For information concerning certain risk factors which should be considered by prospective investors, see risk factors on pages 14 to 15 LEGACY

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1 You are advised to read and understand the contents of the Propectus. Before subscribing, please consult your stockbroker, solicitor, banker or an independent investment adviser registered by the Securities and Exchange Commission. This Prospectus has been seen and approved by the directors of the fund manager of the unit trust and they jointly and individually accept full responsibility for the accuracy of all information given and confirm that, after having made all enquiries which are reasonable in the circumstances, and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading. For information concerning certain risk factors which should be considered by prospective investors, see risk factors on pages 14 to 15 LEGACY U S D B O N D F U N D LEGACY USD BOND FUND (Authorised and Registered in Nigeria as a unit Trust Scheme) INITIAL PUBLIC OFFERING OF 2,500,000 UNITS OF US$1 EACH AT PAR PAYABLE IN FULL ON APPLICATION Application Opens 8 January Application Closes 14 February 2018 FUND MANAGER: ISSUING HOUSE RC RC This prospectus and the Units which it offers have been registered by the Securities and Exchange Commission. The Investments and Securities Act No provides for civil and criminal liabilities for the issue of a prospectus which contains false or misleading information. Registration of this prospectus and the units which it offers does not relive the parties of any liability arising under the Act for false or misleading statements contained or for any omission of a material fact in this prospectus. This propectus is dated 21 December 2017

2 TABLES OF CONTENTS DEFINITIONS... 3 ABRIDGED TIMETABLE... 5 SUMMARY TO THE OFFER... 6 COPORATE INFORMATION OF THE FUND MANAGER... 9 PROFESSIONAL PARTIES TO THE OFFER INFORMATION ON THE LEGACY USD BOND FUND The Fund Investment Policy Investment Incentives Target Investors Subscription to the Fund Minimum Investment Period Income and Distribution Transfer and Redemption Rights Unit Statements Unit-holders Meetings and Voting Rights Valuation of Units Fees and Offer Expenses Risk Factors FINANCIAL FORECAST Letter from Reporting Accountants Balance Sheet Forecast Bases of Assumptions for the Profit Forecast Letter from the Issuing House INFORMATION ON THE FUND MANAGER AND TRUSTEE The Fund Manager The Trustees Investment Committee Members STATUTORY AND GENERAL INFORMATION Extracts From the Trust Deed Indebtedness Claims and Litigation of the Fund Manager Costs and Expenses Relationship between the Fund Manager and the Trustee Relationship between the Fund Manager and the Issuing House Material Contracts Consents Documents Available for Inspections PROCEDURE FOR APPLICATION AND ALLOTMENT RECEIVING AGENTS APPLICATION FORM INSTRUCTIONS FOR COMPLETING THE APPLICATION FORM Page 2

3 DEFINITIONS Term Allotment Date Application Form Bid price Business day CBN Closing Date Custodian Deposited Property Directors or Board FGN Description The date of clearance of the basis of allotment of the IPO The form to be completed by investors subscribing for Units in the Fund contained on page 48. The price at which an investor can sell/redeem Units of the Fund on the relevant day Any day other than a Saturday, Sunday or an official public holiday as declared by the Federal Government of Nigeria on which commercial banks are open for business in Nigeria Central Bank of Nigeria The date that the Application List for the Offer closes and this is 14 February 2018 Standard Chartered Bank Nigeria Limited The assets of the Fund held in trust on behalf of the Fund by virtue of the Trust Deed The directors of the Fund manager, as at the date of this prospectus, whose names are set out on page 9 Federal Government of Nigeria Fund Legacy USD Bond Fund Fund Manager or FCAM IPO or the Offer First City Asset Management Limited Initial Public Offering of 2,500,000 Units of US$1 each at par in the Legacy USD Bond Fund ISA or the Act Investments and Securities Act No Issuing House Legacy USD Bond Fund LFN NAV or Net Asset Value NEFT FCMB Capital Markets Limited The Legacy USD Bond Fund, authorised and registered in Nigeria as a unit trust scheme Laws of the Federation of Nigeria The value of all assets of the Fund less all liabilities attributable to the Fund National Electronic Funds Transfer NSE or the Exchange Offer Period Offer Price Opening Date Prospectus The Nigerian Stock Exchange The period between the opening and closing dates of the Offer, as approved by the Commission. The price an investor will purchase a Unit in the Fund when subscribing to the Fund after the initial offer period The date that the Application List for the Offer opens and this is 8 January 2017 The Offer document which is issued in accordance with the rules and regulations of the Commission Page 3

4 DEFINITIONS Term Receiving Bank Redemption Notice Register Redemption Registrars SEC or the Commission Trust Deed Trustee or MTAMC Unit-holder Units USD or $ Valuation Day Description First City Monument Bank Limited Any notice given by a Unit-holder to the Fund Manager for the purposes of disposing all or part of his Unit holdings in the Legacy USD Bond Fund Register of Unit holders The sale to the Fund Manager of all or part of the Units held by a Unit-holder at the Bid Price CardinalStone Registrars Limited Securities and Exchange Commission The Deed dated 21 December 2017 between FCAM and MTAMC governing the Fund Mainstreet Bank Trustees & Asset Management Company Limited Any person or corporate body registered as a holder of Units of the Fund including persons registered as joint Unit-holders Units(s) of participation in the Fund The United States Dollar, the official currency of the United States of America Any business day, after the conclusion of the IPO on which the offer and bid prices are calculated Page 4

