Items in Part A and B of Form N-2
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Location in Private Placement Memorandum
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1.
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Outside Front Cover
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Front Cover Page of Private Placement Memorandum
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2.
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Cover Pages, Other Offering Information
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Front Cover Page of Private Placement Memorandum
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3.
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Fee Table and Synopsis
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Summary of Fees and Expenses
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4.
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Financial Highlights
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Not Applicable
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5.
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Plan of Distribution
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Front Cover Page of Private Placement Memorandum; Memorandum Summary; Distribution Policy
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6.
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Selling Shareholders
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Not Applicable
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7.
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Use of Proceeds
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Memorandum Summary; Investment Program of the Fund; Use of Proceeds
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8.
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General Description of the Registrant
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Front Cover Page of Private Placement Memorandum; Memorandum Summary; The Fund; Investment Program of the Fund; Risk Factors; Subscriptions for Interests; Repurchases and Transfers of Interests; Voting
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9.
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Management
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Memorandum Summary; Management; The Adviser and the Subadviser; Fees and Expenses; Control Persons; Brokerage
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10.
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Capital Stock, Long-Term Debt, and other Securities
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Subscriptions for Interests; Repurchases and Transfers of Interests; Voting; Taxes; Distribution Policy
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11.
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Defaults and Arrears on Senior Securities
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Not Applicable
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12.
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Legal Proceedings
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Not Applicable
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13.
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Statement of Additional Information
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Not Applicable
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14.
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Cover Page
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Not Applicable
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15. | Table of Contents of SAI | Not Applicable |
16. | General Information and History | Memorandum Summary; The Fund |
17.
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Investment Objective and Policies
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Memorandum Summary; Investment Program of the Fund
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18.
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Management
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Memorandum Summary; Management
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19.
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Control Persons and Principal Holders of Securities
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Management; Control Persons
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20.
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Investment Advisory and Other Services
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Memorandum Summary; The Adviser and the Subadviser; Fees and Expenses
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21.
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Portfolio Managers
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The Adviser and the Subadviser
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22.
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Brokerage Allocation and Other Practices
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Brokerage
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23. | Tax Status | Taxes |
24.
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Financial Statements
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Financial Statements
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DO NOT COPY OR CIRCULATE
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COPY NO. _____ |
MEMORANDUM SUMMARY
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6
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The Fund
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6
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The Fund’s Investment Program
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6
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Borrowing and Use of Leverage
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8
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The Adviser
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9
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The Subadviser
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9
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Management Fee
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9
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Capital Accounts
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10
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Performance Allocation
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10
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Investment Fund Fees
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10
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Administrator
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10
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Custodian
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11
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Organizational Expenses
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11
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Other Expenses
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11
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Expense Limitation Agreement
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11
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Investor Eligibility
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11
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Member Suitability
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11
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ERISA Plans and Other Tax-Exempt Members
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12
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The Offering
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12
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Closed-End Fund Structure: Limited Liquidity and Transfer Restrictions
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13
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Tender Offers and Other Repurchases of Interests by the Fund
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13
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Taxation
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14
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Distribution Policy
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14
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Allocation of Profit and Losses
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14
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Provision of Tax and Other Information to Members
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14
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Fiscal Year
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15
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Risk Factors
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15
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SUMMARY OF FEES AND EXPENSES
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19
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Fee Table
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19
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Example
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21
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THE FUND
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22
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General
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22
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Structure
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22
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USE OF PROCEEDS
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22
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INVESTMENT PROGRAM OF THE FUND
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23
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The Fund’s Investment Objective and Principal Strategies
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23
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Fundamental Investment Policies
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28
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Borrowing and Use of Leverage
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29
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RISK FACTORS
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29
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Principal Risks Relating to the Fund’s Structure
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29
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Principal Risks Relating to Investment Funds and Direct Investments
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38
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Limits of Risk Disclosures
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51
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MANAGEMENT
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51
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The Board of Managers of the Fund
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51
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Managers
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53
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Principal Officers who are not Managers
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54
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Leadership Structure and the Board
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54
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Manager Qualifications
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55
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Committees
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55
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Compensation
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56
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THE ADVISER AND THE SUBADVISER
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57
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General
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57
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Compensation
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59
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Ownership
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60
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FEES AND EXPENSES
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60
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The Advisory Agreement
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60
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The Subadvisory Agreement
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61
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Administrative, Accounting, Custody, Transfer Agent and Registrar Services
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61
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Investment Fund Fees
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62
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Other Expenses of the Fund
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62
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Expense Limitation Agreement
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63
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CONTROL PERSONS
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63
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SUBSCRIPTIONS FOR INTERESTS
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63
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Subscription Terms
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63
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Member Qualifications
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64
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REPURCHASES AND TRANSFERS OF INTERESTS
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65
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No Right of Redemption
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65
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Repurchases of Interests
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66
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Repurchase Procedures
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67
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Mandatory Repurchase by the Fund
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68
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Transfers of Interests
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68
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DISTRIBUTION POLICY
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69
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CALCULATION OF NET ASSET VALUE
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69
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INTERESTS AND CAPITAL ACCOUNTS
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72
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General
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72
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Allocation of Net Profits and Losses
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72
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Allocation of Special Items
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73
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Reserves
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73
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VOTING
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74
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PARTICIPATION IN INVESTMENT OPPORTUNITIES
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74
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The Adviser
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74
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The Subadviser
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74
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OTHER MATTERS
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75
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TAXES
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75
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Classification of the Fund
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76
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Taxation of the Fund
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77
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Taxable Investors in the Fund
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78
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Tax-Exempt Investors in the Fund
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79
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Allocations of Income, Gain, Loss and Deduction
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79
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Tax Treatment of Portfolio Investments
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80
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Deductibility of Fund Investment Expenditures
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82
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Losses
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82
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Tax Elections
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83
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Alternative Minimum Tax
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83
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Unearned Income Medicare Tax
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83
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Tax Shelter Disclosure
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83
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State and Local Taxes
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84
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Other Taxes
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85
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EMPLOYEE BENEFIT PLAN CONSIDERATIONS
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85
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CODE OF ETHICS
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86
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BROKERAGE
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87
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The Fund
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87
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The Investment Funds
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88
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DISTRIBUTION ARRANGEMENTS
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88
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General
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88
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Purchase Terms
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89
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SUMMARY OF LIMITED LIABILITY COMPANY AGREEMENT
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89
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Liability; Indemnification
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89
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Amendment
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89
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Term, Dissolution and Liquidation
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90
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Reports to Members
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90
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Fiscal Year
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90
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ACCOUNTANTS AND LEGAL COUNSEL
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90
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GENERAL INFORMATION
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90
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FINANCIAL STATEMENTS
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90
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The Fund
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The Fund is a newly-formed Delaware limited liability company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end management investment company. Alternative Strategies Group, Inc. (the “Adviser”), a North Carolina corporation, is the investment adviser to the Fund.
The Adviser has retained Aurora Investment Management L.L.C., a Delaware limited liability company, to act as subadviser to the Fund (the “Subadviser”). The Subadviser has been engaged by the Fund and the Adviser to formulate and implement the Fund’s investment program.
The Fund will offer and sell limited liability company interests (the “Interests”) in larger minimum denominations (compared to open-end mutual funds) to investors eligible to invest in the Fund (“Eligible Investors”). Unlike many private investment funds, however, the Fund is able to offer Interests without limiting the number of investors who may participate in its investment program. Eligible Investors must be “accredited investors” and “qualified clients” as set forth elsewhere in this Memorandum. Eligible Investors who purchase Interests in the Fund and other persons who acquire Interests and are admitted to the Fund by the Fund’s Board of Managers (the “Board”) will become members of the Fund (“Members”). The Board has overall responsibility for the management and supervision of the operations of the Fund.
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The Fund’s Investment Program
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The investment objective of the Fund is non-fundamental and may be changed by the Board after sixty (60) days’ notice to Members. Except as otherwise stated in this Memorandum, the investment policies and restrictions of the Fund also are non-fundamental. The Fund’s fundamental investment policies are listed in “Investment Program of the Fund—Fundamental Investment Policies” below. The Fund’s investment objective and principal investment strategies are discussed below.
Investment Objective and Principal Strategies
The investment objective of the Fund is to generate consistent long-term capital appreciation with diversification of risk through the use of a “multi-manager, multi-strategy” global investment strategy. The Fund will attempt to invest broadly across worldwide markets which may include the United States and North America, Latin America, Eastern and Western Europe and Asia.
The Fund seeks to accomplish this objective by allocating its capital primarily among a select group of collective investment vehicles (“Investment Funds”) managed by experienced investment managers (“Investment Managers”) that implement a number of different alternative investment strategies and invest in a variety of worldwide markets. Such strategies include or may include, but are not limited to: long/short equities (global and geographic specific regions), multi-strategy opportunistic, long/short credit, macro and event driven. However, the Fund does not follow a rigid investment policy and is not restricted from participating in any market, strategy or investment other than as set forth hereunder or under the terms of the 1940 Act.
The Subadviser is responsible for selecting Investment Funds and allocating the Fund’s capital among them. The Fund’s assets may be allocated among whatever investment strategies the Subadviser considers appropriate under prevailing economic and market conditions. Investment Funds will be managed by Investment Managers who, at the time of investment, are not affiliated with either the Adviser or the Subadviser. Investment Funds generally have their own investment objectives, strategies and restrictions, over which neither the Adviser nor the Subadviser is expected to have any control or influence. Investment Managers may change the kinds of
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investments they make and their techniques for making investments if they believe that such changes are appropriate in view of the then current or expected market, business or economic conditions.
Investment Managers may invest in a wide range of instruments and markets on a worldwide basis, including, but not limited to: U.S. and non-U.S. equities and equity-related instruments, fixed income and other debt-related instruments, currencies, commodities and derivative instruments. In addition, Investment Managers may utilize both over-the-counter and exchange traded instruments (including derivative instruments such as swaps, futures, options and forward agreements), trade on margin and engage in short sales.
The Subadviser, on behalf of the Fund, may also engage in certain direct trading activities for hedging and portfolio reallocation purposes or in connection with the liquidation of securities which have been distributed in-kind to the Fund. In addition, the Fund may buy or sell interests in Investment Funds in secondary market transactions, although the Fund does not intend to use secondary market transactions as the primary method for allocating to or away from Investment Managers.
Further details regarding the types of investments and the various strategies are provided below in “— Direct Investments by the Fund and the Investments of the Investment Funds.”
The Fund’s Investment Program
The Subadviser has been engaged by the Fund and the Adviser to formulate and implement the Fund’s investment program.
The Subadviser will primarily allocate, and may reallocate, as it believes necessary and appropriate, the Fund’s assets among Investment Funds. The Subadviser may also engage in certain direct trading activities for hedging and portfolio reallocation purposes or to liquidate securities distributed in-kind to the Fund. The number of Investment Funds may increase or decrease and no assurance can be provided that the number of Investment Funds will remain at any particular level, or that the Fund will invest in any particular Investment Fund or direct investment or in any investment strategy.
The Subadviser will seek to implement an investment program for the Fund that will achieve the Fund’s investment objective, but cannot guarantee that a successful investment program will be achieved or that the Fund’s investment objective will be met. Investors are urged to consult with their personal advisers in connection with any investment in the Fund and to understand fully the risks associated with an investment in the Fund, including, but not limited to, those risks associated with the Fund’s investments in the Investment Funds.
See “INVESTMENT PROGRAM OF THE FUND” and “RISK FACTORS” for more information.
Direct Investments by the Fund and Investments of Investment Funds
Generally, the Fund and the Investment Funds may invest in, hold, sell and trade a wide range of investment instruments in worldwide markets. Investments in which the Fund and Investment Funds may invest include, but are not limited to: stocks, bonds, bank loans, warrants, notes, debentures (whether subordinated, convertible, or otherwise), money market funds, commercial paper, certificates of deposit, and governmental obligations (or the obligations of any instrumentality thereof), whether offered publicly or pursuant to private placement. The Fund and Investment Funds also may invest in options, futures contracts, forward contracts, swaps, and other exchange traded and over-the-counter (“OTC”) derivatives of any kind. In particular, the Fund may utilize options, futures, options on futures or other derivatives for hedging or portfolio reallocation purposes.
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The Fund expects that certain of the Investment Funds in which it invests may engage in speculative investment practices extensively, such as using a high degree of leverage, short selling, trading regulated or unregulated commodities contracts, currency speculation, trading listed and OTC options, writing uncovered options, trading complex derivative instruments, participating in workouts and startups, trading distressed and illiquid investments, obtaining control positions, or trading foreign securities and taking concentrated positions, among others.
The Fund may invest all or any portion of its assets in high quality fixed-income securities, money market instruments, shares of money market funds, or overnight repurchase agreements, or the Fund may hold its assets as cash. Such investments may be for temporary purposes, such as maintaining adequate liquidity for distributions in connection with Interest repurchases by the Fund, or for any other purposes, including, but not limited to, defensive investments in times of market volatility.
Selection of Investment Funds
The Subadviser selects Investment Funds on the basis of various criteria, including, among other things, an analysis of a prospective Investment Manager’s performance during various time periods and market cycles and/or the Investment Manager’s reputation, experience, knowledge of a specific geographic market, investment philosophy and policies and training of its principals and key personnel. Additionally, the Subadviser considers, among other things, whether a prospective Investment Manager has an identifiable track record, recognizable prospects and a substantial personal investment in the Investment Fund or such Investment Manager’s investment program. The Fund is not limited, however, to investing in Investment Funds whose Investment Managers have past investment histories and may invest with an Investment Fund based on the Subadviser’s assessment of the future prospects of its Investment Manager.
The Subadviser’s process for selecting Investment Funds and evaluating Investment Managers generally involves reviewing investment performance, processes and talent, performing reference checks, evaluating the operational capabilities of the Investment Manager’s administrative, audit, clearing, execution and custodial relationships, and evaluating the terms and conditions of the proposed investment. While quantitative analysis is an important factor in evaluating prospective Investment Funds, the Investment Fund selection process is subjective, and qualitative analysis plays a significant role.
See “INVESTMENT PROGRAM OF THE FUND” and “RISK FACTORS” for more information.
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Borrowing and Use of Leverage
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The Fund has the power to borrow and may do so when deemed appropriate by the Subadviser. However, the Subadviser does not anticipate any direct borrowings by the Fund except: (i) to make investments pending receipt of redemption proceeds in connection with reallocations among Investment Managers; (ii) to meet redemptions which would otherwise result in the premature liquidation of investments; (iii) to margin or settle hedging contracts; (iv) in anticipation of net subscriptions by investors; or (v) to preserve scarce capacity with Investment Managers, although it is not obligated to do so in any case. Borrowings by the Fund other than for temporary purposes are generally subject to a 300% asset coverage requirement under the 1940 Act.
The Fund currently is a party to a committed, secured credit facility which allows the Fund to borrow approximately 16.0% of its net asset value for the purposes described above. However, the Fund is not obligated to maintain such a facility nor is the lender obligated to renew such facility. There can be no assurance that the Fund will be able to obtain (or maintain) financing for the purposes described above. In the event that the credit facility terminates, the Fund may seek alternative financing or choose to operate without a credit facility and maintain a cash reserve for such purposes. Although the commitment amount of any credit facility to which the Fund is a party may represent only a portion of the Fund’s net asset value, virtually all of the
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Fund’s assets are or would be pledged to secure its obligations to the lender. The costs associated with any credit facility and the borrowings thereunder are borne by the Fund.
Certain Investment Funds may borrow money, trade securities or futures on margin or leverage their investments through various means and such Investment Funds are generally not subject to the limits of the 1940 Act. The use of leverage increases both risk and potential profit.
The Fund may from time to time make investments in derivatives or other instruments, such as futures contracts or swaps that provide a form of leverage. Any such direct investments will be made only in accordance with the requirements of the 1940 Act and the Securities and Exchange Commission (“SEC”) guidance relating to “senior securities.”
See “INVESTMENT PROGRAM OF THE FUND — Borrowing and Use of Leverage” for more information.
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The Adviser
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The Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The Adviser also serves as investment adviser to other private investment funds, some of which utilize a multi-manager, multi-strategy investment approach. Although the Adviser is registered with the CFTC as a “commodity trading advisor,” it will operate the Fund as if it was exempt from registration under CFTC Rule 4.14(a)(8). The Fund is not required to register as a “commodity pool operator” pursuant to CFTC Rule 4.5.
Subject to policies adopted by the Board and applicable law, the Adviser is responsible for appointing the Subadviser to manage the Fund’s investments, monitoring the Subadviser’s management of the Fund, and implementing the Fund’s compliance program. Subject to the limitations set forth in the subadvisory agreement, the Adviser has the ability to restrict initial/additional investment in an Investment Fund and/or remove an Investment Fund from the portfolio, although it does not currently intend to use this ability to manage the portfolio or restrict the Subadviser’s discretion. The Adviser has limited experience managing a registered fund, but its investment personnel have experience managing and overseeing funds of hedge funds. The Adviser’s investment professionals will devote such time to the ongoing operations of the Fund as they deem appropriate.
The Adviser also provides personnel, office space, office facilities, and reports to the Fund. These services are provided as part of the Management Fee (as defined below); provided, however, that reports furnished at the request of the Fund are paid for by the Fund. See “THE ADVISER AND THE SUBADVISER” for more information.
The Adviser holds a non-voting special member interest (the “Special Member Account”) in the Fund for the purpose of receiving the Performance Allocation (as defined below). The Adviser may also invest in the Fund, in which case it will hold an Interest in the Fund. See “INTERESTS AND CAPITAL ACCOUNTS.”
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The Subadviser
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The Subadviser is registered with the SEC as an investment adviser under the Advisers Act. The Subadviser also serves, or may serve, as investment adviser or subadviser to private investment funds, other registered investment companies, and managed accounts both within the U.S. and abroad. Although the Subadviser is registered with the CFTC as a “commodity trading advisor,” it will advise the Fund as if it was exempt from registration under CFTC Rule 4.14(a)(8).
Pursuant to an agreement with the Adviser and the Fund, the Subadviser is responsible for the selection and monitoring of Investment Funds as well as direct investments of the Fund, and for day-to-day management of the Fund’s investment activities and holdings. See “THE ADVISER AND THE SUBADVISER” for more information.
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Management Fee
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The Fund pays the Adviser each month a fee (“Management Fee”) equal to one-twelfth of 1.00% of the aggregate net asset value of outstanding Interests determined as of the last calendar day of that month (before any repurchases of Interests). The Adviser pays the Subadviser a portion of the Management Fee as described in the subadvisory agreement among the Adviser, Subadviser, and the Fund. See “FEES AND EXPENSES” for more information.
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Capital Accounts
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The Fund will establish and maintain on its books a capital account (“Capital Account”) for each Member, to which its investment in the Fund will be credited and in which certain other transactions will be reflected. See “INTERESTS AND CAPITAL ACCOUNTS” for more information.
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Performance Allocation
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In addition to the Management Fee, the Adviser is entitled to receive from the Fund a performance allocation (“Performance Allocation”) that, if earned, will be deducted from Capital Accounts of Members at the end of each Incentive Period and credited to the Special Member Account. An “Incentive Period” with respect to a Member begins on the day of such Member’s contribution of capital to the Fund or on the day immediately following the last calendar day of the preceding Incentive Period and ends at the close of business on the first to occur of the following dates: (1) the last day of each taxable year, (2) the date of a repurchase of all or a portion of a Member’s Interest, or (3) the date of the termination of the Subadviser. The Subadviser will be paid a performance fee by the Adviser equal to the amount of the Performance Allocation.
For purposes of the Performance Allocation, a Member that makes multiple capital contributions will have a separate sub-Capital Account for each contribution. Because the Performance Allocation is charged against each sub-Capital Account separately, it is possible that a Member with multiple sub-Capital Accounts could be charged the Performance Allocation for certain of its sub-Capital Accounts and not others. After each time the Performance Allocation is charged, the Fund may combine such sub-Capital Accounts with respect to a Member, as appropriate.
