Disclosures

SEC BROCHURE

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PRIVACY STATEMENT

Maintaining the confidentiality of your personal financial information is very important to you and to us at Altair Advisers LLC.

INFORMATION WE COLLECT. To provide you with individualized service, we collect several types of non-public personal information about you, including:

  • information from forms you fill out and send to us in connection with your accounts (such as your name, address and social security number);
  • information about the transactions in your accounts (such as purchases, sales, account balances and average cost);
  • information about any bank account you use for transfers between your bank account and your accounts; and
  • information we receive about you or your accounts as a result of your communications with us by mail, e-mail or telephone or in person.

INFORMATION WE SHARE. We do not disclose your personal information to anyone except as permitted by law. So that we can complete transactions you authorize or request, and so that we can provide you information about our products and services, we may disclose the information we collect about you to companies that provide services to us. Those companies use that information only to perform the services for which we hired them, and are not permitted to use or disclose that information for any other purpose. Finally, we may disclose information about you at your request (for example, by sending duplicate account statements to someone you designate), or otherwise as permitted or required by law.

INFORMATION SECURITY. Within Altair Advisers LLC, access to information about you is restricted to those employees who need to know the information to service your account. Our employees are trained to follow our procedures to protect your privacy and are instructed to access information about you only when they have a business reason to obtain it. We use physical, electronic and procedural safeguards to keep your information secure.

CHANGES TO OUR PRIVACY POLICY. We reserve the right to change our privacy policy in the future, but we will not disclose your non-public personal information except to our affiliates and as otherwise required or permitted by law without giving you an opportunity to instruct us not to.

QUESTIONS? For questions about our privacy policy, or for additional copies of this notice, please call us at 312.429.3000.

DISCLAIMER

This website is for informational purposes only, should not be construed as accounting, legal, or tax advice, and does not constitute a complete description of our investment services or performance. All registered investment advisors are subject to the same fiduciary duties as Altair Advisers.

Client stories are shared for illustrative purposes only, and are not intended to imply an all-inclusive inventory of: 1) recommendations made by Altair Advisers to its clients; nor 2) success stories facilitated by Altair Advisers. Rather, the examples represent samples we believe will assist a prospective client in making an informed decision. Further, not all clients will necessarily receive the same advice or level of service as those outlined, as Altair Advisers provides customized services based upon the nature of each client’s needs.

This website is in no way a solicitation or offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. The products described by this website are intended to be made available only to persons in the United States. This website should not be considered a solicitation or an offering of any Altair Advisers’ products to investors residing outside the U.S. Information throughout this site, whether stock quotes, charts or articles, or any other statement or statements regarding market or other financial information is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. Neither we or our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption In the transmission thereof to the user. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY ‘LINKED’ WEBSITE.

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NO RELIANCE

Altair Advisers does not assume any liability or guarantee for the timeliness, accuracy and completeness of the information provided. Altair Advisers uses reasonable efforts to obtain information from sources that it believes to be reliable; however, Altair Advisers makes no representation that the information or opinions contained on this website are accurate, reliable or complete. The information on this website is provided for informational purposes only and is subject to change without notice. The investments and strategies discussed may not be suitable for all investors and are not obligations of Altair Advisers or guaranteed by Altair Advisers. Nothing contained on this website constitutes investment, legal, tax or other advice, nor is to be relied on in making an investment or other decision.

NO VIRUSES

Because of the marked increase in the fabrication and proliferation of computer viruses affecting the Internet, we want to warn you about infections or viral contaminations on your system. It is your responsibility to scan any and all downloaded materials received from the Internet. We are not responsible for any damage caused by such hazards.

NO WARRANTY

THE INFORMATION ON THE SITE IS PROVIDED “AS IS”. ALTAIR ADVISERS DOES NOT WARRANT TO THE ACCURACY OF THE MATERIALS PROVIDED HEREIN, EITHER EXPRESSLY OR IMPLIEDLY, FOR ANY PARTICULAR PURPOSE AND EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

LIMITATIONS OF LIABILITY

In no event, including negligence, will Altair Advisers be liable for any loss or damage of any kind, including any direct, special indirect or consequential damages arising out of or in connection with the access of, use of, performance of, browsing in or linking to other sites from this website.

