TIDMGSDO TIDMGSDE TIDMGSDU
RNS Number : 8049R
Goldman Sachs Dynamic Opportunities
27 August 2010
Goldman Sachs Dynamic Opportunities Limited (the "Company")
Half Yearly Financial Report
The Company has today, in accordance with
DTR 6.3.5, released its Report and Unaudited Condensed Financial Statements for
the six months ended 30 June 2010 (the "Report"). The Report is available from
the Company's website
www2.goldmansachs.com/services/investing/closed-ended-investments/index.html and
will shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is located at:
Financial Services
Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
+-----------------------------+----------------------------------------------+
| Financial Highlights | |
+-----------------------------+----------------------------------------------+
+-----------------------------+-------------+-----------------+-------------+
| | Sterling | U.S. Dollar | Euro Shares |
| | Shares | Shares (US$) | (EUR) |
| | (GBP) | | |
+-----------------------------+-------------+-----------------+-------------+
| | At period | At period end | At period |
| | end | | end |
+-----------------------------+-------------+-----------------+-------------+
| | 30 June | 30 June 2010 | 30 June |
| | 2010 | | 2010 |
+-----------------------------+-------------+-----------------+-------------+
| Total Net Assets | 175,795,575 | 8,360,181 | 12,790,706 |
+-----------------------------+-------------+-----------------+-------------+
| Net Asset Value per Share | 1.0621 | 1.9707 | 1.5603 |
+-----------------------------+-------------+-----------------+-------------+
| Bid-Market Share Price | 0.8650 | 1.6300 | 1.2820 |
+-----------------------------+-------------+-----------------+-------------+
| Premium/(Discount) to Net | (18.56%) | (17.29%) | (17.84%) |
| Asset Value | | | |
+-----------------------------+-------------+-----------------+-------------+
+-----------------------------+-------------+-----------------+-------------+
| | | U.S. Dollar | Euro Shares |
| | Sterling | Shares (US$) | (EUR) |
| | Shares | | |
| | (GBP) | | |
+-----------------------------+-------------+-----------------+-------------+
| | At year | At year end | At year end |
| | end | | |
+-----------------------------+-------------+-----------------+-------------+
| | 31 | 31 December | 31 |
| | December | 2009 | December |
| | 2009 | | 2009 |
+-----------------------------+-------------+-----------------+-------------+
| Total Net Assets | 175,752,305 | 43,547,276 | 19,442,246 |
+-----------------------------+-------------+-----------------+-------------+
| Net Asset Value per Share | 0.9948 | 1.9735 | 1.3340 |
+-----------------------------+-------------+-----------------+-------------+
| Bid-Market Share Price | 0.8200 | 1.6200 | 1.0650 |
+-----------------------------+-------------+-----------------+-------------+
| Premium/(Discount) to Net | (17.57%) | (17.91%) | (20.16%) |
| Asset Value | | | |
+-----------------------------+-------------+-----------------+-------------+
Chairman's Statement
I am pleased to present Shareholders with this interim report of Goldman Sachs
Dynamic Opportunities Limited ("GSDO" or the "Company") for the half year ended
30 June 2010.
The Company's net asset value rose by 6.77% during the first half of 2010
(measured in sterling terms, net of fees). As detailed in the Investment
Manager's Report, the Company's investments performed well throughout the first
quarter, which broadly continued into April. The Company's investments then
experienced negative returns in May and June reflecting the renewed volatility
in markets seen in these months. This reversal led to performance in US$ terms
(net of fees) being negative for the first half of the year with cumulative US$
performance ending the period at -0.14%.
It should be noted that the performance differences between the sterling and US$
share classes for the period under review are largely due to currency
fluctuations that were not hedged during the first quarter. As previously
notified to Shareholders, the Company entered into a new credit facility in
March 2010 and, as a result of the increased liquidity that this facility
provided and demand from sterling investors, currency hedging for the sterling
share class was reinstated on 30 March 2010. Since this reinstatement the
performance between these two share classes has realigned.
In terms of sector performance, the Company continued to benefit from its event
driven allocation with this sector generating a 0.97% cumulative return over the
period (measured in US$ terms, net of underlying manager fees only). The Company
also saw a relatively strong performance from its equity long/short Advisors who
generated a cumulative return of 2.55% in the period (measured on the same
basis). As with other sectors, the latter half of the second quarter eroded
some of the strong performance realised by these Advisors during the first
quarter.
The Investment Manager implemented few changes to the Company's investment
portfolio over the period. In December 2009, one equity long/short investment
was removed from the portfolio but otherwise the Company's list of investments
remained constant in the period under review save for a slight reallocation of
capital amongst the existing Advisors which has resulted in an increase in the
event driven sector and a slight decrease in both the equity long/short and
tactical trading sectors. There is expected to be some reallocation of
investments from the redemption portfolio to the continuing portfolio (as
referred to below) during the second half of the year.
As mentioned in the Company's 2009 annual report, despite the positive
performance for each of the Company's three share classes in 20091, each class
had traded at a greater than 5% average discount to NAV over the previous 12
months. This triggered continuation votes for each share class, pursuant to
which the GBP share vote passed, whilst the EUR and US$ share votes failed.
Following this, Shareholders of the EUR and US$ share classes were able to elect
to redeem up to 100% of their shareholdings. Approximately 87% of the US$ shares
and 34% of the EUR shares were elected to be redeemed. As a result a redemption
portfolio was established comprising approximately 18% of each investment in the
Company's portfolio at 30 June 2010.
These investments in the redemption portfolio are intended to be realised
(including by way of reallocation to the continuing portfolio) in a timely
manner with the cash proceeds being distributed to redeeming Shareholders in
satisfaction of redemption monies. The Board believes that a reallocation of
certain investments from the redemption portfolio to the continuing portfolio
(with cash moving in the opposite direction) has a number of benefits for both
continuing and redeeming Shareholders. Continuing Shareholders will benefit from
the reallocation of investments that would be considered by the Investment
Manager for direct subscription and which, in several cases, are currently
closed to new investment (and which are not considered illiquid), whilst
redeeming Shareholders will benefit from a quicker return of capital.
1 The NAV of the US$ shares rose by 17.9%, whilst the NAV of the EUR shares and
the GBP shares, which were in each case unhedged during the period, rose by
14.2% and 4.9% respectively. The share price of the US$ shares rose by 72.2%,
whilst the share price during 2009 of the EUR shares and the GBP shares rose by
40.8% and 45.8% respectively.
Chairman's Statement continued
The Board is satisfied with the Company's performance in the first half of 2010,
but is also alert to the fact that the continuing share price discount is
unwelcome for Shareholders. It believes the Company's underlying Advisors are
well positioned to benefit from the opportunities that heightened market
volatility and macro uncertainty may provide.
I look forward to writing to you again next year in the full year report for
2010.
Christopher Sherwell
26 August 2010
Investment Manager's Report 1
The Company's net asset value increased by 6.77% in the first half of 2010 (in
Sterling terms, net of fees). The following provides an overview of performance
of the Company's investments by hedge fund sector (in U.S.$ terms, net of
underlying manager fees only).
+--------------------+------+------+------+------+------+---------------------+
| Event Driven | | | | | | Allocation: 50% |
+--------------------+------+------+------+------+------+---------------------+
Advisors in the event driven sector returned 0.97% for the first half of the
year.
First Quarter 2010 Summary:
The Company's event driven investments generated positive returns over the first
quarter of 2010, particularly in January and March. Dedicated credit Advisors
tended to post their best returns in these months as spreads tightened. During
the middle of the quarter, performance was more mixed in this strategy as credit
markets experienced a volatile February with returns being broadly driven by
underlying company events, including earnings announcements as well as company
specific news and events. While multi-strategy Advisors benefitted from their
credit strategies, they also made gains from merger arbitrage trades, for
example including those involving a British confectioner and a U.S railroad
operator. These Advisors also continued to anticipate an increase in corporate
activity as company cash balances continued to grow. Also, several
multi-strategy Advisors shifted their focus away from credit towards more
special situation equity trades. Overall, Advisors continued to run fairly
balanced portfolios, reflecting greater uncertainty about the broader economic
environment.
Second Quarter 2010 Summary:
The Company's event driven investments generated negative returns over the
second quarter as gains in April were more than offset by losses in May and
June. Credit focused Advisors fared well early in the quarter, benefitting from
a supportive backdrop in credit markets as well as idiosyncratic developments in
company specific investments. Not surprisingly, many Advisors reported positive
attribution from long investments while shorts, particularly broader market
index hedges, detracted from performance. In May, credit focused Advisors with
relatively directional exposure to distressed credit and post reorganisation
equity generally ended the month in negative territory as these two areas
underperformed the broader high yield credit market. Performance was more mixed
towards the end of the quarter. Advisors in the sector generally had exposure to
near-term catalyst situations that tended to anchor the price of a security,
which helped mitigate losses in May but muted returns in June. The performance
of multi-strategy event driven Advisors broadly followed the same trend. After a
positive start to the quarter, these Advisors experienced negative performance,
particularly from losses resulting from their exposure to special situations
equity that was not offset by hedging positions. With heightened market
volatility and macro uncertainty, Advisors are cognisant of managing risk with
fairly balanced portfolios and higher cash levels than normal whilst maintaining
flexibility to invest in attractive new opportunities or to increase existing
positions on any dips.
1 Allocations as of 30 June 2010. The Investment Manager may change the
allocations over time. The allocations noted should not be deemed representative
of allocations in the continuing portfolio in the future. All the allocations
were calculated using the continuing portfolio's valuations at month-end.
The returns presented above are net of underlying manager management and
incentive fees, but do not reflect the management and incentive fees paid to GS
Hedge Fund Strategies LLC. Returns as of 30 June 2010. Returns less than 12
months are cumulative, not annualised.
