Sanlam Centre Multi-Asset Real Return Feeder Fund. Supplement to the Prospectus dated 11 May 2016 for Sanlam Qualifying Investors Funds plc

Transcription

1 Sanlam Centre Multi-Asset Real Return Feeder Fund Supplement to the Prospectus dated 11 May 2016 for Sanlam Qualifying Investors Funds plc A QUALIFYING INVESTOR ALTERNATIVE INVESTMENT FUND An open-ended umbrella type investment company with segregated liability between Funds with registration number authorised by the Central Bank of Ireland (the "Central Bank") to which the Companies Act 2014 and chapter 2 of the AIF Rulebook applies. This Supplement contains specific information in relation to Sanlam Centre Multi-Asset Real Return Feeder Fund (the "Fund"), a sub-fund of Sanlam Qualifying Investors Funds plc (the "Company"). There are six other sub-funds of the Company in existence namely Sanlam European Growth Basket Fund, Sanlam Institutional Bond Fund, Sanlam Institutional Balanced Fund, Sanlam Africa Equity Fund, Sanlam Institutional Equity Flexible Fund and Sanlam Global Fund of Hedge Funds. This Supplement forms part of and should be read in conjunction with the Prospectus for the Company dated 11 May 2016 (the "Prospectus") and the latest audited financial statements of the Company. Shareholders should be aware that they may be subject to higher fees due to the layered investment structure of the Fund. The Directors of the Company, whose names appear in the Directors of the Company section of the Prospectus, accept responsibility for the information contained in the Prospectus and this Supplement. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) such information is in accordance with the facts and does not omit anything likely to affect the import of such information. The Directors accept responsibility accordingly. Words and expressions defined in the Prospectus shall, unless the context otherwise requires, have the same meaning when used in this Supplement. Date: 11 May 2016

2 DIRECTORY Investment Objective and Policies... 3 Investment Restrictions... 3 Investment Allocation Manager... 3 Investment Manager... 3 Listing... 3 Borrowing and Leverage... 4 Risk Factors... 4 Dividend Policy... 5 Key Information for Buying and Selling... 5 Fees and Expenses... 6 Material Contracts... 7 Appendix

3 Investment Objective and Policies Investment Objective The investment objective of the Fund is to seek real return. There is no guarantee that the Fund will meet its investment objective. Investment Policies The Investment Manager will seek to achieve the Fund's investment objective by investing all of its assets in the Centre Multi-Asset Real Return Fund (the Underlying Fund ). Further details relating to the Underlying Fund can be found in the Appendix to this Supplement. The Fund may also invest in cash or cash equivalents. Investment Restrictions The general investment restrictions contained in the "Investment Restrictions" section of the Prospectus shall apply. Investment Allocation Manager The AIFM has appointed Sanlam FOUR Investments UK Limited to act as Investment Allocation Manager of the Fund. Sanlam FOUR Investments UK Limited is a company incorporated under the laws of the United Kingdom and having its registered office at 1 Ely Place, London, EC1N 6RY, United Kingdom. Sanlam FOUR Investments UK Limited provides investment management and advisory services to collective investment schemes and is regulated by the Financial Conduct Authority. Investment Manager The Investment Allocation Manager has been appointed to act as Investment Manager of the Fund. Listing Class A Shares issued in respect of the Fund have been admitted to listing on the Official List and trading on the Main Securities Market of the Irish Stock Exchange and dealings in those shares of the Fund on the Irish Stock Exchange commenced on 15 October Neither the admission of the Shares to listing on the Official List and trading on the Main Securities Market of the Irish Stock Exchange nor the approval of this Supplement pursuant to the listing requirements of the Irish Stock Exchange shall constitute a warranty or representation by the Irish Stock Exchange as to the competence of service providers to or any other party connected with the Fund, the adequacy of information contained in this Supplement or this Prospectus or the suitability of the Fund for investment purposes. 3