LINKED INTERNET WEBSITES

Altair Advisers may from time to time provide hypertext or other links to sites that may be of interest to users. Altair Advisers does not endorse, sponsor or promote any products or services offered by such sites and has not passed on the merits of any information contained on such sites. Altair Advisers assumes no responsibility whatsoever for any material outside its own web pages. Altair Advisers is not responsible for the privacy practices of third party websites.

INDEMNIFICATION

You agree to make Altair Advisers whole for any and all claims, losses, liabilities, and expenses (including attorneys’ fees) arising from your use of this website.

PRIVACY INFORMATION FOR PASSWORD-PROTECTED AREAS ON THIS WEBSITE

While Altair Advisers takes active steps, including use of firewall barriers, encryption techniques and authentication procedures, to protect all information Altair Advisers receives online, Altair Advisers cannot guarantee the security of any information you transmit to this website online, and you do so at your own risk.

If you share your information, including, if applicable, your password information, with a third party, you do so at your own risk. By doing so, you may compromise the security of your information, including account/financial information. If you share your password information with a third party, such as an information aggregator, we may not be able to verify the user of the password information. If you choose to share your password information with a third party, including an information aggregator, we assume no liability or responsibility whatsoever for the integrity and security of that third party’s information systems or the dissemination, through a third party, of any of your personal and confidential information.

TERMINATION OF ACCESS

We reserve the right to terminate without notice to you your access to this website in our sole discretion, including without limitation, for overuse or abuse of this website. State of Illinois law governs this website in all respects. Any disputes or actions shall be initiated and resolved through the Illinois courts.

SOCIAL MEDIA DISCLOSURE

General

Altair Advisers and its employees maintain profiles and/or pages on social media platforms or websites including, but not limited to, Twitter, LinkedIn, Facebook and others. Altair Advisers publishes content via social media sites for educational, promotional or other business reasons. Content on these sites should not be construed as an offer to sell or as a solicitation of an offer to purchase an interest in any security, strategy or investment product managed or advised by Altair Advisers. The content provided is for informational purposes only and should not be construed as accounting, legal, or tax advice. Communications posted by Altair Advisers on social media sites reflect the current opinions of the author and are subject to change at any time without notice.

Third Party Content

Altair Advisers does not endorse any content offered by users or other third-parties. Comments and opinions posted by users are the sole responsibility of the person who posted them and do not necessarily represent the views of Altair Advisers. Use linked websites at your own risk. Altair Advisers is not responsible for the content including opinions, advertisements, recommendations or services offered on linked websites. Altair Advisers may monitor postings by third parties on its profiles and pages and reserves the right to moderate or remove comments.

Information You Provide

Altair Advisers is not responsible for the terms of use or policies of any social media site, or any third party sites to which these sites may be linked. Do not provide any personal or account information on Altair Advisers’ social media sites. Use any social media or third party site at your own risk.

ACCOLADES DISCLOSURE

Any reference to recognitions, awards, accolades or rankings (collectively, “recognitions”) issued by unaffiliated parties or publications should not be construed as an: 1) endorsement by or on behalf of any client; or 2) assurance that any current or prospective client will receive a certain level of service from Altair. These recognitions are determined by the organization sponsoring the recognition, and are generally based upon information provided by Altair to the sponsoring organization, which typically does not audit such information. Altair does not compensate the sponsoring organization for such recognitions or pay to participate in media rankings of any kind.

Each sponsoring organization determines the criteria to be used in awarding recognitions to financial services companies such as Altair. Evaluation criteria typically includes, but is not limited to, firm assets under management (AUM), total number of clients served, client type (individual, institutional), total number of employees, average client account size, year-over-year growth in number of total clients and/or AUM, record of disciplinary actions by regulatory agency. Altair’s inclusion and depiction on an award or ranking is determined by the sponsoring organization. Altair’s inclusion and rank placement in a recognition is subject to change at the discretion of the sponsoring organization.

