Tribeca Global Total Return Fund Retail Class ARSN: Supplementary Product Disclosure Statement ( SPDS )

Transcription

1 Tribeca Global Total Return Fund Retail Class ARSN: Supplementary Product Disclosure Statement ( SPDS ) Equity Trustees Limited ( EQT or Responsible Entity ) ABN: AFSL: Level 2, 575 Bourke Street, Melbourne, Victoria 3000 Date Issued: 19 August 2016 This is a Supplementary Product Disclosure Statement ( SPDS ) for the Tribeca Global Total Return Fund Institutional Class (ARSN ) ( the Fund ) Product Disclosure Statement ( PDS ) dated 10 May This SPDS should be read in conjunction with the PDS. If you receive this SPDS electronically, EQT will provide you with a paper copy, free of charge, on request. Terms defined in the PDS have the same meaning in this SPDS unless defined otherwise in this SPDS. The purpose of this SPDS is to update the information in the PDS regarding certain US regulatory considerations. Specifically, the Fund's investment manager, Tribeca Investment Partners Pty Ltd ("Investment Manager"), will no longer be eligible for registration relief as a Commodity Pool Operator ("CPO") under Commodity Futures Trading Commission ("CFTC") Regulation 3.10(c)(3)(i). Consequently, the Investment Manager will claim an exemption under CFTC Rule 4.13(a)(3) from registration as a CPO with the CFTC. Immediately after the second paragraph on page 3, the disclosure is hereby supplemented to include the following: This PDS has not been filed with, or reviewed by, the US Securities Exchange Commission ( US SEC ) or any other US federal or US state agency. Neither the US SEC nor any US state or US federal agency has passed upon the accuracy or adequacy of this PDS or endorsed the merits of this offering. Any representation to the contrary is unlawful. The Investment Manager qualifies for the exemption from registration with the CFTC as a CPO because this pool is operated pursuant to the following criteria: a) the units of the Fund are exempt from registration under the US Securities Act of 1933, as amended ( US Securities Act ), and such units are not offered and sold through a public offering in the United States; b) either the aggregate initial margins and premiums required to establish commodity interest positions for this pool does not exceed 5% of the liquidation value of such pool s portfolio or the aggregate net notional value of such pool s commodity interest positions does not exceed 100% of the liquidation value of such pool s portfolio; and c) the participation in such pool is limited to certain classes of investors recognised under the US federal securities and commodities laws. Therefore, unlike a registered CPO, the Investment Manager is not required to deliver a disclosure document or certified annual reports complying with CFTC regulations to participants in this pool. The Investment Manager will, however, deliver this PDS and the reports, as described herein.

2 Tribeca Global Total Return Fund - Retail Class ARSN APIR ETL0301AU Product Disclosure Statement Issue Date 10 May 2016 Investment Manager Tribeca Investment Partners Pty Ltd ABN AFSL PO Box R278 Royal Exchange Sydney NSW 1225 Phone: (02) Fax: (02) Web: Responsible Entity Equity Trustees Limited ABN AFSL No GPO Box 2307 Melbourne Vic 3001 Phone Web: Administrator Citco Fund Services (Australia) Pty Ltd ABN Investor Relations Group Level 22, 45 Clarence Street, Sydney, NSW, Australia 2000 Fax: (02) sydcfsorders@citco.com

3 This Product Disclosure Statement ( PDS ) was issued on 10 May This PDS is for the offer of interests in the Tribeca Global Total Return Fund - Retail Class ARSN APIR ETL0301AU (referred throughout this PDS as the Fund ). The PDS has been prepared and issued by Equity Trustees Limited (ABN , Australian Financial Services Licence ( AFSL ) No ) in its capacity as the responsible entity of the Fund (referred throughout this PDS as the Responsible Entity, EQT, us or we ). The investment manager is Tribeca Investment Partners Pty Ltd (referred to throughout this PDS as Tribeca or the Investment Manager. This PDS is prepared for your general information only. It is not intended to be a recommendation by the Responsible Entity, Investment Manager or any associate, employee, agent or officer of the Responsible Entity, Investment Manager or any other person to invest in the Fund. This PDS does not take into account the investment objectives, financial situation or needs of any particular investor. You should not base your decision to invest in the Fund solely on the information in this PDS. You should consider the suitability of the Fund in view of your personal financial circumstances, investment objectives and needs. You may want to seek advice before making an investment decision. The Responsible Entity has authorised the use of this PDS as disclosure to investors and prospective investors of an investor directed portfolio service, master trust, wrap account or an investor directed portfolio service-like scheme ( IDPS ). This PDS is available for use by persons applying for units in the Fund through an IDPS ( Indirect Investors ). The operator of an IDPS is referred to in this PDS as the IDPS Operator and the disclosure document for an IDPS is referred to as the IDPS Guide. If you invest through an IDPS, your right and liabilities will be governed by the terms and conditions of the IDPS Guide. Investors should carefully read these terms and conditions before investing in the Fund. Please refer to the Investment and withdrawals section for further information on investments through an IDPS. EQT, the Investment Manager and their employees, associates, agents or officers do not guarantee the success, repayment of capital or any rate of return on income or capital or the investment performance of the Fund. Past performance is no indication of future performance. An investment in the Fund does not represent a deposit with or a liability of EQT, the Investment Manager or any of their associates. An investment is subject to investment risk, including possible delays in repayment and loss of income or capital invested. Units in the Fund are offered and issued by the Responsible Entity on the terms and conditions described in this PDS. You should read this PDS in its entirety. The forward looking statements included in this PDS involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, EQT, the Investment Manager and their officers, employees, agents or associates. Actual future events may vary materially from the forward looking statements and the assumptions on which those statements are based. Given these uncertainties, you are cautioned to not place undue reliance on such forward looking statements. There are references to past performance in this PDS. Past performance is no guarantee of future performance. In particular, in considering whether to invest in the Fund, investors should consider the risk factors that could affect the financial performance of the Fund. Some of the risk factors affecting the Fund are summarised in section 6. All amounts quoted in this PDS are in Australian dollars ( AUD ) unless stated otherwise. If you are a Retail Client you may have a right to a cooling off period in relation to an investment in the Fund within 14 days of the earlier of: confirmation of the investment being received or available; and the end of the fifth Business Day after the units are issued. The right to cool off may not apply if you are an Indirect Investor, even if you are a Retail Client. Indirect Investors should seek advice from their IDPS Operator or consult the IDPS Guide or similar type document as to whether cooling off rights apply. 2