5 ABRIDGED TIMETABLE Date Activity Responsibility 8 Jan 2018 Application opens FCMB CM 14 Feb 2018 Application closes FCMB CM 28 Feb 2018 Receiving Agents make return FCMB CM/ CardinalStone Registrars 14 Mar 2018 Forward Allotment Proposal to SEC FCMB CM 26 Mar 2018 Receive SEC clearance of Allotment proposal FCMB CM 27 Mar 2018 Pay net proceeds to the Custodian Receiving Bank 28 Mar 2018 Allotment Announcement FCMB CM 28 Mar 2018 Return rejected/excess application monies 9 Apr Apr 2018 Dispatch statement of Unit holdings to successful applicants File Declaration of Compliance & General Undertakings, with NSE FCMB CM/ CardinalStone Registrars Registrars Stockbrokers 16 Apr 2018 Listing the Fund on the Exchange Stockbrokers 30 Apr 2018 File post-transaction completion report with the SEC FCMB CM Please note that all dates are indicative only and are subject to change without prior notice. Page 5

6 SUMMARY TO THE OFFER The following information should be read in conjunction with the full text of this prospectus from which it is derived. Investors are advised to seek information on the fees and charges before investing in the Fund: 1 Fund Name Legacy USD Bond Fund 2 Fund Manager First City Asset Management Limited 3 Issuing House FCMB Capital Markets Limited 4 Trustees to Fund Mainstreet Bank Trustees & Asset Management Company Limited 5 Custodian to the Fund Standard Chartered Bank Nigeria Limited 6 The Offer 2,500,000 Units of US$1 each par in the Fund 7 Method of Offer Offer for Subscription 8 Nature of the Fund The Fund is an actively managed open-ended Fund that predominantly invests in credit-rated US Dollar denominated fixed rate, floating rate, inflation index-linked and zero coupon bonds issued by sovereigns, corporate entities and other entities as permitted under section 171(2) of the Act A summary of the Fund s asset allocation guidelines is presented below: Assets Class Sovereign Bonds, Supranational Bonds, and Corporate Bonds (Total allocation to Corporate Bonds shall not exceed 75% of the Fund size) Range % Money Market Instruments 0-30% Cash 0-5% 9 Investment Objective The objective of the Fund is to provide an investment vehicle that will enable the Unitholders of the Fund earn stable income over the longterm, by investing in a diversified portfolio of predominantly fixed income instruments. 10 Minimum Subscription 5,000 Units and multiples of 1,000 Units thereafter 11 Offer Price US$ Offer Size US$2,500, Payment Terms In full on application 14 Mandatory Subscription In accordance with rule 450 (2) of SEC rules and regulations which requires promoters of authorised schemes in Nigeria to subscribe to a minimum of 5% of the initial issue of such schemes, FCAM will subscribe to 5% of the offer size. 15 Oversubscription In the event of oversubscription, additional Units of the fund will be registered with SEC 16 Opening Date 8 January Closing Date 14 February Minimum Holding Period Investors are expected to hold the investment for a minimum of six (6) months from the Allotment date. Any redemption made within six months of investment will be subject to a penal charge of 2% of the redemption proceeds. Page 6

7 SUMMARY TO THE OFFER 19 Redemption Unit-holders wishing to redeem their holdings will be permitted to do so after an initial holding period of six months. A redemption request made within six months days would attract a penal charge of 2% of the redemption proceeds. Redemption payments will normally be made five (5) Business Days after the relevant Valuation Date at the prevailing Net Asset Value following the date of receipt of the redemption notice. All redemption requests must be accompanied by the latest statement of Unit-holding issued to the Unit-holder. Redemption forms are available upon request from the Fund Manager or the Trustee. The minimum holding in the Fund is 5,000 Units. A request for redemption shall not be honoured if such redemption will reduce the balance value of Units held below 5,000 Units; unless the Unit-holder is redeeming his entire holding in the Fund. Every Unit-holder shall be entitled to transfer his Units through the Fund Manager in accordance with the provisions of the Trust Deed. In the case of death of a Unit-holder, the legal representative of the deceased may apply to have the Units transferred to the deceased s nominee. Such application shall be accompanied with the Statement of Unit-holding relating to such Units, which must be surrendered before any transfer or redemption, whether for the whole or any part thereof, can be registered. Units purchased on behalf of an individual under the age of 18 years may be redeemed or transferred by the signatory or by the individual upon attaining the age of 18 years provided that such individual produces a Statement of Unit-holding and a valid means of identification 20 Income Distributions The Fund will invest in dollar denominated securities and consequently, distribute net income in dollars to investors in accordance with existing regulations. The Fund expects to make annual distributions from the Fund s net income, to its Unit holders. All Unit holders as at the qualification date will be entitled to a share of the Fund's distributions 21 Forecast Offer Statistics (Extracted from Reporting Accountants Report $'000 $'000 $'000 $'000 $'000 Opening Net Asset Value 2,437 2,560 2,813 3,019 3,235 Gross Income Fees and Expenses Closing Net Asset Value 2,560 2,813 3,019 3,235 3, Quotation An application has been made to the Council of the NSE for the admission of the 2,500,000 Units being offered for subscription to its memorandum list 23 Status The Units qualify as securities in which Pension Fund Assets can be invested under the Pension Reform Act No 4 of 2014, and securities in which Trustees may invest under the Trustees Investments Act Cap T22 LFN 2004 Page 7