The Performance Allocation for each Incentive Period is equal to 10% of the amount, if any, of: (1) the net profits allocated to each Member’s Capital Account(s) for the Incentive Period in excess of any net losses so allocated for such Incentive Period; above (2) any Loss Carryforward Amount(s) (as defined below) applicable to a Member’s Capital Account.
If, for any Incentive Period, net losses allocated to a Member’s Capital Account exceed net profits so allocated, a “Loss Carryforward Amount” in the amount of such excess will be established for that Capital Account. Loss Carryforward Amounts are cumulative with respect to prior Incentive Periods, and no Performance Allocation is debited from a Member’s Capital Account until subsequent allocations of net profits reduce that Capital Account’s Loss Carryforward Amount(s) to (but not below) zero. This establishes what is commonly referred to as a “high water mark” with respect to Performance Allocation calculations.
The Loss Carryforward Amount will be reduced proportionally with respect to any transfers, distributions, withdrawals and repurchases applicable to a Member’s Capital Account.
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Investment Fund Fees
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The Fund also indirectly bears fees and expenses as an investor in Investment Funds, which includes a management fee and, with respect to most Investment Funds, incentive compensation to the Investment Manager equal to a percentage of the appreciation of the applicable Investment Fund as of the end of each performance period for which such incentive compensation is determined.
Each Investment Fund will also incur transactional expenses, including brokerage costs and margin interest costs, and fees and expenses of service providers, such as a custodian and administrator. Because the fees and expenses of Investment Funds reduce the net return to the Fund, a Member indirectly bears these expenses and fees. See “FEES AND EXPENSES” for more information.
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Administrator
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The Bank of New York Mellon, through its wholly owned subsidiary, BNY Mellon Investment Servicing (U.S.) Inc. (“Administrator”) serves as the administrator for the Fund. The Administrator performs certain administration, accounting and investor services for the Fund. In consideration for these services, the Fund pays the Administrator a fee (the “Administration Fee”), which is based on the beginning of month net asset value of the Fund. In addition, the Administrator charges fees for legal, transfer agency, compliance, and certain other services and is entitled to reimbursement of certain expenses.
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Custodian
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The Bank of New York Mellon (“Custodian”) serves as the custodian for the Fund. Pursuant to a custodian agreement, in consideration for these services, the Fund pays the Custodian a fee (the “Custodian Fee”), which is based on the month-end net asset value of the Fund. The Custodian maintains custody of the Fund’s assets and is paid a fee for such services. The Custodian also charges for transaction-related costs and is entitled to reimbursement of certain expenses.
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Organizational Expenses
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The Fund will pay its start-up, offering and organizational expenses. These expenses include the cost of preparing this Memorandum and the Fund’s Limited Liability Company Agreement (the “LLC Agreement”), the expenses incurred in offering and selling Interests, and other legal, accounting, and administrative expenses related thereto. Organizational costs will be incurred as an expense at the time of commencement of operations, and remaining offering costs will be amortized over the Fund’s first 12 months of operation. See “FEES AND EXPENSES” for more information.
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Other Expenses
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In addition to the foregoing, the Fund will be responsible for its investment and operating expenses, fees associated with certain computer research tools exclusively utilized by or for the Fund, borrowing costs and related interest expenses, accounting fees and expenses (including, without limitation, audit and tax preparation) and other professional fees and expenses (including, without limitation, fees and travel-related expenses of the members of the Board who are not employees of the Adviser or employees of any affiliate of the Adviser), legal expenses, extraordinary expenses, federal, state and local taxes payable by the Fund in connection with its business and other expenses, including, without limitation, the Administration Fee and Custodian Fee. See “FEES AND EXPENSES” for more information.
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Expense Limitation Agreement
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Through the later of (i) January 31, 2012, or (ii) twelve months from the date the Fund commences operations, the Adviser agrees to waive its fees and/or reimburse the Fund for its expenses to the extent necessary to limit the total annualized expenses of the Fund (excluding the Fund’s borrowing and other investment-related costs and fees (including any Investment Fund fees and expenses and the Fund’s Performance Allocation (if any)), taxes, litigation and indemnification expenses, judgments and other extraordinary expenses not incurred in the ordinary course of the Fund’s business) including, for the avoidance of doubt, the Fund’s start-up, offering and organizational expenses, to 1.00% annually of the Fund’s average net assets (2.00% annually, including the Adviser’s management fee) (“Expense Limitation Agreement”). In addition, the Adviser is permitted to recover from the Fund expenses it has borne (whether through reduction of its management fee or otherwise) in later periods to the extent that the Fund’s expenses fall below the annual rate of 2.00%. The Fund, however, is not obligated to pay any such amount more than three years after the end of the fiscal year in which the Adviser deferred a fee or reimbursed an expense. Any such recovery by the Adviser will not cause the Fund to exceed the annual limitation rate set forth above.
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Investor Eligibility
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Each investor in the Fund must certify that the Interests subscribed for are being acquired for the account of an Eligible Investor. To be an Eligible Investor, an investor must, among other things, be an “accredited investor,” as defined in Regulation D under the Securities Act of 1933, as amended (the “1933 Act”) and a “qualified client” within the meaning of Rule 205-3 under the Advisers Act. After initial purchase, existing Members will be required to verify their status as Eligible Investors at the time of any additional contributions.
The qualifications required to invest in the Fund appear in a subscription agreement (the “Subscription Agreement”) that must be completed by each prospective investor. The Subscription Agreement is attached to this Memorandum. See “SUBSCRIPTIONS FOR INTERESTS — Member Qualifications”.
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Member Suitability
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An investment in the Fund involves substantial risks. It is possible that a Member may lose some or all of the Member’s investment. Before making an investment decision, a prospective investor and/or a prospective investor’s representative must (i) consider the suitability of this investment with respect to the prospective investor’s personal investment objectives and individual situation and (ii) consider factors, such as the prospective investor’s personal net worth, income, age, risk tolerance and liquidity needs. See “RISK FACTORS” for more information.
Short-term prospective investors, prospective investors with immediate liquidity needs and
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prospective investors who cannot bear the loss of some or all of their investment or the risks associated with the limited liquidity of an investment in the Fund should not invest in the Fund. | ||
ERISA Plans and Other Tax-Exempt Members
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Investors subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and other tax-exempt entities, including employee benefit plans, individual retirement accounts (“IRAs”), and 401(k) and Keogh Plans (collectively, “ERISA Plans”) may purchase Interests. Because the Fund is an investment company registered under the 1940 Act, the underlying assets of the Fund will not be considered to be “plan assets” of an ERISA Plan investing in the Fund for purposes of ERISA’s fiduciary responsibility and prohibited transaction rules. Thus, neither the Adviser nor the Subadviser will be a fiduciary within the meaning of ERISA with respect to the assets of any ERISA Plan that becomes a Member, solely as a result of the ERISA Plan’s investment in the Fund. See “EMPLOYEE BENEFIT PLAN CONSIDERATIONS.” Tax-exempt investors should be aware, however, that a portion of the Fund’s income may constitute unrelated business taxable income (“UBTI”) with respect to such investors. See “TAXES.”
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The Offering
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The placement agent and wholesaling agent for the Fund is Alternative Strategies Brokerage Services, Inc. (the “Placement Agent”), an affiliate of the Adviser. The Placement Agent may appoint other broker dealers as sub-placement agents, including affiliates of the Subadviser. The Placement Agent also acts primarily as a “wholesaler” and, as such, educates and provides additional services with respect to the Fund to other brokers and financial institutions that may not be the ultimate beneficial owners of such Interests. The Placement Agent or other intermediaries that enter into agreements with the Placement Agent may charge an investor a fee for their services in conjunction with an investment in the Fund and/or maintenance of Member accounts. Such a fee will be in addition to any fees charged or paid by the Fund and is not a Fund expense. Members should direct any questions regarding any such fees to the relevant intermediary. The Fund in the future may engage additional placement agents.
The Adviser or its affiliates also may pay from their own resources (including from fees attributable to the Fund) compensation to the Placement Agent, to other of their affiliates, and to broker-dealers and other intermediaries (“Intermediaries”), in connection with subscriptions for and/or placement of Interests or servicing of Members. Such payments do not affect the Adviser’s payment of a portion of the Management Fee to the Subadviser. Intermediaries and their personnel (who themselves may receive all or a substantial part of the relevant payments) may receive greater compensation in connection with subscriptions for Interests than they would have received in connection with subscriptions for shares of other investment funds. Prospective investors should be aware that these payments could create incentives on the part of an Intermediary to view the Fund more favorably relative to investment funds not making payments of this nature or making smaller such payments. Such payments may be different for different Intermediaries. A prospective investor with questions regarding these arrangements may obtain additional detail by contacting the relevant Intermediary directly. See “DISTRIBUTION ARRANGEMENTS” for more information.
The Fund intends to seek exemptive relief from the SEC to offer classes of Interests with terms different from those described herein. The fees and expenses of such future classes (apart from the Management Fee) may vary from the initial Interests offered and will be offered under a revised memorandum if and when any such relief is obtained. The Fund intends to accept initial and additional subscriptions for Interests only once each month, effective as of the opening of business on the first calendar day of the month (each such day, a “Subscription Date”). In order to subscribe to the Fund, investors must complete and return to the appropriate party (as set forth in the Subscription Agreement) one (1) copy of the Subscription Agreement by at least the number of Business Days prior to the Subscription Date that is described in the applicable Subscription Agreement. Investors must remit the full purchase price of their subscription three (3) Business Days prior to the Subscription Date. Subscription proceeds must be delivered by wire. The Fund will not accept checks. “Business Day” means a day on which banks are ordinarily open for normal banking business in New York or such other day or days as the Board may determine in its sole and absolute discretion.
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The minimum initial investment in the Fund is $50,000. The minimum additional investment is $10,000, in whole increments of $1,000. The minimum initial and minimum additional investment requirements may be reduced or increased by the Board. No certificates will be issued for Interests.
Interests will not be registered under the 1933 Act, or the securities laws of any state or any other jurisdiction, nor is any such registration contemplated.
See “SUBSCRIPTIONS FOR INTERESTS — Subscription Terms” and “DISTRIBUTION ARRANGEMENTS” for more information.
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Closed-End Fund Structure: Limited Liquidity and Transfer Restrictions
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The Fund has been organized as a non-diversified closed-end management investment company. Closed-end funds differ from open-end management investment companies, commonly known as mutual funds, in that closed-end fund shareholders do not have the right to redeem their shares. In order to meet daily redemption requests, mutual funds are subject to more stringent regulatory limitations than closed-end funds. In particular, a mutual fund generally may not invest more than 15% of its assets in illiquid securities. Because Investment Fund investments, which will generally be private Investment Funds, are generally illiquid, the Fund is organized as a closed-end fund. See “RISK FACTORS” for more information.
The Fund will not list the Interests on any securities exchange, and it is not expected that any secondary market will develop for the Interests. In addition, Interests are subject to significant transfer restrictions. Members should not expect that they will be able to transfer Interests. Because the Fund is a closed-end fund, Members will have no right to require the Fund to redeem their Interests. As described below, however, in order to provide a limited degree of liquidity, the Fund will consider whether to conduct quarterly repurchase offers for outstanding Interests. An investment in the Fund is suitable only for Members who can bear the risks associated with the limited liquidity of the Interests. Purchases of Interests should be viewed as long-term investments. See “RISK FACTORS — Principal Risk Factors Relating to the Fund’s Structure — Limited Liquidity” and “RISK FACTORS — Principal Risk Factors Relating to the Investment Funds and Direct Investments — Illiquid Investments” and “— Restricted Securities” for more information.
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Tender Offers and Other Repurchases of Interests by the Fund
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Because the Fund is a closed-end fund, and Members do not have the right to require the Fund to redeem Interests, the Fund may from time to time offer to repurchase Interests pursuant to written tenders by Members, in order to provide a limited degree of liquidity to Members. Repurchases will be made at such times, in such amounts and on such terms as may be determined by the Board, in its sole discretion. In determining whether the Fund should offer to repurchase Interests, the Board will consider a variety of operational, business and economic factors. The Adviser expects to recommend ordinarily that the Board authorize the Fund to offer to repurchase Interests from Members quarterly with March 31, June 30, September 30 and December 31 valuation dates. The Adviser currently expects that it will recommend to the Board that the Fund make its initial offer to repurchase Interests from Members with a valuation date of September 30, 2011. Members tendering Interests for repurchase will be asked to give written notice of their intent to do so by the date specified in the notice describing the terms of the applicable repurchase offer, which date will be approximately ninety-five days prior to the date of repurchase by the Fund. See “REPURCHASES AND TRANSFERS OF INTERESTS” for more information.
If the interval between the date of purchase of Interests and the valuation date with respect to the repurchase of such Interests is less than one year then such repurchase will be subject to a 2.00% early withdrawal fee payable to the Fund. In determining whether the repurchase of a Member’s Interests is subject to an early withdrawal fee, the Member’s Interests held the longest will be repurchased.
In order to finance the repurchase of Interests pursuant to the tender offers, the Fund generally will find it necessary to liquidate a portion of its interests in Investment Funds. The Fund may effect withdrawals from certain Investment Funds only at certain specified times. The Fund may
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not be able to withdraw from certain Investment Funds promptly after it has made a decision to do so, which may result in a loss and adversely affect the Fund’s investment return.
There are no assurances that the Board will, in fact, decide to undertake any such repurchase offer. The Fund will make any repurchase offers to all of its Members on the same terms in accordance with applicable legal requirements. Subject to the Fund’s investment restriction with respect to borrowings, the Fund may borrow money or issue debt obligations to finance its repurchase obligations pursuant to any such repurchase offer.
If a repurchase offer is oversubscribed by Members who tender Interests for repurchase and the Board does not increase the offer, the Fund may repurchase only a pro rata portion of the Interest tendered by each Member. In addition, a Member who tenders for repurchase only a portion of its Interest will be required to maintain a minimum Capital Account balance equal to such amount as may be fixed from time to time by the Board, currently $50,000. The Fund maintains the right to reduce the portion of the Interest to be repurchased from a Member so that the required minimum Capital Account balance is maintained or to repurchase all of the tendering Member’s Interest. Minimum account balance requirements may be waived in the Fund’s discretion.
The Fund has the right to repurchase Interests of Members if the Board determines that the repurchase is in the best interest of the Fund or upon the occurrence of certain events specified in the LLC Agreement, including, but not limited to, Members’ attempted transfers in violation of the transfer restrictions described above. See “REPURCHASES AND TRANSFERS OF INTERESTS — No Right of Redemption” and “— Repurchases of Interests” for more information.
The Investment Funds may be permitted to distribute securities in-kind to investors making redemptions or withdrawals of capital. The Fund therefore may receive securities that are illiquid or difficult to value, which may cause the Fund to incur certain expenses or losses in connection with the valuation or disposition of such securities. In such circumstances, the Subadviser in consultation with the Adviser will determine whether to attempt to liquidate the security, hold it in the Fund’s portfolio or distribute it to investors in the Fund in connection with an Interest repurchase by the Fund.
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Taxation
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The Fund intends to operate as a partnership and not as an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). The Fund should not be subject to U.S. federal income tax, and each Member will be required to report on its own annual tax return, to the extent required, the Member’s distributive share of the Fund’s taxable income or loss. If the Fund were determined to be an association or a publicly traded partnership taxable as a corporation, the taxable income of the Fund would be subject to corporate income tax and any distributions of profits from the Fund would be treated as dividends. See “TAXES” for more information.
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Distribution Policy
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The Fund does not presently intend to make periodic distributions of its net income or gains, if any, to Members. The amount and times of distributions, if any, will be determined in the sole and absolute discretion of the Fund’s Board. Whether or not distributions are made, Members will be required each year to pay any applicable taxes. See “TAXES” for more information.
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Allocation of Net Profits and Losses
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The net profits or net losses of the Fund (including, without limitation, net realized gains or losses and the net change in unrealized appreciation or depreciation of securities positions) will be reflected in each Member’s Capital Account on an ongoing basis. See “INTERESTS AND CAPITAL ACCOUNTS — Allocation of Net Profits and Losses” for more information.
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Provision of Tax and Other Information to Members
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The Fund will file an annual partnership information return with the Internal Revenue Service (“Service”) reporting the results of its operations. After the end of each calendar year, the Fund will distribute to Members federal income tax information reasonably necessary to enable each Member to report its distributive share of the Fund’s partnership items. Each Member must treat partnership items reported on the Fund’s returns consistently on the Member’s own returns, unless the Member files a statement with the Service disclosing the inconsistency. The Fund anticipates sending Members a semi-annual report and an audited annual report within sixty (60) days after
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the close of the period for which the report is being made, or as otherwise required by the 1940 Act. It is not likely that the Fund will receive tax information from Investment Funds in a sufficiently timely manner to enable the Fund to prepare its information return in time for Members to file their returns without requesting an extension of the time to file from the Service or state taxing agencies. Accordingly, Members will be required to obtain extensions of time to file their tax returns. See “TAXES” and “Fiscal Year” below.
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Fiscal Year
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The fiscal year of the Fund shall end on March 31, with the taxable year ending on December 31.
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Risk Factors
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The purchase of Interests is a speculative investment, entails significant risk and should not be considered a complete investment program. An investment in the Fund provides for only limited liquidity, if any, and is suitable only for persons who can afford to lose the entire amount of their investment. There can be no assurance that the investment strategy employed by the Adviser, the Subadviser or the Investment Funds will be successful.
The following is a brief summary of risk factors associated with an investment in the Fund and is not intended to be complete. For more information, see “RISK FACTORS.”
Limited Liquidity. The Fund is a closed-end management investment company designed primarily for long-term investment and is not intended to be a trading vehicle. Interests are not readily marketable, and Members must be prepared to hold Interests for an indefinite period of time. Because the Fund is a closed-end management investment company, Members will have no right to require the Fund to redeem their Interests.
Investment Strategies. The success of the Fund depends on the Subadviser’s ability to select and allocate among individual investment strategies, Investment Funds and other direct investments, and the ability of each Investment Manager to select investments, interpret market data correctly, predict future market movements and otherwise implement its investment strategy.
Changes in Investment Strategies. The allocation of the Fund to any particular investment strategy may be increased, decreased or otherwise revised at any time, without the consent of or notice to the Members. Any such decision to engage in a new activity or alter the Fund’s existing investment strategies could result in the exposure of the Fund’s capital to additional risks that may be substantial.
Conflicts of Interest. The Adviser, the Subadviser and the Investment Managers may render advisory services to a number of persons, including pooled investment vehicles and separately managed accounts, which may have varying investment objectives and different investment portfolios, and the fees earned by the Adviser or Subadviser may vary between accounts. The Adviser’s, Subadviser’s or an Investment Manager’s activities on behalf of its other clients may from time to time disadvantage the Fund or an Investment Fund in which the Fund has invested. For example, the market may be unable to fully absorb orders for the purchase or sale of particular investments placed by the Adviser, the Subadviser or an Investment Manager for its client (the Fund or Investment Fund, as the case may be) and other clients at prices and in quantities that would be obtainable if the same were being placed only by the Fund or Investment Fund.
In addition, employees of the Subadviser and their families hold, and may hold in the future, investments in other accounts managed by the Subadviser. Employees of the Adviser and Subadviser may hold Interests in the Fund and in Investment Funds in which the Fund may invest. Such investments may create an incentive for the Subadviser to favor certain accounts over others.
Investment Risks in General. The Fund will engage in highly speculative investment strategies. The prices of securities and derivative instruments in which some of the Investment Funds will invest, or in which the Fund may invest directly, may be volatile.