4 The offer made in this PDS is available only to persons receiving this PDS in Australia (electronically or otherwise). If you received this PDS electronically we will provide a paper copy free upon request during the life of this PDS. The PDS is available on or you can request a copy free of charge by contacting Tribeca (02) or EQT on This PDS does not constitute a direct or indirect offer of securities in the US or to any US Person as defined in Regulation S under the US Securities Act of 1933 as amended ( US Securities Act ). EQT may vary its position and offers may be accepted on merit at EQT's discretion. The units in the Fund have not been, and will not be, registered under the US Securities Act unless otherwise determined by EQT and may not be offered or sold in the US to, or for, the account of any US Person (as defined) except in a transaction that is exempt from the registration requirements of the US Securities Act and applicable US state securities laws. Information in this PDS that is not materially adverse is subject to change from time to time. We may update this information. You can obtain any updated information: by contacting Tribeca (02) or EQT on ; or by visiting the EQT website at A paper copy of the updated information will be provided free of charge on request. Unless otherwise stated, all fees quoted in the PDS are inclusive of GST, after allowing for an estimate for Reduced Input Tax Credits ( RITC ). 3

5 Contents Page 1. Fund at a glance Benchmarks 6 3. Disclosure Principles 7 4. Who is managing the Fund? 8 5. How the Fund invests Managing risk Investing and withdrawing Keeping track of your investment Fees and other costs Taxation Other important information Glossary of important terms Application form 4

6 1) Fund at a glance Summary For further information Name of the Fund Tribeca Global Total Return Fund - Retail Class section 5 APIR Code ETL0301AU ARSN Investment objective The Fund aims to generate long term capital growth by investing in all liquid asset classes. It aims to provide investors with a total investment return, before fees and expenses, which outperform the Fund s Benchmark over the long term. section 5 Fund Benchmark Bloomberg AusBond Bank Bill Index section 5 Investment strategy and investments held The type(s) of investor(s) for whom the Fund would be suitable Recommended investment timeframe The goal of the Fund s investment strategy is to generate reliable investment returns while managing volatility and correlation to major market risks. The investment strategy has no key dependencies or assumptions. This is a global strategy with the typical asset classes held by the Fund being cash and cash equivalent instruments, global bond and bond equivalent instruments, global equities, convertibles and other equity like securities, derivatives, foreign exchange contracts and other unit trusts. Long-term investors seeking a diversified total return investment strategy with a high level of risk At least 5-7 years We recommend that you consider, with your financial adviser, the suggested investment period for the Fund in relation to your own investment timeframe You should review this regularly to ensure that the Fund continues to meet your investment needs section 5 section 5 section 5 Minimum initial investment Minimum additional investment Minimum withdrawal amount $25,000 section 7 $1,000 section 7 $1,000 section 7 Minimum balance $20,000 section 7 Cut off time for applications and withdrawals Monthly 5:00pm, two Business days prior to the relevant Pricing Date section 7 Cooling Off Available to Retail Clients in certain circumstances section 7 Valuation frequency Monthly, on the last day of the month section 7 Unit pricing Monthly, on the last day of the month section 7 Applications Monthly, on the last day of the month section 7 Withdrawals Monthly, on the last day of the month section 7 Income distribution Annually at the end of June Reinvestment of distributions is available section 7 5

7 Management costs 1% (net of GST and RITC) p.a. of the Net Asset Value ( NAV ) of the Fund, plus a performance fee section 9 Entry fee/ exit fee Nil section 9 Buy/Sell spread +/-0.30% on applications (or withdrawals) into (or from) the Fund section 9 Performance fee 20% (net of GST and RITC) of the Fund return above the Fund Benchmark section 9 2) Benchmarks The information summarised in this table and explained in detail in the identified section reference is intended to assist investors with analysing the risks of investing in the Fund. Investors should consider this information together with detailed explanation of various benchmarks and principles referenced throughout this PDS and the key risks of investing in the Fund highlighted in section 6 of this PDS. Valuation of assets This benchmark addresses whether valuations of the Fund s nonexchange traded assets are provided by an independent administrator or an independent valuation service provider. Is the benchmark satisfied? Yes For further information Please refer to page 11 of this PDS for further information. Periodic reporting This benchmark addresses whether the responsible entity of the Fund will provide periodic disclosure of certain key information on an annual and monthly basis. Yes Please refer to page 21 of this PDS for further information. 6

