Host Capital Sequel Investment Funds ICVC II (previously known as the HC Caerus Investment Funds ICVC II ) Interim Short Report

Transcription

1 Interim Short Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014

2 Interim Short Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 HC SEQUEL CAUTIOUS TARGET RETURN STRATEGY FUND Investment Objective and Policy 3 Investment Manager s Report 4 Comparative Tables 6 Sector Spread and Major Holdings 8 Page HC SEQUEL BALANCED TARGET RETURN STRATEGY FUND Investment Objective and Policy 9 Investment Manager s Report 10 Comparative Tables 12 Sector Spread and Major Holdings 14 HC SEQUEL GROWTH TARGET RETURN STRATEGY FUND Investment Objective and Policy 15 Investment Manager s Report 16 Comparative Tables 18 Sector Spread and Major Holdings 20 General Information 21 Management and Administration 23 Significant Changes 25 2

3 HC Sequel Cautious Target Return Strategy Fund (previously known as the HC Cautious Target Return Fund ) Investment Objective and Policy For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 The investment objective of the Fund is to achieve relatively stable returns over the medium term, with the potential for some long-term capital growth over the full investment cycle (not being less than 5 years) of 2% in excess of the return that could be expected from long term cash deposits. The Fund will seek to achieve its investment objective predominantly by gaining exposure to fixed interest securities, UK and overseas equities, money market instruments, cash and near cash. The Fund's allocation between these asset classes will be dependent on the Investment Manager's view on market conditions. To achieve this exposure, it is anticipated that the Fund may be almost wholly invested through collective investment schemes. As the Fund grows in size, it is intended that the Fund will invest less in collective investment schemes and instead invest to a greater or wholly directly (where permitted) into the asset classes set out above. The Fund may also invest directly or indirectly at the Investment Manager's discretion, in other transferable securities and collective investment schemes which may have exposure to alternatives such as commodities, loans, hedge funds, private equity and property. The Fund may use derivatives for the purpose of efficient portfolio management. Although the Fund seeks to achieve a return over the full investment cycle (not being less than 5 years) of 2% over the return that could be expected from long term cash deposits, this is not guaranteed; the objective may not be achieved, the Fund may experience negative returns and capital invested in the Fund is at risk. 3

4 HC Sequel Cautious Target Return Strategy Fund (previously known as the HC Cautious Target Return Fund ) Investment Manager s Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 The start of the period was framed by US events. October began with political impasse and a government shutdown, while December closed with a new budget deal and the US Federal Reserve s decision to begin tapering its quantitative easing programme. In the UK, downward revisions to unemployment and upward revisions to growth contributed to an upbeat Autumn Statement, while across the Channel, the European Central Bank cut rates to new lows and further small steps were taken towards a banking union. Japan passed a new supplementary budget deal ahead of April s VAT hike, while Chinese authorities focused on rebalancing and reform on the back of slower growth. The start of the quarter was plagued by the government shutdown, an event we deemed binary and one fraught with political tension. In light of this, the weight allocated to equities, and particularly those in the US were taken down slightly, but brought back up once we were happy this risk had passed. Elsewhere in the portfolio one or two new names were added, including Verrazzano European Advantage. This is the first allocation to European equities and being particularly mindful of currency risk, this was done with the euro hedged back into sterling. The start of this year has been characterised by emerging market crises, with currency volatility, social unrest and geopolitical turbulence. However, the drive to reform remained apparent, with China widening its currency s trading band and reformist candidate Joko Widodo gaining popularity in Indonesia s presidential race. Whilst in developed markets, elevated disinflationary pressures persisted in the euro zone, though the European Central Bank has yet to use the tools at its disposal. Since the Fund had no exposure to emerging markets, it was broadly protected from the volatility seen, but this is something we continue to monitor carefully as the reform agenda begins to be the dominant force. One US name was sold from the portfolio where the fund manager had departed and elsewhere we switched a Japanese fund into one we feel has more conviction going forward. During the period the Fund returned 3.2%, versus its cash plus objective of 1.3%. This is in the context of the FTSE All Share returning 6.7%, so almost half the return with only a third of the risk. The top contributors over the period predominantly came from UK equities such as Old Mutual UK Smaller Companies, which returned almost 16%, whilst BH Macro, a macro hedge fund, was the largest detractor. 4