This information discusses general market activity, industry or sector trends,
or other broad-based economic, market or political conditions. It also refers to
specific securities in the context of their past performance or as the basis for
previously made discretionary investment decisions. It should not be construed
as research or investment advice, or a recommendation to buy or sell investments
in GSDO or any other investments mentioned in this report or to follow any
investment strategy. Please see additional disclosures. Past performance is not
indicative of future results, which may vary.
Investment Manager's Report continued
+---------------------+-----+-----+-----+-----+-----+--------------------+
| Equity Long/Short | | | | | | Allocation: 30% |
+---------------------+-----+-----+-----+-----+-----+--------------------+
Advisors in the equity long/short sector returned 2.55% for the first half of
the year.
First Quarter 2010 Summary:
The Company's equity long/short investments generated strong positive returns
towards the end of the first quarter after a slow start to the year,
outperforming global equity markets that posted smaller gains over the quarter.
Advisors with net long exposures in February and March were able to participate
in the market's recovery after January's losses with Advisors in more cyclical
sectors such as consumer, technology or industrials/materials generating the
largest returns. In an environment of rising equity markets, short positions
generally detracted from performance, for both individual stocks as well as for
index level hedges used to protect the Portfolio overall. The Company's
emerging markets focused equity long/short Advisor also generated positive
performance, especially in January where that Advisor was able to generate
positive performance from selected short positions. While the Advisor had to
give back some of these gains during the middle of the month, emerging markets
exposure overall added to performance over the first quarter of 2010.
Second Quarter 2010 Summary:
In the second quarter the Company's equity long/short investments generated
negative returns after beginning the quarter positively. However, these
investments significantly outperformed global equity markets which, on average,
lost more than 10% during that quarter. In April, the majority of Advisors
generated positive performance, with the top performing Advisors being able to
benefit from strong stock selection during the earnings season, generating gains
from longs in a number of sectors including consumer, industrials, financials,
and media & telecommunications. Additionally, these Advisors were also largely
able to avoid losses on the short side. Given the steep decline of the equity
markets in May and their continued deterioration in June, unsurprisingly losses
since the middle of the quarter were largely from long positions. The greatest
losses came from higher beta names in sectors such as resources, industrials,
materials, technology, financials, and consumer discretionary. Short positions
and hedges generated gains and partially offset long book losses. The Company's
emerging markets focused equity long/short Advisor also contributed losses but
in a slightly different pattern. While that Advisor detracted from performance
in April and June, caused primarily by losses from short positions, the Advisor
achieved flat performance in May, the worst month for the Company's other
Advisors in the sector.
Investment Manager's Report continued
+--------------------+------+------+------+------+------+---------------------+
| Tactical Trading | | | | | | Allocation: 20% |
+--------------------+------+------+------+------+------+---------------------+
Advisors in the tactical trading sector returned -1.56% for the first half of
the year.
First Quarter 2010 Summary:
The Company's tactical trading investments experienced negative performance over
the first quarter as losses in January were not recovered by positive returns
later in the quarter. Within the quarter, there was large dispersion of
returns, both between Advisors as well as over time. The Company's fundamental
commodities Advisor experienced a positive return over the quarter as large
gains during the middle of the quarter outweighed smaller losses in the other
two months. These gains were primarily driven by both long and short positions
in selected agricultural commodities. Discretionary macro Advisors displayed
fairly diverse performance over the quarter, with some Advisors having their
best returns around the same time that others had their worst. Overall, it were
mostly currency trading strategies that contributed positively over the quarter,
primarily from long positions in Asian and commodity related currencies against
short positions in the major currencies. Performance from fixed income trading
was more balanced, mostly detracting towards the beginning of the quarter while
being a bit more positive towards the end. Equity trading strategies generally
had a more muted performance impact and results differed across Advisors.
Second Quarter 2010 Summary:
The Company's tactical trading investments experienced negative performance
during the second quarter. May's losses exceeded gains made in April and, as
Advisors ended June on average flat, the weak performance in May resulted in a
negative return for the quarter as a whole. Nevertheless, two of the Company's
discretionary macro Advisors actually finished the quarter in positive
territory, with gains being fairly diversified across asset classes. Some
Advisors benefited from long positions in fixed income while others made the
majority of their gains from foreign currency positions, both in developed and
emerging markets. Performance in equities was generally muted over the quarter.
The global macro Advisor with significantly negative performance over the
quarter experienced large losses in May where negative performance was primarily
driven by losses in fixed income, particularly in corporate credit trading.
Equities and commodities trading also detracted from performance while foreign
exchange trading provided some gains. The fundamental commodities Advisor also
detracted over the quarter. Positive returns in April, primarily from long
livestock positions, were more than offset in May when these gains reversed and
long positions in cotton also detracted, while short wheat positions contributed
some gains. After further losses in June from livestock, ethanol and grains,
Advisors continued to reduce risk across the portfolio and, although they
maintain a bullish long-term view of the positions in the portfolio, they are
cautious about increasing risk in their portfolios at this time.
+--------------------+------+------+------+------+------+---------------------+
| Relative Value | | | | | | Allocation: 0% |
+--------------------+------+------+------+------+------+---------------------+
Presently, the Company only has very limited remaining exposure to one Relative
Value Advisor's side pocketed investments. The remaining exposure to this sector
consists of shares in liquidating side pockets where the return over the period
was 0.58%.
Investment Manager's Report 2 continued
Outlook for remainder of 2010
With heightened market volatility and macro uncertainty, event driven Advisors
are cognisant of managing risk and have maintained fairly balanced portfolios
with fundamental short positions as well as a variety of market hedges. Advisors
are generally maintaining higher cash levels than normal, not only as a risk
management tool, but also as a liquidity reserve to opportunistically initiate
positions in high conviction names at attractive prices.
With regards to the equity long/short sector, after having a positive outlook on
both global economies and individual companies during the first quarter, many
equity long/short Advisors have now started to speak about the dichotomy they
are seeing between micro and macro data. Fundamentally focused managers note
that company fundamentals and equity valuations remain attractive, with
management teams continuing to speak about the strength of their businesses and
balance sheets. However, many Advisors also appreciate the macro headwinds and
have concerns about global growth in the second half of 2010 and 2011. As a
result, Advisors have been hesitant to add risk and are focusing their
portfolios on high conviction names with stable, visible earnings outlooks,
while also looking to identify appropriate hedges. Additionally, Advisors
continue to maintain liquid portfolios so they can actively manage exposure as
new data emerges and market sentiment transforms.
For tactical trading Advisors, as the uncertainty continues to mark the macro
environment and markets continue to experience periodic volatility spikes, the
trading environment will present both opportunities and challenges. Risk
management through market reversals and the ability to source selective
opportunities will prove integral to macro Advisors' abilities to deliver strong
returns through the remainder of 2010. After increasing risk through the first
quarter and April, managed futures Advisors reduced risk as a result of
volatility in May. When the economic outlook becomes clearer and more
sustainable trends emerge - in either direction - managed futures Advisors
should benefit.
2 The economic and market forecasts presented herein have been generated by
GSAM for informational purposes as of the date of this document. They are based
on proprietary models and there can be no assurance that the forecasts will be
achieved. Please see additional disclosures at the end of this document. This
information discusses general market activity, industry or sector trends, or
other broad-based economic, market or political conditions. It also refers to
specific securities which pertains to past performance or is the basis for
previously made discretionary investment decisions. It should not be construed
as research or investment advice, or a recommendation to buy or sell investments
in GSDO or any other investments mentioned in this report or to follow any
investment strategy. Please see additional disclosures. Past performance is not
indicative of future results, which may vary.
Portfolio composition at 30 June 2010 3
See actual Report.
Monthly performance by sector: July 2009 - June 2010, U.S. Dollar
See actual Report.
NAV performance summary (%), net of fees: August 2006 - June 2010
+-----------+-------+----------+-------+-------+------------+------------+---------+------------+---------+----------+-------------------+------------+
| | Jan | Feb | Mar | Apr | May | Jun | Jan-Jun | 2009 | 2008 | 2007 | Aug | Annualised |
| | | | | | | | | | | | - | Net Return |
| | | | | | | | | | | | Dec | Since |
| | | | | | | | | | | | | Inception |
+ +-------+----------+-------+-------+------------+------------+---------+ + + +-------------------+ +
| | 2010 | 2010 | 2010 | 2010 | 2010 | 2010 | 2010 | | | | 2006 | |
+-----------+-------+----------+-------+-------+------------+------------+---------+------------+---------+----------+-------------------+------------+
| Sterling | 1.04% | 5.64% | 2.53% | 0.98% | 2.45% | -0.97% | 6.77% | 4.93% | -17.30% | 13.17% | 3.11% | 2.01% |
+-----------+-------+----------+-------+-------+------------+------------+---------+------------+---------+----------+-------------------+------------+
| US | 0.25% | 0.36% | 1.75% | 0.96% | 2.44% | -0.98% | -0.14% | 17.86% | -20.74% | 13.34% | 3.44% | 2.31% |
| Dollar | | | | | | | | | | | | |
+-----------+-------+----------+-------+-------+------------+------------+---------+------------+---------+----------+-------------------+------------+
| Euro | 3.49% | 2.22% | 2.63% | 2.73% | 5.73% | -0.81% | 16.96% | 14.21% | -28.71% | 11.57% | 2.45% | 2.19% |
+-----------+-------+----------+-------+-------+------------+------------+---------+------------+---------+----------+-------------------+------------+
3 Allocations as of 30 June 2010. The Investment Manager may change the
allocations over time. The allocations noted should not be deemed representative
of allocations in the future. All the allocations were calculated using the
portfolio's valuations at month-end. Note that from 1 July 2010 allocations
between the redemption portfolio and the continuing portfolio may differ over
time. Data source: LSE/RNS.
Investment Manager's Report continued
Share Price Premium/Discount to Net Asset Value: August 2006- June 2010,
Sterling
See actual Report.
Related party transactions
Refer to Note 8- "Significant agreements and related parties" of the Condensed
Unaudited Financial Statements.