8 SUMMARY TO THE OFFER THE OFFER A copy of this prospectus and the documents specified herein have been approved by the Trustee and delivered to SEC for registration. This Prospectus is being issued in compliance with the provisions of the Investments and Securities Act No , the Rules and Regulations of the Commission and the listing requirements of the Exchange, for the purpose of giving information to the public with regard to the Initial Public Offering of 2,500,000 Units at US$1 per unit, in Legacy USD Bond Fund. The Fund has been authorised and registered by the SEC as a Unit Trust scheme. An application has been made to the council of the exchange for the admission of the 2,500,000 Units being offered for subscription, to its Memorandum List. The directors of the Fund Manager individually and collectively accept full responsibility for the accuracy of the information given in this prospectus. The directors have taken reasonable care to ensure that the facts contained herein are true and accurate in all respects, and confirm having made all reasonable enquiries, that to the best of their knowledge and belief, there are no material facts, the omission of which would make any statement contained herein misleading or untrue. FCMB Capital Markets Limited RC ON BEHALF OF First City Asset Management Limited RC OFFERS FOR SUBSCRIPTION AND IS AUTHORISED TO RECEIVE APPLICATIONS FOR 2,500,000 UNITS OF US$1 EACH AT PAR IN THE LEGACY U S D B O N D F U N D LEGACY USD BOND FUND (Authorised and Registered in Nigeria as a unit Trust Scheme) Payable in full on application The application list for the Units now being offered will open on 8 January 2018 and close on 14 February 2018 Page 8

9 COPORATE INFORMATION ON THE FUND MANAGER Fund Manager The Fund Manager Chairman Director Director Director Director Executive Director/Chief Executive Officer Company Secretary Investment Committee Members Corporate Information First City Asset Management Limited 5 th Floor, First City Plaza 44, Marina Lagos Telephone: +234(1) fcamenquiries@fcmb.com Website: Mr Ladi Jadesimi 5 th Floor, First City Plaza 44, Marina Lagos Dr Jonathan Long 5th Floor, First City Plaza 44, Marina Lagos Mr Gboyega Balogun 5 th Floor, First City Plaza 44, Marina Lagos Mr Ladi O. Balogun Primrose Tower 17A, Tinubu Street Lagos Mr Bismack Rewane 5 th Floor, First City Plaza 44, Marina Lagos Mr James Ilori 5 th Floor, First City Plaza 44, Marina Lagos Mrs Funmi Adedibu Primrose Tower 17A, Tinubu Street Lagos Mr Bunkaya B. Gana Mr Gboyega Balogun Mr James Ilori The fund manager s financial summary is on page 25. Mr Opeyemi Agbaje (Independent Member) Page 9

10 PROFESSIONAL PARTIES TO THE OFFER Professional Parties Issuing House Custodian Stockbroker to the Offer Registrars to the Offer Solicitor to the Offer Reporting Accountants Receiving Bank Trustees Company Details FCMB Capital Markets Limited 6 th Floor, First City Plaza 44, Marina Lagos Standard Chartered Bank Nigeria Limited 142 Ahmed Bello Way Victoria Island Lagos CSL Stockbrokers Limited 4 th Floor, First City Plaza 44, Marina Lagos CardinalStone Registrars Limited 358 Herbert Macaulay Way Yaba Lagos Aluko & Oyebode 1, Murtala Muhammed Drive Ikoyi Lagos Ernst & Young 10 th and 13 th Floors UBA House 57 Marina Lagos First City Monument Bank Limited Primose Towers 17A, Tinubu Street Lagos Mainstreet Bank Trustees & Asset Management Company Limited 94, Broad Street, (7 th Floor) Lagos Island Lagos Page 10

11 INFORMATION ON THE LEGACY USD BOND FUND 1. The Fund The Legacy USD Bond Fund is an open-ended investment vehicle initiated and sponsored by First City Asset Management Limited that gives investors the opportunity to invest in dollar denominated fixed income securities on a continuous basis. It also provides flexibility with respect to the timing of investments in, and redemptions from the Fund. It is registered by SEC pursuant to provisions of Section 160 of ISA and is constituted under a Trust Deed executed between the Fund Manager and Mainstreet Bank Trustees & Asset Management Company Limited, the Trustee to the Fund. The objective of the Legacy USD Bond Fund is to generate stable income over the long term. Given that the Fund is open-ended, for the practical purpose of accommodating net daily subscriptions and/or redemptions, the Fund Manager may hold marginal sums in bank balances on a running basis. The Fund will be managed as a unit trust scheme designed for investors seeking to earn stable income from investing in a portfolio comprising of high quality fixed income securities. Subject to such powers and provisions in favour of investors in the Fund as are contained in the Trust Deed, the interest of investors shall be protected by the Trustee, who shall be vested with the assets of the Fund and any income thereon. An application has been made to the Council of the Exchange for admission of the 2,500,000 Units being offered for subscription to its Memorandum List. Additional Units of the Fund will be issued on demand after full subscription of the initial tranche. 2. Investment Policy The Fund will invest in predominantly US Dollar denominated fixed income securities issued by sovereigns, corporate entities and other entities as permitted under section 171(2) of the Act. The table below reflects the Fund s long-term strategic asset allocation guidelines: Asset Class Sovereign Bonds, Supranational Bonds and Corporate Bonds as permitted under Section 171(2) of the Act (Maximum allocation to Corporate Bonds is 75%) Asset Allocation % Money Market Instruments 0 30% Cash 0-5% 3. Investment Incentives The benefits of investing in the Fund include: Opportunity to earn stable income over the long-term; Access to a diversified portfolio with low minimum investment size; Significantly enhances the diversification of portfolios that hold only domestic securities; Skilled and professional fund management; Convenient way of saving towards medium-to-long term goals, including towards future foreign currency related expenditure, like foreign school fees; Zero currency risk, as inflows and investment of funds will be solely in US Dollar; Investments by the Fund will only be made in fixed income instruments Income earned on investments will be paid in US Dollar; Unit holders will receive monthly Performance reports Page 11