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Borrowing and Use of Leverage. The use of leverage by the Fund magnifies both the favorable and unfavorable effects of price movements of an Investment Fund. Although the Fund does not generally expect to borrow money for investment purposes, it may do so when deemed appropriate by the Subadviser. The Fund is also authorized to borrow money on a temporary basis (e.g., to meet repurchase requests or to facilitate reallocation of assets among the Investment Funds). Borrowing may also be used by the Fund for cash management purposes, such as to pay miscellaneous expenses as they arise. The Fund may experience the effects of leverage indirectly through the use of leverage by the Investment Funds in which it invests. In addition, the Fund may from time to time make investments in derivative or other instruments, such as futures contracts or swaps, that provide a form of leverage. Any such direct investments will be made only in accordance with the requirements of the 1940 Act and the SEC relating to “senior securities.”
Layering of Fees. The Fund’s fees and expenses, including the Management Fee and the Performance Allocation, will result in greater expense than would be associated with direct investments in the Investment Funds. The Fund will pay for its own direct expenses and management costs, as well as its pro rata share of the expenses and management costs directly and indirectly incurred by the Investment Funds in which it invests.
Lack of Operating History. The Fund does not have an operating history. Certain of the Investment Funds in which the Fund invests may have limited or no operating histories.
Investments in Other Funds. The Fund has no control of, and will not seek to influence, the trading policies or strategies, brokerage arrangements, or operations of the Investment Funds in which it will invest.
Inability to Vote; Waiver of Voting Rights. To the extent the Fund purchases non-voting interests of, or contractually foregoes the right to vote its interests in, an Investment Fund, it may not be able to vote on matters that require the approval of the investors of the Investment Fund, including matters that could adversely affect the Fund’s investment in such Investment Fund.
1940 Act Restrictions. The 1940 Act imposes certain restrictions on the ability of the Fund to invest in Investment Funds. In order to invest in private Investment Funds, which are not registered as investment companies under the 1940 Act, the Fund generally must be a “qualified purchaser” as defined in the 1940 Act, which requires the Fund to have at least $25 million in net investment assets. In addition, the 1940 Act generally prohibits the Fund from acquiring in excess of 3.00% of the voting interests of Investment Funds that are registered investment companies, including mutual funds and exchange-traded funds (“ETFs”). Registered Investment Funds in which the Fund may invest are in turn subject to extensive regulation and restrictions under the 1940 Act. The rules and regulations under the 1940 Act may require the Fund to limit its position in any one Investment Fund in accordance with applicable regulatory requirements, as may be determined by the Fund in consultation with its counsel. These restrictions could change from time to time as applicable laws, rules or interpretations thereof are modified. The Fund could nevertheless be deemed in some circumstances to be an affiliated person of an Investment Fund and therefore subject to certain 1940 Act prohibitions with respect to affiliated transactions.
Allocation Among Investments. The Fund’s success will depend on the selection of Investment Funds, as well as direct investments that the Fund may make. The performance of the Fund may be affected by the ability of the Fund to add new Investment Funds and the acquisition or disposition of investments at appropriate times.
Tax Risks. There are certain tax risks associated with an investment in the Fund, including without limitation with respect to tax positions taken by and tax estimates made by the Fund and the Investment Funds held by the Fund, as well as the potential for legislative or regulatory change that could impact the Fund. There can be no assurance that positions taken or estimates made by the Fund or the Investment Funds will be accepted by tax authorities. See “TAXES” for more information.
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Changes in United States Law. Changes in the state and Federal laws applicable to the Fund, or applicable to the Investment Managers, Investment Funds and other securities or instruments in which the Fund may invest, may negatively affect the Fund’s returns to Members. The Fund may need to modify its investment strategies in the future in order to satisfy new regulatory requirements or to compete in a changed business environment.
Temporary Defensive Positions. The Fund may invest all or any portion of its assets in high quality fixed-income securities, money market instruments, shares of money market funds, or overnight repurchase agreements, or may hold its assets as cash, for defensive purposes in times of market volatility or for any other reason. As a result, the Fund may not achieve its investment objective.
Repurchases of Interests. Substantial repurchases of Interests within a limited period of time could require the Fund to liquidate positions more rapidly than would otherwise be desirable. Tender offers conducted by the Fund in order to repurchase Interests will generate expenses for the Fund, which may be borne in part by non-redeeming Members. Quarterly tender offers, if conducted by the Fund, will result in higher expenses than if the Fund were to offer to repurchase Interests on a less frequent basis.
Mandatory Repurchase. The Fund has the right to require the repurchase of a Member’s Interest and thus the complete or partial withdrawal of a Member, subject to the limitations of the 1940 Act. See “REPURCHASE AND TRANSFER OF INTERESTS — Mandatory Repurchase by the Fund” for more information.
Increase in Assets under Management. As the Fund’s assets increase, more capital may be allocated to any particular Investment Fund. It is not known what effect, if any, this will have on an Investment Fund’s trading strategies or its investment results.
Employee Benefit Plan Matters. Most pension and profit sharing plans are subject to provisions of the Code, ERISA, or both, which may be relevant to a decision as to whether such a prospective investor should invest in the Fund. For example, tax-exempt investors should be aware that a portion of the Fund’s income may constitute UBTI with respect to such investors. See “TAXES” and “EMPLOYEE BENEFIT PLAN CONSIDERATIONS” for more information.
Custody Risk. The Investment Funds generally are not required to hold custody of their assets in accordance with the requirements of the 1940 Act and the rules thereunder. As a result, bankruptcy or fraud at institutions, such as brokerage firms, banks or administrators, into whose custody those Investment Funds have placed their assets could impair the operational capabilities or the capital position of the Investment Funds and may, in turn, have an adverse impact on the Fund.
Valuation and Estimates. The Fund has limited ability to assess the accuracy of the valuations received from certain Investment Funds with which the Fund invests. See “CALCULATION OF NET ASSET VALUE” for more information.
Non-Diversified Status. The Fund is a “non-diversified” investment company. The portfolio of the Fund may, therefore, be subject to greater risk than the portfolio of a similar fund that diversifies its investments.
Reliance on Management. All decisions regarding the management and affairs of the Fund will be made exclusively by the Adviser and/or the Subadviser, subject to Board oversight. A Member is not entitled to participate in the management of the Fund, or in the conduct of its business, apart from the capacity to vote on certain matters (including the election of the Board). The Adviser and the Subadviser will, in turn, seek to invest the Fund’s assets in Investment Funds and other
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investments. A person should not acquire an Interest unless such person is willing to entrust the Adviser, the Subadviser, and the Investment Funds (and respective Investment Managers) selected for the Fund, with the management of such person’s assets.
Risk of Performance-Based Fees or Allocations. The performance-based fees or allocations to the Subadviser and Investment Managers may create an incentive for the Subadviser and Investment Managers to make investments that are riskier or more speculative than those that might have been made in the absence of performance-based fees or allocations. In addition, because a performance-based fee or allocation will generally be calculated on a basis that includes unrealized appreciation of the Fund’s or an Investment Fund’s assets, the fee or allocation may be greater than if it were based solely on realized gains. Moreover, each Investment Manager will receive any performance-based fees or allocations to which it is entitled irrespective of the performance of the other Investment Funds and the Fund generally. Accordingly, an Investment Manager with positive performance may receive performance-based compensation from the Fund, which will be borne indirectly by Members, even if the Fund’s overall returns are negative.
Offsetting Trades by Investment Managers. Investment decisions for Investment Funds are made by Investment Managers independently of each other. As a result, at any particular time, one Investment Fund may be purchasing shares of an issuer whose shares are being sold by another Investment Fund. Consequently, the Fund could incur indirectly certain transaction costs without accomplishing any net investment result.
Limited Liquidity of Investment Funds. The Fund may make additional investments in or effect withdrawals from Investment Funds only at certain specified times. For example, many Investment Funds impose lock-up periods prior to allowing withdrawals, which can be two years or longer from the date of the Fund’s investment. After expiration of the lock-up period, withdrawals typically are permitted only on a limited basis. Moreover, certain Investment Funds may amend their liquidity provisions or otherwise further restrict the Fund’s ability to make withdrawals from those Investment Funds by creating “side pockets,” imposing gates, suspending the right for investors to withdraw or through other mechanisms. Accordingly, the Fund may not be able to withdraw its investment in an Investment Fund promptly after it has made a decision to do so, which may result in a loss and adversely affect the Fund’s investment returns. Limitations on the Fund’s ability to withdraw its assets from Investment Funds may also limit the Fund’s ability to conduct a repurchase offer. Because the primary source of funds to repurchase Interests will be withdrawals from Investment Funds, the application of these lock-ups and other withdrawal limitations may significantly limit the Fund’s ability to repurchase its Interests.
Investment Fund Risk. In addition to the above risks of the Fund, investors are subject to the risks of the Investment Funds in which the Fund may invest. There are many risks associated with such investments, including that the Fund could lose all or part of its investment in any Investment Fund. Please see and read “RISK FACTORS – Principal Risks Relating to Investment Funds and Direct Investments” carefully.
Prospective investors in the Fund should review carefully the discussion under the captions “RISK FACTORS” for a more complete description of the risks associated with investment in the Fund.
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Fund
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Member Transaction Expenses
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Sales Load (as a percentage of the capital contribution) (1)
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None
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Early withdrawal fee (as a percentage of repurchase proceeds) (2)
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2.00%
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Annual Expenses (as a percentage of net assets attributable to Interests)
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Management Fees
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1.00%
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Performance Allocation (held in Special Member Account) (3)
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10% of net profits
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Other Expenses (4)
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1.35%
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Acquired Fund (Investment Fund) Fees and Expenses (5)
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5.18%
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Expense Reimbursement
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0.35%
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Total Annual Expenses (other than Performance Allocation) (6)
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7.18%
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Example
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Cumulative Expenses Paid for the Period of:
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1 Year
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3 Years
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5 Years
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10 Years
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A prospective investor would pay the following expenses on a $1,000 investment, assuming a 5.00% annual return throughout the periods
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$79
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$247
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$430
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$967
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●
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The return expected from a given investment strategy during a period of time;
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●
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The probability of a significant decrease in value of an investment in a given investment strategy;
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●
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The marketability of the securities involved;
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●
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The extent to which the performance of the strategy correlates with other strategies;
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●
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The type of investment or economic environment that will affect the particular strategy; and
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●
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The cost of implementing the strategy, including transaction costs and fees of an investment in the Investment Fund.
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●
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Identify prospective Investment Funds using the selected strategy;
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●
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Make a preliminary evaluation of those prospective Investment Funds by comparing their respective Investment Managers’ performance, assets under management and structure;
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●
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Interview personnel at the prospective Investment Managers which appear to offer the most attractive investment opportunities;
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●
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Assess the personal characteristics of the principals and/or key personnel of each prospective Investment Manager, including their integrity, talent, expertise, flexibility and dedication;
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●
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Examine and evaluate the operational capabilities of each prospective Investment Manager’s administrative, audit, clearing, execution and custodial relationships (this examination is performed by the Subadviser’s operational due diligence team); and
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●
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Evaluate each prospective Investment Manager in terms of a risk/reward analysis and estimated cost of management.
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●
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The prospective Investment Manager (including its principals and/or key personnel) has a significant amount of its own capital invested in the Investment Fund or its investment program;
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●
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The prospective Investment Manager has achieved a high rate of return relative to the apparent risk;
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●
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The prospective Investment Manager has specialized expertise and is talented, flexible and opportunistic; and
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●
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The prospective Investment Manager has sufficient organizational depth to ensure continuity or, alternatively, to provide liquidity if the prospective Investment Manager is unable to execute its strategy effectively.
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●
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A reallocation or rebalancing of capital among the investment strategies selected for the Fund;
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●
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A change in the Investment Fund’s strategy or discipline;
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●
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A significant change of circumstances with respect to an Investment Manager, including changes in assets under management or investment management personnel;
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●
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A conflict or potential conflict of interest;
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●
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Performance that is low relative to the performance of other prospective Investment Funds implementing the same or a similar investment strategy;
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●
|
Compliance with the 1940 Act or other applicable law; and
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●
|
Identification of new prospective Investment Funds whose prospects are considered superior to current Investment Funds implementing the same or a similar investment strategy.
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●
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Issue senior securities, except to the extent permitted by Section 18 of the 1940 Act or as otherwise permitted by the SEC or its staff.
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●
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Borrow money, except to the extent permitted by Section 18 of the 1940 Act or as otherwise permitted by the SEC or its staff.
|
●
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Underwrite securities of other issuers, except insofar as the Fund may be deemed an underwriter under the 1933 Act, in connection with the disposition of its portfolio securities.
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●
|
Make loans of money or securities to other persons, except through purchasing fixed-income securities or similar investments, lending portfolio securities, or entering into repurchase agreements in a manner consistent with the Fund’s investment policies.
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●
|
Purchase, hold or deal in real estate, except that the Fund may invest in securities that are secured by real estate, or that are issued by companies that invest or deal in real estate or REITs.
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●
|
Invest directly in commodities or commodity contracts. This does not prevent the Fund from purchasing and selling foreign currency, options, futures and forward contracts, including those related to indexes and options on indexes, and the Fund may invest in commodity pools and other entities that purchase and sell commodities and commodity contracts.
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●
|
Invest 25% or more of its total assets in any single industry or group of industries (other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities).
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Name and Age(1)
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Position(s) With the Fund
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Term of Office and Length(2) of Time Served
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Principal Occupation(s) During Past Five Years
|
Number of Portfolios In Fund Complex(3) Overseen by Managers
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Other Directorships Held by Managers During the Last 5 Years
|
Adam Taback*
Age: 39
|
Manager, President
|
Since 2010
|
President, Alternative Strategies Group, Inc., since 2001; President, Alternative Strategies Brokerage Services, Inc., since 2010
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3
|
Trustee, ASGI Agility Income Fund, since 2010; Trustee, ASGI Corbin Multi-Strategy Fund, LLC, since 2010.
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James Dean
Age: 54
|
Manager
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Since 2010
|
Dean, Associate Dean, Kenan-Flagler Business School, UNC Chapel Hill, since 1998
|
3
|
Trustee, ASGI Agility Income Fund, since 2010; Trustee, ASGI Corbin Multi-Strategy Fund, LLC, since 2010.
|
James Dunn
Age: 37
|
Manager
|
Since 2010
|
Vice President, Chief Investment Officer, Wake Forest University, since 2009; Managing Director, Chief Investment Officer, Wilshire Associates, 2005-2009.
|
3
|
Trustee, ASGI Agility Income Fund, since 2010; Trustee, ASGI Corbin Multi-Strategy Fund, LLC, since 2010.
|
Stephen Golding
Age: 62
|
Manager
|
Since 2010
|
Chief Financial Officer, Vice President Finance and Administration, Ohio University, since 2010.
|
3
|
Trustee, Washington College, since 2003; Trustee, ASGI Agility Income Fund, since 2010; Trustee, ASGI Corbin Multi-Strategy Fund, LLC, since 2010.
|
James Hille
Age: 49
|
Manager
|
Since 2010
|
Chief Investment Officer, Texas Christian University, since 2006; Chief Investment Officer, Texas Teachers, 1995-2006.
|
3
|
Trustee, Employees Retirement System of Fort Worth, since 2007; Board Member, Texas Comptroller’s Investment Advisory Board, since 2007; Trustee, Trinity Valley School, since 2009; Trustee, ASGI Agility Income Fund, since 2010; Trustee, ASGI Corbin Multi-Strategy Fund, LLC, since 2010.
|
Jonathan Hook
Age: 53
|
Manager
|
Since 2010
|
Vice President, Chief Investment Officer, The Ohio State University, since 2008; Chief Investment Officer, Baylor University, 2001-2008.
|
3
|
Trustee, ASGI Agility Income Fund, since 2010; Trustee, ASGI Corbin Multi-Strategy Fund, LLC, since 2010.
|
*
|
Indicates an interested Manager.
|
(1)
|
As of January 3, 2011.
|
(2)
|
Each Manager serves until death, retirement, resignation or removal from the Board. Any Manager may be removed, with or without cause, at any meeting of the Members by a vote of Members owning at least two-thirds of the outstanding Interests.
|
(3)
|
The “Fund Complex” is currently comprised of three closed-end registered investment companies.
|
Name and Age(1)
|
Position(s) With the Fund
|
Length of Time Served(2)
|
Principal Occupation During Past Five Years
|
Michael Roman
Age: 30
|
Treasurer
|
Since 2010
|
Fund Reporting Manager, Alternative Strategies Group, Inc., since 2007; Senior Analyst, Alternative Strategies Group, Inc., 2006; Senior Financial Analyst, Turbine, Inc., 2003-2006.
|
Britta Patterson
Age: 36
|
Secretary
|
Since 2010
|
Director, Chief Administrative Officer, Alternative Strategies Group, Inc., since 2005.
|
Lloyd Lipsett
Age: 45
|
Assistant Secretary
|
Since 2010
|
Vice President, Senior Counsel, Wells Fargo & Company, since 2009; Vice President and Secretary, Alternative Strategies Group, Inc., since 2009; Senior Vice President, Counsel, Wachovia Corporation (predecessor to Wells Fargo & Company), 2004-2009.
|
Ankit Patel
Age: 30
|
Assistant Treasurer
|
Since 2010
|
Senior Fund Reporting Analyst, Alternative Strategies Group, Inc., since 2008; Account Manager, State Street Corporation, 2006-2007; Senior Fund Accountant, State Street Corporation, 2005-2006.
|
Sheelpa Patel Brown
Age: 37
|
Chief Compliance Officer
|
Since 2010
|
Chief Compliance Officer, Alternative Strategies Group, Inc., since 2005; Chief Compliance Officer, Alternative Strategies Brokerage Services, Inc. since 2010.
|
Yukari Nakano
Age: 58
|
Chief Operating Officer
|
Since 2010
|
Senior Vice President (since 2003) and Chief Operating Officer, Alternative Strategies Group, Inc., since 2010.
|
(1)
|
As of January 3, 2011.
|
(2)
|
Each officer of the Fund serves for an indefinite term until the date his or her successor is elected and qualified, or until he or she sooner dies, retires, is removed or becomes disqualified.
|
Name of Manager
|
Aggregate Compensation from the Fund
|
Total Compensation from the Fund Complex
|
Adam Taback*
|
$0
|
$0
|
James Dean
|
$6,666.67
|
$20,000
|
James Dunn
|
$6,666.67
|
$20,000
|
Stephen Golding
|
$8,333.33
|
$25,000
|
James Hille
|
$6,666.67
|
$20,000
|
Jonathan Hook
|
$6,666.67
|
$20,000
|
|
* Indicates an interested Manager.
|
|
(1)
|
Information provided in this table is based upon estimated payments to the Managers for the Fund’s first full fiscal year ending March 31, 2012.