DISCLOSURE RELATED TO CLIENT SPECIFIC PORTFOLIO INFORMATION

  • Reports are prepared using investment performance and portfolio information obtained from third-party sources which we believe to be reliable. Some of the information included was obtained directly from the investment management firms themselves. We have not been engaged to perform, nor have we performed an audit of the data.
  • Past performance is not indicative of future results.
  • The products and/or services Altair recommends are not bank deposits, are not FDIC insured, and are not guaranteed.
  • Expressions of opinions herein are subject to change without notice.

DATA SOURCES

  • Security pricing and other security information are provided by the custodian firms and are supplemented by Financial Times Interactive Data (IDC). Portfolio market values of illiquid investments (e.g., hedge funds) are supplied by the managers.
  • Market values and returns containing Aurora L.P reflect the latest information received from the manager, which may lag by one month.
  • Market values are based on trade-date accounting (whenever trade-date information is available). Market values for fixed income accounts include accrued interest.
  • Market Index returns are obtained from Financial Times Interactive Data (IDC), with the following exceptions: HFRI and HFRX Indices, which are provided by Hedge Fund Research, Inc.; iMoneyNet Index, which is provided by iMoneyNet; Barclays Global Aggregate Hedged and Unhedged indices, which are provided by Barclays; MSCI AC Wrld, MSCI AC Wrld ex. US, MSCI Emerging Mkts, MSCI EAFE Small Cap, and MSCI US REIT indices, which are provided by MSCI Inc.; NCREIF Property Index, which is provided by National Council of Real Estate Investment Fiduciaries (NCREIF); S&P Developed Property Index and S&P Global ex. US Property Index, which are provided by Standard & Poor’s. The Wilshire REIT Index, provided by Wilshire Associates, is used in place of the MSCI US REIT Index prior to 1995. The S&P Developed Property Index, provided by Standard & Poor’s, is used in place of the Dow Jones Global Select Real Estate Securities Index prior to October 10, 2012.

GLOSSARY

  • Actual Allocation Benchmark Performance: The Investable Benchmark return for each asset class weighted by the amount of the portfolio invested in that asset class. This benchmark is calculated using the weights at the beginning of each month, except for the inception month, for which the end-of-the-month weight is used. See Investable Benchmark below and in the Disclosure section for more detail.
  • Average Credit Quality: Measure of the average credit quality of a given bond portfolio. The lower the average credit quality, the higher the default risk. The average credit quality is derived by taking the weighted average of the credit ratings for each bond in the portfolio. Bonds issued and backed by the U.S. Government are of such high quality they are considered separate from, but equal to, bonds rated AAA, which is the highest possible rating for a corporate issue. Bonds with BBB ratings are the lowest quality bonds still considered to be investment grade. Bonds rated BB or lower are called “high-yield” or “junk” bonds.
  • Average Maturity: Maturity is the length of time before a bond issuer must return the principal amount. For a municipal bond portfolio, the weighted-average of the maturities of each bond is computed by weighting each maturity date (i.e., when the security comes due) by the market value of the security.
  • Book Value: Company’s assets minus liabilities.
  • Contributions: May include: new position (cash, stocks, bonds, etc.) deposits into the portfolio and position transfers into one account from another within the portfolio.
  • Current Yield: Annual coupon rate divided by the current market price of the bond. A coupon is the periodic interest payment made to bondholders during the life of a bond.
  • Dividends: Dividend distributions from mutual funds and stocks.
  • Dividend Yield: Company’s annual dividend (based on the last 12 months of dividends) per share, divided by the stock price. This measure indicates what percent of the current stock price the company returns to investors through dividends. For example, if the company paid $1.50 in dividends over the last 12 months, and the current stock price in $30 per share, the dividend yield is 5% (1.50/30).
  • Gain/Loss: Market value change of the portfolio after accounting for contributions and withdrawals and deducting investment management and advisor fees, foreign taxes, custodial fees, and ADR management fees.
Hedge Funds¹

