Swiss ALP Constant Cash Yield I AGmvK, 9487 Gamprin-Bendern

Transcription

1 Swiss ALP Constant Cash Yield I AGmvK, 9487 Gamprin-Bendern ReviTrust Grant Thornton AG Bahnhofstrasse 15 P.O. Box 663 FL-9494 Schaan T F (formerly Oceano Constant Cash Yield I AGmvK) Report of the auditors Financial statements for the year ended June 30, 2017 This English report is a translation of the German original. Only the German report is legally binding and has been filed with the supervisory authorities. The English report is for information purposes only. Zürich Schaan Genève Buchs Member of Grant Thornton International Ltd Mitglied von EXPERTsuisse HR-Nr. FL MWST-Nr

2 GT ReviTrust Grant Thornton AG Bahnhofstrasse 15 P.O. Box 663 FL-9494 Schaan T F Report of the statutory auditors to the general meeting of Swiss ALP Constant Cash Yield I AGmvK (formerly Oceano Constant Cash Yield I AGmvK), Gamprin-Bendern As statutory auditors, we have audited the financial statements (balance sheet, income statement and notes) and the annual report of the Swiss ALP Constant Cash Yield I AGmvK for the year ended June 30, These financial statements and the annual report are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Liechtenstein profession, which require an audit to be planned and performed so as to obtain reasonable assurance about whether the financial statements and the annual report are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements give a true and fair view of the financial position, the financial performance and the results of operations in accordance with the Liechtenstein law. Furthermore, the financial statements comply with the Liechtenstein law and the company s articles of incorporation. We recommend that the financial statements submitted to you be approved. Concerning the annual report of administered assets of Swiss ALP Constant Cash Yield I (formerly Oceano Constant Cash Yield I) we record our audit as follows: Our audit was conducted in accordance with auditing standards promulgated by the Liechtenstein profession, which require an audit to be planned and performed so as to obtain reasonable assurance about whether the financial statements and the annual report are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Zürich Schaan Genève Buchs Member of Grant Thornton International Ltd Mitglied von EXPERTsuisse HR-Nr. FL MWST-Nr

3 small In our opinion the assets, the statement of net assets and the income statement, the calculation of the net asset value and the appropriation of available earnings comply with the requirements of the Liechtenstein law, the regulation and the prospectus; the disclosures relating to the issuance, the redemption and the final balance of units in circulation are complete and correct; the disclosures relating to the depositories mandated by the custodian bank and those mandated by the fund management company as well as the matters of particular important economic or legal information are included in the annual report. Without qualifying our report, we draw the attention to the note structural risks and asset concentrations in the notes of the annual report, according to which the fund invests indirectly through a multileveled corporate structure in bearer debentures of special-purpose vehicles. Thereby the purchase of discounted debt claims in the USA (factoring) is financed indirectly through one or more special-purpose vehicles. This multi-levelled corporate structure can give rise to heightened inherent risks when acquiring such factoring transactions in the USA and when the investment undertaking exerts its influence on decisions. Moreover, the structure is subject to several foreign legal systems. Without qualifying our report, we further draw the attention to the note Indirect costs (at SPV level). The fund has the opportunity to invest up to 100% of its net assets in a single instrument. Under some circumstances, this investment may be connected with the company through the Investment Manager in some ways. It may arise that the Investment Manager or companies and/or individuals closely personally and/or economically associated with the Investment Manager receive remunerations, commissions, management fees or other financial inducements from the investment fund and/or from companies in which the investment fund invests directly or indirectly. In certain instances this might give rise to conflicts of interest. In addition, because of the need to cover liquidity requirements not all of the indirect assets are available for continuous investment, and this will reduce the overall rate of return. Zürich Schaan Genève Buchs Member of Grant Thornton International Ltd