4 Borrowing and Leverage In accordance with the general provisions contained in the Prospectus, the Fund may borrow up to 20% of its net assets on a temporary basis. Leverage may be generated in order to pursue the Fund's investment objective and policy by using a variety of strategies, including but not limited to investing in the derivative instruments referred to in the Investment Policies section above. The AIFM shall measure the amount of exposure generated from leverage activities using both the gross notional and commitment methods. Such exposure will not exceed 100% of the Fund s Net Asset Value when calculated using the commitment basis and 250% of the Fund s Net Asset Value when calculated using the gross notional basis. Any change to these maximum levels of leverage must be disclosed to Shareholders as required under AIFMD. Borrowing or leverage presents the potential for a higher rate of total return but also increases the volatility of a Fund, including the risk of a total loss of the amount invested. Leverage may cause increased volatility by magnifying gains or losses. Risk Factors The general risk factors set out under the "Risk Factors" section in the Prospectus apply to the Fund. In addition, the following risk factors apply to the Fund. Costs of investing in Investment Funds The Fund will bear, along with other investors in the Underlying Fund, its portion of the expenses of the Underlying Fund, which expenses may include those relating to any investment companies in which the Underlying Fund invests (e.g., the Underlying Fund s pro rata share of any advisory or other fees). These fees will be in addition to the management, administration and custody fees and other expenses which the Fund bears directly in connection with its own operations. Valuation of Underlying Fund The Fund will determine its net asset value primarily on the basis of the value of the Fund s interests in the Underlying Fund, as reported or provided by the Underlying Fund or its agent. Neither the Fund, nor the Investment Manager, has any control over the valuation methods and accounting rules adopted by the Underlying Fund in which the Fund invests and no assurance can be given that such methods and rules will at all times allow the Fund to correctly assess the value of its assets and investments. Taxation Changes in tax legislation in any of the countries in which the Fund will have investments, or changes in tax treaties negotiated by those countries, could adversely affect the returns of the Fund. No assurance can be given on the actual level of taxation suffered by the Fund. Conflicts of Interest Shareholders should note that the Underlying Fund is advised by Centre Asset Management, LLC ("Centre"), which is a majority owned subsidiary of Sanlam. 4

5 Before determining to invest in the Fund, prospective investors should evaluate whether they accept the aforesaid risks, which investors will assume by buying Shares of the Fund. The foregoing list of risk factors does not purport to be a complete explanation of the risks involved in this offering. Prospective investors should read the entire Prospectus and this Supplement and fully evaluate all other information that they deem to be necessary before determining to invest in the Fund. Dividend Policy It is the Directors' current intention not to distribute the profits of the Fund derived from its investments. All such profits shall be reinvested in the Fund. Key Information for Buying and Selling Base Currency US Dollars Business Day Any day (except Saturday or Sunday) on which the banks in Dublin are open for business and such other days as the Directors may, with the consent of the Depositary, determine and notify in advance to Shareholders. Dealing Day Any Business Day. Dealing Deadline In respect of a Dealing Day, 4.00 p.m. (Irish time) on the Business Day immediately preceding that Dealing Day. Valuation Point Midnight (South African time) on each Dealing Day. Minimum Shareholding Class A USD equivalent of 1,000,000Minimum Initial Investment Amount Class A USD equivalent of 1,000,000 Minimum Additional Investment Amount None Settlement Date 5

