Active Trader Portfolio Issuer: MWF Financial Limited Available in US Dollars
Contents 1. Portfolio Overview 2. High-Frequency Trading at a Glance 3. How is the Return Calculated? 4. Portfolio Holdings 5. Important Points to Note 6. Considering This Portfolio 7. Past Performance Indicators 8. Management Fees 9. Terms and Conditions 10. Schedule
Please take time to read this brochure carefully and thoroughly, including the terms and conditions. Information included in this brochure does not constitute legal, tax, or investment advice, and should not be interpreted as a solicitation of investment from jurisdictions where MWF Limited has no legal right to do so. If you are unsure about the contents of this brochure, or this portfolio’s suitability towards your needs, you should seek advice from an accredited advisor or any other investment professional.
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1. Portfolio Overview
Summary
The total return is calculated by the issuer at the end of each week, and posted to your account on Friday at 18:00 Eastern
The Active Trader portfolio is a medium-risk investment option
Standard Time. Due to extreme market volatility in the last
aimed at investors looking for longer-term placements that earn
moments of trading, some assets are liquidated before the
higher returns than our more flexible products.
closing quote has been set. Therefore, a marginal discrepancy between published and actual figures, in aggregate weekly
This portfolio utilizes high-frequency trading techniques while
returns, can occur.
following upward and downward market trends of 15 U.S. stocks. Assets are diversified between 8 large-cap and 7 midcap stocks. All assets are liquidated at the end of the business
Repayment of Capital
day. At the end of each week, all daily gains are summed up, and you will accrue a return equal to the portfolio’s performance
This portfolio does not have a fixed term. However, withdrawal
for that week.
of capital is restricted for the first 90 calendar days following the day of investment. Any subsequent addition to the portfolio will trigger a new 90 calendar day restriction on withdrawal. A
Short Positions
premature withdrawal fee of 40% will be levied on any capital withdrawn prior to the end of this initial restriction.
This portfolio trades both long and short positions. Shortposition trading allows this portfolio to earn income on declining
Capital can be repaid in full on the 91st calendar day following
market trends. Short trades are executed by ‘borrowing’ stock,
investment.
selling it at the current bid price, and repurchasing moments later when the asking price is lower than the price at which the borrowed stock was sold.
Reinvestment of Return This portfolio allows you to reinvest your returns back into the
Potential Return
portfolio. Reinvestment levels can be set at 25, 50 or a 100%. Reinvestment of your return has the potential to boost your
The Active Trader portfolio follows upward and downward
aggregate returns by as much as 40%.
market trends of 15 U.S. stocks. The sum difference between opening and closing quotes of stocks, that the portfolio is composed of, will be translated into a daily return which is paid
Minimum Guaranteed Earnings
into the investor’s current account at the end of each week. The aggregate value of the stocks that portfolio trades is taken at
This portfolio guarantees minimum earnings of 2.5% per week.
the end of the business day. A positive gain is translated into
Minimum earnings are paid in case portfolio earnings for a
a proportionate gain on investment, then the accrued gains on
given week are less than 2.5%.
investment are summed up and paid into your account at the end of each week. In cases where the aggregate value of the stocks taken at the end of the trading day is less than the value taken at the beginning, a profit in the amount of the total decline in that value is added to the gains to be paid at the end of each week. The amount of profit paid on short-position trading gains cannot exceed 0.3% per day.
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2. High-Frequency Trading at a Glance Summary High-frequency trading is an innovative investment strategy that allows us to place multiple buy/sell orders on a range of securities during the course of the day. Highly sophisticated software, designed by our in-house IT team, follows the market
HFT 26% of all market trading volume in 2006
trend, and is able to make informed trading decisions with minimal intervention from portfolio managers. This strategy allows capital to be invested into securities for no more than a few minutes, and therefore risks associated with high-frequency trading are miniscule.
