Phalanx Capital is an asset management company that employs an absolute-return, moderate volatility multi-strategy approach within the Japanese, Asian, and Australian markets. Its principal place of business is in Chicago, IL. Phalanx Capital commenced operations in April, 2005 and has been registered with the SEC since April 4, 2005. Christopher M. McGuire is the principal owner. Phalanx Capital provides advisory services on a discretionary basis to its clients, including private investment funds (the “Funds”). The Funds are organized as Delaware limited partnerships (for investments by U.S. persons), Cayman Islands exempted companies (for investments by non-U.S. persons and tax-exempt U.S. persons). The Funds’ general partner is an affiliate of Phalanx Capital.

Currently Phalanx Capital serves as the investment manager to the Phalanx Japan AustralAsia Multi-Strategy Fund, Ltd. (the “Fund”). The Phalanx Japan AustralAsia Multi-Strategy (Cayman) Fund, Ltd. (the “Offshore Feeder”), and the Phalanx Japan AustralAsia Multi-Strategy (U.S.) Fund, L.P. (the “U.S. Feeder”) invest their assets in the Fund. Please see Item 8. Methods of Analysis, Investment Strategies and Risk of Loss for more detail of the investment strategy.

Phalanx Capital may tailor its investment services to the individual needs of certain investors in Managed Accounts (if applicable). As of December 31, 2018, Phalanx Capital had approximately $106 million in assets under management on a discretionary basis and $ 0 on a non-discretionary basis. please register to get more info

As the investment manager to the Funds, Phalanx Capital receives a quarterly management fee (the “Management Fee”) in advance based on the net asset value of an investor’s capital account calculated at the rate of approximately 2.0% per annum. The Management Fee is prorated for any period that is less than a full quarter and adjusted for contributions made during the quarter. Management Fees are deducted at our instruction as described in the Funds’ Confidential Phalanx Capital Management, LLC 5 Explanatory Memorandums and Confidential Private Offering Memorandum (the “Offering Documents”). The general partner of the Funds is also allocated a performance-based fee (the “Incentive Allocation”). Fees for Managed Accounts are negotiated directly with the investor. Please see Item 6. Performance-Based Fees and Side-by-Side Management for further details. Phalanx Capital may waive or modify the Management Fee and/or the Incentive Allocation for members, employees or affiliates, relatives of such persons, and for certain large or strategic investors.

In addition, Phalanx Capital may enter into agreements with certain prospective or existing investors whereby such investors may be subject to terms and conditions that are more advantageous than those of other investors. These terms and conditions may be based on the size of a contribution, an agreement to maintain such investment for a significant period of time, or other similar commitment.

For example, such terms and conditions may provide for special rights to make future capital contributions to the Funds, other investment vehicles or Managed Accounts; special withdrawal rights, relating to frequency or notice; a reduction or rebate in fees or withdrawal penalties and/or other terms; and such other rights as may be negotiated by Phalanx Capital.

See Item 15. Custody for additional information regarding the deduction of fees from investor accounts. The U.S. Feeder and Offshore Feeder funds will bear a pro rata share of the expenses such as operating and other expenses including sales expenses, legal expenses, internal and external accounting, audit and tax preparation expenses, and organizational expenses. In addition, investors will incur brokerage and other transaction costs. Please refer to Item 12. Brokerage Practices of this Brochure for a discussion of Phalanx Capital’s brokerage practices. Phalanx Capital Management, LLC 6 please register to get more info

In addition to the management fee discussed in Item 5. Fees and Compensation, the Funds’ general partner receives a quarterly Incentive Allocation calculated at generally 20% of each limited partner’s share of net profits including realized and unrealized gains, subject to a loss-carry forward provision. This means that no performance-based fee will be made from the capital account of an investor until any net loss previously allocated to the capital account of the investor has been offset by subsequent net profits. Any such loss-carry forward will be subject to reduction for withdrawals on a pro rata basis. Limited partners in certain share classes may be subject to a higher incentive allocation in return for special withdrawal rights.

Performance-based fees for Managed Accounts (if applicable) are calculated on an annual basis at year-end or upon redemption.

