harvest stargate fund version en11 f4 october 2012
TRANSCRIPT
Investment Manager Harvest Financial Services Ltd Regulated by the Cyprus Securities and Exchange Commission
License Number 02103 ndashMember of the Investor Protection Fund (TAE)
Harvest Stargate Fund Ltd Registered and Regulated by the Central Bank of Cyprus
As an international Collective Investment Scheme Law No 47 (1) of 1999 (ICIS)
OCTOBER 2012 (V4EN)
CONTACT Telephone + 357 22 552800 andyharvestgroupcomcy
This document is for informational purposes only This document does not constitute an offer an invitation to offer
or a recommendation to enter into any transaction nor does it constitute investment advice This material does not constitute a solicitation to buy or sell securities in any jurisdiction
in which such a solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation
2
Executive Summary
Fund Structure Indicative Summary Terms
Final Maturity bull Open Ended investments Unlimited holding period Minimum Holding two Years
Currency bull EUR or currency equivalent on the subscription date
Principal Protection
Provider
bull Some underline assets bear the principal protection of the issuer of the underline
assets The fund therefore offers soft capital protection only on selected underline
assets that bare issuers guarantees
Form bull Shares ndash ICIS UNITS
Notional bull [] MM minimum 1MM
Issue Price bull NAV
Redemption Amount bull The shares will be redeemed on the NAV
bull The Shares may be redeemed prior to that on a monthly basis after year 2
bull Share Price (t) ndash Early Redemption Premium whereby the Early Redemption
Premium is initially 4 and then decreasing by 1 on each anniversary of the Issue
Date until reaching 0
Additional Investments bull Investors will be able to subscribe additional amounts in the fund on a monthly
basis with rounds of 10000 EURO
Initial Allocation into
the Underlying Fund
bull The Initial Allocation of the Issuer to the Underlying Fund will be equal to 100
thereafter the Trading Administrator will adjust the allocation between the assets of
the Issuer in accordance with the Rebalancing Rules
Investment Manager bull Harvest Financial Services Ltd -
Transaction Fees
bull Investment Manager Fees 20 annual management fees on NAV and an incentive ndash
performance fee of 20 of annual returns in excess of 10
3
Risk Statements
Investment Horizon The fund has a minimum holding period of 2 years with unlimited duration Investors must maintain
capital for this period
Non-Reliance on Historic
Returns
Past performance does not guarantee future performance investment in the fund should be based upon
a complete assessment of their terms
Limitations of Simulated
Returns
Certain presentations and back-testing or other statistical analysis materials that may have been
provided in connection with explanations of the mechanics andor potential returns of the Notes use pro
forma analysis and hypothetical circumstances to estimate how the Reference Portfolio may have
performed prior to its actual existence Harvest provides no assurance or guarantee that the Notes will
operate or would have operated in the past in a manner consistent with those materials As such any
historical returns projected in such material or any hypothetical simulations based on this analysis
provided in relation to the fund may not reflect the performance of and are no guarantee or assurance
in respect of the performance or returns of the fund
Non-Linear Returns Absent the occurrence of a Knock Out the return on the Notes will be based on the performance of the
Reference Portfolio over time As such it is not possible to predict the return on the fund simply by
reference to the initial and final values of the Reference Portfolio The application of the Fundrsquos
Mechanics may result in an opportunity cost when the return on the fund is compared to either a direct
investment in the Reference Portfolio or as the underline assets principal protected investment where
the exposure to the Reference Portfolio is achieved through a conventional call option issued by the
product providers
Clean Up Event If there is a significant reduction in either the value of the Reference Portfolio or shortly after issuance
of the fund a rapid decline in interest rates a Clean Up Event may occur Under both such
circumstances the return on the fund will cease to offer any potential capital gain as a function of the
future performance of the Underlying Fund and will effectively become that of the remaining asset
classes
Credit Risk The value of the fund may decline dramatically based on market conditions Investors understand that
there are risks involved and capital may decline due to market conditions and valuations Past
performance is not guaranteed for future returns
Disclosure of Investor
Identity
It may be required for purposes of the Investment Managerrsquos compliance procedures to disclose to the
name of the initial investor in the fund
LIMITED OFFER
4
Table of Contents
Benefits of the Harvest Stargate Fund Ltd Summary A Multi-Asset Fund offering several key Advantages
The Benefit of Investing in International Collective Investment Funds (ICIS)
Given the recent volatility in stock markets worldwide we wish to give investors an update on the benefits of holding
ICIS as part of a balanced and diversified portfolio
The Harvest Stargate Fund Ltd offers individual investors access to a unique multi-asset multi manager investment
methodology usually only used by sophisticated institutional investors The fundrsquos objective is to deliver returns in
excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across
three key asset classes combined with the active selection of the best performing underline fund managers The fund
provides diversification-the foundation of a successful portfolio The fund invests in three strategies each managed
by a leading specialist manager
Investing in just one asset class carries with it a higher degree of risk and the Harvest Stargate Fund Ltd adopts an
active asset allocation policy that ensures the fund invests across a spread of asset classes that offer the best risk