HFT 61% of all market trading volume in 2009
HFT as a Low Risk Investment Strategy There are several reasons why high-frequency trading does not involve the same amount of risk as conventional equity trading. First, firms that utilize high-frequency trading do not
HFT 73% of all market trading volume in 2011
accumulate positions. This means that firms such us ourselves are not exposed to risks associated with market downturns. Second, high-frequency trading does not require firms to employ significant leverage, thereby limiting a firm’s exposure to the
It is evident that high-frequency trading is becoming more
risks associated with the inherent instability of equity markets.
and more popular among many investment firms. However,
Lastly, firms that are engaged in high-frequency trading usually
until recently, HFT had remained largely in the hands of small
liquidate all their positions at the end of the day, thereby limiting
investment funds who were in the market mostly for themselves.
the risk of losses that may occur in after-hours trading. Although some large hedge funds utilize HFT for part of their placements, none of the firms currently on the market offer
HFT’s Rise in Popularity
portfolios based exclusively on high-frequency trading. The reason for this is obvious: investment portfolios that subscribed
High-frequency trading firms account for 3% of approximately
over $500 million would significantly influence the market trends
22,000 investment firms on the market. The total equity trading
of the securities that they would trade, thereby defeating the
volume of high frequency trading firms accounts for 73% of total
purpose of high-frequency trading strategy altogether. Instead
all-market trading volume.
of following market trends, they would set the trends, thereby making it impossible to profit from their operations.
Limited Subscription Portfolios Our portfolios have limited subscriptions because we intend to remain a mid-size investment firm. It is therefore feasible for firms like ours to utilize HFT exclusively in our investment portfolios, and therefore bring the advantage of this innovative investment strategy to private and institutional investors such as yourself.
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3. How is the Return Calculated?
4. Portfolio Holdings
Investors are offered 100% participation in a portfolio’s
This portfolio invests in 15 US stocks. 7 of these are large-cap1
performance. All gains on said portfolios are paid to investors as
stocks and 8 are mid-cap2.
returns.
52% Large-Cap Returns are calculated by designated issuers at the end of
46% Mid-cap
each business day by subtracting the aggregate value of each stock an invested portfolio trades at the beginning of the trading
2% Gold and Convertible Bonds
session, from the value of each stock within the same portfolio at the end of the trading session. In cases where the aggregate value of stocks the portfolio trades at the end of the trading day is less than in the beginning, a profit in the amount of the total
Table of Holdings:
decline in the value is added to the gains to be paid at the end of each week. The amount of profit paid on short position trading
Symbol
Company Name
gains cannot exceed 0.3% per day.
INTC
Intel Corporation
CSCO Daily returns are proportionate to the change in portfolio value
Cisco Systems, Inc.
JPM
and are paid to current accounts at the end of each week. This
JPMorgan Chase and Co.
T
portfolio cannot generate a loss.
AT&T, Inc.
VZ
Verizon Communications
PFE HFT strategy is applied during the trading session in this
Pfizer, Inc.
MRK
portfolio. Managing software, under the careful observation of
Merck and Co., Inc.
DIS
the portfolio managing staff, follows the upward trends of the
Walt Disney, Co.
AOL
equities that make up the portfolio. Holdings are then liquidated
AOL Inc.
BXS
on downward movements and reacquired when stock prices
BancorpSouth, Inc.
CBT
have reached the level where managers believe a further rise
Cabot Corporation
CVG
in stock prices is sustainable. This portfolio also utilizes short-
Convergys Corporation
FL
trades and takes advantage of declines in stock prices in this
Foot Locker, Inc.
DLX
same manner.
Deluxe Corp.
LNT
Alliant Energy Corporation
Although HFT would allow this portfolio to yield profits on all
1
With market capitalization in excess of $10 billion
intraday upward movement of the stocks, our conservative
2
With market capitalization below $10 billion
approach to risk restricts us from engaging in this kind of market-making.