Financial assets at fair value through profit or loss - 30 June 2010
+------------------------------------------+------------+-------------+----------+-----------+
| Name of investment | Strategy | Market | | % of |
| | | value | | Company's |
| | | (US$) | | net |
| | | | | assets |
+------------------------------------------+------------+-------------+----------+-----------+
| Eton Park Overseas Fund Limited | Event | 52,816,094 | | 18.40% |
| | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Glenview Capital Partners (Cayman) | Equity | 41,463,810 | | 14.45% |
| Limited | Long / | | | |
| | Short | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Silver Point Capital Offshore Fund | Event | 33,785,030 | | 11.77% |
| Limited | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| TPG-Axon Partners (Offshore) Limited | Equity | 27,948,109 | | 9.74% |
| | Long / | | | |
| | Short | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Goldman Sachs BH Fund Offshore SPC(1) | Tactical | 21,372,201 | | 7.45% |
| | Trading | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Anchorage Capital Partners Offshore Fund | Event | 18,510,104 | | 6.45% |
| Limited | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Moore Global Investments Limited | Tactical | 17,334,190 | | 6.04% |
| | Trading | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| AKO Fund Limited | Equity | 16,879,820 | | 5.88% |
| | Long / | | | |
| | Short | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Goldman Sachs Classic Offshore Holdings, | Event | 15,570,189 | | 5.42% |
| Ltd (1) | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| The Children's Investment Fund | Event | 15,086,400 | | 5.26% |
| | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| DE Shaw Oculus International Fund | Tactical | 14,528,553 | | 5.06% |
| | Trading | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Moon Capital Global Equity Offshore Fund | Equity | 9,823,521 | | 3.42% |
| Limited | Long / | | | |
| | Short | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Spinnaker Global Opportunity Fund | Event | 9,612,657 | | 3.35% |
| | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Harbinger Capital Partners Special | Event | 8,986,254 | | 3.13% |
| Situations Offshore Fund, Ltd | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Yannix Fund Limited | Tactical | 8,702,862 | | 3.03% |
| | Trading | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Spinnaker GEM Redemption Pool Limited | Event | 3,201,741 | | 1.12% |
| | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Amaranth International Limited | Relative | 595,273 | | 0.21% |
| | Value | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Tisbury Fund Limited | Event | 464,131 | | 0.16% |
| | Driven | | | |
+------------------------------------------+------------+-------------+----------+-----------+
| Total | | 316,680,939 | | 110.34% |
+------------------------------------------+------------+-------------+----------+-----------+
(1) Substantially all of the assets held by Goldman Sachs BH Fund Offshore SPC
are invested in Brevan Howard Fund Limited and Goldman Sachs Classic Offshore
Holdings, Ltd. are invested in Manikay Master Fund, L.P.
Board Members
The Directors of the Company are as follows:
Christopher Sherwell, (Chairman), aged 62, is a non-executive Director of a
number of investment-related companies. He was Managing Director of Schroders
(CI) Limited from April 2000 until January 2004 and served as a Director of
various Schroder group companies and investment funds. He remained a
non-executive Director of Schroders (CI) Limited before stepping down on 31
December 2008. His other directorships include chairmanship of Hermes
Commodities Umbrella Fund Limited and of Consulta (Channel Islands) Limited, a
specialist investment management company. Before joining Schroders in 1993 he
worked as a Far East regional strategist with Smith New Court Securities in
London and then Hong Kong. He was previously a journalist, working for the
Financial Times. He is a resident of Guernsey. Mr Sherwell was appointed as a
non-executive Director of the Company on 3 July 2006.
Talmai Morgan, aged 57, qualified as a Barrister in 1976. He moved to Guernsey
in 1988 where he worked for Barings and then for the Bank of Bermuda as Managing
Director of Bermuda Trust (Guernsey) Limited. From January 1999 to June 2004, he
was Director of Fiduciary Services and Enforcement at the Guernsey Financial
Services Commission (Guernsey's financial regulatory agency) where he was
responsible for the design and subsequent implementation of Guernsey's law
relating to the regulation of fiduciaries, administration businesses and company
directors. He was also particularly involved in Working Groups of the Financial
Action Task Force and the Offshore Group of Banking Supervisors. Mr Morgan holds
a MA in Economics and Law from Cambridge University. He is a Director of a
number of listed investment funds and is a resident of Guernsey. Mr Morgan was
appointed as a non-executive Director of the Company on 3 July 2006. On 17
February 2010 Mr Morgan was appointed as Senior Independent Director.
Charles Baillie, aged 43, is co-head of the Alternative Investments and Manager
Selection (AIMS) businesses in the Goldman Sachs Asset Management Division,
overseeing the Private Equity Group (PEG), Hedge Fund Strategies Group, Global
Manager Strategies Group, and Petershill Group. Charles is also co-chairman of
the PEG Investment Committee, and previously served as co-head of PEG. Prior to
joining PEG, Charles worked in the Mergers & Acquisitions Group in London, where
he focused on restructurings. He has served as secretary to the Operating
Committee, a group of senior partners that establish firmwide operating policy.
He was named Managing Director in 2002 and partner in 2008. Charles joined the
firm as an analyst in 1991 in the Corporate Finance Department of the Investment
Banking Division. Charles received a BAH from Queen's University, Canada, an MA
from the University of Oxford, and an MBA from the Harvard Graduate School of
Business Administration, where he graduated as a Baker Scholar. Mr Baillie was
appointed as a non-executive Director of the Company on 28 August 2008.
Christopher Legge, aged 55, is a Guernsey resident and worked for Ernst & Young
in Guernsey from 1983 to 2002. Having joined the firm as an audit manager in
1983, he was appointed a partner in 1986 and managing partner in 1998. From 1990
to 1998, he was head of Audit and Accountancy, and was responsible for the
audits of a number of insurance, banking, investment fund and financial services
clients. He also had the responsibility for the firm's training, quality control
and compliance functions. He was appointed managing partner of Ernst & Young for
the Channel Islands region in 2000. Since his retirement from Ernst & Young in
2003, Mr Legge has held a number of non-executive directorships in the financial
services sector including B H Macro Limited and Third Point Offshore Investors
Limited. He is an FCA and holds a BA (Hons) in Economics from the University of
Manchester. Mr Legge was appointed as a non-executive Director of the Company on
29 September 2008.
Responsibility Statement1
The Directors of Goldman Sachs Dynamic Opportunities Limited confirm:
a) the condensed set of interim unaudited financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union:
b) the interim Investment Manager's Report includes a fair review of the
information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8 of
the United Kingdom Financial Services Authority, namely:
* an indication of important events that have occurred during the first six
months and their impact on the condensed set of unaudited financial statements
and a description of the principal risks and uncertainties for the remaining six
months of the financial year; and
* material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report.
By order of the Board
+--------------------------------------+--------------------------------------+
| Christopher Sherwell | Christopher Legge |
| Director | Director |
| 26 August 2010 | |
+--------------------------------------+--------------------------------------+
1The unaudited condensed financial statements are published on the
www2.goldmansachs.com website, which is maintained by the Company's Investment
Manager. The maintenance and integrity of the website is, so far as relates to
the Company, the responsibility of the Investment Manager. The work carried out
by the auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes that may have
occurred to the financial statements since they were initially presented on the
website.