5 HC Sequel Cautious Target Return Strategy Fund (previously known as the HC Cautious Target Return Fund ) Investment Manager s Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 (continued) With higher bond yields and uncertainty over the extent of tightening in China, there is a good chance that we have entered a period of higher volatility, hence the larger than usual allocation to cash at present. Having said that, it is also important to remember that risk aversion never lasts forever: equities are long-term assets, and when sentiment improves they still have substantial long-term positive drivers. The trigger for QE tapering is a strongly improving US economy, and while emerging market growth has recently slowed, convergence with the West will still be a huge driver of global economic growth over the decades to come. Sarasin & Partners LLP 15 April

6 HC Sequel Cautious Target Return Strategy Fund (previously known as the HC Cautious Target Return Fund ) Comparative Tables PERFORMANCE RECORD Year Share Class Highest Price Lowest Price Distribution per Share 2014* Standard Class B Standard Class C Standard Class D N/A Standard Class E N/A Standard Class F N/A Standard Class G N/A Standard Class H N/A Standard Class I N/A * From 7 October 2013 (date of commencement of operations) to 28 February 2014 NET ASSETS Date Share Class Net Assets Shares in Issue Net Assets per Share Standard Class B 19,850,969 19,235, Standard Class C 6,879 6, Standard Class D 1,873,444 1,817, Standard Class E 11,699,883 11,359, Standard Class F 176, , Standard Class G 1,796,110 1,745, Standard Class H 23,185 22, Standard Class I 3,629,154 3,530,

7 HC Sequel Cautious Target Return Strategy Fund (previously known as the HC Cautious Target Return Fund ) Comparative Tables (continued) ONGOING CHARGES FIGURE % Ongoing Charges Figure** Standard Class B 1.83 Standard Class C 1.88 Standard Class D 2.08 Standard Class E 2.33 Standard Class F 2.43 Standard Class G 2.58 Standard Class H 2.68 Standard Class I 2.83 **The Ongoing Charges Figure (OCF) represents the annual operating expenses of the Fund expressed as a percentage of average net assets for the period. The OCF is expressed as an annual percentage rate. Because the Fund invests in other funds, we have adjusted the Ongoing Charges Figure to reflect the fact that these funds also incur charges. This is known as a synthetic OCF. Synthetic Risk and Reward Indicator (SRRI). As disclosed in the most recent Key Investor Information Document (KIID) the SRRI figure for the period of this report is 5. 7

8 HC Sequel Cautious Target Return Strategy Fund (previously known as the HC Cautious Target Return Fund ) Sector Spread of Investments % of Total Net Assets Sector % Other Alternative Assets Sterling Corporate Bonds US Equities UK Equities Hedge Funds 7.02 Overseas Bonds 5.63 European Equities 4.96 Japanese Equities 4.15 Sterling Government Bonds 3.52 Pacific Basin Equities 0.93 Major Holdings The top ten holdings at the end of the period are shown below: Holding Jupiter Global Fund Conv Acc 8.42 SPDR S&P ishares FTSE Muzinich Global Tactical Credit Inc 5.63 Kames High Yield Bond B Institutional 5.21 Legal General UT Dynamic Bond I 5.06 Kames Sterling Corp Bond B Institutional Inc 5.03 Verrazzano Advantage European EI 4.96 ishares Corporate Bond UCITS 4.91 Alcentra European Red