4 Finally, we refer to the notes legal developments indirectly linked to the Fund / events after the balance sheet date, according to which the administration company has ascertained the fact, that a SEC investigation was opened against American business partners of a special purpose vehicle of the investment fund. A possible economic effect on the assets of the AGmvK or rather the investment undertaking cannot be assessed conclusively at this point in time and is related to the ongoing process. The administration company assumes that the outcome of the SEC investigation will not have any economic impact on the investment fund. Schaan, October 26, 2017 ReviTrust Grant Thornton AG Egon Hutter Licensed Accountant (Auditor in Charge) Veronika Schlegel Licensed Accountant Enclosure: - Annual Report as per June 30, 2017 Zürich Schaan Genève Buchs Member of Grant Thornton International Ltd

5 SWISS ALP CONSTANT CASH YIELD I AGMVK (formerly Oceano Constant Cash Yield I AGmvK) Liechtenstein-registered Investment company with variable capital (SICAV) Investment undertaking for qualified investors Reinhardt & Sommer Lifestyle Events GmbH ANNUAL REPORT 2016/2017 (audited) as of 30 June 2017 This English-language Annual Report is a translation of the German original. Only the German report is legally binding. Both reports are available at BENDURA FUND MANAGEMENT ALPHA AG P +423 / Reg.-Nr. FL Schaaner Strasse 27 F +423 / IBAN: LI Gamprin-Bendern info@bendurafunds-alpha.li BIC: HYIBLI22 Principality of Liechtenstein

6 CONTENT 1. FINANCIAL S TATEMENT OF THE INVE STME NT COMPANY ORGANI SATIO N STATEME NT OF NET ASSE TS INCOME STATE MENT ANNEX ACCOUNTING AND V AL U ATION PRI NCI PLES NOTES ON SPECIFIC PO SI TIONS IN THE ST ATEME NT OF NET ASSET S AND THE INCOME STATEME NT SUPPLEME NT ARY NOTE S (ART CPCL / ART CPCL / ART CPCL) PROPOSED APPROPRI ATIO N OF PRO FIT SWI S S ALP CONST A NT CASH YIEL D I KEY INFOR MATIO N KEY DATA REPORT OF THE INVE STMENT MANAGER STATEME NT OF NET ASSE TS OFF BALANCE SHEET TR ANSACTIONS INCOME STATE MENT APPROPRI ATIO N O F PRO FI TS CHANGE S OF THE NET ASSET VALUE AMOUNT OF U NIT S IN CIR CULAT ION DEVELOPMENT OF THE NE T ASSET VAL UE ADDI TIO N AL INF ORM AT IO N Swiss ALP Constant Cash Yield I AGmvK S e i t e 2

7 1. FINANCIAL STATEMENT OF THE INVESTMENT COMPANY 1.1 ORGANISATION Swiss ALP Constant Cash Yield I AGmvK Board of Directors 1 Management Board 1 Investment Management / Asset Manager Administration Company / AIFM 1 BENDURA FUND MANAGEMENT ALPHA AG Schaaner Strasse 27 LI-9487 Gamprin-Bendern BENDURA FUND MANAGEMENT ALPHA AG Schaaner Strasse 27 LI-9487 Gamprin-Bendern Swiss ALP Asset Management GmbH Bangarten 10 LI-9490 Vaduz BENDURA FUND MANAGEMENT ALPHA AG Schaaner Strasse 27 LI-9487 Gamprin-Bendern Custodian Bank VP Bank AG Aeulestrasse 6 LI-9490 Vaduz External Auditor ReviTrust Grant Thornton AG Bahnhofstrasse 15 LI-9494 Schaan Representative in Switzerland First Independent Fund Services AG Klausstrasse 33 CH-8008 Zürich Paying agent in Switzerland Neue Helvetische Bank AG Seefeldstrasse 215 CH-8008 Zürich Swiss ALP Constant Cash Yield I AGmvK S e i t e 3