adjusted return In addition Harvest Stargate Fund Ltd and its advisors Harvest Financial Services Ltd aim to select
the best performing funds for each asset class which are then analyzed on an ongoing basis
NEW ISSUE OCTOBER 2012 ndash LIMITED OFFERING
5
Introduction
The
Manager
Harvest Financial Services Ltd is a leading investment management company based in Nicosia
Cyprus Harvest Financial Services Ltd was established in March 2000 by Harvest Advisors Ltd as
a spin-off from Harvest Financial Group Harvest Financial Services Ltd is regulated by the Cyprus
Securities amp Exchange Commission with license number 02103
Harvest Financial Services Ltd provides a wide range of mutual funds hedge funds and portfolio
management advisory services Its investment team has over 14 years experience in
Tailored portfolio construction- the construction and management of diversified high quality fund
portfolios tailored to the needs of private and institutional clients
Distribution of Hedge Funds- the distribution of a wide range of fund of hedge fund products for
both the institutional and retail markets
Structured Products ndash the structuring and management of products linked to hedge funds
Traditional Investment portfolio Management ndash The construction and management of traditional
predominantly long short portfolios
6
HARVEST STARGATE FUND LTD- BENEFITS
RISK MANAGEMENT PERFORMANCE - RETURN
RISK MANAGEMENT COMPANY SELECTION COMPLIANCE
Reporting
RESEARCH
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
2
Executive Summary
Fund Structure Indicative Summary Terms
Final Maturity bull Open Ended investments Unlimited holding period Minimum Holding two Years
Currency bull EUR or currency equivalent on the subscription date
Principal Protection
Provider
bull Some underline assets bear the principal protection of the issuer of the underline
assets The fund therefore offers soft capital protection only on selected underline
assets that bare issuers guarantees
Form bull Shares ndash ICIS UNITS
Notional bull [] MM minimum 1MM
Issue Price bull NAV
Redemption Amount bull The shares will be redeemed on the NAV
bull The Shares may be redeemed prior to that on a monthly basis after year 2
bull Share Price (t) ndash Early Redemption Premium whereby the Early Redemption
Premium is initially 4 and then decreasing by 1 on each anniversary of the Issue
Date until reaching 0
Additional Investments bull Investors will be able to subscribe additional amounts in the fund on a monthly
basis with rounds of 10000 EURO
Initial Allocation into
the Underlying Fund
bull The Initial Allocation of the Issuer to the Underlying Fund will be equal to 100
thereafter the Trading Administrator will adjust the allocation between the assets of
the Issuer in accordance with the Rebalancing Rules
Investment Manager bull Harvest Financial Services Ltd -
Transaction Fees
bull Investment Manager Fees 20 annual management fees on NAV and an incentive ndash
performance fee of 20 of annual returns in excess of 10
3
Risk Statements
Investment Horizon The fund has a minimum holding period of 2 years with unlimited duration Investors must maintain
capital for this period
Non-Reliance on Historic
Returns
Past performance does not guarantee future performance investment in the fund should be based upon
a complete assessment of their terms
Limitations of Simulated
Returns
Certain presentations and back-testing or other statistical analysis materials that may have been
provided in connection with explanations of the mechanics andor potential returns of the Notes use pro
forma analysis and hypothetical circumstances to estimate how the Reference Portfolio may have
performed prior to its actual existence Harvest provides no assurance or guarantee that the Notes will
operate or would have operated in the past in a manner consistent with those materials As such any
historical returns projected in such material or any hypothetical simulations based on this analysis
provided in relation to the fund may not reflect the performance of and are no guarantee or assurance
in respect of the performance or returns of the fund
Non-Linear Returns Absent the occurrence of a Knock Out the return on the Notes will be based on the performance of the
Reference Portfolio over time As such it is not possible to predict the return on the fund simply by
reference to the initial and final values of the Reference Portfolio The application of the Fundrsquos
Mechanics may result in an opportunity cost when the return on the fund is compared to either a direct
investment in the Reference Portfolio or as the underline assets principal protected investment where
the exposure to the Reference Portfolio is achieved through a conventional call option issued by the
product providers
Clean Up Event If there is a significant reduction in either the value of the Reference Portfolio or shortly after issuance
of the fund a rapid decline in interest rates a Clean Up Event may occur Under both such
circumstances the return on the fund will cease to offer any potential capital gain as a function of the
future performance of the Underlying Fund and will effectively become that of the remaining asset
classes
Credit Risk The value of the fund may decline dramatically based on market conditions Investors understand that
there are risks involved and capital may decline due to market conditions and valuations Past
performance is not guaranteed for future returns
Disclosure of Investor
Identity
It may be required for purposes of the Investment Managerrsquos compliance procedures to disclose to the
name of the initial investor in the fund
LIMITED OFFER
4
Table of Contents
Benefits of the Harvest Stargate Fund Ltd Summary A Multi-Asset Fund offering several key Advantages
The Benefit of Investing in International Collective Investment Funds (ICIS)
Given the recent volatility in stock markets worldwide we wish to give investors an update on the benefits of holding
ICIS as part of a balanced and diversified portfolio
The Harvest Stargate Fund Ltd offers individual investors access to a unique multi-asset multi manager investment