8 3) Disclosure Principles Investment strategy Investment manager Fund structure Valuation, location and custody of assets Liquidity Leverage Derivatives Summary The goal of the Fund s investment strategy is to generate reliable investment returns while managing volatility and correlation to major market risks. The investment strategy has no key dependencies or assumptions. This is a global strategy with the typical asset classes held by the Fund being cash and cash equivalent instruments, global bond and bond equivalent instruments, global equities, convertibles and other equity like securities, derivatives, foreign exchange contracts and other unit trusts. The Fund may use derivatives and leverage as a part of its investment strategy. Diversification guidelines for the Fund are set out in section 5.2. The specific risks of investing in the Fund are described in section 6. Tribeca Investment Partners Pty Ltd is the investment manager. The Fund is managed by Chris Daily who is supported by an experienced team of quantitative and fundamental analysts. Further details in relation to the expertise of the Investment Manager and the investment management agreement are set out in section 4. The responsible entity of the Fund is Equity Trustees Limited who has appointed Tribeca Investment Partners Pty Ltd as investment manager. See section 5.3 for further information on other key service providers, EQT s role in monitoring the performance of service providers and a diagram of flow of funds through the Fund. Interactive Brokers LLC and Morgan Stanley & Co International plc have been appointed as Prime Broker to provide a range of services, including execution, stock lending, margin loans, over-thecounter derivatives exposure and custody. J.P.Morgan Chase Bank, N.A. (Sydney Branch) has been contracted to provide traditional custodial services for unencumbered, unleveraged assets. Citco Fund Services (Australia) Pty Ltd is the administrator of the Fund ( Administrator ) and provides administrative, accounting, registrar and transfer agency services. The Administrator is responsible for determining the Fund s Net Asset Value. See section 5.4 for further information on custodial arrangement and the geographical location of assets. The Fund invests predominately in liquid assets and is expected to be liquid for the purposes of the Corporations Act. The Fund s underlying strategy employs leverage which may result from the use of derivatives or the short selling of securities. See section 5.6 for an explanation of leverage and collateral arrangements for the Fund. The Fund is permitted to hold derivatives (either exchange traded or over-the-counter). The Prime Broker is the main counterparty for derivatives. Section (for further information) section 5.2 section 4 section 5.3 section 5.4 section 5.5 section 5.6 section 5.7 Short selling The Fund is permitted to short sell section 5.8 Withdrawals Monthly: Notify by 5:00 pm two Business Days before end of month. Risks and limitation on withdrawal are set out in section 5.9 section 5.9 7

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10 4) Who is managing the Fund? About the Responsible Entity About the Investment Manager About the Administrator Equity Trustees Limited Equity Trustees Limited, a company listed on the Australian Securities Exchange ( ASX ), is the responsible entity of the Tribeca Global Total Return Fund and issuer of this PDS. Established as a trustee and executorial service provider by a special Act of the Victorian Parliament in 1888, EQT today is a dynamic financial services institution which will continue to grow the breadth and quality of the products and services on offer. Specialist services of EQT include the provision of estate management services, trustee services, financial and taxation advice, personal investment advice including superannuation and responsible entity services for external fund managers. EQT s responsibilities and obligations, as the responsible entity of the Fund, are governed by the Fund s constitution ( Constitution ) as well as the Corporations Act and general trust law. EQT also assists not-for-profit and charitable organisations with their services and financial product needs and offers philanthropy advice to families and individuals seeking to establish charitable trusts. EQT is committed to acting in the best interests of its clients via wealth management solutions over a range of asset classes carrying different risk profiles. EQT has delegated some of the management functions to Tribeca Investment Partners Pty Ltd, which will make investment decisions in relation to the Fund. Tribeca Investment Partners Pty Ltd Established in 1998, Tribeca proudly retains its boutique structure and culture and is majority owned by Tribeca employees, with the remainder held by Grant Samuel Funds Management Pty Limited. At the date of this PDS, Tribeca manages approximately $2 billion in funds for clients, invested across all major asset classes, investing in both small and large capitalisation securities. Tribeca s success is based on a culture of investment creativity balanced by a range of disciplined and comprehensive investment selection processes. Tribeca believes that a systematic investment process that identifies mis-priced securities enhances the potential to achieve returns that consistently outperform the market. This process needs to generate an information advantage as well as be able to exploit observed market biases. A multi-faceted investment approach enables the development of a range of products that apply specific skills to maximum effect in different segments of the market. No significant adverse regulatory findings have been attributed to the Investment Manager. The Fund is currently managed by a highly experienced global macro practitioner, Chris Daily, who is supported by a talented team of quantitative and fundamental analysts. Chris has more than 10 years industry experience managing large institutional investment programs and is fully committed to executing the Fund s strategy. Chris holds a Masters of Engineering from University of Western Australia, Bachelor of Science in Mechanical Engineering (cum laude) from Princeton University and is a CFA charter holder. All assets of the Fund are managed by the Responsible Entity. The Responsible Entity has the right to terminate the services of Tribeca as investment manager on specified grounds as identified in the Investment Management Agreement between Tribeca and the Responsible Entity. For example, the Responsible Entity may terminate the Investment Management Agreement by giving 20 Business Days notice. The Responsible Manager may also immediately by written notice to the Investment Manager terminate the Investment Management Agreement where the Investment Manager goes into administration, receivership, liquidation, breaches the terms of the Investment Management Agreement and fails to remedy the breach within the time specified under the Investment Management Agreement, where there is a change of control of the Investment Manager or where the responsible entity is required to terminate the agreement under the law. Citco Fund Services (Australia) Pty Ltd The Administrator provides certain administrative, accounting, registrar and transfer agency services for the Fund. The Administrator has been appointed to provide these services under an administration agreement between the Responsible Entity and the Administrator. The Administrator has no direct relationship with investors. Citco Fund Services is a global leader in providing administration services to alternative investment funds and has been consistently ranked as Best in Class and Top-Rated across all locations in recognised industry surveys of hedge fund administrators for both single manager funds and funds of hedge funds. 9