8 Availability of key Fund documents The sales prospectus, by-laws and annual report of the Fund are available free of charge from the Representative in Switzerland. Place of performance and place of jurisdiction In respect of units distributed to qualified investors in Switzerland the place of performance and the place of jurisdiction is the registered office of the Representative in Switzerland. BENDURA FUND MANAGEMENT ALPHA AG 1 Board of Directors Dr. Andreas Insam (President) Dr. Gerhard Lackinger, Mag. Prof. Dr. Michael Hanke Management Board MMMag. Franz Glatzl, CIFB (Chief Executive Officer) Dr. Walfried Kraher, Mag., CFA 1 Renaming with effect as of 27 February 2017: Further information can be found at "Information on matters of economic significance". Swiss ALP Constant Cash Yield I AGmvK S e i t e 4

9 1.2 STATEMENT OF NET ASSETS Assets CHF CHF capital assets Fixed Assets Financial assets 80'628' '641' Total Fixed Assets 80'628' '641' Total capital assets 80'628' '641' current assets Bank deposits current accounts 54' ' Total bank deposits 54' ' Total current assets 54' ' Total assets 80'683' '696' Liabilities equity capital Investors' units 80'628' '641' Share capital 56' ' Profit reserve Profit carried forward -2' Profit for the year / period -2' ' Total equity capital 80'680' '695' outside capital Other short-term liabilities Tax provisions 3' ' Total outside capital 3' ' Total liabilities 80'683' '696' Swiss ALP Constant Cash Yield I AGmvK S e i t e 5

10 1.3 INCOME STATEMENT Operating income CHF CHF Other interests and similar income Other operating income Total Operating income Operating expenditure Fund set-up fees / Fund management costs Costs of External Auditors Bank charges Other operating expenditure Total operating expenditure Financial income Currency income / Interest income Total financial income Taxes Profit tax -1' ' Total taxes -1' ' Profit for the year / period -2' ' Swiss ALP Constant Cash Yield I AGmvK S e i t e 6

11 1.4 ANNEX ACCOUNTING AND VALUATION PRINCIPLES Accounting principles Swiss ALP Constant Cash Yield I AGmvK is an externally managed investment company legally constituted as a limited company with variable capital (SICAV) under Liechtenstein law in the form of an investment undertaking for qualified investors. This Annual Report covers the Investment Companys financial year from 01 July 2016 to 30 June The modes of presentation and classification used in the annual accounts comply with the statutory provisions of the Liechtenstein Code of Personal and Company Law (CPCL). Liquidity, receivables and liabilities are valued at par, with due allowance made for any provisioning requirements. The heading «Accrued and deferred items» shows expenditures incurred or income received before the accounting cut-off date but attributable as expenditure or income for subsequent accounting periods NOTES ON SPECIFIC POSITIONS IN THE STATEMENT OF NET ASSETS AND THE INCOME STATEMENT Financial assets The assets managed by the Investment Company are shown under the heading Financial assets. The assets under management form a separate body of assets in favour of the holders of the investors units and in the event of the insolvency of the Investment Company shall not form part of the Investment Company s insolvent estate (Art. 37 Investment Undertakings Act, IUA-2005). Investors units Pursuant to its by-laws the Investment Company has issued registered founders shares with a nominal value and bearer investors units with no nominal value. The investors participate in the assets and earnings of the Fund s individual sub-funds in proportion to the units they acquire. However, the investors units confer neither voting rights nor any other membership rights. Likewise, investors units do not confer any entitlement to participate in the profits of the Investment Company. Swiss ALP Constant Cash Yield I AGmvK S e i t e 7

12 Income Statement of the Investment Company The profit and loss account of the Investment Company shows the income and expenditure chargeable to the share capital. Shares and participation certificates Number Nominal value Registered shares 56 CHF 56' SUPPLEMENTARY NOTES (ART CPCL / ART CPCL / ART CPCL) Exchange rates as of Claims and liabilities of the Investment Company denominated in foreign currencies are valued as at the accounting cut-off date at the following exchange rates: USD CHF Write-downs and provisions Specific provisions and write-downs were carried out in accordance with the precautionary principle for all risks identified as at the accounting cut-off date. Income and expenditure items of extraordinary size None. Guarantees, rights of lien, contingent liabilities None. Notes on financial instruments See Point 1.4.2, notes on the individual balance sheet and income statement items. Residual maturities of liabilities and collateral for liabilities There are no liabilities with residual maturities in excess of five years. There are no liabilities secured against liens or similar rights in rem. Swiss ALP Constant Cash Yield I AGmvK S e i t e 8

