Capital Dynamics AG: investment adviser

CDAG, as a firm, has been in business since 1999 and registered with the SEC on March 30, 2012. Most of CDAG’s clients are based outside of the United States. The principal owner of CDAG is Capital Dynamics Holding AG, based in Zug, Switzerland. CDAG is a Registered Investment Adviser with other investment advisory affiliates, including Capital Dynamics, Inc., a Registered Investment Adviser (“CDI”), and Capital Dynamics Limited, an Exempt Reporting Adviser (“CDL”). All of the investment personnel at CDAG have appropriate degrees in finance, portfolio management or related disciplines. A number of our investment professionals have MBAs from wellknown business schools and/or have hold the designation “Chartered Financial Analyst” (or “CFA”). CDAG expects to require similar qualifications of anyone who joins the investment management or credit analysis team. For more information about the Capital Dynamics Group, please visit www.capdyn.com and click “Our Business.”

Fees may be negotiated, however, CDAG may have substantial control over fees charged if the advisory client is a private equity fund or fund-of-funds sponsored by CDAG or an affiliate. Where permissible, CDAG also reserves the right to charge clients for certain expenses incurred on behalf of clients which are not contemplated in the relevant investment management or advisory agreements. From time to time, CDAG may enter into arrangements involving transactionbased fees or compensation (such as sales commissions).

Advisory clients may also be charged fees for brokerage services, custodian fees and other routine transaction costs. Please refer to Item 12 for a discussion of CDAG's brokerage practices. CDAG does not deduct fees from clients' assets, but rather, fees are generally calculated and billed to the client via its custodian bank or general partner on a quarterly or annual basis. Clients will pay other fees connected with investment management services, such as custodian fees or auditor fees (if applicable), directly to the relevant service provider, not to CDAG. However, CDAG may pay such fees and then seek reimbursement from a client. In the private equity context, governing documents will indicate the various types of fees to be paid, and those documents should be consulted (especially the offering document). Certain types of fees may be prepaid by advisory clients, and, upon the termination of an advisory contract, a client may seek reimbursement of any prepaid fee by following the procedures set forth in their respective advisory agreements.

Type of fee

General range

Asset-Based

1% to 3%

Contingent Performance/Carried Interest

5% to 20% of gain

Sub-Advisory

As negotiated

Fixed/Hourly

Varies, depending on nature of engagement

Transaction-Based

Varies, depending on the nature of engagement

Flat and Billed Time

As negotiated

Mixed Fee Arrangement

As negotiated

Level of Commitment Fees

As negotiated

CDAG has a wide variety of fee arrangements. Certain past or present institutional engagements carried flat fees. Certain other arrangements may carry mixed fees, such as a combination asset based fee and performance fee, among other types of arrangements. In certain private equity funds, the fees paid to CDAG depend upon the level of commitment to those funds, and in some cases the fees paid will be lower than indicated in the above chart. Depending upon terminating engagements, not all fee arrangements may be extant at any given time. The above chart is intended to show the range of fee possibilities.

of meeting the hurdle will be maximized. This could be at the expense of the client accounts that do not pay performance fees (e.g., clients that engage CDAG for due diligence services). CDAG mitigates this potential conflict by, if and where applicable, by requiring allocation, in most cases, at the time that a trade/investment is effected (although not all trades/investments are in fact allocated across client accounts because, among other reasons, the trade/investment may be specific to only a particular client’s strategy or sector focus), and by means of internal deliberation, using committees of investment professionals or otherwise, aimed at mitigating such conflicts of interest. As a fiduciary, CDAG takes all prudent precautions against such inducement to favor one client over another. See “Conflicts of Interest,” below.

Governing documents may require limitations on risk exposure, and may require investments that are below, meet or exceed certain risk standards or parameters. CDAG seeks to mitigate portfolio losses. Portfolio management professionals analyze issuer (company) financials, plans, public filings (if any) related to the company and its industry competitors, capital position and many other variables, and use widely accepted professional techniques to analyze risk. Risk Factors An investment in any CDAG fund involves a significant amount of risk and should only be undertaken by investors capable of evaluating and bearing such risk. There can be no assurance that a fund's investment objectives will be achieved or that there will be any return of capital. InvesForm ADV Part 2A Brochure | Capital Dynamics AG | December 31, 2014

