Schedule 14C Information
Information Statement Pursuant to
Section 14(c) of the Securities Exchange Act of 1934
Filed by the Registrant | x | ||
Filed by a Party other than the Registrant | ¨ |
Check the appropriate box:
¨ | Preliminary Information Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
x | Definitive Information Statement |
TIFF INVESTMENT PROGRAM
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. |
(1) | Title of each class of securities to which transaction applies: | ||
(2) | Aggregate number of securities to which transaction applies: | ||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
(4) | Proposed maximum aggregate value of transaction: | ||
(5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials: |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount previously paid: | ||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: |
TIFF INVESTMENT PROGRAM
170 N. Radnor Chester Road, Suite 300
Radnor, Pennsylvania 19087
_____________
TIFF Multi-Asset Fund
____________
INFORMATION STATEMENT
May 29, 2015
Important Notice Regarding
Internet Availability of this Information Statement:
This Information Statement is available at
https://wwws.tiff.org/MutualFunds/reports/prospectus/InfoStatement.pdf
This Information Statement is being furnished to all persons owning shares (“members”) of TIFF Multi-Asset Fund (“Multi-Asset Fund” or the “Fund”), a series of TIFF Investment Program (“TIP”), to provide members with information regarding a money manager agreement between TIP and Hosking Partners LLP (“Hosking”), a new money manager managing assets on behalf of the Fund. This Information Statement explains why the board of trustees of TIP, all of whom are not “interested persons” of TIP (the “board” or the “trustees”), as such term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”), approved the new money manager agreement with Hosking. Among other things, this Information Statement describes generally the terms of the money manager agreement, and provides information about Hosking.
This Information Statement is being mailed on or about May 29, 2015 to members of record as of May 1, 2015.
Multi-Asset Fund is providing this Information Statement solely for your information.WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement consists of two parts:
PART I contains information relating to Multi-Asset Fund, the new money manager agreement, and the multi-manager method employed by TIP and its investment adviser, TIFF Advisory Services, Inc. (“TAS” or the “Adviser”), and TIP’s advisory agreement with TAS.
PART II contains information about TIP, TAS, Hosking, and other miscellaneous items.
1 |
I. | THE NEW MONEY MANAGER AGREEMENT BETWEEN TIP AND HOSKING |
Introduction
Multi-Asset Fund operates on a “multi-manager” basis, which means that its assets are divided into multiple segments and those segments are managed by different investment management firms as money managers to the Fund. TAS manages a portion of Multi-Asset Fund’s assets directly and is also responsible for determining the appropriate manner in which to allocate assets among money managers, supervising money managers, and making recommendations to the TIP board about money managers, investment mandates, and the Fund’s investment policies and strategies. There is no pre-specified target allocation of assets to any particular money manager. Each money manager manages one or more segments of Multi-Asset Fund pursuant to a money manager agreement between the money manager and TIP, on behalf of Multi-Asset Fund.
During an in-person meeting held on March 30, 2015, the board evaluated and approved the new money manager agreement with Hosking on behalf of Multi-Asset Fund, which became effective April 30, 2015.
In general, a mutual fund cannot enter into new investment advisory agreements or materially amend existing investment advisory agreements unless the members of that mutual fund vote to approve the agreements. Multi-Asset Fund, however, has entered into the new money manager agreement with Hosking without seeking the vote of members in accordance with an exemptive order (the “Exemptive Order”) issued by the Securities and Exchange Commission (the “SEC”). The Exemptive Order permits TAS and the TIP funds, subject to TIP board approval, to enter into and materially amend contracts with money managers not affiliated with TAS without seeking or receiving member approval of those contracts. The Exemptive Order does not apply to the advisory agreements with TIP’s investment adviser, TAS, or any amendments to those agreements. This Information Statement is being provided to all members of Multi-Asset Fund to provide information relating to the new money manager agreement with Hosking as required by one of the conditions of the Exemptive Order.
Description of the Advisory Agreement with TAS
TAS acts as investment adviser to the Fund pursuant to an Advisory Agreement dated as of December 16, 2014 (the “Advisory Agreement”). The Advisory Agreement is substantially the same as the Amended and Restated Advisory Agreement dated as of June 1, 2011 (the “Previous Advisory Agreement”) between TAS and TIP’s predecessor, TIFF Investment Program, Inc. (“TIP Inc.”). Effective December 16, 2014, TIP Inc., a Maryland corporation, was reorganized into TIP, a Delaware statutory trust (the “Reorganization”)1. The Advisory Agreement, which was initially approved by the trustees of TIP at a meeting held on September 11, 2014, was last submitted to a vote of the sole shareholder of TIP on December 16, 2014. The purpose of submission of the Advisory Agreement to the sole shareholder was to seek approval of the new Advisory Agreement in connection with the Reorganization. TAS has served as Multi-Asset Fund’s investment adviser since the Fund’s inception on March 31, 1995.
1 Similarly, TIFF Multi-Asset Fund, which was a series of TIP Inc., was reorganized into a series of TIP, the Delaware statutory trust, which series continues to be known as TIFF Multi-Asset Fund. References in this information statement to “Multi-Asset Fund” or the “Fund” include the TIFF Multi-Asset Fund series of TIP Inc. or TIP, the Delaware statutory trust, or both, as the context of the sentence requires.
2 |
Under the Advisory Agreement, TAS manages the investment program of Multi-Asset Fund and performs such duties as the board and TAS agree are appropriate to support and enhance the investment program of the Fund. The Advisory Agreement provides that TAS will seek to achieve the Fund’s investment and performance objectives by identifying and recommending to the board independent money managers for Multi-Asset Fund, managing and allocating cash among asset classes and money managers, as applicable, monitoring the money managers’ and the Fund’s performance, and employing certain risk management and other investment techniques.
Under Multi-Asset Fund’s Advisory Agreement and the Previous Advisory Agreement, the Fund pays or paid TAS on a monthly basis an annualized fee of 0.25% on the first $1 billion of Multi-Asset Fund’s average daily net assets; 0.23% on the next $1 billion of assets; 0.20% on the next $1 billion of assets; and 0.18% on assets exceeding $3 billion. For the fiscal year ended December 31, 2014, Multi-Asset Fund paid TAS for its services to the Fund under the Previous Advisory Agreement and the Advisory Agreement advisory fees of $12,064,689. For the fiscal year ended December 31, 2014, the management fees earned by the money managers of the Fund in the aggregate were $27,738,807.
TAS also provides certain administrative and other services to TIP pursuant to a services agreement. Under the services agreement, TAS receives on a monthly basis an annualized fee of 0.02% of the Fund’s average daily net assets for such services provided to Multi-Asset Fund. For the year ended December 31, 2014, the fees paid to TAS by Multi-Asset Fund under the services agreement were $1,184,965.