13 Interest on debt capital included in the production costs None. Number of employees The Swiss ALP Constant Cash Yield I AGmvK had no employees in the financial year concerned. Advances and loans to directors and management board members The Swiss ALP Constant Cash Yield I AGmvK did not grant any advances or loans to directors and management board members. Depreciation of goodwill The Swiss ALP Constant Cash Yield I AGmvK has not capitalised any goodwill and therefore is not depreciating any goodwill. There were no other matters subject to a reporting obligation within the meaning of Art et seq. CPCL (Liechtenstein Code of Personal and Company Law) PROPOSED APPROPRIATION OF PROFIT 2016/ /2016 Profit for the year / period -2' ' Profit carried forward from previous period -2' Profit at the disposal of the AGM -4' ' Allocation to legal reserve Profit carried forward to next period -4' ' Swiss ALP Constant Cash Yield I AGmvK S e i t e 9

14 2. SWISS ALP CONSTANT CASH YIELD I 2.1 KEY INFORMATION Basic Information Securities ID no ISIN LI Fund Domicile Principality of Liechtenstein Competent Supervisory Authority Financial Market Authority Liechtenstein (FMA) Legal Form Collective Trusteeship Legal Foundation Investment Undertaking Act for other values and real estate Distribution Yes Duration Unlimited Listing No Accounting Currency of the SICAV CHF Accounting Currency USD Financial Year 1 July - 30 June Valuation frequency monthly Valuation date Last calendar day of the month Acceptance deadline for issuance of units 1 bank working day before the valuation date, 12:00 a.m. CET Acceptance deadline for unit redemptions Redemption day, noon CET subject to four months' notice Publication Liechtenstein Investment Fund Association ( Costs Commissions and costs payable by investors Issue comm. (max.) 5.00% Redemption comm. (max.) None Issue comm. on dissolution of the Fund (max.) 0.25% Commissions and costs payable by the Fund Administration and management fee 0.15% p.a. minimum CHF 30'000 Investment management fee 1.5% p.a. Custodian Bank fee 0.12% p.a. minimum CHF 18'000 Other costs See prospectus / constituent documents Swiss ALP Constant Cash Yield I AGmvK S e i t e 10

15 2.2 KEY DATA Amount of Units in Circulation 8'127' Net Asset Value USD 84'123' Net Asset Value per Unit USD % Total Expense Ratio 1 (TER) Total Expense Ratio 2 (TER) Portfolio Turnover Rate (PTR) TER represents the total commissions and costs charged to the Fund assets on a recurring basis (operating expenditure), expressed retrospectively as a percentage of net Fund assets At the level of the indirect investments an Investment Advisor receives remuneration which reduces the returns on the Fund's direct investments. This constitutes an indirect source of costs. (excl. Performance Fee). 2 TER represents the total commissions and costs charged to the Fund assets on a recurring basis (operating expenditure), expressed retrospectively as a percentage of net Fund assets At the level of the indirect investments an Investment Advisor receives remuneration which reduces the returns on the Fund's direct investments. This constitutes an indirect source of costs. (incl. Performance Fee). 3 Portfolio turnover rate as defined in the Swiss Funds & Asset Management Association (SFAMA) guidelines on calculating and disclosing the TER and PTR of collective capital investments. Swiss ALP Constant Cash Yield I AGmvK S e i t e 11