methodology usually only used by sophisticated institutional investors The fundrsquos objective is to deliver returns in
excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across
three key asset classes combined with the active selection of the best performing underline fund managers The fund
provides diversification-the foundation of a successful portfolio The fund invests in three strategies each managed
by a leading specialist manager
Investing in just one asset class carries with it a higher degree of risk and the Harvest Stargate Fund Ltd adopts an
active asset allocation policy that ensures the fund invests across a spread of asset classes that offer the best risk
adjusted return In addition Harvest Stargate Fund Ltd and its advisors Harvest Financial Services Ltd aim to select
the best performing funds for each asset class which are then analyzed on an ongoing basis
NEW ISSUE OCTOBER 2012 ndash LIMITED OFFERING
5
Introduction
The
Manager
Harvest Financial Services Ltd is a leading investment management company based in Nicosia
Cyprus Harvest Financial Services Ltd was established in March 2000 by Harvest Advisors Ltd as
a spin-off from Harvest Financial Group Harvest Financial Services Ltd is regulated by the Cyprus
Securities amp Exchange Commission with license number 02103
Harvest Financial Services Ltd provides a wide range of mutual funds hedge funds and portfolio
management advisory services Its investment team has over 14 years experience in
Tailored portfolio construction- the construction and management of diversified high quality fund
portfolios tailored to the needs of private and institutional clients
Distribution of Hedge Funds- the distribution of a wide range of fund of hedge fund products for
both the institutional and retail markets
Structured Products ndash the structuring and management of products linked to hedge funds
Traditional Investment portfolio Management ndash The construction and management of traditional
predominantly long short portfolios
6
HARVEST STARGATE FUND LTD- BENEFITS
RISK MANAGEMENT PERFORMANCE - RETURN
RISK MANAGEMENT COMPANY SELECTION COMPLIANCE
Reporting
RESEARCH
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
3
Risk Statements
Investment Horizon The fund has a minimum holding period of 2 years with unlimited duration Investors must maintain
capital for this period
Non-Reliance on Historic
Returns
Past performance does not guarantee future performance investment in the fund should be based upon
a complete assessment of their terms
Limitations of Simulated
Returns
Certain presentations and back-testing or other statistical analysis materials that may have been
provided in connection with explanations of the mechanics andor potential returns of the Notes use pro
forma analysis and hypothetical circumstances to estimate how the Reference Portfolio may have
performed prior to its actual existence Harvest provides no assurance or guarantee that the Notes will
operate or would have operated in the past in a manner consistent with those materials As such any
historical returns projected in such material or any hypothetical simulations based on this analysis
provided in relation to the fund may not reflect the performance of and are no guarantee or assurance
in respect of the performance or returns of the fund
Non-Linear Returns Absent the occurrence of a Knock Out the return on the Notes will be based on the performance of the
Reference Portfolio over time As such it is not possible to predict the return on the fund simply by
reference to the initial and final values of the Reference Portfolio The application of the Fundrsquos
Mechanics may result in an opportunity cost when the return on the fund is compared to either a direct
investment in the Reference Portfolio or as the underline assets principal protected investment where
the exposure to the Reference Portfolio is achieved through a conventional call option issued by the
product providers
Clean Up Event If there is a significant reduction in either the value of the Reference Portfolio or shortly after issuance
of the fund a rapid decline in interest rates a Clean Up Event may occur Under both such
circumstances the return on the fund will cease to offer any potential capital gain as a function of the
future performance of the Underlying Fund and will effectively become that of the remaining asset
classes
Credit Risk The value of the fund may decline dramatically based on market conditions Investors understand that
there are risks involved and capital may decline due to market conditions and valuations Past
performance is not guaranteed for future returns
Disclosure of Investor
Identity
It may be required for purposes of the Investment Managerrsquos compliance procedures to disclose to the
name of the initial investor in the fund
LIMITED OFFER
4
Table of Contents
Benefits of the Harvest Stargate Fund Ltd Summary A Multi-Asset Fund offering several key Advantages
The Benefit of Investing in International Collective Investment Funds (ICIS)
Given the recent volatility in stock markets worldwide we wish to give investors an update on the benefits of holding
ICIS as part of a balanced and diversified portfolio
The Harvest Stargate Fund Ltd offers individual investors access to a unique multi-asset multi manager investment
methodology usually only used by sophisticated institutional investors The fundrsquos objective is to deliver returns in
excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across
three key asset classes combined with the active selection of the best performing underline fund managers The fund
provides diversification-the foundation of a successful portfolio The fund invests in three strategies each managed
by a leading specialist manager
Investing in just one asset class carries with it a higher degree of risk and the Harvest Stargate Fund Ltd adopts an
active asset allocation policy that ensures the fund invests across a spread of asset classes that offer the best risk
adjusted return In addition Harvest Stargate Fund Ltd and its advisors Harvest Financial Services Ltd aim to select
the best performing funds for each asset class which are then analyzed on an ongoing basis
