The directors of UBS (Irl) Alternative Solutions plc (the “Company”) whose names appear in the section entitled “1. Directory” in the Prospectus (the “Directors”) accept responsibility for the information contained in this document (the “Supplement”). To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Supplement is in accordance with the facts and does not omit anything likely to affect the import of such information. The Directors accept responsibility accordingly.
SUPPLEMENT
to the
PROSPECTUS
UBS (Irl) Alternative Solutions plc
(an umbrella investment company with variable capital constituted as an umbrella fund with segregated liability among its funds incorporated with limited liability in Ireland under registered number 551999and authorised and regulated by the Central Bank pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended).
relating to the
A&Q Diversified Alternative Portfolio UCITS
16 March2018
Platform Manager
Lantern Structured Asset Management Limited
Investment Manager
UBS Hedge Fund Solutions LLC
This Supplement describes the A&Q Diversified Alternative Portfolio UCITS, which is a sub-fund of the Company. This Supplement forms part of the prospectus dated 16 March2018 for the Company (the “Prospectus”) and should be read in conjunction with the Prospectus. Applicants for Shares will be deemed to be on notice of all information contained in the Prospectus.
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Table of Contents
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Page
CONTENTS
Page No
1Definitions
2The Fund
3Parties
4Investment Objective, Investment Policy and Investment Restrictions
5Fees and Expenses
6Dividend/Accumulation Policy
7Investing in the Company
8General Information
9Risk Factors and Conflicts of Interest
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1Definitions
In this Supplement, words and phrases defined in the Prospectus have the same meaning unless otherwise indicated below:
“Base Currency” / USD;“Business Day” / unless otherwise determined by the Directors, any day, excluding Saturday, Sunday or a public holiday, on which banks are open for non-automated business in Dublin, London and New York;
“Class Currency” / the currency in which a Class is designated, as set out below under “The Fund”;
“Dealing Day” / each Business Day and/or such other Business Days as may be designated by the Directors in their sole discretion and notified to Shareholders in advance, provided that there will be a minimum of two Dealing Days in each calendar month, at regular intervals, unless the determination of the Net Asset Value of the Fund and/or dealings have been suspended as provided for in the Prospectus;
“Eligible Collective Investment Schemes” / schemes established in Member States which are authorised under the UCITS Directive or the relevant national legislation implementing the UCITS Directive and which may be listed on a Regulated Market in the EU and such other schemes as may be permitted by the Central Bank and set out in this Prospectus;
“Equity Securities” / common stocks, preferred stocks and warrants listed, traded or dealt in on any Regulated Market globally or unlisted;
“Fixed Income Securities” / convertible, exchangeable, non-exchangeable and non-convertible debt securities, fixed and floating rate bonds, zero coupon and discount bonds, transferable notes, mortgage-backed and asset-backed securities, commercial paper, certificates of deposits, bonds issued or guaranteed by corporations or governments or governmental agencies or instrumentalities thereof, central banks or commercial banks, of variable or fixed interest rates, listed, traded or dealt in on any Regulated Market globally or unlisted;
“Fund” / A&Q Diversified Alternative Portfolio UCITS;
“Irish Stock Exchange” / The Irish Stock Exchange plc;
“Initial Offer Period” / a period during which Shares of one or more Classes may be subscribed for at the Initial Offer Price, as set out below under “Subscriptions”;
“Initial Offer Price” / the price per Share at which Shares may be subscribed during the Initial Offer Period, as set out below under “ Subscriptions”;
“Investment Management Agreement” / the investment management agreement made between the Platform Manager and the Investment Manager dated 10 June 2016, as the same may, from time to time, be amended;
“Investment Manager” / UBS Hedge Fund Solutions LLC;
“Money Market Instruments” / commercial paper, bankers’ acceptances, certificates of deposit and other short-term debt securities as ancillary liquid assets;
“Redemption Cut-Off Time” / 12:00 noon (Irish time)on the second Business Day prior to the relevant Dealing Day or such other time as may be determined by the Directors in their sole discretion and notified to Shareholders in advance, provided that it is prior to the relevant Valuation Point or, if several, the earliest thereof;
“Redemption Settlement Day” / five Business Days after the relevant Dealing Day or such other date as may be determined by the Directors in their sole discretion and notified to Shareholders, provided that it is no more than ten Business Days after the relevant Redemption Cut-Off Time;
“Subscription Cut-Off Time” / (i) 12:00 noon (Irish time)on the second Business Day prior to the relevant Dealing Day; or (ii) (with respect to subscriptions during an Initial Offer Period) 12.00 noon (Irish time) on the last day of the relevant Initial Offer Period, or (iii) such other time as may be determined by the Directors in their sole discretion and notified to Shareholders in advance, provided that it is prior to the relevant Valuation Point or, if several, the earliest thereof;
“Subscription Settlement Day” / (i) in respect of any Classes denominated in HKD, JPY and SGD, four Business Days after the relevant Dealing Day;(ii) in respect of all other Classes, three Business Days after the relevant Dealing Day; (iii) with respect to subscriptions during the Initial Offer Period) the last day of the relevant Initial Offer Period; or (iv) such other date as may be determined by the Directors in their sole discretion and notified to Shareholders;
“Valuation Day” / each Business Day; and
“Valuation Point” / 10.45 pm (Irish time) on each Valuation Day.