The New Money Manager Agreement between TIP and Hosking
Prior to April 30, 2015, Multi-Asset Fund engaged TAS and eleven independent money managers to manage Multi-Asset Fund’s investment portfolio. At a meeting held on March 30, 2015, the trustees approved a new money manager agreement with Hosking for Multi-Asset Fund.
TAS recommended to the board that Hosking be added as a money manager for Multi-Asset Fund based on a number of factors, including but not limited to Hosking’s performance and experience, its unique analytical and behavioral investment approach based on the capital cycle, and Hosking’s compensation structure, which aligns its interests with those of its clients. Hosking is a single-strategy, global equity investment firm whose security selection method is based on the observation that over time there is an inverse relationship between the supply of capital and the return of capital. Hosking allocates the portion of the Fund’s capital it manages among generalist multi-counsellors (or portfolio managers), each of whom makes individual stock selection decisions for the portion of the portfolio for which they are responsible. This distinct investment philosophy and portfolio construction strategy results in a large number of holdings which express a limited number of investment ideas.
Upon the recommendation of TAS, and after considering a variety of factors (as described below under “Consideration of the New Money Manager Agreement by the Board”), the trustees voted on March 30, 2015, to approve the new money manager agreement with Hosking. The terms of the new money manager agreement are more fully described below under “Description of the New Money Manager Agreement.”
3 |
Consideration of the New Money Manager Agreement by the Board
In considering the money manager agreement with Hosking for Multi-Asset Fund, the board requested and considered a wide range of information from TAS and Hosking in advance of the meeting. The board considered information regarding Hosking’s personnel and services, investment strategies and philosophies, portfolio management, potential portfolio holdings, and fees and expenses. The board also considered the performance of other accounts that had been managed by Hosking’s investment professionals both during their time at Hosking and with their prior employer. Information about Hosking’s proposed brokerage practices was also provided, including proposed allocation methodologies, best execution policies, and soft dollar arrangements. In addition, the board considered information with respect to the compliance and administration of Hosking, including, but not limited to, its code of ethics and business continuity procedures, as well as information concerning any material violations of such compliance programs, the background of the individual serving as the chief compliance officer, and disclosure about regulatory examinations or other inquiries and litigation proceedings affecting Hosking.
The board also considered a memorandum from its independent counsel setting forth the board’s fiduciary duties and responsibilities under the 1940 Act and state law and the factors the board should consider in its evaluation of the money manager agreement. The board also reviewed Hosking’s responses to a questionnaire prepared by the trustees’ independent counsel requesting information necessary for the trustees’ evaluation of the money manager agreement, as well as responses to additional questions posed by the board regarding Hosking’s expected investment opportunities and strategies, performance benchmarks, investment professionals, “key man” risk, and proposed fee schedule.
The board considered a number of additional factors in evaluating the money manager agreement with Hosking on behalf of Multi-Asset Fund. The board considered information describing the anticipated impact of adding Hosking as a money manager to Multi-Asset Fund; the advisory services Hosking was expected to provide to the Fund; the potential benefits of including Hosking as a money manager to the Fund; and other information deemed relevant. The potential benefits of adding Hosking as a money manager of Multi-Asset Fund were identified as: (1) a unique analytical and behavioral approach based on the capital cycle; (2) a multi-counsellor, global generalist investment team that captures inefficiencies created by silo approaches and committee structures; (3) active management style with daily liquidity; (4) alignment of interests; and (5) performance records achieved by other accounts managed by Hosking’s investment professionals both during their time at Hosking and with their prior employer, as well as their reputations and experience in the industry. The board discussed the relatively recent inception of the Hosking firm and the firm’s lack of experience in the US registered mutual fund space. The board also noted the track record and experience of the management team.
The board concluded that, overall, it was satisfied with the nature, extent, and quality of the services expected to be provided under the money manager agreement with Hosking. The board did not specifically consider the profitability of Hosking expected to result from its relationship with the Fund because Hosking is not affiliated with TAS or TIP except by virtue of serving as a money manager, and the fees to be paid to Hosking were negotiated on an arm’s-length basis in a competitive marketplace.
The board based its evaluation on the material factors presented to it at the meeting and discussed above, including: (1) the terms of the agreement; (2) the reasonableness of the money manager’s fees in light of the nature and quality of the services to be provided and any additional benefits to be received by Hosking in connection with providing services to the Fund; (3) the nature, quality, and extent of the services expected to be performed by Hosking; and (4) the nature and expected effects of adding Hosking as a money manager of Multi-Asset Fund. The board considered the experience of Hosking’s investment personnel. The board also considered that the proposed fee schedule included breakpoints that could enable the Fund to benefit from economies of scale¸ as well as an incentive fee reflecting a percentage of the Fund’s outperformance versus the benchmark over rolling five-year periods and paid annually. The board further noted that, under the fee schedule, the breakpoints could be triggered by an increase in Multi-Asset Fund’s assets as well as an increase in the assets of any other funds or accounts advised by TAS or its affiliates that are managed by Hosking or its affiliates.
4 |
In arriving at its decision to approve the money manager agreement with Hosking, the board did not single out any one factor or group of factors as being more important than the other factors, but considered all of these factors together with a view toward future long-term considerations. After carefully considering the information summarized above and all factors deemed to be relevant, the board unanimously voted to approve the money manager agreement with Hosking for Multi-Asset Fund. Prior to a vote being taken, the board met separately in executive session to discuss the appropriateness of the agreement and other considerations.
In their deliberations with respect to these matters, the trustees were advised by their independent legal counsel. The trustees weighed the foregoing matters in light of the advice given to them by their independent legal counsel as to the law applicable to the consideration of investment advisory contracts. The trustees concluded that the money manager agreement with Hosking was reasonable, fair, and in the best interests of the Fund and its members, and that the fees provided in the agreement were fair and reasonable. In the board’s view, approving the money manager agreement with Hosking was desirable and in the best interests of Multi-Asset Fund and its members.
Description of the New Money Manager Agreement
The new money manager agreement with Hosking for Multi-Asset Fund is included asAppendix A to this Information Statement. The following description of the new money manager agreement is qualified in its entirety by reference to the full text of the agreement.