12 INFORMATION ON THE LEGACY USD BOND FUND 4. Target Investors The Fund is targeted at institutional investors, high net worth investors and retail investors in Nigeria and offshore, seeking exposure to high-credit quality US dollar denominated securities. 5. Subscription to the Fund During the Offer period, investors can subscribe to the Fund by completing the application form on page 48 of this document and following the accompanying instructions. Following the conclusion of this Offer, Units of the Fund can be purchased exclusively from the Fund Manager or any other agent(s) appointed by the Fund Manager. The investment capital of the Fund shall be made up of subscriptions by investors in Units of the Fund. Units therein shall be created, offered and redeemed on a continuous basis throughout the life of the Fund. The price at which Units will be offered and redeemed will be determined by the NAV of the Fund, as at the time of creation or redemption. Purchases of Units after the Offer Period will be at the Offer Price on the Valuation Date that precedes the day on which the Fund Manager receives value for the transaction. 6. Minimum Investment Period Investors are expected to hold the investment for a minimum of six months from the Allotment date. Any redemption made within six months of investment will be subject to a penal charge of 2% of the redemption proceeds. 7. Income and Distribution The Fund s main focus will be income generation. The Fund Manager intends to make annual distributions from the Fund s net income or capital gains, provided the Fund makes a profit in the financial year in respect of which such distributions are made. However, investors may elect to reinvest the dividend distribution in the Fund at the Offer price on the day the distribution is declared by the Fund Manager, by indicating in the appropriate section of the application form or by writing to the Fund Manager, at least 14days before a distribution is made. 8. Transfer and Redemption Rights Unit-holders wishing to redeem their holdings will be permitted to do so after an initial holding period of six months. A redemption request made within six months days would attract a penal charge of 2% of the redemption proceeds. Redemption payments will normally be made five (5) Business Days after the relevant Valuation Date at the prevailing Net Asset Value following the date of receipt of the redemption notice. All redemption requests must be accompanied by the latest statement of Unit-holding issued to the Unit-holder. Redemption forms are available upon request from the Fund Manager or the Trustee. The minimum holding in the Fund is 5,000 Units. A request for redemption shall not be honoured if such redemption will reduce the balance value of Units held below 5,000 Units; unless the Unitholder is redeeming his entire holding in the Fund. Every Unit-holder shall be entitled to transfer his Units through the Fund Manager in accordance with the provisions of the Trust Deed. In the case of death of a Unit-holder, the legal representative of such deceased may apply to have the Units transferred to the deceased s nominee. Such application shall be accompanied with the Statement of Unit-holding relating to such Units, which must be surrendered before any transfer or redemption whether for the whole or any part thereof can be registered. Page 12

13 INFORMATION ON THE LEGACY USD BOND FUND Units purchased on behalf of an individual under the age of 18 years may be redeemed or transferredby the signatory or by the individual upon attaining the age of 18 years provided that such individual produces a Statement of Unit-holding and a valid means of identification. 9. Unit Statements Unit-holders will be issued statements which will constitute evidence of their investment and title to the Units specified. Joint Unit-holders shall be entitled to one statement in respect of the Units held jointly by them. Statements will be jointly signed by the representatives of the Trustees and the Fund Manager. Each new Unit-holder shall be assigned a unique reference number. Unit-holders are requested to quote the reference number in any correspondence with the Fund Manager. 10. Unit-holders Meetings and Voting Rights The Fund shall hold an Annual General Meeting of Unit-holders. All Unit-holders will, in accordance with the Trust Deed, be entitled to receive notice of, attend and vote at any Annual General Meeting of the Fund. Each Unit of the Fund entitles the Unit-holder to one vote in respect of all matters requiring the decision of Unit-holders where a poll is required. 11. Valuation of Units The value of Units of the Fund, being their Net Asset Value, shall be calculated by the Fund Manager at the close of each Business Day or such other period that the Fund Manager may advise from time to time. The current formula approved by the SEC is provided below: a) Bid Price Add 1. Total market value of quoted securities held by the Fund based on the daily official list of an exchange acceptable to the SEC as at the Valuation Date (highest market bid price) 2. Marked to Market or Amortised Value of Bonds not quoted on an exchange 3. Un-invested cash/receivables 4. Undistributed income to date less expenses 5. Total current value of money market instruments Less 6. Stamp Duties 7. Brokerage Fees 8. Other relevant approved costs Value per unit = (Sum 1 to 5) (Sum 6 to 8) Total Number of Units b) Offer Price Add 1. Total market value of quoted securities held by the Fund based on the daily official list of an exchange acceptable to the SEC as at the Valuation Date (highest market offer price) 2. Marked to market or Amortised Value of Bonds not quoted on an exchange 3. Un-invested cash/receivables 4. Undistributed income to date less expenses 5. Total current value of current money market instruments Page 13

