PAI Fund of Hedge Funds Restructuring

Transcription

1 PAI Fund of Hedge Funds Restructuring October 2011 Alternative Relevant Fund of Hedge Funds: The AllWeather Fund Series II, AllWeather Strategy II EUR Fund, AllWeather Strategy II USD Fund (collectively AllWeather ), The DebtMaster Series II Fund, DR AllWeather Fund and DR2 AllWeather Fund, DR Momentum AllWeather Strategies II Fund, DR2 Momentum AllWeather Strategies II Fund, DR Meteor Opportunities Fund and DR DebtMaster Fund (collectively DR Funds ). It is our endeavour to minimise the impact of the restructuring and to ensure a seamless process for all our investors. The impact of the restructuring will be different depending on whether the investor is an existing or redeemed investor. AllWeather In April 2009, we restructured Momentum AllWeather Fund, Momentum AllWeather Institutional Fund, Momentum AllWeather Liquidity Fund and Momentum AllWeather Strategies II Master Fund by pooling the liquid assets into the newly launched Pioneer AllWeather Diversified Fund. Some of the illiquid investments were placed in the corresponding AllWeather Delayed Redemption Fund ( DR AllWeather ). Redeeming investors received their redemption proceeds partially in cash and partially in shares of DR AllWeather. Investors who chose not to redeem are currently exposed to these DR AllWeather shares. A significant proportion of DR AllWeather has been successfully liquidated since their creation and currently represents less than 15% of each of the respective AllWeather funds. Over the past 3 years, our objective has been to improve the liquidity of funds where assets are being actively allocated by diversifying across strategies and new managers. We believe that it would now be appropriate for us to take further steps to simplify and streamline the fund structure across our product range thereby making it more attractive for new investors. This could enable us to further improve the liquidity and diversification potential of our funds. Existing AllWeather investors A new fund company called Pioneer Diversified Limited will be launched, along with a new class fund called Pioneer Diversified Fund. All existing shareholders in AllWeather will become shareholders of Pioneer Diversified Fund on or around the 23 rd December Pioneer Diversified Fund is a multi-share class fund which will apply a similar investment objective and strategy to each of the AllWeather funds. Individual share classes have been established within Pioneer Diversified Fund to correspond to the base currency, dealing terms and fee structures that currently apply to each of the AllWeather funds (including the preservation of any high water marks). AllWeather is currently invested in Pioneer AllWeather Diversified Fund and the corresponding delayed redemption fund. Pioneer AllWeather Diversified Fund is a class fund within Pioneer AllWeather Diversified Limited which will be re-named to Pioneer Horizon Fund and Pioneer Horizon Limited respectively and will remain open for new investments. Consequently, Pioneer Diversified Fund will be invested in Pioneer Horizon Fund. The illiquid portion of investments of DR AllWeather to which existing investors are indirectly exposed to will now be held in Special Investment Class Fund, a class fund of DR Funds Limited. DR Funds Limited has been designed specifically to aggregate and manage the remaining illiquid investments in a more efficient structure. As the investments Page 1

2 within Special Investment Class Fund become liquid, they will be subsequently allocated to the Pioneer Horizon Fund. Thus, in time the Special Investment Class Fund would disappear and Pioneer Diversified Fund will be fully invested into Pioneer Horizon Fund. AllWeather range of funds Multiple class funds (with multiple share classes) Pioneer Diversified Fund One class fund (with multiple share classes) Pioneer AllWeather Diversified Fund DR Funds AllWeather Funds Pioneer Horizon Fund Special Investment Class Fund Redeemed investors who hold DR AllWeather A new legal entity, called DR Funds Limited, will be launched to aggregate and manage the illiquid investments of DR AllWeather in a more efficient structure. As an example, DR AllWeather Fund shareholders in Momentum Performance Strategies Limited will receive DR AllWeather Fund shares in DR Funds Limited. Individual class funds will be launched to replicate existing DR AllWeather funds and the changes will therefore appear as follows: Momentum Performance Strategies Limited DR Funds Limited DR Momentum AllWeather Fund DR2 Momentum AllWeather Fund DR Momentum AllWeather Fund DR2 Momentum AllWeather Fund Momentum AllWeather Strategies Limited DR Funds Limited DR Momentum AllWeather Strategies II Fund DR2 Momentum AllWeather Strategies II Fund DR Momentum AllWeather Strategies II Fund DR2 Momentum AllWeather Strategies II Fund As before, holdings in the class funds of DR Funds Limited will not be redeemable at the option of shareholders. The value of your holdings in the class funds of DR Funds Limited will diminish over time as illiquid investments are realised and paid out. Irrespective of whether the investor is an existing or redeemed investor, no action or response is required on these changes. From on or around 23 rd December 2011, an existing investor in AllWeather will become a shareholder in a share Page 2