The new money manager agreement with Hosking provides that Hosking will manage the investment and reinvestment of certain assets of Multi-Asset Fund allocated to it from time to time by TAS, subject to the supervision of the board and TAS. The new money manager agreement requires Hosking to give primary consideration to obtaining “best execution” – the best overall terms available to the Fund under the circumstances and in the relevant market – in accordance with applicable law when placing orders for the purchase and sale of securities on behalf of the Fund. In evaluating the terms available for executing particular transactions and in selecting broker-dealers, Hosking may consider those factors it deems relevant, including brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) provided by such broker-dealers. Hosking is authorized to pay a broker-dealer who provides such brokerage and research services a commission for executing a transaction which is higher than the commission another broker-dealer would have charged for effecting that transaction if Hosking determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided. In addition, the new money manager agreement includes provisions relating to the confidentiality of the information and recommendations supplied by either party to the agreement, and restricts Hosking from consulting with other money managers for Multi-Asset Fund about transactions in securities or other assets of the Fund, except under certain circumstances.
5 |
The new money manager agreement provides that Hosking will be compensated in part based on assets and in part based on performance. The asset-based fee, payable monthly, is 0.325% per annum on the first $250 million of “TIFF Assets” and 0.275% per annum on all remaining “TIFF Assets” in excess of $250 million. For purposes of this calculation, “TIFF Assets” means the daily average over the applicable period of Multi-Asset Fund assets plus the assets of other funds or accounts advised by TAS or its affiliates that are managed by Hosking or its affiliates in separate accounts. The fee rate is applied to the average daily net assets of the Multi-Asset Fund account managed by Hosking. For the performance fee, Hosking will receive 20% of the amount by which the annualized return generated by the portfolio exceeds the annualized return of the MSCI All Country World Index, measured over rolling sixty (60) month periods, multiplied by the average net asset value of the assets in the Multi-Asset Fund account managed by Hosking over the same sixty (60) month period. During the first five years of funding, the performance fee is similarly structured, with the measurement periods starting at the funding date and running through each annual calculation date.
The new money manager agreement provides that it: (i) will continue in effect for a period of two years from the date of the agreement, and thereafter from year to year if the continuance of the agreement is approved at least annually in conformity with the requirements of the 1940 Act; (ii) may be further amended by mutual consent of the parties thereto, but the consent of the Fund must be approved in conformity with the requirements of the 1940 Act and any order of the SEC that may address the applicability of such requirements in the case of the Fund; (iii) may be terminated without payment of any penalty by (a) the Fund, if a decision to terminate is made by the board of trustees of TIP or by a vote of a majority of the Fund’s outstanding voting securities (as defined in the 1940 Act), or (b) by Hosking, in each case with at least 30 days’ written notice; and (iv) will terminate automatically in the event of its “assignment,” as defined in the 1940 Act.
The new money manager agreement provides that Hosking shall not be liable to Multi-Asset Fund, TIP, or TAS for any error of judgment, but shall be liable to the Fund for any loss resulting from willful misfeasance, bad faith, or gross negligence by Hosking in providing services under the new money manager agreement or from reckless disregard by Hosking of its obligations and duties under the new money manager agreement.
Additional Fee Information
The following table summarizes Multi-Asset Fund’s expenses for its 2014 fiscal year. The table also shows a pro forma estimate of what such 2014 expenses would have been during that year had the new money manager agreement been in effect during that year. The table reflects only the asset-based portion of the Hosking fee schedule but does not reflect the performance-based component because it is not known how such a portfolio would have performed during the period. The table is designed to facilitate an understanding of the potential impact of the new money manager agreement on Multi-Asset Fund’s fees and expenses. Actual Fund fees and expenses will differ from those presented here due in part to factors such as the amount of Fund assets managed by each money manager, the performance achieved by those money managers having performance-based fee schedules, and the Fund’s average net assets during relevant periods.
6 |
Multi-Asset Fund | ||
2014 Actual Expenses |
2014 Pro Forma Expenses | |
Shareholder Fees (fees paid directly from your investment): | ||
Entry Fees on Purchases (as a percentage of amount invested) | 0.50% | 0.50% |
Redemption Fees (as a percentage of amount redeemed)
| 0.50% | 0.50% |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
| ||
Management Fees | 0.67% | 0.69%[a] |
Other Expenses | 0.51% | 0.51% |
Other Expenses | 0.18% | 0.18% |
Interest Expense and Dividends on Short Sales | 0.33% | 0.33% |
Acquired Fund Fees and Expense | 0.53% | 0.53% |
Total Annual Fund Operating Expenses | 1.71%[b] | 1.73%[a] |
[a] Pro Forma Management Fees and Total Annual Fund Operating Expenses show an estimate of what the expenses of the Fund would have been in 2014 had the new money manager agreement with Hosking been in effect during 2014. Such estimates reflect only the asset-based portion of Hosking’s fee schedule but not the performance-based portion of the fee schedule as no performance information is available on which to estimate performance fees. Such fees would be higher if the manager earned a performance fee in addition to the asset-based fee.
[b] Total Annual Fund Operating Expenses may not correspond to the ratio of expenses to average net assets shown in the “Financial Highlights”section of the prospectus, which reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses.
Cost of Investing Example
This example is intended to help members compare the cost of investing in Multi-Asset Fund with the cost of investing in other mutual funds. In calculating the example, the actual expenses of Multi-Asset Fund during 2014 are used, as are pro forma estimates of what such 2014 expenses would have been had Hosking served as a money manager for Multi-Asset Fund during the year under the new arrangements described herein, as shown in the expense table above. The pro forma examples do not reflect the performance fee component of Hosking’s fee schedule for the reason stated above. The actual and pro forma examples assume that a member invests $10,000 in the Fund for the time periods indicated. The examples also assume that the investment has a 5% return each year, the Fund’s operating expenses remain the same based upon the expenses as shown in the fee table above, and all dividends and distributions are reinvested. Entry fees are reflected in both scenarios shown below and redemption (exit) fees are reflected in the rows labeled “With redemption at end of period.” Actual costs may be higher or lower.
7 |
Multi-Asset Fund | ||
2014 Actual |
2014 Pro Forma | |
One Year | ||
With redemption at end of period | $274 | $276 |
No redemption at end of period | $223 | $225 |
Three Years | ||
With redemption at end of period | $641 | $647 |
No redemption at end of period | $586 | $592 |
Five Years | ||
With redemption at end of period | $1,032 | $1,042 |
No redemption at end of period | $974 | $984 |
Ten Years | ||
With redemption at end of period | $2,128 | $2,149 |
No redemption at end of period | $2,059 | $2,081 |
II. OTHER INFORMATION
Information about TIP
TIP is a no-load, open-end management investment company comprised at present of two distinct funds, each with its own investment objective and policies. TIP was organized as a statutory trust under Delaware law on September 11, 2014, and consists of TIFF Multi-Asset Fund and TIFF Short-Term Fund. On December 16, 2014, each series of TIP assumed the assets and liabilities of the corresponding series of TIP Inc. as part of the Reorganization. TIP Inc. was originally incorporated under Maryland law on December 23, 1993, and its Multi-Asset Fund series commenced operations on March 31, 1995. The TIP mutual funds are available primarily to foundations, endowments, other 501(c)(3) organizations, and certain other non-profit organizations.
