General Description of Advisory Fund
HCG Fund Management LP (“HCG” or the “Investment Adviser”) formed in January 2015 and is organized as a limited partnership under the laws of the State of Delaware. The investment activities of HCG are led by Hadi F. Habal and Jose N. Penabad (the “Principals”). HCG is principally owned by MIJ Analytics, LLC and Jenesem, LLC, each wholly owned and controlled by Mr. Penabad and Mr. Habal, respectively. HCG Funds LLC, a Delaware limited liability company, serves as the general partner of HCG.
Description of Advisory Services and Investment Strategy
HCG serves as the investment manager and provides discretionary investment advisory services to pooled investment vehicles that are not registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the securities of which are not registered under the Securities Act of 1933, as amended (the “Securities Act”) (each a “Fund” and collectively, the “Funds”).

The Funds are organized in “master-feeder” structures in which a feeder fund invests substantially all of its assets into a master fund, and in turn, the master fund makes investments. The current master-feeder fund structures consist of the following entities:

Digital Finance Funds: o HCG Funds Ltd, a Cayman exempted company (the “Digital Finance Feeder Fund”); and o HCG Digital Finance LP, a Delaware limited partnership (the “Digital Finance Master Fund” and together with Digital Finance Feeder Fund, the “Digital Finance Funds”).

Digital Venture Funds: o HCG Digital Ventures I Feeder Fund LP, a Cayman Islands exempted limited partnership (the “Digital Venture Feeder Fund” and together with the Digital Finance Feeder Fund, the “Feeder Funds”); and o HCG Digital Ventures, LP, a Delaware limited partnership (the “Digital Venture Master Fund” and together with Digital Ventures I Feeder Fund LP, the “Digital Venture Funds”) and (Digital Venture Master Fund together with the Digital Finance Master Fund, the “Master Funds”).

The Principals are also the owners of the managing members of HCG Partners LLC and HCG DV GP, LLC (each a “General Partner”), the general partner with ultimate responsibility for decisions relating to management, operations, and investment decisions made on behalf of the Master Funds, and as delegated by the governing authorities of the Feeder Funds.

Digital Finance Funds: The Digital Finance Funds’ investment objective is to generate consistent absolute returns over the long-term risk premium, with mitigated downside risk by investing substantially all of its assets in private investment funds vehicles organized by the General Partner or one of its affiliates and managed by the Investment Adviser or one of its affiliates (“Portfolio Funds”). Each Portfolio Fund invests (either directly or indirectly through investments in a trust or similar vehicle) primarily in consumer or business loans, advances, receivables or other financial assets (“Digital Loans”) originated in the United States or outside the United States through Internet-based marketplace lending platforms and other Internet- based lending platforms (“Digital Lending Platforms”) sponsored by and serviced by third party companies (“Digital Lending Platform Sponsors”) and securities or other financial assets (“Digital Loan Securities”) that are issued by trusts or similar special purpose vehicles (“Digital Loan Security Issuers”) and are collateralized by, or reference or otherwise track the performance of, one or more portfolios of Digital Loans. In addition, the Investment Adviser may, in its sole discretion, invest a portion of the assets of the Digital Finance Funds in loans, advances, receivables, securities or other financial assets that are not Digital Loans or Digital Loan Securities (such investments, “Special Situation Investments”). Special Situation Investments may consist of, but are not limited to, litigation finance receivables, trade finance receivables and other consumer or business loans, advances or receivables that are not originated through Digital Lending Platforms and equity or debt securities issued by Digital Lending Platform Sponsors and other issuers. The Digital Finance Funds may hold Special Situation Investments directly or indirectly through one or more Portfolio Funds. There can be no assurance that the Digital Finance Funds will meet their investment objectives.

Generally, each of the Portfolio Funds will be organized as U.S. or non-U.S. limited liability companies, limited partnerships or other entities formed by the General Partner or its affiliates. It is expected that the manager, managing member, directors or general partner of each Portfolio Fund will be, or a similar function will be performed by, the General Partner, the Investment Adviser or their affiliates. Because the Portfolio Funds are generally organized by the General Partner (or its affiliates) for the purposes of facilitating the investment management of assets of the General Partner’s (or its affiliates’) clients, interests in such Portfolio Funds may be held by one or more of the General Partner’s (or its affiliates’) clients, including the Fund. As a general partner, managing member or manager (or similar capacity) of each Portfolio Fund, the General Partner exercises control over the issuance and transfer or other disposition of the membership interests of such Portfolio Funds.

Digital Venture Funds: The Digital Venture Funds’ investment objective is to achieve long-term capital appreciation through privately-negotiated venture capital investments in seed- and early-stage companies (each, a “Portfolio Company” and collectively, the “Portfolio Companies”) with technology-enabled business models, including, but not limited to, Portfolio Companies that are engaged or planning to engage in businesses related to financial technology (“FinTech”). The Digital Venture Funds intend to purchase, directly or indirectly through private funds, special purpose or similar vehicles established to invest in one or more Portfolio Companies, equity and equity-related securities (including options and warrants for the equity securities) of Portfolio Companies and may also purchase debt (including convertible debt) securities of Portfolio Companies, subject to certain restrictions described herein. The Digital Venture Funds may from time to time also receive options and warrants for the equity securities of Portfolio Companies in connection with the Fund’s investment in the Portfolio Companies. There can be no assurance that the Digital Venture Funds will achieve their investment objectives or avoid substantial or total losses.

In providing services to the Funds, among other things, HCG: (i) manages the Funds’ assets in accordance with the terms of the applicable Fund’s confidential offering memoranda, individual limited partnership or shareholder agreements and other governing documents applicable to each Fund (collectively the “Fund Documents”); (ii) formulates investment objectives; (iii) directs and manages the investment and reinvestment of the Funds’ assets; and (iv) provides, or causes to be provided, periodic reports to investors. HCG provides investment advice directly to the Funds and not individually to a Fund’s limited partners or shareholders. Investment restrictions for the Funds, if any, are generally established in the applicable Fund Documents. It should be noted that HCG (as well as the Funds and the general partners of the Funds) has in the past and may in the future enter into side letters or similar agreements with certain investors. Such agreements may provide for, among other things, reduced fees, redemption and withdrawal rights, notice periods and information rights. HCG also provides advisory services to HCG Finance DAC, an Irish designated activity company (“Irish DAC” and, together with the Funds, “Advisory Clients”) in connection with its investment and capital management activities. Irish DAC acts essentially as a Portfolio Fund to Digital Finance Master Fund (with Digital Finance Master Fund investing in securities issued by Irish DAC and receiving leveraged returns from Irish DAC’s senior notes under its note issuance program) but it is deemed a separate Advisory Client given its unique legal structure. Advisory services to Irish DAC include providing research services, making recommendations about investments, and reporting on the performance of assets. HCG’s investment authority for Irish DAC is non-discretionary with the board of directors of Irish DAC retaining absolute authority to make all investment decisions. As of December 31, 2019, HCG managed regulatory assets under management on behalf of Advisory Clients totaling approximately $584,220,519 ($496,034,981 on a discretionary basis and $88,185,538 on a non-discretionary basis). please register to get more info

Management Fee
HCG generally charges asset-based investment advisory fees to each Fund (“Management Fee”). Management Fees paid by a Fund are indirectly borne by investors in such Fund. Such Management Fees are deducted from Fund assets and generally payable quarterly in arrears or in advance, as described in more detail below. The precise amount of, and the manner and calculation of, the Management Fee for each Fund is established by HCG, as modified by negotiations with investors in the applicable Fund, and is set forth in the applicable Fund Documents received by each investor prior to investment in such Fund.

Digital Finance Funds: Consistent with the Digital Finance Fund Documents, generally, each Digital Finance Fund pays a maximum quarterly Management Fee equal to 1/4th of 2% (or 2% annualized) of the net asset value (“NAV”) of each series of shares of the Digital Finance Fund. Digital Finance Fund investors do not have the ability to choose to be billed directly for fees.

HCG will generally not charge any management fees to Portfolio Funds but if a Portfolio Fund issues debt or preferred equity or equity securities to third-party investors, HCG may charge management fees with respect to the capital contribution made by such third-party investors. If the Portfolio Fund procures leverage by issuing securities to third-party investors representing senior positions in such Portfolio Fund relative to the Digital Finance Fund’s interest in such Portfolio Fund, management fees paid by the Portfolio Fund to HCG with respect to the capital contributions made by such third-party investors may provide an incentive to HCG to give preference to such leverage arrangements over traditional bank leverage facilities, in which lenders would typically not pay any such fees to HCG.

Digital Venture Funds: The Digital Venture Funds pays the General Partner an annual Management Fee, payable quarterly in advance, equal to 1% of the aggregate capital commitments. After the expiration of the commitment period as defined in their applicable Fund Documents, the Management Fee equaled 0.5% of (i) the aggregate commitments that have been taken down less (ii) distributions constituting returns of capital. The Management Fee commenced as of the designated effective date based on total commitments, regardless of when an investor was actually admitted to the Digital Venture Fund. Investors participating in a subsequent closing after the effective date will be assessed Management Fees retroactive to the effective date and, in addition, will be charged interest on such amounts at a rate of 8% per annum from the effective date.