11 5) How the Fund invests 5.1 Investment objective The Fund aims to generate long term capital growth by investing in all liquid asset classes. It aims to provide investors with a total investment return, before fees and expenses, which outperform the Fund s Benchmark over the long term. 5.2 Investment strategy The goal of the Fund s investment strategy is to generate reliable investment returns while managing volatility and correlation to major market risks. The investment strategy has no key dependencies or assumptions. To pursue its goals the Fund invests in a diversified range of investment and trading strategies which span most liquid asset classes and markets. Typical asset classes held by the Fund are cash and cash equivalent instruments, global bond and bond equivalent instruments, global equities, convertibles and other equity like securities, derivatives, foreign exchange contracts and other unit trusts. Leverage is regularly used in the Fund to increase the magnitude of returns derived from low volatility asset classes. Derivatives will be used extensively to create long/short portfolio positions in equities, equity indices, bonds, currencies, commodities, volatility indices and other types of exposure where appropriate. Both exchange traded and OTC derivatives are used. Leverage and counterparty exposure is monitored closely by the Investment Manager and is strictly controlled to achieve the aims of the Fund. The Fund regularly engages in short selling, although in aggregate it is usually net long assets. The Fund may invest in assets located in Australia and assets located in other countries. Investments of the Fund may be denominated in Australia dollars or the foreign currency referrable to the location of the asset. The Investment Manager s investment policy is not limited to investments in any index, country or currency. The Investment Manager also has the discretion to invest across a broad range of liquid asset classes. Please refer to section 5.4 for further information on the range of assets the Fund could invest in and the location and currency denomination of those assets. In implementing its investment strategy, the Investment Manager may use leverage, derivatives and short selling to gain exposure to certain assets or asset classes or to hedge its risk. Please refer to sections 5.6, 5.7 and 5.8 for further details. The success of the Fund s investment strategy is subject to a number of factors and subject to a number of key risks and assumptions. These risks factors, assumptions and the Fund s risk management measures are summarised in section 6. The Investment Manager reserves the right to change its investment strategy from time to time. Any changes to the investment strategy will be notified to investors in accordance with the law. All investments carry risks. The risks of the Fund are the inherent risks associated with a global macro strategy. More information can be found in section 6 Managing Risks. 5.3 Fund Structure The investment offered under this PDS is a class of units in the Tribeca Global Total Return Fund ( Fund ), a registered managed investment scheme, governed by the Constitution. The Fund comprises assets which are acquired in accordance with its investment strategy. Investors receive retail class units when they invest. In general, each unit represents an individual s interest in the assets as a whole subject to liabilities; however it does not give the investor an interest in any particular asset. The value of a unit in the Fund is determined by reference to the assets and liabilities referable to the Fund. EQT is the responsible entity for the Fund and has appointed Tribeca as the investment manager to manage the investments of the Fund on a day to day basis. The Responsible Entity has engaged a number of professional service providers to provide a range of investment, administration and back office services to the Fund including custody, brokerage, administration services, transaction execution. The Responsible Entity has entered into service agreements with the service providers and will, with the assistance of Tribeca, regularly monitor the performance of the service providers against service standards set out in the relevant agreements. The service providers and their relationship to the Fund and the flow of funds through the Fund are shown in the diagram below. 10

