1. © 2013 Hilltop Fund Management LLP | Regulated and authorised by the Financial Conduct Authority | +44 (0)20 7788 7799 | www.hilltop.co.uk 1
Underlying Portfolio
fund* Headline strategy weighting
ATP Equity long/short non-directional 11.4%
SAC Volatility arbitrage 10.4%
RAB Trade finance 9.8%
CRA Equity long/short non-directional 9.7%
FJE Activist credit 9.3%
LOP Long/short convertibles 8.0%
FSP Relative value commodity 7.1%
CBK Volatility arbitrage 6.5%
PGD Equity long/short non-directional 6.1%
SEK Activist micro-cap equity 5.7%
TCC Equity long/short non-directional 5.4%
IAH Fixed income arbitrage 5.1%
WTH Long/short commodity 4.4%
TEM Long/short mortgages 4.3%
SUT Long/short commodity equities 3.3%
COK Macro volatility 3.2%
The Hilltop Decorrelated Fund
Delivering decorrelated returns in a highly correlated environment
The Hilltop Decorrelated Fund was down 0.2% in August, with half our sixteen managers up and half down.
The attribution of both was very similar (gross the fund was flat) with costs carrying us down 0.2%. No funds performed
outside of expectations. As mentioned in our July factsheet, we are currently undertaking a comprehensive review of our
entire shortlist, unsatisfied as we are with performance year to date. This process has highlighted a number of outstanding
managers exploiting niche opportunity sets, which we believe will continue to deliver strongly asymmetric returns, quite
independent of market conditions. We have started to add four of these funds to the portfolio (two in August and two in
September) and expect a couple more to follow suit shortly. We are confident that these changes, once finalised, will help
push our monthly returns closer to our target of +0.9% each month (not, of course, in a straight line but with relatively
few (and minor) losing months and with no discernible correlation to traditional benchmarks.
Monthly perf (%)* Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2013 -0.8 0.3 0.1 0.5 -1.0 -0.2 0.5 -0.2 -0.8
2012 1.3 1.2 1.3 1.2 0.5 1.0 0.8 -0.3 0.3 -0.1 -0.3 2.7 9.7
2011 2.6 0.0 0.7 2.8 2.0 1.2 2.2 -0.4 2.0 0.4 3.6 4.2 23.2
2010 0.1 2.7 0.6 1.7 1.5 0.1 0.5 3.1 1.0 2.5 0.8 1.7 17.5
2009 2.7 -0.3 1.4 2.3 2.6 0.3 1.8 0.2 1.9 2.1 3.6 1.1 21.7
2008 2.3 -0.3 -1.5 0.5 2.9 1.4 -0.3 0.3 -0.7 5.1 3.0 1.8 15.0
* Pro forma results are shaded in grey. Results are shown net of all fees and costs assuming a fund size of $20m excluding any redemption fees.
2008 2009 2010 2011 2012
-6%
0%
6%
2008 2009 2010 2011 2012
The Hilltop Decorrelated Fund MSCI World Index
HFRI Fund Weighted Composite Index HFRI FoF Composite Index
$0
$250
$100
Risk metrics (January 2008 – August 2013)
0 to 2 2 to 4-2 to 0 4 to 6-4 to -2-6 to -4
% returns
Numberofmonths
0
10
20
30
40
NAV impact per fund Profit/loss ratio = 1.0x
0%
-0.4%
0.4%
8 funds down,
avg contribution
per fund -1.0%
8 funds up,
avg contribution
per fund +0.09%
FSP SAC
E E EE E
E E EE E
FJEWTH CBKCRA ATP TEM TCC RAB SEKCOKIAH SUT LOPPGD
2010 2011 2012
High correlation Medium correlation Low correlation
-1
0
1
Distribution of returns
Contribution analysis (August 2013)
Rolling 24-mth correlation with MSCI World
Historical performance
Growth of $100 since inception
Asset allocation Length of track record
Liquidity AUM ($m)
Portfolio characteristics (as at August 2013)Portfolio snapshot
Monthly
(71%)
Quarterly
(29%)
R
e d u ci
ng
Lending (8%)
Bonds/FI (4%) Mortgages (4%)
Volatility (17%)
Equities (35%)
Commodities
(10%)
Cash
(8%)
Credit (14%)
>9yrs (27%)
>2yrs<5yrs (56%) >5yrs<9yrs (17%)
D
eclini
ng
>1bn
(12%)
<50
(24%)
>100<200
(5%)
>200<500
(25%)
>500<1bn
(15%)>50<100
(19%)
D
eclini
ng
The pros and cons of ‘back-tests’
Never seen a bad ‘back-test’? Neither have we.
