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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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

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

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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

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

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Unregistered Hedge Fund Fund Accounting / Investor Services

Audit

Legal

Unregistered Hedge Fund

Prime Broker / Custodian

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

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

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

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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

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

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.

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

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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

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

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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

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

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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

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

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