Information about TAS
TIFF Advisory Services, Inc. is the investment adviser to the TIP mutual funds. TAS’s principal offices are located at 170 N. Radnor Chester Road, Suite 300, Radnor, PA 19087. TAS seeks to achieve Multi-Asset Fund’s investment and performance objectives in part by identifying and recommending to the board external money managers for the Fund, managing and allocating cash among asset classes and money managers, as applicable, monitoring the money managers’ and the Fund’s performance, and employing certain risk management and other techniques. Each money manager is responsible for day-to-day investment decisions for that portion of Multi-Asset Fund’s assets allocated to it. Each money manager specializes in a particular market sector or utilizes a particular investment style. TAS may invest a substantial portion of the Fund’s assets in futures contracts, other derivative investments, duration investments, US Treasury securities, and other securities and financial instruments in accordance with the Fund’s objective, policies, and restrictions.
8 |
Information about Hosking
Hosking Partners LLP is located at St Vincent House, 30 Orange Street, London WC2H 7HH, United Kingdom. As of March 31, 2015, Hosking had assets under management of approximately $2.7 billion. Hosking was founded by Jeremy Hosking, Senior Partner and Portfolio Manager, in 2013. Prior to founding Hosking, Mr. Hosking was a head of the global division and portfolio manager for Marathon Asset Management LLP (“Marathon”), a firm he co-founded in 1986. James Seddon, Partner and Portfolio Manager, joined Hosking in 2014. Previously, he was a global portfolio manager at Marathon for six years. Julius Mort, Partner and Portfolio Manager, joined Hosking in 2014. Previously, he was a global fund manager at Marathon from 2010 through 2012. Previous to that, he was deputy emerging markets fund manager at Threadneedle from 2007. Luke Bridgeman, Partner and Portfolio Manager, joined Hosking in 2014. Previously, he was a senior analyst at Marathon from 2008 through 2012. Django Davidson, Partner and Portfolio Manager, joined Hosking in 2013. Prior to joining Hosking, he was a partner at Algebris Investments LLP from 2009 to 2012. Hosking has managed assets for Multi-Asset Fund since May 2015.
Mr. Hosking is the Senior Partner of Hosking, and Mr. Hosking and Simon Hooper comprise the management committee at Hosking, and each is located at St Vincent House, 30 Orange Street, London WC2H 7HH, United Kingdom.
Hosking is not an investment adviser to any other registered investment companies with an investment objective similar to that of Multi-Asset Fund.
Certain Brokerage Matters
When selecting brokers or dealers, TAS and the money managers are authorized to consider the “brokerage and research services,” as defined in Section 28(e) of the Exchange Act, provided to TIP’s funds, to TAS, or to the money manager. TAS and the money managers may cause TIP’s funds to pay a commission to a broker or dealer who provides such brokerage and research services which is in excess of the commission another broker or dealer would have charged for effecting the transaction. TAS or the money manager, as appropriate, must determine in good faith that such commission is reasonable in relation to the value of the brokerage and research services provided. Reasonableness will be viewed in terms of that particular transaction or in terms of all the accounts over which TAS or the money manager exercises investment discretion.
Interests of Trustees and Officers of the Fund
To the knowledge of Multi-Asset Fund, no trustee of TIP has any substantial interest, direct or indirect, by security holdings or otherwise, in the new money manager agreement with Hosking. No trustee purchased or sold securities of or interests in Hosking, or any entity directly or indirectly controlling or controlled by Hosking since January 1, 2014. No trustee or officer of TIP is an officer, employee, director, general partner, or shareholder of Hosking. No trustee or officer of TIP owns securities of or has any material direct or indirect interest in Hosking or any other person controlling, controlled by, or under common control with Hosking. No trustee of TIP had any material interest, direct or indirect, in any material transactions in which Hosking, or any entity directly or indirectly controlling or controlled by Hosking, is or was a party since January 1, 2014, or has such an interest in any such proposed transactions.
9 |
Information Regarding the Service Providers to Multi-Asset Fund
Custodian, Administrator, Fund Accounting Agent, Transfer Agent, Registrar, and Dividend Disbursing Agent. State Street Bank and Trust Company (“State Street”), One Lincoln Street, Boston, Massachusetts 02111-2900, serves as the custodian of TIP’s assets as well as its administrator, fund accounting agent, transfer agent, registrar, and dividend disbursing agent. As custodian, State Street may employ sub-custodians outside the United States.
Distributor. Foreside Fund Services, LLC, Three Canal Plaza, Suite 100, Portland, Maine 04101, serves as the distributor of TIP’s shares.
Outstanding Shares and Significant Shareholders
As of May 1, 2015, Multi-Asset Fund had 365,799,116.503 shares outstanding.
As of May 1, 2015, there were no members that owned of record or beneficially 5% or more of the outstanding shares of Multi-Asset Fund.
As of May 1, 2015, the trustees and officers of TIP as a group owned less than 1% of the outstanding shares of Multi-Asset Fund.
Annual and Semi-Annual Reports
TIP’s annual report for the fiscal year ended December 31, 2014, and semi-annual report for the period ended June 30, 2014, were previously distributed to members.TIP will furnish, without charge, an additional copy of its most recent annual report and semi-annual report to any member requesting such reports. An additional copy of the annual and semi-annual report may be obtained, without charge, by contacting TIFF Member Services by mail, telephone, or email using the contact information below or by visiting the SEC’s website at www.sec.gov.
170 N. Radnor Chester Road, Suite 300
Radnor, PA 19087
1-800-984-0084
www.tiff.org
Electronic mail inquiries:
Services offered by TIFF: info@tiff.org
Member-specific account data: memberservices@tiff.org
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
10 |
Appendix A
Money Manager Agreement
This agreement (the “Money Manager Agreement”) is between TIFF Investment Program (“TIP”), a Delaware statutory trust, for its TIFF Multi-Asset Fund (the “Fund”), and Hosking Partners LLP (the “Manager”), a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and is effective as ofApril 30, 2015 (the “Effective Date”).
Recitals
TIP is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”); and
TIP wishes to retain the Manager to render advisory services to the Fund and the Manager is willing to render those services.