14 INFORMATION ON THE LEGACY USD BOND FUND Less 6. Stamp Duties 7. Brokerage Fees 8. Other relevant approved costs Value per unit = (Sum 1 to 5) (Sum 6 to 8) Total Number of Units 12. Fees and Offer Expenses The initial cost of establishing the Fund will be charged against the expected proceeds. This charge includes the expenses of this Offer, which comprises regulatory and professional fees, printing, advertising and publicity, and brokerage commission estimated at about N 22,341, (2.93 % of the offer size). All future costs and expenses of maintaining the Fund shall be chargeable to the Fund. The annual fees payable in respect of managing the fund is detailed below: Management Fee Custodian Fee Trustee Fee Others The Fund Manager shall be paid an annual management fee of 1.50% of the NAV of the Fund. This fee will be paid annually in arrears and represents the remuneration due to the Fund Manager for the management and advisory roles involved in the day-to-day management of the Fund. The Manager is also entitled to a performance fee if total returns exceed 10% of the Fund s NAV per annum. An annual fee of 0.06% of the Net Asset Value, payable annually in arrears An annual fee of % of the Net Asset Value, payable annually in arrears Other expenses include fee payable to the registrars, advert, printing and audit expenses are not expected to exceed 0.50% of the NAV of the Fund. 13. Risk Factors An investment in the Fund involves various risks. The value of investments and the income derived from them, may rise or fall. This will cause the Fund price to rise as well as fall. These changes may be more extreme in sustained periods of uncertainties, market disruption and other exceptional events. Whilst the Fund Manager will exercise prudence in undertaking investment of the Deposited Property, there are no guarantees that the Fund will attain its objective, and that investors will receive full sums originally invested. A subscription to the Fund should be considered a calculated investment and is subject to factors such as interest rate risk, market risk, liquidity risk, credit risk, sector risk and regulatory risk; all of which must be considered before investing in the Fund. Interest Rate Risk - The Fund s performance may be affected by changes in interest rates. Changes in market interest rates will affect the value of, and the interest earned from, the fixed income securities held by the Fund. Interest rates have a converse relationship with the value of fixed income securities. Thus, when interest rates rise, the value of fixed securities held by the Fund, and hence, the Fund, is likely to fall. Market Risk - Market risk is the possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets. The Fund Manager shall use its skills and expertise to maximise the Fund s absolute returns within the set risk thresholds but does not guarantee the achievement of its target return. Page 14

15 INFORMATION ON THE LEGACY USD BOND FUND Liquidity Risk - Liquidity risk is the risk of a delay in redemption of Units occasioned by the inability of the Fund Manager to promptly convert short term securities to cash. This may occur either due to the inability to convert debt investments within the Fund to cash as at when due or without a loss of capital and/or income in the process. Credit Risk - The Fund is subject to the risk that issuers of securities within the portfolio will be unable to make scheduled interest payments and to pay the principal sum at maturity. The Fund manager has set a minimum credit rating threshold for securities the Fund will be investing in, thus reducing the Fund s exposure to credit risk. Regulatory Risk - The Fund is subject to various forms of regulations primarily from the SEC and the NSE. These regulations may have an adverse effect on the Fund including increasing the costs of the Fund. This risk may also arise from the possible breach of regulatory guidelines or requirements. There is also the risk that possible amendments to the local and foreign legislation, including tax legislation, may cause additional expenses to the Fund. Page 15

16 FINANCIAL FORECAST 1. Letter from Reporting Accountants The following is a copy of the letter on the profit forecast by Ernst & Young, the Reporting Accountants to the Offer. The Chief Executive Officer First City Asset Management Limited 44 Marina Lagos. April 12, 2017 Gentleman, MEMORANDUM OF PROFIT FORECAST FOR THE 5 YEARS ENDING JUNE 30, 2018 to 2022 REGARDING THE ESTABLISHMENT OF FIRST CITY ASSET MANAGEMENT LIMITED S $2.5MILLION LEGACY USD BOND FUND We have reviewed the accounting policies and calculations of the financial statements forecast and projections of First City Asset Management Limited ( FCAM or the Company ) in connection with the $2.5 million Legacy USD Bond Fund (for which the Directors of FCAM are solely responsible) for the years ending June 30, 2018, 2019, 2020, 2021 and In our opinion, this financial forecast has been properly prepared, with regards to the accounting policies and computations inherent, and also on the basis of the assumptions made by the Directors. The forecast is being presented on a basis consistent with the accounting policies normally adopted by the Company. However, there may be differences between forecast and actual results, because events and circumstances frequently do not occur as expected, and these differences may sometimes be material. We have no responsibility to update this report for events and circumstances occurring after the date of this report. Yours faithfully, Dayo Babatunde, FCA FRC/2013/ICAN/0702 For: Ernst & Young Lagos, Nigeria Page 16

17 FINANCIAL FORECAST 2. Profit Forecast The Directors are of the opinion that subject to unforeseen circumstances, and based on the setout assumptions, the profit forecast for the years ending 30 June 2018, 2019, 2020, 2021 and 2022 will be as detailed below: Income $ $ $ $ $ Interest Income 178, , , , ,529 Expenses Management Fees (36,559) (38,520) (42,486) (45,747) (49,173) Trustee Fees (792) (835) (921) (991) (1,065) Custody Fees (1,462) (1,541) (1,699) (1,830) (1,967) Registrar's Fees (731) (770) (850) (915) (983) Auditors' remuneration (8,607) (8,607) (8,607) (8,607) (8,607) Total Expenses (48,151) (50,273) (54,563) (58,090) (61,795) Profit before taxation 130, , , , ,734 Income tax expenses Profit after tax 130, , , , ,734 Other comprehensive income Unrealised gain/loss on Bond (Available For Sale) Total comprehensive income (8,404) (9,105) (9,722) (10,468) (11,252) 122, , , , ,482 Page 17

18 FINANCIAL FORECAST 3. Balance Sheet Forecast The Directors are of the opinion that subject to unforeseen circumstances, and based on the setout assumptions, the balance sheet at the years ending 30 June 2018, 2019, 2020, 2021 and 2022 will be as detailed below: ASSETS $ $ $ $ $ Investment in Bonds 2,380,102 2,630,014 2,894,687 3,113,401 3,343,163 Money Market Securities & Bank balances 197, , , , ,114 2,578,068 2,833,945 3,042,674 3,261,448 3,493,267 LIABILITIES Accrued Expenses 18,493 19,023 20,097 20,097 21,850 18,493 19,023 20,097 20,097 21,850 Net assets 2,559,575 2,814,922 3,022,577 3,240,469 3,471,417 UNIT-HOLDERS EQUITY Fund Units 2,437,251 2,562,251 2,693,501 2,831,314 2,976,017 Fair value reserve (8,404) (17,509) (27,223) (37,678) (48,912) Profit and Loss Account 130, , , , ,518 2,559,575 2,814,922 3,022,577 3,240,469 3,471,417 Page 18