Phalanx Capital and its investment personnel provide investment management services to multiple clients, thus a potential exists for one client to be favored over another. Certain accounts may have higher asset-based fees or more favorable performance-based compensation arrangements than other accounts. To mitigate the risk of favoring certain clients over others, Phalanx Capital has implemented policies and procedures intended to address conflicts of interest relating to the management of multiple client accounts and the allocation of investment opportunities. please register to get more info

The Funds are Phalanx Capital’s clients. Investors in the Funds consist of sophisticated individual and institutional investors, family offices and other business entities. Fund of funds investors will invest through the Funds. Access to the Funds is limited to investors who meet specified minimum investment criteria relating to their financial holdings, investment experience, and the like. Additional details regarding initial and additional subscription minimums are disclosed in the Offering Documents for the Funds. Phalanx Capital Management, LLC 7 please register to get more info

Phalanx Capital employs an absolute-return, multi-strategy approach primarily within the Japanese, Australian and Asian markets and may use this approach to a lesser extent in the United States and Europe. A diversified portfolio invests in convertible arbitrage, volatility, merger arbitrage, capital structure arbitrage, special situations and event-driven strategies. The trading strategies are fully integrated in order to allow capital to be deployed in the asset class and discipline believed to provide the greatest expected risk-adjusted returns at any moment in time.

Risk management is performed both at the portfolio and strategy level to minimize portfolio-wide, absolute downside volatility. A comprehensive set of risk guidelines that includes directional equity market exposure, exposures to changes in credit spreads, interest rates and volatilities is monitored by an independent risk management team. Phalanx Capital uses a combination of third- party and proprietary risk measurement and reporting systems to produce various risk measures and monitor compliance with risk guidelines. The firm combines sensitivities with respect to various risk factors and liquidity metrics with portfolio stress testing to identify specific risk exposures, portfolio concentrations and ensure risk compliance.

The firm employs a third-party portfolio management system that monitors the entire trade life cycle, calculates profit and loss for all positions and portfolios, performs comprehensive reconciliation checks and facilitates the process of portfolio monitoring and management from both an operational as well as from an investment decision-making perspective. The framework is fully integrated with other third-party order management, trade execution and trade confirmation/settlement systems and is being monitored and managed by an experienced team of operations professionals. The operational framework used by Phalanx Capital allows for various fail-safes and constraint checks that leverages both third-party and proprietary technology to the fullest possible extend.
These strategies and investments involve risk of loss to investors and investors must be
prepared to bear the loss of their entire investment. Fund investors may also view the Funds’
Offering Documents for a more detailed description of risks Phalanx Capital Management, LLC 8 Emerging Markets and Non-U.S. Securities. Investing in emerging markets and the securities of non-U.S. governments and companies which are generally denominated in non-U.S. currencies, involves certain considerations comprising both risk and opportunity not typically associated with investing in other more established economies or securities markets or in the securities of U.S. companies. Nature of Investments. Investments generally consist of Japanese, Australian and Asian equity and debt securities and other assets that may be affected by business, financial market or legal uncertainties. There can be no assurance that Phalanx Capital correctly evaluates the nature and magnitude of the various factors that could affect the value of and return on such investments. Prices may be volatile, and a variety of factors that are difficult to predict, such as domestic or international economic and political developments, may significantly affect the results and the value of these investments.

Non-Diversification. The portfolio is relatively concentrated with respect to types of securities (i.e., equities) and issuers and is invested primarily in Japan. Accordingly, the investment portfolio may be subject to more rapid change in value than would be the case if there was a wider diversification among types of securities, issuers and geographic areas.

