This section is designed to give you an understanding of what you can expect as you develop your Fund and specifically discusses the following:

Step 1. Forming your Fund
Step 2. Setting up your bank and brokerage accounts
Step 3. Beginning trading

Step 1. Forming Your Fund

Fund Associates recommends that you enlist the services of appropriate professionals (i.e. attorneys, CPA, etc.) for assistance in developing the structure and legal entity of the fund. Fund Associates has developed strategic relationships with seasoned professionals who can help you through this process. Typically your fund will be comprised of two entities: a Limited Partnership, which will be the Fund, and a Limited Liability Company to serve as the Management Company. The Management Company will be the Fund’s general partner and you, as the Fund’s manager, will sit as the Management Company’s Managing Director, Managing Member, or Chief Executive Officer, depending on your preference. This structure grants both you and your investors limited personal liability and beneficial tax treatment.

Typically, the Management Company is formed in the manager’s home state – this is the most convenient and cost-effective way for you to manage your fund. The Fund will usually be formed in Delaware. Over time, Delaware has developed a highly sophisticated court system and an extensive body of law relating to financial institutions that may facilitate a more predictable result in certain legal proceedings. For this and other reasons, your Fund’s prospective investors will likely be most comfortable with a Delaware entity.

When you have decided on names for the Fund and the Management Company, you will submit your formation documents and obtain a Federal Employer Identification Number (EIN) for each entity, which is necessary to file tax returns and to open bank accounts. You will set up your registered agent in the state in which the Fund is formed and a physical location in that state where you can receive service of process. You will also create a private placement memorandum (PPM) which explains relevant trading strategies, the associated risks, the biographies of key personnel, and contains documents disclosing the names of the attorneys, accountants, and other administrators as appropriate. Within the PPM you will indicate your fund’s management fee structure and any performance fees.

Step 2. Setting Up Your Bank and Brokerage Accounts

Bank Accounts

You will need to establish two bank accounts: one for the Fund and one for the Management Company. Banks will want to see your Certificate of Formation and will need your EIN. Also, depending on the institution, a bank may want to see additional documentation, such as the Management Company’s Operating Agreement. It is recommended that you establish wiring capabilities for both of your bank accounts; doing so facilitates efficient fund administration and will make accepting investor subscriptions less burdensome.

Brokerage Account

Once you have set up bank accounts for both the Fund and Management Company, you will need to open a brokerage account for the Fund – this will be the primary account that you use to effect trades and begin establishing your track record. While most brokerage firms will be satisfied with the information you provided to the bank, every brokerage firm is different. If a particular brokerage firm wants other documents, your attorney will assist you in obtaining such additional information.

Step 3. Beginning Trading

Now is the time to do what you do best – start trading for the Fund account! This means that you should be depositing your investor’s funds into the Fund account and then transferring funds from the Fund account to the Fund’s brokerage account. This is how you establish a marketable track record since your performance history will be the Fund’s performance history.

This is also the time that Fund Associates services will provide value to you. We will coordinate with the Fund and its prime broker. We will integrate your information into our systems and begin to independently track the Fund’s performance. We will then be able to calculate the Fund’s Net Asset Value (NAV) and provide that information to the Fund manager and directly to existing and potential investors, if desired.