The General Partner, HCG or other affiliates of the Digital Venture Funds may from time to time receive monitoring fees, director’s fees, management agreement termination fees, transaction fees and break-up fees from portfolio companies or proposed portfolio companies; the Management Fee will be reduced by 100% of the Digital Venture Fund’s share of all such fees. To the extent any application of the foregoing sentence would reduce the Management Fee for a given quarter below zero, such credit against the Management Fee will be carried forward for future application. Irish DAC: In connection with its advisory services to Irish DAC, HCG receives a monthly annualized fee of 0.50% of the aggregate outstanding principal amount of certain senior notes issued under its note issuance program as well as $5,000 monthly calculation agent fee, and $1,500 monthly cash manager fee. In addition, following the occurrence of a liquidation event, HCG would be eligible to receive an incentive fee (if any) to the extent of available funds, subject to the terms of is advisory agreement. Irish DAC is not charged with any management fees or incentive fees in connection with the Digital Finance Master Fund’s investments in securities issued by Irish DAC. The Digital Finance Master Fund is not charged with any additional management fees or incentive fees at the Irish DAC level in connection with its investments in securities issued by Irish DAC.
Performance Fee
Additionally, at the end of the Digital Finance Fund’s fiscal year, the Investment Adviser is entitled to a performance fee (“Performance Fee”) of the net capital appreciation attributable to each Digital Finance Fund investor’s capital account in the applicable Digital Finance Fund, subject to a hurdle rate (the “Hurdle Rate”). The Performance Fee is generally equal to 20% of an amount (if positive) equal to (a) the result of (i) the net asset value of such capital account as of the end of the fiscal year (adjusted for capital contributions, withdrawals or distributions made during such fiscal year) (the “Year-End Value”) minus (ii) the net asset value of such capital account as of the first day of the fiscal year (the “Beginning Year Value”), minus (b) the product of the applicable Hurdle Rate and the Beginning Year Value of such capital account.

The Investment Adviser may, in its sole discretion, waive any portion of the Management Fee and Performance Fee that would otherwise be allocable to any particular Digital Finance Fund investor or class of Digital Finance Fund interests, and may effect such waiver by means of a reimbursement to a Digital Finance Fund investor or investors.
Additional Fees and Expenses
Digital Finance Funds: In addition to the Management Fee and Performance Fee, the Digital Finance Funds may pay or reimburse the General Partner, the Investment Adviser and/or their affiliates for all expenses related to the organization and initial offering expenses of the Digital Finance Master Fund and Digital Finance Feeder Fund, including, but not limited to, legal and accounting fees, printing and mailing expenses and government filing fees (including blue sky filing fees). The Digital Finance Funds’ organizational and initial offering expenses will be, for accounting purposes, amortized by the Digital Finance Funds for up to a sixty (60) month period. Amortization of such expenses is a divergence from U.S. generally accepted accounting principles (“GAAP”). In certain circumstances, this divergence may result in a qualification of the Digital Finance Funds’ annual audited financial statements. In such instances, the Digital Finance Funds may elect to (i) avoid the qualification by recognizing the unamortized expenses or (ii) make GAAP conforming changes for financial reporting purposes, but amortize expenses for purposes of calculating the Digital Finance Funds’ net asset value (resulting in a divergence in fiscal year-end net asset values reported in the Digital Finance Funds’ financial statements, and as otherwise applicable under the provisions of the applicable Fund Documents). If the Digital Finance Fund is terminated within sixty (60) months of its commencement, any unamortized expenses will be recognized. If a Digital Finance Fund investor makes a withdrawal prior to the end of the period during which the Digital Finance Fund is amortizing expenses, the Digital Finance Fund may, but is not required to, accelerate a proportionate share of the unamortized expenses based upon the amount being withdrawn and reduce withdrawal proceeds accordingly. The Digital Finance Funds will also pay or reimburse the General Partner, the Investment Adviser and their affiliates for (i) all expenses incurred in connection with the ongoing offer and sale of Digital Finance Funds’ interests, including, but not limited to, printing of Digital Finance Fund Documents and exhibits and documentation of performance and the admission of Digital Finance Fund investors, (ii) all operating expenses of the applicable Digital Finance Funds such as tax preparation fees, governmental fees and taxes, administrator fees, costs of communications with Digital Finance Fund investors, and ongoing legal, accounting, asset valuation, auditing, bookkeeping, consulting and other professional fees and expenses, (iii) all Digital Finance Funds’ trading and investment related costs and expenses (including, without limitation, travel expenses and other expenses of the Investment Adviser related to diligence of investment opportunities for the Digital Finance Funds), (iv) all fees and other expenses incurred in connection with the investigation, prosecution or defense of any claims, assertion of rights or pursuit of remedies, by or against the Digital Finance Funds, including, without limitation, professional and other advisory and consulting expenses, (v) fees and expenses relating to software tools, programs or other technology utilized in managing the Digital Finance Funds (including, without limitation, third-party software licensing, implementation, data management and recovery services and custom development costs), (vi) research and market data (including, without limitation, any computer hardware and connectivity hardware (e.g., telephone and fiber optic lines) incorporated into the cost of obtaining such research and market data), (vii) insurance expenses, including costs related to directors and officers insurance, errors and omissions insurance, premiums for cybersecurity insurance and other liability insurance covering the General Partner, the Investment Adviser and the members, partners, officers, employees and agents of any of them, (viii) costs of printing and mailing reports and notices, (ix) regulatory expenses (including, without limitation, filing fees) and (x) extraordinary expenses, including the following: indemnification expenses; fees and expenses incurred in connection with any tax audit by any U.S. federal, state or local authority, including any related administrative settlement and judicial review; and fees and expenses incurred in connection with the reorganization, dissolution, winding-up or termination of a Digital Finance Fund. The Digital Finance Funds will also bear all of the expenses similar to those described above and incurred by any feeder fund organized by the General Partner to invest in the Digital Finance Master Fund. The Digital Finance Funds also will bear its pro rata share of the organizational costs, operating costs, investment related expenses and any other expenses of each of the Portfolio Funds.

The General Partner and the Investment Adviser will bear their respective overhead expenses, such as salaries and real estate lease expenses.

Fees and expenses paid or incurred by the Digital Finance Funds that are attributable to only one class of investors’ interests in the Digital Finance Funds will be specially allocated to that class. Fees and expenses that may be attributable to more than one class or all classes of investor interests will be allocated among such classes in a manner that the General Partner determines to be fair and equitable.

The General Partner and/or the Investment Adviser may sell Digital Finance Fund interests through broker- dealers, placement agents and other persons and pay a marketing fee or commission in connection with such activities, including ongoing payments, at the General Partner’s or the Investment Adviser’s own expense. In certain cases, the General Partner and/or the Investment Adviser reserve the right to deduct a percentage of the amount invested by an investor in the Digital Finance Funds to pay sales fees or charges, on a fully disclosed basis, to a broker-dealer, placement agent or other person based upon the capital contribution of the investor introduced to the Digital Finance Funds by such broker-dealer, agent or other person. Any such sales fees or charges would be assessed against the referred Digital Finance Fund investor and would reduce the amount actually invested by such investor in the Digital Finance Funds. Digital Venture Funds: HCG will be required to pay all management expenses associated with conducting its activities. “Management Expenses” shall mean the costs and expenses incurred by HCG in providing for its normal operating overhead, including, but not limited to, compensation of its employees and the cost of providing relevant support and general services (e.g., office rental, secretarial, clerical and bookkeeping expenses) but not including any Digital Venture Fund expenses described below. The Digital Venture Funds will be responsible for all organizational expenses up to an aggregate cap of $300,000 and all other fund expenses (as described below). The General Partner will bear the cost of all organizational expenses in excess of $300,000, if any (“Excess Organizational Expenses”), and of any placement agent fees incurred in connection with the formation of the Digital Venture Funds. The Digital Venture Funds, to the extent not reimbursed by a prospective or actual Portfolio Company, if any, will be responsible for all costs, expenses, liabilities and obligations relating to the Digital Venture Funds’ activities, investments, operations and business, including, without limitation, (i) any taxes, fees, duties or other governmental charges or costs imposed on the Digital Venture Funds and any fees and expenses for the preparation and filing of any governmental or regulatory reports relating to the Digital Venture Funds or any investment or proposed investment, (ii) commitment fees and other fees and expenses (including expenses of the lender which are required to be paid and legal, accounting, administrative, audit and other expenses incurred in connection therewith) and principal and interest payable in connection with any indebtedness, credit facility or other credit arrangement of the Digital Venture Funds, any Portfolio Company, or any alternative investment vehicle (to the extent not reimbursed by a Portfolio Company or alternative investment vehicle), (iii) accounting fees, third-party fees, fees of consultants, advisors, finders, cash management agents, administrators and custodians, attorneys’ fees and any expenses related thereto, (iv) due diligence, appraisal, financing and filing fees and expenses and all other costs and expenses related to the identification, evaluation, acquisition, investment, holding, monitoring, valuation and disposition of securities (whether or not the transaction is consummated) (including out-of-pocket travel expenses, broken deal fees and expenses, legal accounting expenses, consulting expenses and any banking, brokerage, registration, qualification, finders’ and similar fees or commissions), (v) all out-of-pocket fees and expenses incurred by the Digital Venture Funds Fund, the General Partner or HCG in connection with any conference or meeting of the investors and any meeting of the advisory board (including services, food, lodging, transportation and entertainment provided at or in connection with any such meetings), (vi) premiums and fees, costs and expenses associated with directors and officers, general partners liability, cybersecurity and errors and omissions liability or other insurance coverage covering the General Partner, HCG and members, partners, officers, managers, directors, employees or agents of any of the foregoing, (vii) the costs and expenses of any litigation, audit, examination, investigation, indemnification or governmental proceedings involving the Digital Venture Funds or any investment or proposed investment and the amount of any judgments, settlements, indemnification or other amounts paid in connection therewith, (viii) any expenses associated with the Digital Venture Funds’ reporting, financial statements, tax returns and K-1s, as well as fees, costs and expenses incurred in connection with any communications or inquiries with the investors (including with respect to reporting, capital calls and distributions), compliance with side letters, or the amendment or supplement of any documentation relating to the Digital Venture Funds, the General Partner and investors (ix) fees, costs and expenses incurred in connection with dissolving, liquidating, winding-up and terminating the Digital Venture Funds, (x) any expenses associated with compliance with applicable laws, rules and regulations by the Digital Venture Funds or in respect of the Digital Venture Funds’ investment activities, (xi) any expenses associated with the operation and actions of the advisory board, (xii) expenses incurred in connection with the establishment, operation and dissolution of any alternative investment vehicle (to the extent not reimbursed by such alternative investment vehicle), (xiii) organizational expenses, (xiv) fees, costs and expenses incurred in connection with dissolving, liquidating, winding-up and terminating the Digital Venture Funds, (xv) costs and expenses incurred in connection with developing, licensing, implementing, maintaining or upgrading any web portal, extranet tools, computer software or other administrative or reporting tools (including subscription-based services) for the benefit of the Digital Venture Funds or the General Partner or investors; (xvi) costs and expenses incurred in connection with any transfer or proposed transfer of an interest in the Digital Venture Funds, an investor’s withdrawal or default (but only to the extent not paid by the investor, the transferee or the withdrawing investor), (xvii) fees, expenses and governmental charges relating to the preparation and filing of any regulatory or governmental reports or filings required to be made by the Digital Venture Funds or relating to the Digital Venture Funds’ investments, potential investments or other activities (including, without limitation, Form PF required to be filed under the Investment Advisers Act, Section 16 filings, Schedule 13D filings, Schedule 13G filings and other forms, schedules, reports, filings, information and documents required to be filed under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), any forms, schedules, reports, filings, information or other documents prepared with respect to the Foreign Account Tax Compliance Act , or filed with the United States Internal Revenue Service, Commodities Futures Trading Commission, SEC or other U.S. governmental authority, and any non-U.S. forms, schedules, reports, filings, information or other documents filed with or prepared to comply with any non-U.S. governmental authority or non-U.S. law, rule or regulation, including those related to or arising out of the Alternative Investment Fund Managers Directive; (xviii) all fees, costs and expenses related to complying with anti-money laundering, know-your-customer and similar laws, rules and regulations, including, without limitation, (A) fees, costs and expenses incurred in connection with vetting potential investors in the Digital Venture Funds prior to, concurrently with or following the offering of Interests or any transfer of interests, (B) fees, costs and expenses incurred in connection with monitoring the Digital Venture Funds’, the General Partner’s, and any Portfolio Company’s ongoing compliance with such laws, rules and regulations, and (C) the external costs of any third party engaged to perform anti- money laundering and know-your-customer compliance and administration; (xviii) fees, compensation and expenses of portfolio support professionals and other third parties retained to provide management, consulting or other business services to or with respect to the Digital Venture Funds, its investments or potential investments and Portfolio Companies; (xix) any activities with respect to protecting the confidential or non-public nature of any information or data, including confidential information (including any costs and expenses incurred in connection with EU Data Protection Law or the Freedom of Information Act ), (xiv) research and market data (including without limitation, an computer hardware and connectivity hardware (e.g. telephone and fiber optic lines) incorporated into the costs of obtaining such research and market data, and (xv) all other fees, expenses and costs as may be described in the relevant Fund Documents but not including (A) Excess Organizational Expenses, (B) ordinary overhead and administrative expenses which are payable by the General Partner and/or HCG and (C) any certain expenses that are expressly excluded under the relevant Fund Documents.
It is critical that Fund investors refer to the relevant confidential Fund Documents for a complete
understanding of how HCG is compensated for its advisory services and the fees they will pay. The
information contained herein is a summary only and is qualified in its entirety by the relevant Fund
Documents. please register to get more info

