Registered Fund Solutions Presentation

Hed g e F u n d s v s . R e g i s t e r e d H e d ge Funds

Starting and Operating a Registered Hedge Fund

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y o u r s e l f

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Contact us at 1.888.844.3350 I jdclark.com

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Overview

Registered Fund Solutions (RFS) – a turnkey registered hedge fund solution for investment managers  RFS is a program of professional services firms that offers investment

managers a turnkey solution to register and service hedge funds under the Investment Company Act of 1940, as amended (“1940 Act”)  Sponsored, coordinated, and managed by Registered Fund Solutions, LLC

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Why Register a Hedge Fund? Registering your fund under the 1940 Act facilitates broader distribution  Exempt fund structures (3c-1 or 3c-7) limit the number of investors to 99 or 499  By registering these funds under the 1940 Act, you can broaden your

distribution capabilities while maintaining many of the same fund features  You can accept an unlimited number of accredited or qualified investors  This allows you to lower your account minimums and appeal to more investors

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Unregistered Hedge Fund Fund Accounting / Investor Services

Audit

Legal

Unregistered Hedge Fund

Prime Broker / Custodian

Registered vs. Unregistered Hedge Funds

How are they the same?  Monthly NAVs

 Monthly subscriptions / quarterly tenders  Security / cash reconciliations  Portfolio valuation

 Management and performance fee  Performance calculations  Accredited and qualified investors  Quarterly investor statements / annual tax reporting  Annual audit and tax return

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Registered Hedge Fund Fund Accounting Fund Governance

Distribution

Audit

Legal

Registered Hedge Fund Regulatory Administration

Custodian

Chief Compliance Officer

Prime Broker

Transfer Agency

Registered vs. Unregistered Hedge Funds

How are registered hedge funds different? SEC Registration & Reporting Board of Directors

 Required to file the following forms:

Form N-8, Form N-2, N-PX, NSAR-A/B, N-CSR, NQ  Fund board required; must have a majority of independent members

Unitization

 Investments are typically unitized

Legal Counsel

 Fund and board counsel required  Code of Ethics for trustees and officers of the fund

Regulatory Administration

 Maintain books and records under Rule 13a-3  Fund’s policies and investment limitations  SEC/IRS compliance, regular SEC filings, Blue Sky  Board support, secretarial services, provide assistance to fund’s CCO, etc.

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Registered vs. Unregistered Hedge Funds

How are registered hedge funds different?

cont’d

 Provide financial data required in the fund’s prospectus  Prepare financial statements

Financial Administration

 Compute fund performance and expense ratios, monitor accruals

 Prepare quarterly schedule of investments for Form N-Q filings with SEC  Support annual audit  Prepare income/wash sales schedules  Support/prepare tax returns and K-1s or 1099s  High-volume retail; accept and process subscriptions and redemptions

Investor Services (Transfer Agency)

 Open and maintain investor records, track and reconcile monies  Pend activity for month-end processing  Conduct AML (anti-money laundering) review, identify fraudulent activity  Generate investor statements, confirms and tax forms

CCO

 Fund Chief Compliance Officer (CCO) required

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Registered vs. Unregistered Hedge Funds

How are registered hedge funds different? Insurance

cont’d

 E&O/D&O, fidelity bond insurance required

 Safekeep portfolio securities

 Accept/deliver portfolio transactions for settlement

Custody

 Maintain and move cash  Provide regular reporting  Prepare investment documents on behalf of the fund (fund of funds only)  Serve as principal underwriter  Provide sign-off and filing of sales and marketing materials with FINRA

Distribution

 Process 12b-1 and load payments  Provide supervision and continuing education for registered representatives

 Provide active distribution, outbound marketing and third-party wholesaling

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Registered Fund Solutions: Participating professional service providers

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JD Clark & Company, UMB Fund Services & affiliates – fund accounting, administration, transfer agent, Blue Sky, tax reporting and custody services

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Drinker, Biddle & Reath, LLP – fund registration and legal counsel

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Rothstein, Kass & Company, P.C. – audit services

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Cipperman Compliance Services – CCO and compliance consulting services

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Foreside Fund Services, Inc. – distribution and marketing services Providing the full spectrum of professional services for registered hedge funds © 2010 JD Clark & Company® – a division of UMB Fund Services

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UMB Fund Services / JD Clark & Co.  Participant/service provider in the Registered Fund Solutions program  UMB Fund Services has 60+ years of experience servicing pooled

investment vehicles  A recognized leader in the innovation and creation of new products

and services for the investment industry  Multiple offices servicing clients through the RFS program  Fund accounting and K-1 tax reporting through its highly regarded alternative

investments division, JD Clark & Company, in Ogden, UT, and Media, PA  Regulatory and financial administration, transfer agent, Blue Sky, and 1099 tax reporting through its office in Milwaukee, WI  Custody through its affiliate, UMB Bank, n.a., in Kansas City, MO

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