3 class of Pioneer Diversified Fund through a transfer in value of their current AllWeather holding. Also on the same date, a redeemed investor will become an investor in a corresponding class fund of DR Funds Limited through a transfer of the value of their current DR AllWeather holding. Contract notes detailing their holding will be sent by HSBC Luxembourg in due course. Important Note on Transfers: In order to facilitate the restructuring process, it will not be possible to transfer current shareholdings after the 25 th November Investors wishing to transfer shares should organise all transfers before this date. If this is not possible, shares received in the new fund company post this restructuring will be fully transferable once the restructuring process is complete. HSBC Luxembourg will notify the shareholder of any transfer requests sent through after the 25 th November 2011 since a new transfer request will need to be resubmitted in the new fund name after the completion of the restructure. Potential for a Secondary Market Transaction: Although liquidity conditions have improved in the past 3 years, an extensive secondary market for illiquid hedge fund investments does not exist. However, grouping together the number of individual Delayed Redemption Funds may help to facilitate such a transaction from a practical perspective. DR Funds Limited may appoint specialist advisors in this market segment and depending on market opportunities the directors of DR Funds Limited may revert to shareholders with further information on this in due course. DR Meteor Opportunities Fund The restructuring will only impact holders of DR Meteor Opportunities Fund ( DR Meteor ), which is a class fund of Meteor Limited. On 1 st December 2011, a new legal entity, called DR Funds Limited, will be launched to aggregate and manage the illiquid investments of delayed redemption funds in a more efficient structure. Hence, as part of the restructuring, shareholders will receive shares of DR Meteor Opportunities Fund, a class fund of DR Funds Limited. No action or response is required on these changes. From on or around the 1st December 2011, investors holding DR Meteor will become shareholders in DR Funds Limited through a transfer of the value of their current holding. Contract notes detailing their holding will be sent by HSBC Luxembourg in due course. Important Note on Transfers for holders of DR Meteor: In order to facilitate the restructuring process, it will not be possible to transfer current shareholdings in DR Meteor after the 25 th November Investors wishing to transfer shares should organise all transfers before this date. If this is not possible, the shares of DR Funds Limited received post this restructuring will be fully transferable once the restructuring process is complete. HSBC Luxembourg will notify investors of any transfer requests sent through after the 25 th November 2011 since a new transfer request will need to be resubmitted in the new fund name after the completion of the restructure. Potential for a Secondary Market Transaction: Although liquidity conditions have improved in the past 3 years, an extensive secondary market for illiquid hedge fund investments does not exist. However, grouping together the number of individual Delayed Redemption Funds may help to facilitate such a transaction from a practical perspective. DR Funds Limited may appoint specialist advisors in this market segment and depending on the market opportunities the directors of DR Funds Limited may revert to shareholders with further information on this in due course. The DebtMaster Series II Fund ( DebtMaster ) DR DebtMaster Fund ( DR DebtMaster ), class fund of Momentum Performance Strategies Ltd. Existing DebtMaster investors DebtMaster will cease trading on 23 rd December 2011 ( Effective Date ) and all underlying positions will be liquidated. The holdings of DebtMaster investors will be compulsorily redeemed on the Effective Date at the Net Asset Value applicable on 23 rd December Investors, through their DebtMaster holdings, are exposed to certain illiquid investments which were segregated into a delayed redemption share class called DR DebtMaster in December On redemption, investors will receive a mixture of cash and shares in DR DebtMaster Fund, a class fund in DR Funds Limited. The exact proportion of cash and DR DebtMaster Fund shares will be known on or around 23 rd December Page 3

4 Redeemed investors who currently hold shares in DR DebtMaster On 1 st December 2011, DR DebtMaster will transfer its assets into a new share class of DR Funds Limited, which is a new legal entity launched to aggregate and manage the illiquid investments of multiple delayed redemption funds. Shares in the class funds of DR Funds Limited will not be redeemable at the option of shareholders. Holdings in the class funds of DR Funds Limited will diminish over time as illiquid investments are realised. Irrespective of whether the investor is an existing or redeemed investor, no action or response is required on these changes. From on or around 1 st December 2011, the investor will become a shareholder in DR Funds Limited through a transfer in value of their DR DebtMaster holding. Contract notes detailing their holding will be sent by HSBC Luxembourg in due course. Important Note on Transfers for holders of DR DebtMaster: In order to facilitate the restructuring process, it will not be possible to transfer current shareholdings in DR DebtMaster after the 25 th November Investors wishing to transfer shares should organise all transfers before this date. If this is not possible, shares of DR Funds Limited received post this restructuring will be fully transferable once the restructuring process is complete. HSBC Luxembourg will notify investors of any transfer requests sent through after the 25 th November 2011 since a new transfer request will need to be resubmitted in the new fund name after the completion of the restructure. Page 4