SIDE-BY-SIDE MANAGEMENT
As described in Item 5 above, HCG (or its affiliate, the Digital Finance Fund General Partner) may receive performance-based compensation from the Digital Finance Funds. This creates a potential conflict of interest in that the Performance Fee may create an incentive for HCG to make more speculative investments than would otherwise be made or make decisions regarding the timing and manner of realization of investments differently than if such Performance Fee was not received. HCG may have a conflict between its obligation to advise Advisory Clients to manage its portfolio prudently and the financial incentive created by such fees for HCG to advise Advisory Clients to make investments that are riskier or more aggressive than would be the case in the absence of such fees. Digital Finance Fund investors are provided with clear disclosure as to how the Performance Fee is charged with respect to the Digital Finance Funds and the risks associated with such performance-based compensation prior to making an investment.

Managing Advisory Clients with a Performance Fee side-by-side with Advisory Clients without a Performance Fee may create conflicts of interest in that HCG may be incentivized to favor the accounts with a Performance Fee. It is HCG’s policy to devote such time and attention to each Advisory Client as it deems necessary and not to favor one Advisory Client over another on the basis of the fees or types of fees charged. HCG has policies and procedures to assess these and other potential conflicts of interest. As noted in Item 5, HCG may elect to waive or reduce the Management Fee or Performance Fee for any Digital Finance Fund investor, including investors that are affiliates and/or related persons of HCG. please register to get more info

HCG’s only advisory clients are the Advisory Clients referenced in Item 4. Each investor in the Advisory Clients must meet certain eligibility provisions set forth in the applicable subscription documents. The minimum commitment for an investor in the Funds is also outlined in its applicable subscription documents, including the discretion of the General Partner to accept less than the minimum investment threshold. Each investor in the Master Funds and each investor in the Feeder Funds who is a U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) is required to meet certain suitability qualifications, such as being (1) an “accredited investor” as defined in Regulation D under the Securities Act and/or (2) a “qualified purchaser” as defined in Section 2(a)(51) of the Investment Company Act. Irish DAC is not currently offering or issuing securities to any U.S. persons other than the Digital Finance Master Fund. None of the senior notes issued by Irish DAC is offered or issued to U.S. persons. please register to get more info

AND RISK OF LOSS
The descriptions set forth in this Brochure of specific advisory services that HCG offers to clients,
and investment strategies pursued and investments made by HCG on behalf of its clients, should not
be understood to limit in any way HCG 's investment activities. HCG may offer any advisory
services, engage in any investment strategy and make any investment, including any not described in
this Brochure, that HCG considers appropriate, subject to each client's investment objectives and
guidelines. The investment strategies HCG pursues are speculative and entail substantial risks.
Investors in the Advisory Clients should be prepared to bear a substantial loss of capital. There can
be no assurance that the investment objectives of any Advisory Client will be achieved.

INVESTMENT STRATEGIES
Digital Finance Funds: The Digital Finance Funds’ investment objective is to generate consistent absolute returns over the long- term risk premium, with mitigated downside risk by investing substantially all of its assets in Portfolio Funds. Each Portfolio Fund invests primarily in Digital Loans and Digital Loan Securities. In addition, the Investment Adviser may, in its sole discretion, invest a portion of the assets of the Digital Finance Funds in Special Situation Investments. The Investment Adviser will generally seek credit opportunities with asymmetrical risk/reward balance and short durations and has the flexibility of investing and re-investing the Funds’ assets in a variety of Digital Loan types across multiple Digital Lending Platforms, as well as Special Situation Investments.

Digital Loans are generally private, small-balance, short-term consumer or business loans, advances, receivables, loan participations, structured credit positions or other financial assets originated through Digital Lending Platforms. Digital Loans were either inaccessible, not historically available to capital market investors, or reserved for specialist finance institutions, niche investors, and banks. The Digital Finance Funds offer investors a single point of access to participate in what the Investment Adviser believes to be one of the most attractive risk-adjusted and time-adjusted return streams provided by a diversified pool of Digital Loans and Digital Loan Securities, achieved by allocating Digital Finance Fund assets across one or more Portfolio Funds. Each Portfolio Fund will consist of a diversified portfolio of Digital Loans or Digital Loan Securities.

The Digital Finance Funds expect that most Digital Loans held by a Portfolio Fund (either directly or through Digital Loan Securities) will have maturities ranging between 30 days and 84 months, will pay cash interest monthly and may in some cases (such as sinking balance loans) amortize principal monthly. Combined with penalty-free loan prepayments that are permitted by the terms of most Digital Loans, Digital Loans typically generate monthly cash flow that the Digital Finance Funds will generally reinvest into new Digital Loans to achieve high cash utilization and minimize drag on returns. Each Portfolio Fund may experience some capital loss due to loan charge offs. When the Investment Advisor deems appropriate, in its sole discretion, a Portfolio Fund may establish a loan loss reserve to absorb losses in respect of investments. If and when leverage is added to a Portfolio Fund, interest expense on that leverage will be absorbed by that Portfolio Fund. Paradigm Shift: Following the financial crisis of 2008, the combination of increased regulatory burdens, escalating bank capital requirements, and compressing interest rates for bank products caused many banks to reduce their lending activities. They refrained from product innovation in loans historically dominated by a small group of lenders (e.g., personal loans) or stopped providing credit altogether to borrowers who relied exclusively on banks for credit (e.g., small businesses, single family rehabilitation companies). At the same time, social online behavior, financial technology, and the Internet led to the birth of Digital Lending Platforms, including “online peer-to-peer” or “marketplace lending” platforms, that have started to disintermediate traditional banking and lending activity. This confluence of regulation, technology and online behavior paved the way for the emergence of a sustained paradigm shift in the traditional funding channel. It is this paradigm shift that enabled the Digital Finance Funds’ opportunity in the new reality of digital finance.

The HCG Approach: The Investment Adviser’s investment approach combines traditional due diligence and decision-making processes with technology and engineering to create a powerful tool suited for 21st century investment management. Each leg of the approach works symbiotically with the other in an iterative manner to inform the investment team both, prior to making initial investments and after investments have been made.
Portfolio Funds Generally

Because the Portfolio Funds are generally organized by the General Partner (or its affiliates) for the purposes of facilitating the investment management of assets of clients of the Investment Adviser or its affiliates, interests in such Portfolio Funds may be held by one or more of clients of the Investment Adviser or its affiliates, including the Fund. As a general partner, managing member or manager (or similar capacity) of each Portfolio Fund, the Investment Adviser or one of its affiliates exercises control over the issuance and transfer or other disposition of the interests of such Portfolio Funds.