9 HC Sequel Balanced Target Return Strategy Fund (previously known as the HC Balanced Target Return Fund ) Investment Objective and Policy For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 The investment objective of the Fund is to provide a balance of income and capital growth over the medium to long term and aims to achieve a return over the full investment cycle (not being less than 5 years) of 3.5% in excess of the return that could be expected from long term cash deposits. The Fund will seek to achieve its investment objective predominantly by gaining exposure to UK and overseas equities, fixed interest securities, money market instruments, cash and near cash. The Fund's allocation between these asset classes will be dependent on the Investment Manager's view on market conditions. To achieve this exposure, it is anticipated that the Fund may be almost wholly invested through collective investment schemes. As the Fund grows in size, it is intended that the Fund will invest less in collective investment schemes and instead invest to a greater or wholly directly (where permitted) into the asset classes set out above. The Fund may also invest directly or indirectly at the Investment Manager's discretion, in other transferable securities and collective investment schemes which may have exposure to alternatives such as commodities, loans, hedge funds, private equity and property. The Fund may use derivatives for the purpose of efficient portfolio management. Although the Fund seeks to achieve a return over the full investment cycle (not being less than 5 years) of 3.5% over the return that could be expected from long term cash deposits, this is not guaranteed; the objective may not be achieved, the Fund may experience negative returns and capital invested in the Fund is at risk. 9

10 HC Sequel Balanced Target Return Strategy Fund (previously known as the HC Balanced Target Return Fund ) Investment Manager s Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 The start of the period was framed by US events. October began with political impasse and a government shutdown, while December closed with a new budget deal and the US Federal Reserve s decision to begin tapering its quantitative easing programme. In the UK, downward revisions to unemployment and upward revisions to growth contributed to an upbeat Autumn Statement, while across the Channel, the European Central Bank cut rates to new lows and further small steps were taken towards a banking union. Japan passed a new supplementary budget deal ahead of April s VAT hike, while Chinese authorities focused on rebalancing and reform on the back of slower growth. The start of the quarter was plagued by the government shutdown, an event we deemed binary and one fraught with political tension. In light of this, the weight allocated to equities, and particularly those in the US were taken down slightly, but brought back up once we were happy this risk had passed. Elsewhere in the portfolio Muzinich Global Tactical Credit was added, a fixed income product with sufficient flexibility to adjust duration, or interest rate sensitivity, which will be important in the months and years to come. The start of this year has been characterised by emerging market crises, with currency volatility, social unrest and geopolitical turbulence. However, the drive to reform remained apparent, with China widening its currency s trading band and reformist candidate Joko Widodo gaining popularity in Indonesia s presidential race. Whilst in developed markets, elevated disinflationary pressures persisted in the euro zone, though the European Central Bank has yet to use the tools at its disposal. Since the Fund had no exposure to emerging markets, it was broadly protected from the volatility seen, but this is something we continue to monitor carefully as the reform agenda begins to be the dominant force. One US name was sold from the portfolio where the fund manager had departed and elsewhere we switched a Japanese fund into one we feel has more conviction going forward. During the period the Fund returned 4.6%, versus its cash plus objective of 1.8%. This is in the context of the FTSE All Share returning 6.7%, so almost 70% of the return with less than half the risk. The top contributors over the period predominantly came from UK equities such as Blackrock Throgmorton Trust, which returned 10% and Liontrust Special Situations, returning 11%. BH Macro, was the largest detractor, a macro hedge fund, which was down 5%. 10

11 HC Sequel Balanced Target Return Strategy Fund (previously known as the HC Balanced Target Return Fund ) Investment Manager s Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 (continued) With higher bond yields and uncertainty over the extent of tightening in China, there is a good chance that we have entered a period of higher volatility, hence the larger than usual allocation to cash at present. Having said that, it is also important to remember that risk aversion never lasts forever: equities are long-term assets, and when sentiment improves they still have substantial longterm positive drivers. The trigger for QE tapering is a strongly improving US economy, and while emerging market growth has recently slowed, convergence with the West will still be a huge driver of global economic growth over the decades to come. Sarasin & Partners LLP 15 April