12 As at the date of this PDS, the service providers to the Fund are: Investment Manager: Tribeca is responsible for managing the investments of the Fund. For further details on Tribeca s role please refer to section 4. Responsible Entity: Equity Trustees Limited. For further details on Equity Trustee s role please refer to section 4. Custodian: J.P.Morgan Chase Bank, N.A. (Sydney Branch) is responsible for holding custody of application money, excess cash, short dated cash instruments and other unencumbered, unleveraged instruments. The custodian is located in Australia. Prime brokers: Morgan Stanley & Co International plc and Interactive Brokers LLC will act as prime brokers for the Fund s transactions. Prime brokers will hold securities on behalf of the Fund and execute transactions on the Fund s behalf. Morgan Stanley & Co International plc is located in the United Kingdom and Interactive Brokers LLC is located in the United States of America. Administrator: Citco Fund Services (Australia) Pty Ltd (the Administrator ) has been appointed as the Fund s administrator to perform certain administrative, accounting, registrar, and transfer agency services for the Fund. The Administrator is located in Australia. For further details on Citco s role please refer to section 4. Service providers to the Fund may change without notice to investors. Risks relating to the use of third party service providers are outlined in section 6. 11

13 5.4 Valuation, location and custody of assets All positions in the Fund are independently valued by the Administrator. The majority of assets currently traded and held in the Fund are exchange traded and are valued on a mark to market basis at the close of trading on each day. Assets not traded on exchanges include foreign exchange forwards, cash and cash equivalent instruments, bills of exchange and short dated cash contracts. These assets are liquid and valued independently by the Administrator in accordance with the market value of the assets. For the purpose of calculating the NAV of the Fund, the Administrator shall, and shall be entitled to, rely on, and will not be responsible for the accuracy of, financial data furnished to it by the Fund s prime broker(s), market makers and/or independent third party pricing services. The Administrator may also use and rely on industry standard financial models in pricing any of the Fund s securities or other assets. If and to the extent that EQT or the Investment Manager are responsible for or otherwise involved in the pricing of any of the Fund s portfolio securities or other assets, the Administrator may accept, use and rely on such prices in determining the Net Asset Value of the Fund and shall not be liable to the Fund in so doing. Note that the Fund can take positions in instruments from a number of asset classes including, but not limited to: Cash and cash equivalent instruments, bills of exchange or similar securities in all currencies; International government and corporate bonds and bond equivalent instruments fixed interest and/or floating rate securities, corporate and/or government bonds of all levels of credit worthiness; Australian listed equities and international listed equities which may be listed on any world exchange; Australian unlisted equities and international unlisted equities which are expected to be listed within 90 days; Over-the-counter derivatives and exchange traded derivatives including, but not limited to, equity index futures, government bond futures, commodity futures, volatility futures as well as options; Foreign exchange contracts spot, forward and swap; and Other products such as structured products and other unit trusts. There is no pre-determined strategic asset allocation to these asset classes. As described in section 5.3, excess cash, short dated cash instruments and other unencumbered, unleveraged instruments are held in custody at J.P.Morgan Chase Bank, N.A. (Sydney Branch). Other assets are held in prime brokerage accounts and may be subject to counterparty risk should issues arise at those Prime Brokers. The custodial arrangements in respect of various asset classes are described in the table below. Asset Class Responsible Custodian Location of Custodian Custodian allocation range All Interactive Brokers United States 0% 100% All Morgan Stanley United Kingdom 0% 100% Unencumbered assets J.P.Morgan Australia 0% 100% 5.5 Liquidity The majority of assets currently traded and held by the Fund are liquid. In recognition of ASIC s Regulatory Guide 240 Hedge Funds: Improving disclosure, the Responsible Entity and Investment Manager expect that the Fund will be able to realise at least 80% of the Fund s assets, at the value ascribed to those assets in the most recent calculation of NAV, within 10 Business Days. It is unlikely that liquidity issues will result from withdrawal requests. Generally, it is the Investment Manager s policy to ensure that the Fund remains liquid. 5.6 Leverage The Fund s underlying strategies employ leverage. Leverage is regularly used in particular to increase the magnitude of returns derived from low volatility asset classes. As such, most leverage comes from long/short positions in low volatility, liquid asset classes such as government bonds and currencies. Note that this can result in gross notional exposure that is a multiple of the value of the Fund s net asset value. This means gains and losses are amplified and may be significantly greater than those in a fund that is not leveraged. Leverage is primarily obtained through the use of various over-the-counter derivatives and exchange traded derivatives such as futures, foreign exchange forwards and other financial instruments. In addition, leverage can be obtained via borrowings within prime broker margin accounts where certain cash and assets are posted as margin collateral. Note that if a prime broker becomes insolvent those assets may become impaired and only partially recoverable. Whilst there are no hard limits to total leverage levels, there is a policy which seeks to limit gross exposure (longs plus absolute value of shorts) to 14 times the Fund s net asset value. An important point is that this is not a statement about risk or volatility. Traditional investors will often compare notional gross exposure rather than the amount of inherent risk or volatility between strategies and this can lead to erroneous conclusions about the riskiness of particular strategies. As most of the exposure is in low volatility asset classes the expected volatility of the Fund is generally lower than many common market risks, such as equity or commodity risk. As the Fund can hold long and short positions across a range of asset classes it is impossible to give a simple example of how 12