19 FINANCIAL FORECAST 4. Bases of Assumptions for the Profit Forecast The forecast have been arrived at on the following bases and assumptions: Bases The profit forecast for each of the 5 years ending June 30, 2018, 2019, 2020, 2021 and 2022 have been prepared in accordance with International Financial Reporting Standard (IFRS). The bases and assumptions have been reviewed as the basis for determining the reasonableness of the forecast for the years ending June 30, 2018 to June 30, Assumptions The following underlying assumptions were applied in preparing the profit forecast for the years June 30, 2018 to 2022: 1. Macro-Economic Indicators: The official exchange rate for the Fund s reporting currency (the Naira) is assumed to be stable at an average of N305/US$1 for the forecast period. 2. The total Fund size of $2.5 million will be raised and invested in December In addition, the Fund will have an additional bond subscription of about $125,000 in 2019, $131,250 in 2020, $137,813 in 2021 and $144,703 in The Fund will hold predominantly US Dollar denominated fixed income securities issued by sovereigns, corporate entities and other entities as permitted under section 171(2) of the Act. Specifically, the Fund will invest at least 2% in Money Market Instruments, and up to 98% in bonds. The Fund shall have no currency risk. 5. The investment income from the bonds is based on a weighted average coupon rate of 7.47% in 2018, 7.52% in 2019, 7.56% in 2020, 7.56% in 2021 and 7.56% in The investment income from Bank placements is based on an interest rate of 1% per annum. 7. The unrealized gains and losses on bonds available for sale are as a consequence of the Fund investing its proceeds in bonds priced at a premium to par and the potential losses the Fund may make from the investments, if they are held to maturity. 8. The Fund s offer expenses, including fees to professional parties, shall not exceed 2.93% of the total Fund size. The composition of offer expenses comprises the following: Issuing house fee Solicitors fee Reporting accountant fee Stockbrokers fee Marketing and Printing expenses SEC fees NSE Listing fee 9. The composition of operating expenses comprises the following: Management fees (1.5% of net asset value) Outperformance fees (20% of the excess return above the net of fees earned when return is above 10%) Trustee fees (0.0325% of net asset value) Registrars fees (0.03% of net asset value) Custody fees (0.06% of net asset value) and Auditors remuneration (N2,625,000 per annum) 25% of all operating expenses (excluding Auditors remuneration and Outperformance expenses) are paid in the subsequent year from the year they are incurred. Page 19

20 FINANCIAL FORECAST Auditors remuneration and Outperformance expenses are paid in full in the subsequent year from the year they are incurred. 10. The outperformance fees is calculated as 20% of the excess return above the net of fees earned when return is above 10%, commencing in the year ending 30th June The tax is nil throughout the forecast period as interest income earned on Bonds is a franked investment income. 12. The Fund will pay no dividend in 2018 but will subsequently pay 50% of its profit as dividend to unit holders. 13. The Fund will be structured as an open-ended mutual Fund. 14. The Fund accounting policies will not change throughout the forecast period. 15. The quality of management will be sustained over the forecast period. Page 20

21 FINANCIAL FORECAST 5. Letter from the Issuing House April 10, 2017 The Directors First City Asset Management Limited First City Plaza (4th Floor) 44, Marina Lagos Dear Sirs, Initial Public Offering of 2,500,000 Units of $1.00 each at par in the Legacy USD Bond Fund We write with reference to the Prospectus issued in respect of the initial public offering of 2,500,000 Units in the Legacy USD Bond Fund ( the Fund ), which contains financial forecasts of the Fund for the years ending 30 June 2018, 2019, 2020, 2021 and 2022 respectively. We have discussed the bases and assumptions upon which the forecasts were made with you and Ernst and Young, the Reporting Accountants. We have also considered the letter dated 10 April, 2017 from the Reporting Accountants regarding the accounting bases and calculations upon which the forecasts were compiled. Having considered the assumptions made by you, as well as the accounting bases and calculations reviewed by the Reporting Accountants, we consider that the forecasts (for which you as Directors are solely responsible) have been made by you after due and careful diligence. Yours faithfully, Tolu Osinibi Executive Director Page 21

