quarterly report - ip capital partners · page is ceo of alphabet, sundar pichai is ceo of google...

QUARTERLY REPORT2nd QUARTER 2017 IP-Participaccedilotildees

Googlersquos data center in The Dalles Oregon

This document is published exclusively for the purpose of

providing information and conferring transparency to the

management carried out by IP Capital Partners is not the

Offering Memorandums of the IP Global Fund Ltd and IP Fund

SPC (ldquoFundsrdquo) and is not to be considered as an offer for the

sale of Shares of the Funds or of any other security The Funds

are prohibited from making any invitation to the public in The

Cayman Islands to subscribe for any of their Shares Shares

may be subscribed for by exempted or ordinary non-resident

companies or other exempted or non-resident entities

established in The Cayman Islands Shares of the Funds may not

be offered or sold within the United States or to any US Person

The Funds may not be sold redeemed or transferred in Brazil

The offer and sale of Shares of the Funds in certain jurisdictions

may be restricted by law Before subscribing for the Shares each

prospective investor should (i) carefully read and retain the

Offering Memorandums of the Funds and the relevant Annex

in respect of the Class of Shares (ii) consult with hisherits own

counsel and advisors as to all legal tax regulatory financial

and related matters concerning an investment in the Funds

Past performance does not guarantee future results IP Capital

Partners takes no responsibility for the accidental publication of

incorrect information nor for investment decisions taken based

on this material Access to this document or use of the services

or information provided herein is prohibited by any person or

entity in any jurisdiction or country where such distribution or

use would be contrary to local law rule or regulation

indEx

IP-Participaccedilotildees 04

Miscellaneous 16

Performance 19IP-Participaccedilotildees Class 20

4

Quarterly Report | Second Quarter 2017

Investors were excited about the Brazilian market With

greater rationality and reforms moving forward the

economy was stabilizing inflation and interest rates

were in free fall and the local index and exchange

rates kept rising Some were convinced that the realrsquos

appreciation against the dollar still had a long way to

go It seemed too good to be true

Profound reforms about to pass with no last-

minute dropouts among ldquoalliedrdquo parties from the

governmentrsquos base Would there be no deadlocks

for endless questioning in the judiciary branch

With several categories certainly upset about losing

privileges would there be no backlash from public

interest groups In other words would the ldquosystemrdquo

really accept these important changes because of

the basic arithmetic and public accountsrsquo logic that

underpins them ndash without any of the mayhem we

have grown accustomed to expect

As skeptical Brazilians while obviously hoping for

the best we were prepared for the worst Based on

historical standards the recent entanglement wasnrsquot

exactly a surprise - just another sad chapter in our

history brought upon by the materialization of widely

known risks

With the local market upheaval we were able to

deploy some of the fundsrsquo cash We slightly increased

our investments in ItauacuteItauacutesa and B3 (result of

the merger between BMampFBovespa and CETIP) In

addition the fundsrsquo foreign currency exposure ndash

which we had increased in favorable moments during

the first months of the year ndash was partially reduced as

the dollar appreciated against the real

Another important change in the first half of 2017

ndash between February and March ndash was the increase

of our stake in Alphabet (the holding company that

controls Google) which we will describe in greater

detail in this report

OutlOOk

The low volatility in the US stock market largely

influenced by still low interest rates and abundant

global liquidity should not be mistaken for low risk

After the appreciation of recent years it is only natural

that the US market should be more vulnerable to

shocks and price corrections

The same liquidity that reduces volatility in the

developed world also attracts funds to emerging

markets cushions shocks like the ones Brazil has

experienced in recent years and helps companies

maintain higher-than-usual leverage among other

indirect consequences At some point this tide will

turn with important consequences for many markets

Having said this it is also true that sitting out on the

truly exceptional businesses tends to cost dearly

What kind of crisis would it take for a conservative

investor to ldquoreach for a bucketrdquo A 25 drawdown

in the SampP500 Maybe 30 Well around two years

ago Alphabetrsquos shares traded at levels around 30

iP-PARTiCiPACcedilOtildeES

5

IP-Participaccedilotildees

lower than today Berkshire Hathaway was 17 below

current levels while Amazon Thermo Fisher and

Danaher were 55 25 and 18 lower respectively

In all these cases the increase in the value of these

companies was such that nowadays at prices of only

two years ago their shares would be trading at very

attractive valuations ndash even more so in a low interest

rate world To mention just one example which we

will discuss in further detail below Alphabet at prices

of two years ago would be trading at only 13x its 2016

earnings1 In practice we would see a drawdown of

this magnitude as a tremendous buying opportunity

rather than a risk of permanent loss Not investing in

such special companies for fear of a price correction is

usually a recipe for regret

Our goal therefore was and continues to be to obtain

superior returns over time searching for a balance

between attractive and conservative investments and

cash available to be deployed at times of pessimism

and crisis - but always making sure that we are not

excessively conservative which would prevent us from

participating in the growth of remarkable companies

AlphAbet2

ldquoOur mission is to organize the worldrsquos information and

make it universally accessible and useful We believe that

the most effective and ultimately the most profitable

way to accomplish our mission is to put the needs of our

users firstrdquo ndash Alphabetrsquos S-1 form

ldquoOur value proposition to marketers of all sizes is

simple mdash Google can help you show the right ads to