14 the combination of leverage and market returns will affect fund performance. While in general the Fund seeks to be roughly neutral on average to major market risks, such as market wide equity or bond returns, it can during certain periods be exposed to general market risk. The Fund usually has significant exposure to within asset class relative returns, although this too can vary. For example, at one point in time $100 invested in the Fund may have zero exposure to global equity risk, but significant exposure to one basket of equities returns versus another. At another point in time, the same $100 may move in line with global equities but have very little exposure to relative moves within equities. This flexibility allows the Fund to take advantage of the wide possible spectrum of opportunities. 5.7 Derivatives A derivative is a financial instrument whose value depends on underlying variables. Derivatives used by the Fund may be exchange traded or over-the-counter ( OTC ). The most common derivatives are futures, options and swaps but may also include other tradable assets such as a security or commodity or non-tradable items such as the temperature (in the case of weather derivatives), the unemployment rate, or any other kind of index. A derivative is essentially a contract whose payoff depends on the value of something else such as benchmark or the price of a security or currency. There is often leverage, or borrowing, inherent in derivative positions as only a small initial margin is usually required to establish positions in most derivatives. Risks associated with derivatives may include adverse movement in the physical asset or benchmark underlying the derivative, potential illiquidity of the derivative, the Fund being unable to meet payment obligations as they arise and the counterparty to any derivative contract not being able to meet its obligations under the contract. For OTC derivatives, such as foreign exchange forwards and options, there is also counterparty risk. Counterparty risk refers to the fact that certain portions of exposure and margin (i.e. collateral) held at a prime broker are held in the prime broker s name. Exposure in assets, such as foreign exchange forwards and other OTC positions, as well as the margin to support those positions, are held by the Prime Broker in an account controlled by the Responsible Entity and the Investment Manager but owned by the Prime Broker. This means that the Fund becomes a general creditor to the Prime Broker. It is therefore important to have multiple prime brokers and distribute risk among them. In the Fund, derivatives will be used extensively to create long/short portfolio positions in equities, equity indices, bonds, currencies, commodities, volatility indices and other types of exposure where appropriate. Both exchange traded and OTC derivatives will be used. Leverage and counterparty exposure is monitored closely and strictly controlled to achieve the aims of the Fund. The Investment Manager intends to manage counterparty risk by choosing multiple counterparties with relatively large and stable businesses, leverage levels below industry norms and good systems to support daily mark-to-market. 5.8 Short selling Short selling plays an important role in ensuring that securities are priced correctly relative to fundamentals. The Fund regularly engages in short selling in order to participate in this process, although in aggregate it is usually net long assets. In creating a short position the Fund will borrow a security from a securities lender (such as a Prime Broker) and sell it with the intention of repurchasing the security when the price of the security falls. If the price of the security rises, a loss is incurred which can be greater than the purchased value of the security if the price of the security continues to rise. There is also the risk that the securities lender may recall a security that the Fund has borrowed at any time which means that the Fund may have to buy the security at an unfavourable price to meet its obligations. These risks can be managed by ensuring short positions are primarily in liquid securities rather than the small, low liquidity assets which are more regularly subject to price spikes and supply issues. 5.9 Withdrawals The Fund trades predominately in liquid instruments and therefore it is likely that withdrawal requests can be satisfied in virtually all market conditions. However, note that in exceptional circumstances the Responsible Entity has a right to suspend withdrawals. Such circumstances may include, but are not necessarily limited to: a severe breakdown in markets in which the Fund trades; a credit event at a Prime Broker where the Fund holds margin and assets; and a credit event which impairs the short dated cash instruments held in custody; In certain circumstances, such as when there is a suspension of withdrawal or where the proportion of liquid assets of the Fund falls below the specified thresholds under the Corporations Act, investors may not be able to withdraw their investments within the usual period upon request. In the unlikely event that material changes to withdrawal rights are made, investors will be notified via correspondence. Please see section 7 for details of applications and withdrawals under normal circumstances. 13

15 5.10 Suggested investment timeframe The suggested investment timeframe is at least 5 to 7 years Labour standards and environmental, social and ethical considerations Neither EQT nor Tribeca takes labour standards or environmental, social or ethical considerations into account when making their investment decisions. However, where those factors negatively impact the investment performance or company stability, Tribeca s investment team will generally discuss these matters with company management and/or review the decision to hold the specific investment. No specific methodology is used for such reviews nor are there pre-determined views about the extent to which such factors will be taken into account in a review Fund performance Fund performance will be available from or by contacting Tribeca on (02) Please note that due to the historical nature of performance information and the volatility of returns, future returns may differ from past returns. If you are an Indirect Investor, contact your IDPS Operator. 14