12 HC Sequel Balanced Target Return Strategy Fund (previously known as the HC Balanced Target Return Fund ) Comparative Tables PERFORMANCE RECORD Year Share Class Highest Price Lowest Price Distribution per Share 2014* Standard Class B N/A Standard Class D N/A Standard Class E N/A Standard Class F N/A Standard Class G N/A Standard Class H N/A Standard Class I N/A * From 7 October 2013 (date of commencement of operations) to 28 February 2014 NET ASSETS Date Share Class Net Assets Shares in Issue Net Assets per Share Standard Class B 14,686,330 14,045, Standard Class D 19,809 18, Standard Class E 15,694,482 15,039, Standard Class F 413, , Standard Class G 1,868,817 1,792, Standard Class H 111, , Standard Class I 6,335,514 6,083,

13 HC Sequel Balanced Target Return Strategy Fund (previously known as the HC Balanced Target Return Fund ) Comparative Tables (continued) ONGOING CHARGES FIGURE % Ongoing Charges Figure** Standard Class B 1.88 Standard Class D 2.13 Standard Class E 2.38 Standard Class F 2.48 Standard Class G 2.63 Standard Class H 2.73 Standard Class I 2.88 **The Ongoing Charges Figure (OCF) represents the annual operating expenses of the Fund expressed as a percentage of average net assets for the period. The OCF is expressed as an annual percentage rate. Because the Fund invests in other funds, we have adjusted the Ongoing Charges Figure to reflect the fact that these funds also incur charges. This is known as a synthetic OCF. Synthetic Risk and Reward Indicator (SRRI). As disclosed in the most recent Key Investor Information Document (KIID) the SRRI figure for the period of this report is 6. 13

14 HC Sequel Balanced Target Return Strategy Fund (previously known as the HC Balanced Target Return Fund ) Sector Spread of Investments % of Total Net Assets Sector % US Equities UK Equities Other Alternative Assets European Equities 8.39 Japanese Equities 7.75 Overseas Bonds 4.97 Sterling Corporate Bonds 4.93 Hedge Funds 4.00 Sterling Government Bonds 3.85 Other Overseas Equities 2.31 Major Holdings The top ten holdings at the end of the period are shown below: Holdings EI Sturdza Nippon Growth D 7.75 SPDR S&P Jupiter Global Fund Conv Acc 7.44 Vulcan Value Equity G2 Inc 6.87 Liontrust Special Situats 5.18 Blackrock Throgmorton Trust 5.17 ishares FTSE Muzinich Global Tactical Credit Inc 4.97 ishares Corporate Bond UCITS 4.93 Verrazzano Advantage European EI

15 HC Sequel Growth Target Return Strategy Fund (previously known as the HC Growth Target Return Fund ) Investment Objective and Policy For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 The investment objective of the Fund is to provide long term capital growth and aims to achieve a return over the full investment cycle (not being less than 5 years) of 5% over the return that could be expected from long term cash deposits. The Fund will seek to achieve its investment objective predominantly by gaining exposure to UK and overseas equities, fixed interest securities, money market instruments, cash and near cash. The Fund's allocation between these asset classes will be dependent on the Investment Manager's view on market conditions. However, over the longer term, there will be a higher weighting in equities over any other asset class. The Fund may be expected to have a relatively high degree of volatility. To achieve this exposure, it is anticipated that the Fund may be almost wholly invested through collective investment schemes. As the Fund grows in size, it is intended that the Fund will invest less in collective investment schemes and instead invest to a greater or wholly directly (where permitted) into the asset classes set out above. The Fund may also invest directly or indirectly at the Investment Manager's discretion, in other transferable securities and collective investment schemes which may have exposure to alternatives such as commodities, loans, hedge funds, private equity and property. The Fund may use derivatives for the purpose of efficient portfolio management. Although the Fund seeks to achieve a return over the full investment cycle (not being less than 5 years) of 5% over the return that could be expected from long term cash deposits, this is not guaranteed; the objective may not be achieved, the Fund may experience negative returns and capital invested in the Fund is at risk. 15

