Professional Documents
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Q&A
What is Pharos Fund I?
The asset management team has an extensive experience in the field of financial
services, specifically asset management.
The fund is open to all investors interested in investing in the stock market.
However it is particularly suited for both investors that do not have the technical
expertise to invest in the market or those that do have the expertise but do not
have the time to follow the markets closely.
Research has proven that investors cannot time the markets, and equity markets
outperform fixed income over the long term. In the last 12 months the global
economy was hit by both a meltdown in financial system and a global recession.
Reforms implemented in the Egyptian banking sector starting the early 2000s
have protected the local market from the grave impacts of the global financial
crisis, leaving Egypt suffering only the impact of reduced aggregate demand.
However in the last 12 months the Egyptian stock market was among the worst
hit by the global financial crisis. Currently Egypt is among the cheapest
emerging markets and hence it is expected to perform well in the coming period.
The fund also has the flexibility to invest up to 20% in markets in the region that
Pharos believes is undervalued.
The bank that receives all the subscription and redemption requests and has any
cash owned by the fund is Arab African International Bank.
The assets are all held by an independent custodian, in this case Arab African
International Bank. While the registry of all the certificate holders as well as
calculating the NAV daily is done by Arab African International Bank
administrative services.
Finally all trading transactions are settled on a delivery versus payment system to
eliminate any risk from brokers.
Pharos Fund I price per certificate is the EGP amount of the fund calculated by
dividing the total value of all the assets in its portfolio less any liabilities, divided
by the number of fund certificates outstanding.
The NAV per certificate is calculated at the closing prices of the securities in the
fund and the certificate price (NAV) will be announced at the end of each
business day.
A separate entity, in charge of the administrator role, will calculate the NAV.
Arab African International Bank will act as the fund’s administrator.
At any point in time, the bank account held at Arab African International Bank in
the name of the fund will hold cash and/or shares purchased in the name of the
fund and held with the custodian (which is Arab African International Bank).
The administrator will keep track of all investors in the fund and their respective
number of certificates.
Is there risk in broker bankruptcy?
The fund will settle all accounts with brokers using DVP settlement (delivery
versus payment). As the fund purchases shares in the market, the fund will only
pay cash to the broker once the shares are bought and then settled in the fund’s
name two days later. Moreover, as the fund sells shares, cash is deposited in the
fund’s account prior the release of the shares.
The initial size of the fund is EGP 25,000,000 (twenty five million Egyptian
Pounds) divided into two hundred and fifty thousand certificates each with a par
value of EGP 100. Since the fund is an open ended fund, it allows investors to
subscribe and redeem daily without any cost. As such the, fund size would
increase as subscriptions increase. The fund company capital is currently EGP 5
Million pounds, as per the law, the fund can grow up to 50 times the said amount
prior to increasing the capital of the fund company, thus with current company
capital the fund may grow to EGP 250 Million before increasing capital.
The certificate price is in Egyptian Pounds, as all assets and liabilities of the fund
are valued in Egyptian Pounds.
Additionally:
The fund may not invest in fixed income securities with a credit rating
below BBB-
The fund manager must work to achieve the investment objectives of the
fund
The fund manager must apply the Prudent Investor Rule
The fund may not use short selling or margin buying
The fund may not invest in any company whereby the shareholders are not
subject to limited liability
How can I buy or sell certificates?
Subscription:
1. The client opens an account with the bank
2. The client then places the total amount required to be invested using the
last NAV available as a guide at any branch till 12 pm.
3. Based on the actual NAV that is released by the administrator at the end of
the subscription day, the exact number of certificates is calculated and the
remaining balance would then be deposited in the account.
Redemption:
1. The client in person or his attorney delivers a redemption request to
liquidate a number of certificates at any branch till 12 pm.
2. Based on the actual NAV that is released by the administrator on the date
of redemption, the actual amount is transferred to the client’s account
within two days from date of request.
The published price of the certificate entails all the following fees:
Management fees:
0.65% of NAV per annum
Pharos Asset Management
Performance fees: 15% above a 12% hurdle rate accrued & paid
Pharos Asset Management yearly
Administration fees:
0.3% of NAV per annum
Arab African International Bank
First time investors (during the subscription period or thereafter) must initially
invest in a minimum of five certificates and can then subscribe in increments of
one certificate.
Pharos Fund I will reinvest its profits and dividends in the fund. As such the fund
does not intend to distribute any dividends. All of the profits and dividends will
be reflected in the price of the certificate.
What is the fund’s financial year and who are its auditors?
Pharos Fund I’s fiscal year begins on January 1st and ends December 31st and the
financials will be revised by KPMG and Baker Tilly quarterly and audited
annually.
Pharos Fund I prospectus will be provided upon request and are available at all
branches of Arab African International Bank. For more information please call
Pharos on 00202 2739-3666 from outside Egypt or 16665 in Egypt, alternatively
call Arab African International Bank on 19555.