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
||||
Subadviser Portfolio Managers
|
Number of Accounts*
|
Total Assets of Accounts Managed
($)
|
Number of
Accounts**
|
Total Assets of
Accounts Managed
($)
|
Number of Accounts
|
Total Assets of
Accounts Managed
($)
|
Roxanne M. Martino
|
0
|
0
|
11
|
10,285,085,031
|
0
|
0
|
Scott C. Schweighauser
|
0
|
0
|
11
|
10,285,085,031
|
0
|
0
|
Justin D. Sheperd
|
0
|
0
|
11
|
10,285,085,031
|
0
|
0
|
Anne Marie Morley
|
0
|
0
|
11
|
10,285,085,031
|
0
|
0
|
Registered Investment Companies(1)
|
Other Pooled Investment Vehicles
|
Other Accounts
|
|||
Number of
Accounts
(not
including
the fund)
|
Total Assets of
Accounts
Managed
($)
|
Number of
Accounts
|
Total Assets of
Accounts
Managed
($)
|
Number
of
Accounts
|
Total Assets of
Accounts Managed
($)
|
0*
|
0*
|
5*
|
369,756,033*
|
0*
|
0*
|
0**
|
0**
|
9**
|
10,285,085,031**
|
0**
|
0**
|
● |
the Management Fee and certain out-of-pocket expenses incurred by the Adviser, as set forth in the advisory agreement between the Adviser and the Fund;
|
|
● |
all costs and expenses directly related to investment transactions and positions for the Fund’s account, including, but not limited to, advisory fees, performance allocation, brokerage commissions, placement fees, issue and transfer taxes, fees associated with certain computer research tools exclusively utilized by or for the Fund, interest and commitment fees on loans and debit balances, borrowing charges on securities sold short, dividends on securities sold but not yet purchased, custodial fees, margin fees, transfer taxes and premiums, taxes withheld on foreign dividends, and indirect expenses from investments in Investment Funds; provided, that the Subadviser will pay the cost of any research it conducts pursuant to its obligations under the Subadvisory Agreement;
|
|
● |
all costs and expenses associated with organizational matters, operation and registration of the Fund, the offering costs and the costs of compliance with applicable federal and state laws, including any regulatory filings;
|
|
● |
all fees paid to the Independent Managers as compensation for serving in such capacity, including fees and travel-related expenses of the Independent Managers;
|
|
● |
attorneys’ fees and disbursements associated with updating the Fund’s registration statement, this Memorandum and other offering related documents (the “Offering Materials”); the costs of printing the Offering Materials; and attorneys’ fees and disbursements associated with the preparation and review thereof;
|
|
● |
the fees and costs and expenses of holding meetings of the Board and any meetings of Members, including costs associated with the preparation and dissemination of proxy materials;
|
|
● |
the fees and disbursements of the Fund’s counsel, legal counsel to the Independent Managers, if any, auditing and accounting expenses and fees and disbursements for independent accountants for the Fund, and other consultants and professionals engaged on behalf of the Fund, and any extraordinary expenses;
|
|
● |
all costs and expenses associated with the Fund’s repurchase offers;
|
|
● |
all fees payable to custodians and other persons providing administrative services to the Fund;
|
|
● |
the costs of a fidelity bond and any liability insurance obtained on behalf of the Fund, the Board or indemnitees;
|
|
● |
all costs and expenses of preparing, setting in type, printing, filing and distributing reports, tax information and other communications to Members;
|
|
● |
all expenses associated with computing the Fund’s net assets, including any equipment or services obtained for these purposes;
|
|
● |
all taxes, membership dues, interest on borrowings, nonrecurring and extraordinary expenses; and
|
|
● |
such other types of expenses as may be approved from time to time by the Board.
|
● |
Any bank, as defined in Section 2(13) of the 1933 Act, acting in its individual or fiduciary capacity;
|
|
●
|
Any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, acting in its individual or fiduciary capacity;
|
|
●
|
Any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “1934 Act”);
|
|
●
|
Any insurance company as defined in Section 2(a)(13) of the 1933 Act;
|
|
●
|
Any investment company registered under the 1940 Act or a business development company as defined in Section 2(a)(48) of the 1940 Act;
|
|
●
|
Any small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;
|
|
●
|
Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and who has a reasonable expectation of reaching the same income level in the current year;
|
|
●
|
Any natural person who has a net worth or joint net worth with that person’s spouse at the time of purchase of an Interest that exceeds $1,000,000, excluding the value of the primary residence of such natural person (“net worth” for this purpose means excess of total assets at fair market value over total liabilities. For the purposes of determining "net worth", the principal residence owned by a natural person shall be excluded from both total assets and total liabilities, except that liabilities attached to such residence should be included in total liabilities to the extent that liabilities attached to such residence exceed the fair market value of the residence);
|
|
●
|
Any private business development company as defined in Section 202(a)(22) of the Advisers Act;
|
|
●
|
Any trust (i) with total assets in excess of $5,000,000, (ii) that was not formed for the purpose of acquiring an Interest and (iii) of which the person responsible for directing the investment of assets in the Fund has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment;
|
|
●
|
Any Manager or executive officer of the Fund;
|
|
●
|
Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
|
|
●
|
Any employee benefit plan within the meaning of ERISA, if (i) the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company or registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000, or (iii) if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
|
|
●
|
Any organization described in section 501(c)(3) of the Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring an Interest, with total assets in excess of $5,000,000; or
|
|
●
|
An entity in which all of the equity owners meet the qualifications set forth above.
|
|
A “qualified client” includes, among others, a natural person or company (as defined in the Advisers Act) that: | ||
●
|
Has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $1.5 million; or
|
|
●
|
Immediately after its purchase of an Interest, will have at least $750,000 under the management of the Adviser or Subadviser.
|
● |
An Interest has been transferred or such Interest has vested in any person by operation of law as the result of the death, divorce, bankruptcy, insolvency, dissolution, or incompetency of a Member;
|
● |
Ownership of an Interest by the Member or other person will cause the Fund to be in violation of, or subject the Fund to additional registration or regulation under, the securities laws of the United States or any other relevant jurisdiction;
|
● |
Continued ownership of the Interest may subject the Fund or any of its Members to an undue risk of adverse tax or other fiscal consequences;
|
● |
Any of the representations and warranties made by a Member in connection with the acquisition of the Interest was not true when made or has ceased to be true; or
|
● |
It would be in the best interests of the Fund, as determined by the Board in its sole and absolute discretion, for the Fund to repurchase such Interest.
|
Equity securities, puts, calls and futures traded on a U.S. securities or futures exchange or on NASDAQ are valued as follows: | ||
(1)
|
If last sale information is regularly reported, they are valued at the last reported sale price on the principal exchange on which they are traded or on NASDAQ, as applicable, on that day; or
|
|
(2)
|
If last sale information is not available on a valuation date, they are valued at the last reported sale price preceding the valuation date if it is within the spread of the closing “bid” and “ask” prices on the valuation date or, if not, at the closing “bid” price on the valuation date.
|
|
Equity securities traded on a foreign securities exchange generally are valued in one of the following ways: | ||
(1)
|
At the last sale price available to the pricing service approved by the Board; or
|
|
(2)
|
At the last sale price obtained by the Fund or the Adviser from the report of the principal exchange on which the security is traded at its last trading session on or immediately before the valuation date; or
|
|
(3)
|
At the mean between the “bid” and “ask” prices obtained from the principal exchange on which the security is traded or, on the basis of reasonable inquiry, from two market makers in the security.
|
|
The following securities are valued at the mean between the “bid” and “ask” prices determined by a pricing service approved by the Board or obtained by the Fund or the Adviser from two active market makers in the security on the basis of reasonable inquiry: | ||
(1)
|
Debt instruments that have a maturity of more than 397 days when issued;
|
|
(2)
|
Debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more than 60 days;
|
|
(3)
|
Non-money market debt instruments that had a maturity of 397 days or less when issued and which have a remaining maturity of 60 days or less; and
|
|
(4)
|
Puts, calls and futures that are not traded on an exchange or on NASDAQ.
|
|
●
|
Performance figures are not the performance of the Fund. The Composite Performance shown is not the performance of the Fund and is not an indication of how the Fund would have performed in the past or will perform in the future. The Fund’s performance in the future will be different from the Composite Performance presented, due to factors such as differences in the cash flows, expenses, portfolio size and composition, availability of underlying hedge funds, willingness of hedge fund managers to take additional assets, asset allocation methodology, and differing hedge fund liquidity constraints. In particular, Composite Performance is not necessarily an indication of how the Fund will perform, as the Private Funds are not subject to investment limitations, leverage restrictions, diversification requirements and other restrictions imposed on investment companies by the 1940 Act and the Internal Revenue Code, which, if applicable, can have a negative impact on the Fund’s performance.
|
|
●
|
There have been significant fluctuations in the market in the past few years. The performance for the period is shown through November 30, 2010. The markets have been quite volatile in the last few years, and this trend may continue. As a result, the performance included herein will not reflect the latest volatility in the markets, if any occurs.
|
●
|
The performance shown are averages. The information below shows monthly rates of return for the years indicated, but does not reflect any volatility that may have occurred within a given period.
|
Year
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
YTD
|
2010
|
0.56%
|
0.57%
|
3.31%
|
1.54%
|
-3.97%
|
-1.57%
|
1.98%
|
-0.91%
|
3.51%
|
1.82%
|
-0.07%
|
6.74%
|
|
2009
|
0.49%
|
-1.40%
|
0.56%
|
4.85%
|
6.34%
|
0.82%
|
3.95%
|
2.86%
|
3.35%
|
-0.25%
|
1.57%
|
2.65%
|
28.71%
|
2008
|
-5.15%
|
0.71%
|
-3.31%
|
2.22%
|
2.34%
|
-2.63%
|
-2.96%
|
-1.03%
|
-8.68%
|
-8.30%
|
-2.68%
|
0.10%
|
-26.30%
|
2007
|
1.38%
|
0.95%
|
1.70%
|
2.48%
|
2.45%
|
1.19%
|
1.11%
|
-1.58%
|
2.73%
|
4.03%
|
-1.08%
|
0.71%
|
17.15%
|
2006
|
3.22%
|
0.49%
|
1.70%
|
1.87%
|
-2.78%
|
-0.99%
|
-0.04%
|
1.25%
|
0.91%
|
2.36%
|
2.24%
|
1.87%
|
12.65%
|
2005
|
0.46%
|
2.03%
|
-0.28%
|
-1.10%
|
1.26%
|
1.71%
|
2.37%
|
1.54%
|
2.44%
|
-2.61%
|
1.98%
|
2.82%
|
13.22%
|
2004
|
1.34%
|
1.31%
|
0.71%
|
-0.90%
|
-0.68%
|
0.65%
|
-0.22%
|
0.29%
|
1.51%
|
1.19%
|
3.30%
|
2.46%
|
11.43%
|
2003
|
1.35%
|
0.48%
|
0.75%
|
2.86%
|
3.62%
|
0.78%
|
0.13%
|
0.95%
|
2.12%
|
1.31%
|
1.10%
|
3.20%
|
20.26%
|
2002
|
0.93%
|
0.22%
|
1.11%
|
1.42%
|
0.17%
|
-2.21%
|
-2.54%
|
0.63%
|
0.02%
|
-0.45%
|
1.54%
|
1.37%
|
2.12%
|
2001
|
3.06%
|
0.40%
|
-0.66%
|
0.18%
|
1.38%
|
0.25%
|
-0.12%
|
0.63%
|
-0.53%
|
1.40%
|
1.82%
|
2.58%
|
10.80%
|
2000
|
-1.26%
|
7.21%
|
-0.08%
|
-3.63%
|
-0.17%
|
2.00%
|
-1.10%
|
2.60%
|
-0.76%
|
-0.94%
|
-2.48%
|
1.98%
|
2.98%
|
1999
|
2.52%
|
-0.40%
|
5.14%
|
6.45%
|
0.46%
|
6.31%
|
1.28%
|
0.37%
|
0.66%
|
0.77%
|
7.53%
|
10.83%
|
49.99%
|
1998
|
0.04%
|
3.48%
|
4.17%
|
0.38%
|
-2.53%
|
-2.24%
|
0.35%
|
-16.95%
|
-2.07%
|
-1.35%
|
3.75%
|
2.09%
|
-12.03%
|
1997
|
3.46%
|
1.92%
|
0.15%
|
0.13%
|
1.62%
|
2.49%
|
6.15%
|
-1.70%
|
2.37%
|
-2.37%
|
0.04%
|
2.29%
|
17.51%
|
1996
|
3.98%
|
0.26%
|
0.93%
|
3.94%
|
3.25%
|
1.74%
|
-0.13%
|
1.75%
|
1.45%
|
1.45%
|
2.93%
|
1.92%
|
26.05%
|
1995
|
-2.71%
|
0.05%
|
0.69%
|
3.60%
|
2.15%
|
0.76%
|
1.66%
|
0.53%
|
1.39%
|
-1.07%
|
0.03%
|
3.29%
|
10.70%
|
1994
|
1.98%
|
-2.00%
|
-3.71%
|
-2.59%
|
-0.35%
|
0.43%
|
1.28%
|
2.07%
|
1.12%
|
-0.88%
|
-1.17%
|
-1.22%
|
-5.10%
|
1994
|
1995
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
-5.10%
|
10.70%
|
26.05%
|
17.51%
|
-12.03%
|
49.99%
|
2.98%
|
10.80%
|
2.12%
|
20.26%
|
11.43%
|
13.22%
|
12.65%
|
17.15%
|
-26.30%
|
28.71%
|
Annualized Return Since Inception
(January 1994 – November 2010)
|
Standard Deviation
|
Sharpe Ratio
|
9.78%
|
9.28%
|
0.70
|
(1)
|
The Composite Performance has been calculated using an asset-weighted average of the returns of the Private Funds.
|
|
(2)
|
The Composite Performance shown is calculated using gross of management and performance fee Private Fund performance adjusted to deduct the Management Fee and Performance Allocation applicable to the Fund, except that the Expense Limitation Agreement has not been applied (if applicable). Performance Allocations for the Fund, if any, will be accrued and paid with respect to a Member’s Capital Account(s) as set forth in the Memorandum. Except for 2010, Composite Performance returns are derived from audited numbers.
|
|
(3)
|
The total operating fees and expenses of the Private Funds may be lower than the anticipated total operating expenses of the Fund, in which case the Composite Performance shown would have been lower had the anticipated total operating expenses of the Fund been used to compute the Composite Performance.
|
|
(4)
|
The Composite Performance information from January 1, 1994 to June 30, 2006 is based on the performance of one Private Fund (because the other Private Fund had yet to commence operations). The Composite Performance information from July 1, 2006 through November 30, 2010 is based on the performance of both Private Funds.
|
|
(5)
|
The Composite Performance includes all fees and expenses borne directly by the Private Funds (with the exception of management and performance fees, which have been adjusted to reflect those for the Fund) and indirectly by the Private Funds as investors in other private investment funds.
|
|
(6)
|
Standard Deviation measures the dispersal or uncertainty in a random variable (in this case, investment returns). It measures the degree of variation of returns around the mean (average) return. The higher the volatility of the investment returns, the higher the standard deviation will be.
|
|
(7)
|
Sharpe Ratio is a measure of reward per unit of risk. The return of a portfolio in excess of the risk-free rate (in this case, the annualized 90 day T-bill rate) is divided by the portfolio’s historical standard deviation.
|
ARTICLE I: DEFINITIONS
|
1
|
||
ARTICLE II: ORGANIZATION; ADMISSION OF MEMBERS
|
4
|
||
2.1
|
FORMATION OF LIMITED LIABILITY COMPANY
|
4
|
|
2.2
|
NAME
|
5
|
|
2.3
|
PRINCIPAL AND REGISTERED OFFICE
|
5
|
|
2.4
|
DURATION
|
5
|
|
2.5
|
BUSINESS OF THE FUND
|
5
|
|
2.6
|
BOARD OF MANAGERS
|
7
|
|
2.7
|
MEMBERS
|
8
|
|
2.8
|
INITIAL CONTRIBUTION
|
8
|
|
2.9
|
BOTH MANAGERS AND MEMBERS
|
8
|
|
2.10
|
LIMITED LIABILITY
|
9
|
|
ARTICLE III: MANAGEMENT
|
9
|
||
3.1
|
MANAGEMENT AND CONTROL
|
9
|
|
3.2
|
ACTIONS BY THE BOARD OF MANAGERS
|
10
|
|
3.3
|
MEETINGS OF MEMBERS
|
10
|
|
3.4
|
CUSTODY OF THE FUND’S ASSETS
|
11
|
|
3.5
|
OTHER ACTIVITIES OF MEMBERS AND MANAGERS
|
12
|
|
3.6
|
DUTY OF CARE
|
12
|
|
3.7
|
INDEMNIFICATION
|
12
|
|
3.8
|
FEES, EXPENSES AND REIMBURSEMENT
|
14
|
|
ARTICLE IV: TERMINATION OF STATUS OF ADVISER AND MANAGERS, TRANSFERS AND REPURCHASES
|
15
|
||
4.1
|
TERMINATION OF STATUS OF A MANAGER
|
15
|
|
4.2
|
REMOVAL OF THE MANAGERS
|
16
|
|
4.3
|
TRANSFER OF INTERESTS OF MEMBERS
|
16
|
|
4.4
|
REPURCHASE OF INTERESTS
|
17
|
|
ARTICLE V: CAPITAL
|
19
|
||
5.1
|
CAPITAL CONTRIBUTIONS
|
19
|
|
5.2
|
RIGHTS OF MEMBERS TO CAPITAL
|
20
|
|
5.3
|
CAPITAL ACCOUNTS
|
20
|
5.4
|
ALLOCATION OF NET PROFIT AND NET LOSS; ALLOCATION OF OFFERING COSTS
|
20
|
|
5.5
|
RESERVES
|
22
|
|
5.6
|
TAX ALLOCATIONS
|
22
|
|
5.7
|
DISTRIBUTIONS
|
22
|
|
5.8
|
WITHHOLDING
|
22
|
|
ARTICLE VI: DISSOLUTION AND LIQUIDATION
|
23
|
||
6.1
|
DISSOLUTION
|
23
|
|
6.2
|
LIQUIDATION OF ASSETS
|
23
|
|
ARTICLE VII: ACCOUNTING, VALUATIONS, AND BOOKS AND RECORDS
|
24
|
||
7.1
|
ACCOUNTING AND REPORTS
|
24
|
|
7.2
|
DETERMINATIONS BY THE BOARD OF MANAGERS
|
25
|
|
7.3
|
VALUATION OF ASSETS
|
25
|
|
ARTICLE VIII: MISCELLANEOUS PROVISIONS
|
26
|
||
8.1
|
AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT
|
26
|
|
8.2
|
SPECIAL POWER OF ATTORNEY
|
27
|
|
8.3
|
NOTICES
|
27
|
|
8.4
|
AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
|
28
|
|
8.5
|
APPLICABILITY OF 1940 ACT AND FORM N-2
|
28
|
|
8.6
|
CHOICE OF LAW
|
28
|
|
8.7
|
NOT FOR BENEFIT OF CREDITORS
|
28
|
|
8.8
|
THIRD-PARTY BENEFICIARIES
|
28
|
|
8.9
|
MERGER AND CONSOLIDATION
|
28
|
|
8.10
|
PRONOUNS
|
29
|
|
8.11
|
CONFIDENTIALITY
|
29
|
|
8.12
|
SEVERABILITY
|
30
|
|
8.13
|
FILING OF RETURNS
|
30
|
|
8.14
|
TAX MATTERS PARTNER
|
30
|
|
8.15
|
SECTION 754 ELECTION
|
31
|
|
8.16
|
USE OF NAMES “ALTERNATIVE STRATEGIES GROUP, INC.,” “ASGI” AND “ASGI AURORA OPPORTUNITIES FUND, LLC”
|
31
|
|
8.17
|
ACKNOWLEDGMENT BY THE PARTIES
|
32
|
1)
|
the last day of each Fiscal Year;
|
|
2)
|
the last day of each Taxable Year;
|
|
3)
|
the day preceding any day as of which a contribution to the capital of the Fund is made pursuant to Section 5.1;
|
|
4)
|
any day on which the Fund values any Interest of any Member in connection with the repurchase of such Interests;
|
|
5)
|
the day upon which any subadvisory agreement is terminated; or
|
|
6)
|
any day (other than one specified in clause (2) above) as of which this Agreement provides for any amount to be credited to or debited against the Capital Account of any Member, other than an amount to be credited to or debited from the Capital Accounts of all Members in accordance with their respective ownership of Interests.
|
5.4
|
ALLOCATION OF NET PROFIT AND NET LOSS; ALLOCATION OF OFFERING COSTS
|
|
|||
ALTERNATIVE INVESTMENTS
_______________________________________________________
Name of Offeree
_______________________________________________________
Copy Number
|
|||
Subscription Agreement
ASGI Aurora Opportunities Fund, LLC
Important Information About Opening Your New Account
To help fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record information that identifies
each person who opens an account.
|
|||
WealthAOF2011v1 | |||
Investment Procedures
|
Pages(s)
|
|
Read this part in its entirety
|
3-11
|
|
Part I – Account Ownership/Investor Information – (applicable to ALL Subscribers)
|
||
Complete
|
Section A - Registered Holder of Record Information
|
12
|
Complete
|
Section B - Investor Type
|
12
|
Complete
|
Section C - Correspondence Preference
|
12
|
Complete
|
Section C - Interested Party Communications if applicable
|
13
|
Part II – Subscription Information – (applicable to ALL Subscribers)
|
||
Complete
|
Effective Date
|
13
|
Subscription Amount
|
||
Wells Fargo Funding Account
|
||
Part III – Supplemental Data for Entities – (applicable to ALL entities including ALL Trusts)
|
||
Complete
|
Legal Form of Entity
|
14
|
State in Which Organized
|
||
State of Primary Business
|
||
Year of Organization
|
||
Primary Business (not applicable to Trusts)
|
||
Part IV – Accredited Investor and Qualified Client Status – (applicable to All Subscribers)
|
||
Complete
|
Accredited Investor Status by checking the MOST applicable option
|
14-15
|
Complete
|
Qualified Client Status by checking the MOST applicable option
|
15-16
|
Part V – Substitute W9 Form
|
||
Complete
|
Name & U.S. Tax Identification Number
|
17-18
|
Part VI – Wells Fargo Bank, N.A. Certification and Signatures
|
||
Complete
|
Section D - Capacity in which Wells Fargo Bank, N.A. is Acting.
|
19
|
Complete
|
Section E – Signatures
|
19
|
Appendix A – Document Checklist
|
||
Supply
|
The required documentation with the complete Subscription Agreement
|
20
|
Wells Fargo Bank, N.A.