16 2.3 REPORT OF THE INVESTMENT MANAGER The investment objective of the Swiss ALP Constant Cash Yield I AGmvK is to generate a constant stream of income that permits an annual distribution to be made to the investors by way of an alternative to traditional fixed-interest investments. In so doing the emphasis shall not be on maximising income but rather on ensuring that the distributions remain constant. Returns are generated by factoring business in which claims are acquired indirectly via specially created specialpurpose vehicles. The clients of this factoring business are generally law firms or similar companies and/or their clients who have claims for fees based on negotiated settlements and similar agreements, on court rulings or parliamentary decisions or on prevailing law. These claims are acquired from them at a discount. The factoring business is carried out primarily in the United States of America. Swiss ALP Asset Management GmbH, in its capacity of Investment Manager of the Fund, is frequently present in the USA to evaluate potential new investments and to cultivate and expand its close contacts with local service providers engaging in factoring business. In the light of the annual distribution and the underlying credit risk associated with the ultimate obligors, the Swiss ALP Constant Cash Yield I AGmvK positions itself as an alternative to fixed-income investments. The Swiss ALP Constant Cash Yield I AGmvK aims to make an annual cash distribution of approx. 7% on the capital invested. In January 2014 a first distribution of 4.13% (or 7.1%, annualised) was made to the investors in respect of the 2013 calendar year. The distributions for the 2014, 2015 and 2016 calendar years were 7.2% (made in January 2015), 7.1% (made in January 2016) and 7.1% (made in January 2017) respectively. As at 30 June 2017 the Swiss ALP Constant Cash Yield I AGmvK had a net asset value (NAV) of USD 84' At the level of the managing special-purpose vehicles, the claim portfolio ultimately underlying this NAV comprised 31 obligors spread across 15 industries as at the accounting cut-off date. As at 30 June 2017 the majority of the portfolio consisted of obligors with investment grade credit ratings. Most of the settlement payments had already been deposited in an escrow account as at the accounting cutoff date. During the last financial year the Fund's exposure to the pharmaceutical and US government sectors decreased substantially. In the previous financial year the Fund's exposure to the "Health Care Equipment & Services", "Capital Goods" and "Consumer Durables & Apparel" sectors increased sharply. These changes are largely the result of collections received during the reporting period and of the ongoing transaction pipeline. The exposure to the US government is likely to decrease sharply in the coming financial year on account of collections expected in Q3 and Q The future financial performance of the Fund's portfolio will depend principally on changes in the transaction pipeline and on the collections stream. Both these factors are liable to change at short notice. The Investment Manager reserves the right in consultation with the Management Company to reject additional subscriptions to Fund units by existing or new investors if the Investment Manager takes the view that no attractive investment opportunities exist in the short term, i.e. that no claims are available that conform to the Investment Manager's purchase profile. Such a soft-closing of the Fund, where necessary on a temporary basis, helps to protect the interests of the investors and to achieve the desired overall rate of return. Swiss ALP Constant Cash Yield I AGmvK S e i t e 12

17 2.4 STATEMENT OF NET ASSETS USD Credit balances with banks Current accounts 5'172' Sight accounts 0.00 Securities regular Bonds, convertible Bonds, other Bonds 79'329' Other Assets activated setup costs 9' Gross Asset Value 84'511' Liabilities liabilities on current accounts 0.00 other liabilities -388' Net Asset Value 84'123' Amount of Units in Circulation 8'127' Net Asset Value per Unit Swiss ALP Constant Cash Yield I AGmvK S e i t e 13

18 2.5 OFF BALANCE SHEET TRANSACTIONS Derivative financial instruments At the end of the reporting period there were no open positions in derivative financial instruments. Securities Lending At the end of the reporting period there were no securities lendings. Liabilities from Loans At the end of the reporting period there were no liabilities outstanding form loans taken out. Swiss ALP Constant Cash Yield I AGmvK S e i t e 14