16 6) Managing risk All investments carry risk. Different investment strategies may carry different levels of risk, depending on the assets acquired under the strategy. Assets with the highest long-term returns may also carry the highest level of short-term risk. The significant risks below should be considered in light of your risk profile when deciding whether to invest in the Fund. Your risk profile will vary depending on a range of factors, including your age, the investment time frame (how long you wish to invest for), your other investments or assets and your risk tolerance. Neither EQT nor Tribeca guarantee the liquidity of the Fund s investments, repayment of capital or any rate of return or the Fund s investment performance. You may lose money by investing in the Fund and your investment in the Fund may not meet your objectives. Future returns may differ from past returns. In addition neither EQT nor Tribeca offers advice that takes into account your personal financial situation, including advice about whether the Fund is suitable for your circumstances. If you require personal financial advice, you should contact a licensed financial adviser. The Fund should be considered as a high risk strategy investment. It is not intended as a complete investment program. The Fund is designed only for informed and educated investors who can bear the economic risks of the loss of their investment in the Fund and who have a limited need for liquidity in their investment. There can be no assurance that the Fund will achieve its investment objective or that any investor will get their money back. Key Risks Market risk Fund risk Liquidity risk Currency risk International investing risk Regulatory risk Credit risk Changes in legal and economic policy, political events, technology failure, changes in interest rates, economic cycles, investor sentiment and social climate can all directly or indirectly create an environment that may influence (negatively or positively) the value of your investments in the Fund. As with all managed funds, there are risks particular to the Fund, including that the Fund could terminate, the fees and expenses could change, the Investment Manager could be replaced and the investment professionals could change. There is also a risk that investing in the Fund may give different results than investing directly because of income or capital gains accrued in the Fund and the consequences of investment and withdrawals by other investors. We aim to keep Fund risk to a minimum by monitoring the Fund and acting in your best interests. There may be times when there is a limited secondary market for the securities in which the Fund may invest, and this may affect the ability of the Fund to realise investments or to meet withdrawal requests. EQT does not guarantee the liquidity of the Fund s investments or your investments in the Fund. EQT has attempted to mitigate the liquidity risk factor by ensuring sufficient cash exposure in the Fund to meet liquidity requirements. The Fund has exposure to investments which are denominated in foreign currencies. If the value of foreign currencies changes relative to the Australian dollar, the value of the investments of the Fund may change. The Fund is managed on an unhedged basis so it is fully exposed to currency movements. The Fund will hold investments in global securities. Certain countries may impose restrictions on the ability of locally domiciled companies to make payments of principal, dividends or interest to investors located outside the country, due to blockage of foreign currency exchanges, changes to tax laws, and changes to local regulations or otherwise. Generally, there may be less publicly available information about foreign companies due to less rigorous disclosure or accounting standards and regulatory practices. In addition, the Fund could be subject to risks associated with adverse political and economic developments in certain countries, which could cause the Fund to lose money on these investments. This is the risk that domestic or international laws or regulations (including tax laws) are changed adversely or that regulatory supervision of transactions and reporting is performed by the Investment Manager at less than an appropriate standard. The Investment Manager aims to manage this risk by regularly and closely reviewing changes in the regulatory and tax environment. The Fund faces several types of credit risks including market, counterparty, prime brokerage and custodian risk. Market risk can result from explicit or implicit exposure to market instruments such as interest rate swaps, corporate bonds, credit default swaps, bank bills, etc. Counterparty risk can result when a party to a credit transaction fails to meet its obligations, such as a counterparty defaulting under a derivative contract or a securities lender failing to deliver a borrowed security. Risk from Prime Brokers exists because Prime Brokers do not usually guarantee the return of collateral held and any collateral may be lost in the event of insolvency of the Prime Broker. Any assets of the Fund which are taken as collateral by a Prime Broker become the property of the Prime Broker and the Prime Broker can use the Fund s assets for any purpose and, in the event of the insolvency of the Prime Broker, the Fund may not be able to recover such 15

17 equivalent assets in full. Even where the Fund is able to recover all of its capital, its trading could be materially disrupted in the interim, potentially resulting in material losses. Custodian risk can result from a failure of the Custodian to secure custody of assets held there. Key personnel risk Interest rate risk Tribeca is dependent to some extent upon the expertise of its existing investment team. Consequently, the Fund s performance could be adversely affected if key members of the investment team do not continue to provide their services to Tribeca. Changes in official interest rates can directly and indirectly impact (negatively or positively) on investment returns. This relates to the possibility of a reduction in the value of a security, especially a long bond position, resulting from a rise in interest rates. Similarly, short bond positions can experience a reduction in value from a drop in interest rates. Another source of interest rate risk is the Fund Benchmark, which is a short term floating cash rate. As short term interest rates go down the returns generated from the Fund Benchmark will also go down. Leverage risk See section 5.6 Derivatives risk See section 5.7 Short selling risk See section 5.8 Outsourcing risk The Responsible Entity outsources key operational functions including investment management, custody, execution, administration and valuation to a number of third party service providers. There is a risk that third party service providers may intentionally or unintentionally breach their obligations to the Fund or provide services below standards which are expected by the Responsible Entity causing loss to the Fund. 16