Should there be any inconsistency between the contents of the Prospectus and this Supplement, the contents of this Supplement will, to the extent of any such inconsistency, prevail.
2
The Fund
The Fund is a sub-fund of UBS (Irl) Alternative Solutions plc, which, as of the date of this Supplement to the Prospectus, has two other sub-funds, namely the O’Connor Opportunistic UCITS Fund and the O’Connor Opportunistic II UCITS Fund.
The Base Currency of the Fund is USD and the Class Currency of each Class is designated in the name of each Class, as described in the section entitled “Class Structure” in the Prospectus. In addition, as also described in the section entitled “Class Structure” in the Prospectus, Classes which have “hedged” in their name will be hedged to minimise the effect that fluctuations in the exchange rate between the relevant Class Currency and the Base Currency may have on the performance of the Shares of those Classes, relative to the performance of Shares in the Base Currency, as described in the paragraph entitled “Foreign Exchange Hedging” in the section “Investment Objective” of the Prospectus.
As at the date of this Supplement, the following categories of Shares of the Fund are available for investment: Class P, Class K-1, Class Q, Class I-A1, Class I-A2, Class I-A3, Class I-X, Class U-A and Class U-X. Please see the section of the Prospectus entitled “Class Structure” to see the various Classes available in these categories. Shares are no longer available in the Founder Class and the Accelerator Class.
Application may be made for all Shares to be admitted to the Official List and to trading on the Main Securities Market of the Irish Stock Exchange. The Directors do not anticipate that an active secondary market will develop in the Shares.
As at the date of this Supplement, all of the Classes available for issue are accumulation Classes, within which every currency and hedging designation is available as detailed in the section of the Prospectus entitled “Class Structure”. The Company (on behalf of the Fund) may in the future issue one or more Classes which pay dividends, in which case this Supplement will be updated appropriately.
The Platform Manager intends to appoint one or more service providers (each a “Collateral Administrator”) to assist the Platform Manager in administering and executing, on a non-discretionary basis, the margin requirementsof the Fund’s brokers and trading counterparties. These services include calculating the Fund’s margin requirement, valuing and delivering margin to applicable trading counterparties, accepting margin from trading counterparties and facilitating substitutions of eligible margin. The terms of each such appointment are expected to contain limitations on liability and indemnities operating in favour of the Collateral Administrator in the absence of such Collateral Administrator’s fraud, negligence and wilful default and may, in certain cases, cap the Collateral Administrator’s liability in the event of its negligence. The Platform Manager has appointed the Administrator as the first Collateral Administrator and will pay fees of the Administrator in this context out of its own fees.
The Directors may, without notice to Shareholders and with the approval of the Central Bank, create additional Classes in the Fund, including Classes that are subject to fee arrangements and/or other terms that are different from those of any Class being offered hereby or then outstanding, including, without limitation, Classes of Shares which are made available solely to certain entities affiliated with the Platform Manager and/or Investment Manager.
The Company may also issue different Classes with the same characteristics but which are subject to different fees.
The Directors may apply for reporting fund status for the Shares in the United Kingdom. It cannot be guaranteed, however, that such status will be sought or obtained. If sought and obtained, it cannot be guaranteed that reporting fund status will be maintained. Investors should refer to the Section entitled “Shareholders in Classes with Reporting Fund Status” under “12.3 Taxation of the Company in the United Kingdom” in the Prospectus which outlines the United Kingdom taxation consequences and risks should reporting fund status be obtained.
Some or all of the Classes of the Fund may, in the future, be registered for public sale in certain countries. Further information in this regardcanbe requested from the Distributor.
A separate pool of assets will not be maintained for each Class.
The Fund may not issue all Classes listed in this Supplement. Information in relation to the Classes available for subscription at any time is available on request from the Distributor or the Administrator.
Profile of a typical investor: The Fund is suitable for investors seeking an actively managed portfolio, combined with diversification across investment strategies, asset classes and geographies. The Fund is suitable for investors who can afford to set aside the capital for the medium to long term and who seek medium to high investment risk. The Fund provides exposure to investment strategies with medium to high volatility and no capital protection strategies. As an investment in the Fund is designed to be a medium to long term investment, investors should not expect to obtain short-term gains from such investment.
3Parties
General
Details of the Platform Manager, the Distributor, the Administrator and the Depositary are set out in the Prospectus.
Investment Manager
Pursuant to the Investment Management Agreement, the Platform Manager has delegated day to day discretionary investment management of the Fund to the Investment Manager.