The parties therefore agree as follows:
1. | Managed Assets |
The Manager will provide investment management services with respect to assets placed with the Manager on behalf of the Fund from time to time. Such assets, as changed by investment, reinvestment, additions, disbursements of expenses, and withdrawals, are referred to in this Agreement as the “Managed Assets.” The Fund may make additions to the Managed Assets subject to the prior agreement of the Manger and may withdraw all or part of the Managed Assets from this management arrangement at any time provided that, if the Fund requires the Manager to liquidate 20% or more of the Managed Assets, the Fund will endeavor to give the Manager not less than 10 Business Days’ prior notice in writing. For the purposes of this Agreement, a “Business Day” shall mean a day (other than a Saturday or Sunday) on which banks are open for business in London and New York.
2. | Appointment and Powers of Manager; Investment Approach |
(a) Appointment. TIP, acting on behalf of the Fund, hereby appoints the Manager to manage the Managed Assets for the period and on the terms set forth in this Agreement. The Manager hereby accepts this appointment and agrees to render the services herein described in accordance with the requirements described in Section 3(a).
(b) Powers. Subject to the supervision of the board of trustees of TIP and subject to the supervision of TIFF Advisory Services, Inc.(“TAS”) as Investment Adviser to the Fund, the Manager shall direct investment of the Managed Assets in accordance with the requirements of Section 3(a). TIP, acting on behalf of the Fund, grants the Manager authority to:
(i) | acquire (by purchase, exchange, subscription, or otherwise), hold, and dispose of (by sale, exchange, or otherwise) securities and other investments; |
(ii) | determine what portion of the Managed Assets will be held uninvested; and |
(iii) | enter into such agreements and make such representations (including representations regarding the purchase of securities for investment) as may be necessary or proper in connection with the performance by the Manager of its duties hereunder. |
A-1 |
Appendix A |
(c) Power of Attorney. To enable the Manager to exercise fully the discretion granted hereunder, TIP appoints the Manager as its attorney-in-fact to invest, sell, and reinvest the Managed Assets as fully as TIP itself could do. The Manager hereby accepts this appointment.
(d) Voting. The Manager shall be authorized to vote on behalf of the Fund any proxies relating to the Managed Assets, provided, however, that the Manager shall comply with any instructions received from the Fund as to the voting of securities and handling of proxies.
(e) Independent Contractor. Except as expressly authorized herein, the Manager shall for all purposes be deemed to be an independent contractor and shall have no authority to act for or to represent TIP, the Fund, or TAS in any way, or otherwise to be an agent of any of them.
(f) Reporting. The Manager shall furnish to TIP upon reasonable request such information that TIP may reasonably require to complete documents, reports, or regulatory filings.
3. | Requirements; Duties |
(a) Requirements. In performing services for the Fund and otherwise discharging its obligations under this Agreement, the Manager shall act in conformity with the following requirements (the “Requirements”):
(i) | the 1940 Act, the Internal Revenue Code of 1986, as amended, and all other applicable federal and state laws and regulations which apply to the Manager in conjunction with performing services for the Fund, if any; |
(ii) | TIP’s Registration Statement under the 1940 Act and the Securities Act of 1933, as amended, on Form N-1A as filed with the Securities and Exchange Commission relating to the Fund and the shares of beneficial interest in the Fund, as such Registration Statement may be amended from time to time (the “Registration Statement”); |
(iii) | the Manager’s Investment Guidelines, which may be amended from time to time through mutual agreement by TAS and the Manager; |
(iv) | written instructions and directions of the board of trustees of TIP; and |
(v) | written instructions and directions of TAS. |
(b) Responsibility with Respect to Actions of Others. TIP may place the investment portfolio of each of its funds, including the Fund, with one or more investment managers. To the extent the applicability of, or conformity with, the Requirements depends upon investments made by, or activity of, the managers other than the Manager, the Manager agrees to comply with such Requirements: (i) to the extent that such compliance is within the Manager’s Investment Guidelines; and (ii) to the extent that the Manager is provided with information sufficient to ascertain the applicability of such Requirements. If it appears to the Fund at any time that the Fund may not be in compliance with any Requirement and the Fund or TAS so notifies the Manager, the Manager shall promptly take such actions not inconsistent with applicable law or regulation as the Fund or TAS may reasonably specify to effect compliance.
(c) Responsibility with Respect to Performance of Duties. In performing its duties under this Agreement, the Manager will act solely in the interests of the Fund and shall use reasonable care and its best judgment in matters relating to the Fund. The Manager will not deal with the Managed Assets in its own interest or for its own account.
A-2 |
Appendix A |
(d) Valuation. The Manager shall not be responsible for calculating the Net Asset Value of the Fund’s portfolio or making final decisions on the value of portfolio securities used to calculate such net asset value, but must review regularly the pricing of the Managed Assets as made available by or on behalf of the Fund. The Manager agrees to notify the Fund promptly if the Manager reasonably believes that the value of any portfolio security comprising the Managed Assets may not reflect fair value. The Manager agrees to provide upon request any pricing information of which the Manager is aware to the Fund, to TAS, or to the Fund’s administrator to assist in the determination of the fair value of any portfolio security for which market quotations are not readily available or as otherwise required in accordance with the 1940 Act or the Fund’s valuation procedures for the purpose of calculating the Fund’s Net Asset value in accordance with procedures and methods established by the board of trustees of TIP.
4. | Recordkeeping and Reporting |
(a) Records. The Manager shall maintain proper and complete records relating to the furnishing of investment management services under this Agreement, including records with respect to the securities transactions for the Managed Assets required by Rule 31a-1 under the 1940 Act. All records maintained pursuant to this Agreement shall be subject to examination by the Fund and by persons authorized by it during reasonable business hours upon reasonable notice. Records required by Rule 31a-1 maintained as specified above shall be the property of the Fund; the Manager will preserve such records for the periods prescribed by Rule 31a-2 under the 1940 Act and shall surrender such records promptly at the Fund's request. Upon termination of this Agreement, the Manager shall promptly return records that are the Fund's property and, upon demand, shall make and deliver to the Fund true and complete and legible copies of such other records maintained as required by this Section 4(a) as the Fund may request. The Manager may retain copies of records furnished to the Fund.
(b) Reports to Custodian. The Manager shall provide to the Fund's custodian and to the Fund, on each business day, information relating to all transactions concerning the Managed Assets.
(c) Other Reports. The Manager shall render to the board of trustees of TIP and to TAS such periodic and special reports as the board or TAS may reasonably request.