Directional Based Strategies
Directional-based strategies are those that retain some amount of systematic risk exposure or are specifically driven by the movements of the market. Sub-strategies include:

  • Long/Short Equity: Managers build their portfolios by combining a core group of long stock positions with short sales of stock, stock index options/futures, or exchange-traded funds. The net market exposures of these portfolios generally have a net long bias.
  • Short Equity: Strategy where portfolios are created to profit from declining stock prices. Short selling hedge funds tend to use some type of market timing. That is, they trim their short positions when the stock market is advancing and go fully short when the stock market is declining. This strategy can be used to provide downside protection during bear markets.
  • Long/Short Credit: Same concept as Long/Short Equity, however, the strategy is implemented in the credit markets.
  • Short Credit: Same concept as Short Equity, however, the strategy is implemented in the credit markets.

Convergence Strategies
These hedge funds practice the art of arbitrage. In general, the funds make bets that two similar securities, but with dissimilar prices, will converge in value over the investment holding period. Sub-strategies include:

  • Fixed Income Arbitrage: Fixed income arbitrage involves purchasing one fixed income security and simultaneously selling a similar fixed income security with the expectation that over the investment holding period, the two security prices will converge in value. Typically, the two securities are related either mathematically or economically such that they move similarly in response to market developments.
  • Relative Value Arbitrage: Relative value arbitrage managers invest in a wide variety of convergence trades: the simultaneous purchase of one security and the sale of another when there is a discrepancy between the two securities.
  • Convertible Arbitrage: Convertible bonds combine elements of both stock and bonds in one trade. Convertible arbitrage funds build long positions of convertible bonds and then hedge the long exposure. Arbitrageurs attempt to make profits by identifying pricing discrepancies between the convertible bond and its component parts, and then continually monitoring these component parts for any change in their relationship.
  • Market Neutral: MManagers construct long/short portfolios of equal weightings that eliminate market risks so to drive return purely from stock selection.
  • Statistical Arbitrage: Managers use quantitative analysis to construct a market neutral portfolio. Managers, typically, build multifactor models to identify those factors that have a consistent impact on security prices.

Corporate Structure Strategies
Corporate structure strategies take advantage of significant corporate transactions like a merger, acquisition, or bankruptcy. These funds attempt to generate returns by concentrating their portfolios in companies where it is more important to understand the event. The trade involves taking less market risk in favor of more company specific risk. Sub-Strategies include:

  • Distressed: Distressed debt hedge funds invest in the securities of a corporation that is in bankruptcy or likely to fall into bankruptcy. The fund may short sell the company to profit on declining values or may purchase the security prior to the company announcing its reorganization plan to the bankruptcy court with the expectation that there will be a positive resolution with the company’s creditors. A manager may also employ capital structure arbitrage through buying and selling certain securities of the same company depending on the estimated outcome.
  • Merger Arbitrage: This strategy generally entails buying the stock of the firm that is to be acquired and selling the stock of the firm that is to be the acquirer to capitalize on pricing spreads based on a successful completion of the announced merger.
  • Event Driven: Event driven managers attempt to profit from significant market events that are nonrecurring, including merger arbitrage, but also can be in the form of spin-offs, share buy-backs, and re-organizations. Because the events are nonrecurring, financial markets typically do not digest the information associated with these transactions in a timely manner.

Opportunistic Strategies
These funds are designed to take advantage of a wide-range of opportunities presented by various markets. Opportunistic strategies typically take directional bets in specific markets or securities. Sub-strategies include:

  • Global Macro: Global macro funds take a macroeconomic investment approach on a global basis. These are top-down managers who invest opportunistically across financial markets, national borders, and commodities. They take positions depending upon the manager’s forecast of changes in interest rates, currency movements, monetary policies, and macroeconomic indicators.
  • Multi-Strategy: These managers employ more than one of the strategies already outlined.
  • Other: A strategy not previously discussed.