NEW ISSUE OCTOBER 2012 ndash LIMITED OFFERING
5
Introduction
The
Manager
Harvest Financial Services Ltd is a leading investment management company based in Nicosia
Cyprus Harvest Financial Services Ltd was established in March 2000 by Harvest Advisors Ltd as
a spin-off from Harvest Financial Group Harvest Financial Services Ltd is regulated by the Cyprus
Securities amp Exchange Commission with license number 02103
Harvest Financial Services Ltd provides a wide range of mutual funds hedge funds and portfolio
management advisory services Its investment team has over 14 years experience in
Tailored portfolio construction- the construction and management of diversified high quality fund
portfolios tailored to the needs of private and institutional clients
Distribution of Hedge Funds- the distribution of a wide range of fund of hedge fund products for
both the institutional and retail markets
Structured Products ndash the structuring and management of products linked to hedge funds
Traditional Investment portfolio Management ndash The construction and management of traditional
predominantly long short portfolios
6
HARVEST STARGATE FUND LTD- BENEFITS
RISK MANAGEMENT PERFORMANCE - RETURN
RISK MANAGEMENT COMPANY SELECTION COMPLIANCE
Reporting
RESEARCH
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
4
Table of Contents
Benefits of the Harvest Stargate Fund Ltd Summary A Multi-Asset Fund offering several key Advantages
The Benefit of Investing in International Collective Investment Funds (ICIS)
Given the recent volatility in stock markets worldwide we wish to give investors an update on the benefits of holding
ICIS as part of a balanced and diversified portfolio
The Harvest Stargate Fund Ltd offers individual investors access to a unique multi-asset multi manager investment
methodology usually only used by sophisticated institutional investors The fundrsquos objective is to deliver returns in
excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across
three key asset classes combined with the active selection of the best performing underline fund managers The fund
provides diversification-the foundation of a successful portfolio The fund invests in three strategies each managed
by a leading specialist manager
Investing in just one asset class carries with it a higher degree of risk and the Harvest Stargate Fund Ltd adopts an
active asset allocation policy that ensures the fund invests across a spread of asset classes that offer the best risk
adjusted return In addition Harvest Stargate Fund Ltd and its advisors Harvest Financial Services Ltd aim to select
the best performing funds for each asset class which are then analyzed on an ongoing basis
NEW ISSUE OCTOBER 2012 ndash LIMITED OFFERING
5
Introduction
The
Manager
Harvest Financial Services Ltd is a leading investment management company based in Nicosia
Cyprus Harvest Financial Services Ltd was established in March 2000 by Harvest Advisors Ltd as
a spin-off from Harvest Financial Group Harvest Financial Services Ltd is regulated by the Cyprus
Securities amp Exchange Commission with license number 02103
Harvest Financial Services Ltd provides a wide range of mutual funds hedge funds and portfolio
management advisory services Its investment team has over 14 years experience in
Tailored portfolio construction- the construction and management of diversified high quality fund
portfolios tailored to the needs of private and institutional clients
Distribution of Hedge Funds- the distribution of a wide range of fund of hedge fund products for
both the institutional and retail markets
Structured Products ndash the structuring and management of products linked to hedge funds
Traditional Investment portfolio Management ndash The construction and management of traditional
predominantly long short portfolios
6
HARVEST STARGATE FUND LTD- BENEFITS
RISK MANAGEMENT PERFORMANCE - RETURN
RISK MANAGEMENT COMPANY SELECTION COMPLIANCE
Reporting
RESEARCH
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
5
Introduction
The
Manager
Harvest Financial Services Ltd is a leading investment management company based in Nicosia
Cyprus Harvest Financial Services Ltd was established in March 2000 by Harvest Advisors Ltd as
a spin-off from Harvest Financial Group Harvest Financial Services Ltd is regulated by the Cyprus
Securities amp Exchange Commission with license number 02103
Harvest Financial Services Ltd provides a wide range of mutual funds hedge funds and portfolio
management advisory services Its investment team has over 14 years experience in
Tailored portfolio construction- the construction and management of diversified high quality fund
portfolios tailored to the needs of private and institutional clients
Distribution of Hedge Funds- the distribution of a wide range of fund of hedge fund products for
both the institutional and retail markets
Structured Products ndash the structuring and management of products linked to hedge funds
Traditional Investment portfolio Management ndash The construction and management of traditional
predominantly long short portfolios
6
HARVEST STARGATE FUND LTD- BENEFITS
RISK MANAGEMENT PERFORMANCE - RETURN
RISK MANAGEMENT COMPANY SELECTION COMPLIANCE
Reporting
RESEARCH
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
6
HARVEST STARGATE FUND LTD- BENEFITS
RISK MANAGEMENT PERFORMANCE - RETURN
RISK MANAGEMENT COMPANY SELECTION COMPLIANCE
Reporting
RESEARCH
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
7
Competitive Fund
Management
Integrated Fund Management
Harvest Financial Services Ltd Managerrsquos Style
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
8
THE IMPORTANCE OF ASSET CLASSES
The
Fund
The most popular traditional asset classes are cash bonds equities real estate
futures forex and energy hedge funds Harvest Stargate Fund Ltd combines these
asset classes with the exception of cash in order to create the next generation of
multi asset Global Macro investments
The different asset classes will perform their best at different stages of a normal
investment cycle When building a portfolio it is therefore essential that it should not