the right people at the right momentrdquo ndash Sundar Pichai

Googlersquos CEO

One of our first investments abroad after the creation

of the BDR3 market in 2012 was Google (currently a

subsidiary of Alphabet) The shares appreciated quickly

and we exited the investment at the end of 2013 We

watched from the sidelines for around two and a half

years in which the company continued to grow rapidly

In mid-2016 seeing that the shares had not accompanied

the colossal evolution of the business we began a new

investment which we increased at the beginning of

2017 We currently hold a mid-sized position

Advertising in the Internet age

Approximately 90 of Googlersquos revenue comes from

advertising The company is a pioneer in a secular

trend digital ads in which consumersrsquo attitudes can

be measured

With the mass adoption of the Internet since the

90s the advertising world has gone through its own

revolution Until then advertising was essentially

an exercise of creativity Professionals came up with

high-impact concepts to promote a product created

an ad and distributed it repeatedly on the radio

newspapers and TV Communication channels fought

over who would reach the greatest number of people

1 Multiple adjusted as mentioned further in the report Considers dilution from executive compensation2 In 2015 Google was restructured resulting in the creation of Alphabet the holding company that currently controls it The Google subsidiary comprises the companyrsquos main services such as Search Maps Android Play YouTube Cloud etc while others have been created to pursue longer maturity goals connected for instance to the transport health and robotics markets When disclosing its results Alphabet groups these other initiatives under the name Other Bets Currently Larry Page is CEO of Alphabet Sundar Pichai is CEO of Google and Ruth Porat is CFO of both companies In this report we are focusing our analysis on the business of the Google subsidiary which accounts for 99 of revenue and 100 of profits3 Brazilian Depositary Receipts are certificates representing shares of foreign companies traded in Brazil

6


who received exactly the same message regardless

of their particular interests The campaignrsquos impacts

were measured indirectly and imprecisely usually

based on consumer opinion surveys

On the Internet after a successful period for portals

such as AOL and Yahoo it became clear that the

first model to truly win would be Googlersquos In 2000

the company created AdWords a system in which

advertisers pay to show small ads to users of its search

service The factors that determine where and when an

ad appears are i) the relevance of the ad to the userrsquos

search ii) the amount the advertiser is willing to pay

(in an auction system) iii) the quality of the ad and iv)

the quality of the page to which the ad directs the user

The first point ndash the relevance to the search - in

itself already makes the AdWords system completely

different from traditional media The ad only appears

when the user expresses explicit interest in a particular

subject Another fundamental difference is that the

advertiser only pays when the ad is clicked which

reinforces the connection between the advertiserrsquos

investment and the userrsquos behavior With the evolution

of systems that track usersrsquo online attitudes it became

possible to monitor them until the time of purchase

As a result advertisers have definitive proof that their

investment has paid off

This basic concept is at the heart of the money-making

machine Google has turned into By delivering the

right ad to the right person at the right time every

dollar spent on AdWords produces easily measurable

results The success of AdWords coupled with Googlersquos

leadership in usability and technology solidified

the search enginersquos dominance outstripping rivals

like AltaVista to become the biggest gateway to the

Internet for billions of people

With the ease of assessing user attitudes advertisers

have increasingly adopted ROI measures to determine

the size of their advertising budgets As returns were -

and still are - high Google has captured an explosion

in online ad spending The result can be seen in the

graph below


Source Alphabet

GrOss revenue - AlphAbeT in us$ billiOn

ADVERTISING GOOGLE OTHERS OTHER BETS

20042010

20062012

20082014

20052011

20072013

20092015

2016

100

60

90

50

80

40

70

30

1020

032

293

61

379

106

460

166

555

218

660

237

750

903

Over time creative talent has given room to statistics

in advertising agencies Campaigns are designed in

an increasingly scientific manner with thousands of

variations evaluated iteratively

Large advertising conglomerates such as WPP have

updated their business model giving emphasis to

digital agencies some of which are solely dedicated

to the search service

7


In the last 17 years both AdWords and Google Search have evolved a lot but the core concept has remained the

same In this period Google has absorbed an increasing share of advertising revenues in the world especially

superseding print media The graph below designed by venture capital firm Andreessen Horowitz clearly shows

what happened

Believing in Googlersquos revenue growth means to a

large extent a bet on the continuity of this share gain

There are essentially two elements required to make

this possible

bull The ability to attract users with interesting and

useful services

bull The ability to offer productive tools to advertisers

ndash connecting them to the right users at the

right times ndash in order to capture more of their

advertising budgets

We will analyze these two points below

the ability to attract users

We have reasons to believe that Google has a good

chance to continue attracting the attention of users

with differentiated services ndash beginning with the

critical mass that has already been reached Google

currently has seven assets with more than 1 billion

monthly active users Search Android Maps Chrome

YouTube Play and Gmail Android has over 2 billion

users and YouTube has more than 15 billion users

Besides these services the company has Drive with

800 million users and Photos with 500 million users

growing rapidly

8



4 For example Googlersquos work to index the web is the same as Bingrsquos but it can dilute those costs between far more users5 Machine learning is the science of giving computers the ability to learn without being explicitly programmed

