AFRICA FUNDS

At Caveo we believe that the transforming African landscape provides a unique alternative investment opportunity for investors. The multi-manager solution allows investors access to the opportunity without concentrating exposures or risks. By carefully selecting our underlying managers we have created an African solution that gives investors the best of the continent.

The manager selection process is a combination of both qualitative and quantitative assessment. The investment team applies the highest standard of both local and international practices when evaluating managers. Once the best managers are identified portfolios are rigorously tested so that allocations are balanced to ensure that the investor will get the optimal risk adjusted exposures. Our flexible platform allows for the structuring of bespoke Africa solutions, on a fund of fund basis. These solutions are US Dollar based and are available to both South African and international investors.

Caveo partners with experienced external providers to ensure that our administration, compliance and risk monitoring process are the very best available.

AFRICA EQUITY FUND

The Caveo Africa Equity Fund is a multi-managed, Pan Africa equity fund. The portfolio utilises African based managers, offering portfolios that invest in Africa excluding South Africa.

Caveo blends the investment strategies of these investment managers with the aim of maximising investment returns at below-average risk over a long term investment horizon.

The Fund aims to outperform the benchmark, the MSCI Emerging Frontier Markets Africa excluding South Africa Index, over rolling 36-60 month periods.

The Fund may at times invest in other asset classes such as bonds (maximum of 20%), cash (maximum of 30%) and unlisted equities (maximum of 10%). Securities listed outside of the continent, but deriving greater than 50% of their economic value from the continent, are also permitted.

The Fund is available to investors from within South Africa, and to those seeking to access the unique opportunity set from offshore jurisdictions.

The Fund was launched on 1 June 2012.

HEDGE FUNDS

In Caveo's opinion, a hedge fund should:

• Aim to deliver positive returns with reduced dependence on market conditions
• Have a clear focus on downside risk management
• Utilise some form of short selling to either reduce risk or enhance returns
• Be able to use leverage, resulting in the underlying trading positions sometimes exceeding the amount of capital

At Caveo we believe that a multi-management solution is the most optimal way to invest in hedge funds. By carefully selecting our underlying managers we create well constructed solutions so that our clients can achieve their return objectives in a risk controlled way.

The manager selection process is a combination of both qualitative and quantitative assessment. The investment team applies the highest standard of both local and international practices when evaluating managers. Once the best managers are identified portfolios are rigorously tested to ensure that allocations allow the targeted returns with the lowest risk over the long term. An experienced Investment and Risk committee oversee the investment process with representatives from both shareholders and the Caveo executive.

Caveo partners with experienced external providers to ensure that our administration, compliance and risk monitoring process are the very best available.

Caveo provides investors with a number of investment portfolios, each with different risk and return objectives. By offering a suite of portfolios, investors can select the one most appropriate to their specific investment needs.

CAVEO STABLE FUND

Caveo Stable portfolio launched in January 2006 and is a low-risk portfolio that is suitable for investors seeking absolute returns with capital protection characteristics. The portfolio aims to outperform a composite index of 15% of the JSE Shareholder Weighted Index (SWIX) and 85% of the Short-term Fixed Interest Call Index (STeFi). The probability of capital loss over any 12 month period is extremely low. The portfolio is multi-strategy, meaning it invests in a range of funds that employ different investment strategies. These strategies can invest in a number of asset classes including; equities, bonds, property and cash.

CAVEO MODERATE FUND

Caveo Moderate portfolio launched in January 2006 and is a low-risk portfolio that is suitable for investors seeking absolute returns with capital protection characteristics. The portfolio aims to outperform a composite index of 30% of the JSE Shareholder Weighted Index (SWIX) and 70% of the Short-term Fixed Interest Call Index (STeFi). The probability of capital loss over any 12 month period is extremely low. The portfolio is multi-strategy, meaning it invests in a range of funds that employ different investment strategies. These strategies can invest in a number of asset classes including; equities, bonds, property and cash.

CAVEO PERFORMANCE FUND

Caveo Performance portfolio launched in January 2006 and is a medium risk portfolio that is suitable for investors seeking absolute returns with capital protection characteristics. The portfolio aims to outperform a composite index of 40% of the JSE Shareholder Weighted Index (SWIX) and 60% of the Short-term Fixed Interest Call Index (STeFi) over any 12 month period. The portfolio is multi-strategy, meaning it invests in a range of funds that employ different investment strategies. These strategies can invest in a number of asset classes including; equities, bonds, property and cash.

CAVEO FOCUS FUND

Caveo Focus portfolio launched in February 2011 and aims to deliver competitive returns with a degree of downside protection by investing in equity biased long/short managers with alpha generating properties. It may be appropriate for investors with a medium degree of risk appetite over the medium-to-longer term investment horizon. The fund targets returns above a composite benchmark comprising 65% South African equities and 35% South African cash over any 12 month period.

FUND FACT SHEETS

INFORMATION SHEETS

CONTACT US

CONFLICT OF INTEREST MANAGEMENT POLICY

COMPLAINTS PROCEDURE DOCUMENTS

1. Hedge fund strategies may include leverage, short-selling and short term investments. In addition, hedge fund portfolios often invest in unlisted instruments, low-grade debt, foreign currency and other exotic instruments. All of these expose investors to additional risk. However, not all hedge fund managers appointed by Caveo Fund Solutions employ any or all of these strategies and it is recommended that investors consult their advisors in order to determine which strategies are being employed by the relevant manager and which consequent risks arise.

