CFM Connaught Income Series 1 Index

SRI Operating Memorandum

Participation Units Participation in the Strategy will be sub-divided

into standard participation units with a nominal

value of £1 each. The Strategy Manager may

issue additional units or cancel units as necessary

to facilitate contributions to or withdrawals from

the Strategy.

Valuation The Strategy will be valued on a mark to market

basis quarterly on the last calendar day of each

quarter. The Strategy Manager may at its absolute

discretion determine additional valuation points on

an ad-hoc basis.

The Strategy’s value will be determined by

deducting the total liabilities from the total assets of

the Strategy. The value of the assets and liabilities

of the Strategy will be determined in accordance

with CFML’s standard strategy valuation policy,

which is available on request and may be

published from time to time on CFML’s website.

Unit Pricing The net asset value per unit will be calculated by

dividing the net asset value of the Strategy by the

total number of units participating in the Strategy.

The Directors reserve the right to adjust the unit

price on any valuation date to reflect the

approximate true cost or value per unit

associated with any investment or redemption

from the strategy.

Publication of Unit Pricing

The unit price of the strategy will be available on

request from CFML. The unit price may also be

published on CFML’s website. CFML will

additionally endeavour to maintain pricing of the

strategy on Bloomberg.

Introduction The CFM Connaught Income Series 1 Index was

formed by Capital Financial Markets Limited

(“CFML”) in February 2011.

Operating Memorandum This Operating Memorandum details the basis by

which the Index will be managed and how the

index levels are calculated.

Reference Strategy The CFM Connaught Income Series 1 Index is

based on the performance of an underlying

reference strategy called the CFM Connaught

Income Series 1 Strategy (the “Strategy”) and the

rest of this document details how this Strategy

operates.

Strategy Manager The Strategy is managed by Capital Financial

Markets Limited (“CFML”) of Capital House,

Circular Road, Douglas, Isle of Man, IM1 1AG.

CFML is a specialist provider and issuer of

contracts for difference and spread bet contracts.

CFML is regulated by the Isle of Man Government

Financial Supervision Commission (“FSC”) to

conduct investment business.

CFML is a wholly owned subsidiary of Capital

International Limited (“CIL”).

CIL is a member of the London Stock Exchange

and is also licensed by the FSC.

CFML is a member of the Capital International

Group.

Custodian & Broker The Strategy Manager has appointed Capital

International Limited (“CIL”) of Capital House,

Circular Road, Douglas, Isle of Man, IM1 1AG as

lead custodian and broker to the Strategy.

CIL provides international dealing, custody,

investment management and portfolio

administration services. At the time of publication,

CIL administered over $3.5 billion of assets. CIL is

a member of the London Stock Exchange and is

licensed by the FSC. CIL is a member of the

Capital International Group.

CFM Connaught

Income Series 1 Index

www.capital-iom.com

Contributions & Withdrawals The Strategy is a private strategy operated by

CFML. From time to time CFML may choose to

contribute additional monies to or withdraw monies

from the Strategy at its absolute discretion.

Contribution and withdrawals may only be made

on a valuation date. The amount of the

contribution or withdrawal (after deduction of any

charges) divided by the unit price on that valuation

date will determine the number of units invested

or disinvested.

The Strategy is subject to certain restrictions and

minimum notice periods with respect to

withdrawals.

Investment Objective To track the performance of the Connaught

Income Fund, Series 1.

Base Currency Sterling

Management Approach The Strategy is passively managed by the Strategy

Manager and is intended to track the performance

of the Connaught Income Fund, Series 1.

Leverage & Borrowing Powers The Strategy will not utilise leverage or borrow

against the assets of the Strategy.

Restrictions The Strategy only tracks the Connaught Income

Fund, Series 1, and no other securities. It is

anticipated that the Strategy will hold a modest

cash balance.

Risk Due to the focused nature of the investment

Strategy, there is likely to be higher levels of

volatility and risk when compared to more

diversified strategies.

It is the responsibility of the regulated adviser,

recommending the CFM Connaught Income

Series 1 Index to a client, to provide of copy of this

Memorandum and such relevant documentation

relating to the Connaught Income Fund, Series 1,

in order that the client is able to adequately

understand the risks of entering into a spread bet

against the CFM Connaught Income Series 1

Index.

Fees, Charges and Expenses The following fees and charges will be applied to

the Strategy.

An initial Set-Up Fee of 1.0% will be deducted at

outset.

An Investment Administration Fee of 0.7% per

annum will be calculated and deducted quarterly.

Financial Advisers may be paid initial and ongoing

commission and these amounts will be levied in

addition to the Set-Up Fee and the Investment

Administration Fee. For further details prospective

investors should contact their financial advisers.

The Set-Up Fee and the Investment

Administration Fees are inclusive of all custody

and administration charges.

All dealing and clearing costs, miscellaneous and

legal costs will passed onto the Strategy.

Capital Financial Markets Limited Capital House Circular Road Douglas Isle of Man IM1 1AG

www.capital-iom.com

T : +44 (0) 1624 654200 E: info@capital-iom.com

Contact Details

Capital International Limited and Capital Financial Markets Limited are members of the Capital International Group

Capital International is a member of the London Stock Exchange and is licensed by the Isle of Man Financial Supervision Commission Capital Financial Markets Limited is licensed by the Isle of Man Financial Supervision Commission

Registered Address: Capital House, Circular Road, Douglas, Isle of Man, IM1 1AG

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