Digital Venture Funds: The Digital Venture Funds’ investment objective is to generate long term capital gains by investing directly and indirectly in seed and early-stage Portfolio Companies in the FinTech industry. The Digital Venture Funds may invest in other venture capital funds. The Digital Venture Funds’ strategy is premised on two core beliefs: (1) that investing early through a well-structured program can lead to outsized gains with some risk mitigation, and (2) that the FinTech sector is in the early stages of broad-based and irreversible digitalization which will help the sector grow. HCG believes significant opportunities exist for new entrants to participate in this digitization trend but recognizes that founders and management teams of these new participants often face significant challenges in launching and scaling their respective companies. Among the key challenges are the relatively small number of seed- and early-stage investors and capital providers, the complex regulatory and legal environment, the difficulty in attracting users in a very competitive market, and the challenges of partnering with larger firms and service providers in order to access important distribution channels and financial products. As such, the failure rates for early-stage FinTech firms can be high. Consequently, the Digital Venture Funds seek to mitigate these risks through a two-pronged approach: (a) by investing in companies that are already backed by, or are in the process of raising capital from, top- tier FinTech venture capital firms, and (b) by working with an incubator program (the “Program”), which is a hands-on six-month program that is primarily focused on: connecting entrepreneurs to key participants in the U.S. financial system; providing advice on product development, user acquisition, fundraising, and other key business objectives; and providing guidance and insight into the regulatory framework under which the participating business will operate.
RISK OF LOSS
Prospective investors in the Funds should be aware that an investment in the Funds involves a high
degree of risk. Investors could lose the entire amount of their investments or recover only a small
portion of their investments if the Funds suffer substantial losses. The list of risk factors below does
not purport to be a complete enumeration or explanation of the risks involved in an investment in
the Funds. Different or new risks not addressed below may arise in the future and, therefore, the
following list is not intended to be exhaustive. Potential investors in the Funds should carefully review
the Fund Documents in their entirety and consult with their own financial, tax and/or other advisers
before deciding whether to invest in the Funds.
Digital Finance Funds:

Investment Risks

Dependence Upon the Investment Adviser and the Principals. The Digital Finance Funds’ success will depend on the investment advice and recommendations of the Investment Adviser and on the skill and acumen of the Principals. Further, if the Principals should cease to participate in the Digital Finance Funds’ business, the Digital Finance Funds’ ability to select attractive investments and manage its portfolio could be severely impaired. Investors have no right or power to take part in the management of the Digital Finance Funds and will have no opportunity to select or evaluate any of the Digital Finance Funds’ investments or strategies. As limited partners, holders of limited partnership interests will not have any voting rights regarding the management of the Digital Finance Funds or otherwise, other than in relation to proposed amendments to the LP Agreement that would have a material adverse effect on the rights of such limited partners. Accordingly, no person should purchase a limited partnership interest unless such person is willing to entrust all aspects of the management of the Digital Finance Fund and its investments to the discretion of the General Partner and the Investment Adviser.

Unspecified Investments. The Investment Adviser has complete discretion to select investments for the Funds as investment opportunities arise, including, without limitation, investments in Portfolio Funds investing in Digital Loans, Digital Loan Securities or Special Situation Investments. The Investment Adviser has complete discretion to select the Portfolio Funds and the Investment Adviser or other entities controlled by the Principals will have complete discretion to organize the Portfolio Funds and select the assets in which such Portfolio Funds invest. A limited partner must rely upon the ability of the Investment Adviser to identify and implement investments consistent with the Fund’s investment objective. No limited partner will have any right under a limited partnership agreement to require the Investment Adviser to invest in a particular Portfolio Fund or require any Portfolio Fund to make investments in any particular asset type.

Although the Funds expect to invest in Portfolio Funds that invest primarily in Digital Loans and Digital Loan Securities, the Investment Adviser may, in its sole discretion, invest a portion of the assets of the Funds in investments, which may consist of, but are not limited to, Special Situations Investments. Although many of the risk factors related to Digital Loans and Digital Loan Securities that are described in the Fund Documents may also apply to the Funds’ investments in Special Situation Investments, the Funds may be exposed to different or new risks not addressed in the Fund Documents in respect of Special Situation Investments because of the unspecified characteristics of Special Situation Investments. Therefore, the disclosure of the risks related to Digital Loans and Digital Loan Securities in the Fund Documents may not adequately address the potential risks related to Special Situation Investments in which the Funds may invest from time to time. Concentration Risk. A Portfolio Fund may invest virtually all of its assets in Digital Loans or Digital Loan Securities related to a single Digital Lending Platform Sponsor. As a result, a Portfolio Fund’s portfolio may be concentrated almost exclusively in assets that depend on a single Digital Lending Platform Sponsor even though the Portfolio Fund’s portfolio may include a diverse pool of assets originated by the Digital Lending Platform Sponsor. This concentration of risk will substantially increase the risk of material losses, even total losses, of investments held by the Portfolio Fund and the Fund. This concentrated exposure to a single Digital Lending Platform Sponsor could expose any such Portfolio Fund to losses disproportionate to market movements in general if the Digital Lending Platform Sponsor becomes insolvent or runs into significant financial difficulties. Illiquidity Risk of Investments. Digital Loans, Digital Loan Securities and Special Situation Investments are not expected to have any active trading markets. Upon the purchase of such assets, a Portfolio Fund (and therefore, the Funds) will have a very limited ability to liquidate assets to meet withdrawal requests of limited partners, or to reposition the portfolio in response to a change in economic events. In the event a forced liquidation were to take place, the Funds may be subject to sizable capital losses if a Portfolio Fund were forced to create a market into which it can sell these assets.

Risks of Digital Loan Securities. A Portfolio Fund may invest primarily in Digital Loan Securities. Each Digital Loan Security is a security evidencing an interest in the Digital Loan Security Issuer backed by Digital Loans linked to such Digital Loan Security. A Digital Loan Security may not be secured by the Digital Loans that are linked to such Digital Loan Security. Typically, none of the Digital Loan Security Issuers, trustees of the Digital Loan Security Issuer, the Portfolio Funds, the Funds, the General Partner, the Investment Adviser and the limited partners will have any right to service the Digital Loans linked to the Digital Loan Securities held by Portfolio Funds or any direct recourse to the obligors under such Digital Loans. Only Digital Lending Platform Sponsor and any successor servicer of Digital Loans under the Digital Lending Platform Sponsor’s platform will have the right to enforce claims against the borrowers of Digital Loans.

Reliance on Digital Lending Platform Sponsor. The online lending industry is a relatively new industry. Digital Lending Platform Sponsors are typically new companies with limited operating histories. A Portfolio Fund, as an investor in Digital Loans or Digital Loan Securities, will rely exclusively on the Internet-based platforms established and maintained by the related Digital Lending Platform Sponsor to screen loan applicants, set interest rates on the loans, and service and enforce collection of the loans. Given the short history of the online lending industry and the limited historical data about the performance of Digital Loans, there is substantial uncertainty about the robustness and reliability of any Digital Lending Platform Sponsor’s Internet platform, including its largely automated credit-decision models, underwriting process, loan pricing models and collection infrastructure. In addition, the loan origination process effected through a Digital Lending Platform Sponsor’s Internet platform may not be transparent and Portfolio Funds will not be able to verify the robustness and reliability of that process.

Because investors in Digital Loans and Digital Loan Securities must rely on the related Digital Lending Platform Sponsor to originate and service the related Digital Loans, the Funds and the Portfolio Funds rely heavily on Digital Lending Platform Sponsors. Consequently, although a Digital Lending Platform Sponsor is typically not a creditor or guarantor in respect of the related Digital Loans or Digital Loan Securities, a bankruptcy of a Digital Lending Platform Sponsor or financial difficulties of a Digital Lending Platform Sponsor would have several materially adverse effects on the value of the Funds’ investments in such Digital Loans or Digital Loan Securities. If a Digital Lending Platform Sponsor became insolvent or suffered financial difficulties, the servicing of the related Digital Loans or Digital Loan Securities in which the Fund is invested through its Portfolio Funds may be disrupted for an extended period of time, creating cash flow issues for the Funds as a whole, and could lead to significant capital losses to the extent leverage is being employed by the related Portfolio Fund. In addition, if a Digital Lending Platform Sponsor became insolvent, the bankruptcy court might consolidate the assets of the Digital Lending Platform Sponsor and the Digital Loan Security Issuers sponsored by the Digital Lending Platform Sponsor under a doctrine of substantive consolidation or invalidate the Digital Lending Platform Sponsor’s transfer of Digital Loans to the Digital Loan Security Issuers that are related to the Digital Loan Securities held by a Portfolio Fund. In either case, the Portfolio Fund will have only a general unsecured creditor’s claim against the bankruptcy estate of such Digital Lending Platform Sponsor. Therefore, upon the occurrence of a bankruptcy or financial difficulties of a Digital Lending Platform Sponsor, the Portfolio Fund may recover only a small fraction of the aggregate principal balance of its Digital Loan Securities from its claims against the company or recover nothing. Any disruption in a Digital Lending Platform Sponsor’s operations may result in a disruption of cash flows being generated by the related Portfolio Fund’s portfolio, and hence could create cash flow issues for the Funds that could result in losses for limited partners.

The Funds are assuming a certain level of generation of Digital Loans or Digital Loan Securities by the Digital Lending Platform Sponsors to enable the Portfolio Funds to successfully invest their capital in such assets. In the event a Digital Lending Platform Sponsor experiences meaningful decreases in Digital Loan originations on its platform, the related Portfolio Fund may find it is unable to invest all of the capital under management in a reasonable timeframe, or may be unable to fully use its asset selection processes due to a lack of loans available on the platform. In either event, the Portfolio Fund’s returns may be hampered by this lack of platform assets, and may be forced to return capital to the Fund due to an inability to invest on the Digital Lending Platform Sponsor platform. The failure of Digital Lending Platform Sponsor as a company would eliminate the related Portfolio Fund’s ability to reinvest in substantially similar assets in the future.

Accuracy of Digital Lending Platform Sponsor Information. Typically, the Investment Adviser’s advice and recommendations about the investments for the Funds will be formulated on the basis of information and data provided by the borrowers on the Digital Lending Platform Sponsor’s platform and obtained through the Digital Lending Platform Sponsor itself. The Investment Adviser has a very limited ability to independently verify the information being provided by Digital Lending Platform Sponsor and is not in a position to confirm the completeness, genuineness or accuracy of such information and data. The results from investments made by the Funds may be impacted by errors, omissions or fraud by a Digital Lending Platform Sponsor that, in the presence of correct, complete and truthful information, may have resulted in the Funds making a different investment decision, and for which the Funds and the related Portfolio Fund have limited recourse against the Digital Lending Platform Sponsor.