Use of Leverage. Phalanx Capital’s strategy utilizes leverage, resulting in control of substantially more assets than equity. Leverage increases the returns if there is a greater return on investments purchased with borrowed funds than the cost of borrowing such funds. However, the use of leverage exposes investors to additional levels of risk, including (i) greater losses from investments than would otherwise have been the case had the portfolios not borrowed to make the investments, (ii) margin calls or interim margin requirements which may force premature liquidations of investment positions and (iii) losses on investments where the investment fails to earn a return that equals or exceeds the cost of borrowing such funds. In the event of a sudden, precipitous drop in value of the assets, the investors might not be able to liquidate assets quickly enough to repay borrowings, further magnifying losses. Currency Hedging. While the portfolio’s investments are denominated in U.S. dollars, many of Phalanx Capital Management, LLC 9 the underlying investments are typically denominated in multiple currencies. Accordingly, any hedging of currency exposure that is implemented primarily involves hedging back to the U.S. dollar, but in certain circumstances may involve other hedging activities. To the extent any such hedges are profitable during any month or quarter, the profits will be invested at the end of such month or quarter into the portfolio’s core investment portfolio. Conversely, if the hedges generate losses in any month or quarter, Phalanx Capital may liquidate a portion of the core investment portfolio to cover such losses. There can be no assurance that such hedges will be effective. Counterparty and Custody Risk. To the extent that Phalanx Capital makes investments in options, swaps, derivative or synthetic instruments, forward contracts, or other over-the-counter transactions (including certain equities), there may be a credit risk with regard to parties with whom it trades and may also bear the risk of settlement default. These risks may differ materially from those entailed in exchange-traded transactions which generally are backed by clearing organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered directly between two counterparties generally do not benefit from such protections and expose the parties to the risk of counterparty default.

Portfolio Turnover. The investment strategy may require active trading in the portfolio, and as a result, turnover and brokerage commission expenses may significantly exceed those of other investment entities of comparable size.

Short Sales. Short sales can, in certain circumstances, substantially increase the impact of adverse price movements on the portfolio. A short sale involves the risk of a theoretically unlimited increase in the market price of the particular investment sold short, which could result in an inability to cover the short position and a theoretically unlimited loss. There can be no assurance that securities necessary to cover a short position will be available for purchase. Reliance on the Investment Manager. Christopher McGuire is the managing member of the investment manager. There could be adverse consequences in the event that Mr. McGuire ceases to be available. The success of Phalanx Capital’s strategy is therefore expected to be significantly dependent upon the expertise and efforts of Mr. McGuire. Phalanx Capital Management, LLC 10 Absence of Regulatory Oversight. The Funds are not registered under the Investment Company Act of 1940, as amended, in reliance upon an exemption available to privately offered investment companies; accordingly, the provisions of that Act (which, among other matters, require investment companies to have disinterested directors, require securities held in custody to at all times be individually segregated from the securities of any other person and marked to clearly identify such securities as the property of such investment company and regulate the relationship between the adviser and the investment company) will not be afforded to investors.

Special Situations and Distressed Securities. The Fund may invest in companies involved in (or the target of) acquisition attempts or tender offers or in companies involved in or undergoing work- outs, liquidations, spin-offs, reorganizations, bankruptcies or other catalytic changes or similar transactions. Because there is substantial uncertainty concerning the outcome of transactions involving financially troubled companies in which the Fund may invest, there is a potential risk of loss of the entire investment in such companies.

Convertible Securities. The Fund may invest in convertible securities which are securities that may be exchanged or converted into a predetermined number of the issuer's underlying shares or the shares of another company. Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures, stock purchase warrants, zero-coupon bonds or liquid-yield option notes, stock index notes, mandatories, or a combination of the features of these securities. Prior to conversion, convertible securities have the same general characteristics as non-convertible debt securities. As with all debt securities, the market value of convertible securities tends to decline as interest rates increase and conversely, increase as interest rates decline. Convertible securities also appreciate when the underlying common stock appreciates, and conversely, depreciate when the underlying common stock depreciates. Arbitrage Transaction Risks. Arbitrage strategies attempt to take advantage of perceived price discrepancies of identical or similar financial instruments, on different markets or in different forms. Examples of arbitrage strategies include event-driven arbitrage, merger arbitrage, capital structure arbitrage, convertible arbitrage, fixed income or interest rate arbitrage, debt spread arbitrage and index arbitrage. Phalanx Capital may employ any one or more of these arbitrage Phalanx Capital Management, LLC 11 strategies. There can be no assurances that arbitrage strategies will be profitable in either up or down markets, and various market conditions may be materially less favorable to certain strategies than others. Options. Purchasing options involves the risk that the underlying instrument will not change price in the manner expected, so that the investor loses its premium. Selling options involves potentially greater risk because the investor is exposed to the extent of the actual price movement in the underlying security rather than only the premium payment received (which could result in a potentially unlimited loss). Over-the-counter options also involve counterparty solvency risk.