19 2.6 INCOME STATEMENT USD Income Income from bank deposits 3' Income from securities regular Bonds, convertible Bonds, other Bonds 6'472' Other Income 17' Adjustment of current income due to issue of units 202' Total Income 6'696' Expenses Bank charges 0.00 Audit charges 24' Regulatory compensation to Administration Company / AIFM 143' Custodian Bank 106' Investment Management / Asset Manager 1'329' Other expenses 33' Adjustment of current income due to redemption of units 1'255' Total Expenses 2'891' Net Income 3'804' Realised capital gains / losses 196' Realised Income 4'000' Non-realised capital gains / losses 870' Overall Income 4'871' Swiss ALP Constant Cash Yield I AGmvK S e i t e 15

20 2.7 APPROPRIATION OF PROFITS USD Profit for the period Capital gains intended for distribution current period 3'804' '552' Capital gains intended for distribution previous periods 0.00 Retained earnings balance brought forward 0.00 Earnings available for distribution 6'357' Earnings intended for distribution to the investors 6'357' Retained earnings for reinvestment 0.00 Carried forward to New Account CHANGES OF THE NET ASSET VALUE USD Net Assets at the Beginning of the Period Distributions Balance from issuance and redemption Total Profit Net Assets at the End of the Period 100'019' '357' '410' '871' '123' Swiss ALP Constant Cash Yield I AGmvK S e i t e 16

21 2.9 AMOUNT OF UNITS IN CIRCULATION Amount of Units at the Beginning of the Period Units issued Units redeemed Amount of Units at the End of the Period 9'651' '363' '887' '127' DEVELOPMENT OF THE NET ASSET VALUE Date Net Assets Amount of Units Net Asset Value Development Valuation USD in Circulation per Unit per financial year '123' '127' % '019' '651' % '839' '995' % '012' '674' % '017' ' % '000' ' The stated figures are inclusive of distributions 2 Actual period only, not annualised Past performance is not an accurate guide to future performance. The performance data do not take account of costs and commissions charged in connection with unit subscriptions and redemptions. Swiss ALP Constant Cash Yield I AGmvK S e i t e 17

22 3. ADDITIONAL INFORMATION Depositaries The securities of the investments shown in the asset inventories were held with following depositaries as at the end of the reporting period: - VP BANK AG, Vaduz, Liechtenstein Exchange rates as of USD CHF Information on matters of economic significance Notice to unit holders of 1 December 2016 With effect from 1 December 2016 the following significant amendments to the Prospectus entered into force: - The "Oceano Constant Cash Yield I AGmvK" was renamed the "Swiss ALP Constant Cash Yield I AGmvK". - Section 1: The acceptance deadline for unit subscriptions was changed from 3 bank working days to 1 bank working day prior to the valuation day. In future unit subscriptions will be limited to whole units. - Section 5.1: The description of the investment strategy was somewhat clarified. The clients of the factoring business underlying the Fund are now described in greater detail, as are the parties with the ultimate payment obligations (counterparties). - Section 9: Minor update to the information on distribution in respect of Switzerland. On 21 November 2016 the FMA certified that it had received the confirmation of the aforementioned amendments issued by the eternal auditors on 15 November Notice to unit holders of 5 January 2017 Decision as at 31 December 2016 in favour of a distribution amounting USD per unit in respect of the 2016 calendar year. Pamyent date was 10 January Rebranding Administration Company / AIFM Please note that with effect as of 27 February 2017 our company Valartis Fund Management (Liechtenstein) AG has been renamed to BENDURA FUND MANAGEMENT ALPHA AG. The according change in the register of companies was effected on 01 March The renaming is due to the recent sale and renaming of our 100% shareholder, namely BENDURA BANK AG (formerly Valartis Bank (Liechtenstein) AG). Relevant press releases can be found at the website of Valartis Group AG as seller of BENDURA BANK AG ( the website Swiss ALP Constant Cash Yield I AGmvK S e i t e 18