The scale the company has achieved gives it

important advantages not only in terms of costs4

but also in terms of its ability to capture data about

users introduce new relevant products and take

advantage of network effects with participants such

as advertisers app creators (Play Store) and content

creators (YouTube in particular)

Googlersquos scale and engineering expertise have so

far protected it from frontal attacks on Search and

its adjacencies The company has also made highly

successful strategic acquisitions such as YouTube

DoubleClick and Android

Android which originally served to protect the

company from Microsoftrsquos possible dominance on the

web via smartphones was quickly and successfully

redirected to compete with the iPhone Today it has

over 80 of the smartphone market and serves as a

Trojan Horse for Google services Even on the iPhone

where Apple applications such as e-mail and maps

come pre-installed Google services are among the

most widely used

The ability to ride the adoption of smartphones has

been one of Googlersquos trump cards While Apple has

been the one to best turn the purchase of these

devices into profit Google is well positioned to

capture revenue from services related to their use

Smartphones have brutally increased the average

daily time people are connected to the Internet

Even with the rise of apps and social networks this

wave has also strongly boosted Googlersquos services In

the US market estimates of search-focused digital

agencies show that spending on AdWords ads for

smartphones has grown at rates above 50 percent in

recent years As the default search service on both

iOS and Android browsers Google Search has gained

even more market share (versus Bing and Yahoo) with

the adoption of smartphones

Time spenT per ADulT user per DAy wiTh DiGiTAl meDiA in The usA

ho

urs

per

day

Source eMarketer

MOBILE DESkTOPLAPTOP OTHER CONNECTED DEVICES

20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31

The increasing processing power improved wireless

connections and larger screen sizes are also factors

that will enable increasingly useful and valuable

services for Google users Add to that the multiplicity

of existing sensors in smartphones and it becomes

easier to know the userrsquos context in order to provide

the most appropriate information or advertisement at

any given time

In order to seize these opportunities Google

invests heavily to remain at the forefront of artificial

intelligence techniques such as machine learning5

It appears to have been successful both in its own

9


Source Google IO (517)

initiatives and in acquisitions and partnerships with

leaders in the field (such as Fei-Fei Li from Stanford)

One curious and impressive example was the victory

in the game of Go against champions Lee Sedol6 and

ke Jie7 In the practical field the combination of these

techniques with the infinite amount of data collected

by Google is beginning to emerge as a strong

competitive advantage

Results have appeared on various fronts such as voice

recognition accuracy facial recognition and image

contexts in the Photos app automated response

suggestions for e-mail and prediction of user interest

in various services Google has announced that it will

soon be possible to point your smartphone camera at

an object or establishment and receive information

about it

Search and Maps services have been great labs for

these techniques but YouTube may currently be the

most surprising beneficiary More than 400 hours of

video are uploaded to YouTube every minute Service

quality relies heavily on the ability to sort the wheat

from the chaff and recommend what really interests

each user ndash something absolutely impossible to do

with humans on the necessary scale Despite a few

stumbles here and there8 YouTube has learned and

reacted quickly At the beginning of 2016 YouTube

usersrsquo watch time grew at a rate of 60 per year

according to company data In December 2016 it

exceeded the mark of 1 billion hours per day 10 times

more than in 2012 Meanwhile the US TV industry

clocked in at 125 billion hours per day Netflix9 at

116 million hours and Facebook10 videos at

100 million hours

Digital video on demand is gaining ground for several

reasons The first of which is mobility YouTube users

watch on average one hour per day on their cell

phones11 without having to negotiate the use of the

home TV with anybody With improved screens and

connections this type of use only tends to grow Since

it is on demand users can take advantage of small

opportunities to watch throughout the day such as

on the way to work ndash or even in the bathroom As the

library is virtually endless (over 200 million hours of

video on YouTube) the content is extremely diverse

allowing users to search for the niche that most

appeals to them something impossible to accomplish

on TV regardless of the number of cable channels

available Finally since it is digital new content

standards such as 1080p 4k 360deg VR and so on are

6 httpswwwtheatlanticcomtechnologyarchive201603the-invisible-opponent4756117 httpswwwnytimescom20170525technologydaily-report-alphago-wins-againhtml8 httpsdigitalcontentnextorgblog20170331timeline-youtube-brand-safety-debacle9 httpswwwinccomemily-canalyoutube-gets-1-billion-of-videos-watched-a-dayhtml10 httpstechcrunchcom20160127facebook-grows11 httpsyoutubegoogleblogcom201706updates-from-vidcon-more-users-morehtml