Two percent of each investor’s portfolio holdings is placed in convertible bonds and gold as a reserve to cover any minor losses that may be encountered during trading operations. Income from this two percent is also held in reserve.
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5. Important Points to Note
6. Considering This Portfolio
◆ This portfolio takes advantage of declining market trends.
To help you decide if this portfolio is right for you, here is a
In cases where the aggregate value of the stocks this
summary of some key points you should think about. If in
portfolio trades at the end of the trading day is less than
doubt, contact your accredited advisor for further help.
the beginning, a profit in the amount of the total decline in that value is added to the gains to be paid at the end of the week. The amount of profit paid on short-position trading
Yes, this portfolio is right for me because:
gains cannot exceed 0.3% per day. ◆ I want to earn higher than average returns on ◆ Capital is guaranteed only if its withdrawal is requested after 90 calendar days from the initial investment. The 90 day restriction will begin again if and when any additional funds
investment by investing into a firm utilizing HFT and other modern technological trading methods. ◆ I am happy to invest with a medium-sized investment
are added to the portfolio balance, excepting the funds
firm. I believe my account will receive more attention
which are automatically reinvested into the portfolio from
due to the subscription limits that the company has
that portfolio’s returns.
placed on its investment products. ◆ I will not need to access my original deposit (capital)
◆ Investment portfolios are not guaranteed by a third party. MWF Financial Limited is not a bank, and does not participate in any kind of Deposit Compensation Scheme. Repayment of capital depends on the ability of MWF Financial Limited to pay such amounts when they are due.
in the first three months after I have invested. ◆ I am comfortable with my investment being directly linked to market performance. ◆ I want my capital to be guaranteed and I want to be sure that I will not receive less than I originally invested. ◆ I like the idea of earning income on declining as well
◆ Minimum investment into this portfolio is $100. The portfolio
as rising markets.
has a limited subscription. As a consequence, we do not accept investments in excess of $5 million into this portfolio. Investors who wish to invest amounts in excess of $5 million
No, this portfolio is not right for me because:
should contact our Wealth Management team for further advice. Such investment amounts can be accommodated by other available investment products.
◆ I may need to access a substantial part of my original deposit (capital) in the first three months after I have invested.
◆ Income from this portfolio is subject to our standard
◆ I do not trust medium-sized, unregulated investment
management fees. Management fees are deducted at
companies. I wish to invest with a large, known and
the time the income is credited to your account. See the
reputable firm.
Management Fees section of this brochure for further information.
◆ I am not comfortable with my investment being directly linked to market performance. I need the peace of mind that comes with fixed returns on investment. ◆ I believe that management fees levied on portfolio income are excessive. ◆ I am not comfortable with investing outside my country.
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7. Past Performance Indicators
8. Management Fees
Please keep in mind that past performance does not guarantee
MWF Financial Limited operates a fair and transparent fees
future results. It can only serve as an indicator of how this
structure. Income earned on portfolios is passed on to investors.
portfolio may perform in the future.
MWF Financial Limited does not retain any part of the income, with the exception of management fees that are fixed for the
Time Period
Return
whole term of the investment. The management fees vary
30-Jan-2013 – 01-Mar-2013
10.5%
according to the amount invested by the client. Below is the
01-Dec-2012 – 01-Mar-2013
23.3%
01-Sep-2012 – 01-Mar-2013
48.7%
Amount Invested
01-Mar-2012 – 01-Mar-2013
149%
Less than $5000
6%
1%
Inception – 1-Mar-2013
223%
$5001 - $25000
4%
1%
Greater than $25001
2%
1%
Average weekly in the year ending 1 March 2013
3.2%
table that shows how management fees are calculated: Regular Investor Accredited advisor
In the year ending 10 August 2012, the average weekly income paid by this portfolio was 2.5%. The figures above are indication of portfolio performance
Private and Institutional clients pay a flat rate of 2% on income
only and do not take into account minimum guaranteed earnings.
received on their investments with MWF Financial Limited.