Pursuant to the Investment Management Agreement, the Investment Manager provides discretionary investment management services in respect of the Fund, implementing the Fund’s investment objective and policy, subject to its investment restrictions. The Investment Manager may delegate part or all of the discretionary investment management to a sub-investment manager, which may be an affiliate or another entity within the UBS AG group of companies. Details of any sub-investment managers so appointed will be available upon request and will be provided in the Company’s periodic reports. The fees of any such sub-investment manager will be paid by the Investment Manager. Any reference to the activities of the “Investment Manager” in this Supplement may therefore refer to the Investment Manager or to such sub-investment manager as the context allows.
The Investment Manager isregistered with the SEC in the USA as an investment advisor.
The business address of the Investment Manager is 600 Washington Boulevard, 4th Floor, Stamford, CT 06901, USA.
The Investment Manager shall not be liable for any error of judgement or any loss suffered by the Company in connection with the services which it provides under the Investment Management Agreement unless such loss arises from its negligence, wilful default or fraud or that of its delegates or agents.
The Platform Manager has undertaken to keep the Investment Manager and its agents, delegates and employees effectively indemnified out of the assets of the Fund against all costs, charges, liabilities and expenses whatsoever incurred by them pursuant to or in connection with the Investment Management Agreement,other which arise due to the negligence, wilful default or fraud of the Investment Manager.
The Investment Management Agreement may be terminated by either of the parties giving at least 90 days’ prior written notice to the other party or immediately on written notice if the notified party (i) goes into liquidation or receivership or an examiner is appointed over its assets (except for a voluntary liquidation for the purposes of reconstruction or amalgamation) or it is unable to pay its debts as they fall due; or (ii) commits any material breach of the Investment Management Agreement and fails to remedy that breach within 30 days after the service of written notice requiring it to be remedied; or (iii) has, by any acts or omissions in the reasonable opinion of the terminating party, seriously damaged the interests or shall have brought into disrepute the reputation of the terminating party. The Investment Management Agreement will terminate immediately on termination of the Management Agreement.
4Investment Objective, Investment Policy and Investment Restrictions
Investment Objective
The Investment Objective of the Fund is to achieve a positive risk-adjusted return over the medium to long term, irrespective of market conditions. There can be no assurance that the Fund will achieve its investment objective or be profitable.
Investors should note that the Fund may seek to achieve its investment objective by investing primarily in Financial Derivative Instruments (FDI), as described below, which may be complex and sophisticated in nature, as well as in Eligible Collective Investment Schemes. An investment in the Fund is not in the nature of a deposit in a bank account and is not protected by any government, government agency or other guarantee scheme which may be available to protect the holder of a bank deposit account. An investment in the Fund should not constitute a substantial proportion of an investment portfolio and may not be appropriate for all investors.
Investment Policy
The Fund seeks to achieve its investment objective primarily by investing in a portfolio of systematic strategies and, up to 10% of its Net Asset Value, in Eligible Collective Investment Schemes. The Fund will also allocate a portion of its assets to a hedging overlay component as described below under “Hedging overlay component”. The systematic strategies provide exposures to factors that can be grouped broadly in the following categories: momentum, carry, value, quality, liquidity, event, hedging, and multi-strategy and will be implemented with respect to a range of asset classes, as described below (namely equities, fixed income, commodity indices, currencies and credit). These systematic strategies will be implemented through the use of FDIs as described in the “Financial instruments used in the investment strategies” section belowand the use of structured financial instruments as described in the “Structured Financial Instruments” section below. The Fund has no specific bias towards any particular factor, underlying asset class, country or region and, subject to the investment restrictions, its investments may be listed or traded on any Regulated Market globally.
Systematic strategies
The Fund will take exposure to certain systematic strategies. Exposure to the systematic strategies will be implemented synthetically, through derivative instruments (with underlyings across a range of asset classes including equities, fixed income, commodity indices, currencies and credit) and structured financial instruments (described below). The strategies to which exposure is taken are developed by the relevant counterparty, agreed to in advance by the Investment Manager and may or may not be proprietary. However, they will be completely rules based and systematic and the only party with discretion over the exposures taken thereto by the Fund is the Investment Manager. Exposure to commodities will be achieved through exposure to commodity indices that have been cleared in advance by the Central Bank for use by UCITS.
The systematic strategies can be broken down into the following categories: Momentum, Carry, Value, Quality Liquidity Event, Hedging and Multi-Strategy. As detailed below under “Financial instruments used in the investment strategies”, exposure to the assets comprising the systematic strategies will be provided through the use of total return swaps and portfolio swaps.Exposure to the systematic strategies will be provided through the use of structured financial instruments (described below).
Momentum: A Momentum, or trend, strategy exploits the tendency for an asset's recent relative positive or negative performance to continue into the near future. A strategy to exploit this serial correlation effect will take long exposures to the rising assets and synthetically short exposures to those that have declined. An example would be to take a synthetic short position in respect of equities which have declined in value in the expectation that the trend would continue. Momentum positions can be invested in the time series of a single asset or cross-sectionally within an asset class.