+----------------------------------------------------------------------------+
| Independent Review Report to the Members of Goldman Sachs Dynamic |
| Opportunities Limited |
+----------------------------------------------------------------------------+
| Introduction |
+----------------------------------------------------------------------------+
| We have been engaged by the Company to review the condensed set of |
| financial statements in the half-yearly financial report for the six |
| months ended 30 June 2010 which comprise the Condensed Unaudited |
| Statements of Assets and Liabilities, the Condensed Unaudited Statements |
| of Comprehensive Income, the Condensed Unaudited Statements of Changes in |
| Equity and Net Assets Attributable to Holders of Repayable Shares, the |
| Condensed Unaudited Statements of Cash Flows and related notes. We have |
| read the other information contained in the half-yearly financial report |
| and considered whether it contains any apparent misstatements or material |
| inconsistencies with the information in the condensed set of financial |
| statements. |
+----------------------------------------------------------------------------+
| Directors' responsibilities |
+----------------------------------------------------------------------------+
| The half-yearly financial report is the responsibility of, and has been |
| approved by, the Directors. The Directors are responsible for preparing |
| the half-yearly financial report in accordance with the Disclosure and |
| Transparency Rules of the United Kingdom's Financial Services Authority. |
| As disclosed in Note 2 - Significant accounting policies, the annual |
| financial statements of the Company were prepared in accordance with |
| International Financial Reporting Standards ("IFRS") as adopted by the |
| European Union. The condensed set of financial statements included in this |
| half-yearly financial report has been prepared in accordance with |
| International Accounting Standard 34, "Interim Financial Reporting", as |
| adopted by the European Union. |
+----------------------------------------------------------------------------+
| Our responsibility |
+----------------------------------------------------------------------------+
| Our responsibility is to express to the Company a conclusion on the |
| condensed set of financial statements in the half-yearly financial report |
| based on our review. This report, including the conclusion, has been |
| prepared for and only for the Company for the purpose of the Disclosure |
| and Transparency Rules of the United Kingdom's Financial Services |
| Authority and for no other purpose. We do not, in producing this report, |
| accept or assume responsibility for any other purpose or to any other |
| person to whom this report is shown or into whose hands it may come save |
| where expressly agreed by our prior consent in writing. |
+----------------------------------------------------------------------------+
| Scope of review |
+----------------------------------------------------------------------------+
| We conducted our review in accordance with International Standard on |
| Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial |
| Information Performed by the Independent Auditor of the Entity' issued by |
| the Auditing Practices Board for use in the United Kingdom. A review of |
| interim financial information consists of making enquiries, primarily of |
| persons responsible for financial and accounting matters, and applying |
| analytical and other review procedures. A review is substantially less in |
| scope than an audit conducted in accordance with International Standards |
| on Auditing (UK and Ireland) and consequently does not enable us to obtain |
| assurance that we would become aware of all significant matters that might |
| be identified in an audit. Accordingly, we do not express an audit |
| opinion. |
+----------------------------------------------------------------------------+
| Conclusion |
+----------------------------------------------------------------------------+
| Based on our review, nothing has come to our attention that causes us to |
| believe that the condensed set of financial statements in the half-yearly |
| financial report for the six months ended 30 June 2010 is not prepared, in |
| all material respects, in accordance with International Accounting |
| Standard 34 "Interim Financial Reporting" as adopted by the European Union |
| and the Disclosure and the Disclosure and Transparency Rules of the United |
| Kingdom's Financial Services Authority. |
+----------------------------------------------------------------------------+
| |
| PricewaterhouseCoopers CI LLP |
| Chartered Accountants |
| 26 August 2010 |
+----------------------------------------------------------------------------+
Condensed Unaudited Statements of Assets and Liabilities
+--------------------------------------------+------+----------+--------------+--+---------------+
| | | | As at | | As at |
| | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| | Note | 30 June 2010 | 31 |
| | | | December |
| | | | 2009 |
+--------------------------------------------+------+-------------------------+------------------+
| | | | US$ | | US$ |
+--------------------------------------------+------+----------+--------------+--+---------------+
| ASSETS | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Financial assets at fair value through | 5 | | 316,680,939 | | 349,551,024 |
| profit or loss | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Unrealised gain on forward currency | 7 | | 11,743,823 | | - |
| contracts | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Cash and cash equivalents |2(b) | | 45,182,223 | | 69,748,549 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Amount due from Investees | | | - | | 550,404 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Other receivables | | | 16,655 | | 26,067 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Total assets | | | 373,623,640 | | 419,876,044 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| LIABILITIES | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Current liabilities | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Redemptions payable | 10 | | 65,221,973 | | 62,835,004 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Unrealised loss on forward currency | 7 | | 19,222,290 | | - |
| contracts | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Management fee |8(a) | | 886,104 | | 1,031,950 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Legal fees | | | 662,298 | | 354,726 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Administration fee |8(c) | | 29,537 | | 17,200 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Custodian fee |8(d) | | 44,669 | | - |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Other expenses | | | 526,936 | | 371,377 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Total current liabilities, excluding net | | | | | |
| assets attributable | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| to holders of repayable shares | | | 86,593,807 | | 64,610,257 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Net assets attributable to holders of | 12 | | 287,029,833 | | 355,265,787 |
| repayable shares | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| | | | | | |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Net assets per GBP share | 11 | | GBP1.0621 | | GBP0.9948 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Net assets per US$ share | 11 | | US$1.9707 | | US$1.9735 |
+--------------------------------------------+------+----------+--------------+--+---------------+
| Net assets per EUR share | 11 | | EUR1.5603 | | EUR1.3340 |
+--------------------------------------------+------+----------+--------------+--+---------------+
The financial statements were authorised for issue by the Board of Directors on
26 August 2010 and are signed on its behalf by:
+--------------------------------------+--------------------------------------+
| Christopher Sherwell | Christopher Legge |
| Director | Director |
+--------------------------------------+--------------------------------------+
The accompanying notes form an integral part of the financial statements.
Condensed Unaudited Statements of Comprehensive Income
+---------------------------------+------+------+-------------+------+-------------+
| | | For the six | For the six |
| | | months ended | months ended |
+---------------------------------+------+--------------------+--------------------+
| | Note | | 30 June | 30 June 2009 |
| | | | 2010 | |
+---------------------------------+------+------+-------------+--------------------+
| | | | US$ | | US$ |
+---------------------------------+------+------+-------------+------+-------------+
| Income | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Interest income | | | 9,402 | | 38,923 |
+---------------------------------+------+------+-------------+------+-------------+
| Net changes in financial assets | | | 1,112,491 | | 50,070,974 |
| at fair value | 6 | | | | |
| through profit or loss | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Other income | | | 766,426 | | 53,711 |
+---------------------------------+------+------+-------------+------+-------------+
| Total income | | | 1,888,319 | | 50,163,608 |
+---------------------------------+------+------+-------------+------+-------------+
| | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Expenses | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Management fee |8(a) | | 2,891,041 | | 3,958,465 |
+---------------------------------+------+------+-------------+------+-------------+
| Legal fees | | | 630,371 | | 368,600 |
+---------------------------------+------+------+-------------+------+-------------+
| Listing sponsor fees | | | 341,977 | | 306,371 |
+---------------------------------+------+------+-------------+------+-------------+
| Administration fee |8(c) | | 93,212 | | 65,974 |
+---------------------------------+------+------+-------------+------+-------------+
| Custodian fee |8(d) | | 129,397 | | - |
+---------------------------------+------+------+-------------+------+-------------+
| Directors' remuneration and |8(b) | | 61,145 | | 59,398 |
| expenses | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Audit fee | | | 42,918 | | 37,439 |
+---------------------------------+------+------+-------------+------+-------------+
| Bank Interest and overdraft |8(e) | | 173,407 | | 66,058 |
| facility fees | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Professional fees | | | 71,727 | | 89,428 |
+---------------------------------+------+------+-------------+------+-------------+
| Other expenses | | | 91,657 | | 80,308 |
+---------------------------------+------+------+-------------+------+-------------+
| Total operating expenses | | | 4,526,852 | | 5,032,041 |
+---------------------------------+------+------+-------------+------+-------------+
| | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Net (loss)/income from | | | (2,638,533) | | 45,131,567 |
| operations | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Change in net assets from | | | (2,638,533) | | 45,131,567 |
| operations | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Other comprehensive income: | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Currency translation | | | (375,448) | | (52,357) |
| differences | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Total comprehensive income | | | (3,013,981) | | 45,079,210 |
+---------------------------------+------+------+-------------+------+-------------+
| | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Return per GBP share | 16 | | GBP0.0486 | | GBP0.0805 |
| | | | | | |
+---------------------------------+------+------+-------------+------+-------------+
| Return/(loss)per US$ share | 16 | | (US$0.0048) | | (US$0.3527) |
+---------------------------------+------+------+-------------+------+-------------+
| Return/(loss) per EUR share | 16 | | EUR0.1558 | | (EUR0.1201) |
+---------------------------------+------+------+-------------+------+-------------+
All items derive from continuing activities.
The accompanying notes form an integral part of the financial statements.
Condensed Unaudited Statements of Changes in Net Assets Attributable to Holders
of Repayable Shares
+-----------------------------+------------------------------------+--------------+
| | | Net |
| | | Assets |
+-----------------------------+------------------------------------+--------------+
| | | Attributable |
| | | to |
+-----------------------------+------------------------------------+--------------+
| For the six months ended | | Holders |
| 30 June 2010 | | of |
+-----------------------------+------------------------------------+--------------+
| | | Repayable |
+-----------------------------+------------------------------------+--------------+
| | | Shares |
+-----------------------------+------------------------------------+--------------+
| | | US$ |
+-----------------------------+------------------------------------+--------------+
| | | |
+-----------------------------+------------------------------------+--------------+
| Net assets at beginning of | | 355,265,787 |
| period | | |
+-----------------------------+------------------------------------+--------------+
| Total comprehensive income | | (3,013,981) |
| for the period | | |
+-----------------------------+------------------------------------+--------------+
| Redemption of shares | | (65,221,973) |
+-----------------------------+------------------------------------+--------------+
| Net assets at end of | | 287,029,833 |
| period | | |
+-----------------------------+------------------------------------+--------------+
+-----------------------------+------------------------------------+---------------+
| | | Net |
| | | Assets |
+-----------------------------+------------------------------------+---------------+
| | | Attributable |
| | | to |
+-----------------------------+------------------------------------+---------------+
| For the six months ended 30 | | Holders |
| June 2009 | | of |
+-----------------------------+------------------------------------+---------------+
| | | Repayable |
+-----------------------------+------------------------------------+---------------+
| | | Shares |
+-----------------------------+------------------------------------+---------------+
| | | US$ |
+-----------------------------+------------------------------------+---------------+
| | | |
+-----------------------------+------------------------------------+---------------+
| Net assets at beginning of | | 515,067,190 |
| period | | |
+-----------------------------+------------------------------------+---------------+
| Total comprehensive income | | 45,079,210 |
| for the period | | |
+-----------------------------+------------------------------------+---------------+
| Redemption of shares | | (232,372,335) |
+-----------------------------+------------------------------------+---------------+
| Net assets at end of | | 327,774,065 |
| period | | |
+-----------------------------+------------------------------------+---------------+
The accompanying notes form an integral part of the financial statements.
Condensed Unaudited Statements of Cash Flows
+-------------------------------------------+--+----------------+-----+---------------+
| For the six months ended | For the six |
| | months ended |
+---------------------------------------------------------------+---------------------+
| | 30 June | 30 June 2009 |
| | 2010 | |
+-------------------------------------------+-------------------+---------------------+
| | | US$ | | US$ |
+-------------------------------------------+--+----------------+-----+---------------+
| Cash flows from operating activities | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Net (loss)/income from Operations | | (2,638,533) | | 45,131,567 |
+-------------------------------------------+--+----------------+-----+---------------+
| Adjustments to reconcile net | | | | |
| increase/(decrease) in net assets | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| to net cash from operating activities: | | | | |
| | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Net changes in fair value through profit | | (3,777,787) | | (50,070,974) |
| or loss | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Purchase of financial assets and | | - | | (30,109,388) |
| settlement of financial liabilities | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Proceeds from sales of financial assets | | | | |
| at fair value through | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| profit or loss | | 36,647,872 | | 147,418,955 |
+-------------------------------------------+--+----------------+-----+---------------+
| Increase in redemptions payable | | 354,780 | | - |
+-------------------------------------------+--+----------------+-----+---------------+
| Net unrealised loss on forward currency | | 7,478,467 | | - |
| contracts | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Decrease in operating assets | | 9,412 | | 73,705 |
+-------------------------------------------+--+----------------+-----+---------------+
| Decrease in amount due from investees | | 550,404 | | - |
+-------------------------------------------+--+----------------+-----+---------------+
| Increase in operating liabilities | | 374,291 | | 471,746 |
+-------------------------------------------+--+----------------+-----+---------------+
| Net cash from operating activities | | 38,998,906 | | 112,915,611 |
+-------------------------------------------+--+----------------+-----+---------------+
| | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Cash flows from financing activities | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Redemption of shares | | (63,189,784) | | - |
+-------------------------------------------+--+----------------+-----+---------------+
| Net cash inflow/(outflow) from financing | | (63,189,784) | | - |
| | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Net cash (decrease)/increase in cash and | | (24,190,878) | | 112,915,611 |
| cash equivalents | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Cash/(bank overdraft) and cash | | 69,748,549 | | (41,074,558) |
| equivalents at beginning of period | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| Effect of exchange rate on translation | | (375,448) | | (52,357) |
+-------------------------------------------+--+----------------+-----+---------------+
| Cash and cash equivalents at end of | | 45,182,223 | | 71,788,696 |
| period | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
| | | | | |
+-------------------------------------------+--+----------------+-----+---------------+
The accompanying notes form an integral part of the financial statements.