6 In the case of applications, close of business on the Business Day preceding the relevant Dealing Day (or up to two Business Days after the relevant Dealing Day as may be permitted by the AIFM at its absolute discretion). In the case of repurchases, six Business Days after the relevant Dealing Day or, if later, two Business Days after the receipt of the relevant duly signed repurchase documentation. This section should be read in conjunction with the sections entitled "Subscription for Shares" and "Repurchase of Shares" in the Prospectus. Fees and Expenses Fees of the AIFM, the Depositary, any sub-custodian, the Registrar and Transfer Agent and the Administrator The AIFM will be entitled to receive from the Company an annual fee of 0.15% of the net assets of the Class A Shares. These fees will accrue and be calculated on each Dealing Day and be payable monthly in arrears. The AIFM will be responsible for all its own out of pocket costs and expenses. Where the Fund invests in the Underlying Fund and the Underlying Fund invests in units of collective investment schemes, the manager of the Underlying Fund and/or the scheme in which the Underlying Fund invests must waive the preliminary/initial/redemption charge which it is entitled to charge for its own account in relation to the acquisition of units. Where a commission is received by the AIFM by virtue of an investment in the units of another collective investment scheme, this commission must be paid into the property of the Fund. The Administrator will be entitled to receive out of the assets of the Fund an annual fee which will not exceed 0.025% of the net assets of the Fund plus an annual fee of up to US$15,000 (plus VAT, if any) and its reasonable costs and expenses incurred by the Administrator in the performance of its duties as Administrator of the Fund. These fees shall accrue and be calculated on each Dealing Day and shall be payable monthly in arrears. The Registrar and Transfer Agent will be entitled to receive from the Company out of the assets of the Fund an annual fee which will not exceed US$3,000 plus $1,250 for each additional share class greater than two, together with reasonable costs and expenses incurred by the Registrar and Transfer Agent in the performance of their duties as Registrar and Transfer Agent of the Fund. These fees shall accrue and be calculated on each Dealing Day and shall be payable monthly in arrears. The Registrar and Transfer Agent shall also be entitled to be reimbursed out of the assets of the Fund all agreed transaction charges (which will be charged at normal commercial rates). The Depositary is entitled to receive out of the assets of the Fund an annual fee (which will not exceed 0.005% of the net assets of the Fund (plus any applicable taxes). This fee accrues and is calculated on each Dealing Day and payable monthly in arrears. The Depositary is also entitled to charge to the Fund all agreed fees and transaction charges, at normal commercial rates, together with reasonable out-of-pocket expenses (plus any applicable taxes), it incurs on behalf of that Fund in the performance of its duties under the Depositary Agreement, which shall be payable monthly in arrears. The maximum level of management fees that may be charged by the Underlying Fund or collective investment schemes in which the Underlying Fund may invest shall not exceed 2.5% of the Net Asset Value of the Underlying Fund or the relevant collective investment scheme. The cost of establishing the Fund, obtaining authorisation from any authority, regulatory or other body, listing the Shares on the Irish Stock Exchange, filing fees and the preparation and printing of 6

7 this Supplement, marketing costs and the fees of all professionals relating to it, which are estimated not to exceed 15,000 will be borne by the Fund and amortised over the five years following the first issue of shares in the Fund. The Company may be required to meet additional fees relating to AIFMD support services including (i) risk and liquidity management reporting; (ii) regulatory reporting; and (iii) cross-border registration services which, in all cases, will be at normal commercial rates. This section shall read in conjunction with the section entitled Fees and Expenses in the Prospectus. Voting of Proxies With Respect to Shares of the Underlying Fund In the event of a required vote of the Underlying Fund, the Fund will vote proxies with respect to Underlying Fund shares held by it by either (i) seeking instructions from shareholders of the Fund with regard to voting proxies with respect to shares of the Underlying Fund and vote such proxies only in accordance with such instructions or (ii) voting the shares of the Underlying Fund in the same proportion as the vote of all other holders of shares of the Underlying Fund (to the extent there are other holders of such shares). Material Contracts The Investment Management and Advisory Agreement dated 1 January 2011 (as amended) between the AIFM and Sanlam International Investments Limited, as novated by a Deed of Novation, dated 20 July 2015, between the AIFM, Sanlam International Investments Limited and Sanlam FOUR Investments UK Limited, provides that the appointment of Sanlam FOUR Investments UK Limited will continue in force unless and until terminated by the AIFM giving not less than 30 days' written notice to Sanlam FOUR Investments UK Limited or by Sanlam FOUR Investments UK Limited giving not less than 90 days' written notice to the AIFM although in certain circumstances the Agreement may be terminated forthwith by notice in writing by either party; the Agreement contains certain indemnities in favour of the AIFM arising by reasons of the fraud, bad faith, negligence or wilful default of Sanlam FOUR Investments UK Limited in the performance or non-performance of its duties. 7