16 HC Sequel Growth Target Return Strategy Fund (previously known as the HC Growth Target Return Fund ) Investment Manager s Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 The start of the period was framed by US events. October began with political impasse and a government shutdown, while December closed with a new budget deal and the US Federal Reserve s decision to begin tapering its quantitative easing programme. In the UK, downward revisions to unemployment and upward revisions to growth contributed to an upbeat Autumn Statement, while across the Channel, the European Central Bank cut rates to new lows and further small steps were taken towards a banking union. Japan passed a new supplementary budget deal ahead of April s VAT hike, while Chinese authorities focused on rebalancing and reform on the back of slower growth. The start of the quarter was plagued by the government shutdown, an event we deemed binary and one fraught with political tension. In light of this, the weight allocated to equities, and particularly those in the US were taken down slightly, but brought back up once we were happy this risk had passed. Elsewhere in the portfolio Muzinich Global Tactical Credit was added, a fixed income product with sufficient flexibility to adjust duration, or interest rate sensitivity, which will be important in the months and years to come. The start of this year has been characterised by emerging market crises, with currency volatility, social unrest and geopolitical turbulence. However, the drive to reform remained apparent, with China widening its currency s trading band and reformist candidate Joko Widodo gaining popularity in Indonesia s presidential race. Whilst in developed markets, elevated disinflationary pressures persisted in the euro zone, though the European Central Bank has yet to use the tools at its disposal. Since the Fund had no exposure to emerging markets, it was broadly protected from the volatility seen, but this is something we continue to monitor carefully as the reform agenda begins to be the dominant force. One US name was sold from the portfolio where the fund manager had departed and elsewhere we switched a Japanese fund into one we feel has more conviction going forward. During the period the Fund returned 5.4%, versus its cash plus objective of 2.3%. This is in the context of the FTSE All Share returning 6.7%, so the Fund achieved over 80% of the return with less than 60% of the risk. The top contributors over the period predominantly came from UK equities such as Liontrust Special Situations which returned 11% and AXA Framlington UK Select Opportunities, which returned 12%. The largest detractor was Schroder Asian Alpha Plus which suffered during the emerging market woes, ending the period down 3.8%, but pleasingly the Fund has since recovered these losses. 16

17 HC Sequel Growth Target Return Strategy Fund (previously known as the HC Growth Target Return Fund ) Investment Manager s Report For the period from 7 October 2013 (date of commencement of operations) to 28 February 2014 (continued) There is currently much uncertainty in the market and this explains our higher than usual allocation to cash. Whilst the Fund only earns a negligible return, it is the only truly uncorrelated asset and hence protects in periods of risk aversion. Our view is that equities are long-term assets, and risk aversion never lasts forever, so when sentiment improves they still have substantial long-term positive drivers. The trigger for QE tapering is a strongly improving US economy, and while emerging market growth has recently slowed, convergence with the West will still be a huge driver of global economic growth over the decades to come. Sarasin & Partners LLP 15 April

18 HC Sequel Growth Target Return Strategy Fund (previously known as the HC Growth Target Return Fund ) Comparative Tables PERFORMANCE RECORD Year Share Class Highest Price Lowest Price Distribution per Share 2014* Standard Class B N/A Standard Class C N/A Standard Class E N/A Standard Class F N/A Standard Class G N/A Standard Class H N/A Standard Class I N/A * From 7 October 2013 (date of commencement of operations) to 28 February 2014 NET ASSETS Date Share Class Net Assets Shares in Issue Net Assets per Share Standard Class B 9,891,167 9,384, Standard Class C 7,609 7, Standard Class E 5,146,865 4,893, Standard Class F 226, , Standard Class G 1,172,546 1,115, Standard Class H 99,183 94, Standard Class I 983, ,

19 HC Sequel Growth Target Return Strategy Fund (previously known as the HC Growth Target Return Fund ) Comparative Tables (continued) ONGOING CHARGES FIGURE % Ongoing Charges Figure** Standard Class B 2.12 Standard Class C 2.17 Standard Class E 2.62 Standard Class F 2.72 Standard Class G 2.87 Standard Class H 2.97 Standard Class I 3.12 **The Ongoing Charges Figure (OCF) represents the annual operating expenses of the Fund expressed as a percentage of average net assets for the period. The OCF is expressed as an annual percentage rate. Because the Fund invests in other funds, we have adjusted the Ongoing Charges Figure to reflect the fact that these funds also incur charges. This is known as a synthetic OCF. Synthetic Risk and Reward Indicator (SRRI). As disclosed in the most recent Key Investor Information Document (KIID) the SRRI figure for the period of this report is 6. 19