The Fund may purchase put and call options on global equity, commodity and fixed income indices and securities to hedge against risks of market-wide price movements affecting its assets and in response to certain market events. Options on an index are similar to options on securities. Successful use of options on indices is subject to Phalanx Capital’s ability to correctly predict changes in the relationship of the underlying index to the portfolio holdings.

Futures Trading. The use of futures is a specialized activity that involves investment strategies and risks different from those associated with ordinary portfolio securities transactions, and there can be no guarantee that their use will increase return or not cause large losses.

Derivatives. To the extent that Phalanx Capital invests in swaps, derivatives, forward contracts, or synthetic instruments, repurchase agreements or other over-the-counter transactions or non-U.S. securities, there may be a credit risk with regard to parties with whom it trades and may also bear the risk of settlement default. Swap Agreements. Whether Phalanx Capital’s use of swap agreements is successful in furthering its investment objective depends on the portfolio manager's ability to correctly predict whether certain types of investments are likely to produce greater returns than other investments. There is the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The swaps market is a relatively new market and it is largely unregulated. It is possible that developments in the swaps market, including Phalanx Capital Management, LLC 12 potential government regulation, could adversely affect Phalanx Capital’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Cybersecurity Risk – The Funds, Phalanx Capital, the General Partner and third-party service providers are all subject to risks associated with a breach in cybersecurity. Cybersecurity is a generic term used to describe the technology, processes and practices designed to protect networks, systems, computers, programs and data from both intentional cyber-attacks and hacking by other computer users as well as unintentional damage or interruption that can result in damage or interruption from computer viruses, network failures, computer and telecommunications failures, infiltration by unauthorized persons, and security breaches and usage errors by their respective professionals. A cybersecurity breach could expose the Funds, Phalanx Capital and the General Partner to substantial costs (including, without limitation, those associated with forensic analysis of the origin and scope of the breach, increased and upgraded cybersecurity services, identity theft, unauthorized access to and use of proprietary information, litigation, the dissemination of confidential and proprietary information, and reputational damage), civil liability, and regulatory inquiry and/or action. While the Phalanx Capital has established a business continuity plan and cybersecurity policy including risk management strategies, systems, and policies and procedures to seek to prevent cybersecurity breaches, there are inherent limitations in such plans, strategies, systems, and policies and procedures including the possibility that certain risks have not been identified. In addition, since the Firm does not directly control the cybersecurity systems of third-party service providers, there can be no assurance that the cybersecurity practices of these providers will protect the Funds, Phalanx Capital or the General Partner from any potential breaches. please register to get more info

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Christopher McGuire is the Managing Member of Phalanx Capital Management, LLC and is also the Managing Member of Phalanx Capital GP, LLC, the General Partner of Phalanx Japan Phalanx Capital Management, LLC 13 AustralAsia Multi-Strategy (U.S.) Fund, L.P. He is also a Director of the Phalanx Japan AustralAsia Multi-Strategy (Cayman) Fund, Ltd. and the Phalanx Japan AustralAsia Multi- Strategy Fund, Ltd. Tony McGuire serves as General Partner of the Phalanx Japan AustralAsia Multi-Strategy (U.S.) Fund, L.P. Balan Murugesu and Philip Hughes serve as Directors for the Phalanx Japan AustralAsia Multi- Strategy Fund, Ltd. and the Phalanx Japan AustralAsia Multi-Strategy (Cayman) Fund, Ltd.