8 Appendix Investment Objective and Policy of the Underlying Fund The Underlying Fund is a 1940 Act fund. The Underlying Fund s investment objective is to seek real return. The Underlying Fund seeks to achieve its investment objective by using a flexible allocation strategy that is diversified across various asset classes, including U.S. and foreign (non-us) equity securities (including shares of registered open-end companies), fixed-income securities, exchangetraded notes ( ETNs ) and exchanged-traded funds ( ETFs ) whose returns are linked to commodity indices and cash and cash equivalents. The Underlying Fund is structured as a limited fund of funds, meaning that it seeks to achieve its investment objective by investing directly in securities and in other registered open-end investment companies ( Investment Funds ), primarily those managed by the investment adviser of the Underlying Fund (the Adviser ). The Underlying Fund may invest up to 100% of its total assets in Investment Funds. Generally, the Underlying Fund will not invest 25% or more of its assets in a single Investment Fund. Investment Restrictions of the Underlying Fund As a matter of fundamental policy, which policy may not be changed without approval by holders of a majority of the outstanding voting shares of the Underlying Fund), the Underlying Fund may not: 1 Issue senior securities, except as permitted by the Investment Company Act of 1940, as amended (the 1940 Act ) or any rules, exemptions or interpretations thereunder that may be adopted, granted or issued by the SEC; 2 Borrow money, except to the extent permitted by the 1940 Act, or any rules, exemptions or interpretations thereunder that may be adopted, granted or issued by the SEC (including, without limitation, borrowing to meet redemptions). For purposes of this investment restriction, the entry into options, forward contracts, futures contracts, including those relating to indices, and options on futures contracts or indices shall not constitute borrowing; 3 Act as an underwriter, except to the extent that the Underlying Fund may be deemed to be an underwriter when disposing of securities it owns or when selling its own shares; 4 Purchase or sell real estate, unless acquired as a result of securities or other instruments and provided that this restriction does not prevent the Underlying Fund from (i) purchasing or selling securities or instruments secured by real estate or interests therein, (ii) purchasing or selling securities or instruments representing interests in real estate or securities or instruments of issuers that invest, deal or otherwise engage in transactions in real estate or interests therein (including, without limitation, investments in REITs, mortgage-backed securities, and privately-held real estate funds); and/or (ii) making, purchasing or selling real estate mortgage loans; 5 Purchase or sell physical commodities, unless acquired as a result of ownership of securities or other instruments and provided that this restriction does not pre vent the Underlying Fund from (i) purchasing or selling commodity-linked instruments, including commodity-linked notes with res pect to indices or individual commodities or otherwise; and/or (ii) investing in securities or other instruments that are linked to or secured by physical commodities or related indices; 8

9 6 Make loans, provided that the Underlying Fund may lend its portfolio securities in an amount up to 33% of total Underlying Fund assets, and provided further that, for purposes of this restriction, investment in U.S. government obligations, short-term commercial paper, certificates of deposit, bankers acceptances and repurchase agreements shall not be deemed to be the making of a loan; 7 With respect to 75% of its total assets, the Underlying Fund may not: (i) purchase 10% or more of the outstanding voting securities of any one issuer; or (ii) purchase securities of any issuer if, as a result, 5% or more of the Underlying Fund s total assets would be invested in that issuer s securities. This limitation does not apply to investments in (i) cash and cash items; (ii) securities of other registered investment companies including ETFs; and (iii) obligations of the U.S. government, its agencies, or instrumentalities; or 8 Invest more than 25% of its net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies). Fees and Expenses of the Underlying Fund Shareholder Fees (fees paid directly from the Fund s investment) Maximum Sales charge (Load) imposed on Purchases (as a percentage of offering price) Redemption Fee (as a percentage of amount Redeemed) None None Annual Underlying Fund Operating Expenses (expenses that the Fund pays each year as a percentage of the value of the Fund s investment in the Underlying Fund) Investor Class Institutional Class Management Fees 0.55% 0.55% Distribution and/or Service (12b-1) Fees 0.25% None Other Expenses 0.69% 0.69% Acquired Fund Fees and Expenses 0.68% 0.68% Total Annual Fund Operating Expenses 2.17% 1.92% Expense Reimbursement % -0.24% 1 The investment adviser to the Underlying Fund, Centre Asset Management, LLC (the Adviser or Centre ), has contractually agreed, pursuant to a written expense limitation agreement (the Expense Limitation Agreement ), to reduce its advisory fees and/or reimburse other expenses of the Underlying Fund until September 14, 2015 to the extent necessary to limit the current operating expenses of each class of shares of the Underlying Fund including (but not limited to) investment advisory fees of the Advisor and distribution/service (Rule 12b-1) fees but exclusive of any front-end or contingent deferred sales loads, taxes, leverage interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, extraordinary expenses such as litigation and other expenses not incurred in the ordinary course of the Underlying Fund s business, and acquired fund fees and expenses, except that, if 9

