Managed Discretionary Accounts (MDA's)

Investment Methodology

InCapital Advisers will operate MDAs on behalf of retail and wholesale clients i.e. InCapital Advisers will manage client funds on a discretionary basis. InCapital Advisers will have the authority to execute an order on behalf of an individual client without the client's prior consent.

InCapital Adviser's investment strategy will be to invest primarily in securities and related derivative contracts (in particular options and warrants).

InCapital Advisers will seek to provide investors with capital growth over the short and medium term. Although some income will be generated (such as dividends), the focus will be on investments offering the potential for capital gain and no minimum level of income will be taken into consideration.

An active investment approach will be adopted. The derivative component will allow InCapital Advisers to take long and/or short positions on behalf of the MDA. The investments will generally be restricted to the domestic stock-market - with particular focus on larger capitalised companies (i.e. in the top 200). Where a client authorises InCapital Advisers, investments may also be made in international markets.

InCapital Advisers will use a combination of fundamental and technical research. Research will also be sourced from third parties. The intentions is to offer a strategy that is performance orientated (absolute return).

Investment Process

InCapital Advisers:

• will understand the risk profile of each client and will only make investments within the risk level tolerances permitted by the client;
• will minimise the risk of loss of capital through the use of best practice risk management procedures and by operating at all times within the stated risk parameters;
• will "rebalance" portfolios if and when required. Exposures will be checked against target portfolio positions and any rebalancing done is required to eliminate position drift;
• will only trade in liquid markets;
• follow the investment objective i.e. to achieve capital growth predominately through exposure to domestic (and occasionally international) securities markets;
• where deemed appropriate, will use hedging techniques to minimise market risk and currency risk;
• will continuously monitor positions;
• will perform scenario testing;
• will, every six months, conduct a comprehensive review of the performance of the MDAs;