tors should also be aware that some funds may terminate early, enter into bankruptcy or otherwise enter into a condition in which continued operations may be in jeopardy. Clients and prospective clients should consider such risks before investing, including those described below, and refer to relevant offering materials for a more detailed review of relevant risk factors. Investments in Securities Clients may invest in debt or equity securities of companies which may be undergoing restructuring or require additional capital and active management. These securities are subject to various inherent risks, including that (i) equity and debt securities fluctuate in value, often based on factors unrelated to the issuer of the securities, and such fluctuations can be pronounced, (ii) such investments generally may be subject to risks with respect to the issuer, (iii) the market for these securities may be less liquid than that for other higher rated or more widely followed securities, (iv) securities of some foreign issuers are less liquid and more volatile than securities of comparable US issuers, and (v) securities markets in some countries are fragmented, small and less liquid than the securities markets of the US and certain other developed countries. There can be no assurance that such investments will not be sold at prices significantly below their acquisition costs. Dependence on Portfolio Companies and Underlying Managers Investments in portfolio companies, unquoted companies and private investment funds can be difficult or impossible to realize. Portfolio companies may require a significant period to invest new capita, and many investments in portfolio companies or underlying managers will be highly illiquid. There can be no assurance that an investor or investing fund will be able to realize returns from investments in portfolio companies or underlying managers in a timely manner. Any investing fund will also be reliant on the expertise and skill of the managers of the portfolio companies and underlying managers, and generally, will not have the ability to participate in the management and control of those companies or funds. Difficulty of Locating Suitable Investments The success of a fund depends on CDAG's ability to select, effect and realize appropriate investments. There is no guarantee that suitable investments will be or can be secured, of that they will be successful, nor is there a guarantee that the relevant investment strategy will be achieved.

These advisers benefit from the respective expertise of all affiliates in the Capital Dynamics Group, including through mutual assistance on various projects or processes, however, each of CDI, CDAG and CDL are operationally independent. All of CDAG’s investment decisions on behalf of CDAG clients are taken by CDAG and not by any of its affiliates. Any potential conflict of interest among such entities, in the event one should arise, would be resolved in a manner consistent with CDAG's compliance policies and procedures, which are available to any client or prospective client upon written request. Visit www.capdyn.com for a list of affiliates and other offices around the world.

It may do so in the future at any time and without further notice other than that required by applicable regulation. CDAG does not participate in any directed brokerage arrangements. CDAG may, acting as principal, participate in a client transaction, i.e., buy or sell securities to clients (See ADV, Part 1), but it has not done so to date and there are no plans to do so presently. For information on how CDI identifies, evaluates and mitigates the risks posed by actual or perceived conflicts of interest, please refer to “Conflicts of Interest”. Conflicts of interest CDAG may effect principal trades with clients in accordance with the constraints imposed on it under documents that govern client accounts (such as offering memoranda, management agreements, indentures or other documents) and pursuant to the requirements of the Investment Advisers Act of 1940, as amended ("Advisers Act"). Such trades (if any) will be rare.

At times CDAG, its affiliates, or employees ("Affiliated Persons") may purchase or sell for their own accounts the same issue or class of securities that are being purchased or sold for client accounts. Affiliated Persons may employ investment strategies for client accounts that differ from the investment strategies they employ for their own accounts. In connection therewith, Affiliated Persons may at times buy the same issue or class of security that is being sold from client accounts, or sell the same issue or class of security that is being purchased for client accounts. Such disparities in direction will likely, inter alia, reflect a difference between the Affiliated Persons' investment objectives, policies, risk tolerances, and investment limitations and those of clients. Nevertheless, these activities may create a conflict of interest in respect of client accounts. CDAG intends to mitigate such conflicts of interest by following policies and procedures (such as its code of ethics and compliance policies and procedures) as it has created to determine whether such proprietary purchases and sales by Affiliated Persons do or may violate CDAG's fiduciary obligations to clients, or in any material manner undermine the clients' interests. CDAG has adopted a code of ethics which requires a high degree of internal transparency with respect to proprietary and personal transactions so that potential conflicts of interest may be addressed. The code of ethics and other policy documentation require employees of CDAG to report to the Chief Compliance Officer (or his or her designee) securities and commodities transactions in which they have a beneficial interest. The code of ethics also precludes certain types of transactions without prior approval. CDAG or its Affiliated Persons may at times purchase securities where such securities will be partially allocated to both client accounts and to their own accounts. Where there are such trades, CDAG will generally determine in advance the portion that will be allocated to its own or an affiliate’s account and that portion that will be allocated among client accounts. As indicated above, a similar advance determination will be made when the allocation concerns only client accounts. This advance determination will usually be recorded in an appropriate memorandum or similar record (which may be in electronic form). Sometimes it may not be possible to allocate in accordance with such advance determination because of bona fide client or portfolio considerations. CDI will record the reason for amending such advance allocation determination in an internal memorandum. Further, at certain times CDAG will only allocate after a substantial amount of time has elapsed. Allocations will be made in accordance with bona fide client portfolio considerations, including any investment restrictions or limitations. It is CDAG's policy that all allocations will be made in a fair and equitable manner over time. CDAG or an Affiliated Person may hold securities for longer or shorter periods of time than in client accounts over which CDAG exercises discretion. Generally, this will have to do with the differing objectives between CDAG's various client accounts and its or an affiliate’s accounts. At times CDAG may purchase for its own account or the account of Affiliated Persons securities that it is not also purchasing for client accounts (this is also the case with sales of securities). Generally, this has to do with the differing investment objectives, policies and investment restrictions imposed (explicitly or by agreement, or both) by the various accounts. Further, CDAG may employ investment strategies for client accounts that differ from the investment strategies it employs for its own or Affiliated Persons’ accounts (and the same is true of such Affiliated Persons). Again, this is due, generally, to differing investment objectives, policies, restrictions and strategies.