only be spread between different asset classes but should also make an allocation to
the asset class that is likely to provide the best return in the following year Whilst
equities may be rising bonds or property could be falling and when equities fall
hedge funds could perform well
The Stargate Fund is an aggressive market neutral fund with a return objective of 10-
15 annually with a standard deviation of approximately 4-7 It allocates capital
among managers who have stated investment objective of returns in excess of 15
per annum It is expected that the fund will have higher than average volatility but
through diversification of strategies can mitigate drawdowns during bear market
environments In positive market periods the fund should produce returns above
market benchmarks
HIGH RETURNS POTENTIAL
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
9
INVESTMENT FOCUS GEOGRAPHIC AREA
Scientists recently discovered a massive offshore reserve of an estimated 122 trillion cubic feet of
natural gas called the Levant Basin Province While it is one of the worlds richest natural gas reserves
the Levant Basin Province is located between countries with endless amounts of mutual hatred It
straddles the sea borders of Israel Lebanon Palestine the Republic of Cyprus The largest section
discovered so far the Leviathan gas field is believed to possibly contain alongside natural gas 42
billion barrels of oil Leviathan straddles the Israeli-Lebanese maritime border
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
10
Example of the investment Strategy Zero Coupon +Direct Investment 13 Strategy
bull The standard way to create capital protected notes for a variety of underlying asset types
bull The initial investment strategy of the Harvest Stargate Fund Ltd is allocated (13 of its assets) into or through structured funds and High Yield Treasuries and Bonds
ndash Buying a zero coupon bond that will mature at 100 at the maturity of the transaction [cost of zero coupon bond = 75] Buying the Underlying Fund (or an option on the Fund if such can be created) using [100 - price of zero coupon = 25]
T = 0 Maturity eg5- 7 years
euro100 invested euro75
Price of
Zero
Coupon
Bond
euro25
Underlying Fund
RISKLESS
Zero coupon
Bond will mature
at euro100 to repay
Principal in full
RISKY
Payoff
dependent on
Underlying Fund
Zero
Coupon
Bond
Matures
At euro100
Payoff
eg at euro50
Redemption
Of euro100+50
bull This structure is the oldest and simplest principal protection strategy
ndash TOTAL RETURN OF UNDERLYING FUND 5025 = 2000
ndash TOTAL RETURN OF INVESTMENT 150100 = 1500
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
11
Fund Structure 13 of the fundrsquos assets are investment into protected asset classes with 100 Initial Participation or Real Estate Assets
SPV
Put Option
at Guaranteed Amount
Investment
euro 100
Fund
Units
Investor
Hellenic Bank PLC Administrator
Zero Coupon Bond
(Riskless) Underlying Fund
(Issuer)
ISSUER
at Maturity
Part 1
Dynamic Rebalancing
euro 100 initially euro 0 initially
Part 2
Put Option
HFS as the fund manager
Determines the proportion
of Assets invested
in the Underlying Fund or
the 0-Coupon Bond
Or Real Estate Assets
bull Part Portfolio Capital protection is composed of 2 parts
1 A dynamic rebalancing between an investment into the Underlying Fund and a zero coupon bond
Objective to ensure that funds are invested in the Underlying Fund for the maximum time possible
Through the fund structure it is possible to capture 100 of the performance of the Underlying Fund
2 An unconditional put at 100 at maturity
To ensure full repayment of 13 capital in case the dynamic rebalancing is insufficient
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
12
Successful Investment Strategy
bull The Harvest Stargate Fund Ltd offers individual investors access to unique multi-asset multi manager investment strategy usually only used by sophisticated institutional investors and hedge fund managers The principal questions faced by any private investor today are how to allocate their investable funds between the various asset classes available how would this asset allocation should be regularly reviewed and how they can be certain that theyrsquore in the best possible funds run by the best possible fund managers The Harvest Stargate fundrsquos objective is to deliver returns in excess of those offered by traditional investment funds by the careful and active allocation of the portfolio across the five key asset classes-bonds equities property capital protected funds and commodities-combined with the active selection of the best performing underlying fund managers
Global MacroReal Estate
Capital Protected
Equity LongShort
bull Primary Fund strategy focused on undervalued equities in Europe and US either directly or through selected highly rated mutual funds Investments in the CY and GR markets will take an opportunistic approach based on fundamental catalysts that will yield capital gains for the fund
bull Secondary strategy overlaying portfolio focused on different products The addition of capital protected notes as the strategy yields stability and earns possible coupons for the fund
bull Tertiary strategy overlaying portfolio focused on currency management and occasional non-equity opportunities such as bonds forex commodities and real estate funds and property assets13 of the Funds assets are allocated into this dynamic strategy which offers stability and growth
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
13
Experienced and Accessible Investment Manager
bull Founded in Cyprus in 1998 (EPEY since 2003)
ndash Harvest Financial Services Limited (ldquoHFSrdquo) is a Cyprus based fund
management group providing discretionary portfolio management
services to high net worth individuals institutions and mutual funds
both in Cyprus and abroad (wwwharvestgroupcomcy)
bull Head Office in Nicosia
ndash Key management and staff nearby and available to investors to
answers questions regarding investment strategy performance
Harvest Stargate Fund Ltd mechanics and administration
bull Regulated by the Cyprus Securities and Exchange Commission License