5. | Purchase and Sale of Securities |
(a) Selection of Brokers. The Manager shall place all orders for the purchase and sale of securities on behalf of the Fund with brokers or dealers selected by the Manager in conformity with the policy respecting brokerage set forth in the Registration Statement. Neither the Manager nor any of its officers, employees, or any of its “affiliated persons,” as defined in the 1940 Act, will act as principal or receive any compensation in connection with the purchase or sale of investments by the Fund other than the management fees provided for in Section 6 hereof, except to the extent provided in the following paragraph. The Manager shall exercise reasonable skill and care in the selection and use of brokers and counterparties. Provided the Manager has exercised such reasonable skill and care, it will not be liable for the acts and omissions of brokers and counterparties, including without limitation, their agents, officers, or employees and any loss arising from the insolvency (or its equivalent) of any broker or counterparty, unless such liability resulted from the acts or omissions of the Manager or from information provided by the Manager.
A-3 |
Appendix A |
In placing such orders, the Manager will give primary consideration to obtaining ”best execution” (the best overall terms available to the Fund under the circumstances and in the relevant market) in accordance with applicable law. In evaluating the terms available for executing particular transactions for the Fund and in selecting broker-dealers to execute such transactions, the Manager may consider, in addition to the price of the security, the cost, and execution capabilities, those factors that it deems relevant, such as the breadth of the market, the financial stability and reputation of broker-dealers and the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended) provided by such broker-dealers. The Manager is authorized to pay a broker-dealer who provides such brokerage and research services a commission for executing a transaction which is in excess of the amount of commission another broker-dealer would have charged for effecting that transaction if the Manager determines in good faith that such commission is reasonable in relation to the value of the brokerage and research services provided by such broker-dealer in discharging responsibilities with respect to the Fund or to other client accounts as to which it exercises investment discretion.
(b) Aggregating Orders. On occasions when the Manager deems the purchase or sale of a security to be in the best interest of the Fund as well as other advisory clients of the Manager, the Manager, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be so sold or purchased in order to obtain the most favorable price or lower brokerage commissions and efficient execution. In such event, allocation of securities so purchased or sold, as well as the expense incurred in the transaction, will be made by the Manager in the manner it considers to be most equitable and consistent with its fiduciary obligations to the Fund and its other clients.
6. | Management Fees; Expenses |
(a) Management Fees. Schedule I attached hereto sets out the fees to be paid by the Fund to the Manager. The Manager represents that the fee schedules offered to the Fund are not higher than any fee schedule in effect for clients that (i) have a separately managed account with a value which is not more than 120% of the aggregate value of the TIFF Assets (as defined in Schedule I attached hereto) as at the inception date of the Similar Account; (ii) have a substantially similar investment mandate; and (iii) that have an inception date on or after the date of this Agreement (a “Similar Account”). The Manager agrees that if it subsequently agrees to a fee schedule for a Similar Account that is lower than the fee schedules offered to the Fund, the Manager will promptly offer the lower fee schedule to the Fund.
(b) Expenses. The Manager shall furnish at its own expense all of its own office facilities, equipment and supplies, and shall perform at its own expense all routine and recurring functions necessary to render the services required under this Agreement including administrative, bookkeeping and accounting, clerical, statistical, and correspondence functions. The Fund shall pay directly, or, if the Manager makes payment, reimburse the Manager for, (i) custodial fees for the Managed Assets, (ii) brokerage commissions, issue and transfer taxes and other costs of securities transactions to which the Fund is a party, including any portion of such commissions attributable to research and brokerage services; and (iii) interest and taxes, if any, payable by the Fund. In addition, the Fund shall pay directly, or, if the Manager makes payment, reimburse the Manager for, such non-recurring special out-of-pocket costs and expenses as may be authorized in advance by the Fund.
A-4 |
Appendix A |
7. | Non-Exclusivity of Services |
The Manager is free to act for its own account and to provide investment management services to others. The Fund acknowledges that the Manager and its officers and employees, and the Manager's other clients, may at any time have, acquire, increase, decrease or dispose of positions in the same investments which are at the same time being held, acquired or disposed of under this Agreement for the Fund. Neither the Manager nor any of its officers or employees shall have any obligation to effect a transaction under this Agreement simply because such a transaction is effected for his or its own account or for the account of another client. The Fund agrees that the Manager may refrain from providing any advice or services concerning securities of companies for which any officers, directors, partners or employees of the Manager or any of the Manager’s affiliates act as financial adviser, investment manager or in any capacity that the Manager deems confidential, unless the Manager determines in its sole discretion that it may appropriately do so. The Fund appreciates that, for good commercial and legal reasons, material nonpublic information which becomes available to affiliates of the Manager through these relationships cannot be passed on to Fund and that the Manager may be restricted from trading the securities of issuers about which it is in possession of material nonpublic information.
8. | Liability |
The Manager shall not be liable to the Fund, TIP, or TAS for any error of judgment, but the Manager shall be liable to the Fund for any loss resulting from willful misfeasance, bad faith, or gross negligence by the Manager in providing services under this Agreement or from reckless disregard by the Manager of its obligations and duties under this Agreement. Nothing in this Agreement shall constitute a waiver or limitation of any rights that the Fund, TIP, or TAS may have under applicable state or federal laws.
9. | Representations |
(a) The Manager hereby represents to the Fund that the Manager is registered as an investment adviser under the Advisers Act, that it has full power and authority to enter into and perform fully the terms of this Agreement and that the execution of this Agreement on behalf of the Manager has been duly authorized and, upon execution and delivery, this Agreement will be binding upon the Manager in accordance with its terms.
(b) The Manager represents that it is in material compliance with all applicable laws, both federal and state.
(c) TIP hereby represents to the Manager that it has full power and authority to enter into and perform fully the terms of this Agreement and that the execution of this Agreement on behalf of the Fund has been duly authorized and, upon execution and delivery, this Agreement will be binding upon TIP in accordance with its terms.
(d) TIP acknowledges receipt of Parts 2A and B of the Manager’s Form ADV and Commodity Trading Advisor (CTA) Disclosure Document (if applicable).
(e) TIP acknowledges receipt of the Manager’s UK Financial Conduct Authority Disclosure Statement.
A-5 |
Appendix A |
(f) TIP represents that TIP and the Fund are in material compliance with all applicable laws and regulations, both federal and state.
(g) The Manager represents that it shall notify TIP of any additions to or withdrawals from the membership of the Manager within a reasonable time after such additions or withdrawals but no less frequently than annually.
10. | Term |
This Agreement shall continue in effect for a period of two (2) years from the date hereof and shall thereafter be automatically renewed for successive periods of one (1) year each, provided such renewals are specifically approved at least annually in conformity with the requirements of the 1940 Act; provided, however, that this Agreement may be terminated without the payment of any penalty, by (a) the Fund, if a decision to terminate is made by the board of trustees of TIP or by a vote of a majority of the Fund’s outstanding voting securities (as defined in the 1940 Act), or (b) the Manager, in each case with at least 30 days' written notice from the terminating party and on the date specified in the notice of termination.
