EUR2,000 per month when assets are below EUR10m and EUR1,500 per month when assets are below EUR5m) per month; or • • • • EUR0m to EUR200m: 8 basis points per annum of net asset value; Next EUR200m: 6 basis points per annum of net asset value; Next EUR200m: 4 basis points per annum of net asset value; Any amount over EUR600m: 2 basis points per annum of net asset value. Assistance in the preparation of the Audited Financial Statements Financial Statement assistance EUR2,500 per annum. Out of pocket expenses Out of pocket expenses are recoverable. Out of pocket expenses assistance shall include allocated security pricing services and related audit, postage, telephone, facsimile, delivery services and communications. Fund administration Fee Terms Fees are invoiced monthly in arrears and are due 10 business days after the invoice is forwarded. Payments received after the due dates are subject to a late charge of 5% per month. In the event that the Administrator has signing authority over the Fund’s bank account, the Administrator will be authorized to debit the Fund’s account for fees accrued in accordance with the Fee Schedule upon approval of the relevant period’s NAV by the Manager. Fees are subject to review after the first two year period of operation and at the end of each calendar year thereafter. 26 DIRECTORY Directors of the Company: Investment Committee: Mr Abbas Merchant Mr Aon Hassan Mr Malcolm St John Mr Aon Hassan Mr Raymondip Bedi Mr Steven Tedesco Company Secretary: Portfolio Manager Apex Corporate and Advisory Services Ltd Central North Business Centre, Level 1, Sqaq Il-Fawwara Sliema SLM 1670 Malta Mr Aon Hassan Assistant Portfolio Manager Mr. Raymondip Bedi Anti-Money Laundering Officer Mr Malcolm St John Compliance Officer Ms Paulianne Nwoko Registered Office: Banker: Central North Business Centre, Level 1, Sqaq Il-Fawwara Sliema SLM 1670 Malta Sparkasse Bank Malta plc 101 Town Square, Ix-Xatt Ta’ Qui-Si-Sana, Sliema SLM3112, Malta Administrator: Brokers: Apex Fund Services (Malta) Limited Central North Business Centre, Level 1, Sqaq Il-Fawwara Sliema SLM 1670 Malta LMAX Limited Cornhill Capital Limited Velocity Trade International Limited Invast Financial Services PTY Ltd See page 16 for further details. Auditors: KPMG Portico Buildings Marina Street Pieta PTA 9044 Malta Legal Advisors: Fenech Farrugia Fiott Legal Tower Business Centre Level 1, Suite 5,Tower Street Swatar, BKR 4013, Malta 27 THE BOARD OF DIRECTORS MAY DECIDE TO APPOINT ADDITIONAL SERVICE PROVIDERS FOR A PARTICULAR SUB-FUND IN WHICH CASE THE CONTACT DETAILS OF SUCH SERVICE PROVIDERS SHALL BE FULLY DISCLOSED IN THE RELEVANT OFFERING SUPPLEMENT FOR SUCH SUB-FUND. THE APPOINTMENT OF ANY SUCH ADDITIONAL SERVICE PROVIDERS SHALL ALWAYS BE SUBJECT TO THE PRIOR APPROVAL OF THE MFSA. 28