Alternative Strategies Group
333 Market Street, 29th Floor (A0119-291)
San Francisco, CA 94105
|
(A)
|
The Investor agrees to become a Member of the Fund and, in connection therewith, subscribes for and agrees to purchase Interests in and to make a capital contribution (a “Capital Contribution”) to the Fund. Payment for Interests must be received by wire three (3) Business Days prior to the closing date established by the Fund for the subscription (the “Closing Date”). Any interest earned on the Investor’s payment (the “Payment”) will be for the benefit of the Fund rather than be paid to the Investor, whether the subscription for the Interests is accepted or rejected. The minimum initial investment in the Fund is $50,000. The minimum additional investment is
|
(B)
|
The Investor understands and agrees that the Fund reserves the right to reject a subscription for Interests for any reason or no reason, in whole or in part, and at any time prior to its acceptance. If the subscription is rejected, the Payment will be returned promptly to the Investor without deduction and this Subscription Agreement shall have no force or effect. Upon acceptance of this subscription by the Fund, the Investor shall become a Member of the Fund.
|
(A)
|
The Investor will not sell or otherwise transfer the Interests without registration under the Securities Act, or an exemption therefrom. The Investor understands and agrees that it must bear the economic risk of its investment in Interests for an indefinite period of time (subject to limited rights of repurchase and transfer provided in the LLC Agreement) because, among other reasons, the Interests have not been registered under the Securities Act or under the securities laws of certain states and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless it is so registered or an exemption from registration is available. The Investor understands that the Fund is under no obligation to register the Interests on its behalf or to assist it in complying with any exemption from registration under the Securities Act. With limited exceptions, the Interests can only be transferred with the prior authorization of the Board, which may be withheld in the Boards’ sole and absolute discretion. The Investor understands and acknowledges that the Board in its sole and absolute discretion may cause a mandatory repurchase of all or any portion of the Investor’s Interest(s) in accordance with the LLC Agreement. The Investor also understands that sales or transfers of Interests are further restricted by the LLC Agreement and state securities laws.
|
(B)
|
The Investor has received, carefully read and understands the LLC Agreement and the Memorandum outlining, among other things, the organization and investment objectives and policies of, and the risks and expenses of an investment in, the Fund. The Investor acknowledges that it has made an independent decision to invest in the Interests and that, in making its decision to subscribe for Interests, the Investor has relied solely upon the Memorandum, the LLC Agreement and independent investigations made by the Investor. The Investor is not relying on the Fund or the Board, Alternative Strategies Group, Inc. (the “Adviser”), Aurora Investment Management L.L.C. (the “Subadviser”), the Administrator or any other person or entity with respect to the legal, tax and other economic considerations involved in this investment other than the Investor’s own advisors. The Investor’s investment in Interests is consistent with the investment purposes, objectives and cash flow requirements of the Investor and will not adversely affect the Investor’s overall need for diversification and liquidity.
|
(C)
|
The Investor has not reproduced, duplicated or delivered the Memorandum, the LLC Agreement or this Subscription Agreement to any other person, except professional advisors to the Investor or as instructed by the Fund or the Adviser. Notwithstanding the foregoing, the Investor and each employee, representative or other agent of the Investor may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of (i) the Fund and (ii) any of its transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the Investor relating to such tax treatment and tax structure.
|
(D)
|
The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of the Investor’s investment in the Interests and is able to bear such risks. The
|
(E)
|
The Investor is aware of the limited provisions for repurchase and transfer of Interests, and has read the section of the Memorandum entitled “Repurchases and Transfers of Interests.” The Investor has no need for liquidity in this investment, can afford a complete loss of the investment in the Interests and can afford to hold the investment for an extended period of time. The Investor acknowledges that distributions, including, without limitation, the proceeds of repurchases, may be paid in cash or in-kind.
|
(F)
|
The Investor is acquiring Interests for its own account, for investment purposes only and not with a view toward distributing or reselling Interests in whole or in part.
|
(G)
|
The Investor understands that by investing in the Fund, the Investor is indirectly investing in investment funds, and that the Investor’s Interests will indirectly bear a pro rata portion of the asset-based fees, performance-based allocations and other expenses borne indirectly by the Fund as an investor in such investment funds.
|
(H)
|
The Investor understands that:
|
|
(1)
|
No federal or state agency has passed upon the Interests or made any findings or determination as to the fairness of this investment; and
|
|
(2)
|
The representations, warranties, agreements, undertakings and acknowledgments made by the Investor in this Subscription Agreement will be relied upon by the Fund and the Adviser in determining the Investor’s suitability as a purchaser of Interests and the Fund’s compliance with federal and state securities laws, and shall survive the Investor’s admission as a Member.
|
(I)
|
The Investor has all requisite power, authority and capacity to acquire and hold the Interests and to execute, deliver and comply with the terms of each of the instruments required to be executed and delivered by the Investor in connection with the Investor’s subscription for the Interests, including this Subscription Agreement, and such execution, delivery and compliance does not conflict with, or constitute a default under, any instruments governing the Investor, or violate any law, regulation or order, or any agreement to which the Investor is a party or by which the Investor may be bound. If the Investor is an entity, the person executing and delivering each of such instruments on behalf of the Investor has all requisite power, authority and capacity to execute and deliver such instruments, and, upon request by the Fund or the Adviser, will furnish to the Fund a true and correct copy of any instruments governing the Investor, including all amendments thereto.
|
(J)
|
All information that the Investor has provided to the Fund or the Adviser concerning the Investor, the Investor’s status, financial position and knowledge and experience of financial, tax and business matters, or, in the case of an Investor that is an entity, the knowledge and experience of financial, tax and business matters of the person making the investment decision on behalf of such entity, is correct and complete as of the date set forth herein.
|
(K)
|
The Investor understands that the value of a Member’s Interests and repurchases from the Fund under the LLC Agreement, and the performance of the Fund, may be based on unaudited and in some cases, estimated, valuations of the Fund’s investments and that valuations provided in an Investor’s account statement may be an unaudited, estimated value.
|
(L)
|
If the Investor is a Benefit Plan Investor (as defined below) or an employee benefit plan or account of any kind, regardless of whether the plan is subject to U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”)(such Benefit Plan Investor, plan, or account are referred to collectively as a “Plan”), the person executing this Subscription Agreement on behalf of the Plan (the “Fiduciary”) represents and warrants to the Fund that:
|
(3)
|
The Fiduciary acknowledges that the assets of the Fund will be invested in accordance with the
|
||
investment policies and objectives described in the Memorandum. The Fiduciary has determined that an investment in the Interests meets all requirements of all laws and regulations applicable to the Plan. The Fiduciary has determined that an investment in the Interests is prudent and in the interests of the Plan, considering, among other things: (A) the role that an investment in the Interests would play in the Plan’s portfolio, taking into consideration whether the investment is designed reasonably to further the Plan’s purposes, the risk and return factors associated with the investment, the composition of the Plan’s total investment portfolio with regard to diversification, the liquidity and current return of the Plan’s portfolio relative to its anticipated cash flow needs, and the projected return of the Plan’s portfolio relative to its objectives, (B) the fact that the Members may consist of a diverse group of investors (possibly including taxable and tax-exempt entities) and that the Adviser necessarily will not take the investment objectives of any particular Member that are not consistent with those of the Fund into account in managing Fund investments, (C) limitations on the Plan’s right to redeem or transfer Interests, and (D) the tax effects of an investment in the Interests. | |||
(4)
|
The Plan’s purchase and holding of Interests will not constitute a transaction prohibited under ERISA,
|
||
Section 4975 of the Code, or other applicable law, for which no exemption applies. Neither the Adviser, the Subadviser nor any of their respective affiliates, agents, or employees: (A) exercises any authority or control with respect to the management or disposition of assets of the Plan used to purchase the Interests, (B) renders investment advice for a fee (pursuant to an agreement or understanding that such advice will serve as a primary basis for investment decisions and that such advice will be based on the particular investment needs of the Plan), with respect to such assets of the Plan, or has the authority to do so, or (C) is an employer maintaining or contributing to, or any of whose employees are covered by, the Plan. | |||
(5)
|
The Fiduciary understands the fee arrangements described in the Memorandum, including any
|
||
management or performance- or incentive-based compensation or allocation arrangements, and has obtained information (and has had the opportunity to request additional information) regarding such arrangements and the risks associated with them, as necessary to enable the Fiduciary to conclude that such fee arrangements are reasonable and consistent with the interests of the Plan. | |||
(6)
|
Unless otherwise indicated in writing, the Plan is not a participant-directed defined contribution plan and
|
||
the participants of the Plan do not have the power or authority to direct the investment in the Interests. | |||
(M)
|
The Investor acknowledges, or, if the Investor is acting as agent, representative or nominee for a subscriber (a “Beneficial Owner”), the Investor has advised the Beneficial Owner, that the Investor or Beneficial Owner, as the case may be, may be charged a placement fee by a Placement Agent (as defined in the Memorandum) or a sub-placement agent that may be an affiliate of the Adviser or Subadviser. The Investor further acknowledges the Adviser may also pay a percentage of the management fee payable to the Adviser that is earned and attributable to such Investor’s Interests to a Placement Agent.
|
||
(N)
|
The Investor represents and warrants that:
|
||
(1)
|
(a)
|
Except as disclosed herein, the Investor is the beneficial owner of all assets in the Fund and the
|
|
Investor does not own or hold such assets as agent, custodian, nominee, trustee or in any similar capacity for or on behalf of any other person; or
|
|||
(b)
|
the Investor is the representative for an omnibus position and represents that the Investor: (A)
|
||
maintains anti-money laundering policies and procedures that comply with applicable law in jurisdictions in which Interests are distributed; (B) takes reasonable steps to determine (i) the true identity of its customers, (ii) the source of its customers’ funds, and (iii) that its customers are not involved in money laundering activities; (C) complies with any other “know your customer” or customer identification requirements under applicable law; and (D) monitors its customers’ transactions in order to detect attempted or actual money laundering involving Interests. Upon the Administrator’s reasonable request, the Investor agrees to promptly provide the Administrator with documentation relating to its anti-money laundering policies and procedures.
|
|||
(2)
|
all evidence of identity provided to the Fund and/or the Administrator is genuine and all related information
|
||
furnished is accurate; and
|
(O)
|
The Investor understands and agrees that the Fund prohibits the investment of funds by any persons or entities that are acting, directly or indirectly, (1) in contravention of any applicable laws and regulations, including the Bank Secrecy Act and any other anti-money laundering regulations or conventions, (2) on behalf of terrorists, terrorist organizations and any other persons or entities that are included on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Treasury Department's Office of Foreign Assets Control1 (“OFAC”), as such list may be amended from time to time, (3) for a senior foreign political figure, any member of a senior foreign political figure’s immediate family or any close associate of a senior foreign political figure2, unless the Fund, after being specifically notified by the Investor in writing that it is such a person, conducts further due diligence, and determines that such investment shall be permitted, or (4) for a foreign shell bank3 (such persons or entities in (1) – (4) are collectively referred to as “Prohibited Persons”).
|
(P)
|
The Investor represents, warrants and covenants that: (1) it is not, nor is any person or entity controlling, controlled by or under common control with the Investor, a Prohibited Person, and (2) to the extent the Investor has any Beneficial Owners,4 (a) the Investor has all requisite power and authority from the Beneficial Owners to execute and perform the obligations under this Subscription Agreement, (b) the representations, warranties and covenants made in this Subscription Agreement are made by the Investor on behalf of itself and the Beneficial Owners, (c) the Investor has carried out thorough due diligence in accordance with applicable laws and regulations, including the Bank Secrecy Act and any other anti-money laundering regulations or conventions, to establish the identities of such Beneficial Owners, (d) no such Beneficial Owners are Prohibited Persons, (e) it holds the evidence of the identity of each Beneficial Owner and will maintain all such evidence for at least five years from the date as of which the Fund repurchased all of Investor’s remaining Interests in the Fund, and (f) it will make available such information and any additional information requested by the Fund or the Administrator from time to time.
|
(Q)
|
If any of the representations, warranties or covenants in paragraphs (N), (O) and (P) of this Section II ceases to be true or if the Fund no longer reasonably believes that it has satisfactory evidence as to their truth, notwithstanding any other agreement to the contrary, the Fund or the Administrator may, in accordance with applicable regulations, freeze the Investor’s investment, either by prohibiting additional investments, declining or suspending any repurchase requests and/or segregating the assets constituting the investment, or the Investor’s investment may immediately be redeemed by the Fund, and the Fund or the Administrator may also be required to report such action and to disclose the Investor’s identity to OFAC or other authority.
|
(R)
|
The Investor understands and agrees that any repurchase proceeds paid to it will be paid to the same account from which the Investor’s investment in the Fund was originally remitted, unless the Fund, in its sole discretion, agrees otherwise. The Investor recognizes that the Administrator, in accordance with the Administrator’s anti-money laundering (“AML”) procedures, reserves the right to prohibit the movement of any monies if all due diligence requirements have not been met, or, if for any reason, the Administrator feels that the origin of the funds or the parties involved is suspicious. In the event that the movement of monies is withheld in accordance with the Administrator’s AML procedures, the Administrator’s personnel will strictly adhere to all applicable laws, and will notify the Fund as soon as professional discretion allows or as otherwise permitted by law.
|
(S)
|
The Investor agrees that this Subscription Agreement, the Memorandum and all financial statements, tax reports, portfolio valuations, reviews or analyses of potential or actual investments, reports or other materials prepared or produced by the Fund and/or the Adviser and all other documents and information concerning the affairs of the Fund, and its investments (collectively, the “Confidential Information”), that the Investor may receive pursuant to or in accordance with this Subscription Agreement, or otherwise as a result of its ownership of Interests, constitute proprietary and confidential information about the Fund, and/or the Adviser (the “Affected Parties”). The Investor acknowledges that the Affected Parties derive independent economic value from the Confidential Information not being generally known and that the Confidential Information is the subject of reasonable efforts to maintain its secrecy. The Investor further acknowledges that the Confidential Information is a trade secret, the disclosure of which is likely to cause substantial and irreparable competitive harm to the Affected Parties and their respective businesses. The Investor shall not reproduce any of the Confidential Information or portion thereof or make the contents thereof available to any third party other than a disclosure on a need-to-know basis to the Investor’s legal, accounting or investment advisers, auditors and representatives (collectively, “Representatives”) without the prior consent of the Fund and/or the Adviser, except to the extent compelled to do so in accordance with applicable law (in which case the Investor shall promptly notify the Adviser and the Fund of the Investor’s obligation to disclose any Confidential Information) or with respect to Confidential Information that otherwise becomes publicly available other than through breach of this provision by the Investor. The Investor agrees to notify the Investor’s Representatives about their obligations in connection with Confidential Information and will further cause such Representatives to abide by the aforesaid provisions relating to Confidential Information. The Investor understands and agrees that, although the Fund will use its reasonable efforts to keep the information provided in the answers to this Subscription Agreement strictly confidential, the Fund may present this Subscription Agreement and the information provided in answers to it to such parties as it deems advisable if called upon to establish the availability under any applicable law of an exemption from registration of the Interests, the compliance with applicable law and any relevant exemptions thereto by the Fund or its Board, the Adviser, the Administrator or their affiliates or if the contents thereof are relevant to any issue in any action, suit or proceeding to which the Fund or its Board, the Adviser, the Administrator or their affiliates are a party or by which they are or may be bound. The Fund may also release information about the Investor if directed to do so by the Investor, if compelled to do so by law or in connection with any government or self-regulatory organization request or investigation.
|
(A)
|
The Investor agrees to indemnify and hold harmless the Fund and its Board, the Adviser, the Subadviser, the Administrator and each of their affiliates, and each other person, if any, who controls, is controlled by or is under common control with any of the foregoing within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim, damage and expense whatsoever (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) arising out of or based upon (i) any false representation or warranty made by the Investor, or breach or failure by the Investor to comply with any covenant or agreement made by the Investor, in this Subscription Agreement or in any other document furnished by the Investor to any of the foregoing in connection with this transaction or (ii) any action for securities law violations instituted by the Investor which is finally resolved by judgment against the Investor. The Investor also agrees to indemnify the Fund and its Board, the Adviser, the Subadviser, the Administrator and their affiliates and agents for any and all costs, fees and expenses (including legal fees and disbursements) in connection with any damages resulting from the Investor’s assertion of lack of proper authorization from the Beneficial Owner to enter into this Subscription Agreement or perform the obligations hereof.
|
(B)
|
If any provision of this Subscription Agreement is invalid or unenforceable under any applicable law, then such
|
|
If the Investor is acting as trustee, agent, representative or nominee for a Beneficial Owner, the Investor understands and acknowledges that the representations, warranties and agreements made herein are made by the Investor (A) with respect to the Investor and (B) with respect to the Beneficial Owner. The Investor further represents and warrants that it has all requisite power and authority from said Beneficial Owner to execute and perform the obligations under this Subscription Agreement. The Investor also agrees to indemnify the Fund and its Board, the Adviser, the Subadviser, the Administrator and each of their affiliates and each of their officers and agents for any and all costs, fees and expenses (including legal fees and disbursements) in connection with any damages resulting from the Investor’s misrepresentation or misstatement contained herein, or the assertion of the Investor’s lack of proper authorization from the Beneficial Owner to enter into this Subscription Agreement or perform the obligations hereof.
|
V.
|
ADDITIONAL INFORMATION AND SUBSEQUENT CHANGES IN THE FOREGOING REPRESENTATIONS
|
(A)
|
The Fund or the Adviser may request from the Investor such additional information as it may deem necessary to evaluate the eligibility of the Investor to acquire Interests, and may request from time to time such information as it may deem necessary to determine the eligibility of the Investor to hold Interests or to enable the Fund or the Adviser to determine the Fund’s or the Adviser’s compliance with applicable regulatory requirements or the Fund’s tax status, and the Investor agrees to provide such information as may reasonably be requested.
