Mutual Wealth Growth and Income Portfolio Brochure

Growth and Income 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 Growth and Income portfolio is a medium-risk investment

Standard Time. Due to extreme market volatility in the last

option aimed at investors looking for longer-term placements

moments of trading, some assets are liquidated before the

that earn 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 the upward and downward market trends of 16 U.S. stocks. Assets are diversified between 2 large-cap and 14 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 180 calendar days following the day of investment. Any subsequent addition to the portfolio will trigger a new 180 calendar day restriction on withdrawal. A

Short Positions

premature withdrawal fee of 60% will be levied on any capital withdrawn prior to the end of this initial restriction.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 upon the 181st calendar day

market trends. Short trades are executed by ‘borrowing’ stock,

following 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 requires you to reinvest a minimum of 50 percent

Potential Return

of your returns back into the portfolio. Reinvestment levels can be set at either 50 or a 100%. Reinvestment of your return has a

The Growth and Income portfolio follows upward and downward

potential to boost your aggregate returns by as much as 40%.

market trends of 16 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 3% 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 3%.

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 0.8% 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

trends 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 accumulate

HFT 73% of all market trading volume in 2011

positions. This means that firms such us ours are not exposed to risks associated with market downturns. Second, highfrequency trading does not require firms to employ significant leverage, thereby limiting a firm’s exposure to risks associated

It is evident that high-frequency trading is becoming more

with the inherent instability of equity markets. Lastly, firms that

and more popular among many investment firms. However,

are engaged in high-frequency trading usually liquidate all their

until recently, HFT had remained largely in the hands of small

positions at the end of the day, thereby limiting the risk of losses

investment funds who were in the market mostly for themselves.

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 16 U.S. stocks. 2 of these are large-cap1

performance. All gains on said portfolios are paid to investors as

stocks and 14 are mid-cap2.

returns.

12% Large-Cap Returns are calculated by designated issuers at the end of

86% 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 0.8% per day.

MSFT

Microsoft Corp.

GE Daily returns are proportionate to the change in portfolio value

General Electric Co.

JBLU

and are paid to current accounts at the end of each week. This

JetBlue Airway Corp

PAY

portfolio cannot generate a loss.

VeriFone Systems, In.

RE

Everest Re Group

PNR HFT strategy is applied during the trading session in this

Pentair, Inc.

TFX

portfolio. Managing software, under the careful observation of

Teleflex, Inc.

LUV

the portfolio managing staff, follows the upward trends of the

Southwest Airlines

URS

equities that make up the portfolio. Holdings are then liquidated

Urs Corporation

KWK

on downward movements and reacquired when stock prices

Quicksilver Resources, Inc.

HLX

have reached the level where managers believe a further rise

Helix Energy Solutions

GGG

in stock prices is sustainable. This portfolio also utilizes short-

Graco, Inc.

ENDP

trades and takes advantage of declines in stock prices in this

Endo Health Solutions

CY

same manner.

Cypress Semiconductor

CNL

Cleco Corporation

ALK

Alaska Air Group

Although HFT would allow this portfolio to yield profits on all intraday upward movement of the stocks, our conservative

1

With market capitalization in excess of $10 billion

approach to risk restricts us from engaging in this kind of

2

With market capitalization below $10 billion

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 0.8% per day. ◆ I want to earn the highest return possible on my ◆ Capital is guaranteed only if its withdrawal is requested after 180 calendar days from the initial investment. The 180 day

investment with Mutual Wealth. ◆ I want to earn higher than average returns on

restriction will begin again in cases where additional funds

investment by investing into a firm utilizing HFT and

are added to the existing portfolio balance, excepting the

other modern technological trading methods.

funds which are automatically reinvested into the portfolio from that portfolio’s returns.

◆ I am happy to invest with a medium-sized investment firm. I believe my account will receive more attention due to the subscription limits that the company has

◆ 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.

on its investment products. ◆ I will not need to access my original deposit (capital) in the first six months following my initial investment. ◆ I am comfortable with my investment being directly linked to market performance. ◆ I want my capital to be guaranteed and I want to be

◆ Minimum investment into this portfolio is $100. The portfolio has a limited subscription. As a consequence, we do not accept investments in excess of $5 million into this portfolio.

sure that I will not receive less than I originally invested. ◆ I like the idea of earning income on declining as well as rising markets.

Investors who wish to invest amounts in excess of $5 million should contact our Wealth Management team for further advice. Such investment amounts can be accommodated by

No, this portfolio is not right for me because:

other available investment products. ◆ I may need to access a substantial part of my original ◆ Income from this portfolio is subject to our standard management fees. Management fees are deducted at the time the income is credited to your account. See

deposit (capital) within the first six months following my initial investment. ◆ I do not trust medium-sized, unregulated investment

the Management Fees Table of this brochure for further

companies. I wish to invest with a large, known and

information.

reputable firm. ◆ 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 investment. The management fees vary according

30-Jan-2013 – 01-Mar-2013

10.1%

to the amount invested by the client. Below is the table that

01-Dec-2012 – 01-Mar-2013

27.1%

01-Sep-2012 – 01-Mar-2013

59.5%

Amount Invested

01-Mar-2012 – 01-Mar-2013

203%

Less than $5000

6%

1%

Inception – 1-Mar-2013

292%

$5001 - $25000

4%

1%

Greater than $25001

2%

1%

Average weekly in the year ending 1 March 2013

4.1%

shows how management fees are calculated: Regular Investor Accredited advisor

As of 10 August, 2012, the average weekly income paid by this portfolio since the start of the year was 3.3%. The figures above are indication of portfolio

Private and Institutional clients pay a flat rate of 2% on income

performance 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 Growth and Income 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. I nvestment into the Growth and Income 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 Growth and Income portfolio.

3. By investing into the Growth and Income 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 Growth and Income portfolio.

4. P rofits on investment in the Growth and Income portfolio are subject to management fees, per the Management Fee Table, as provided in this brochure.

5. T he minimum term of investment into the Growth and Income portfolio is 180 calendar days. Full or partial withdrawals from the portfolio, prior to the expiration of the full 180 day period from initial investment, will carry a 60% early withdrawal penalty. Additional investments into this portfolio are subject to the minimum term, excepting the funds automatically reinvested from said portfolio’s returns.

6. 5 0% of the profits on investment from the Growth and Income portfolio must be automatically reinvested back into the portfolio.

7. T he 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 the 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 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 the week. The amount of profit paid on short-position trading gains cannot exceed 0.8% per day.

8. P rofits 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. T his 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 180 calendar day prior notice.

Portfolio

Mutual Wealth Growth and Income Portfolio

Inception date

12 May 2010

Issuer

MWF Financial Limited

Currency

US Dollar

Minimum deposit

USD 100

Minimum guaranteed earnings Capital withdrawal restriction

3% per week 180 calendar days

Early withdrawal penalty 60% of withdrawal amount Reinvestment requirement Reinvestment options

50%

Minimum 50% reinvestment, optional 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 180 calendar days from initial or additional deposit.

11. This portfolio is not available to persons residing in Cuba, Sudan, Syria, North Korea, Cyprus (Greece), 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.

13. F leet 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