10 Total Annual Fund Operating Expenses (after expense reimbursement) 1.93% 1.68% Suspension of Valuations and Redemptions Redemption requests or payments may be postponed or suspended if (i) the New York Stock Exchange is closed for trading or trading is restricted; (ii) an emergency exists which makes the disposal of securities owned by the Underlying Fund or the fair determination of the value of the Underlying Fund s net assets not reasonably practicable; or (iii) the Securities Exchange Commission, by order, permits the suspension of the right of redemption. Principal Investment Risks Market Risk. The value of securities may decline due to daily fluctuations in the securities markets. Stock prices change daily as a result of many factors, including developments affecting the condition of individual companies, the sector or industries in which they operate, and the market in general. The price of a stock may even be affected by factors unrelated to the value or condition of its issuer, such as changes in interest rates, national and international economic and/or political conditions and general equity market conditions. In a declining stock market, prices for all companies may decline regardless of their long-term prospects, and the Underlying Fund performance per share will change daily in response to such factors. Allocation Risk. The ability of the Underlying Fund to achieve its investment objective is dependent upon the Underlying Fund Adviser s ability to allocate Underlying Fund assets among asset classes and to select investments, including the Investment Funds, within each asset class. An investor in the Underlying Fund could lose money on the investor s investment in the Underlying Fund as a result of the allocation of Underlying Fund assets. The allocation of Underlying Fund assets to different asset classes or investment styles within an asset class may have a more significant effect on the Underlying Fund s net asset value when one of those asset classes or styles is performing more poorly than the others. Affiliated Fund Risk. The Underlying Fund may invest a significant portion of its assets in Investment Funds which are managed by the Underlying Fund Adviser and Underlying Fund subadviser. The Underlying Fund Adviser is responsible for selecting the Investment Funds. Investment Funds may pay to the Underlying Fund Adviser asset-based investment advisory fees that are higher than the investment advisory fee paid by the Underlying Fund to the Underlying Fund Adviser. As a result, a conflict of interest may exist because the Adviser has an incentive to an acquired fund is an underlying fund managed by the Adviser and such acquired fund is not subject to an effective expense limitation or fee waiver agreement at any time during the term of the Expense Limitation Agreement, then, for that time, the operating expenses of each class of shares of the Underlying Fund shall not exclude the amount of advisory fees included in such acquired fund s fees and expenses to which the Underlying Fund would otherwise be subject, to an annual rate of 1.25% of the average daily net assets of the Investor Class shares and 1.00% of the average daily net assets of the Institutional Class shares. The Expense Limitation Agreement may be terminated at any time, and without payment of any penalty, by the Board of Trustees of the Trust, on behalf of the Underlying Fund, upon 60 days written notice to the Adviser. The Adviser may receive reimbursement of any amount waived pursuant to the Expense Limitation Agreement, provided that the reimbursement does not cause the Underlying Fund to exceed the then-existing expense limitation for that class at the time such reimbursement is to be paid by the Underlying Fund. 10