|
(B)
|
The Investor agrees to notify the Adviser promptly if there is any change with respect to any of the information or representations made herein and to provide the Adviser with such further information as the Adviser may reasonably require.
|
(C)
|
This Subscription Agreement may be executed through the appropriate Investor Application Supplement by the use of separate signature pages or in any number of counterparts, which together with the Memorandum constitute the entire agreement between the parties hereto. The counterparts shall, for all purposes, constitute one agreement binding on all the parties, notwithstanding that all parties do not execute the same counterpart.
|
(D)
|
To the extent that state law is not preempted by the provisions of any law of the United States of America, the laws of the state of Delaware (without regard to its conflicts of law principles) govern all matters arising out of or relating to this Subscription Agreement and all transactions contemplated in connection with this Subscription Agreement, including, without limitation, its interpretation, construction, performance, and enforcement. Any disputes under this Subscription Agreement must be brought in the state courts or the Federal courts located in North Carolina and the parties hereby consent to the exclusive jurisdiction and venue of these courts.
|
(E)
|
This Subscription Agreement is not intended to confer upon any person, other than the parties hereto, any rights or remedies.
|
(F)
|
No failure by any party hereto to insist upon the strict performance of any covenant, duty, agreement or condition of this Subscription Agreement, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition hereof.
|
(G)
|
Except as otherwise provided herein, this Subscription Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their legal representatives, heirs, successors and permitted assigns.
|
(H)
|
The Investor understands that any checks sent to the Investor’s registered address or address for notices, or any wire transfers of any repurchase or distribution proceeds sent to the account indicated in the Investor Application Supplement, will constitute payment to the Investor and relieve the Fund of any further obligation to the Investor with respect to the amounts so paid and, if applicable, the Interests thereby repurchased, and the Investor, for itself and any of its estate, heirs, assigns or successors of any kind, release the Fund from any further obligation with respect thereto. The Investor also understands that the Fund may impose such procedures as it deems
|
|
appropriate before it will accept any change in the Investor’s registered address or the Investor’s address for notices.
|
(I)
|
The titles set forth in this Subscription Agreement are for convenience only and shall not be considered part of this Subscription Agreement in any respect, nor shall they in any way affect the substance of any provisions contained in this Subscription Agreement.
|
Registration Name:
|
_______________________________________________
|
Account Number: ________________________
|
(Print or type exact legal name in which the Units will be registered)
|
||
Registered Subscribers Legal Address (No P.O. Boxes)
|
Attention: ___________________________________________________________________________________________________________
|
||
Address Line 1: ___________________________________________________________________________________________________________
|
||
Address Line 2: ___________________________________________________________________________________________________________
|
||
City: ______________________
|
State: _____________________
|
Postal Code: _____________________________
|
Phone: ____________________
|
Fax: ______________________
|
Email: __________________________________
|
[ ] Individual Account
|
[ ] Joint Account
|
[ ] Individual Retirement Account
|
|
[ ] Revocable Trust
|
[ ] Irrevocable Trust
|
[ ] Corporation
|
|
[ ] Limited Liability Company
|
[ ] Limited Partnership or
Limited Liability Partnership
|
[ ] Employee Benefit Plan or Keogh Plan
|
|
[ ] Other: ______________________________________________
|
Attention: ___________________________________________________________________________________________________________
|
||
Address Line 1: ___________________________________________________________________________________________________________
|
||
Address Line 2: ___________________________________________________________________________________________________________
|
||
City: ______________________
|
State: _____________________
|
Postal Code: _____________________________
|
Phone: ____________________
|
Fax: ______________________
|
Email: __________________________________
|
Attention: ___________________________________________________________________________________________________________
|
||
Address Line 1: ___________________________________________________________________________________________________________
|
||
Address Line 2: ___________________________________________________________________________________________________________
|
||
City: ______________________
|
State: _____________________
|
Postal Code: _____________________________
|
Phone: ____________________
|
Fax: ______________________
|
Email: __________________________________
|
Information to Receive (please select all that apply)
[ ] Financial Statements
[ ] Fund Notices
|
||
Attention: ___________________________________________________________________________________________________________
|
||
Address Line 1: ___________________________________________________________________________________________________________
|
||
Address Line 2: ___________________________________________________________________________________________________________
|
||
City: ______________________
|
State: _____________________
|
Postal Code: _____________________________
|
Phone: ____________________
|
Fax: ______________________
|
Email: __________________________________
|
Information to Receive (please select all that apply)
[ ] Financial Statements
[ ] Fund Notices
|
Effective Date:
|
__________________________________________________
|
Subscription Amount:
|
__________________________________________________
|
Wells Fargo Funding Account:
|
__________________________________________________
|
Legal form of entity:
|
__________________________________________________
|
State in which organized:
|
__________________________________________________
|
State of primary business:
|
__________________________________________________
|
Year of organization:
|
__________________________________________________
|
Primary Business:
|
__________________________________________________
|
_______
|
The Investor is a bank, as defined in Section 2(13) of the Securities Act, acting in its individual or fiduciary capacity;
|
_______
|
The Investor is a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, acting in its individual or fiduciary capacity;
|
_______
|
The Investor is a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;
|
_______
|
The Investor is an insurance company as defined in Section 2(a)(13) of the Securities Act;
|
_______
|
The Investor is an investment company registered under the Investment Company Act of 1940, as amended (“Company Act”), or a business development company as defined in Section 2(a)(48) of the Company Act;
|
_______
|
The Investor is a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;
|
_______
|
The Investor is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and who has a reasonable expectation of reaching the same income level in the current year;
|
_______
|
The Investor is a natural person who has a net worth or joint net worth with that person’s spouse at the time of purchase of Interests that exceeds $1,000,000 (“net worth” for this purpose means total assets (exclusive of the value of the Investor’s primary residence) in excess of total liabilities (note that if the amount of the mortgage(s) on your primary residence exceed the value of your primary residence, then such excess amount must be counted in your total liabilities) );
|
_______
|
The Investor is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;
|
_______
|
The Investor is a trust (i) with total assets in excess of $5,000,000, (ii) that was not formed for the purpose of acquiring Interests and (iii) of which the person responsible for directing the investment of assets in the Fund has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment;
|
_______
|
The Investor is a Trustee or executive officer of the Fund;
|
_______
|
The Investor is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
|
_______
|
The Investor is an employee benefit plan within the meaning of ERISA, if (i) the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company or registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000, or (iii) if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
|
_______
|
The Investor is an organization described in section 501(c)(3) of the Code, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring Interests, with total assets in excess of $5,000,000; or
|
|
The Investor is an entity in which all of the equity owners meet the qualifications set forth above.
|
1. For Individuals:
|
|||
A.
|
______
|
I certify that I am a Qualified Client because I have an individual net worth, including assets held jointly with my spouse, in excess of $1,500,000. As used in the foregoing sentence, “net worth” means the excess of total assets at fair market value over total liabilities; or
|
|
B.
|
______
|
I certify that I am a Qualified Client because I have at least $750,000 under the management of the Adviser; or
|
|
C.
|
______
|
I certify that I am a “qualified purchaser” as defined in Section 2(a)(51)(A) of the Investment Company Act.
|
|
2. For Entities Which Are Not Investment Funds5, Please Check the Applicable Certification:
|
|||
A.
|
______
|
I certify that I am the representative of the Investor, that I qualify as an independent agent6 (i.e., I personally am not connected with the Fund or the Adviser or any of their Affiliates in any way other than as a representative of a Investor in the Fund) and that the Investor is a Qualified Client because:
|
5
|
“Investment Funds” are generally pooled investment vehicles and may include non-US corporations, investment partnerships, limited liability companies, managed funds, join ventures or separately managed accounts specializing in diversified strategies to produce long-term risk adjusted performance.
|
6
|
“Independent agent” means any person agreeing to act as Investor’s agent in connection with this investment other than: (i) the Adviser, an “affiliated person” of the Adviser, an affiliated person of an affiliated person of the Adviser, or an “interested person” of the Adviser; (ii) a person who receives, directly or indirectly, any compensation in connection with this investment from the Adviser, an affiliated person of the Adviser, an affiliated person of an affiliated person of the Adviser or an interested person of the Adviser; or (iii) a person with any material relationship between himself (or an affiliated person of such person) and the Adviser (or an affiliated person of the Adviser) that exists, or has existed at any time during the previous two years.
|
B.
|
______
|
I certify that the Investor is not (i) a non-publicly offered investment fund with fewer than 100 beneficial owners, (ii) an investment company registered under the Investment Company Act or (iii) a private business development company as defined in Section 202(a) of the Advisers Act; and
|
|
C.
|
______
|
I certify that the Investor either (i) has a net worth in excess of $1,500,000, (ii) has at least $750,000 under the management of the Adviser or (iii) is a “qualified purchaser” as defined in Section 2(a)(51)(A) of the Investment Company Act. As used in the foregoing sentence, “net worth” means the excess of total assets at fair market value over total liabilities.
|
|
3. For Investment Funds, Please Check the Applicable Certification:
|
|||
A.
|
______
|
I certify that I am the representative of the Investor, that I qualify as an independent agent (as defined above) and that the Investor is a Qualified Client because each and every equity owner of the Investor is a Qualified Client as defined in item 1 above and items b-d, below:
|
|
B.
|
______
|
I certify that I am a Qualified Client because I have an individual net worth, including assets held jointly with my spouse, in excess of $1,500,000. As used in the foregoing sentence, “net worth” means the excess of total assets at fair market value over total liabilities; or
|
|
C.
|
______
|
I certify that I am a Qualified Client because I have at least $750,000 under the management of the Adviser; or
|
|
D.
|
______
|
I certify that I am a “qualified purchaser” as defined in Section 2(a)(51)(A) of the Investment Company Act.
|
|
Name (as shown on your income tax return)
|
|
U.S. Tax Identification Number
|
|
I am awaiting a tax identification number
|
Payees Exempt from Backup Withholding
|
||
The following is a list of payees exempt from backup withholding and for which no information reporting is required.
|
||
(1)
|
An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”), or an individual retirement plan or custodial account under section 403(b)(7) of the Code, if the account satisfies the requirements of section 401(f)(2) of the Code.
|
|
(2)
|
The United States or any agency or instrumentality thereof.
|
|
(3)
|
A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof.
|
|
(4)
|
A foreign government, a political subdivision of a foreign government, or an agency or instrumentality thereof.
|
|
(5)
|
An international organization or any agency or instrumentality thereof.
|
|
Other payees that may be exempt from backup withholding include:
|
||
(6)
|
A corporation.
|
|
(7)
|
A foreign central bank of issue.
|
|
(8)
|
A dealer in securities or commodities required to register in the U.S. or a possession of the U.S.
|
|
(9)
|
A futures commission merchant registered with the Commodity Futures Trading Commission.
|
|
(10)
|
A real estate investment trust.
|
|
(11)
|
An entity registered at all times under the Investment Company Act of 1940.
|
|
(12)
|
A common trust fund operated by a bank under section 584(a) of the Code.
|
|
(13)
|
A financial institution.
|
|
(14)
|
A middleman known in the investment community as a nominee or custodian.
|
|
(15)
|
A trust exempt from tax under section 664 of the Code, or a non-exempt trust described in section 4947 of the Code.
|
|
Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. File this form with the Fund, furnish your TIN, write “EXEMPT” on the face of the form and sign and date the form. If you are a foreign entity not subject to backup withholding, give the Fund a completed Form W-8BEN.
|
||
Privacy Act Notice. Section 6109 of the Code requires most recipients of dividend, interest or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states and the District of Columbia to carry out their tax laws. The IRS may also disclose this information to other countries under a tax treaty, or to federal and state agencies to enforce federal non-tax criminal laws and to combat terrorism. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% of taxable interest, dividend and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.
|
||
Penalties
|
||
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil Penalty for False Information with Respect to Withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.
|
||
(3) Criminal Penalty for Falsifying Information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
|
||
(4) Misuse of Taxpayer Identification Number. If the requester discloses or uses taxpayer identification numbers in violation of Federal law, the requester may be subject to civil and criminal penalties.
|
|
Signature of Authorized Wells Fargo Bank, N.A. Representative
|
Printed Name of Authorized Wells Fargo Bank, N.A. Representative
|
Title of Authorized Wells Fargo Bank, N.A. Representative
|
Employee ID
|
Date Executed
|
By: | ||
Name: | ||
Title: |
(1)
|
Financial Statements:
|
||
Registrant has not conducted any business, other than in connection with its organization.
|
|||
(2)
|
Exhibits:
|
||
(a)
|
(i)
|
Certificate of Formation dated November 19, 2010 filed herewith.
|
|
(ii)
|
Limited Liability Company Agreement dated November 19, 2010 is included under Appendix A of the Private Placement Memorandum in this Registration Statement.
|
||
(b)
|
Bylaws dated November 19, 2010 filed herewith.
|
||
(c)
|
Not applicable.
|
||
(d)
|
See (2)(a) and (2)(b).
|
||
(e)
|
Not applicable.
|
||
(f)
|
Not applicable.
|
||
(g)
|
(i)
|
Investment Advisory Agreement between Registrant and Alternative Strategies Group, Inc. (the “Adviser”) dated December 10, 2010 filed herewith.
|
|
(ii)
|
Investment Subadvisory Agreement between ASGI and Aurora Investment Management, L.L.C. (the “Subadviser”) dated December 21, 2010 filed herewith.
|
||
(h)
|
Not applicable.
|
||
(i)
|
Not applicable.
|
||
(j)
|
(i)
|
Custody Agreement dated August 26, 2010 incorporated by reference to the Form N-2 filing for ASGI Agility Income Fund (filed September 2, 2010) (the “Agility Income Fund Initial Filing”).
|
|
(ii)
|
Custody Agreement Amendment A dated November 16, 2010 filed herewith.
|
||
(k)
|
(i)
|
Administrative Services Agreement dated August 26, 2010 incorporated by reference to the Agility Income Fund Initial Filing.
|
|
(ii)
|
Amendment to the Administrative Services Agreement dated December 15, 2010 filed herewith.
|
||
(ii)
|
Expense Limitation Agreement dated December 10, 2010 filed herewith.
|
||
(iii)
|
Wholesaling and Placement Agent Agreement between Registrant and Alternative Strategies Brokerage Services, Inc. ("ASBSI") dated December 10, 2010 filed herewith.
|
||
(l)
|
Not applicable.
|
|||
(m)
|
Not applicable.
|
|||
(n)
|
Not applicable.
|
|||
(o)
|
Not applicable.
|
|||
(p)
|
Not applicable.
|
|||
(q)
|
Not applicable.
|
|||
(r)
|
(i)
|
Code of Ethics of the Adviser, ASBSI and the Fund filed herewith.
|
||
(ii)
|
Code of Ethics of the Subadviser filed herewith.
|
|||
(s)
|
Power of Attorney dated December 10, 2010 filed herewith.
|
Item 26. |
Marketing Arrangements
|
Not applicable. | |
Item 27.
|
Other Expenses of Issuance and Distribution
|
Not applicable.
|
|
Item 28.
|
Persons Controlled by or Under Common Control
|
Not applicable.
|
|
Item 29.
|
Number of Holders of Securities
|
Title of Class
|
Number of Record Holders
|
|
Shares of Beneficial Interest
|
1
|
Item 30.
|
Indemnification
|
Item 31.
|
Business and Other Connections of Investment Adviser
|
Item 32.
|
Location of Accounts and Records
|
Item 33.
|
Management Services
|
Item 34.
|
Undertakings
|
ASGI AURORA OPPORTUNTIES FUND, LLC | ||
By:
|
/s/ Lloyd Lipsett | |
Lloyd Lipsett
Assistant Secretary
|
(a)
|
Certificate of Formation dated November 19, 2010. | ||
(b)
|
Bylaws dated November 19, 2010.
|
||
(g)
|
(i)
|
Investment Advisory Agreement between Registrant and Alternative Strategies Group, Inc. (the “Adviser”) dated December 10, 2010.
|
|
(ii)
|
Investment Subadvisory Agreement between ASGI and Aurora Investment Management, L.L.C. (the “Subadviser”) dated December 21, 2010.
|
||
(j)
|
Custody Agreement Amendment A dated November 16, 2010. | ||
(k)
|
(i)
|
Amendment to the Administrative Services Agreement dated December 15, 2010.
|
|
(ii)
|
Expense Limitation Agreement dated December 10, 2010.
|
||
(iii)
|
Wholesaling and Placement Agent Agreement between Registrant and Alternative Strategies Brokerage Services, Inc. ("ASBSI") dated December 10, 2010.
|
||
(r)
|
(i)
|
Code of Ethics of the Adviser, ASBSI and the Fund.
|
|
(ii)
|
Code of Ethics of the Subadviser.
|
||
(s)
|
Power of Attorney dated December 10, 2010.
|
||
State of Delaware
Secretary of State
Division of Corporations
Delivered 11:33 AM 11/19/2010
FILED 11:33 AM 11/19/2010
SRV 101105598 - 4901924 FILE
|
a.
|
Subject to the general supervision of the Board and the terms of this Agreement, the Adviser will at its own expense, except as noted below, select and contract with one or more investment subadvisers (“Subadvisers”) to manage the investments and determine the composition of the assets of the Fund; provided, that any contract with a Subadviser (a “Subadvisory Agreement”) shall be in compliance with and approved as required by the Investment Company Act of 1940, as amended (the “1940 Act”), except for such exemptions therefrom as may be granted to the Fund or the Adviser. Subject always to the direction and control of Board, the Adviser will monitor the Subadviser’s management of the Fund’s investment operations in accordance with the investment objectives and related investment policies, as set forth in the Fund’s registration statement with the Securities and Exchange Commission, and review and report to the Board on the performance of such Subadviser.
|
b.
|
The Adviser shall furnish to the Fund the following:
|
|
i.
|
Office and Other Facilities. — The Adviser shall furnish to the Fund office space in the offices of the Adviser or in such other place as may be agreed upon by the parties hereto from time to time, and all necessary office facilities and equipment;
|
|
ii.
|
Board Members and Officers. — The Adviser agrees to permit individuals who are directors, officers or employees of the Adviser to serve (if duly elected or appointed) as members of the Board or President of the Fund, or in any other officer position with respect to the Fund, without remuneration from or other cost to the Fund.
|
|
iii.
|
Investment Personnel. — The Adviser shall furnish to the Fund any personnel necessary for the oversight and/or conduct of the investment operations of the
|
|
iv.
|
Reports to Fund. — The Adviser shall furnish to, or place at the disposal of, the Fund such information, reports, valuations, analyses and opinions as the Fund may, at any time or from time to time, reasonably request or as the Adviser may deem helpful to the Fund, provided that the expenses associated with any such materials furnished by the Adviser at the request of the Fund shall be borne by the Fund.
|
c.
|
In addition to negotiating and contracting with one or more Subadvisers as set forth in section (2)(a) of this Agreement and providing facilities, personnel and services as set forth in section (2)(b), the Adviser will pay the compensation of the President and members of the Board who are also directors, officers or employees of the Adviser or its affiliates.
|
d.
|
The Adviser will vote all proxies received in connection with securities held by the Fund or will delegate such authority to a Subadviser.
|
e.
|
The Adviser may elect to manage the investments and determine the composition of the assets of the Fund, subject to the approval of the Board. In the event of such election, the Adviser, subject always to the direction and control of the Board, will manage the investments and determine the composition of the assets of the Fund in accordance with the Fund’s registration statement, as amended. In fulfilling its obligations to manage the investments and reinvestments of the assets of the Fund, the Adviser:
|
|
i.
|
will obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual investment funds, companies or industries the securities of which are included in the Fund or are under consideration for inclusion in the Fund;
|
|
ii.