CDAG may have an incentive to select or recommend a particular broker-dealer, but CDAG will always take into account a combination of qualitative and quantitative factors in determining which broker-dealers to use for client account transactions, including commission cost, the availability of research, responsiveness of the brokerdealer, willingness to assume principal risk, and other qualitative factors as discussed above. Research obtained by directing certain transactions to certain broker-dealers will be used for all clients and all clients will therefore benefit from such research, all else being equal. Presently, CDAG has not entered into any soft dollar or directed brokerage arrangements with any brokerdealer, but may enter into such arrangements in the future. Generally, such arrangements will be consistent with the safe harbor provisions of Section 28(e) of the Securities Exchange Act of 1934, as amended, unless arrangements outside of Section 28(e) are required and consistent with the policies and objectives of certain hedge funds or other institutional clients advised/managed by CDAG, consistent with CDAG's fiduciary duties under the various securities laws. CDAG does not consider whether it or any of its related persons receive client referrals from a broker-dealer or third party in order to select a broker-dealer. Certain prime brokers to certain funds (or other pooled investment vehicles) expected to be sponsored by CDAG (or by an affiliate) may, however, pay or provide reimbursement for certain investment management related expenses incurred (e.g., investment research, investment data service providers, on-line quotation services, and news and research services). This practice will or may benefit CDAG since the clients will not need to pay for such products and services and since CDAG will not need to provide for those services out of its own resources. This practice may be a factor in such clients’ selection of prime brokers. CDAG's brokerage practices on behalf of its clients may be modified based upon the governing documents applicable to such clients.

These reports may communicate strategic and portfolio analysis and information, and may include retrospective commentary concerning the previous month with discussion of those factors believed to have been relevant to a client's account performance or prospective performance. CDAG may provide more or less frequent reports to certain clients as and if mutually agreed or requested (including upon the occurrence of unusual or extraordinary events), or pursuant to the requirements of an extant management agreement calling for more or less frequent reports.

Qualified custodians will send account statements directly to clients, and clients should review those statements carefully.

The procedures require that a reasonable decision be made regarding a vote on any matters recommended by issuer management or concerning any issuer shareholder proposals. The procedures require that if CDAG determines not to vote, CDAG must have a reasonable basis for withholding our vote. The policies and procedures address the handling of conflicts of interest that may arise in the voting of proxies. CDAG’s vote on any matter regarding any issuer’s equity securities will be recorded and kept on file in their office. Clients may request to see how CDAG voted any on proxy, and obtain an explanation as to why CDAG voted as it did. Requests for an explanation of votes, or for a copy of CDAG's proxy voting policies and procedures, should be sent to the address listed on the cover page. Since CDAG does not typically have proxy voting authority, clients can expect to receive their proxies or other solicitations from the custodian or transfer agent, which can be voted directly by the client.

Concerning communications with clients; Additional Information CDAG seeks to communicate with clients in the most efficient manner possible. To that end, CDAG intends to use e-mail to communicate with clients in lieu of paper mail, unless otherwise requested. Clients should expect all communications to be effected electronically once they have provided preferred e-mail addresses and appropriate consents to an authorized CDAG representative. Clients may be asked to provide consent to the receipt of regulatory disclosures

or other documents, statements and other information in electronic form and are urged to provide such consents, to accelerate the receipt of important information.