10


much easier to adopt ndash while satellite and cable TV

infrastructure is much less flexible All this is wreaking

havoc in the US TV industry with a greater impact on

younger cohorts

The critical mass it has already reached the ability to

capture growth in smartphone usage its leadership

in both data and AI and its privileged position in

on-demand digital video with YouTube are the main

reasons that lead us to believe that Google will

continue to attract increasing attention of users

We will now focus on Googlersquos value proposition

for advertisers

the ability to offer productive tools to advertisers

The Search business (AdWords) still represents

Googlersquos biggest source of revenue The company does

not disclose exact figures but we estimate that this

represents something around 60 of gross revenue

and more than 80 of operating profit Given the

penetration already reached - especially in developed

countries - it does not seem reasonable to suppose

wATch Time TrenDs per week fOr TrADiTiOnAl Tv in The usAby AGe GrOup in The lAsT five yeArs

12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen

that most advertisers are failing to take advantage of

available ROI in their campaigns Thus future revenue

growth will mainly depend on i) the increase in time

spent using Google services (discussed in the previous

section) ii) adjustments to the predominance of ads

vs organic content in Search results and iii) Googlersquos

ability to improve its advertising targeting tools

Google constantly adjusts the way ads appear on

its search results page with some pages recently

creating room for ads by showing fewer unpaid

(organic) results The addition of a third and fourth

paid ads in search results on smartphones in 2015 and

2016 is an example of this trend Another example

was the increased space dedicated to Product Listing

Ads (PLAs) We have also noticed that it is becoming

increasingly harder to distinguish ads from organic

results For instance Google no longer highlights

ads on the results page in yellow Because of this the

company is sometimes accused of squeezing more

dollars from the traffic it already has effectively

forcing companies to pay to appear in search results

The company defends itself by arguing that it always

prioritizes the user experience and constantly tests

the side effects of this kind of change Its algorithms

have always prioritized higher quality ads in the

rankings so many of these ads turn out to be more

useful to users than organic results However it

still raises a yellow flag If Googlersquos growth relies

only on its current traffic it will be squeezed dry at

some point


11

Fortunately we see other more structural reasons for

Googlersquos revenue growth and returns to advertisers

As mentioned earlier smartphone ads account for

the lionrsquos share of growth in spending on AdWords

However the average cost per click on smartphone ads

is still roughly half that of desktops As ads are priced

at auctions their final price is associated with the sales

volume they can generate In fact this conversion

of clicks into sales is much lower on smartphones

than on desktops partly because it is harder to fill

out forms with address and credit card data when

making purchases on mobile devices Technologies

such as Android Pay and Apple Pay which facilitate

the customer checkout process should help close this

gap promoting sales boosting ROI making these ads

more valuable and fueling Googlersquos growth

Another way to improve advertiser ROI is to provide

more granular ad targeting Last year Google finally

divided AdWords campaigns into smartphones

tablets and desktops enabling it to determine the

words and prices for each campaign in a more refined

and assertive manner which has also increased

advertiserrsquos returns and consequently their spending

power The feedback from digital agencies is that

other steps in this direction would have the same

effect such as the ability to target different prices for

ads that will appear on different smartphone brands

in different locations or even the possibility of taking

greater advantage of the data that Google already has

on each userrsquos profile

There is also the opportunity to capture more

revenue by connecting the physical world to the

online world with the help of smartphones We have

already mentioned what Google is doing with maps

and smartphone cameras Today a third of Google

searches are made for local interests12 such as shops

and restaurants While the Amazon boogeyman

terrorizes retail Google is seen as an essential ally for

those who want to survive ndash offering branding and

customer capture and conversion services Google

will soon be able to measure the impact not only on

traffic but also on sales in physical stores after users

interact with online ads13 As we have seen in the past

measuring returns is an important step in convincing

advertisers to spend As around 90 of global retail is

not yet on the Internet it becomes clear how valuable

this initiative can be

When the campaign involves banners and videos that

have not immediately generated a purchase but have

influenced the customerrsquos final decision correctly

attributing their impact is crucial to knowing how

much to pay for them One of the common mistakes

is to attribute all the merit to the last click before

the purchase which is why Google created another

recently announced machine learning initiative

Google Attribution which estimates the role of

interactions with each ad in the customer convincing

trajectory leading to the purchase This improves

advertisersrsquo conversion ability (and therefore ROI)

and ads that appeared before the customerrsquos last

12 httpsearchenginelandcomsaying-third-mobile-searches-local-google-brings-new-ads-maps-25027813 httpsadwordsgoogleblogcom201705powering-ads-and-analytics-innovationshtml