Notes to the Condensed Unaudited Financial Statements
for the six months ended 30 June 2010
Glossary of Hedge Fund Strategies
1. Organisation
Goldman Sachs Dynamic Opportunities Limited (the "Company") was incorporated
with limited liability in Guernsey, Channel Islands as a closed-ended investment
company on 3 July 2006. The Company's ordinary shares were listed on the London
Stock Exchange on 27 July 2006.
2. Significant accounting policies
a) Basis of preparation
The condensed set of unaudited financial statements included in this half-yearly
financial report have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and International
Accounting Standards 34 'Interim Financial Reporting', as adopted by the
European Union.
The condensed interim unaudited financial statements do not include all of the
information required for the annual financial statements, and should be read in
conjunction with the annual financial statements for the Company as at and for
the year ended 31 December 2009. The financial statements of the Company as at
and for the year ended 31 December 2009 were prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the European
Union.
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 December 2009, as described in those
financial statements, except as described below.
The following standards and amendments to existing standards, that are relevant
to the Company's operations have been published and are mandatory for accounting
periods beginning on 1 January 2011 or later periods and have not been early
adopted:
* IFRS 9, 'Financial instruments', issued in December 2009. The standard
addresses the classification and measurement of financial assets. IFRS 9 divides
all financial assets that are currently in the scope of IAS 39 into two
classifications - those measured at amortised cost and those measured at fair
value. The standard is not applicable until 1 January 2013 but is available for
early adoption. The Directors have not yet decided when to adopt IFRS 9. Its
adoption is not expected to have a very significant impact on the financial
statements because the majority of the Company's financial assets are designated
as at fair value through profit or loss.
* Revised IAS 24, 'Related party disclosures', issued in November 2009. It
supersedes IAS 24, 'Related party disclosures' issued in 2003 and is required to
be applied from 1 January 2011.The Company will apply the standard from 1
January 2011. However its adoption is not expected to have a significant impact
on the financial statements.
2. Significant accounting policies - continued
b) Cash and cash equivalents
Cash and cash equivalents consist principally of cash on hand, demand deposits
and short-term, highly liquid investments (3 months or less) and bank
overdrafts. Cash equivalents are valued at amortised cost, which approximates to
fair value.
c) Repayable Shares
The Company has issued 3 classes of Ordinary Shares comprising GBP shares, US$
shares and EUR shares. As a result of the discount management provisions as
discussed in Note 12 - Share capital, the Ordinary Shares are repayable and are
classified as financial liabilities. The Repayable shares are carried at the
redemption amount that is payable at the Statements of Assets and Liabilities
date if the holders are able to exercise the right to put the shares back to the
Company as a result of the discount management provisions.
3. Operating segments
The Company is engaged in a single segment of business, investing in hedge
funds. Information on realised gains and losses derived from sales of
investments are disclosed in Note 6 - Net changes in financial assets at fair
value through profit or loss.
The Company is domiciled in Guernsey. All of the Company's income from
investments is from underlying investment vehicles ("Investees") that are
incorporated in countries other than Guernsey. The Company has no assets
classified as non-current assets.
The Company has a diversified portfolio of investments and no single investment
accounts for more than 20% of the Company's net assets.
The Company also has a diversified Shareholder base. One investor in the EUR
Class, one investor in the US$ Class and three investors in the GBP Class own
more than 10% of the issued capital of the respective Share Classes of the
Company.
4. Taxation
The Company is domiciled in Guernsey. The Company is exempt from paying income
tax in Guernsey. The Company is registered for taxation purposes in Guernsey
where it pays an annual exempt status fee which is currently GBP600 under The
Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989.
5. Financial assets at fair value through profit or loss
+---------------------------------------------+-------------+----------+-------------+
| 30 June 2010 | 31 December 2009 |
+-----------------------------------------------------------+------------------------+
| | US$ | | US$ |
+---------------------------------------------+-------------+----------+-------------+
| Investees | 316,680,939 | | 349,551,024 |
+---------------------------------------------+-------------+----------+-------------+
6. Net changes in financial assets at fair value through profit or loss
The net realised and unrealised investment gain/(loss) from trading in financial
assets and financial liabilities shown in the Condensed Unaudited Statements of
Comprehensive Income for the six months ended 30 June 2010 and the six months
ended 30 June 2009 can be analysed as follows:
+------------------------------------------------+--------------+--+--------------+
| | For the | | For |
| | | | the |
+------------------------------------------------+--------------+--+--------------+
| six months ended | six |
| | months |
| | ended |
+---------------------------------------------------------------+-----------------+
| 30 June 2010 | 30 June |
| | 2009 |
+---------------------------------------------------------------+-----------------+
| | US$ | | US$ |
+------------------------------------------------+--------------+--+--------------+
| Net realised gain/(loss) on Investees | (3,544,621) | | 8,221,369 |
+------------------------------------------------+--------------+--+--------------+
| Net realised gain/(loss) on forward currency | 4,813,171 | | - |
| contracts | | | |
+------------------------------------------------+--------------+--+--------------+
| Net realised investment gain/(loss) | 1,268,550 | | 8,221,369 |
+------------------------------------------------+--------------+--+--------------+
| | | | |
+------------------------------------------------+--------------+--+--------------+
| Net change in unrealised gain/(loss) on | 7,322,408 | | 41,849,605 |
| Investees | | | |
+------------------------------------------------+--------------+--+--------------+
| Net change in unrealised gain/(loss) on | (7,478,467) | | - |
| forward currency contracts | | | |
+------------------------------------------------+--------------+--+--------------+
| Net unrealised investment gain/(loss) | (156,059) | | 41,849,605 |
+------------------------------------------------+--------------+--+--------------+
| | | | |
+------------------------------------------------+--------------+--+--------------+
| Net changes in financial assets at fair value | 1,112,491 | | 50,070,974 |
| through profit or loss | | | |
+------------------------------------------------+--------------+--+--------------+
| | | | |
+------------------------------------------------+--------------+--+--------------+
| Cumulative realised investment gain/(loss) | (83,621,306) | | (84,096,758) |
+------------------------------------------------+--------------+--+--------------+
| Cumulative unrealised investment gain/(loss) | 3,894,571 | | (42,530,422) |
+------------------------------------------------+--------------+--+--------------+
7. Forward currency contracts
As announced on 22 March 2010, the Company reinstated the currency hedging
arrangements in full for its GBP shares only (through the use of rolling forward
foreign exchange contracts) effective 30 March 2010. Currency hedging has not
been reinstated for the EUR shares. Following the reinstatement of the currency
hedging arrangements for GBP share, the Company had the following open forward
currency contracts at 30 June 2010:
+----------------------+----------------+--------------+-------+-----------------+
| As at 30 June 2010 | | | | |
+----------------------+----------------+--------------+-------+-----------------+
| Currency Bought | Currency | Maturity | Fair value/ |
| | Sold | Date | Unrealised |
| | | | gain/(loss) |
+----------------------+----------------+--------------+-------------------------+
| | | | | |
+----------------------+----------------+--------------+-------+-----------------+
| GBP177,496,291 | $273,049,645 | 22/07/2010 | | |
+----------------------+----------------+--------------+-------+-----------------+
| $273,049,645 | GBP190,344,820 | 22/07/2010 | | (US$19,222,290) |
+----------------------+----------------+--------------+-------+-----------------+
| | | | | |
+----------------------+----------------+--------------+-------+-----------------+
| GBP190,343,494 | $273,049,645 | 23/08/2010 | | |
+----------------------+----------------+--------------+-------+-----------------+
| $273,049,645 | GBP184,667,689 | 23/08/2010 | | US$8,491,316 |
| | | | | |
+----------------------+----------------+--------------+-------+-----------------+
| | | | | |
+----------------------+----------------+--------------+-------+-----------------+
| GBP3,354,185 | $4,971,328 | 24/09/2010 | | |
+----------------------+----------------+--------------+-------+-----------------+
| GBP184,658,322 | $273,049,645 | 24/09/2010 | | US$3,252,507 |
| | | | | |
+----------------------+----------------+--------------+-------+-----------------+
| | | | | |
| | | | | (US$7,478,467) |
+----------------------+----------------+--------------+-------+-----------------+
8. Significant agreements and related parties
a) Investment Manager
The Investment Manager is remunerated at a rate of 1.5% per annum of the Net
Assets attributable to each class of shares as at each month end (out of which
it pays the trail commission payable to qualifying investors) for the provision
of investment management services. The Investment Manager will be entitled to a
performance fee equivalent to 10% of the amount by which the year-end Net Assets
attributable to each class of shares exceeds the greatest value of the Net
Assets attributable to each class of shares at the end of any previous financial
period. During the six months ended 30 June 2010, Management fees were
US$2,891,041 (30 June 2009: US$3,958,465). Management fees payable at period end
were US$886,104 (31 December 2009: US$1,031,950).
b) Directors' remuneration and expenses
During the six months ended 30 June 2010, Directors fees and expenses were
US$61,145 (30 June 2009: US$59,398). No Directors' fees and expenses were
outstanding as at 30 June 2010 (31 December 2009: Nil). Mr Baillie is affiliated
with the Investment Manager and waived his right to a fee of GBP22,000 per
annum.
c) Administrator
Effective 12 January 2010 the annual remuneration rate for Administration fees
was 0.05%; (0.025% for the period from 1 January 2009 to 12 January 2010).
