Re: | A&Q Alternative Fixed-Income Strategies Fund LLC (File Nos. 333-194092 and 811-21117) A&Q Masters Fund (File Nos. 333-211675 and 811-22859) A&Q Multi-Strategy Fund (File Nos. 333-204588 and 811-22500) |
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Post-Effective Amendment No. 5 to the Registration Statement of A&Q Alternative Fixed-Income Strategies Fund LLC on Form N-2 under the Securities Act of 1933, as amended (the "1933 Act") (also constituting Amendment No. 28 to the Registration Statement on Form N-2 under the Investment Company Act of 1940, as amended (the "1940 Act")), filed on May 27, 2016;
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the Registration Statement of A&Q Masters Fund on Form N-2 under the 1933 Act (also constituting Amendment No. 6 to the Registration Statement on Form N-2 under the 1940 Act), filed on May 27, 2016; and
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Post-Effective Amendment No. 1 to the Registration Statement of A&Q Multi-Strategy Fund on Form N-2 under the 1933 Act (also constituting Amendment No. 11 to the Registration Statement on Form N-2 under the 1940 Act), filed on May 27, 2016.
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________________________________
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1
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In A&Q Alternative Fixed-Income Strategies Fund LLC's prospectus, shares are referred to as "Units"—otherwise, this disclosure is identical on all three Funds' cover pages.
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Investor Transaction Expenses
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Maximum Sales Load(1) (percentage of purchase amount)
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2.00%
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Maximum Redemption Fee
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None(2)
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Offering Expenses Borne by the Fund (as a percentage of offering amount)
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0.01%
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Annual Expenses (as a percentage of net assets attributable to Units)
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Management Fee
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1.45%
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Interest Payments on Borrowed Funds(3)
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0.00%
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Other Expenses
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1.11%
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Acquired Fund Fees and Expenses (Investment Fund fees and expenses)(4)
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5.84%
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Total Annual Expenses
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8.40%
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Fee Waiver(5)
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(0.45)%
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Total Annual Expenses(6) (after fee waiver)
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7.95%
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___________________
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(1)
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Generally, the stated minimum initial investment in the Fund is Units with an initial value of at least $50,000, which minimum may be reduced for certain investors. Investments may be subject to a waivable sales load of up to 2%. See "Plan of Distribution."
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(2)
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While the Fund does not impose any charges on a repurchase of Units in the Fund, it may allocate to tendering investors withdrawal or similar charges imposed by Investment Funds if the Adviser determines to withdraw from the Investment Fund as a result of a tender and such a charge was imposed on the Fund.
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(3)
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The Fund's interest expense for the fiscal year ended March 31, 2016 was $3,051.
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(4)
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Includes the fees and expenses of the Investment Funds in which the Fund is already invested and intends to invest, based upon the anticipated net proceeds of this offering. Some or all of the Investment Funds in which the Fund invests charge incentive fees or allocations based on the Investment Funds' earnings. The incentive fees or allocations charged by unregistered Investment Funds in which the Fund invests generally are expected to range from 0% to 25% of net profits. The "Acquired Fund Fees and Expenses" disclosed above are based on historic earnings of the Investment Funds, which may change substantially over time and, therefore, significantly affect "Acquired Fund Fees and Expenses." The amount of the Fund's average net assets used in calculating this percentage was based on average net assets for the fiscal year ended March 31, 2016 of approximately $104.3 million, plus anticipated net proceeds of approximately $822 million from this offering. The Adviser estimates that approximately 1.78% (as a percentage of the net assets attributable to Units) of the 5.84% shown as "Acquired Fund Fees and Expenses" reflects operating expenses of the Investment Funds (i.e., management fees, administration fees and professional and other direct, fixed fees and expenses of the Investment Funds). The Adviser estimates that the balance of approximately 4.06% is attributable to performance-based fees and allocations as well as other investment-related expenses of the Investment Funds (for example, interest expense, dividends paid on investments sold short, bank charges and commissions, stock loan fees, etc.).
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(5)
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The Adviser has contractually agreed, pursuant to a "Fee Waiver Agreement" with the Fund, to waive receipt of 45 basis points of the Advisory Fee until August 1, 2017. The Adviser may discontinue its obligations under the Fee Waiver Agreement at any time in its sole discretion on or after August 1, 2017 upon appropriate notice to the Fund. See "Management of the Fund—Fee Waiver Agreement."
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(6)
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Total annual expenses shown in the table are as of the Fund's fiscal year ended March 31, 2016 and will increase or decrease over time based on the Fund's asset level and other factors.
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EXAMPLE:
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1 Year
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3 Years
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5 Years
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10 Years
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You would pay the following expenses,
including a sales load (see footnote 1 above), on a $1,000 investment, assuming a 5% annual return: |
$97
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$244
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$382
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$693
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* Without the sales load, the expenses would be: $78 (1 Year), $228 (3 Years), $369 (5 Years) and $687 (10 Years).