Fraud by Borrowers of Digital Loans. While a Digital Lending Platform Sponsor typically makes efforts to ensure that the borrowers under Digital Loans are honest and truthful in their submission of information, it is possible that the borrowers under Digital Loans may successfully fabricate data and otherwise defraud the Digital Lending Platform Sponsor in connection with their loan applications. While the Digital Lending Platform Sponsor may have some recourse against the borrowers in this event and the Portfolio Fund may have some recourse against the Digital Lending Platform Sponsor in this case, the Portfolio Fund may nonetheless suffer a partial or complete loss in respect of the portion of the principal of any Digital Loan Security that corresponds to such Digital Loans. Risks Related to Non-US Investments. The Funds may invest in Digital Loans, Digital Loan Securities and Special Situation Investments that are originated or issued outside the United States. The Funds may invest in Digital Loans made to consumers and businesses outside the United States and serviced by servicers operating outside the United States. Investing in such non-U.S. assets involves certain considerations not usually associated with investing in U.S. assets or U.S. markets, including: political and economic considerations, such as greater risks of expropriation and nationalization of private property, confiscatory taxation, the potential difficulty of repatriating funds, general social, political and economic instability and adverse diplomatic developments; the possibility of imposition of withholding or other taxes on dividends, interest, capital gain, gross sale or disposition proceeds or other income; the small size of the securities markets in certain countries and the low volume of trading, resulting in potential lack of liquidity and in price volatility; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; and certain government policies that may restrict the Funds’ investment opportunities. In addition, accounting and financial reporting standards that prevail in such countries generally are not equivalent to U.S. standards and, consequently, less information is available to investors in companies located in such countries than is available to investors in companies located in the United States. There is also less regulation, generally, of the financial markets in certain countries than there is in the United States. As a result, the Funds may be unable to structure its transactions to achieve the intended results or to mitigate all risks associated with such markets. It may also be difficult to enforce the Funds’ rights in respect of its investments in such markets.

Limitations on Risk Management. Although the Investment Adviser attempts to identify, monitor and manage significant risks, these efforts do not take all risks into account and there can be no assurance that these efforts will be effective. Many risk management techniques are based on observed historical market behavior, but future market behavior may be entirely different. Any inadequacy or failure in the Investment Adviser’s risk management efforts could result in material losses for the Funds. The ability of the Investment Adviser to manage the risks related to the Funds’ investments through hedging activity or otherwise will also be limited by its lack of control over the origination and servicing activities of the Digital Lending Platform Sponsors. Therefore, the Funds, the Investment Adviser and each Portfolio Fund must rely on the experience and competency of each Digital Lending Platform Sponsor to conduct origination and servicing activities properly. Moreover, even where the Investment Adviser or the Portfolio Funds undertake such hedging activity, there is the possibility that such hedging activity may not effectively mitigate the risks, may not result in achieving positive risk-adjusted returns and may otherwise increase the loss of Fund assets.

Lack of Insurance. The assets of the Funds are not insured by any government or private insurer except to the extent portions may be deposited in bank accounts insured by the U. S. Federal Deposit Insurance Corporation or with brokers insured by the U. S. Securities Investor Protection Corporation and such deposits and securities are subject to such insurance coverage (which, in any event, is limited in amount). Therefore, in the event of the insolvency of a depository or custodian, the Funds may be unable to recover all of its funds or the value of its securities so deposited.

Valuation of the Investments. The value of the Funds’ investments in Portfolio Funds will be determined primarily by using the values provided by the Portfolio Funds. Each Portfolio Fund will value the Digital Loan Securities and other assets in accordance with the Investment Adviser’s valuation policies with respect to such assets. Both interests in Portfolio Funds and Digital Loan Securities held by Portfolio Funds are typically illiquid securities for which market prices are not available. The Funds’ ability to properly value the Funds’ investment in a Portfolio Fund may be limited by the accuracy and timeliness of the Funds’ receipt of valuation information related to such Portfolio Fund’s Digital Loan Securities reported by Digital Lending Platform Sponsors, servicers, trustees and other outside sources responsible for providing valuation information regarding such Digital Loan Securities. Illiquid investments and other assets and liabilities for which no such market prices are available may be carried on the books of a Portfolio Fund at fair value (which may be cost). There is no guarantee that fair value will represent the value that will be realized by the Funds or a Portfolio Fund on the eventual disposition of the investment or that would, in fact, be realized upon an immediate disposition of the investment. Use of Estimated and Unaudited Information. The Funds will use estimated and unaudited data and information to calculate, account for and report the Funds’ assets, liabilities and investment performance for any period. Accordingly, the net asset value of the Funds and a limited fund interest (and any other data or information derived therefrom) will be estimated and unaudited for any date other than December 31st of each year. Such estimated and unaudited data and information is subject to adjustment based on any errors or changes that are discovered by a Fund, the General Partner, the administrator, the Investment Adviser or their service providers, and any such adjustments may be effected in the accounting period in which it was discovered or following its discovery rather than the accounting period to which the adjustment relates. Such adjustments could be material and, to the extent related to a past accounting period, could cause a significant change in the Funds’ previously reported assets, liabilities or net asset values. Because it may be impractical for the Funds to restate the Fund assets, liabilities, net asset values or other information reported for past accounting periods, the Funds may adjust current accounting period values in connection with any such changes, regardless of whether all or any current holders of limited fund interests held such interests during the accounting period to which the adjustment relates. Furthermore, none of the Funds, the General Partner, the Investment Adviser, the administrator or other service providers would be obligated to return to the Funds any portion of any asset based fees or allocations previously paid or made by the Funds to such party and later discovered to be in excess of the amount that the Fund would have otherwise owed based on the actual net or gross asset values of the Funds.

Leverage. Although the Funds may borrow funds on a secured or unsecured basis, at such times and in such amounts as the General Partner may determine in its sole discretion, the Funds do not expect to do so. Each Portfolio Fund has acquired or will actively pursue leverage to enhance returns on its investments in Digital Loan Securities.

A Portfolio Fund may borrow funds on a secured or unsecured basis, in order to: (i) fund capital withdrawals to investors in such Portfolio Fund; (ii) pay operating expenses on an interim basis; (iii) meet other working capital needs; and (iv) leverage its investments.

There is no assurance that any Portfolio Fund will be able to obtain such borrowed funds on reasonable terms, if at all. The lender providing the borrowed funds to a Portfolio Fund may require that the borrowed amounts be repaid, pursuant to an event of default or otherwise, at a time when the Portfolio Fund has little or no liquidity and such lender will thereafter have certain rights with respect to the collateral, including the right to possess the collateral or liquidate the collateral. A lender under a leverage facility will likely require the Portfolio Fund to pledge all or a substantial portion of its assets to secure the Portfolio Fund’s obligations to repay the loans under the leverage facilities. Also, in general, lenders to a Portfolio Fund and other creditors of a Portfolio Fund will have claims on such Portfolio Fund’s assets that are senior to any obligations that the Portfolio Fund may have to the Funds. Consequently, if the Portfolio Fund defaults under any of its covenants under any leverage facility, the related lender may foreclose on the pledged assets in a manner that can cause a severe or total loss of the investments made by the investors in the Portfolio Fund, including the Funds.

While the use of leverage by a Portfolio Fund increases the opportunity to achieve higher returns on the amounts invested, it also increases the risk of loss to such Portfolio Fund. The level of interest rates generally, and the rates at which such funds may be borrowed in particular, could affect the operating results of such Portfolio Fund. If the interest expense on this leverage were to exceed the net return on the investments made with borrowed funds, the Portfolio Fund’s use of leverage would result in a lower rate of return than if the Portfolio Fund were not leveraged. If the amount of leverage which a Portfolio Fund may have outstanding at any one time is large in relation to its capital, any spike in losses in such Portfolio Funds’ portfolio will have disproportionately large effects in relation to such Portfolio Fund’s capital and the possibilities for profit, and the risk of loss will therefore be increased. Any investment gains made with the additional leverage will generally cause the net asset value of such Portfolio Fund to rise more rapidly than would otherwise be the case. Conversely, if the investment performance of the leveraged capital fails to cover its cost to such Portfolio Fund, the net asset value of such Portfolio Fund will generally decline faster than would otherwise be the case. Consequences of Withdrawal from Portfolio Funds. The Funds could be required to withdraw from Portfolio Funds at disadvantageous times in order to fund amounts due to any withdrawing limiting partners of the Funds. Additionally, to the extent that the Funds are co-invested in a Portfolio Fund along with other investment vehicles managed by the General Partner or its affiliates, any withdrawal by such other investment vehicles from the Portfolio Fund may adversely affect the Funds’ investment in such Portfolio Fund. The withdrawal by the Funds from one or more Portfolio Funds in order to satisfy a withdrawal request or otherwise may result in realized capital gains or losses that will be allocated to the capital accounts relating to the remaining outstanding limited partnership interests. In addition, simultaneous withdrawals by the Funds and any other investment vehicles managed by the General Partner or its affiliates from a Portfolio Fund may adversely affect the liquidity of such Portfolio Fund.

In the event that there are substantial withdrawals by limited partners within a limited period of time, the Investment Adviser may find it difficult to adjust its asset allocation and investment strategies to the suddenly reduced amount of assets under management. Under such circumstances, in order to provide funds to pay withdrawal proceeds, the Investment Adviser might be required to liquidate positions at an inappropriate time or on unfavorable terms. The Investment Adviser may be required to commence liquidation well in advance of the applicable Withdrawal Date, thereby having excess cash in the Funds to satisfy the withdrawal request on a timely basis. On an ongoing basis, irrespective of the period over which substantial withdrawals occur, it may be more difficult for the Funds to generate favorable returns operating on a smaller asset base and, as a result of liquidating assets to fund withdrawals, the Funds may be left with a much less liquid portfolio.