23 of Citychamp Watch & Jewellery Group Ltd. as purchaser of BENDURA BANK AG ( and the website of BENDURA BANK AG ( Investment policy Information on the investment policy is given in the section entitled "Report of the Investment Manager". The investment objective described there is implemented with recourse to local and international special-purpose vehicles, as a result of which the Fund acquires an indirect participation in claims bought from their original holders at a discount (factoring). Thus the resulting return is not like the return on a share but rather is comparable with the continuous yield on a bullet bond, with the maximum achievable rate of return ultimately depending on the purchase price of the claim and the expected duration before it is repaid. With regard to investments involving special-purpose vehicles, the following should be noted: a) Structural risks and asset concentrations The Fund invests mainly in bearer debentures of national special-purpose vehicles and thereby funds purchases of discounted debt claims in the USA (factoring) indirectly through one or more international special-purpose vehicles. This means that, at the level of the Fund, little or no diversification of the assets held is directly evident. In this regard the Fund is permitted to invest up to 100% of its net assets in a single instrument. Influence on the decisions taken by the SPVs is exerted through the Investment Manager. A multi-tiered corporate structure of this kind can give rise to heightened inherent risks when acquiring such factoring transactions in the USA and when the Fund exerts influence on decisions. Moreover, the structure is subject to several foreign legal systems and, in particular, the purchases and legal enforceability of the claims are governed by US law. b) Indirect costs (at SPV level) Because the assets are invested via local and international special-purpose vehicles, additional costs may arise which are not plainly evident as direct costs at Fund level. However, these potential costs have already been factored into the avowed target rate of return at Fund level of approx. 7% p.a. c) Conflicts of interest concerning indirect costs It may arise that the Investment Manager or companies and/or individuals closely associated with the Investment Manager receive remunerations, commissions, management fees or other financial inducements (e.g. any surplus profits that may exist) from the Fund and/or from instruments/companies in which the Fund invests directly or indirectly. In certain instances this might give rise to conflicts of interest. Particular reference is made to Section d) of the Prospectus, from which it is possible in economic terms to infer the possibility of a form of indirect performance fee (surplus gains). The main way in which conflicts of interest are avoided is by creating incentives wherever possible to ensure that the target 7% rate of return at Fund level is attained and secured. The indirect performance fee certainly plays a part in this, since it only Swiss ALP Constant Cash Yield I AGmvK S e i t e 19

24 kicks in if at SPV level the target rate of return required to service the debt capital component of the involved bearer debentures is also attained or exceeded. On the other hand, because of the way the investment is configured, investors in the Fund cannot expect the rate of return to be significantly higher than 7% p.a. at Fund level. d) Securing liquidity versus maximising returns Because of the need to cover liquidity requirements, in certain circumstances not all of the funds may be available to the Investment Manager for continuous investment, and this will reduce the overall rate of return. This situation can arise in particular whenever the Fund makes plans to service future redemptions and refrains from making (further) investments in order to guarantee sufficient liquidity. Given that the time at which the indirectly acquired claims will actually pay out cannot be determined with scientific accuracy, this type of investment calls for a degree of gut instinct regarding the expected durations. Legal developments indirectly linked to the Fund / events after the balance sheet date In the USA, accusations against indirect business partners of the Fund were made public in 2016 and In essence the accusations relate to the business conduct (misleading marketing; inadequate representation of the risks associated with certain investments; criticisms of the valuation methodology; profiteering at the expense of those selling claims) of a number of firms which at least indirectly count the Fund among their business partners. As the Administration Company in charge of the Fund, BENDURA FUND MANAGEMENT AL- PHA AG ("BFMA") is therefore monitoring the accusations very closely and ensuring that it is kept informed of the facts of the matter by the appointed Investment Manager. From BFMA's point of view the key question is whether these cases have foreseeable negative implications for the Fund in economic terms. At present BFMA does not believe the two cases described below can be expected to have direct, economically negative consequences for the Fund. Further information is available at any time on request from the Investment Manager of the Fund and/or the Administration Company. SEC investigation of RD Legal ("Iran case") This investigation was opened by the SEC in July 2016 against RD Legal Capital LLC ("RDLC") and Roni Dersovitz ("RD", owner and managing director). In the annual report as at 30 June 2016 the Iran case was described as follows: "In the opinion of CCY Ltd. / Oceano Constant Cash Yield I, the default risk associated with this prominent case is very low. The claim for damages totalling almost USD 2 billion relates to a car bomb attack in Beirut in 1983 and US legislation on the satisfaction of such claims in respect of Iran. The first payments have now been made, the last instalments of those payments being initiated in September CCY Ltd. did not invest in this case until much later than the investments made by RD Legal Capital Ltd. as representative of various other companies, by which time the risks had diminished accordingly. From the present perspective Swiss ALP Constant Cash Yield I AGmvK S e i t e 20