During the six months ended 30 June 2010, Administration fees were US$93,212 (30
June 2009: US$65,974). Administration fees payable at 30 June 2010 were
US$29,537 (31 December 2009: US$17,200).
d) Custodian
Effective 12 January 2010, the annual remuneration rate for custodian fees was
0.05%. During the six months ended 30 June 2010, Custodian fees were US$129,397
(30 June 2009: Nil). Custodian fees payable at 30 June 2010 were US$44,669 (31
December 2009; Nil).
e) Credit facility
The Company's overdraft facility (the "Facility") with Royal Bank of Canada
(Channel Islands) Limited ("RBC") matured effective March 2010.
Effective March 2010, the Company entered into a new credit facility with the
Royal Bank of Canada, Grand Cayman for up to a maximum of US$45 million. The new
facility is renewable annually and carries interest on amounts drawn down at
LIBOR plus 1.50%. In addition, an annual commitment fee of 1.00% is payable on
the maximum amount which may be drawn.
9. Financial risk management
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting
obligations associated with financial
liabilities. The Company's investments in the Investees can be redeemed on a
limited basis. As a result, the Company may not be able to liquidate quickly
some of its investments in these instruments in order to respond to specific
events such as deterioration in the creditworthiness of any particular Investee.
The Company, being closed-ended, is able to invest its portfolio with less
regard to the issues arising from the limited liquidity of the Investees than
would be the case for open-ended funds of hedge funds. In order to help mitigate
liquidity risk, the Company maintains a short-term overdraft facility as
detailed in Note 8(e) - Credit facility.
The Advisors of the Investees may, at their discretion, transfer a portion of
the Company's investment into share
classes where liquidity terms are directed by the Advisor in accordance with the
respective Investee's offering
memorandum, commonly referred to as side pocket share classes. These side pocket
share classes may have
restricted liquidity and prohibit the Company from fully liquidating its
investments without delay. The Company's
Investment Manager attempts to determine each Investee's strategy on side
pockets prior to making an allocation to the Investee through its due diligence
process. However, no assurance can be given on whether or not the Investee will
implement side pockets during the investment period. The Advisors of the
Investees may also, at their discretion, suspend redemptions or implement other
restrictions on liquidity which could impact the Company. As at 30 June 2010,
US$30,182,777 or 8% (31 December 2009: US$34,924,631 or 10%) of Net Assets,
inclusive of amounts payable to redeeming Shareholders, were considered illiquid
by the Company due to restrictions implemented by certain Advisors of the
Investees.
Certain of the Company's Investees may have liquidity exposure related to the
Advisors' estimates of the recovery value of claims against Lehman Brothers
Holdings, Inc. and for certain of its subsidiaries and affiliates ("Lehman"),
including cash claims involving amounts owed to the Investees by Lehman and/or
proprietary claims involving recovery of Investees' assets held by Lehman at the
time of its insolvency. These estimates are based on information received from
the majority, but not all of, the Advisors, and the Company has no way of
independently verifying or otherwise confirming the accuracy of the information
provided. As a result, there can be no guarantee that such estimates are
accurate. There is significant uncertainty with respect to the ultimate outcome
of the Lehman insolvency proceedings, and therefore the amounts ultimately
recovered from Lehman could be materially different than such estimates. Based
on the information received, the gross indirect exposure to Lehman did not
materially affect the Company's net assets attributable to holders of repayable
shares.
9. Financial risk management - continued
Liquidity risk - continued
The table below summarises the Company's ability to redeem from the underlying
Investees. The minimum holding period represents the initial restriction
associated with each new invested amount.
+--------------------------------------------+-------------+------+---------+
| | | | |
+--------------------------------------------+-------------+------+---------+
| | Redemption | Remaining |
| | | Holding |
+--------------------------------------------+-------------+----------------+
| Investees | Period | | Period |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Equity Long/Short | | | |
+--------------------------------------------+-------------+------+---------+
| AKO Fund Limited | Quarterly | | None |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Glenview Capital Partners (Cayman) Limited | Quarterly | | None |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Moon Capital Global Equity Offshore Fund | Quarterly | None |
| Limited | | |
+--------------------------------------------+-------------+----------------+
| TPG-Axon Partners (Offshore) Limited(1) | Quarterly | None |
| | | |
+--------------------------------------------+-------------+----------------+
| Event Driven | | | |
+--------------------------------------------+-------------+------+---------+
| Anchorage Capital Partners Offshore Fund | Annually | | None |
| Limited(1) | | | |
+--------------------------------------------+-------------+------+---------+
| Eton Park Overseas Fund Limited(1) | Annually | | None |
+--------------------------------------------+-------------+------+---------+
| Goldman Sachs Classic Offshore Holdings, | Quarterly | | 15 |
| Ltd. | | | Months |
+--------------------------------------------+-------------+------+---------+
| Harbinger Capital Partners Special | N/A | | N/A |
| Situations Offshore Fund, Ltd.(1) | | | |
+--------------------------------------------+-------------+------+---------+
| Silver Point Capital Offshore Fund | Annually | | None |
| Limited(1) | | | |
+--------------------------------------------+-------------+------+---------+
| Spinnaker GEM Redemption Pool Limited(1) | N/A | | N/A |
+--------------------------------------------+-------------+------+---------+
| Spinnaker Global Opportunity Fund | 3 | | 12 |
| | Years | | Months |
+--------------------------------------------+-------------+------+---------+
| The Children's Investment Fund | 3 | 9 Months |
| | Years | |
+--------------------------------------------+-------------+----------------+
| Tisbury Fund Limited(1) | N/A | | N/A |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Relative Value | | | |
+--------------------------------------------+-------------+------+---------+
| Amaranth International Limited(1) | N/A | | N/A |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Tactical Trading | | | |
+--------------------------------------------+-------------+------+---------+
| Goldman Sachs BH Fund Offshore SPC | Monthly | | None |
| | | | |
+--------------------------------------------+-------------+------+---------+
| DE Shaw Oculus International Fund(1) | Quarterly | | None |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Moore Global Investments Limited | Quarterly | | None |
| | | | |
+--------------------------------------------+-------------+------+---------+
| Yannix Fund Limited | Quarterly | | None |
| | | | |
+--------------------------------------------+-------------+------+---------+
| | | | |
+--------------------------------------------+-------------+------+---------+
| (1)This Investee has notified the Company of certain restrictions |
| on liquidity, which may include side pocket investments, suspended |
| redemptions or other implemented restrictions on liquidity. |
+--------------------------------------------+-------------+------+---------+
Other aspects of the Company's financial risk management objectives and policies
are consistent with those described in the annual report for the year ended 31
December 2009.
10. Redemptions payable
2009 redemptions payable
On 9 April 2010, the remaining redemption monies in relation to the 2009
redemption proposals and redemption offers were paid in one tranche on the basis
of a NAV Calculation Date as of 26 February 2010 as follows:
+-----------------------+---------------+----------+---------------+----------+---------------+----------+---------------+
| | GBP | | US$ | | EUR | | Total |
| | shares | | shares | | shares | | |
+-----------------------+---------------+----------+---------------+----------+---------------+----------+---------------+
| Remaining shares | 15,980,992 | | 9,143,716 | | 10,054,424 | | 35,179,132 |
| payable | | | | | | | |
| (April 2010) | | | | | | | |
+-----------------------+---------------+----------+---------------+----------+---------------+----------+---------------+
| April 2010 redemption | GBP16,922,717 | | US$18,112,392 | | EUR14,152,742 | | |
| value and payment | | | | | | | |
| (based on NAV as at | | | | | | | |
| 26 February 2010) | | | | | | | |
+-----------------------+---------------+----------+---------------+----------+---------------+----------+---------------+
| US$ paid equivalent | US$25,763,145 | | US$18,112,392 | | US$19,314,247 | | US$63,189,784 |
+-----------------------+---------------+----------+---------------+----------+---------------+----------+---------------+
2010 redemptions payable
Redemptions payable in relation to the 2010 redemption proposals consists of the
amounts payable to holders of the cancelled 29,090,245 US$ shares and 4,130,495
EUR shares based on the acceptances received for the redemption proposals as
announced on 24 June 2010. The redemption payable amounts at 30 June 2010 are
set out in the below table:
+-----------------------+---------+----------+---------------+----------+--------------+----------+---------------+
| | GBP | | US$ | | EUR | | Total |
| | shares | | shares | | shares | | |
+-----------------------+---------+----------+---------------+----------+--------------+----------+---------------+
| Number of shares | - | | 29,090,245 | | 4,130,495 | | 33,220,740 |
| redeemed | | | | | | | |
+-----------------------+---------+----------+---------------+----------+--------------+----------+---------------+
| Redemptions payable | - | | US$57,327,891 | | EUR6,444,674 | | |
| value (based on NAV | | | | | | | |
| as at 30 June 2010) | | | | | | | |
+-----------------------+---------+----------+---------------+----------+--------------+----------+---------------+
| US$ payable | - | | US$57,327,891 | | US$7,894,082 | | US$65,221,973 |
| equivalent | | | | | | | |
+-----------------------+---------+----------+---------------+----------+--------------+----------+---------------+
Subsequent to 30 June 2010 all the Redeemed shares have been cancelled and all
Redeeming Shareholders have ceased to be Shareholders in the Company and instead
will be unsecured creditors in respect of the redemption monies outstanding from
time to time.
See Note 17 - Subsequent Events for more information regarding redemptions.