11 select a particular Investment Fund for investment by the Underlying Fund. Fixed-Income Risk. Return of fixed-income securities will fluctuate with changes in interest rates. Debt securities generally tend to lose market value when interest rates rise and increase in value when interest rates fall. Securities with longer maturities or lower coupons or that make little (or no) interest payments before maturity tend to be are more sensitive to these price changes. Other factors that may affect a debt security's market price and yield include investor demand, changes in the financial condition of debt security issuers and economic conditions inside and outside the United States. Interest Rate Risk. When interest rates rise, debt security prices generally fall, and debt security prices generally rise when interest rates fall. In general, securities with longer maturities are more sensitive to such interest rate changes. Income Risk. Because distributions are based on earnings, distributions to shareholders may decline when prevailing interest rates fall or when an issuer experiences defaults on debt securities it holds. Credit Risk. An issuer of debt securities may fail to make timely interest payments or repay principal when due. Any change the financial strength of an issuer or in the security rating of a security may affect the security's value. Investment Fund Risk. Because the Underlying Fund intends to invest in Investment Funds, and the Underlying Fund s performance relates, in part, to the performance of the Investment Funds, the ability of the Underlying Fund to achieve its investment objective is related to ability of the Investment Funds to meet their investment objectives. In addition, the Underlying Fund shareholders will bear indirectly the fees and expenses of the Investment Funds. Commodity Exposure Risk. Although the Underlying Fund will not invest directly in physical commodities, it may still be affected by the risks associated with such investments as a result of its investments in ETNs or ETFs linked to commodity indices. Indirect investments in commodities through such ETNs or ETFs present unique risks. Investing in physical commodities is speculative and can be extremely volatile. Market prices of commodities may fluctuate rapidly based on numerous factors, including change in supply and demand relationships (whether actual, perceived, anticipated, unanticipated or unrealised); weather; agriculture; political and economic events and policies inside and outside the United States; disease; pestilence; trade; technological developments; and monetary and other governmental policies, action and inaction. Inflation-Indexed Security Risks. Inflation-indexed securities, such as TIPS, have a tendency to react to changes in real interest rates. Real interest rates represent nominal (stated) interest rates lowered by the anticipated effect of inflation. In general, the price of an inflation-indexed security can decrease when real interest rates increase and increase when real interest rates decrease. Interest payment on inflation-indexed securities will fluctuate as the principal and/or interest is adjusted for inflation and can be unpredictable. Any increase in the principal amount of an inflationprotected debt security will be considered taxable ordinary income, even though investors, such as the Underlying Fund, do not receive their principal until maturity. TIPS-Related Risks. TIPS are issued with a fixed interest rate and a fixed maturity date, but their principal value will change, as the U.S. Treasury raises or lowers such value each month to keep pace with inflation. Consequently, the coupon payments made to investors will also vary. Although generally considered a low-risk investment because they are backed by the U.S. government and have a fixed interest rate, TIPS are long-duration assets, sensitive to changes in interest rates and, in the short term, can experience substantial fluctuations in price. In addition, TIPS could lose value 11

12 during protracted periods of deflation. Tax-Related Risks. To qualify for favourable tax treatment as a regulated investment company, the Underlying Fund must comply with certain requirements under the Internal Revenue Code of 1986 (the Code ), including asset diversification and income requirements. If the Underlying Fund were to fail to qualify as a regulated investment company under the Code, the Underlying Fund would be liable for federal, and possibly state, corporate taxes on its taxable income and gains. With respect to an investment in TIPS, adjustments for inflation to the principal amount of an inflation-protected U.S. Treasury bond held by the Underlying Fund may be included in the Underlying Fund s gross income for tax purposes, even though the Underlying Fund did not receive cash attributable to such gross income. In such a case, the Underlying Fund may be required to make annual distributions to shareholders that exceed the cash it otherwise received. To meet such distribution requirements, the Underlying Fund may need to sell portfolio investments, which could result in capital gains to the Underlying Fund and additional capital gain distributions to its shareholders. The risks described below are the principal risks of the Investment Funds. Common Stock Risk. The value of common stocks held by an Investment Fund might decrease in response to the activities of a single company or in response to general market or economic conditions. If this occurs, the value of such Investment Fund may also decrease. Market Risk. The value of securities may decline due to daily fluctuations in the securities markets. Stock prices change daily as a result of many factors, including developments affecting the condition of individual companies, the sector or industries in which they operate, and the market in general. The price of a stock may even be affected by factors unrelated to the value or condition of its issuer, such as changes in interest rates, national and international economic and/or political conditions and general equity market conditions. In a declining stock market, prices for all companies may decline regardless of their long-term prospects, and the Investment Fund s performance per share will change daily in response to such factors. Foreign Securities Risk. Investing in foreign securities involves investment risks different from those associated with U.S. securities. Foreign markets may be less liquid, more volatile, and subject to less government supervision than U.S. markets. It may be difficult to enforce contractual obligations, and it may take more time for trades to clear and settle. Emerging Market Risk. Investing in foreign securities in countries with newly organised or less developed securities markets typically involve greater risk. Economic structures in these developed market countries are generally less diverse and mature than those in developed countries and their political systems tend to be less stable. Investments in emerging markets countries may be adversely affected by government restrictions on foreign investment, abrupt and severe price declines, potentially smaller securities markets and lower trading volumes, which may cause relative illiquidity and greater volatility than investments in developed countries. An Investment Fund may have to accept a lower price for, or be unable to sell, a portfolio security at all, which can negatively impact the Investment Fund s value or prevent the Investment Fund from being able to meet cash obligations or take advantage of other investment opportunities. Derivative Risk. Investing in derivatives, including exchange-traded futures and options and derivatives traded over-the-counter, involves the risk of sustaining large and sudden losses. The value of derivatives may rise or fall more rapidly than other investments, and there may be an imperfect correlation between the value of these instruments and the underlying assets. Additional risks of investing in derivatives include the risk of counter-party default, the risk that the transactions may result in losses that offset gains in portfolio positions, the risk that the derivative transaction 12