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Shareholder Transaction Expenses
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Maximum Sales Load(1) (percentage of purchase amount)
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2.00%
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Maximum Redemption Fee
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None(2)
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Offering Expenses Borne by the Fund (as a percentage of offering amount)
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0.03%
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Annual Expenses (as a percentage of net assets attributable to Shares)
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Advisory Fee
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1.25%
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Incentive Fee(3)
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0.06%(4)
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Interest Payments on Borrowed Funds(5)
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0.01%
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Other Expenses
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0.74%
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Acquired Fund Fees and Expenses(6)
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3.83%
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Total Annual Expenses
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5.89%
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Expense Waiver(7)
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(0.38)%
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Total Annual Expenses(8) (after expense waiver)
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5.51%
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____________________
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(1)
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Generally, the stated minimum initial investment in the Fund is Shares with an initial value of at least $50,000, which minimum may be reduced for certain shareholders, but not below $25,000. Investments may be subject to a waivable sales load of up to 2%. See "Plan of Distribution."
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(2)
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While the Fund does not impose any charges on a repurchase of Shares in the Fund, it may allocate to tendering Shareholders withdrawal or similar charges imposed by Investment Funds if the Adviser determines to withdraw from the Investment Fund as a result of a tender and such a charge was imposed on the Fund.
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(3)
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The Fund pays the Adviser an Incentive Fee, on a quarterly basis, at an annual rate of 5% of the Fund's net profits, if any. For the purposes of calculating the Incentive Fee for any fiscal quarter, net profits are determined by taking into account net realized gain or loss (including realized gain that has been distributed to shareholders during such fiscal quarter and net of Fund expenses), and the net change in unrealized appreciation or depreciation of securities positions, as well as dividends, interest and other income. No Incentive Fee will be payable for any fiscal quarter unless losses and depreciation from prior fiscal quarters (the "cumulative losses") have been recovered by the Fund. The cumulative loss to be recovered before payment of any Incentive Fees will be reduced in certain circumstances, including as a result of withdrawals by shareholders. The Adviser is under no obligation to repay any Incentive Fee previously paid by the Fund. The Incentive Fee is accrued monthly as a liability of the Fund and thus reduces the net asset value of all Shares. See "Risk Factors—Incentive Fee," "Management of the Fund—Incentive Fee" and "Redemptions, Repurchases of Shares and Transfers—Consequences of Repurchase Offers."
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(4)
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This amount represents the Incentive Fee paid by the Fund, expressed as a percentage of average net assets of the Fund, during the period from April 1, 2015 to March 31, 2016 (see footnote 3 above). A larger Incentive Fee is reflective of positive investment performance. See "—Financial Highlights."
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(5)
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The Fund's interest expense for the fiscal year ended March 31, 2016 was $11,776.
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(6)
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Includes the fees and expenses of the Investment Funds in which the Fund is already invested and intends to invest based upon the anticipated net proceeds of this offering. Some or all of the Investment Funds in which the Fund invests charge incentive fees or allocations based on the Investment Funds' earnings. The incentive fees or allocations charged by unregistered Investment Funds in which the Fund invests generally are expected to approximate 20% of net profits. The "Acquired fund fees and expenses" disclosed above are based on historic earnings of the Investment Funds, which may change substantially over time and, therefore, significantly affect "Acquired fund fees and expenses." The amount of the Fund's average net assets used in calculating this percentage was based on average net assets for the fiscal year ended March 31, 2016 of approximately $150 million, plus anticipated net proceeds of approximately $366 million from this offering. The Adviser estimates that approximately 1.80% (as a percentage of the net assets attributable to Shares) of the 3.83% shown as "Acquired fund fees and expenses" reflects operating expenses of the Investment Funds (i.e., management fees, administration fees and professional and other direct, fixed fees and expenses of the Investment Funds). The Adviser estimates that the balance of approximately 2.03% is attributable to performance-based fees and allocations as well as other investment-related expenses of the Investment Funds (for example, interest expense, dividends paid on investments sold short, bank charges and commissions, stock loan fees, etc.).
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(7)
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The Adviser has contractually agreed, pursuant to an "Expense Limitation and Reimbursement Agreement" with the Fund, to limit in perpetuity the amount of "Specified Expenses" (as described below) borne by the Fund to an amount not to exceed 1.62% per annum of the Fund's net assets (the "Expense Cap") (computed and applied on a monthly basis). This agreement does not cover (i) the Incentive Fee, (ii) fees of the Investment Funds in which the Fund invests and (iii) extraordinary expenses, as these expenses will be in addition to the expenses of the Fund that may be limited by the Adviser to 1.62% of the Fund's net assets. The Adviser may discontinue its obligations under the Expense Limitation and Reimbursement Agreement only with the consent of a majority of the Independent Trustees. To the extent that the Adviser pays or bears Specified Expenses, it will not seek reimbursement for any such amounts. See "Management of the Fund—Expense Limitation and Reimbursement Agreement."
