Registered Fund Solutions Presentation

Starting and Operating a Registered Hedge Fund

Hedge Funds vs . Reg is tered Hedge Funds

Con t ac t u s a t 1 . 888 .844 .3350 I j dc l a rk . com

G i v e y o u R s e l F T H e P O W E R T o D o M O R E

© 2010 JD Clark & Company® – a division of UMB Fund Services

Registered Fund Solutions (RFS) –a turnkey registered hedge fund solution for investment managers

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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

Overview


Registering your fund under the 1940 Act facilitates broader distribution

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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

Why Register a Hedge Fund?


Unregistered Hedge Fund

FundAccounting /

InvestorServices

PrimeBroker /

Custodian

LegalAudit

UnregisteredHedge Fund


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

Registered vs. Unregistered Hedge Funds

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How are they the same?


FundGovernance

Distribution

ChiefCompliance

Officer

RegulatoryAdministration

Registered Hedge Fund

FundAccounting

PrimeBroker

TransferAgency

LegalAudit

Custodian

RegisteredHedge Fund



How are registered hedge funds different?

SEC Registration & Reporting

Board of Directors Fund board required; must have a majority of independent members

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Unitization Investments are typically unitized

Required to file the following forms:Form N-8, Form N-2, N-PX, NSAR-A/B, N-CSR, NQ

Regulatory Administration

Code of Ethics for trustees and officers of the fund

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.

Legal Counsel Fund and board counsel required



How are registered hedge funds different? cont’d

CCO Fund Chief Compliance Officer (CCO) required

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Investor Services (Transfer Agency)

High-volume retail; accept and process subscriptions and redemptions

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

Financial Administration

Provide financial data required in the fund’s prospectus

Prepare financial statements

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



How are registered hedge funds different? cont’d

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

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Distribution

Serve as principal underwriter

Provide sign-off and filing of sales and marketing materials with FINRA

Process 12b-1 and load payments

Provide supervision and continuing education for registered representatives

Provide active distribution, outbound marketing and third-party wholesaling

Custody

Safekeep portfolio securities

Accept/deliver portfolio transactions for settlement

Maintain and move cash

Provide regular reporting

Prepare investment documents on behalf of the fund (fund of funds only)

© 2010 JD Clark & Company® – a division of UMB Fund Services 10

Registered Fund Solutions:Participating professional service providers

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Providing the full spectrum of professional services for registered hedge funds

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

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

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

Cipperman Compliance Services – CCO and compliance consulting services

Foreside Fund Services, Inc. – distribution and marketing services


UMB Fund Services / JD Clark & Co.

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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

Registered Fund Solutions Presentation

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