20 HC Sequel Growth Target Return Strategy Fund (previously known as the HC Growth Target Return Fund ) Sector Spread of Investments % of Total Net Assets Sector % US Equities UK Equities European Equities 8.96 Other Alternative Assets 8.20 Other Overseas Equities 7.83 Japanese Equities 7.42 Overseas Bonds 4.39 Private Equity 1.51 Major Holdings The top ten holdings at the end of the period are shown below: Holding Jupiter Global Fund Conv Acc 8.20 EI Sturdza Nippon Growth D 7.42 SPDR S&P ishares S&P 500 Hedged UCITS 7.26 Vulcan Value Equity G2 Inc 6.68 ishares FTSE Verrazzano Advantage European EI 4.61 Liontrust Special Situats 4.49 Nomura US High Yield Bond I 4.39 Third Point Off Investors

21 General Information Head Office: 73 New Bond Street, London W1S 1RS. Address for Service: The Head Office is the address of the place in the United Kingdom for service on the Company of notices or other documents required or authorised to be served on it. Base Currency: The base currency of the Company is GBP. Each sub-fund and share class is designated in GBP. Shares in the Company have no par value. The share capital of the Company at all times equals the sum of the Net Asset Values of each of the sub-funds. Share Capital: The minimum share capital of the Company is 1 and the maximum is 100,000,000,000. STRUCTURE OF THE COMPANY The Company is an investment company with variable capital incorporated under the OEIC Regulations. It is a UCITS scheme as defined in the COLL Sourcebook and also an umbrella company for the purposes of the OEIC Regulations. The Company is incorporated in England and Wales with registered number IC The Company has five sub-funds, Global Opportunities Fund, Monthly Income Fund, Cautious Target Return Strategy Fund, Balanced Target Return Strategy Fund and Growth Target Return Strategy Fund. On the introduction of a new sub-fund or class, a revised prospectus will be prepared, setting out the relevant details of each sub-fund or class. The assets of each sub-fund will be treated as separate from those of every other sub-fund and will be invested in accordance with the investment objective and investment policy applicable to the relevant sub-fund. Investment of the assets of each of the sub-funds must comply with the COLL Sourcebook and the investment objective and policy of the relevant sub-fund. REPORT AND ACCOUNTS A printed version of Host Capital Sequel Investment Funds ICVC II long form accounts for the period ended 28 February 2014 are available by written request to SMT Fund Services (Ireland) Limited, Block 5 Harcourt Centre, Harcourt Road, Dublin 2, Ireland. VALUATION POINT The sub-funds are normally valued at 12 noon on a dealing day. BUYING AND SELLING SHARES The ACD will accept instructions to purchase, redeem or exchange shares in writing by post, fax or scanned copy of the completed application by (or by electronic messaging where there is a prior agreement in place with the ACD as further detailed below). For the initial subscription the original application will be required to follow by post. The ACD will also accept instructions by telephone in the case of all Funds other than HC Sequel Cautious Target Return Strategy Fund, HC Sequel Balanced Target Return Strategy Fund and HC Sequel Growth Target Return Strategy Fund. Where permitted in respect of a Fund, telephone instructions are only be accepted between 8.30 am and 4.30 pm on any Business Day. 21