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(8)
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Total annual expenses shown in the table will increase or decrease over time based on the Fund's asset level and other factors.
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EXAMPLE:
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1 Year
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3 Years
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5 Years
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10 Years
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You would pay the following expenses,
including a sales load* (see footnote 1 above), on a $1,000 investment, assuming a 5% annual return: |
$74
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$181
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$286
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$546
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* Without the sales load, the expenses would be: $55 (1 Year), $164 (3 Years), $272 (5 Years) and $537 (10 Years).
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Shareholder Transaction Expenses
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Maximum Sales Load(1) (percentage of purchase amount)
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2.00%
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Maximum Redemption Fee
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None(2)
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Offering Expenses Borne by the Fund (as a percentage of offering amount)
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0.03%
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Annual Expenses (as a percentage of net assets attributable to Shares)
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Advisory Fee
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1.50%
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Incentive Fee(3)
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0.00%(4)
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Interest Payments on Borrowed Funds(5)
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0.02%
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Other Expenses
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0.40%
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Acquired Fund Fees and Expenses(6)
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7.97%
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Total Annual Expenses(7)
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9.89%
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____________________
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(1)
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Generally, the stated minimum initial investment in the Fund is Shares with an initial value of at least $50,000, which minimum may be reduced for certain shareholders. Investments may be subject to a waivable sales load of up to 2%. See "Plan of Distribution."
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(2)
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While the Fund does not impose any charges on a repurchase of Shares in the Fund, it may allocate to tendering shareholders withdrawal or similar charges imposed by Investment Funds if the Adviser determines to withdraw from the Investment Fund as a result of a tender and such a charge was imposed on the Fund.
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(3)
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The Fund pays the Adviser an Incentive Fee, on a quarterly basis, at an annual rate of 5% of the Fund's net profits, if any. For the purposes of calculating the Incentive Fee for any fiscal quarter, net profits are determined by taking into account net realized gain or loss (including realized gain that may have been distributed to shareholders during such fiscal quarter) and the net change in unrealized appreciation or depreciation of securities positions. No Incentive Fee will be payable for any fiscal quarter unless losses and depreciation from prior fiscal quarters (the "cumulative losses") have been recovered by the Fund. The cumulative loss to be recovered before payment of any Incentive Fees will be reduced in certain circumstances, including as a result of withdrawals by shareholders. The Adviser is under no obligation to repay any Incentive Fee previously paid by the Fund. The Incentive Fee is accrued monthly as a liability of the Fund and thus reduces the net asset value of all Shares. See "Risk Factors—Incentive Fee," "Management of the Fund—Incentive Fee" and "Redemptions, Repurchases of Shares and Transfers—Consequences of Repurchase Offers."
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(4)
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The Fund paid Incentive Fees of $38,824 during the period from April 1, 2015 to March 31, 2016 (see footnote 3 above), which is expressed in the table as a percentage of the Fund's average net assets for the fiscal year ended March 31, 2016 of approximately $720 million. A larger Incentive Fee is reflective of positive investment performance. See "—Financial Highlights."
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(5)
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The Fund's interest expense for the fiscal year ended March 31, 2016 was $120,196.
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(6)
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Includes the fees and expenses of the Investment Funds in which the Fund is already invested and intends to invest based upon the anticipated net proceeds of the offering. Some or all of the Investment Funds in which the Fund invests charge incentive fees or allocations based on the Investment Funds' earnings. The incentive fees or allocations charged by unregistered Investment Funds in which the Fund invests generally are expected to approximate 20% of net profits. The "Acquired Fund Fees and Expenses" disclosed above are based on historic earnings of the Investment Funds in which the Fund invests, which may change substantially over time and, therefore, significantly affect "Acquired Fund Fees and Expenses." The amount of the Fund's average net assets used in calculating this percentage was based on average net assets for the fiscal year ended March 31, 2016 of approximately $720 million, plus anticipated net proceeds of approximately $780 million from the offering. The Adviser estimates that approximately 2.79% (as a percentage of the net assets attributable to Shares) of the 7.97% shown as "Acquired Fund Fees and Expenses" reflects operating expenses of the Investment Funds (i.e., management fees, administration fees and professional and other direct, fixed fees and expenses of the Investment Funds). The Adviser estimates that the balance of approximately 5.18% is attributable to performance-based fees and allocations as well as other investment-related expenses of the Investment Funds (for example, interest expense, dividends paid on investments sold short, bank charges and commissions, stock loan fees, etc.).
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(7)
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Total annual expenses shown in the table will increase or decrease over time based on the Fund's asset level and other factors.
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EXAMPLE:
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1 Year
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3 Years
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5 Years
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10 Years
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You would pay the following expenses,
including a sales load* (see footnote 1 above), on a $1,000 investment, assuming a 5% annual return: |
$115
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$290
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$449
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$782
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________________________
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*
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Without the sales load, the expenses would be: $96 (1 Year), $276 (3 Years), $437 (5 Ye+ars) and $778 (10 Years).
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