Multi-Strategy Fund of Hedge Funds
These funds invest in hedge fund strategies through several underlying managers. Sub-strategies include:

  • Directional: Generally have a net long exposure of more than 20%.
  • Non-Directional: Generally have a net long exposure of 20% or less.

Diversified Alternative Investments

  • Opportunistic Equity: Funds which invest predominantly in all global equity markets based on either fundamental company valuation analysis or macroeconomic shifts.
  • Enhanced Fixed Income: Funds which invest in less efficient areas of the global fixed income markets, including High-Yield, Distressed, and Global Debt investing.
  • Absolute Return: Funds with a low or negative correlation to the equity markets.
  • Private Equity: Funds seeking to generate capital appreciation through investments in private companies.
  • Real Estate: Funds which invest in REITs and/or private partnerships with direct investments in existing or new income-producing properties, raw land, and/or timber.
  • Energy/Natural Resources: Funds which invest in publicly-traded energy companies or in private partnerships with direct investments in private or smaller publicly-traded energy companies. These companies include firms in the business of oilfield services and equipment manufacturing, exploration and production, technology, pipelines and storage, and power generation and transmission.
  • Higher Risk, Medium Risk and Lower Risk Benchmarks: The Investable Benchmark return for each asset class weighted by the amount of the risk allocation class invested in that asset class. This benchmark is calculated using the weights at the beginning of each month, except for the inception month, for which the end-of-the-month weight is used. See the Investable Benchmark definition and Disclosure section for more detail.
  • Interest: Interest payments from bonds.
  • Investable Benchmark: A mutual fund or exchange traded product (e.g. an ETF) which attempts to replicate the performance of a specific market index or benchmark. Investors cannot purchase market indices directly, but they can invest in products intended to replicate them. For example, the S&P Total Return Index is not available for direct investment but investors can purchase shares in the iShares Core S&P 500 ETF which has an expense ratio of 0.07%. We assume distributions from the mutual fund or exchange traded product are reinvested on the payable date.
  • Investment Earnings: Sum of dividends, interest, and gain/loss.
  • Long Term Policy Benchmark: Investable Benchmark return for each asset class, weighted by the amount of the portfolio’s long term policy if it was invested in that asset class. This benchmark is calculated using the fixed weights as set by the Investment Policy Statement for the period of time the Investment Policy Statement was in force. See the Investable Benchmark definition and Disclosure section for more detail.
  • Market Capitalization: Company’s stock price multiplied by the total number of shares outstanding. Weighted-average market capitalization is the average market capitalization of all the stocks in the portfolio adjusted for each stock’s market value weighting in the portfolio. For example, in calculating the average, a stock with 5% of the portfolio value is weighed more than a stock with 3% of the portfolio value. Median market capitalization is the market capitalization of the stock in the middle of the portfolio based on market capitalization order.
  • Modified Adjusted Duration: Weighted-average length of time to maturity of a bond portfolio’s cash flow (measured in years), adjusted for imbedded options that may change the expected cash flows. This measure is used in the estimation of the price sensitivity of fixed-income securities for a given change in interest rates.
  • Net Flows: Contributions minus Withdrawals.
  • Number of Holdings: Number of individual securities held in the account and each benchmark. Cash is excluded in this calculation.
  • Peer Comparison: Ranks each manager’s performance among its peers in the same investment category (e.g., large cap value). A manager that ranks in the 25th percentile has outperformed 75% of the current managers in this investment category. It is often referred to as “universe comparison.”
  • Price-to-Book (P/B) Ratio: Company’s per-share stock price divided by its per-share book value. This measure works best with a company that has many “hard assets” like factories and machinery. However, many companies in today’s economy rely heavily on intellectual assets that do not appear on the balance sheet. Many technology firms have a relatively low book value which gives them a very high P/B ratio.