|
will formulate and implement a continuous investment program for the Fund consistent with the investment objectives and related investment policies for the Fund as described in the Fund’s registration statement, as amended;
|
|
iii.
|
will take whatever steps are necessary to implement this investment program by the purchase and sale of securities including the completion of subscription documents and the placing of orders for such purchases and sales;
|
|
iv.
|
will regularly report to the Board with respect to the implementation of this investment program;
|
|
v.
|
will provide assistance to the Fund’s custodian regarding the fair value of securities held by the Fund for which market quotations are not readily available;
|
|
vi.
|
will furnish, at its expense: (i) all necessary investment and management facilities, including salaries of personnel required for it to execute its duties faithfully; and (ii) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the investment affairs of the Fund (excluding any such services that are the subject of a separate agreement as may from time to time be in effect between the Fund and the Adviser or another party);
|
|
vii.
|
will select brokers and dealers to effect all applicable transactions subject to the following conditions: the Adviser will place all necessary orders with brokers, dealers, or issuers, and will negotiate brokerage commissions if applicable; the Adviser is directed at all times to seek to execute brokerage transactions for the Fund in accordance with such policies or practices as may be established by the Board and described in the Fund’s registration statement as amended; the Adviser may pay a broker-dealer which provides research and brokerage services a higher spread or commission for a particular transaction than otherwise might have been charged by another broker-dealer, if the Adviser determines that the higher spread or commission is reasonable in relation to the value of the brokerage and research services that such broker-dealer provides, viewed in terms of either the particular transaction or the Adviser’s overall responsibilities with respect to accounts managed by the Adviser; and the Adviser may use for the benefit of its other clients, or make available to companies affiliated with the Adviser for the benefit of such companies or their clients, any such brokerage and research services that the Adviser obtains from brokers or dealers;
|
|
viii.
|
to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, on occasions when the Adviser deems the purchase or sale of a security to be in the best interest of the Fund as well as other clients of the Adviser, aggregate the securities to be purchased or sold to attempt to obtain a more favorable price or lower brokerage commissions and efficient execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Adviser in the manner the Adviser considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to its other clients; and
|
|
ix.
|
will maintain all accounts, books and records with respect to the Fund as are required of an investment adviser of a registered investment company pursuant to the 1940 Act and the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and the rules thereunder.
|
|
3.
|
EXPENSES ASSUMED BY THE FUND
|
a.
|
Edgarization, Printing and Mailing. — Costs of edgarization, printing and mailing (i) all registration statements (including all amendments thereto) and prospectuses/statements of additional information (including all supplements thereto), all annual, semiannual and periodic reports to investors in the Fund, regulatory authorities or others, (ii) all notices and proxy solicitation materials furnished to investors in the Fund or regulatory authorities and (iii) all tax returns;
|
b.
|
Compensation of Officers and Board members. — Compensation of the officers and members of the Board (other than persons serving as President or member of the Board, or as any other officer of the Fund, who are also directors, officers or employees of the Adviser or its affiliates);
|
c.
|
Registration and Filing Fees. — Registration, filing, blue-sky and other fees in connection with requirements of regulatory authorities, including, without limitation, all fees and expenses of registering and maintaining the registration of the Fund under the 1940 Act;
|
d.
|
Custodial Services. — The charges and expenses of the custodian appointed by the Fund for custodial services;
|
e.
|
Accounting Fees. — The charges and expenses of the independent accountants retained by the Fund;
|
f.
|
Legal, Accounting and Administrative Services. — The charges and expenses of the Adviser or any other party pursuant to any separate contract with the Fund from time to time in effect with respect to the provision of legal services (including registering and qualifying the Fund’s shares with regulatory authorities), as well as accounting, administrative and any other non-investment related services.
|
g.
|
Transfer, Bookkeeping and Dividend Disbursing Agents. — The charges and expenses of any transfer, bookkeeping and dividend disbursing agents appointed by the Fund;
|
h.
|
Commissions and Placement Fees. — Broker’s commissions, placement fees and issue and transfer taxes chargeable to the Fund in connection with securities transactions to which the Fund is a party;
|
i.
|
Research. — Expenses related to third-party research and ongoing due diligence of pooled investment vehicles in which the Fund invests, and the managers of such pooled investment vehicles;
|
j.
|
Taxes. — Taxes and corporate fees payable by the Fund to federal, state or other governmental agencies and the expenses incurred in the preparation of all tax returns;
|
k.
|
Stock Certificates. — The cost of stock certificates, if any, representing shares of the Fund;
|
l.
|
Membership Dues. — Association membership dues, as explicitly approved by the Board;
|
m.
|
Insurance Premiums. — Insurance premiums for fidelity, errors and omissions, directors and officers and other coverage;
|
n.
|
Investors and Board Meetings. — Expenses of investors and Board meetings;
|
o.
|
Pricing. — Pricing of the Fund and interests, including the cost of any equipment or services used for obtaining price quotations and valuing Fund portfolio investments;
|
p.
|
Interest. — Interest on borrowings;
|
q.
|
Communication Equipment. — All charges for equipment or services used for communication between the Adviser or the Fund and the custodian, transfer agent or any other agent selected by the Fund; and
|
r.
|
Nonrecurring and Extraordinary Expense. — Such nonrecurring expenses as may arise, including the costs of actions, suits, or proceedings to which the Fund is, or is threatened to be made, a party and the expenses the Fund may incur as a result of its legal obligation to provide indemnification to its Board, officers, agents and investors.
|
a.
|
the Adviser fails to be registered as an investment adviser under the Advisers Act or under the laws of any jurisdiction in which the Adviser is required to be registered as an investment adviser in order to perform its obligations under this Agreement;
|
b.
|
the Adviser is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the Fund; and
|
c.
|
the chief executive officer or parent company of the Adviser or the portfolio manager of the Fund changes.
|
a.
|
To the fullest extent permitted by applicable law, the Fund shall indemnify the Adviser, its affiliates and the officers, directors, employees and agents of the Adviser and its affiliates (each an “indemnitee”) against any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit relating to the Fund and not resulting from the willful misfeasance, bad faith, gross negligence, or reckless disregard of the indemnitee in the performance of the obligations and duties of the indemnitee’s office. The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement will waive or limit any rights that the Fund may have under those laws. An indemnitee will not confess any claim or settle or make any compromise in any instance in which the Fund will be asked to provide indemnification, except with the Fund’s prior written consent.
|
b.
|
Any indemnification or advancement of expenses made in accordance with this section shall not prevent the recovery from any indemnitee of any amount if the indemnitee subsequently is determined in a final judicial decision on the merits in any action, suit, investigation or proceeding involving the liability or expense that gave rise to the indemnification to be liable to the Fund or its investors by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the indemnitee’s office.
|
c.
|
The rights of indemnification provided in this section shall not be exclusive of or affect any other rights to which any person may be entitled by contract or otherwise under law. Nothing contained in this section shall affect the power of the Fund to purchase and maintain liability insurance on behalf of the Adviser or any indemnitee.
|
ASGI AURORA OPPORTUNITIES FUND
|
|
By: /s/ Michael Roman
|
|
Name: Michael Roman
|
|
Title: Treasurer
|
ASGI AURORA OPPORTUNITIES FUND, LLC
|
By: /s/ Michael Roman
Name: Michael Roman
|
Title: Treasurer
|
ALTERNATIVE STRATEGIES GROUP, INC.
|
By: /s/ Lloyd Lipsett
Name: Lloyd Lipsett
Title: Senior Vice President
|
AURORA INVESTMENT MANAGMENT L.L.C.
|
By: /s/ Scott Craven Jones
Name: Scott Craven Jones
|
Title: Chief Operating Officer and
Chief Financial Officer
|
EACH FUND LISTED ON ANNEX I HERETO
|
||
/s/ Michael Roman
|
||
By:
|
Michael Roman
|
|
Title:
|
Vice President
|
|
THE BANK OF NEW YORK MELLON
|
||
/s/ Lisa Rosen | ||
By: | Lisa Rosen | |
Title: | Managing Director |
Fund Name:
|
Form of Organization:
|
ASGI AGILITY INCOME FUND
|
DELAWARE BUSINESS TRUST
|
ASGI CORBIN MULTI-STRATEGY FUND LLC
|
DELAWARE LIMITED LIABILITY COMPANY
|
ASGI AURORA OPPORTUNITIES FUND LLC
|
DELAWARE LIMITED LIABILITY COMPANY
|
A.
|
The Funds and BNYM-AIS are parties to an Administrative Services Agreement dated as of August 26, 2010, as amended to date (the “Agreement”).
|
B.
|
The parties desire to add additional Funds to Annex I.
|
C.
|
The parties desire to amend the description of the services set forth in Schedule I as set forth below.
|
D.
|
The Funds and BNYM-AIS desire to amend the Agreement to accommodate the foregoing.
|
E.
|
This Background section is hereby incorporated by reference in and made a part of this Amendment.
|
1.
|
Annex I to the Agreement is hereby deleted in its entirety and is amended and restated as attached hereto.
|
||
2.
|
A new item (e) shall be added to the Tax Services Section of Schedule 1 of the Agreement as follows:
|
||
(e)
|
If applicable, BNYM-AIS will provide to the Tax Preparer the monthly capital and investment registers.
|
||
3.
|
Item (g) of the Administration Services section of Schedule 1 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
||
(g)
|
(i) Assemble and mail or otherwise make available board materials for quarterly board meetings; and (ii) upon agreement of the parties hereto, permit persons or entities entering a valid password to have electronic access, via an Internet-based secure website, to current quarterly board meeting materials and such other board meeting materials as the parties hereto may agree (such electronic access is herein defined as the “Enhanced Services”);.
|
||
4.
|
BNYM-AIS will charge and the Fund will pay to BNYM-AIS such compensation relating to the Enhanced Services referenced in Section 3 above as BNYM-AIS and the Fund agree upon in writing.
|
||
5.
|
BNYM-AIS may utilize a sub-contractor to provide or assist in providing the Enhanced Services referenced in Section 3 above, and if BNYM-AIS so utilizes a sub-contractor BNYM-AIS will inform the Fund of the identity of such sub-contractor. BNYM-AIS will be responsible for the acts and omissions of any sub-contractor utilized by BNYM-AIS in connection with providing the
|
Enhanced Services referenced in Section 3 above to the same extent that BNYM-AIS is responsible for its own acts and omissions pursuant to the Agreement.
|
||
6.
|
Notwithstanding anything in this Amendment or otherwise to the contrary, BNYM-AIS may unilaterally in its sole discretion cease providing any of the Enhanced Services referenced in Section 3 above at any time that there is not then-currently in effect an agreement between BNYM-AIS and a sub-contractor requiring the sub-contractor to perform such services as BNYM-AIS may require with respect to such Enhanced Services.
|
|
7.
|
The Fund understands and agrees that (1) BNYM-AIS will charge the Fund more for the Enhanced Services referenced in Section 3 above than any sub-contractor that BNYM-AIS may utilize in connection with providing such Enhanced Services charges BNYM-AIS and (2) the Fund is free to attempt to contract directly with such sub-contractor for the provision of such Enhanced Services.
|
|
8.
|
The Fund represents, warrants and covenants that this Amendment and the compensation related thereto has been or will be duly reviewed and approved or ratified by its Governing Board.
|
|
9.
|
Miscellaneous.
|
|
(a)
|
Capitalized terms not defined in this Amendment have their respective meanings as defined in the Agreement.
|
|
(b)
|
As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms hereof and the Agreement, this Amendment shall control.
|
|
(c)
|
This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The facsimile signature of any party to this Amendment shall constitute the valid and binding execution hereof by such party.
|
|
(d)
|
This Amendment shall be governed by the laws of the State of Delaware, without regard to its principles of conflicts of laws.
|
THE BANK OF NEW YORK MELLON
|
||
/s/ Lisa Rosen | ||
By: Lisa Rosen
|
||
Title: Managing Director
|
||
EACH FUND LISTED ON ANNEX I
|
||
/s/ Michael Roman
|
||
By:
|
Michael Roman
|
|
Title:
|
Vice President
|
Fund Name
|
Form of Organization
|
ASGI Agility Income Fund
|
Delaware Business Trust
|
ASGI Aurora Opportunities Fund, LLC
|
Delaware limited liability company
|
ASGI Corbin Multi-Strategy Fund, LLC
|
Delaware limited liability company
|
EACH FUND LISTED ON ANNEX I
|
By: /s/ Adam I. Taback
|
Name: Adam I. Taback
|
Title: President
|
ALTERNATIVE STRATEGIES BROKERAGE SERVICES, INC.
|
By: /s/ Yukari Nakano
|
Name: Yukari Nakano
|
Title: Chief Operating Officer
|
Fund Name
|
Form of Organization
|
|
ASGI Agility Income Fund
|
Delaware Business Trust
|
|
ASGI Aurora Opportunities Fund
|
Delaware Limited Liability Company
|
|
ASGI Corbin Multi-Strategy Fund
|
Delaware Limited Liability Company
|
|
|
|
a)
|
the duty at all times to place the interests of clients first;
|
|
b)
|
the duty to act at all times in the spirit of openness, integrity, honesty and trust; and
|
|
c)
|
the duty to ensure that all personal securities transactions be conducted in a manner consistent with the standards below.
|
See the Definitions located in Appendix A for definitions of capitalized terms | The Covered Companies are required to maintain a policy governing personal securities transactions and insider trading by their respective officers and employees. This Code of Ethics and Policy on Personal Securities Transactions and Insider Trading (the “Code”) has been adopted under Section 204A of the Investment Advisers Act of 1940, as amended (“the Advisers Act”), and Rule 204A-1 thereunder, in order to establish and enforce the Covered Companies’ policies and procedures governing the personal securities transactions of their respective officers and employees. The Covered Companies believe that the Code is reasonably designed to prevent the misuse of material, non-public information, and it outlines the policies and procedures for the activities referred to above. | |
Section 17(j) of the Investment Company Act of 1940, as amended (the “Company Act”), and Rule 17j-1 thereunder, require that every investment adviser to a registered investment company adopt a written code of ethics. Because ASGI serves as an investment adviser to several registered investment companies (“Registered Funds”), the Covered Companies have incorporated the requirements of Rule 17j-1 in this Code. The Registered Funds has adopted its own code of ethics pursuant to Rule 17j-1 and a copy is attached as Appendix D. Under Rule 17j-1, ASGI is required to provide a report to the Registered Funds’ Board of Trustees, at least annually, certifying that it has procedures in place reasonably designed to prevent access persons from violating the Code and describing issues arising under the Code, if any, and the sanction/response imposed. | ||
This Code outlines the policies and procedures team members must follow and the guidelines we use to govern their personal securities transactions and prevent insider trading. We monitor any activity that may be perceived as conflicting with the fiduciary responsibility we have to our clients. |
|
1.
|
any employees of a Covered Company who have been determined (a) not to have access to any Non-Public Information regarding any Purchase or Sale of Securities for Accounts or any
|
September 2010 | 2 | Code of Ethics |
|
portfolio holdings of any Account or Reportable Fund and (b) not to be involved in making securities recommendations for Accounts and not to have access to such recommendations that are non-public; or
|
|
1.
|
all employees of a Covered Company or members of the Investment Committee of such Covered Company who may have access to or are able to obtain access to Non-Public Information as it relates to any Purchase or Sale of Securities for Accounts or any portfolio holdings of any Account; or
|
|
2.
|
all employees of a Covered Company who are involved in making Securities recommendations for Accounts or who have access to such recommendations that are non-public; or
|
|
3.
|
directors and officers of a Covered Company; or
|
|
4.
|
any natural person in a Control relationship to a Reportable Fund or an investment adviser, general partner and/or managing member to a Reportable Fund who obtains information concerning recommendations made to a Reportable Fund with regard to the purchase or sale of Securities by the Reportable Fund; or
|
|
5.
|
anyone else designated in writing by the relevant CCO.
|
|
1.
|
any Access Person who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of Securities by an Account; or
|
|
2.
|
anyone else designated in writing by the relevant CCO.
|
September 2010 | 3 | Code of Ethics |
|
●
|
Access Persons (as well as all team members) must also certify that they have read and will comply with this Code.
|
|
●
|
Access Persons must provide the report by the business day immediately before the weekend or holiday if the tenth day falls on a weekend or holiday.
|
September 2010 | 4 | Code of Ethics |
|
●
|
Access Persons must inform us of any new Personal Securities Accounts established during the past quarter.
|
|
●
|
Access Persons must provide us the report by the business day immediately before the weekend or holiday if the thirtieth day falls on a weekend or holiday.
|
|
●
|
The quarterly acknowledgment and certification must be submitted via iTrade.
|
|
●
|
Access Persons must report all Personal Securities Accounts, including account numbers, and holdings of Securities in those accounts. The information in the statements must be current as of a date no earlier than December 31st of the previous year. NOTE: Wachovia/Wells Fargo & Co. 401(k) plans and Immediate Family Members’ 401(k) plans must be reported initially and annually as Personal Securities Accounts, unless there are no investments in Reportable Funds or Securities in such plans. Statements for 401(k) plans are not required to be provided directly to the Compliance Department; however, Access Persons need to report their holdings of Reportable Funds and Securities in such plans annually.
|
|
●
|
Access Persons (as well as all team members) must certify annually that they have read and will comply with this Code.
|
|
●
|
Access Persons must provide us the report by the business day immediately before the weekend or holiday if January 30th falls on a weekend or holiday.
|
|
●
|
The annual holdings report must be submitted via iTrade.
|
September 2010 | 5 | Code of Ethics |
September 2010 | 6 | Code of Ethics |
September 2010 | 7 | Code of Ethics |
|
●
|
Direct obligations of the U.S. Government; |
|
●
|
Money market instruments including banker’s acceptances, bank certificates of deposit, commercial paper and High
|
September 2010 | 8 | Code of Ethics |
|
|
quality short-term debt instruments, including repurchase agreements;
|
|
●
|
Shares issued by money market mutual funds, whether affiliated or unaffiliated;
|
|
●
|
Shares issued by open-end registered investment companies that are not Reportable Funds;
|
|
●
|
Transactions in 529 plan accounts, except Edvest and Tomorrow’s Scholar (“Reportable 529 Plans”); and
|
|
●
|
Purchases or sales that were done as part of an Automatic Investment Plan (“AIP”). (However, team members must report his/her initial pre-set schedule or allocation of an AIP that includes allocations to any Securities, including Reportable Funds, and including those made to any 401(k) plan. Additionally, if a team member makes a purchase or sale that overrides or changes the pre-set schedule or allocation of the AIP, he/she must include that transaction in his/her your quarterly transaction report if it is otherwise reportable.)
|
|
a)
|
Delinquent Certifications
|
|
b)
|
Breaches of Trading Restrictions
|
September 2010 | 9 | Code of Ethics |
|
i.
|
On a quarterly basis, the Compliance Department will run a potential “front-running” and “restricted securities” report from the iTrade/Examiner personal securities software. The reviews will:
|
|
·
|
Compare reported personal transactions in Securities with transactions in associated client Accounts; and
|
|
·
|
Compare reported personal transactions with Securities being considered for purchase or sale by IM&T to determine whether a violation may have occurred. Securities being considered for purchase or sale will be determined via Alerts published for changes to the investment models offered by Private Asset Management.
|
|
ii.
|
The relevant CCO will then forward an e-mail to all Access Persons with possible violation information. Once the Access Person has received the e-mail and corresponding possible violation detail, he/she must respond in writing to the Compliance Department within 14 days of receipt with an explanation detailing all circumstances concerning the noted possible violations.
|
|
iii.
|
Before determining that an Access Person has violated the Code of Ethics, the relevant CCO shall give the person an opportunity to supply explanatory material. No team member is required to participate in a determination of whether he or she has committed a violation or discuss the imposition of any sanction against himself or herself.
|
|
iv.
|
After the Compliance Department has received all responses, an analysis will be conducted to determine any trending, the legitimacy of explanations, and/or possible disciplinary actions. Senior Management of the Covered Company will be contacted in writing should further disciplinary action be warranted for violations of this policy.
|
September 2010 | 10 | Code of Ethics |
|
●
|
limiting their access to files likely to contain Non-Public Information,
|
|
●
|
restricting or monitoring their trades, including trades in securities about which they might have Non-Public Information, and
|
|
●
|
providing them with continuing education programs about insider trading.
|
Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in deciding how to act. Information is considered non-public when it has not been made available to investors generally. Information becomes public once it is publicly disseminated. Limited disclosure does not make the information public (for example, if an insider makes information available to a select group of individuals, it is not public). Examples of illegal and prohibited insider trading and related activity include, but are not limited to, the following:
|
WARNING!