22 General Information (continued) BUYING AND SELLING SHARES (continued) All dealings are at forward prices, such that instructions accepted on a Business Day prior to 12 noon will be priced at the 12 noon valuation point on the same day, instructions received after 12 noon on any Business Day will be priced at the 12 noon valuation point on the next Business Day. Dealing instructions in the Funds should be addressed as follows: (i) (ii) for HC Sequel Cautious Target Return Strategy Fund, HC Sequel Balanced Target Return Strategy Fund and HC Sequel Growth Target Return Strategy Fund, to the ACD at 73 New Bond Street, London, W1S 1RS or by Dealing@HostCapital.com. Except for dealings by institutional investors and platform providers, who should contact SMT Fund Services (UK) Limited at 17 Dominion Street, London EC2M 2EF or by SMTSHSdealing@sumitrustgas.com for HC Sequel Monthly Income Fund and the HC Sequel Global Opportunities Fund, address instructions to Phoenix Fund Services, PO Box 10717, Essex, CM1 9PQ PRICES The prices of all share classes are available at and will be published on The prices of the shares may also be obtained by calling the Administrator on The ACD deals on a forward pricing basis. A forward price is the price calculated at the next Valuation Point after the purchase or redemption is deemed to be accepted by the ACD. As the ACD deals on a forward pricing basis, the price that appears in these sources will not necessarily be the same as the one at which investors can currently deal. RISK WARNING An investment in an open-ended investment company should be regarded as a medium to long term investment. Investors should be aware that the price of shares and the income from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. The sub-funds of an umbrella ICVC are segregated portfolios of assets and, accordingly, the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella, or any other sub-fund, and shall not be available for any such purpose. While the provisions of the OEIC Regulations provide for segregated liability between sub-funds, the concept of segregated liability is relatively new. Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not yet know how those foreign courts will react to regulation 11A and 11B of the OEIC Regulations. 22

23 Management and Administration AUTHORISED CORPORATE DIRECTOR ( ACD ) Host Capital Limited 73 New Bond Street London W1S 1RS United Kingdom (Authorised and regulated by the Financial Conduct Authority) DIRECTORS OF THE ACD C T Finch C P Chapman G L Brooks B Primrose INVESTMENT MANAGER Sarasin & Partners LLP Juxon House 100 St. Paul s Churchyard London EC4M 8BU United Kingdom (Authorised and regulated by the Financial Conduct Authority) INVESTMENT ADVISOR Sequel Investments Limited 1 st Floor 8 Eastcheap London EC3M 1AE United Kingdom (Authorised and regulated by the Financial Conduct Authority) DEPOSITARY Citibank International plc Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom (Authorised and regulated by the Financial Conduct Authority) 23

24 Management and Administration (continued) ADMINISTRATORS (for HC Sequel Global Opportunities Fund and HC Sequel Monthly Income Fund) Phoenix Fund Services (UK) Ltd Springfield Lodge Colchester Road Springfield Chelmsford Essex CM2 5PW United Kingdom (Authorised and regulated by the Financial Conduct Authority) (for HC Sequel Cautious Target Return Strategy Fund, HC Sequel Balanced Target Return Strategy Fund and HC Sequel Growth Target Return Strategy Fund) SMT Fund Services (UK) Limited 3 rd Floor 17 Dominion Street London EC2M 2EF United Kingdom (Authorised and regulated by the Financial Conduct Authority) AUDITOR Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU United Kingdom 24

25 Significant Changes With effect from the 7 October 2013, the following changes were made to the Company and its Sub- Funds; Current Name Host Capital Caerus Investment Funds ICVC II New Name Host Capital Sequel Investment Funds ICVC II HC Caerus Global Opportunities Fund HC Sequel Global Opportunities Fund HC Caerus Monthly Income Fund HC Sequel Monthly Income Fund HC Balanced Target Return Strategy Fund HC Sequel Balanced Target Return Strategy Fund HC Cautious Target Return Strategy Fund HC Sequel Cautious Target Return Strategy Fund HC Growth Target Return Strategy Fund HC Sequel Growth Target Return Strategy Fund The changes were made as Sequel Investments Limited replaced Caerus Portfolio Management Limited as the sponsor of the Company with effect from the 7 October This was subject to the mergers of the assets from the Sub Funds of the SA Sequel Smart Funds which seeded the HC Balanced Target Return Strategy Fund, HC Cautious Target Return Strategy Fund and HC Growth Target Return Strategy Fund. These Mergers were agreed and the mergers were effected on the 5 October The rebranding was to reflect the change of sponsor. The rebranding had no impact on how the Sub- Funds are managed or invested. 25