11. Net asset value
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| | Six months ended | | Year | | Year |
| | | | Ended | | Ended |
+------------------------------+------------------------+----------+-------------+----------+--------------+
| GBP shares | | 30 June | 31 December 2009 | 31 December 2008 |
| | | 2010 | | |
+------------------------------+----------+-------------+------------------------+-------------------------+
| Net assets (GBP) | | 175,795,575 | | 175,752,305 | | 234,149,408 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| Number of shares in issue | | 165,516,362 | | 176,674,709 | | 246,974,943 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| NAV (GBP) per GBP share(1) | | 1.0621 | | 0.9948 | | 0.9481 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| US$ shares | | | | | | |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| Net assets (US$) | | 8,360,181 | | 43,547,276 | | 82,471,432 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| Number of shares in issue | | 4,242,264 | | 22,066,468 | | 49,253,593 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| NAV (US$) per US$ share | | 1.9707 | | 1.9735 | | 1.6744 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| EUR shares | | | | | | |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| Net assets (EUR) | | 12,790,706 | | 19,442,246 | | 69,056,105 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| Number of shares in issue | | 8,197,745 | | 14,574,570 | | 59,122,699 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
| NAV (EUR) per EUR share(2) | | 1.5603 | | 1.3340 | | 1.1680 |
+------------------------------+----------+-------------+----------+-------------+----------+--------------+
(1) In US$ terms, the NAV (GBP) per GBP share is US$1.5890 (31 December 2009:
US$1.6065) based on an exchange rate of 1.4961 (31 December 2009: 1.6149).
(2) In US$ terms, the NAV (EUR) per EUR share is US$1.9112 (31 December 2009:
US$1.9140) based on an exchange rate of 1.2249 (31 December 2009: 1.4348).
12. Share capital
2010 Continuation resolutions and redemptions
Over the current period and similar to the prior year, the Company's GBP shares,
the US$ shares and the EUR shares traded, on average, at discounts to their
respective Net Asset Values in excess of the discount management provisions, as
described in the Articles of Association, and accordingly, the Company announced
on 14 January 2010 that the Directors were required to propose 2010 continuation
resolutions in respect to each share class.
A meeting to consider the2010 continuation resolutions was held on 23 April
2010. Shareholders passed a continuation resolution for the GBP shares. However,
continuation resolutions for the EUR shares and the US$ shares failed to pass. As
announced on 24 June 2010, the Board received acceptances for redemption
proposals for 29,090,245 US$ shares and 4,130,495 EUR shares.
The redeemed shares have an aggregate value (based on NAV as at 30 June 2010 and
prevailing spot currency exchange rates) of US$65,221,973. The redeemed shares
were cancelled in July 2010 and as a result, all holders of the redeemed shares
ceased to be Shareholders in the Company and are classified as unsecured
creditors on the Condensed Unaudited Statements of Assets and Liabilities. See
Note 10 - Redemptions payable.
See Note 17 - Subsequent Events for more information regarding redemptions.
13. Treasury Shares
The Company has not repurchased any of its own shares and has not sold any
shares held in treasury back to the market during the six month ended 30 June
2010 (30 June 2009: Nil). The Company did not hold any shares in treasury as at
30 June 2010 (31 December 2009: Nil).
14. Seasonality
The Company's operations are not affected by seasonality or cyclicality and as
such they have no impact on the condensed unaudited financial statements.
15. Ultimate Controlling Party
In the opinion of the Directors on the basis of shareholdings advised to them,
the Company has no ultimate controlling party.
16. Return Per Share
Basic return per share is calculated by dividing the returns attributable to
holders of repayable shares of the Company by the weighted average number of
shares in issue during the period excluding shares purchased by the Company and
held as treasury shares and redeemed shares.
There were no potentially dilutive shares in issue at 30 June 2010.
17. Subsequent Events
In July 2010, the Company reported the conversion between share classes operated
in respect of the June 2010 Conversion Calculation Date. Following the above
transactions and on the basis of Conversion Notices received by the Company, the
Company's issued share capital at 31 July 2010 consisted of 166,895,620 GBP
shares, 6,918,005 EUR shares and 4,371,277 US$ shares.
Subsequent to 30 June 2010, the Company established a redemption portfolio
comprising approximately 18% of each investment in the Company's portfolio, as
well as a pro-rata portion of assets and liabilities as valued at 30 June 2010.
Investments in the redemption portfolio will be realised over time including by
way of a reallocation to the continuing portfolio.
Corporate Information
+--------------------------------------+--------------------------------------+
| Directors | Custodian |
| Christopher Sherwell (Chairman) | Royal Bank of Canada (Channel |
| Talmai Morgan (Senior Independent | Islands) Limited |
| Director) | PO Box 48, Canada Court |
| Christopher Legge | Upland Road |
| Charles Baillie | St Peter Port |
| | Guernsey |
| All the above are non-executive | GY1 3BQ |
| Directors having the following | |
| correspondence address: | Independent Auditors |
| | PricewaterhouseCoopers CI LLP |
| RBC Offshore Fund Managers Limited | PO Box 321, National Westminster |
| PO Box 246, Canada Court | House |
| Upland Road | Le Truchot |
| St Peter Port | St Peter Port |
| Guernsey | Guernsey |
| GY1 3QE | GY1 4ND |
| | |
| Administrator | Registrar |
| RBC Offshore Fund Managers Limited | Capita IRG (CI) Limited |
| PO Box 246, Canada Court | 2nd Floor |
| Upland Road | No 1 Le Truchot |
| St Peter Port | St Peter Port |
| Guernsey | Guernsey |
| GY1 3QE | GY1 4AE |
| | |
| Secretary and Registered Office | Advocates to the Company |
| RBC Offshore Fund Managers Limited | Ogier |
| PO Box 246, Canada Court | Ogier House |
| Upland Road | St Julians Avenue |
| St Peter Port | St Peter Port |
| Guernsey | Guernsey |
| GY1 3QE | GY1 1WA |
| | |
| Investment Manager | Broker |
| Goldman Sachs Hedge Fund Strategies | RBS Hoare Govett Limited |
| LLC | 250 Bishopsgate |
| 200 West Street | London |
| New York, New York | EC2M 4AA |
| 10282 | |
| United States | |
| | |
| UK Solicitors to the Company | |
| Bingham McCutchen (London) LLP | |
| 41 Lothbury | |
| London | |
| EC2R 7HF | |
| | |
+--------------------------------------+--------------------------------------+
+----------------------------------------------------------------------------+
| Event Driven |
+----------------------------------------------------------------------------+
| Event driven strategies seek to identify security price changes resulting |
| from corporate events such as restructurings, mergers, takeovers, |
| spin-offs and other special situations. Corporate events arbitrageurs |
| generally choose their investments based on their perceptions of the |
| likelihood that the event or transaction will occur, the amount of time |
| that the process will take and the perceived ratio of return to risk. |
| Strategies that may be used in the event driven sector include risk |
| arbitrage/special situations and credit opportunities/distressed |
| securities, each of which is described in greater detail below. However, |
| other strategies may be employed as well. |
| |
| Risk Arbitrage/Special Situations |
| Risk arbitrageurs seek to capture the price spread between current market |
| prices and the value of securities upon successful completion of a |
| takeover or merger transaction. The availability of spreads reflects the |
| unwillingness of other market participants to take on transaction-based |
| risk, i.e. the risk that the transaction will not be completed and the |
| price of the company being acquired will fall. Risk arbitrageurs evaluate |
| this risk and seek to create portfolios that reduce specific event risk. |
| Special situations such as spin-offs and corporate reorganisations and |
| restructurings offer additional opportunities for Advisors. Often these |
| strategies are employed alongside risk arbitrage or distressed investing. |
| An Advisor's ability to evaluate the effect of the impact and timing of |
| the event and to take on the associated event risk is the source of the |
| returns. Advisors differ in the degree to which they hedge the equity |
| market risk of their portfolios. |
| |
| Credit Opportunities/Distressed Securities |
| Credit opportunities/distressed securities strategies invest in debt or |
| equity securities of firms in or near bankruptcy. Advisors differ in terms |
| of the level of the capital structure in which they invest, the stage of |
| the restructuring process at which they invest, and the degree to which |
| they become actively involved in negotiating the terms of the |
| restructuring. |
+----------------------------------------------------------------------------+
| Equity Long/Short |
+----------------------------------------------------------------------------+
| Equity long/short strategies involve making long and short equity |
| investments, generally based on fundamental evaluations, although it is |
| expected that Advisors in this investment sector will employ a wide range |
| of styles. For example, such Advisors may (i) focus on companies within |
| specific industries; (ii) focus on companies only in certain countries or |
| regions; (iii) focus on companies with certain ranges of market |
| capitalisation; or (iv) employ a more diversified approach, allocating |
| assets to opportunities across investing styles, industry sectors, market |
| capitalisations and geographic regions. |
+----------------------------------------------------------------------------+
| Tactical Trading |
+----------------------------------------------------------------------------+
| Tactical trading strategies are directional trading strategies, which |
| generally fall into one of two categories: managed futures strategies and |
| global macro strategies. Managed futures strategies involve trading in |
| futures and currencies globally, generally using systematic or |
| discretionary approaches. Global macro strategies generally utilise |
| analysis of macroeconomic and financial conditions to develop views on |
| country, regional or broader economic themes and then seek to capitalise |
| on such views by trading in securities, commodities, interest rates, |
| currencies and other instruments. Advisors use quantitative models or |
| discretionary inputs to speculate on the direction of individual markets |
| or subsectors of markets. Advisors invest assets in a diversified |
| portfolio composed primarily of futures contracts, forward contracts, |
| physical commodities, options on futures and on physical commodities, and |
| other derivative contracts on foreign currencies, financial instruments, |
| stock indices, and other financial market indices, metals, grains and |
| agricultural products, petroleum and petroleum products, livestock and |
| meats, oil seeds, tropical products and softs (such as sugar, cocoa, |
| coffee and cotton). Advisors also engage in the speculative trading of |
| securities, including, but not limited to, equity and debt securities, |
| high yield securities, emerging market securities and other security |
| interests, and may do so on a cash basis or using options or other |
| derivative instruments. Certain Advisors may utilise other investment |
| media, such as swaps and other similar instruments and transactions. |
