CF 7IM Opportunity Funds - Seven Investment Management

Risk Factors
Emerging markets
Emerging markets tend to be more volatile than more
established markets and therefore your money is at
greater risk. Risk factors such as local political and
economic conditions should also be considered.
The reliability of trading and settlement systems in
some emerging markets may not be equal to that
available in more developed markets, which may result
in delays in realising investments within the Fund. A
counterparty may not pay or deliver on time or as
expected.
Lack of liquidity or efficiency in certain stock markets
or foreign exchange markets in certain emerging
markets may mean that from time to time the
Investment Manager may experience more difficulty in
purchasing or selling securities than it would in a more
developed market.
Given the possible lack of a regulatory structure it is
possible that securities in which investments are made
may be found to be fraudulent. As a result, it is possible
that loss may be suffered.
The currencies of certain emerging countries prevent
the undertaking of currency hedging techniques.
Some emerging markets may restrict the access of
foreign investors to securities. As a result, certain
securities may not always be available to the Fund
because the maximum permitted number of an
investment by foreign shareholders has been reached.
In addition, the outward remittance by foreign
investors of their share of net profits, capital and
dividends may be restricted or require governmental
approval.
Accounting, financial reporting standards and
disclosure requirements in emerging markets may
differ from those in more developed markets and,
accordingly, investment possibilities may be difficult to
properly assess.
Warrants
Whilst warrants may be utilised for the management
of investment risk they can also be volatile. A warrant
allows, within a subscribed period, the right to apply
for shares, debentures, loan stock or government
securities from the issuer of the underlying security. A
small movement in the price of the underlying security
results in a disproportionately large movement,
favourable or unfavourable in the price of the warrant.
Therefore the larger the fund holding in warrants the
larger the risk of volatility.
Alternative Investments
Alternative investment products, including hedge funds
and managed futures, involve a high degree of risk.
They often engage in gearing and other speculative
investment practices that may increase the risk of
investment loss, can be highly illiquid and may not
provide periodic pricing or valuation information to
investors.
They may involve complex tax structures and delays in
distributing important tax information. They are often
not subject to the same regulatory requirements as
mutual funds, often charge high fees which may offset
any trading profits, and in many cases the underlying
investments are not transparent and are known only to
the Investment Manager.
Alternative investment performance can be volatile
with the potential to lose all or a substantial amount
of an investment. There is often no secondary market
for an investor’s interest in alternative investments,
with no expectation one will develop. There may be
restrictions on transferring interests in any alternative
investment.
Non-UCITS Retail Schemes (NURS)
Such funds can have wider investment and borrowing
powers than UCITS schemes, with higher investment
limits applying in various areas. They may also be able
to invest to a greater extent in areas such as property
and unregulated collective investment schemes, and
have the potential to borrow on a permanent basis.
Such additional powers can increase potential reward,
but may also increase risk.
Structured Products
The Fund may invest in structured products in
accordance with COLL Sourcebook. For the purposes of
the FSA’s rules, structured products may be regarded
as either transferable securities, collective investment
schemes or derivatives depending on the product
in question. The common feature of these products
is that they are designed to combine the potential
upside of market performance with limited downside.
Structured products typically are investments
which are linked to the performance of one or more
underlying instruments or assets such as market prices,
rates, indices, securities, currencies and commodities
and other financial instruments that may introduce
significant risk that may affect the performance of the
Fund.
However, in addition to providing exposure to the
asset classes described in the investment objective,
the intention is that the use of structured products in
the context of the Fund should assist with keeping the
volatility levels of the Fund relatively low.
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