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Personal Trading
Phalanx Capital has adopted a Code of Ethics (the “Code”) in accordance with rule 204A-1 of the Investment Advisers Act of 1940 (the “Adviser’s Act”) to promote high levels of ethical conduct among our partners and employees. Certain consultants may be subject to the Code at the discretion of the Chief Compliance Officer (the “CCO”). Among the purposes of the Code are to: (1) educate employees regarding our expectations and the laws governing their conduct; (2) remind employees that they are in a position of trust and must act with complete propriety at all times; (3) protect the reputation of Phalanx Capital; (4) guard against violation of the securities laws; (5) protect our clients by deterring misconduct; and (6) establish procedures for employees to follow so that Phalanx Capital can assess whether our employees are complying with the firm’s ethical principles. The Code’s policies and procedures include disclosures and certifications regarding personal trading, non-public information, gifts and business entertainment, confidentiality and political contributions. The Code requires pre-approval for participation in private placements and initial public offerings. Employees and their family members are required to report all personal securities transactions quarterly and holdings upon employment and annually thereafter. Employees are required to report gifts and business entertainment over an established amount to Phalanx Capital Management, LLC 14 ensure there is no real or appearance of impropriety in business relationships. Phalanx Capital maintains written policies and procedures that prohibit the communication of confidential or material non-public information to persons who do not have a legitimate need to know such information and to assure that Phalanx Capital is meeting its obligations to clients and remains in compliance with applicable law. Phalanx Capital and its employees may invest their personal money in the Funds and therefore such persons may indirectly hold the same securities as other investors in the Funds. Phalanx Capital’s Code contains a policy that prohibits investments in personal accounts in the same securities that are recommended by Phalanx Capital to the Funds.

Investors or prospective investors may obtain a copy of the Code by contacting Christopher McGuire, CCO, by email at [email protected].

Conflicts of Interest

Phalanx Capital uses its best efforts in connection with the purposes and objectives of its clients to devote as much time and effort as may, in their judgment, be necessary to accomplish their purposes. The general partner, Phalanx Capital and any affiliates may conduct any other business, including any business within the securities industry. The general partner and Phalanx Capital may act as general partner, investment adviser or investment manager for others, may manage funds, separate accounts or capital for others, may have, make and maintain investments in their own name or through other entities and may serve as an officer, director, consultant, partner or stockholder of one or more investment funds, partnerships, securities firms or advisory firms. To the extent a particular investment is suitable for both the Funds and other clients of Phalanx Capital, such investments are allocated between the Funds and the other clients pro rata based on assets under management or in some other manner that Phalanx Capital determines is fair and equitable under the circumstances to all clients, including the Funds. As a result of the foregoing, Phalanx Capital may have conflicts of interest in allocating its time and activity between the Funds and other entities, in allocating investments among the Funds and other entities and in effecting Phalanx Capital Management, LLC 15 transactions for the Funds and other entities, including ones in which Phalanx Capital may have a greater financial interest. Simultaneous identical portfolio transactions for the Funds and the other clients may tend to decrease the prices received, and increase the prices required to be paid, by the Funds for their portfolio sales and purchases. Where less than the maximum desired number of shares of a particular security to be purchased is available at a favorable price, the shares purchased are allocated among the Funds and other clients in an equitable manner as determined by Phalanx Capital. Further, it may not always be possible or consistent with the investment objectives of the various persons or entities described above and of the Funds for the same investment positions to be taken or liquidated at the same time or at the same price; however, all transactions will be made on a “best execution" basis.

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Phalanx Capital has established general criteria to determine whether a broker is qualified to provide brokerage services on behalf of its clients, and considers, among others, the following relevant factors:


• Quality of execution – accurate and timely execution, clearance and error/dispute resolution;


• Reputation, financial strength and stability of the broker;


• The difficulty of execution and the broker’s ability to handle difficult trades;


• Confidentiality of trading activity;
• The broker’s willingness and ability to commit capital;
• Overall costs of trades (i.e., net price paid or received) including commissions, mark-ups, mark-downs or spreads in the context of Phalanx Capital’s knowledge of negotiated commission rates currently available and other current transaction costs;
• Value of research and custodial services provided by the broker that are expected to enhance Phalanx Capital’s general portfolio management Phalanx Capital Management, LLC 16 capabilities;
• Nature of the security and the available market makers;
• Desired timing of the transaction and size of trade;
• Counterparty risk;
• The operational facilities of the broker, including back office efficiency; and


• Market intelligence regarding trading activity.