| Advisors generally trade futures and securities on commodities and |
| securities exchanges worldwide as well as in the interbank foreign |
| currency forward market and various other over-the-counter markets. |
+----------------------------------------------------------------------------+
+----------------------------------------------------------------------------+
| Relative Value |
+----------------------------------------------------------------------------+
| Relative value strategies seek to profit from the mispricing of financial |
| instruments, capturing spreads between related securities that deviate |
| from their fair value or historical norms. Directional and market exposure |
| is generally held to a minimum or completely hedged. Hence, relative value |
| strategies endeavour to have low correlation and beta to most market |
| indices. |
| |
| Credit Relative Value |
| Credit relative value encompasses strategies that take long and short |
| positions in corporate bonds or their derivatives to capture misvaluations |
| between single issues as well as between portfolios or indices and their |
| underlying constituents. Strategies may also involve a capital structure |
| component to capture mispricing between equity and corporate debt. |
| Strategies are driven by both qualitative fundamental analysis and |
| quantitative considerations. Portfolios are constructed to ensure that the |
| directional exposure to credit spreads is minimal. |
| |
| Convertible Arbitrage |
| Convertible bond arbitrage strategies consist of buying convertible bonds |
| and shorting an appropriate number of shares of the issuer's common stock. |
| The stock short sale is intended to hedge the stock price risk arising |
| from the equity conversion feature of the convertible bond. Due to the |
| bond features of convertibles, credit and interest rate risk may also be |
| hedged. Convertible arbitrage strategies are long volatility strategies |
| and profit primarily from rapid changes in stock price. A second source of |
| potential profit is the cash flows generated from the bond's coupon |
| payment and the short sale interest rebate. |
| |
| Equity Market Neutral |
| Equity market neutral strategies try to avoid market direction influences |
| and seek to generate returns purely from stock selection. Advisors |
| construct long and short baskets of equity securities with similar |
| characteristics but different current valuations, with the view that the |
| market will gradually realise these different valuations and correct the |
| difference. Portfolios are designed to exhibit zero or negligible beta to |
| all or most markets. In many instances, Advisors also attempt to protect |
| portfolios from industry, market capitalisation and country exposure. |
| |
| Fixed Income Relative Value |
| Fixed income relative value strategies seek to exploit pricing anomalies |
| that might exist across fixed income securities and their related |
| derivatives. Some fixed income strategies are based on macro |
| considerations, and others are primarily quantitative in nature where |
| financial modelling is an integral component. Mispricing in fixed income |
| instruments to baskets of securities is found when securities deviate from |
| historical relationships or fair value. These relationships can be |
| temporarily distorted by exogenous shock to fixed income supply and demand |
| or by structural changes in the fixed income market. Markets covered are |
| predominantly G10, developed countries, although some specialists employ |
| similar techniques in developing fixed income markets. |
+----------------------------------------------------------------------------+
Disclosures
+-------------------------------------------------------+
| The value of investments and the income derived from |
| investments can go down as well as up. Future returns |
| are not guaranteed, and a loss of principal may |
| occur. There may be conflicts of interest relating to |
| the Company and its service providers, including |
| Goldman Sachs and its affiliates, who are engaged in |
| businesses and have interests other than that of |
| managing, distributing and otherwise providing |
| services to the Company. These activities and |
| interests include potential multiple advisory, |
| transactional and financial and other interests in |
| securities and instruments that may be purchased or |
| sold by the Company, or in other investment vehicles |
| that may purchase or sell such securities and |
| instruments. These are considerations of which |
| investors in the Company should be aware. Additional |
| information relating to these conflicts is set forth |
| in the most recent prospectus for the Company. |
| Goldman Sachs Hedge Fund Strategies LLC is a U.S. |
| registered investment adviser, is part of |
| Goldman Sachs Asset Management and is a wholly owned |
| subsidiary of The Goldman Sachs Group, Inc. |
| THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR |
| SOLICITATION IN ANY JURISDICTION NO PERSON HAS BEEN |
| AUTHORISED TO GIVE ANY INFORMATION OR TO MAKE ANY |
| REPRESENTATION, WARRANTY, STATEMENT OR ASSURANCE ON |
| BEHALF OF THE COMPANY AND, IF GIVEN OR MADE, SUCH |
| OTHER INFORMATION OR REPRESENTATION, WARRANTY, |
| STATEMENT OR ASSURANCE MAY NOT BE RELIED UPON. |
| Prospective investors should inform themselves as to |
| any applicable legal requirements and taxation and |
| exchange control regulations in the countries of |
| their citizenship, residence or domicile which might |
| be relevant. |
| Opinions expressed are current opinions as of the |
| date appearing in this material only. |
| Supplemental Risk Disclosure for All Potential |
| Investors in Hedge Funds and other private investment |
| funds (collectively, "Alternative Investments") |
+-------------------------------------------------------+
| In connection with your consideration of an |
| investment in any Alternative Investment, you should |
| be aware of the following risks: |
+-------------------------------------------------------+
| Alternative Investments are not subject to the same |
| regulatory requirements or governmental oversight as |
| mutual funds. The sponsor or manager of any |
| Alternative Investment may not be registered with any |
| governmental agency. |
| Alternative Investments often engage in leverage and |
| other investment practices that are extremely |
| speculative and involve a high degree of risk. Such |
| practices may increase the volatility of performance |
| and the risk of investment loss, including the loss |
| of the entire amount that is invested. |
| Alternative Investments may impose significant fees, |
| including incentive fees that are based upon a |
| percentage of the realised and unrealised gains, and |
| such fees may offset all or a significant portion of |
| such Alternative Investment's trading profits. |
| Alternative Investments may themselves invest in |
| instruments that may be highly illiquid and extremely |
| difficult to value. |
| Alternative Investments may not be required to |
| provide their investors with periodic pricing or |
| valuation information. Such valuations may be based |
| on manager estimates. |
| Alternative Investments are not required to provide |
| their investors with periodic pricing or valuation |
| information. There may be conflicts of interest |
| between the Alternative Investment and other service |
| providers, including the investment manager and |
| sponsor of the Alternative Investment. |
| Investors in Alternative Investments may have limited |
| rights with respect to their investment interest, |
| including limited voting rights and participation in |
| the management of the Alternative Investment. |
| Alternative Investments may involve complex tax and |
| legal structures. Investment in any particular |
| Alternative Investment or Alternative Investments |
| generally, is only suitable for sophisticated |
| investors for whom such an investment does not |
| constitute a complete investment program and who |
| fully understand and are willing to assume the risks |
| involved in such Alternative Investment. You are |
| urged to consult with your own tax, accounting and |
| legal advisers regarding any investment in any |
| Alternative Investment. |
| |
| Investors are also urged to take appropriate advice |
| regarding any applicable legal requirements and any |
| applicable taxation and exchange control regulations |
| in the country of their citizenship, residence or |
| domicile which may be relevant to the subscription, |
| purchase, holding, exchange, redemption or disposal |
| of any Alternative Investment. |
| Investment Restrictions apply to many of Goldman |
| Sachs' Alternative Investments. IRS Circular 230 |
| Disclosure: Goldman Sachs does not provide legal, tax |
| or accounting advice. Any statement contained in this |
| communication (including any attachments) concerning |
| U.S. tax matters is not intended or written to be |
| used, and cannot be used, for the purpose of avoiding |
| penalties imposed on the relevant taxpayer. Clients |
| of Goldman Sachs should obtain their own independent |
| tax advice based on their particular circumstances. |
| Goldman Sachs Dynamic Opportunities Limited is a |
| Guernsey company listed on the London Stock |
| Exchange and the rights and obligations of the |
| participants in Goldman Sachs Dynamic Opportunities |
| Limited are governed by its organisational documents, |
| the laws of Guernsey and the listing rules of the |
| London Stock Exchange. References to market or |
| composite indices, benchmarks or other measures of |
| relative market performance over a specified period |
| of time (each, an "index") are provided for your |
| information only. Reference to this index does not |
| imply that the portfolio will achieve returns, |
| volatility or other results similar to the index. The |
| composition of the index may not reflect the manner |
| in which a portfolio is constructed in relation to |
| expected or achieved returns, portfolio guidelines, |
| restrictions, sectors, correlations, concentrations, |
| volatility or tracking error targets, all of which |
| are subject to change over time. |
+-------------------------------------------------------+
| Goldman Sachs Dynamic Opportunities Limited - |
| Underlying Manager Data |
+-------------------------------------------------------+
| The data of the underlying managers contained herein |
| is based on information obtained from the given |
| manager, unless otherwise indicated. Goldman Sachs |
| takes reasonable steps to verify - but does not |
| guarantee - the accuracy of this information. |
| Historical data of managers is as reported by the |
| given manager or by other sources and may not be |
| calculated in a uniform or consistent basis with the |
| information for other managers. The data presented |
| may be for an onshore, offshore or Master Fund |
| vehicle of the particular manager. |
+-------------------------------------------------------+
Copyright (c) 2010, Goldman Sachs Dynamic Opportunities Limited. All rights
reserved.
These are not full statutory accounts. The condensed interim unaudited financial
statements do not include all of the information required for the annual
financial statements, and should be read in conjunction with the annual
financial statements for the Company as at and for the year ended 31 December
2009. The full audited accounts for 31 December 2009 are available for
inspection at Canada Court, Upland Road, St Peter Port, Guernsey, the registered
office of the Company and the Company's website
www2.goldmansachs.com/services/investing/closed-ended-investments/index.html.
Enquiries:
Robin Amer
RBC Offshore Fund Managers Ltd
Tel: +44 (0)1481 744130
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QDLFLBVFFBBK
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