This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act).
11. | Amendment |
Except as otherwise provided in this Agreement, this Agreement may be amended by mutual consent, but the consent of the Fund must be approved in conformity with the requirements of the 1940 Act and any order of the Securities and Exchange Commission that may address the applicability of such requirements in the case of the Fund. Any such amendment must be in writing and signed by each party.
12. | Notices |
Notices or other communications required to be given pursuant to this Agreement shall be deemed duly given when delivered electronically, in writing, or sent by fax or three business days after mailing registered mail postage prepaid as follows:
Fund: TIFF Investment Program
c/o TIFF Advisory Services, Inc.
Attn: General Counsel
170 N. Radnor Chester Road, Suite 300
Radnor, PA 19087
Fax: 610-684-8080
Email: miops@tiff.org with a copy to rmaestro@tiff.org
Manager: Hosking Partners LLP
Savoy Hill House
7-10 Savoy Hill
London WC2R 0BU
United Kingdom
Attention: Simon Hooper
Tel: +44 (0) 20 7257 6280
Email: shooper@hoskingandco.com
Each party may change its address by giving notice as herein required.
A-6 |
Appendix A |
13. | Sole Instrument |
This instrument constitutes the sole and only agreement of the parties to it relating to its object and correctly sets forth the rights, duties, and obligations of each party to the other as of its date. Any prior agreements, promises, negotiations, or representations not expressly set forth in this Agreement are of no force or effect.
14. | Counterparts |
This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which, taken together, shall be deemed to constitute one and the same instrument.
15. | Applicable Law |
This Agreement shall be governed by, and the rights of the parties arising hereunder construed in accordance with, the laws of the State of Delaware without reference to principles of conflict of laws. Nothing herein shall be construed to require either party to do anything in violation of any applicable law or regulation.
16. | Confidential Information |
Any information or recommendations supplied by any party to this Agreement, which are not otherwise in the public domain or previously known to another party in connection with the performance of obligations hereunder, including securities or other assets held or to be acquired by the Fund, transactions in securities or other assets effected or to be effected on behalf of the Fund, or financial information or any other information relating to a party to this Agreement, are to be regarded as confidential (“Confidential Information”).
No party may use or disclose to others Confidential Information about the other party, except solely for the legitimate business purposes of the Fund for which the Confidential Information was provided; as may be required by applicable law or rule or compelled by judicial or regulatory authority having competent jurisdiction over the party; or as specifically agreed to in writing by the other party to which the Confidential Information pertains. Further, no party may trade in any securities issued by another party while in possession of material non-public information about that party. Lastly, the Manager may not consult with any other money managers for the Fund about transactions in securities or other assets of the Fund, except for purposes of complying with the 1940 Act or SEC rules or regulations applicable to the Fund. Nothing in this Agreement shall be construed to prevent the Manager from lawfully giving other entities investment advice about, or trading on their behalf in, shares issued by the Fund or securities or other assets held or to be acquired by the Fund.
A-7 |
Appendix A |
In witness whereof, the parties hereto execute this Agreement on and make it effective on the Effective Date specified in the first paragraph of this Agreement.
TIFF Investment Program | Hosking Partners LLP | |
on behalf of the Fund | ||
/s/ Kelly Lundstrom | /s/ Luke Bridgeman | |
Signature | Signature | |
Kelly Lundstrom, Vice President | Luke Bridgeman, Partner | |
Print Name/Title | Print Name/Title |
A-8 |
Appendix A |
Schedule I
to the
Money Manager Agreement
Dated as of April 30, 2015
Between
Hosking Partners LLP (the “Manager”)
and
TIFF Investment Program, for its TIFF Multi-Asset Fund (the “Fund”)
As compensation for the services performed and the facilities and personnel provided by the Manager for TIFF Multi-Asset Fund pursuant to this Agreement, the Fund will pay the Manager a fee as set forth below.
The Fund will pay the Manager (i) an asset based fee (the “Investment Management Fee”) plus (ii) a performance based fee (the “Performance Fee”), each as described below.
All capitalized terms used but not defined in this Schedule I shall have the meanings ascribed to them in the Agreement unless otherwise defined herein.
1 | Definitions related to Fee Calculations |
Average Net Assets:The net asset value of the Managed Assets shall initially be equal to the value of such assets placed with the Manager as of the close of the Fund’s business on the Effective Date, computed as described in the Funds’ Registration Statement, and shall thereafter be adjusted to reflect the daily change in the value of the Managed Assets and cash flows, if any, including withdrawals from or additions to the Managed Assets by the Fund and payment of the following expenses due in respect of the preceding months or Calculation Periods (as the case may be): the Investment Management Fee, the Performance Fee, and custodian transaction charges. Average Net Assets of the Managed Assets means the average of the daily net asset values of the Managed Assets for the applicable period. Where there are multiple Holdings, the Average Net Assets of a Holding shall be determined by multiplying the Average Net Assets of the Managed Assets by the applicable Holding Ratio.
Calculation Date: The date which is (i) the last day of the calendar month in which the anniversary of the Effective Date for the relevant Holding occurs and (ii) if earlier, the date on which the Fund withdraws all or part of a Holding (exclusive of withdrawals made to pay custodian transaction charges and the fees payable hereunder).
Calculation Period: In relation to a Calculation Date during the Transitional Period, the Calculation Period is the period starting on the Effective Date of the Holding and ending on that Calculation Date. In relation to a Calculation Date during the Post-Transitional Period for the Holding, (i) the period of 60 months ending on the Calculation Date of the Holding or (ii) in relation to a Calculation Date arising on a withdrawal of a Holding, the period that starts on the day on which the next regularly occurring Calculation Period would have started (i.e. assuming no withdrawal) and ends on the date of the withdrawal, resulting in a Calculation Period of up to but not more than 60 months.
A-9 |
Appendix A |
Effective Date: The Effective Date is (i) in relation to the first Holding, the day on which the Managed Assets are first placed with the Manager except that for purposes of the Performance Fee, the Effective Date shall be May 7, 2015, and (ii) in relation to each other Holding, the date on which the relevant addition is made to the Managed Assets or such later date as TIP and the Manager may agree.
Excess Return: Excess Return is the arithmetic difference between the annualized performance of a Holding during the applicable Calculation Period, calculated geometrically, and the annualized performance of the MSCI All Country World Index (net) during the same Calculation Period, calculated geometrically.