13 may not be liquid; and the risk that derivatives contain inherent leverage, because they may give rise to an obligation on the part of the investor for future payments or liabilities that are greater than the initial margin or premiums required to establish such positions. Sector Risk. Sector risk is the risk that securities within the same group of industries will decline in price due to sector-specific market or economic developments. To the extent that an Investment Fund invests more heavily in a particular sector, the value of the Investment Fund s shares will be more sensitive to risks associated with that sector and its share price may fluctuate more widely than a fund that invested in a broader range of industries. In addition, changes in regulatory policies may have a material effect on the value of securities issued by companies in highly regulated sectors. Currency Risk. Currency risk is the risk that changes in currency exchange rates will negatively affect securities denominated in, and/or companies receiving revenues in, foreign currencies. Adverse changes in currency exchange rates (relative to the U.S. dollar) may erode or reverse any potential gains from an investment in securities denominated in a foreign currency or may widen existing losses. Investment Company Risk. From time to time, one or more Investment Funds may invest in other investment companies as provided herein and to the extent permitted by the 1940 Act, the rules and regulations thereunder and any exemptions thereto provided by the SEC. By investing in an investment company, an Investment Fund will be subject to two layers of fees, because such investment companies pay advisory, administrative and/or service fees that are borne indirectly by investors. In addition, the Investment Fund will be subject to the same risks that other investors experience when making such investments, and, because the Investment Fund Adviser is the investment adviser to the Underlying Fund and the Investment Funds, there is an inherent conflict of interest because the Adviser has fiduciary duties to both the Underlying Fund and the Investment Funds. Tax-Related Risks. As with the Underlying Fund, to qualify for favourable tax treatment as a regulated investment company, the Investment Funds must comply with certain requirements under the Code, including asset diversification and income requirements. If an Investment Fund were to fail to qualify as a regulated investment company under the Code, such fund would be liable for federal, and possibly state, corporate taxes on its taxable income and gains. Miscellaneous As of the date of this document, the Underlying Fund does not have any loan capital (including term loans) outstanding or created but unissued or any outstanding mortgages, charges, debentures or other borrowings or indebtedness in the nature of borrowings, including bank overdrafts, liabilities under acceptance (other than normal trade bills) or acceptance credits, hire purchase or finance lease commitments, guarantees or other contingent liabilities which are material in nature. The most recent audited financial information of the Centre Multi-Asset Real Return Fund will be available to shareholders and prospective investors, on request. INVESTORS SHOULD BE AWARE THIS APPENDIX IS ONLY A SUMMARY OF THE CONTENTS OF THE SUPPLEMENT OF THE UNDERLYING FUND AND IS NOT A SUBSTITUTE FOR READING THE SUPPLEMENT OF THE UNDERLYING FUND (A COPY OF WHICH IS AVAILABLE FREE OF CHARGE ON REQUEST TO THE COMPANY). IN THE EVENT OF ANY CONFLICT BETWEEN THE CONTENTS OF THIS APPENDIX AND THE SUPPLEMENT OF THE UNDERLYING FUND, THE SUPPLEMENT OF THE UNDERLYING FUND WILL PREVAIL. 13

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