2. The hedge fund managers appointed by Caveo Fund Solutions may use leverage. This means that the hedge fund manager borrows additional funds or trades on margin in order to amplify investments decisions. This means that the volatility of the hedge fund portfolio can be many times that of the underlying investments. The degree to which leverage may be employed in any given hedge fund portfolio will be limited by the mandate Caveo Fund Solutions has with the manager. The limits laid down by the mandate should be carefully reviewed in making an investment decision.

3. The hedge fund managers appointed by Caveo Fund Solutions may borrow securities in order to sell them short, in the hope that the price of the underlying instrument will fall, Where the price of the underlying instrument rises, the client can be exposed to significant losses, given that the manager is forced to buy securities (to deliver to the purchaser under the short sale) at high prices.

4. The hedge fund managers appointed by Caveo Fund Solutions may invest in unlisted instruments where a market value is not determined by willing buyers and sellers. The hedge fund managers appointed by Caveo Fund Solutions may have to estimate the value of such instruments, and these estimates may be inaccurate, leading to an incorrect impression of the fund's value. Investors should ensure that objective valuations are performed for all instruments in a portfolio and that the manager utilises the services of a competent administrator .

5. Hedge fund managers appointed by Caveo Fund Solutions may invest in low-grade bonds and other fixed interest investments. These investments are more likely to suffer from defaults on interest or capital. They are also more likely to have volatile valuations when the market changes its view on credit risk.

6. Hedge fund managers appointed by Caveo Fund Solutions might invest in currencies other than the base currency. For example, a South African hedge fund manager might invest in UK or US shares. The portfolio is therefore exposed to the risk of the rand strengthening or the foreign currency weakening.

7. In addition to the above, hedge fund managers appointed by Caveo Fund Solutions might invest in complex instruments such as but not limited to futures, forwards, swaps, options and contracts for difference. Many of these will be derivatives, which could increase volatility. Many will be 'over-the counter', which could increase counterparty risk. Many exotic instruments may also be challenging for the manager to administer and account for properly. Investors should enquire into how these instruments are objectively and independently valued.

8. Given their often short term nature, hedge fund managers appointed by Caveo Fund Solutions need to be able to disinvest from or close certain positions quickly and efficiently. But market liquidity is not always stable, and if liquidity were to decrease suddenly, the hedge fund manager appointed by Caveo Fund Solutions might be unable to disinvest from or close such positions rapidly or at a good price, which may lead to losses.

9. Hedge fund managers appointed by Caveo Fund Solutions often have special relationships with so-called 'prime' brokers. These are stock-brokers that provide the required leveraging and shorting facilities. Prime brokers usually require collateral for these facilities, which collateral is typically provided using assets of the relevant client, and consequently such collateral might be at risk if the prime broker were to default in some way. A similar situation could occur with the custodian of the client's funds.

10. Legal, tax and regulatory changes could occur during the term of the investor's investment in a hedge fund portfolio that may adversely affect it. The effect of any future legal, tax and regulatory change or any future court decision on a hedge fund portfolio could be substantial and adverse.

11. Hedge fund portfolios are on occasion marketed using theoretical or paper track records. Past performance is seldom a reliable indicator of future performance. Theoretical past performance is often an even less reliable indicator, and investors should place a lower significance on these.

12. The hedge fund manager appointed by Caveo Fund Solutions might be managing other hedge fund portfolios or other traditional investment funds. The investor should ensure that sufficient controls are in place to manage any conflicts of interest between the different funds.

13. Hedge fund structures are not fully regulated and they are often housed in legal structures not originally meant for pooled funds, for example partnerships and companies. Given the many risks listed above, investors need to ensure that the structure is robust enough to contain any unlimited losses.

14. Hedge fund portfolios are often managed by specific individuals and investors should ensure that sufficient controls are in place for the times when the manager is being covered for by colleagues, In addition, a hedge fund structure (for example, a fund of funds) and its managers or its advisors may rely on the trading or investing expertise and experience of third party managers or advisors, the identity of which may not be disclosed to investors. This constitutes an additional risk for investors, which they must take into account.

15. Hedge fund structure fees may be significantly higher than the fees charged on traditional investment funds. Investments should be made only where the potential returns justify the higher fees.

16. Hedge fund manager's fees are usually performance-based. This means that the managers typically get a higher fee where their portfolios outperform specified performance targets, which might lead to riskier positions being taken. Investors need to ensure that performance fees allow for a fair sharing of both the good and the bad.

17. Given the often short term nature of investment positions, hedge fund portfolios are often traded more aggressively. This implies more stock-broking commission and charges being paid from the portfolio, which is ultimately for the client's account. Again, investments should be made only where the potential returns make up for the costs.

18. A hedge fund manager's performance is often the result of unique proprietary strategies or contrarian investment positions. For obvious reasons, managers will want to keep these confidential. Managers are therefore less likely to disclose trades to their investors, and holdings might be disclosed only in part or with a significant delay.

19. A hedge fund manager's performance can often be disturbed by irregular cash flows into or out of the hedge fund structure. For this reason, hedge fund managers often limit the frequency of investments and withdrawals. Similarly, the manager may choose to report infrequently on performance and other statistics. Investors should ascertain, prior to investing, the nature and frequency of reporting.

20. As mentioned above, the frequency of withdrawals might be limited to monthly or quarterly dates. In addition, the manager may impose notice periods or lock-ins in order to ensure that he has the necessary time for his investment positions to deliver their desired results.