Terms and Conditions This investment portfolio is marketed and sold through Fleet Mutual Wealth Limited, Hong Kong. The issuer and manager of the portfolio is MWF Financial Limited, Cyprus. 1. I nvestment into the Active Trader portfolio (MWAT) is subject to the general terms and conditions of investments posted on our company website and spelled out in this brochure. This portfolio is open exclusively to current account holders of Fleet Mutual Wealth Limited. 2. Investment into the Active Trader portfolio constitutes a “private placement” with MWF Financial Limited. By investing, the client does not acquire shares of MWF Financial Limited. Neither does the client acquire shares in other publicly traded companies that constitute part of the Active Trader portfolio. 3. By investing into the Active Trader portfolio, the client executes an investment contract. The terms of the investment contract include the general terms and conditions and the terms and conditions of investment into the Active Trader portfolio. 4. Profits on investment in the Active Trader portfolio are subject to management fees, per the management fee table provided in this brochure. 5. The minimum term of investment into the Active Trader portfolio is 90 calendar days. Full or partial withdrawals from the portfolio, prior to the expiration of the full 90 day period from initial investment, will carry a 40% early withdrawal penalty. Additional investments into this portfolio are subject to the minimum term, excepting automatic reinvestments from returns on said portfolio. 6. P rofits on investment in the Active Trader portfolio can be automatically reinvested back into the portfolio. There is no minimum reinvestment requirement on this portfolio. 7. The aggregate value of stocks that this portfolio trades is calculated at the end of each business day. A positive gain in the aggregate value of stocks that portfolio trades is translated into a percentage gain on investment. The gains on investment are summed up and paid into each client’s account at the end of the week. In cases where the aggregate value of stocks that portfolio trades at the end of the trading day is less than in the beginning, a profit in the amount of the total decline in that value is added to the gains to be paid at the end of the week. The amount of profit paid on short-position trading gains cannot exceed 0.3% per day. 8. Profits are not accrued for days when stock market trading is disrupted due to public holidays in market’s jurisdiction or unforeseen events. At times, portfolio managers can interrupt trading operations when markets are extremely volatile and managers decide that further involvement will carry with it an unnecessary amount of risk. 9. This portfolio is available to persons aged 18 years or over and Corporate and Trust clients. 10. If you reside, or move to a jurisdiction in which MWF Financial Limited is not properly licensed or authorized, MWF Financial Limited reserves the right to refuse your deposit or decline to open an account or close your account with a 90 calendar day prior notice.
Portfolio
Mutual Wealth Active Trader Portfolio
Inception date
12 May 2010
Issuer
MWF Financial Limited
Currency
US Dollar
Minimum deposit
USD 100
Minimum guaranteed earnings Capital withdrawal restriction
2.5% per week 90 calendar days
Early withdrawal penalty 40% of withdrawal amount Reinvestment requirement Reinvestment options
None 25%, 50%, 100%
Charges
Subject to management fees published in this brochure.
Returns
HFT on long and short positions. 100% participation.
Capital guarantee
100% capital guarantee if no withdrawals requested before 90 calendar days from initial or additional deposit.
11. This portfolio is not available to persons residing in Cuba, Sudan, Syria, North Korea, Cyprus (Greek), Hong Kong SAR, Liberia and Myanmar. 12. MWF Financial Limited shall inform you of changes to the contents of this brochure and the company website that may affect the terms and conditions of your investment as they occur. 13. Fleet Mutual Wealth Limited and MWF Financial Limited have the right to refuse any new account applications and/or deposits from clients.
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Fleet Mutual Wealth Limited Wheelock House | 20 Pedder Street Central | Hong Kong Tel. 852-3-9733868 | Fax. 852-3-0159056 Web. www.mutualwealth.com E-mail. info@mutualwealth.com