18 Risk Management Policies Many layers of risk control are in place to handle the broad set of asset classes traded: Basic position sizing by asset class Volatility and correlation modelling Market stress modelling Optimisation constraints Risk overrides Real-time accounting Margin management A simple and robust approach to allocating risk and exposure is to understand that different asset classes have different fundamental volatilities and liquidity characteristics. A 2 year government bond is both liquid and has a low volatility. A Volatility Index future ( VIX ) has very high volatility and is less liquid. It is important to understand these characteristics and size portfolio positions accordingly. Guidelines are set for net and gross exposure by asset class which are monitored daily via the portfolio management system and via prime brokerage systems. The portfolio construction process for the bulk of positions in the Fund requires explicit forecasts for volatilities and correlations of the investment universe. These estimates are dynamic in nature and can react to rapidly changing volatility levels and correlation relationships between assets. The practical outcome of these calculations is that as markets become stressed expected volatility and correlations go up. Tribeca s portfolio construction process takes this into account and reduces positions on a daily basis if market conditions deteriorate. An additional way to look at risk is to measure stresses using multiple metrics across a range of asset classes. Tribeca assigns these measurements equal importance to its volatility and correlation modelling. Some example metrics Tribeca uses to identify stressed environments include implied volatilities in several asset classes, correlation concentration by asset class, changes in policy rates, swap spreads, emerging market dynamics, credit spreads, credit default swap levels, etc. The availability of these metrics allows investment ideas and sub-strategies to be viewed in the context of their exposure and response to stressed environments. That exposure is then varied where appropriate. Another risk management tool in portfolio construction is to put explicit limits on individual position sizes during portfolio construction optimisation. This prevents undesired concentration in individual assets and because it happens during portfolio construction it allows rational tradeoffs to be made. An important aspect of the risk management framework is modification of positions to account for unique market conditions. Tribeca aims to be keenly aware of any development that could impact the expected alpha, volatility, correlation or market environment assumptions embedded in our systematic process. The response to a unique environment or events is almost always to reduce risk in a way that mitigates exposure to areas of concern. While not strictly necessary for prudent management of the strategy, the Fund has access to certain real-time accounting capabilities. This allows a very rapid understanding of intraday profit & loss and facilitates responses to developing situations. Understanding leverage and counterparty risk inherent in using margined Prime Broker services is essential. As a general policy Tribeca aims to (a) be over margined in order to prevent margin calls and (b) keep a significant allocation of the Fund in liquid, unencumbered, high quality cash vehicles at the independent custodian. To mitigate counterparty risk Tribeca aims to spread the positional risk and margin across as many counterparties as practical for the funds under management size. 17

19 7) Investing and withdrawing Initial applications Additional applications Terms and conditions for applications Investments through an IDPS Investors can acquire units by completing an Application Form. Applicants must be 18 years of age or over. The minimum investment amount for the Fund is $25,000. To invest directly please complete the Application Form accompanying this PDS and send your original Application Form to: Investor Relations Group Citco Fund Services (Australia) Pty Ltd Level 22, 45 Clarence Street Sydney, NSW, Australia 2000 For any queries regarding the applications, investors can contact the Investor Relations Group of Citco Fund Services (Australia) Pty Ltd at Application money should be transferred to the bank account details shown in the Application Form. Please note that neither cash nor cheques will be accepted. Indirect Investors should use the Application Form attached to their IDPS Guide (not the Application Form accompanying this PDS) to invest in the Fund. You will need to contact your IDPS Operator regarding the cut-off times for pricing purposes and the minimum investment amount. The price at which units are acquired is determined in accordance with the Constitution ( Application Price ). The Application Price, in general terms, is equal to the NAV of the Fund, divided by the number of units on issue plus any transaction costs. Unit prices are calculated monthly. However, EQT may determine the price on another day, or more or less often than monthly. Each day on which unit prices are determined is a Pricing Date. The cut-off time for applications is 5:00 pm two Business Days before the month end date. The Application Price for applications received by the cut-off time, which are accepted, will be determined on the relevant Pricing Date. Applications received after the cut-off time will not be processed until the following Pricing Date. Transaction costs may reduce the number of units which an investor receives when applying for units. See the Buy/Sell spread information in the fees section for further information. If you are investing via an IDPS, you need to contact your IDPS operator regarding the cut-off times for pricing purposes. The Application Price will vary as the market value of assets in the Fund rises or falls. You can make additional investments into the Fund at any time by sending us your additional investment amount together with a completed Application Form. Investors can add to their investment at any time. The minimum additional investment into the Fund is $1,000. Applications can be made at any time. Application cut-off times and unit pricing are set out in the initial applications section above. Please note that we do not pay interest on application monies (any interest is credited to the Fund). EQT reserves the right to refuse any application without giving a reason. If for any reason EQT refuses or is unable to process your application to invest in the Fund, EQT will return your application money to you, subject to regulatory considerations, less any taxes or bank fees in connection with the application. You will not be entitled to any interest on your application money in this circumstance. Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, applications made without providing all the information and supporting identification documentation requested on the Application Form cannot be processed until all the necessary information has been provided. As a result delays in processing your application may occur. EQT is not responsible for the operation of any IDPS. Indirect Investors should note that they are directing the IDPS Operator to arrange for their money to be invested in the Fund on their behalf. Indirect Investors do not become unit holders in the Fund or have rights of unit holders. The IDPS Operator becomes the unit holder in the Fund and acquires these rights. The IDPS Operator can exercise or decline to exercise the rights of a unit holder on their behalf according to the arrangement governing the IDPS. Indirect Investors should refer to their IDPS Guide for information relating to their rights and responsibilities as an investor through the IDPS, including any information on the structure of the relevant IDPS, any fees and charges applicable to their investment and communication procedures for the relevant IDPS. Indirect Investors do not complete the Application Form attached to this PDS. Information regarding how to apply for units in the Fund (including Application Form where applicable) will also be contained in the IDPS Guide. Please ask your adviser or IDPS Operator if you have any questions about 18