5 Important Information Unless otherwise stated all information contained in this document is from Pioneer Alternative Investments and is as of 19 October This document is provided as an aid to Merrill Lynch and seeks to provide an overview of the product restructuring as communicated to shareholders in letters dated 21 October 2011 ( Shareholders Letters ). In the event of discrepancies between the content of this document and the content of the Shareholder Letters, the Shareholder Letters shall prevail. This document refers to two proposed fund companies, DR Funds Limited and Pioneer Diversified Limited which have not yet been created. DR Funds Limited and Pioneer Diversified Limited have not been authorised by any regulatory or supervisory authority. In the event of relevant and appropriate offering materials ( Offering Materials ) being published in respect of DR Funds Limited and Pioneer Diversified Limited at a future date, recipients are reminded that transactions in the DR Funds Limited and Pioneer Diversified Limited may only be made on the basis of the information contained in those Offering Materials alone which may differ from the information contained herein. This document was prepared by the staff and management of Pioneer Global Investments Limited. In preparing this document, information has been received and collated from various companies comprising the Pioneer Global Asset Management S.p.A. group of companies. Whilst every effort has been made to ensure that all factual data provided is accurate based on the most current information available at the time of preparation, Pioneer Global Investments Limited cannot accept liability for any errors or omissions contained within and expressly disclaim any liability whether in contract or negligence to the addressee of this document or any third party who may review it or use any material from it in respect of any loss or damage occasioned whether direct or consequential. Other than Pioneer Diversified Limited and DR Funds Limited, the fund of hedge funds mentioned in this document are class funds of mutual fund companies incorporated under the laws of Bermuda with a separate class of funds for each class of shares created from time to time. Additional reporting comprising the ten largest holdings in the portfolios is available on request. In addition, further portfolio reporting may be available subject to the satisfaction of certain circumstances. Unless otherwise stated, all views expressed are those of Pioneer Alternative Investments. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. Investments employing the strategies of the funds referred to in this document are by nature highly speculative and may be volatile, involve leverage and be affected by a lack of liquidity. This material is not a prospectus and does not constitute an offer to buy or a solicitation to sell any shares of any fund or any services. This information is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities or services in the United States or in any of its territories or possessions subject to its jurisdiction to or for the benefit of any United States person (being residents and citizens of the United States or partnerships or corporations organized under United States laws). The funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and shares of the funds referred to herein are not registered in the United States under the Securities Act of The content of this document is approved by Pioneer Global Investments Limited. In the UK, it is directed at professional clients and not at retail clients and it is approved for distribution by Pioneer Global Investments Limited (London Branch), Portland House, 8 Floor, Bressenden Place, London SW1E 5BH, authorised by the Central Bank of Ireland in Ireland and regulated by the Financial Services Authority for the conduct of UK business. The funds referred to herein are unregulated collective investment schemes under the UK Financial Services and Markets Act 2000 and therefore do not carry the protection provided by the UK regulatory system. This document may not be circulated to third parties or distributed to the public. The document is not intended for and no reliance can be placed on this document by retail clients to whom this document should not be provided. This material is provided for information purposes only and should not be used for solicitation purposes Pioneer Funds Distributor, Inc., 60 State Street, Boston, MA ( PFD ), a U.S.-registered broker-dealer, provides marketing services in connection with the distribution of Pioneer Alternative Investments products. PFD markets these products to financial intermediaries, both within and outside of the U.S. (in jurisdictions where permitted to do so) for sale to clients who are not United States persons. Only For Use by Merrill Lynch and, in Merrill Lynch s sole discretion, for use with existing investors in the Fund. It may not be distributed to the public or other PGIL takes no responsibility for determining the suitability or appropriateness of this document for clients of Merrill Lynch. Pioneer Alternative Investments and Pioneer Investments are trading names of the Pioneer Global Asset Management S.p.A. group of companies. Date of First Use: 24 October 2011 Page 5