Number 02103
bull Affiliated with some of the Worldrsquos most prestigious investment service
Providers
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
14
The Fundrsquos Asset Allocation Process Financial Instrumentrsquos
FuturesOptions
Equities
ENERGY
EAST MED
RUSSIA Real Estate
Energy Focus
60
GOLD
GLOBAL ENERGY DIVERSIFICATION
Fundrsquos Underline
Strategies
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
15
Primary Strategy FOCUS ON NATURAL GAS COMPANIES
bull Primary Strategy FOCUS ON ENERGY-NATURAL GAS AND OIL (60 ASSET ALLOCATION)
bull The First and core strategy seeks to buy undervalued equities either on an individual or sector basis and hold them for capital appreciation and income for the medium term The Fund will engage models prior in investing in speculative investments and simulate possible return vs risk prior of entering in such transactions
bull The strategy also seeks to identify major changes of direction in key markets through independent analysis of relevant macro-economic factors trend developments and investor sentiment Harvest seeks to vary overall market exposure accordingly either through further allocationsreductions to existing holdings or investmentdivestments in market heavy weights The strategy does not aim at a particular geographical exposure but rather is driven by a sector approach Historically Europe and US have provided the main holdings for the strategy but Israel and Russia are currently in focus
US 20
Continental Europe
20
South East Europe
15
Cyprus 15
Greece 15
UK 5
Other 10
EAST MED INVESTMENT OPPORTUNITIES
ndash Global gas use over
next 30 years
(bcm)
1048729 2000 - 2527
1048729 2010 - 3377
1048729 2020 - 4254
1048729 2030 - 5047
Tamar and Leviathan the two biggest
deep-water Gas discoveries of the past 10 years
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
16
MED ENERGY Primary Strategy Equities Long Short Hedged
GLOBAL MACRO PRIMARY STRATEGY 60 Weight of Portfolio (FOCUS ON MED ENERGY)
bull Delek Energy Delek Drilling and Avner Nobel Energy Lukoil initiating coverage on the fund diversification policy Triple digit upside potential of an oil discovery Symbols (DELKGTA) (AVNRPTA) (DEDRPTA) (DLENTA) (NBL NYSE) (LUKOIL DR) (CUSIP 677862104) MICEX (Moscow) Gazprom (OGZPY) TOTAL OIL (TOTNYSE) (GASCSE)
bull The value of the Levithan Tamar and the Cyprus Aphrodite Reserves (12) can be derived from two sources The
value of the natural gas reserves and the value of the oil potential The current share prices do not reflect value of oil potential Ratio share price partially reflects an oil discovery highest upside potential from an oil discovery Levithan oil results likely in early 2012 US-based Noble Energy has discovered gas in Block 12 of Cyprusrsquo Exclusive Economic Zone (EEZ) and the reserve is thought to be 30-40 higher than estimates Tamar was discovered in 2009 and holds an estimated 87 tcf (246 bcm) of natural gas It is expected to come on-stream in 2013 and investment is estimated at $4 bln Peak production for the first phase is targeted at 10-12 bln cfd Leviathan was discovered in December 2010 with reserves estimated at 16 tcf (453 bcm) It is estimated its production life would be 2017-48 with gas sold from two LNG trains each with a capacity of 75 mln tonsyear The first would come on-stream in 2017 the second in 2020 Total development costs would amount to $14 bln It forecasts that 75 of the LNG would be shipped to Europe and the remaining 25 to Asia
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
17
INDUSTRY GROWTH LNG
-
5
10
15
20
25
30
35
2007 2009 2011 2013 2015
Bcf
da
y
Peru
Malaysia
Indonesia
Brunei
Australia
Nigeria
Yemen
UAE
Oman
Qatar
Egypt
Algeria
Trinidad
World LNG Production May Double by 2016
LNG hub in Cyprus seems most likely
Cyprus seems to be gaining popularity as a potential hub for a future LNG facility that would help pump natural
gas upstream from the Israeli and adjacent Cypriot offshore fields and use the island to transport the product to
customers Two reports have cited the current geopolitical climate in the Middle East and North Africa as
reinforcing the case for Israeli gas while looking at Cyprus as an alternative solution to lengthy and politically
sensitive pipelines in other countries Recent natural gas discoveries halfway between Cyprus and Israel at the
Tamar and Leviathan fields estimates gas reserves at 25 tr cubic feet (705 bln cum) enough to meet domestic
demand for several decades and enough to transform Israel into an energy exporter the Middle East Economic
Survey
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
18
INDUSTRY FOCUS ndash RECENT DEVELOPMENTS
ldquoWith the increasing financial burdens clouding Europes future it is crucial to ascertain how we can explore new opportunities to gauge how the new discoveries will help pave the way out of an economic crisis and lead to forming new business alliances shape difficult strategic relations and of course determine how new energy will bring about a wealth of positive change in old watersrdquo
bullCypriot minister Block 12 gas production by 2017
bullBlock 12 owned 70 by Noble Energy and 30 by Delek has an estimated 8 trillion+ cubic feet of gas just
under half the size of the nearby Israeli Leviathan field
bullCypriot Minister of Commerce Industry and Tourism Mr Neoklis Sylikiotis says that Noble Energy Inc (NYSE
NBL) plans to begin a second round of drilling at Block 12 in 2013 begin production by 2017 and begin exports
by 2019 Noble Energy owns 70 of Block 12 and Delek Group Ltd (TASE DLEKG) units Avner Oil and Gas LP
(TASE AVNRL) and Delek Drilling LP (TASE DEDRL) each own 15 Block 12 has an estimated 8 trillion cubic
feet of gas just under half the size of the nearby Israeli field Leviathan owned by the same companies together
with Ratio Oil Exploration (1992) LP (TASERATIL)
bullMr N Sylikiotis added that Cyprus expects to earn euro300 million from its offshore gas and oil concessions
bullAccording to the Cyprus Mail today In the government gazette edition of August 17 the US firm invited bids for two
separate contracts which taken jointly suggest that it is pressing forward with the natural gas field - approximately nine