Insider trading is illegal. A team member could go to prison or be forced to pay a large fine for participating in insider trading. We could also be fined for such actions.
|
● |
Tipping of material, Non-Public Information is illegal and prohibited. A person is tipping when he/she gives Non-Public Information about an issuer to someone else who then trades in securities of the issuer.
|
|
|
● |
Front running is illegal and prohibited. A person is front running if he/she trades ahead of an Account order in the same or equivalent security (such as options) in order to make a profit or to avoid a loss.
|
|
● |
Scalping is illegal and prohibited. A person is scalping when he/she purchases or sells a security (or an equivalent security) for his/her own account before that that security or equivalent is recommended/bought or recommended/sold for a client’s Account.
|
September 2010 | 11 | Code of Ethics |
|
● |
Share with any other person (unless it is are permitted or required by law, it’s necessary to carry out their duties and appropriate confidentiality protections are in place, as necessary) any Non-Public Information about an Account , including, without limitation: (a) any securities holdings or transactions of an Account; (b) any securities recommendation made to an Account; (c) any securities transaction (or transaction under consideration) by an Account, including information about actual or contemplated investment decisions; (d) any changes to portfolio management teams of Reportable Funds; (e) any information about planned mergers or liquidations of Reportable Funds; and (f) any ASGI Valuation Committee proceedings and plans for future actions (either through attendance at, or receipt of the output from, such proceedings).
|
|
● |
Use any Non-Public Information regarding an Account in any way that might compete with, or be contrary to, the interest of such Account.
|
|
● |
Use any Non-Public Information regarding an Account in any way for personal gain.
|
September 2010 | 12 | Code of Ethics |
September 2010 | 13 | Code of Ethics |
Accounts or clients
|
Accounts of investment advisory clients of ASGI and clients of ASBSI, including but not limited to registered and unregistered investment companies and Managed Accounts, including due diligence clients of ASGI.
|
Automatic Investment Plan
|
A program that allows a person to purchase or sell Securities, automatically and on a regular basis, without any further action by the person. May be part of a SIP (systematic investment plan), SWP (systematic withdrawal plan), SPP (stock purchase plan), DRIP (dividend reinvestment plan), or employer-sponsored plan.
|
Beneficial Owner (Ownership)
|
An individual is the “beneficial owner” of any Securities in which he/she has a direct or indirect Financial or Pecuniary Interest, whether or not he/she has the power to buy and sell, or to vote, the Securities.
In addition, an individual is the “beneficial owner” of Securities in which an Immediate Family Member has a direct or indirect Financial or Pecuniary Interest, whether or not he/she or the Immediate Family Member has the power to buy and sell, or to vote, the Securities. For example, an individual has Beneficial Ownership of Securities in trusts of which Immediate Family Members are beneficiaries.
An individual is also the “beneficial owner” of Securities in any account, including but not limited to those of relatives, friends and entities in which he/she has a non-controlling interest, over which investment discretion is exercised. Such accounts do not include accounts someone manages on behalf of a Covered Company or any other affiliate of Wells Fargo & Co.
|
Control
|
The power to exercise a controlling influence over the management or policies of a company, unless the power is solely the result of an official position with such company. Owning 25% or more of a company’s outstanding voting securities is presumed to give an individual control over the company. (See Section 2(a)(9) of the 1940 Act for a complete definition.)
|
Covered Company
|
Includes ASGI and ASBSI.
|
Appendix A | 14 | Definitions |
Federal Securities Laws
|
The Securities Act of 1933 (15 U.S.C. 77a-aa), the Securities Exchange Act of 1934 (15 U.S.C. 78a—mm), the Sarbanes-Oxley Act of 2002 (Pub. L. 107-204, 116 Stat. 745 (2002)), the Investment Company Act of 1940 (15 U.S.C. 80a), the Investment Advisers Act of 1940 (15 U.S.C. 80b), Title V of the Gramm-Leach-Biley Act (Pub. L. No. 100-102, 113 Stat. 1338 (1999)), any rules adopted by the SEC under any of these statutes, the Bank Secrecy Act (31 U.S.C. 5311-5314; 5316-5332) as it applies to funds and investment advisers, and any rules adopted thereunder by the SEC or the Department of the Treasury.
|
Financial or Pecuniary Interest
|
The opportunity for an individual or his/her Immediate Family Member, directly or indirectly, to profit or share in any profit derived from a transaction in the subject Securities whether through any contract, arrangement, understanding, relationship or otherwise. This standard looks beyond the record owner of Securities to reach the substance of a particular arrangement. Someone not only has a Financial or Pecuniary Interest in Securities held by that person for his/her own benefit, but also Securities held (regardless of whether or how they are registered) by others for that person’s benefit, such as Securities held for him/her by custodians, brokers, relatives, executors, administrators, or trustees. The term also includes any Security owned by an entity directly or indirectly controlled by that person , which may include corporations, partnerships, limited liability companies, trusts and other types of legal entities. An individual or his/her Immediate Family Member may have a Financial or Pecuniary Interest in:
|
|
● |
That person’s accounts or the accounts of his/her Immediate Family Members;
|
|
● |
A partnership or limited liability company, if that person or an Immediate Family Member is a general partner or a managing member;
|
|
● |
A corporation or similar business entity, if that person or an Immediate Family Member has or shares investment control; or
|
|
● |
A trust, if that person or an Immediate Family Member is a beneficiary.
|
High quality short-term
|
Any instrument that has a maturity at issuance of less than 366 days and
|
debt instrument
|
that is rated in one of the two highest rating categories by a nationally recognized statistical rating organization such as Moody’s Investors Service.
|
Immediate Family Member
|
Any of the following persons, including any such relations through adoption, who reside in the same household with an individual:
|
● Spouse
|
● grandparent
|
● mother-in-law
|
● domestic partner
|
● grandchild
|
● father-in-law
|
● parent
|
● brother
|
● daughter-in-law
|
● stepparent
|
● sister
|
● son-in-law
|
● child
|
● sister-in-law
|
|
● stepchild
|
● brother-in-law
|
Appendix A | 15 | Definitions |
Inside Information or
|
|
Non-Public Information
|
Any information that is not generally available to the general public in widely disseminated media reports, SEC filings, public reports, prospectuses, or similar publications or sources, or known by the public.
|
|
|
Investment Club
|
An investment club is a group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and, after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions.
|
IPO
|
An initial public offering, or the first sale of a company’s securities to public investors. Specifically it is an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before registration, was not subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
|
Limited Offering
|
An offering that is exempt from registration under the Securities Act of 1933, as amended, pursuant to section 4(2) or 4(6) thereof or Rule 504, Rule 505 or Rule 506 thereunder.
|
Managed Account
|
Any account for which the holder gives, in writing, his/her broker or someone else the authority to buy and sell securities, either absolutely or subject to certain restrictions. In other words, the holder gives up the right to decide what securities are bought or sold for the account.
|
Personal Securities Account
|
Any holding of Securities of which an individual has Beneficial Ownership, other than a holding of Securities previously approved in writing by the relevant CCO over which that person has no direct influence or Control. A Personal Securities Account is not limited to Securities accounts maintained at brokerage firms, but also includes holdings of Securities owned directly by an individual or an Immediate Family Member or held through a retirement plan of Wachovia, Wells Fargo & Co. or any other employer.
|
Personal Securities Transaction
|
A purchase or sale of a Security, of which an individual has or acquires Beneficial Ownership.
|
Purchase or Sale of a Security
|
Includes, among other things, gifting or the writing of an option to purchase or sell a Security.
|
Reportable 529 Plan
|
Edvest and Tomorrow’s Scholar.
|
Appendix A | 16 | Definitions |
Reportable Fund
|
Reportable Fund means (i) any investment company registered under the 1940 Act for which a Covered Company serves as an investment adviser as defined in Section 2(a)(20) of the 1940 Act, or as general partner, managing member or in a similar capacity with respect thereto; and (ii) any investment company registered under the 1940 Act whose investment adviser, principal underwriter, general partner, managing member or party acting in a similar capacity with respect thereto controls a Covered Company, is controlled by a Covered Company, or is under common control with a Covered Company; provided, however, that Reportable Fund shall not include an investment company that holds itself out as a money market fund. For purposes of this definition, "control" has the same meaning as it does in Section 2(a)(9) of the 1940 Act. A list of all Reportable Funds shall be maintained and made available for reference under "Reportable Funds" under the "Code of Ethics" tab in the Compliance Department InvestNet web page.
|
SEC
|
U.S. Securities and Exchange Commission.
|
Security/Securities
|
As defined under Section 2(a)(36) of the 1940 Act or Section 202(a)(18) of the Advisers Act, except that it does not include direct obligations of the U.S. Government; bankers’ acceptances; bank certificates of deposit; commercial paper; High quality short-term debt instruments, including repurchase agreements; shares issued by affiliated or unaffiliated money market mutual funds; or shares issued by open-end registered investment companies other than the open-end Reportable Funds.
|
Appendix A | 17 | Definitions |
Signed _______________________________
|
|
Print: _____________________________
|
|
Date: ________________________________
|
Date Received: ________________________
|
|
Reviewed by: _________________________
|
|
Date Reviewed: _______________________
|
Date Received: ________________________
|
|
Reviewed by: _________________________
|
|
Date Reviewed: _______________________
|
1.
|
DEFINITIONS
|
Appendix D | 3 | Fund Products |
|
●
|
Direct obligations of the U.S. Government;
|
|
●
|
Bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; and
|
|
● |
Shares issued by non-proprietary open-end investment companies registered under the 1940 Act.
|
|
● |
“Funds” means ASGI Agility Income Fund, ASGI Aurora Opportunities Fund and ASGI Corbin Multi-Strategy Fund.
|
Appendix D | 4 | Fund Products |
2.
|
RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
|
3.
|
REPORTING
|
|
● |
The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect Beneficial Ownership when the person became an Access Person;
|
|
● |
The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and
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● |
The date that the report is submitted by the Access Person.
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Appendix D | 5 | Fund Products |
|
● |
The date of the transaction, the title, the interest rate and maturity date (if applicable) and the number of shares and the principal amount of each Covered Security involved;
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● |
The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
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● |
The price of the Covered Security at which the transaction was effected;
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● |
The name of the broker, dealer or bank with or through which the transaction was effected; and
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● |
The date that the report is submitted by the Access Person.
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● |
The name of the broker, dealer or bank with whom the Access Person established the account;
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● |
The date the account was established; and
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● |
The date that the report is submitted by the Access Person.
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Appendix D | 6 | Fund Products |
|
Annual Holdings Reports
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|
● |
The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect Beneficial Ownership;
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●
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The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and
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|
● |
The date that the report is submitted by the Access Person.
|
Appendix D | 7 | Fund Products |
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●
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Describes any issues arising under this Code or related procedures since the last report to the Funds’ Board, including, but not limited to, information about material violations of this Code or procedures and sanctions imposed in response to material violations; and
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|
● |
Certifies that the respective Funds, the Adviser, and any sub-adviser or principal underwriter have adopted procedures reasonably necessary to prevent Access Persons from violating this Code.
|
Appendix D | 8 | Fund Products |
CODE OF ETHICS
(amended and restated effective as of December 1, 2010)
|
Part I | General Policies | |
Part II | Reporting Responsibilities and Transaction Restrictions |
|
Part III | Definitions |
●
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The Firm expects that waivers will be granted only in limited instances, and
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●
|
Some provisions of the Code that are prescribed by U.S. Securities and Exchange Commission (“SEC”) rules cannot be waived. These provisions include, but are not limited to, the requirements that Employees file
|
reports and obtain pre-approval before investing in private placements (e.g., hedge funds) and initial public offerings.
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||
Aurora Investment Management L.L.C. Code of Ethics | 2 | Effective December 1, 2010 |
●
|
The Funds’ respective investments in individual hedge funds are made in private placements or separate account transactions.
|
|
●
|
Generally speaking, the Firm does not make investment recommendations to clients or Funds concerning specific publicly-traded securities, and does not buy and sell publicly-traded securities, such as equities or bonds, for its own account. On occasion, the Firm will receive publicly-traded securities from a portfolio hedge fund as part of a distribution in kind; the Firm generally sells those holdings shortly thereafter. For certain client accounts, the Firm will invest directly in options or futures for portfolio hedging purposes, typically with respect to indices rather than any particular security.
|
|
Aurora Investment Management L.L.C. Code of Ethics | 3 | Effective December 1, 2010 |
●
|
use for their own benefit (or the benefit of anyone other than the Firm’s clients) information about the Firm’s trading or recommendations for client accounts; or
|
|
●
|
take advantage of investment opportunities that would otherwise be available for the Firm’s clients.
|
|
Aurora Investment Management L.L.C. Code of Ethics | 4 | Effective December 1, 2010 |
B.
|
Compliance with Applicable Law, including the Federal Securities Laws
|
●
|
the Securities Act of 1933 and the Securities Exchange Act of 1934;
|
|
●
|
the Advisers Act and the SEC rules thereunder (because the Firm is a registered investment adviser);
|
|
●
|
the Company Act and the SEC rules thereunder (because most of the Firm’s client funds operate under either the Section 3(c)(1) or 3(c)(7) exemption under that law);
|
|
●
|
title V of the Gramm-Leach-Bliley Act of 1999 (which is designed to protect privacy and enhance security of non-public information regarding individuals);
|
|
●
|
the Bank Secrecy Act, as it applies to investment advisers, and the SEC and Department of the Treasury rules thereunder (which are designed to combat money-laundering and terrorism); and
|
|
●
|
the Commodity Exchange Act and the Commodity Futures Trading Commission rules thereunder (because the Firm, with respect to certain of its clients, is registered as a Commodity Pool Operator and a Commodity Trading Advisor).
|
Aurora Investment Management L.L.C. Code of Ethics | 5 | Effective December 1, 2010 |
C.
|
Gifts to or from Managers, Brokers, Clients or Others
|
D.
|
Outside Employment and Service to Another Company
|
Aurora Investment Management L.L.C. Code of Ethics | 6 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 7 | Effective December 1, 2010 |
●
|
trading while in possession of material, non-public information;
|
|
●
|
communicating (“tipping”) such information to others;
|
|
●
|
recommending the purchase or sale of securities on the basis of such information; or
|
|
●
|
providing substantial assistance to someone who is engaged in any of the above activities.
|
Aurora Investment Management L.L.C. Code of Ethics | 8 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 9 | Effective December 1, 2010 |
(i)
|
a list of all persons subject to the Code during that period;
|
|
(ii)
|
acknowledgement by all persons subject to the Code affirming receipt of copies of the Code and acknowledging that they are subject to the provisions contained therein;
|
|
(iii)
|
a copy of each Code that has been in effect at any time during the period;
|
|
(iv)
|
copies of all approvals or notice forms mandated by this Code, including those relating to: personal trades, initial public offerings, use of external managers, private placements, brokerage accounts, outside employment, associations or business activities, and of monthly transaction summaries and other transaction reports;
|
|
(v)
|
copies of all initial, quarterly and annual Code of Ethics Questionnaires and other certifications of compliance; and
|
|
(vi)
|
a copy of each report filed pursuant to the Code and a record of any known violations and actions taken as a result thereof during the period as well as a record of all persons responsible for reviewing these reports.
|
Aurora Investment Management L.L.C. Code of Ethics | 10 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 11 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 12 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 13 | Effective December 1, 2010 |
●
|
Transaction occurring by operation of law (e.g., the Covered Security is inherited).
|
|
●
|
The Employee or a member of the Employee’s Family/Household acquires or sells the Covered Security under any circumstance in which neither the Employee nor any member of the Employee’s Family/Household exercises any discretion to buy or sell the Covered Security, or makes recommendations to the person who exercises the discretion to do so.
|
|
●
|
The Employee buys or sells a Reportable Fund (i.e., a mutual fund managed by an affiliate of the Firm) (subject to Part II.B.6 below).
|
|
●
|
The Covered Security is an exchange-traded fund (an “ETF”), exchange-traded note tracking an index or commodity or closed-end investment company. (A Covered Security does not include open-end mutual funds that are not Reportable Funds.)
|
Aurora Investment Management L.L.C. Code of Ethics | 14 | Effective December 1, 2010 |
●
|
The Covered Security is a municipal bond (also known as a “muni”). A municipal bond is a debt security issued by a state, municipality or county to finance its capital expenditures. Municipal bonds are generally exempt from federal taxes and from most state and local taxes.
|
|
●
|
The Covered Security is an exchange-traded derivative of an index or widely held basket of Covered Securities that otherwise does not require pre-approval under the Code. For example, an exchange-traded call or put option on the S&P 500 Stock Index or on an ETF that tracks the S&P 500 Stock Index does not require pre-approval.
|
|
●
|
Transactions in equity securities issued by the employer of a member of an Employee’s Family/Household (i.e., through an employee stock purchase plan). An investment in an initial public offering for an issuer where a member of an Employee’s Family/Household is employed requires advance approval. See Paragraph 4 below.
|
|
●
|
Transactions under a 529 plan.
|
|
●
|
Transactions in private placements (please see the advance approval requirements under Paragraph 3 below).
|
|
Aurora Investment Management L.L.C. Code of Ethics | 15 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 16 | Effective December 1, 2010 |
This prohibition does not apply to the following categories of transactions: | |||
●
|
Transactions under automatic investment or withdrawal plans, including automatic 401(k) plan investments and transactions under a Reportable Fund’s dividend reinvestment plan.
|
||
●
|
For example, if you have established an automatic investment plan under which regular monthly investments are automatically made in a Reportable Fund, that investment will not be considered to begin or end a 30-day holding period.
|
||
●
|
Transactions that occur by operation of law or under any other circumstance in which neither you nor any member of your Family/Household exercises any discretion to buy or sell or make recommendations to a person who exercises such discretion.
|
Aurora Investment Management L.L.C. Code of Ethics | 17 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 18 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 19 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 20 | Effective December 1, 2010 |
Aurora Investment Management L.L.C. Code of Ethics | 21 | Effective December 1, 2010 |
●
|
such person does not have access to non-public information regarding any Firm client’s purchase or sale of securities, or non-public information regarding the portfolio holdings of any Reportable Fund; and
|
|
●
|
such person is not involved in making recommendations to the Firm’s clients with respect to securities, and does not have access to such recommendations that are non-public.
|
Aurora Investment Management L.L.C. Code of Ethics | 22 | Effective December 1, 2010 |
SIGNATURES
|
OFFICE WITH THE FUND
|
DATE
|
/s/ James W. Dean, Jr.
James W. Dean, Jr.
|
Manager
|
December 10, 2010
|
/s/ James J. Dunn
James J. Dunn
|
Manager
|
December 10, 2010
|
/s/ James R. Hille
James R. Hille
|
Manager
|
December 10, 2010
|
/s/ Stephen T. Golding
Stephen T. Golding
|
Manager
|
December 10, 2010
|
/s/ Jonathan D. Hook
Jonathan D. Hook
|
Manager
|
December 10, 2010
|
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