Portfolio Funds may have issued, and may in the future issue, Funds or membership interests to investors other than the Funds (including to other investment funds or other entities or persons that are either managed or advised by the General Partner or one of its affiliates). In the event that there are substantial withdrawals by any of the members of a Portfolio Fund other than the Funds, the Portfolio Fund may find it difficult to adjust its asset allocation and investment strategies to the suddenly reduced amount of assets under management or might be required to liquidate positions at an inappropriate time or on unfavorable terms to fund such withdrawals, in each case as discussed above, thereby causing adverse consequences to the Portfolio Fund’s remaining members, including the Funds.

Potential of Insufficient Investment Opportunities. Depending on the market conditions, the Funds may not be able to identify and obtain a sufficient number of investment opportunities to fully invest the investment proceeds received by the Funds at any time. Also, pending such investment, to the extent that any funds are invested in cash equivalents, at the sole discretion of the Investment Adviser, such cash equivalents may not earn a return sufficient to cover the Funds’ operating expenses and, therefore, the result would be a loss of capital invested by limited partners in the Funds.

Allocation of Participation. If the General Partner determines for tax, regulatory or any other reason that a limited partner or class of partners should not participate fully or in any part of the profit or loss attributable to any asset or transaction, or should have no interest in a particular asset or transaction, the interest of that asset or transaction may be set forth in a separate memorandum account in which such limited partners or class of partners will not participate, and the profit or loss attributable thereto for each such memorandum account will be calculated separately and allocated by the General Partner accordingly. Risks of Unsecured Digital Loans. A Portfolio Fund may invest in Digital Loans that are unsecured Digital Loans. Unlike an asset-backed or secured loan in which the lender has recourse against the relevant collateral, unsecured Digital Loans are not secured by any collateral. Investments in unsecured Digital Loans may be subject to high levels of loss in the event of defaults by the borrowers. Borrowers of unsecured Digital Loans may view such loans as lower in payment priority than secured loans. Unsecured Digital Loans rank relatively low in the hierarchy of repayments in the event of a bankruptcy of the borrower, falling well behind delinquent taxes and secured obligations of the borrower. Therefore, if the borrower on an unsecured Digital Loan held by a Portfolio Fund defaults, Digital Finance Fund may suffer a partial or total principal loss in respect of its exposure to such Digital Loan.
Legal Risks Affecting Investments in Digital Loans

Federal Regulatory Risks.

The current federal regulatory landscape applicable to marketplace lending continues to evolve. By way of example, (i) the Consumer Financial Protection Bureau (“CFPB”), which has authority to enforce many federal consumer protection laws, has in the past brought a number of enforcement actions against unlicensed online marketplace lenders alleging attempts to circumvent state usury laws; (ii) the Federal Deposit Insurance Corp. (“FDIC”) has issued consent orders against certain third-party lenders for alleged unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act, alleged violation of Truth in Lending Act and Electronic Fund Transfer Act by requiring loan payments by preauthorized electronic fund transfers as a condition of the loans and alleged unsafe and unsound banking practices by failing to have an adequate compliance management system and the FDIC has also proposed guidance codifying the FDIC actions in such consent orders; and (iii) the Federal Trade Commission (“FTC”) has made fintech companies a focus of the FTC’s enforcement activities and has taken actions against such major online lenders as Social Finance, Inc., dba SoFi, and LendingClub Corporation alleging deceptive and unfair acts in connection with its marketing and origination of consumer loans. Increase of federal regulatory oversight over Digital Lending Platform Sponsors and their businesses may make it more difficult and more expensive for Digital Lending Platform Sponsors to operate, which may increase the investment costs and reduce investment opportunities for the Digital Finance Funds. State Regulatory Risks. Marketplace lenders may be subject to licensing laws of the states in which the borrowers are located. Several states have announced changes to their licensing and other requirements (such as truth in lending and other consumer protection requirements) to provide additional or expanded oversight over marketplace lenders. New York and California are two states that have asked about broadening their state licensing and other requirements to sweep in “fintech” companies. Such requirements and increased state regulatory oversight over the online lending industry may make it more difficult and more expensive for Digital Lending Platform Sponsors to operate in such states, which may increase the investment costs and reduce investment opportunities for the Digital Finance Funds.

Adverse Court Decisions. Marketplace lenders are subject to litigation risk, particularly arising from statutes that provide consumers with a private right of action. Buying or selling loans in the secondary market risk violating state usury laws if the purchased or sold loans do not comply with state usury laws. These risks may also apply to marketplace lenders who purchase loans on a flow basis from a bank partner. To date, several class action suits have been brought against marketplace lenders. One such suit is Bethune v. Lending Club Corporation, which claimed that a New York plaintiff received a loan from Lending Club that carried an interest rate of 29.97% which exceeds the New York usury limits. The complaint alleged that Lending Club sought to “create the illusion that a bank (without usury rate limitations) was lending the funds to the borrowers, to attempt to legitimize the otherwise usurious loans” and that Web Bank (its partner bank) was only “involved as a ‘pass through’ sham party.” The federal district court for the Southern District of New York granted the defendants’ motion to compel arbitration on an individual basis rather than as a class. Another example is Madden v. Midland Funding, LLC, 786 F.3d 246 (2d Cir. 2015), in which the plaintiff filed a putative class action complaint alleging that the defendant debt buyer, which had purchased the plaintiffs charged-off credit card debt from a national bank, and the buyer's affiliated servicer, violated the federal Fair Debt Collection Practices Act by falsely representing in a collection letter interest they may legally collect. The plaintiff claimed that the interest charged by the defendants after the sale of her account was usurious under New York law. On June 27, 2016, the Supreme Court denied certiorari in Madden and therefore, the Second Circuit’s decision, which held that the purchaser of a loan from a national bank was not entitled to federal preemption of New York’s usury laws, will remain in effect. The case was remanded back to the U.S. District Court for the Southern District of New York which granted class certification on February 27, 2017. The parties filed a settlement agreement with the Southern District Court on March 1, 2019 providing class members $550,000 in monetary relief, $9,250,000 in account balance reductions and attorneys’ fees. As a result of Madden and other cases, unsuccessful efforts were commenced to obtain Congressional action to overrule the Madden decision.

Other cases attacking the scope of federal bank preemption for marketplace lending have been brought by state regulators and consumer advocates. These and similar court cases that are adverse to the marketplace lending industry may have the effect of reducing the interest that can be charged on Digital Loans to borrowers in certain states or even invalidating certain Digital Loans altogether, including Digital Loans that back Digital Loan Securities in which the Funds invests through the Portfolio Funds. In addition, such court cases may make it more difficult and more expensive for Digital Lending Platform Sponsors to operate, which may increase the investment costs and reduce investment opportunities for the Digital Finance Funds.

Digital Ventures Funds:

New Venture. The Digital Venture Funds and the General Partner are newly formed entities and therefore will not have any financial or operating history. The Digital Venture Funds’ future prospects must be weighed against the risks and difficulties frequently encountered by companies in the early stages of a business enterprise. The Digital Venture Funds cannot provide any assurances that it will be successful in addressing these risks or achieving its objectives.

Portfolio Company Risk, Suitable Investment Risk. The Digital Venture Funds will invest in a limited number of portfolio companies. Hence, the aggregate return of the Digital Venture Funds may be affected by the performance of a few holdings. To the extent that less capital is raised than targeted, the Digital Venture Funds may make fewer investments and thus be less diversified. The identification of attractive investment opportunities is difficult and involves a high degree of uncertainty. Except as otherwise described in the Digital Venture Fund Documents, the General Partner has not yet identified any particular investments. The General Partner anticipates encountering competition in connection with its selection of investments from other investors, some of which may have greater financial and other resources. While HCG and its affiliates believe they have experienced a substantial pipeline of suitable investment opportunities in the past on a regular basis in connection with prior investment funds, there can be no assurance that the investments made by the Digital Venture Funds will generate the targeted rate of return on invested capital. Regardless of the timing of the Digital Venture Funds’ investments and whether or not Digital Venture Funds are ever fully invested, for the duration of the commitment period, the investors will be required to pay the Management Fee based upon the entire amount of their commitments. In addition, there can be no assurance that the General Partner and/or HCG will be able to identify a sufficient number of attractive opportunities to meet the investment objectives of the Digital Venture Funds or deploy any amount of the commitments, or that the Digital Venture Funds will be able to negotiate favorable terms with respect to the acquisition (or disposition) of any target portfolio companies. Risk of Private Company Investments. The Digital Venture Funds’ investment portfolio will consist primarily of investments in privately held entities, and results in a specified period will be difficult to predict. While private company investments offer the opportunity for significant gains, such investments also involve a high degree of business and financial risk and can result in substantial losses. Among these risks are the general risks associated with investing in companies at an early or middle-stage of development, companies operating at a loss or with substantial variations in operating results from period to period and companies with the need for substantial additional capital to support expansion or to achieve or maintain a competitive position. Such companies may face intense competition, including competition from entities with greater financial resources, more extensive development, manufacturing, marketing and service capabilities and a larger number of qualified managerial and technical personnel. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments successfully.

Seed Stage Company Investments. The Digital Venture Funds’ strategy includes directly or indirectly investing in companies in early stages of growth that have inherently greater risk than more established businesses. In some instances, the portfolio companies in which the Digital Venture Funds invest may not have a product available on the market prior to the Digital Venture Funds’ investment and there can be no assurance that such product will become marketable or even profitable. Seed stage companies may be more volatile due to their limited product lines, markets or financial resources, or their susceptibility to major setbacks or downturns. Furthermore, companies in the seed stages of growth may not have sophisticated financial professionals, accounts or controls to accurately reflect their respective financial positions. In addition, companies in the seed stages of growth may have little or no operating history, undeveloped products, inexperienced management teams, and therefore may not be profitable. Early and seed stage companies often experience unexpected problems in the areas of product development, manufacturing, marketing, financing and general management, which, in some cases, cannot be adequately solved. In addition, such companies may require substantial amounts of financing which may not be available through traditional markets. The percentage of companies that survive and prosper can be small.