months after it announced a significant find there It adds Subsea testing costs around US$350 million Analysts say
the total tab for developing the Block 12 prospect including all the facilities for subsea testing as well as the pipelines
could come to $35 billion
bullPublished by Globes [online] Israel business news - wwwglobes-onlinecom - on August 22 2012
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
19
INTERNATIONAL INTEREST
bull Novatek Shows Interest in Cyprus Offshore Oil Gas Licenses
bull By Stelios Orphanides and Anna Shiryaevskaya - Apr 5 2012 617 PM GMT+0300
bull OAO Novatek (NVTK) Russiarsquos second-biggest natural-gas producer is looking at bidding for
licenses to explore off Cyprus after the island nationrsquos first gas discovery attracted global
companies
bull Leonid Mikhelson Novatekrsquos billionaire chief executive officer flew to Cyprus for talks yesterday
Neoklis Sylikiotis Cyprusrsquo commerce and industry minister told reporters in Nicosia today The
country is accepting applications for a second licensing round until May 11
bull Houston-based Noble Energy Inc (NBL) reported the first discovery off Cyprusrsquos coast in
December with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas
The find prompted ldquoa lot of interestrdquo in the area Sylikiotis said
bull Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including
OAO Gazprombank Chairman Andrei Akimov said Phidias Pilides the chairman of the Cyprus
Chamber of Commerce and Industry
bull Novatekrsquos press service confirmed the company is considering participating in the announced
tenders
bull The Siberian companyrsquos natural-gas production and sales are now limited to Russia where state-
run OAO Gazprom (GAZP) the worldrsquos biggest producer controls the pipeline network and
exports Novatek ended a concession agreement last year to its only exploration project outside
Russia the El-Arish project in Egypt after drilling didnrsquot find commercial prospects
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
20
INTERNATIONAL INTEREST ndash FUTURE DEVELOPMENTS
bull Gas Liquefaction
bull The Russian gas producer may invest in Cyprusrsquos gas industry including gas production transport
and processing if it is successful in the licensing round Pilides said by phone from Nicosia
Liquefaction and petrochemical projects may follow he said Chinese companies have already
submitted proposals for construction of a gas facility Sylikiotis said last week
bull Cyprus must hold a ldquoconsiderablerdquo stake in a proposed liquefaction plant to export its gas Sylikiotis
said on March 28 As construction costs will be ldquoextremely highrdquo Cyprus is seeking ldquomultiparty
cooperation with the involvement of other important countries and energy giantsrdquo he said at the
time
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
21
INTERNATIONAL INTEREST ndash KEY PLAYERS
bull Israel Opportunity lists unit on Cypriot Stock Exchange
bull Cyprus Opportunity and Norways AGR are bidding for two Cypriot offshore exploration licenses
bull 22 July 12 Amiram Barkat
bull Cyprus Opportunity Energy plc (CSE GAS) a subsidiary of Israel Opportunity - Oil and Gas Exploration Ltd listed its shares
for trading on the Cyprus Stock Exchange last week at a market value of euro14 million Sources inform Globes that Cyprus
Opportunity plans to hold a public offering in 2013 It is a sister company of Israel Opportunity Energy Resources LP
(TASE ISOPL) Cyprus Opportunity is controlled by Israeli Norwegian and Cypriot shareholders The Israeli shareholders
are Rony Halman and Uri Aldubi the general partners of Israel Opportunity The Norwegian shareholders are the owners of
AGR Group Inc which is jointly bidding with Cyprus Opportunity for two of the offshore exploration licenses that the Cypriot
government is offering - Block 2 and Block 8
bull The two companies submitted their bids on May 11 as part of the 2nd Licensing Round tender for 12 offshore licenses
Cyprus Opportunity acquired 2D seismic data on which it has already performed preliminary analysis as part of its business
strategy The Cypriot government is due to publish the results of the tender in November Cyprus Opportunity says that even if
it does not win in the tender it will continue to operate in the Cypriot offshore oil and gas exploration business through joint
ventures with third parties
bull Israel Opportunity owns 5-10 of the five of the deep-water Pelagic licenses - Aditya Ishai Lela Yahav and Yoad - covering
500000 acres 170 west of Haifa between Leviathans Ratio Yam and Block 12 which includes the Aphrodite structure in
Cypruss exclusive economic zone (EEZ) Israel Opportunity owns 10 of the licenses Beny Steinmetz and Teddy Sagi each
own 425 and AGR owns 5
bull Cyprus says that Cyprus Opportunity is the first oil and gas exploration company to list on the stock exchange The Cyprus
Stock Exchange is still recovering from a corruption and insider trading scandal from almost ten years ago
bull 25 consortia have filed 15 bids for the 12 licenses Industry sources believe that the size of the signature fee that the bidders
will offer the Cypriot government will be an important factor in selecting the winners The Cypriot government and the gas
developers will sign production sharing contracts
bull Published by Globes [online] Israel business news - wwwglobes-onlinecom - on July 22 2012
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
22
INDUSTRY FOCUS ndash REGIONAL EFFECTS
bull Shekel appreciation and ldquoDutch diseaserdquo to be mitigated through a SWF
With Israelrsquos current account surplus likely to get even bigger in the future concerns have been
raised about ldquoDutch diseaserdquo ie a large appreciation of the shekel damaging the competitiveness
of Israelrsquos non-energy exports While further shekel appreciation appears very likely we think the
extent of appreciation can be reduced through the establishment and careful management of a
SWF that would help to sterilize a large part of the natural gas-related FX inflows
bull The real game-changer could be oil