25 there is no longer a heightened degree of litigation / collection risk attaching to the legal receivables in connection with the "Iran case". Likewise, the legal basis appears to have been underpinned by the Supreme Court ruling. That the legal receivables are enforceable is also demonstrated by the payments already made. If fresh information should come to light in this regard, VFM will analyse it and factor it into the above considerations." Update on the Iran case as at the cut-off date 30 June 2017: The assessment of BFMA as Administration Company has been borne out in this regard. Nearly all the original receivables linked to the Beirut bombing in 1983 had been paid by the accounting cut-off date for the Fund. According to the Investment Manager, the administrative processes necessary for payment of those "Iran claims" that remain in the portfolio are already under way and further payments can be expected in the second half of On 16 August 2017 (i.e. since the accounting cut-off date) an important judgement was handed down in favour of RDLC and RD, rejecting key charges brought by the SEC and, on the contrary, largely agreeing with the independent experts put forward by RDLC and the views they expressed. In particular the judgement once again raises the issue of the method used to value the various claims. The judge presiding bases his findings on, among other things, statements/reports by reputable independent experts in which the method of valuing the claims is found to be appropriate in the light of their complexity and which once again underline the independent verifications carried out by third-party service providers (Pluris Valuation Advisors LLC, Marcum LLP). In turn, this judgement indirectly corroborates the continuous valuation by the Swiss ALP Constant Cash Yield I AGmvK. Consumer Financial Protection Bureau vs. RD Legal ( CFPB-Case ) In February 2017 the New York-based Consumer Financial Protection Bureau (CFPB), represented by the New York Attorney General Eric T. Schneiderman, filed charges against various RD Legal companies (RD Legal Funding LLC, RD Legal Finance LLC, RD Legal Funding Partners LP) and against Roni Dersovitz as their principal representative. The main charges are that certain claims a) should not, in the CFPB's opinion, have been purchased by the RD Legal companies, b) were purchased, in the CFPB's opinion, on usurious terms to the detriment of the original owners of the claims, and c) ought, in the CFPB's opinion, to have qualified as lendings under New York law rather than as purchases of claims. In February and March 2017 these accusations attracted a degree of media coverage in the USA, since the claims in question had links to former NFL players and victims of 9/11. Both areas (sport and 9/11) carry an emotional charge in the USA, which can sometimes quickly lead the media into unjustified pre-judgements. In economic terms the Fund has a very limited (approx. USD 2.3 million, as at 30 June 2017) indirect participation in such claims. As a result, even if the investigations were to come to an unfavourable outcome from the RD Legal perspective, there would probably be no appreciable economic impact on the Fund in Liechtenstein. Swiss ALP Constant Cash Yield I AGmvK S e i t e 21

26 On 15 May 2017 the companies cited in the accusations filed a highly plausible and well-founded motion to dismiss the charges brought by the CFPB. BFMA takes the view that the arguments advanced in the motion to dismiss are very sound and comprehensible. As things stand BFMA assumes that the motion to dismiss filed by counsel for the defendants will be upheld. BFMA has received assurances from the general legal counsel for the RD Legal companies that, for instance, all those who sold the claims had received advice from an independent third party before concluding the relevant agreements and that some of them had their own lawyers involved. Swiss ALP Constant Cash Yield I AGmvK S e i t e 22