Phalanx Capital receives research or other products or services other than execution from broker- dealers and/or third parties in connection with client securities transactions known as “soft dollars” that are covered by the safe harbor provided under Section 28(e) of the Securities Exchange Act of 1934 and are in accordance with the SEC’s 2006 interpretive guidance regarding client commission practices.

When Phalanx Capital causes clients to pay commissions (or markups or markdowns) higher than those charged by other broker-dealers in return for soft dollar benefits (known as paying-up), it may result in higher transaction costs for clients. The use of client commissions (or markups or markdowns) to obtain research and brokerage products and services raises conflicts of interest. For example, Phalanx Capital will not have to pay for the products and services itself. This creates an incentive for Phalanx Capital to select or recommend a broker-dealer based on its interest in receiving those products and services. Our traders and portfolio manager periodically review and evaluate our soft dollar practices to determine in good faith whether, with respect to any research or other products or services received from a broker-dealer, the commissions used to obtain those products and services were reasonable in relation to the value of the brokerage, research or other products or services provided by the broker-dealer. please register to get more info

The chief investment officer and risk manager review the Funds continuously to determine whether they are appropriately positioned and whether investment objectives and policies are being followed. Reviews also occur prior to the assessment of any performance fee or incentive Phalanx Capital Management, LLC 17 allocation. Each investor receives unaudited reports of the performance of their accounts monthly and audited financial statements annually. Additionally, investors receive monthly portfolio statistics, performance summaries and commentaries from the chief investment officer, Christopher McGuire. please register to get more info

Phalanx Capital receives certain research or other products or services from broker-dealers through “soft-dollar” arrangements. These “soft-dollar” arrangements create an incentive to select or recommend broker-dealers based on our interest in receiving the research or other products or services and may result in the selection of a broker-dealer on the basis of considerations that are not limited to the lowest commission rates and may result in higher transaction costs than would otherwise be obtainable for our investors. Please see Item 12 for further information on our “soft- dollar” practices, including our procedures for addressing conflicts of interest that arise from such practices.

Phalanx Capital has agreements with several third-party solicitors for investor referrals, provided that, to the extent required, such arrangements and payments will be structured to comply fully with the requirements of Rule 206(4)-3 under the Advisers Act and related SEC staff interpretations. please register to get more info

Phalanx Capital is deemed to have custody with regard to the Funds because it can directly access investor assets. Fund assets are held with banks or registered broker-dealers that are “qualified custodians.” Ernst & Young serves as the Funds’ auditor and issues audited financial statements annually within 120 days of the fiscal year end. Phalanx Capital Management, LLC 18 please register to get more info

Phalanx Capital provides investment advisory services on a discretionary basis to its clients, including the Phalanx Japan AustralAsia Multi-Strategy Funds. Investors in the Funds cannot impose any limitations or restrictions on the Funds’ strategy. Managed Accounts may impose limitations or restrictions as set forth in the Managed Account Agreement. Phalanx Capital may effect cross transactions between discretionary client accounts. Cross transactions enable the firm to effect a trade between two clients for the same security at a set price, thereby possibly avoiding an unfavorable price movement that may be created through entrance into the market and saving commission costs for both accounts. Cross transactions include rebalancing transactions that are undertaken so that, after withdrawals or contributions have occurred, the portfolio compositions of similarly managed accounts remain substantially similar. The firm has a potentially conflicting division of loyalties and responsibilities regarding both parties to cross transactions and has established policies and procedures to ensure notice and consent requirements are satisfied and equitable treatment is achieved.

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Phalanx Capital invests primarily in long convertible bonds and short equity. As convertible bonds and short equities are non-voting, we vote proxies only in limited circumstances. When proxy votes are cast, they will be voted in accordance with our Proxy Voting Policies and Procedures with the aim of furthering the best economic interest of our clients. Investors may obtain a copy of Phalanx Capital’s proxy voting policies and procedures and information about how Phalanx Capital voted a client’s proxies by contacting Christopher McGuire, CCO, by email at [email protected]. please register to get more info

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