Fee Rate:
0.325% | per annum on the first $250 million of the TIFF Assets |
0.275% | per annum on all TIFF Assets in excess of $250 million, |
summing the result of each calculation and dividing by TIFF Assets to determine an effective fee rate, which shall be the “Fee Rate.”
Holding: The first tranche of Managed Assets placed with the Manager by the Fund and each subsequent addition to the Managed Assets shall be a separate Holding, unless TIP and the Manager agree otherwise, in which case such additional assets will be added to the latest Holding. Each Holding will have its own Effective Date and separate Performance Fees will be calculated in respect of each Holding.
Holding Ratio: In relation to each Holding, the Holding Ratio is the value of the Holding divided by the value of the Managed Assets as at the date when an addition or withdrawal is made or when a Performance Fee is paid. Where the Manager and TIP agree to treat an addition as part of the latest Holding, each Holding Ratio shall be recalculated accordingly (e.g. the value of the latest Holding plus the addition divided by the value of the Managed Assets as at the date when the addition is made).
Post-Transitional Period: The Post-Transitional Period for a Holding shall commence on the first day of the month that immediately follows the last day of the Transitional Period.
TIFF Assets: TIFF Assets for any period means the daily average over the period of the aggregate assets placed by TIFF Advisory Services, Inc., or its affiliates, with the Manager or its affiliates, in a separately managed account. For assets placed with the Manager by a TIFF vehicle that calculates its net asset value on a daily basis, the average of the daily net asset values of such Managed Assets for the applicable period will be used for these purposes, and for assets placed by a TIFF vehicle or other account that does not calculate its net asset values on a daily basis, the average will be approximated using the value of such Managed Assets at the opening of the applicable period, adjusted by any contributions or withdrawals during the period.
Transitional Period: The Transitional Period for a Holding shall commence on the Effective Date of such Holding and shall end on the last day of the calendar month in which a full 60 months of performance for such Holding has been achieved.
A-10 |
Appendix A |
2 | Calculation of the Investment Management Fee |
The Fund will pay the Manager an asset-based fee calculated monthly as of the last day of the calendar month by applying the Fee Rate to the Average Net Assets of each Holding for the month to which the fee relates and summing the results.
The Investment Management Fee will be paid within 30 days of the end of the month to which the fee relates and will be pro-rated for any period that is less than a full calendar month.
3 | Calculation and Payment of Performance Fee |
For each Calculation Period and upon a withdrawal of all or part of a Holding, the Performance Fee shall be the higher of zero and the amount determined using the applicable formula set forth below.
The Performance Fee shall be payable annually in arrears at the end of the month following the month in which the relevant Calculation Date occurs. The Performance Fee shall be paid from the Holding to which the fee relates, except for (i) those fees payable upon a complete withdrawal of a Holding or if the value of the Holding is less than the Performance Fee payable, in which case the fee shall be applied to the remaining Holding(s) on a first-in-first-out basis and (ii) those fees payable subsequent to a complete withdrawal of the Managed Assets.
3.1 Performance Fee—Transitional Period:
During the Transitional Period for a Holding, the Performance Fee for such Holding shall be calculated using the following formula:
Period 1 (commences on the Effective Date of such Holding and ends on the last day of the calendar month in which the first anniversary of the Effective Date occurs): (2/5 x [n/365 x (Period 1 Excess Return x 20% x Period 1 Average Net Assets of the relevant Holding)]), where n is equal to the number of days in the Calculation Period.
Period 2 (commences on the Effective Date of such Holding and ends on the last day of the calendar month in which the second anniversary of the Effective Date occurs): (2/5 x [n/365 x (2 x Period 2 Excess Return x 20% x Period 2 Average Net Assets of the relevant Holding)]) – Performance Fees paid to-date on that Holding, where n is equal to the number of days in the Calculation Period.
Period 3 (commences on the Effective Date of such Holding and ends on the last day of the calendar month in which the third anniversary of the Effective Date occurs): (3/5 x [n/365 x (3 x Period 3 Excess Return x 20% x Period 3 Average Net Assets of the relevant Holding)]) – Performance Fees paid to-date on that Holding, where n is equal to the number of days in the Calculation Period.
Period 4 (commences on the Effective Date of such Holding and ends on the last day of the calendar month in which the fourth anniversary of the Effective Date occurs): (4/5 x [n/365 x (4 x Period 4 Excess Return x 20% x Period 4 Average Net Assets of the relevant Holding)]) – Performance Fees paid to-date on that Holding, where n is equal to the number of days in the Calculation Period.
Period 5 (commences on the Effective Date of such Holding and ends on the last day of the calendar month in which the fifth anniversary of the Effective Date occurs): [n/365 x (5 x Period 5 Excess Return x 20% x Period 5 Average Net Assets of the relevant Holding)] – Performance Fees paid to-date on that Holding, where n is equal to the number of days in the Calculation Period.
A-11 |
Appendix A |
3.2 Performance Fee—Post-Transitional Period:
For each Calculation Period following the Transitional Period, the Performance Fee of a Holding shall be calculated using the following formula: Excess Return for the relevant Calculation Period (the 60 month period just ended) x 20% x Average Net Assets of the relevant Holding for the Calculation Period.
3.3 Performance Fee—On Complete and Partial Withdrawal of a Holding
A Performance Fee will also be calculated on a withdrawal of all or part of a Holding and shall become payable at the end of the month following the month in which such withdrawal occurred. Where the Fund has multiple Holdings, a partial withdrawal of Managed Assets shall be applied to the Holdings on a first-in-first-out basis.
3.3.1 Complete or Partial Withdrawal during the Transition Period
A Performance Fee will be calculated for each Holding which is withdrawn during the Transition Period using the following formula:
[n/365 x (Excess Return for the relevant Calculation Period x 20% x Average Net Assets of the Holding for the relevant Calculation Period)] - Performance Fees paid to-date on that Holding, where n is equal to the number of days in the Calculation Period.
Where a withdrawal is allocated to only part of a Holding (on the first-in-first-out basis), the Performance Fee for that Holding shall be pro-rated according to the proportion of the Holding withdrawn.
3.3.2 Complete or Partial Withdrawal following the Transition Period
A Performance Fee will be calculated for each Holding which is withdrawn following the Transition Period using the following formula: [n/365 x (Excess Return for the relevant Calculation Period x 20% x Average Net Assets of the Holding for the relevant Calculation Period)] – any Performance Fees paid during the Calculation Period on that Holding, where n is equal to the number of days in the Calculation Period.
Where a withdrawal is allocated to only part of a Holding (on the first-in-first-out basis), the Performance Fee for that Holding shall be pro-rated according to the proportion of the Holding withdrawn.
A-12 |