22 INFORMATION ON THE FUND MANAGER AND TRUSTEE 1. The Fund Manager Profile First City Asset Management Limited ( FCAM or the Company) was incorporated in 1997 and registered with the SEC in 2001 to provide wealth and investment management services to individual and institutional clients, globally. The Company is a wholly-owned subsidiary of CSL Stockbrokers Limited, a member of FCMB Group Plc. CSL Stockbrokers has existed for more than thirty years and is one of the leading stockbroking companies in Nigeria, in terms of value and volume of trades on the Exchange. FCAM currently manages the Legacy Equity Fund and Legacy Short Maturity Fund. Board of Directors of the Fund Manager Mr Ladi Jadesimi- Chairman Ladi Jadesimi has been a Non-Executive Member of the Board of Directors at First City Monument Bank Limited since He graduated from the University of Oxford with a Master of Arts degree 1969 as well as an LLB degree in 1966 and subsequently qualified as Chartered Accountant with Coopers and Lybrand in London, England, in After his return to Nigeria, Mr. Jadesimi became Senior Executive of NAL Merchant Bank Limited and Partner at Arthur Andersen & Co. in He is now an Independent Financial Consultant. Dr Jonathan Long- Non-Executive Director Jonathan Long joined the FCMB in 1985 as Deputy Managing Director. Two years later he became the Managing Director of the Bank, a position he held till He has over 31 years corporate finance experience, working in merchant banking industry in the United Kingdom, Switzerland and Nigeria. He began his working career with William & Glyn's Bank Limited in 1973 and was appointed Manager, Corporate Finance, with Charterhouse Japhet Limited in London in He later became the General Manager of the bank's Swiss investment management subsidiary Charterhouse Japhet (Suisse) SA in Geneva in 1979 and eventually Assistant Director in He later established the operations of Standard Chartered Bank Plc in Geneva, Switzerland in He holds bachelor's (1967) and master's (1970) degrees in Modern History from Balliol College and a Doctorate degree (1973) in French Politics from St. Anthony's College, both at Oxford University in the United Kingdom.. Mr Gboyega Balogun- Non-Executive Director Gboyega holds a B.Sc. in Economics and Management from the University of London (Royal Holloway College), in 1996 and M.Sc. in Property Investment from City University, London in He was a registered representative of the New York Stock Exchange (Series 7), the London Stock Exchange, through his accreditation with Futures and Securities Association Registration (SFA) and is now an authorized dealer on The Nigerian Stock Exchange. Gboyega s professional career began as a trainee with Merrill Lynch International Bank Chester Street, London in 1999 and subsequently moved to Private Wealth Management in Merrill Lynch Financial Centre (London) in 2000 within a team of Financial Consultants managing in excess of $600mm in assets for Ultra High Net Worth clients in the African and Middle East Region. Gboyega returned to Nigeria in 2003, assuming the position of divisional head of stock broking, asset management and, registrars business. In 2008, Gboyega was appointed Managing Director of CSL Stockbrokers Ltd. Mr Ladi Balogun- Non-Executive Director Ladi obtained a bachelor's degree in Economics from the University of East Anglia, United Kingdom in (1993) and an MBA from Harvard Business School, USA in 2008.He began his banking career in 1993 at Morgan Grenfell and Co Limited and worked at Citibank in New York 1995 to 1996 before returning to Nigeria as an Executive Assistant to the Chairman/ Chief Executive of First City Page 22

23 INFORMATION ON THE FUND MANAGER AND TRUSTEE Merchant Bank Limited (which later became FCMB) in He has over 20 years' experience in commercial and investment banking in Europe, the United States of America and Africa. He is currently the Group Chief Executive Officer of FCMB Group Plc. Mr Bismack Rewane- Non-Executive Director Mr. Bismarck Rewane holds a Bachelor s degree from the University of Ibadan 1972 and is an Associate of The Institute of Bankers, England and Wales Mr. Rewane worked with the First National Bank of Chicago (which later became the International Merchant Bank Nigeria Limited) as a General Manager and Treasurer between 1976 and He is currently the Managing Director of Financial Derivatives Company Ltd and also serves on the Board of FCMB Group Plc, FCMB (UK) Limited, Top Feeds Nigeria Limited, Delta Packaging Nigeria Limited, Seepec Nigeria Limited, Nigerian Economic Summit Group, Modant Marine Limited, Virgin Nigeria Airways Limited, Nigeria LNG Foundation, UBA Custodian Limited, UNIC Insurance Plc, Navgas (a Vitol subsidiary), and Guinness Nigeria Plc. Mr. Rewane has over 40 years experience in the financial services industry. Mr James Ilori- Executive Director/Chief Executive Officer James obtained a Bachelor s degree in accounting from the Obafemi Awolowo University in 1995, a Master s of Science degree in Economics from the University of Lagos in 2000, and an MBA from Warwick Business School, UK in He obtained a Chartered Financial Analyst (CFA) qualification in 2011, as well as the UK Investment Management Certificate in James has over 18 years experience across Portfolio Management, Research and Strategy, Corporate Banking, Auditing, and Relationship Management. He joined FCAM in 2014 from Crown Agents Investment Management Limited UK where he was a Fixed Income Fund Manager between 2007 and He was appointed Chief Executive Officer of FCAM in July Management Team of the Fund Manager Mr James Ilori- Executive Director/Chief Executive Officer James obtained a Bachelor s degree in accounting from the Obafemi Awolowo University in 1995, a Master s of Science degree in Economics from the University of Lagos in 2000, and an MBA from Warwick Business School, UK in He obtained a Chartered Financial Analyst (CFA) qualification in 2011, as well as the UK Investment Management Certificate in James has over 18 years experience across Portfolio Management, Research and Strategy, Corporate Banking, Auditing, and Relationship Management. He joined FCAM in 2014 from Crown Agents Investment Management Limited UK where he was a Fixed Income Fund Manager between 2007 and He was appointed Chief Executive Officer of FCAM in July Mr Abiodun Jinadu- Head, Risk Management & Internal Control Abiodun obtained a Higher National Diploma in Accountancy from Federal Polytechnic Offa, Kwara State in He has been an Associate of the Institute of Chartered Accountants of Nigeria since Abiodun joined the Internal Control Department of CSL Stockbrokers Limited in October Thereafter, he was redeployed to the Branch Control Unit of First City Monument Bank Limited in September, Thereafter, he returned to CSL Stockbrokers Limited in 2012 as Head, Internal Control and later, as Chief Compliance Officer of its subsidiary, First City Asset Management Limited. Abiodun has formidable experience in risk management, internal control and operations. He is currently Head, Risk Management & Internal Control. Mr Adekunle Awoderu- Head, Finance and Operations Adekunle obtained a Higher National Diploma in Accountancy from Federal Polytechnic, Ilaro in He was admitted as a Fellow of the Institute of Chartered Accountants of Nigeria in 2010; a Fellow of Certified Pension Institute of Nigeria in 2008: and as an Associate member of Chartered institute of Taxation of Nigeria in He is also a certified member of Institute of Financial Consultants, Canada. Adekunle started his career as a trainee in KPMG in In 1995, he moved Page 23