12


14 httpswwwmagnaglobalcomwp-contentuploads201612MAGNA-December-Global-Forecast-Update-Press-Releasepdf

click become more valuable (generating revenue

for Google) This technique will also be useful for

YouTube where ads tend to promote brands rather

than immediately capture purchases as is the case

in AdWords

YouTubersquos success is allowing Google to compete for

the global TV advertising budget of around 186 billion

dollars14 Several steps have been taken to speed up

this process At the end of 2013 Google allowed

Nielsen and comScore to independently measure

user interactions with YouTube ads increasing the

confidence of TV advertisers to invest in the platform

In 2014 it created Google Preferred a selection of

YouTubersquos premium content (1-5) in 13 categories

including beauty food and auto These high-profile

videos were chosen to receive ads from the most

conservative brands (which are used to the world of

TV) In 2016 Magna responsible for buying advertising

space for brands such as Johnson amp Johnson Coca-

Cola and Fiat Chrysler promised to transfer at least

US$ 250 million of its TV spending to Google Preferred

between October 2016 and December 2017 This was

partially motivated by high TV time prices There are

several experiments on ad formats that would be

impossible without the interactivity of the Internet

YouTube has been gradually breaking the inertia of

the relationship between agencies and TV networks

to show that its ads offer good returns As a result we

expect advertising spending on YouTube to grow at a

fast rate possibly outpacing growth in the platformrsquos

watch time

At some point Googlersquos revenue growth will saturate

and keep pace with the growth of the global advertising

market The perception that the digitization of

advertising still has a long runway ahead and that

Google remains one of the leaders in this process

makes us believe that this moment is still far enough to

justify our investment Mobile revenue growth plenty

of opportunity to refine ad targeting the growing

connection between the online and physical worlds

and the evolution of YouTubersquos monetization initiatives

are the main reasons why we believe that Google will

still have a lot to offer to its advertisers and therefore

has ample room for growth

As with every investment there are some problems

Thorny issues related to Alphabet and Google lie on

our radar and demand attention These are all reasons

for the fundrsquos fairly controlled exposure to a business

we consider to be truly exceptional We will briefly go

over some of them

bull Our eternal ignorance Google operates highly

dynamic businesses Although its skills and

competitive advantages may protect it from

most frontal attacks other indirect attacks of a

competitive regulatory technological or even

criminal nature are always possible Some of

them can cause serious damage We are not able


13

to judge or even anticipate all these risks and

therefore we adjust the position to our ignorance

bull the price Alphabet shares returned 26 per year

over the last five years Simple math shows that its

price to earnings ratio went from 22x in 2011 to 28x

at the close of 2016 (GAAP criteria unadjusted)

