Intro To Hedge Funds-OLc1.2-pc

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Introduction to Hedge Funds Part One: Terminology:

Introduction to Hedge Funds Part One: Terminology Nik Rowlston April 2012

Who is involved in a Hedge Fund?:

© Intelligii Consulting Ltd. April 2012 Introduction to Hedge Funds Page 2 Who is involved in a Hedge Fund? . There are a number of different parties involved in the operation of a typical Hedge Fund: Investors Directors, Partners or Trustees Investment Manager Administrator Custodian, Bank Prime Broker

Who is involved in a Hedge Fund?:

© Intelligii Consulting Ltd. April 2012 Introduction to Hedge Funds Page 3 Who is involved in a Hedge Fund? Back

Who is involved in a Hedge Fund?:

© Intelligii Consulting Ltd. April 2012 Introduction to Hedge Funds Page 4 Who is involved in a Hedge Fund? . Other parties associated with the operation of a typical Hedge Fund: Auditors Corporate Secretary Tax Accountant Lawyers The operations of a fund can be broken out into three categorizations, Front-, Middle- and Back-Office. Front-Office relates to the trading activity Middle-Office relates to the settlement of trades, cash-flow and risk analysis Back-Office relates to record keeping and investor servicing

Roles and terminology:

© Intelligii Consulting Ltd. April 2012 Introduction to Hedge Funds Page 5 Roles and terminology . Investors Investors put money or assets into the fund and take no further part in the operation of the fund. The investors are allocated profits and losses from the activities of the fund. The value of the investor’s holding is their share of the value of the fund. If the fund is a partnership, the investors may be referred to as the Limited Partners. If the fund is a trust, the investors may be referred to as the Settlor and Beneficiary of the trust. It is possible for these parties to be different, but not usual in the case of hedge funds. Link back to Hedge Fund Parties Diagram

Roles and terminology:

© Intelligii Consulting Ltd. April 2012 Introduction to Hedge Funds Page 6 Roles and terminology . Directors The directors of the fund company are responsible for the day to day operation of the fund. Directors organize the fund’s activities, but are not employees. Typically funds do not have any employees. Usually, the directors will delegate many of the tasks to other parties (Administrator, Investment Manager, etc.). If the fund is a Partnership, the General Partner is analogous to the Directors. If the fund is a trust, the Trustee is analogous to the Directors. Link back to Hedge Fund Parties Diagram

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