24 INFORMATION ON THE FUND MANAGER AND TRUSTEE to an Audit firm, Adewale Osinowo & Co, as a Senior Auditor. He also worked in Toyota Nigeria Limited as an Assistant Manager in charge of Finance and Accounts from 1997 until 2004, when he joined FCMB Group Plc as the Deputy Head, Financial Control, of one of the Group s subsidiaries, CSL Stockbrokers Limited. Thereafter, he was promoted Head, Financial Control. He is currently the Head of Finance and Operations. Mr Abiodun Fagbulu- Head, Institutional Sales & Trading Abiodun graduated with a Bachelor of Science degree in Accounting from Obafemi Awolowo University in 1998 and Masters of Science in Financial and Business Economics from the University of Greenwich in He is an Associate member of the Chartered Institute of Stockbrokers and an Authorised Dealing Clerk of the Nigerian Stock Exchange. Abiodun has over 15 years experience of which the last 13 years has been in the Nigerian capital market. He was a director at TDA Capital between 2005 and 2011 where he established and managed a fund for a group of HNIs with assets under management of over N3billion. He also participated in the execution of several advisory mandates in the oil and gas sector. Abiodun became Head of Dealing (Nigeria) at African Alliance in 2012, a Pan-African investment management firm with offices in eleven (11) African countries. He was responsible for equities and fixed income trading in Nigeria with a mandate to provide direction to international clients who sought insights (macro, policy, industry and company-specific) required to navigate the local market. Prior to joining FCAM as Head, Institutional Sales & Trading in August 2015, he was Head of Asset Management and Securities at Kedari Capital Limited in 2015 where he was responsible for all investment management activities of the firm. Mrs Gloria Fadipe- Head, Research Gloria obtained a degree in Zoology from the University of Ibadan in She also obtained a Master s in Business Administration degree from the Pan African University (formerly Lagos Business School), in Gloria had a brief stint as an intern at KPMG in 2007, where she participated in the provision of HR advisory services on the merger of Telkom SA and Multilink Nigeria Limited. Subsequently, she gained experience as a Research and Credit Analyst at Diamond Capital and Financial Markets, a division of Diamond Bank Plc between 2008 and 2011, and assessed the credit of individual and corporate clients, analysing financial information and recommending credits to Delegated Lending Authorities. Gloria joined FCAM in 2012 as Senior Equity Research Analyst with a focus on the Banking sector and became the Head of Research in July, 2016 Toyin Akinde- Portfolio Advisor. Toyin joined First City Asset Management Limited in 2017 as Portfolio Advisor. She was Relationship/Business Development Manager at Asset and Resource Management (ARM) Investment Managers for over 8 years where she managed High Networth Individuals (HNI) and Ultra High Networth Individuals (UHNI) relationships. She ensured clients investment portfolios were optimally structured by the provision of superior investment management services and she also sourced new businesses and developed strategies and products to deepen these relationships with clients. Toyin worked closely with Product Specialists across the ARM Group to cross sell products and services and at different times, worked in the Financial Control, Risk Management and Business Process Re-engineering Units. Prior to ARM, Toyin was a Business Analyst at Shell, Canada and Ernst & Young, Canada. Toyin graduated with a Bachelors degree in Economics from Baylor University, Texas, USA in 2001 and Masters degree in Financial Economics from State University of New York, Albany, New York, USA in She is a Certified Wealth Manager and currently working to be a Certified Financial Planner. Page 24

25 INFORMATION ON THE FUND MANAGER AND TRUSTEE Income Statement of the Fund Manager '000 '000 '000 '000 '000 Income 729,810 1,699,395 1,651,642 57,315 8,219 Profit/(loss)before tax 334,416 78, ,421 13,420 5,355 Taxation (52,374) (20,964) (59,899) (10,723) (2,484) Profit/(loss)after tax 282,042 57, ,522 2,697 2,871 Earnings per share (kobo) Statement of Financial Position of the Fund Manager Assets '000 '000 '000 '000 '000 Cash and cash equivalents 97,395 1,005,941 4,372,254 38,410 60,668 Investments 5,000 Trade and other receivables 173, , ,476 38,847 Cash collateral on securities borrowed & reverse repurchase 2,873,162 agreement Financial Investments- Held for trading 145,852 89,644 Financial Investments- Available for sale 79,639 75,583 59,861 81,063 Financial Investments- Held for maturity 191,298 7,022,062 5,700,267 Other assets 2,248 3,163 2, ,457 Property, plant and equipment 9,856 10,976 12, Intangible assets 768 1,123 Deferred tax assets 16,357 26,191 Total Assets 700,999 8,501,964 13,230, ,711 93,541 Liabilities Trade and other payables 47,699 8,182,976 12,957,287 97,838 14,555 Income tax payable 49,215 4,127 40,169 1,239 9,115 Deferred tax liabilities 16,011 12,954 3, ,925 8,200,057 13,001,183 99,077 23,670 Equity Share capital 150, , ,000 50,000 50,000 Available for sale reserve 4, (14,500) 3,063 Retained earnings 433, ,751 94,093 22,571 19, , , ,593 75,634 69,871 Total liabilities and Equity 700,999 8,501,973 13,230, ,711 93,541 Page 25