In this period the company has accumulated

US$ 42 billion in net cash and began providing

transparency to its investments in Other Bets its

division for long maturity projects including the

self-driving car We prefer to look at the value of

the business by excluding cash from the market

value and the cost of these investments from

net income (as if they were being capitalized

instead of being recognized as an expense) At

current prices this would indicate an adjusted PE

multiple of 18x for 2018 It means some juggling

but we believe this is a reasonable way to value

the business After the gains recorded since

we resumed purchasing the stock in 2016 we

consider the current price reasonable although

obviously less attractive than a few months ago

We do not expect fast appreciation but we do

expect the continued growth of the business to

be gradually recognized

bull the dilution Google is one of the companies

that most heavily compensates its employees

with equity instruments especially restricted

stock The dilution ranges between 15 and

20 per year which bothers us We take this into

account in our calculations but we would prefer if

the company used this instrument less frequently

while also being more aggressive in buybacks We

welcome CFO Ruth Poratrsquos initiatives to force the

adoption of GAAP criteria (which at least attempt

to account for these costs) in internal discussions

and budgets of Googlersquos team leaders We are

also pleased with the fact that the company has

stopped discussing non-GAAP data with the

market and is now adopting GAAP Paraphrasing

Charlie Munger the granting of restricted stock

represents both spending and dilution for

us shareholders

bull the super-voting shares Larry Page and Sergey

Brin protect their controlling power with no less

than three classes of shares There were two

classes in the IPO one with ten votes per share

(for them) and another with one vote per share

(for everyone else) The third class was created in

2014 with no voting rights as the dilution caused

by restricted stock and share-based acquisitions

had started bothering them Both have sold shares

and are increasingly less active in the companyrsquos

day-to-day life leaving the biggest operational

responsibilities to Sundar Pichai Despite being a

genius Sundar still has to deal with the fact that he

is neither a founder nor a controlling shareholder

something history shows to be a handicap in

difficult decisions We prefer Amazonrsquos model

because Bezos has the same class of shares as we


14


do and his voting power like ours is diluted when

it comes to rewarding executives This makes us

less confident about the long-term commitment

of Googlersquos founders to minority shareholders

and reduces the maximum size of the position we

are willing to hold

bull Antitrust When companies become too strong

problems tend to come from governments

Googlersquos power has attracted the scrutiny of

antitrust regulators for a number of years In the

United States where regulators value consumer

well-being above all else the company has so far

been able to avoid major problems In Europe

where there is greater concern about protecting

competition things have been a lot more

complicated As has been widely reported the

company was recently fined 24 billion euros for

allegedly abusing its monopoly power at Search

in order to offer product comparison services

(the Product Listing Ads mentioned above) A lot

more complicated than the fine is negotiating the

complex practical aspects to meet the regulatorsrsquo

requests and the fact that this decision creates a

precedent for other probable convictions Google

is deciding whether to appeal in a case that

is likely to last for a few years Europe accounts

for approximately 30 of Googlersquos revenue and

European Product Listing Ads generate around

US$ 4 billion in annual revenue (around 4 of

total) according to JP Morgan estimates

bull Amazon The Bezos steamroller also bothers

Google Research shows that more than half of

online product searches in the US are already

made directly through the Amazon website15

Amazon is also increasingly developing

advertising solutions within its own website

which should eventually steal dollars from the

budgets currently allocated to AdWords These

moves have not yet had a meaningful impact

but represent trends we will closely monitor On

the other hand global digital budgets should

continue to rise Given the different use situations

we do not see this as a zero-sum game In any

event we are also Amazon shareholders and hope

to benefit in the other side of the equation

bull Facebook The same idea (that this is not a

zero-sum game) applies to Mark Zuckerbergrsquos

social network the main alternative to Google

in the online advertising market Facebook

has been quick to adopt new features and

copy competitors such as Twitter and Snap

Zuckerberg has recently tried to direct user

experience to videos in an attempt to increase

engagement on the platform ndash which puts it on

a collision course with YouTube At the end of the

day the competition is for usersrsquo attention and

ultimately for advertisers Facebook has made

enormous strides in this field its two billion users

currently spend an average of almost an hour per

day engaged with its products Facebook also

15 httpswwwbloombergcomnewsarticles2016-09-27more-than-50-of-shoppers-turn-first-to-amazon-in-product-search


15

allows very precise audience targeting based on

detailed profile and use data voluntarily provided

by its users However Facebook offers only a few

of the many useful services that attract usersrsquo

attention Google has its own services which have

proved to be useful as discussed above While

there are obvious threats between companies like

Alphabet Facebook and Amazon - which must

be monitored - we believe it is more productive

for us investors to focus on the great opportunity

to gain ground against more traditional players

(eg TV and newspapers) rather than on the fight

between them

bull the mix There are few businesses as profitable

as Search As Google grows with products such as

YouTube and Cloud (which we did not have space

to discuss in this report) or even through the

maturity of its Other Bets there will be a natural

pressure on margins The focus should clearly

be on absolute profit growth In this aspect the

fact that Google is one of the highest-spending

companies we know may ldquohelprdquo It is curious to see

that while revenue climbed from US$ 46 billion in

2012 to US$ 90 billion in 2016 margins did not

rise by a single percentage point This is largely

explained by the number of people Google has

hired to develop its new initiatives ndash almost

40000 in the last five years an annual growth of

17 Given Searchrsquos scalability the growth of this

business and the various initiatives Google has

become involved in over the last few years we

believe the company has a relevant and latent

ability to adjust the volume of these expenses if

necessary CFO Ruth ldquoVaderrdquo has her eye on it

Based on its original mission to organize the worldrsquos

information and make it available and useful Google

has created a fabulous collection of assets As an

ldquoinvisible tollrdquo on the Internet it provides essential

services ndash a true utility company that connects

everyone and everything Regardless of how big the

business has become we believe that the company

has an interesting and profitable future ahead


16


MiSCELLAnEOUS

ldquoBrazil is not a serious countryrdquo mdash Quote attributed to Charles de Gaulle

ldquoWhen something seems too good to be true it probably isrdquo mdash Anonymous

ldquoAnything can happen in stock markets and you ought to conduct your affairs so that if the most extraordinary events happen that yoursquore still around to play the next dayrdquo mdash Warren Buffett

ldquoIf you ask me in retrospect what our biggest mistake is in the tech field itrsquos not buying Google We were smart enoughrdquo mdash Charlie Munger 2017 Berkshire Hathaway Annual Meeting

ldquoIf you focus on your competition you will never deliver anything truly innovativerdquo mdash Eric Schmidt How Google Works

ldquoWe want to build technology that everybody loves using and that affects everyone We want to create beautiful intuitive services and technologies that are so incredibly useful that people use them twice a day Like they use a toothbrush There arenrsquot that many things people use twice a dayrdquo mdash Larry Page

ldquoA platform is when the economic value of everybody that uses it exceeds the value of the company that creates it Then itrsquos a platformrdquo mdash Bill Gates

17

ldquoAt Google our users are the people who use our products while our customers are the companies that

buy our advertising and license our technology There are rarely conflicts between the two but when there are our bias is toward the user It had to be this way regardless of your industry Users are more empowered than ever and

wonrsquot tolerate crummy productsrdquo mdash Eric Schmidt How Google Works

ldquoRight now wersquore in a period of growth Wersquore thinking about how we get to the next billion users and how we build additional monetization Wersquore focused on setting

ourselves up for the most successful long-term business Wersquore reinvesting in the business to reach users and offer more monetization options and better service Growth is

the priorityrdquo mdash Susan Wojcicki CEO of YouTube

ldquoUsers can make decisions relatively quickly and there is no cost associated with making a change in your viewing

behavior But if yoursquore an advertiser you need to make sure it works Advertisers usually start small and test it It

doesnrsquot make sense for them to advertise in a place where there are no users right Irsquom confident that advertisers

will catch up and the ad dollars will flow to digital Itrsquos just going to take some timerdquo