Geological tests suggest a possibility that in addition to natural gas Israel might also find sizeable
quantities of offshore oil While the lsquoprobability of successrsquo is currently considered to be low our
calculations suggest that in the event of success oil could potentially deliver a boost to GDP
growth the budget and the external balance that might potentially be even bigger than the impact
from natural gas This would also imply a larger appreciation potential for the shekel and an even
greater requirement to manage the resulting macroeconomic challenges through a carefully
managed sovereign wealth fund
More meaningful results of geological tests on oil are expected in late 2013
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
23
EAST MED DEVELOPMENTS
bull The east Mediterranean island is working with Israel 300 miles (480 kilometers)
south across the sea on plans to build a pipeline to link their gas fields before
the fuel is liquefied for export to Europe or Asia Israeli Prime Minister Benjamin
Netanyahu said Feb 16 2012
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
24
Geographic Map
Source Delek Energy
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
25
Important Legal Note
bull The material provided herein is for informational purposes only It does not constitute an offer to sell or a solicitation of an offer to buy any securities relating to any of the products referenced herein notwithstanding that any such securities may be currently being offered to others Any such offering will be made only in accordance with the terms and conditions set forth in the Offering Memorandum pertaining to such fund Alternative investments such as hedge funds and ICIS are subject to less regulation than other types of pooled investment vehicles may be illiquid and can involve a significant use of leverage making them substantially riskier than the other investments including any products which may be shown as comparison herein Prior to investing investors are strongly urged to review carefully the Offering Memorandum (including the risk considerations described therein) and all related fund documents to ask such additional questions of the Investment Manager as they deem appropriate and to discuss any prospective investment in the Fund with their legal and tax advisers in order to make an independent determination of the suitability and consequences of an investment
bull This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship residence or domicile which might be relevant to the subscription purchase holding exchange redemption or disposal of any investments
bull Investment in ICIS Funds are suitable only for sophisticated investors for whom an investment in such fund does not constitute a complete investment program and who fully understand and are willing to assume and understand the risks involved While the given material is subject to change and although based upon information which we consider reliable it is not guaranteed as to accuracy or completeness No person has been authorized to give any information or to make any representation warranty statement or assurance not contained in the Offering Memorandum and if given or made such other information or representation warranty statement or assurance may not be relied upon
bull Past performance is not a guide to future performance and the value of investments and the income derived from those investments can go down as well as up Future returns are not guaranteed and a loss of principal may occur Harvest Financial Services Ltd makes no warranty or representation that the security and or recommendationthe fund made are appropriate for all recipients and investors
bull Opinions expressed are current opinions as of the date appearing in this material only No part of this material may be i) copied photocopied or duplicated in any form by any means or ii) redistributed without Harvest Financial Services Ltd prior written consent
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
26
IMPORTANT INFORMATION
ldquoThe Central Bank of Cyprus shall not be liable by virtue of its recognition of the ICIS or by
reason of its exercise of the functions conferred on it by the International Collective Investment
Schemes Law Recognition of the ICIS does not constitute a warranty by the Bank as to the
creditworthiness or financial standing of the various parties to the ICISrdquo
Supervision of ICIS
In accordance with section 3 of the Law the Central Bank of Cyprus is the regulatory and
supervisory authority in the Republic of Cyprus for ICIS their managers and trustees
An ICIS must sell redeem or repurchase its units at the request of unit holders in accordance
with its constitutional documentation Units may not be issued as partly paid and may not be
sold unless the equivalent of the net issue price is paid Basic Rules for the calculation of sale
redemption or repurchase price can be found in ldquoRegulations on the valuation of the
property of an ICISrdquo
Taxation
Any gains or profits generated by an ICIS of any type including a unit trust or an investment
limited partnership are subject to an effective tax rate of 0425 while no further tax is
imposed on any dividends or other distributions made by an ICIS to its unit holders The
income of managers and trustees if not permanent residents of the Republic which is
generated from services they offer to ICIS is exempt from income tax
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals
27
Professionals
bull Fund Regulator Central Bank of Cyprus bull Investment Manager Regulator Cyprus Securities amp Exchange Commission bull Investment Manager ndash Harvest Financial Services Ltd bull Internal Auditor KPMG Advisory Services Ltd bull Administrator ndash Hellenic Bank Public Ltd bull Custodian - Hellenic Bank Public Ltd bull Auditors ndash PKP Professional Services Ltd bull Legal Advisor ndash Drakos amp Efthymiou - Tornaritis Law bull Hellenic Bank Public Ltd bull Wall Street Global LLC bull Interactive Brokers LLP bull Deutsche Bank Securities Israel Ltd- via Hellenic Bank PLC bull XNET European Broker Systems
Professionals