  • Price-to-Earnings (P/E) Ratio: Company’s per-share stock price divided by its total earnings per share from the last four quarters. For example, if XYZ Company is trading at $40 per share and earnings are $2 per share, its P/E is 20 (40/2). That means investors are paying $20 for every $1 of company’s earnings based on the last four quarters. If the P/E slips to 16, investors are now paying $16 per share for that same $1 profit. This P/E number is also known as the stock’s “multiple,” as in: “XYZ Company is trading at a multiple of 16 times earnings.” The P/E ratios presented in this report exclude those stocks with negative earnings to avoid producing counter-intuitive results, as these numbers would cancel out positive numbers.
  • Protective Puts: A put option is a contract that gives its owner, the buyer, the right to sell an underlying asset at a specified price (its “strike price”) for a fixed period of time (until the option’s expiration). For example, an S&P 500 Index December 20xx 850 put entitles the owner to sell 100 shares of the S&P 500 Index at $850 per share at any time prior to the option’s expiration date in December. For the seller of a put option, the contract represents an obligation to buy the underlying stock from the option owner if the option is exercised. A call option is a contract that gives its owner, the buyer, the right to buy an underlying asset at a specified price (its “strike price”) for a fixed period of time (until the option’s expiration). For example, an S&P 500 Index December 20xx 850 call entitles the owner to buy 100 shares of the S&P 500 Index at $850 per share at any time prior to the option’s expiration date in December.
  • Risk Allocation: Portfolio’s exposure to the risk of principal loss. Each asset class is mapped to one of three broad categories: Higher Risk, Medium Risk and Lower Risk. For example, assume a current asset allocation of 25% Large Cap Equity, 15% International Equity, 20% Hedged / Opportunistic, 35% Fixed Income, 5% Cash. The risk allocation would be 40% Higher Risk, 20% Medium Risk, and 40% Lower Risk. Lower risk investments include, but are not limited to, no risk investments. Although a risk free or no risk investment only exists in theory, in practice, investments explicitly backed by the U.S. Government are considered to have no risk of default (e.g. U.S. Treasury Bills).
  • Since Inception IRR: IRR, or Internal Rate of Return, is the annualized discount rate that allows an investment’s capital outflows to be equal to its inflows, in present value terms. IRR is regarded as a “money-weighted” return, because more weight is given to the returns achieved during periods in which more dollars are at work. This contrasts with a “time-weighted” return, in which periodic (typically monthly) returns are calculated and “chain linked” together such that each period’s weight is equal. For managers, Altair calculates the IRR using the standard Microsoft Office XIRR formula. The capital calls, distributions and ending capital balances found in this report are the inputs into the XIRR calculation. For benchmarks, the Since Inception IRR is a blend of the median Cambridge Associates U.S. Private Equity, U.S. Private Real Estate and U.S. Venture Capital Since Inception IRRs, weighted by the given manager’s allocation to each vintage year.
  • Time-Weighted Performance: Designed to measure a manager’s skill, this measure isolates the performance of the manager’s security selection while eliminating the effect of cash flows on portfolio performance. Since managers have no control as to when investors make significant contributions or withdrawals, this performance measure strives to eliminate the performance bias of cash flows during market volatility.
  • Total Portfolio Performance: Time-weighted performance of the investment portfolio when intra-month valuation can be obtained.
  • Withdrawals: May include: position (cash, stocks, bonds, etc.) withdrawals out of the portfolio and position transfers from one account into another within the portfolio.
  • Yield-to-Worst: Lowest possible yield that the investor will realize. For example, assume there are only three call dates for a callable bond and that the yields-to-call for each call date are 5.0%, 5.3%, and 4.7%, along with a yield-to-maturity of 6.5%. In this example the yield-to-worst is the minimum of the yields, at 4.7%.

¹Mark J.P. Anson, Handbook of Alternative Assets (New Jersey: John Wiley & Sons, 2006).