mdash Susan Wojcicki CEO of YouTube

Miscellaneous

18


ldquoWhat we want with Alphabet is to be an extraordinary magnet the best magnet for entrepreneurs and to be an accelerant for their development and to give them the kind of environment where they can continue to thrive and therefore build great businesses that generate tremendous returnsrdquomdash Ruth Porat CFO of Alphabet and Google

ldquoEntrepreneurship is working very hard having a strong belief being very consistent choosing the right partners choosing very solid consistent paths considering the medium and long term instead of worrying about tomorrow () It is the day-to-day job of building a business There are no giant leaps (hellip) Something that is very consistent over time which actually builds something in the long term There are no shortcuts () It may take a while but it gets there One step at a time () This consistency is fundamental That relentless routine of someone who is working hard to make the business grow to create somethingrdquomdash Roberto Setubal at a recent conference emphasis added

PERFORMAnCE

20


sTrucTure

ObJecTive AnD sTrATeGy

IP-Participaccedilotildees Class is a class of the IP Fund SPC VBF Segregated Portfolio which is an exempted company registered as a segregated portfolio company incorporated under the provisions of the Companies Law of August 3rd 2006 of the Cayman Islands

IP-Participaccedilotildees Class aims to provide absolute returns through long positions in both Brazilian and foreign companies that exhibit interesting combinations of criteria such as (i) excellent business models (ii) a competent and ethical management team (iii) an alignment of interests between management and minority shareholders and (iv) prices that provide a good margin of safety and allow for substantial absolute return over a minimum 5-year investment horizon

5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s

PERFORMANCE iP-PARTiCiPACcedilOtildeES CLASS

lAsT 12 mOnThs reTurns (us$)perfOrmAnce

Since February 26th 1993(2)

AnnuAl reTurns (us$)

eQuiTy hOlDinG chArAcTerisTics

cOncenTrATiOn

AnnuAliZeD reTurns (us$)

(1) Only Brazilian companies were taken into account in the market capitalization breakdown (2) For the period before IP-Participaccedilotildees Class inception on December 1995 for reference we show the Brazilian investment vehicle (IP-Participaccedilotildees) results in dollar terms The returns are net of all fees(3) Inception of the Brazilian investment vehicle IP-Participaccedilotildees 02261993

portfolioTop 5 44Next 5 19Other 8Cash 27

portfolioInternational Assets 39Small Cap (smaller than US$ 1bi)(1) 16Mid Cap (between US$ 1bi and US$ 5bi)(1) 0Large Cap (larger than US$ 5bi)(1) 16

IP-Part Class(2) () Ibovespa () MSCI EM ()June 17 -063 -165 107May 17 -113 -545 298April 17 -057 -030 221March 17 -109 -464 255February 17 263 400 307January 17 547 1191 595December 16 1089 140 -016November 16 -646 -1070 -460October 16 356 1351 025September 16 -001 062 132August 16 294 099 252July 16 260 1022 50912 months 1864 1844 2417

IP-Part Class(2) () Ibovespa () MSCI EM ()2017 (YTD) 459 289 19132016 4933 6646 11112015 -2467 -4103 -14602014 -405 -1437 -1822013 -616 -2629 -2272012 1823 -142 18632011 -1047 -2726 -18172010 3952 559 19202009 12767 14516 79022008 -5706 -5547 -53182007 5410 7343 39822006 4532 4641 32552005 2313 4409 34542004 2811 2816 25952003 8765 14104 56282002 -2636 -4601 -6002001 -758 -2398 -2372000 -099 -1808 -30611999 13673 6955 66411998 -2564 -3844 -25341997 -1153 3447 -11191996 3257 5323 5551995 334 -1377 -5211994 14254 5897 -7321993 5054 6392 6565

IP-Part Class(2) () Ibovespa () MSCI EM ()Last 5 years 474 -664 430Last 10 years 519 -386 224Last 15 years 1614 1105 1106Since Inception(3) 1789 981 738

21

TERMS And COndiTiOnS

IP-PARTICIPACcedilOtildeES CLASS

Minimum Initial

Management fee

Minimum Balance Left

Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000

bull2paoftheNetAssetValuebullAccrueddailyandpaidmonthly

US$ 10000000

US$ 10000000

bull15oftheincreaseoftheNetAsset Value per SharebullAccrueddailyandpaidsemi-annualyor on redemption subjetct to highwater mark

The redemption day shall be the lastbusiness day of the second subsequentmonth following receipt by the RTAof the redemption form Payment ofredemption proceeds shall generally bemade within 10 business days followingthe redemption day

Daily

Terms and Conditions

22


AddiTiOnAL inFORMATiOn


Net Asset ValueCalculator

Auditor

Bank

Brazilian Custodian

Registrar and TransferAgent

Investment Manager

BNY Mellon Serviccedilos Financeiros DTVM SAPhone +55 21 39744600wwwbnymelloncombrsf

kPMG

UBS AG Stamford Branch CT (USA)

Banco BNY Mellon SA

MUFG Alternative Fund Services (Cayman) LtdMain Officer Sherie DawkinsEmail SDawkinsmfsadmincomOL-Investidor-IRmfsadmincomPhone +345 914 6164