Leverage. The Digital Venture Funds may make use of leverage by incurring debt directly. Portfolio companies, including any pooled investment funds through which the Digital Venture Funds may invest, may also incur debt to finance growth. Leverage generally magnifies both the Digital Venture Funds’ opportunities for gain and its risk of loss from a particular investment. The use of leverage will also result in interest expenses and other costs to the Digital Venture Funds or a portfolio company that may not be covered by distributions made to the Digital Venture Funds or by appreciation of its investments in a portfolio company.

Risk of Bridge Financing. If the Digital Venture Funds makes an investment with the intent of subsequently financing a portion of that investment, there is a risk that the Digital Venture Funds will be unable to successfully complete such a financing. This could lead to the Digital Venture Funds having a larger amount of capital invested in an investment than anticipated as well as reduced diversification. FinTech Industry. The Digital Venture Funds intend to make investments primarily in the FinTech industry, which is undergoing rapid technological change. The Digital Venture Funds cannot predict the effects of technological changes on the businesses of its portfolio companies. The Digital Venture Funds expect that new services and technologies applicable to the industries in which its portfolio companies operate will continue to emerge and may be superior to, or render obsolete, the technologies that the Digital Venture Funds’ portfolio companies use in their products and services. Developing and incorporating new technologies into their products and services may require substantial expenditures, take considerable time, and ultimately may not be successful. In addition, their ability to adopt new products and services and develop new technologies may be inhibited by industrywide standards, changes to laws and regulations, resistance to change from consumers or merchants, third-party intellectual property rights, or other factors. Furthermore, the Digital Venture Funds’ portfolio companies will face larger competitors that have substantially greater resources to invest in technological improvements. They will compete against a wide range of businesses, and many will already have a dominant and secure position in the market, or offer other products and services to customers that the portfolio companies do not offer. The success of the portfolio companies will depend on their ability to develop and incorporate new technologies, adapt to technological changes and evolving industry standards, and react to competitive threats. If they are unable to do so in a timely or cost-effective manner, their businesses could be harmed, which may result in diminished returns with respect to the interests.

Irish DAC:

Material risk factors for the Irish DAC mirror the risk factors disclosed above for Digital Finance Funds.

Global Event Risks.

Coronavirus Outbreak. The Coronavirus outbreak in Wuhan, China in December of 2019 and the subsequent spread of the virus throughout China and other countries have resulted in widespread infections and fatalities. Governments in affected countries, including China, Japan, South Korea and the United States, have launched measures to combat the spread of Coronavirus, including travel bans, quarantines and lock-downs of affected areas. These measures in turn have led to slowdown in production and trade of goods and services which have adversely affected global economic activity and caused unprecedented turmoil and volatility in the global financial markets. A continued spread of the Coronavirus could have a severe adverse impact on global economic activity and lead to political and economic uncertainty throughout the world. These uncertainties could have a material adverse effect on loans and securities in which the Funds invest and the business, financial condition, results of operations and prospects of the obligors or issuers of such loans or securities. Any impact on such obligors or issuers could impair their ability to make payments due under such loans or securities which would adversely affect the performance of the Digital Finance Funds as well as impact the performance of all Advisory Clients. Withdrawal of the United Kingdom from the EU. The United Kingdom has initiated its official withdrawal from the EU pursuant to Article 50 of the Treaty on EU (“Article 50”), which triggered a negotiation process between the United Kingdom and the EU in respect of the arrangements for the United Kingdom’s withdrawal from the EU. The United Kingdom’s decision to leave the EU has caused and may in the future cause uncertainties and instability in the financial markets, which may affect the risk profile of loans in which the Funds invests. It is possible that the United Kingdom will leave the EU without a withdrawal agreement in place, which could result in further political and economic uncertainty. These uncertainties could have a material adverse effect on loans and securities in which the Funds invest and the business, financial condition, results of operations and prospects of the obligors or issuers of such loans or securities. Any impact on such obligors or issuers could impair their ability to make payments due under such loans or securities which would adversely affect the performance of the Digital Finance Funds as well as impact the performance of all Advisory Clients.
It is critical that prospective investors refer to the relevant Fund Documents for a complete
understanding of the principal risk factors associated with an investment in the Funds. The
information contained herein is a summary only and is qualified in its entirety by such documents. please register to get more info

There are no legal or disciplinary events to report that are material to an Advisory Client’s or prospective Advisory Client’s evaluation of HCG’s advisory business or the integrity of HCG’s management. please register to get more info

ACTIVITIES AND AFFILIATIONS
Broker-Dealer Registration Status
Neither HCG nor its management persons are registered or have an application pending to register as a broker-dealer or registered representative of a broker-dealer.
Futures Commission Merchant, Commodity Pool Operator or Commodity Trading Adviser
Registration Status

Neither HCG nor its management persons are registered or have an application pending to register as futures commission merchants, commodity pool operators, commodity trading advisors or associated persons of the foregoing entities.

As described in Item 4, affiliates of the General Partners act as general partner and Investment Adviser for several investment funds, including the Master Funds and Feeder Funds. The General Partners and their affiliates may also act in these or similar capacities for, and receive fees, allocations and other benefits from, other investment funds that may co-invest with the Funds in Portfolio Funds or Portfolio Companies. Accordingly, investors in such other investment funds who may or may not be similarly situated to the investors of the Funds may, at any time, be invested directly or indirectly in such other investment funds on terms that are different from, and possibly more favorable than, the terms on which Master Funds and Feeder Funds investors hold their interests. Among the terms and conditions that may differ are, without limitation, rights of optional or mandatory redemption, fees or allocations payable or allocable to the General Partner or its affiliates or unaffiliated service providers and information rights and investment minimums. None of the General Partner, the Investment Adviser, the applicable Fund administrator or any of their affiliates can give any assurance to any investor that an investment in a Fund is the most beneficial or efficient manner in which to participate in the investment program represented by HCG and the selected Portfolio Funds or Portfolio Companies. Related persons or entities may buy notes issued by Irish DAC, from which related persons or entities may derive revenues and profits in addition to the fees and payments as disclosed in Item 5. Irish DAC is managed by a three person board of directors, one of which is a principal of HCG. please register to get more info

CLIENT TRANSACTIONS AND PERSONAL TRADING
HCG has adopted a Code of Ethics (the “Code”) which is designed to meet the requirements of Rule 204A- 1 of the Investment Advisers Act of 1940. The Code applies to HCG’s Access Persons (which term includes all employees of HCG) and sets forth a standard of business conduct that takes into account HCG’s status as a fiduciary and requires Access Persons to place the interests of Advisory Clients above their own interests. The Code requires Access Persons to comply with applicable federal securities laws. Further, Access Persons are required to promptly bring violations of the Code to the attention of HCG’s Chief Compliance Officer. All Access Persons are provided with a copy of the Code and are periodically required to acknowledge receipt of the Code.

The Code incorporates the following general principles that all Access Persons are expected to uphold:

1. Access Persons will not create a conflict of interest between the Access Person’s own interest and the responsibility of the Access Person to HCG or the Advisory Clients.

2. Access Persons will not use their position with HCG for improper personal or private gain to themselves, their family or other persons. Improper use includes the use of nonpublic information or the use of one’s position with HCG to obtain gifts, discounts or other preferred arrangements from existing or potential service providers, investors or counterparties.

3. Access Persons’ personal securities transactions will be executed and reported in compliance with this Code and any other applicable federal securities regulations.

4. Access Persons who are or become aware of a violation of the Code, including their own violation, are required to report it on a confidential basis to the Chief Compliance Officer or his/her designee.

5. Retaliation against Access Persons reporting violations of the Code will not be tolerated.

6. Access Persons will periodically acknowledge their understanding of and compliance with the Code.

As required by Rule 204A-1 of the Advisers Act, HCG’s Access Persons must provide HCG’s Chief Compliance Officer with a list of their personal accounts and an initial holdings report within 10 days of becoming an Access Person. HCG also requires its Access Persons to report their securities transactions on a quarterly basis thereafter and disclose their securities holdings on an annual basis. HCG restricts the personal trading of its Access Persons. Pursuant to the Code, certain personal securities transactions, including transactions in IPOs and limited offerings, must be pre-cleared with the Chief Compliance Officer. HCG maintains a Restricted List and Access Persons are generally prohibited from trading the securities of issuers on the Restricted List. This list generally includes any issuers for which HCG has come into contact with material non-public information. The Code of Ethics also prohibits trading in material, non-public information about securities/investment recommendations, and the Investment Adviser maintains separate insider trading policies and procedures that are designed to prevent the improper use of material, non-public information. Such insider trading policies and procedures prohibit HCG and its personnel from trading for Advisory Clients or themselves, or recommend trading, in securities of a company while in possession of material, non-public information about the company, and from disclosing such information to any person not entitled to receive it. In addition, the Code of Ethics seeks to ensure the protection of nonpublic information about the activities of Advisory Clients. Investors or prospective investors may obtain a copy of HCG’s Code of Ethics by contacting the Chief Compliance Officer at (919) 300-7702. The Principals, senior management and employees of the Investment Adviser may choose to personally invest, directly and/or indirectly, in the Funds. Such investors may be in possession of information relating to the Fund that is not available to other Fund investors and prospective investors. The Principals and employees may also participate in future investment management services offered by HCG, including, without limitation, investment funds, separately managed accounts, proprietary accounts and other investment vehicles (collectively, “Other Accounts”). It is expected that, if such investments are made, the size and nature of these investments will change over time without notice to the Fund investors. Investments by the Principals and employees in the Funds and/or Other Accounts could incentivize the Principals and employees to increase or decrease the risk profile of the Funds.