Investidor Profissional Gestatildeo de Recursos LtdaPhone +55 21 21040506wwwip-capitalpartnerscomcontactusip-capitalpartnerscom

IP-CAPITAL PARTNERSCOM

RUA DIAS FERREIRA190 - 702 LEBLONRIO DE JANEIRO RJ - BRASILCEP 22431050

This document is published exclusively for the purpose of

providing information and conferring transparency to the

management carried out by IP Capital Partners is not the

Offering Memorandums of the IP Global Fund Ltd and IP Fund

SPC (ldquoFundsrdquo) and is not to be considered as an offer for the

sale of Shares of the Funds or of any other security The Funds

are prohibited from making any invitation to the public in The

Cayman Islands to subscribe for any of their Shares Shares

may be subscribed for by exempted or ordinary non-resident

companies or other exempted or non-resident entities

established in The Cayman Islands Shares of the Funds may not

be offered or sold within the United States or to any US Person

The Funds may not be sold redeemed or transferred in Brazil

The offer and sale of Shares of the Funds in certain jurisdictions

may be restricted by law Before subscribing for the Shares each

prospective investor should (i) carefully read and retain the

Offering Memorandums of the Funds and the relevant Annex

in respect of the Class of Shares (ii) consult with hisherits own

counsel and advisors as to all legal tax regulatory financial

and related matters concerning an investment in the Funds

Past performance does not guarantee future results IP Capital

Partners takes no responsibility for the accidental publication of

incorrect information nor for investment decisions taken based

on this material Access to this document or use of the services

or information provided herein is prohibited by any person or

entity in any jurisdiction or country where such distribution or

use would be contrary to local law rule or regulation

indEx


Miscellaneous 16


4

























known risks














OutlOOk





















5
























AlphAbet2









Googlersquos CEO















be measured










6










































graph below


Source Alphabet



20042010

20062012

20082014

20052011

20072013

20092015

2016

100

60

90

50

80

40

70

30

1020

032

293

61

379

106

460

166

555

218

660

237

750

903









7





what happened




this possible


useful services




advertising budgets













growing rapidly

8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





indEx


Miscellaneous 16


4

























known risks














OutlOOk





















5
























AlphAbet2









Googlersquos CEO















be measured










6










































graph below


Source Alphabet



20042010

20062012

20082014

20052011

20072013

20092015

2016

100

60

90

50

80

40

70

30

1020

032

293

61

379

106

460

166

555

218

660

237

750

903









7





what happened




this possible


useful services




advertising budgets













growing rapidly

8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





4

























known risks














OutlOOk





















5
























AlphAbet2









Googlersquos CEO















be measured










6










































graph below


Source Alphabet



20042010

20062012

20082014

20052011

20072013

20092015

2016

100

60

90

50

80

40

70

30

1020

032

293

61

379

106

460

166

555

218

660

237

750

903









7





what happened




this possible


useful services




advertising budgets













growing rapidly

8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





5
























AlphAbet2









Googlersquos CEO















be measured










6










































graph below


Source Alphabet



20042010

20062012

20082014

20052011

20072013

20092015

2016

100

60

90

50

80

40

70

30

1020

032

293

61

379

106

460

166

555

218

660

237

750

903









7





what happened




this possible


useful services




advertising budgets













growing rapidly

8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





6










































graph below


Source Alphabet



20042010

20062012

20082014

20052011

20072013

20092015

2016

100

60

90

50

80

40

70

30

1020

032

293

61

379

106

460

166

555

218

660

237

750

903









7





what happened




this possible


useful services




advertising budgets













growing rapidly

8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





7





what happened




this possible


useful services




advertising budgets













growing rapidly

8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





8
























most widely used


















ho

urs

per

day

Source eMarketer


20102012

20082014

20112013

20092015

2016

6

2

5

1

4

3

0

22 23 24 26 25 23 22 22 22

03 0304

0816 23 26 28 31








any given time





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





9


















about it

















100 million hours


















10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

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457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





10





younger cohorts








for advertisers










12-17 18-24 25-34 35-49 50-64 65+

-375

-265

-98

1684

-390

Source Nielsen






























some point


11































































12







in AdWords


























watch time



















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13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

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457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





11































































12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

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868

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MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





12







in AdWords


























watch time



















over some of them









13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





13











































us shareholders



















14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





14







are willing to hold

























































15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

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868

Ibove

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MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





15













between them































16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





16


MiSCELLAnEOUS








17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





17












Miscellaneous

18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





18




PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





PERFORMAnCE

20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





20


sTrucTure




5223

IP-

Part

Clas

s

868

Ibove

spa

457

MSCI

Emerg

ing M

arket

s






cOncenTrATiOn








21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





21



Minimum Initial

Management fee


Minimum Additional

Performance fee

Redemption

Subscription

US$ 10000000


US$ 10000000

US$ 10000000



Daily


22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





22





Auditor

Bank

Brazilian Custodian


Investment Manager


kPMG


Banco BNY Mellon SA





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