Access Persons of HCG generally may not purchase, sell or otherwise invest in securities that HCG has also recommended to Advisory Clients. HCG seeks to monitor the potential conflicts of interests within the firm as it relates to Access Person personal trading. HCG requires each of its Access Persons to pre- clear certain personal securities transactions. In reviewing pre-clearance requests, the Chief Compliance Officer, or her designee, considers all the facts and circumstances related to the contemplated trade, including whether any Advisory Clients hold, recently held or may hold the relevant security. Such pre- clearance requests are only approved by the Chief Compliance Officer, or her designee, after careful consideration to the attendant conflicts of interests (if any). Access Persons are generally prohibited from trading any security on the same day that the Access Persons knew such security was traded or would be traded on behalf of an Advisory Client(s).

With respect to Digital Finance Funds, a Portfolio Fund may purchase or sell Digital Loans, Digital Loan Securities, Special Situation Investments and/or other assets from Digital Finance Master Fund’s other Portfolio Funds or from Digital Finance Master Fund. By acquiring its investment, each limited partner of the Digital Finance Funds will be deemed to have consented to such transactions to the extent such purchase or sale constitutes cross-agency transactions.

In addition to transactions between Digital Finance Funds and Portfolio Funds, the Investment Adviser may determine that it would be in the best interests of Advisory Clients to transfer an asset from one Advisory Client to another (each such transfer, a “Cross Trade”) for a variety of reasons, including, without limitation, tax purposes, liquidity purposes, to rebalance the portfolios of the Advisory Clients, or to reduce transaction costs that may arise in an open market transaction. If the Investment Adviser decides to engage in a Cross Trade and if permitted under the governing documents of each Advisory Client, the Investment Adviser will determine that the trade is in the best interests of both of the Advisory Clients involved and take steps to ensure that the transaction is consistent with the duty to obtain best execution for each of those Advisory Clients. The Investment Adviser generally intends to execute Cross Trades, if at all, on terms that the Investment Adviser are arms-length terms. If the Investment Adviser effects a Cross Trade, the Investment Adviser will not receive any fee in connection with the completion of the transaction. To the extent that Cross Trades may be viewed as principal transactions (as such term is used under the Advisers Act) due to the ownership interest in an Advisory Client by the General Partner, the Investment Adviser or its personnel, the General Partner and the Investment Adviser will comply with the requirements of Section 206(3) of the Advisers Act. The Investment Adviser may organize and advise Advisory Clients that invest in Digital Lending Platform Sponsors or affiliates of Digital Lending Platform Sponsors. The Digital Finance Funds may, in certain circumstances, (i) make investments in such Digital Lending Platform Sponsors or affiliates of Digital Lending Platform Sponsors either directly or through Advisory Clients and (ii) dispose of such investments through Cross Trades, in each case, if the Investment Adviser determines that such trade is in the best interests of the Advisory Clients. please register to get more info

Best Execution
Although HCG does not generally trade in listed securities, to the extent such transactions were effected by HCG, it is HCG’s policy to seek best execution, based upon a number of considerations, from the brokers with whom it places trades for execution on behalf of Advisory Clients. In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represents the overall best qualitative execution, taking into consideration the full range of a broker-dealer’s services. In selecting a broker, dealer or other intermediary, HCG understands its responsibility would be to consider such factors that in good faith and judgment it deems reasonable under the circumstances.

While trade price is often a significant quantitative factor in best execution, HCG understands its responsibility would be to also evaluate qualitative execution factors, such as research capabilities, success of prior research recommendations, ability to execute trades, nature and frequency of sales coverage, depth of services provided (including back office and processing capabilities), financial stability and responsibility, reputation, commission rates, responsiveness to HCG and the value of research and brokerage products and services provided by such brokers.
Soft Dollars
HCG does not anticipate entering into soft dollar arrangements with respect to securities transactions on behalf of its Advisory Clients. Should HCG enter into any such arrangement in the future, HCG understands its responsibility would be to ensure that any soft dollars paid under such arrangement to obtain research and brokerage services be undertaken in accordance with “safe harbor” under Section 28(e) of the Exchange Act. please register to get more info

Advisory Clients’ portfolios are reviewed on a continuous basis. HCG’s investment personnel hold investment meetings to discuss investment ideas, investment strategies, economic developments, current events, and other issues related to current portfolio holdings and potential investment opportunities. Digital Finance Funds: HCG will provide each investor in a Digital Finance Fund with the following reports in accordance with the terms of the applicable Fund Documents: (i) a commentary discussing the results of the Digital Finance Funds’ investments on at least a quarterly basis; (ii) monthly updates on each investor’s net asset value as calculated by the Digital Finance Funds’ administrator; (iii) annual audited financial reports; and (iv) annual tax information necessary to complete any applicable tax returns.

Digital Venture Funds: The Digital Venture Funds will furnish annually to all investors audited financial reports, Schedule K-1s, valuations of the Digital Venture Funds’ investments as of the end of each year, an investment summary describing the nature and amount of each Digital Venture Funds investment, and, for such annual period, a summary of fees and expenses incurred, a summary of fees received by the General Partner or its affiliates from the Digital Venture Funds or portfolio companies, and a summary of all capital calls and distributions made by the Digital Venture Funds. On a quarterly basis, each investor will be furnished with a transaction report describing significant transactions of the Digital Venture Funds, a summary of fees and expenses incurred in such quarterly period and the remaining commitments to be contributed by each investor. Irish DAC: HCG will provide a monthly report to be sent to the holder of the senior notes containing the following information: (1) the adjusted loan portfolio balance as of the calculation date; (2) the aggregate outstanding principal amount of all senior notes issued; (3) the interest coverage ratio as of the calculation date; (4) the overcollateralization ratio as of the calculation date; (5) the amount held in the reserve account as of the calculation date; and (6) the amount of unencumbered cash as of the calculation date.
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The General Partner and/or the Investment Adviser may sell Fund interests through broker-dealers, placement agents and other persons and pay a marketing fee or commission in connection with such activities, including ongoing payments, at the General Partner’s or the Investment Adviser’s own expense. In certain cases, the General Partner and/or the Investment Adviser reserve the right to deduct a percentage of the amount invested by an investor in the Funds to pay sales fees or charges, on a fully disclosed basis, to a broker-dealer, placement agent or other person based upon the capital contribution of the investor introduced to the Funds by such broker-dealer, agent or other person. Any such sales fees or charges would be assessed against the referred investor and would reduce the amount actually invested by such investor in the Funds.

The Investment Adviser may also enter into fee sharing arrangements with third party marketers or solicitors who refer investors to the Funds. Such third party marketers may have a conflict of interest in advising prospective investors whether to purchase or redeem interests in the Funds. Other than the circumstances described above, HCG does not receive any economic benefits from non- clients in connection with the provision of investment advice to the Funds. please register to get more info

The Investment Adviser is deemed to have custody of the Funds’ funds and securities pursuant to Advisers Act Rule 206(4)-2 (the “Custody Rule”). In accordance with the provisions of the Custody Rule, HCG maintains the assets of the Funds in accounts with “qualified custodians” as defined in Rule 206(4)-2. However, it will not be required to comply (or will be deemed to have complied) with certain requirements of the Custody Rule with respect to the Funds because it will comply with the provisions of the so-called “Pooled Vehicle Annual Audit Exception,” which, among other things, requires that the Funds be subject to audit at least annually by an independent public accountant that is registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board, and requires that each Fund distribute its audited financial statements to all investors within 120 days of the end of its fiscal year. Irish DAC has appointed an independent custodian to hold its collateral. All its assets are held by or on behalf of custodians under one or more custody agreements between a custodian and one or more trusts or other special purpose vehicles organized to hold such assets. please register to get more info

In accordance with the terms and conditions of the Fund Documents and subject to the direction and control of the Funds’ General Partner and Board of Directors, as applicable, HCG generally has discretionary authority to determine, without obtaining specific consent from the Funds or its investors, the securities and the amounts to be bought or sold on behalf of the Funds and to perform the day-to-day investment operations of the Funds. Additionally, the Investment Adviser or an affiliate of the Investment Adviser entered into an investment advisory agreement, or similar agreement with each Fund, pursuant to which the Investment Adviser or an affiliate of the Investment Adviser was granted discretionary trading authority. HCG does not have any discretionary authority to invest the assets of Irish DAC, and its board of directors retains absolute authority to make investment decisions on its behalf. please register to get more info

In compliance with Rule 206(4)-6 under the Advisers Act, the Investment Adviser has adopted proxy voting policies and procedures. The general policy is to vote proxy proposals, amendments, consents or resolutions (collectively, “Proxies”), in a prudent and diligent manner that will serve the best interest of Advisory Clients and is in line with applicable investment objectives. It should be noted that given substantially all Advisory Clients’ investments are Peer-to-Peer or debt securities or privately placed securities, it is anticipated that it will be extremely rare that HCG will receive proxies with respect to securities held on behalf of Advisory Clients. However, there may be situations where Portfolio Funds or Portfolio Companies could have proxy issues. In such situations, HCG would have authority to vote proxies on behalf of an Advisory Client (assuming that HCG does not otherwise have control over the company and exercise such authority through control of the company’s board).

In evaluating how to vote a proxy, HCG understands it is responsible to first determine whether there is a conflict of interest related to the proxy in question between HCG and the Advisory Clients. This examination would include (but will not be limited to) an evaluation of whether HCG (or any affiliate of HCG) has any relationship with the company (or an affiliate of the company) to which the proxy relates outside an investment in such company by an Advisory Client managed by HCG. If a conflict were identified and deemed “material,” HCG would generally seek to mitigate the conflict either by the Chief Compliance Officer appointing another HCG employee who is not conflicted out to vote in lieu of the HCG employee who has the conflict of interest or by appointing an independent third party to vote the proxy. Fund investors or prospective investors may obtain a copy of HCG’s proxy voting policies and procedures by contacting the Chief Compliance Officer at (919) 300-7702. please register to get more info

HCG is not required to include a balance sheet for its most recent fiscal year, is not aware of any financial condition reasonably likely to impair its ability to meet contractual commitments to Advisory Clients, and has not been the subject of a bankruptcy petition at any time during the past ten years. please register to get more info