Discounting pro forma results is sober – that said, this
portfolio is clearly able to deliver excellent returns with:
a lack of down months, low correlation and low (c.5%)
volatility, which we are confident can be maintained.
See overleaf for more guidance.
Decor-
related
Fund*
HFR FoF
Composite
HFR Fund
Weighted
Composite
MSCI
World
Total return 120.5% -4.7% 11.9% -7.3%
Compound annual 15.0% -0.8% 2.0% -1.3%
Annual volatility 4.6% 6.2% 7.4% 19.9%
Downside deviation¥
1.3% 5.6% 5.8% 15.6%
Max drawdown -1.8% -21.4% -20.1% -52.7%
Sharpe ratio¥
2.6 -0.6 -0.1 -0.2
Sortino ratio¥
9.2 -0.7 -0.2 -0.3
% positive periods 79.4% 58.8% 60.3% 50.0%
Average gain 1.6% 1.1% 1.5% 4.5%
Average loss -0.5% -1.7% -1.8% -4.4%
Skewness 0.5 -1.4 -0.8 -0.7
¥ Assumes minimum acceptable return of 3%.
Uses actual fund duration data
except for two funds which
use strategy duration.
August 2013 -0.2%e
An estimate, based on actual results from
6/16 funds and an estimate from 10/16 funds

2. © 2013 Hilltop Fund Management LLP | Regulated and authorised by the Financial Conduct Authority | +44 (0)20 7788 7799 | www.hilltop.co.uk 2
ISIN: GI000A1J6ZB9 (USD)
GI000A1T87X1 (GBP)
Bloomberg: HTDCBC2 TL
Target returns
An average of 10-12% p.a. net of fees
over a three-year period
Expected volatility
Less than 5%
Correlation target
A maximum of 0.4 to the MSCI World
Index over any three-year period and
on average closer to zero
Investment liquidity
75% of AuM invested in funds with
monthly redemption or better
Leverage
Maximum of 33% long-term
and 10% short-term
Target size
$500m
Share class
USD (£ and € to follow)
Fund domicile / type
Gibraltar / Experienced Investor Fund
Minimum investment
$10k if invested via a life wrapper,
$ equivalent of €50k if advised by
an IFA, €100k if investing directly
Fund liquidity
Monthly
Redemption notice
45 days’ notice
Fees
Initial fee: none
Management fee: 1.75%
Performance fee: 10% above HWM
with 3% trigger
Redemption fee: 5% reducing
Fund manager
Hilltop Fund Management LLP
Auditors
Deloitte, Gibraltar
Custodian
Royal Bank of Canada
Administrator
Helvetic Fund Administration
Legal advisers
Eversheds LLP, Hassans International
Contact
Cressida St Aubyn, Investor Relations
cressida.staubyn@hilltop.co.uk
Distribution partner
The Synergy Partnership
+603 2301 0930
Hilltop’s Portfolio Manager, Rory
Hills, started his career in financial
markets in 1986 and for 27 years
has maintained an on-going and
detailed engagement with a great
many fund managers employing a
wide range of investment strategies.
Since 2002, Rory has focused
on selecting hedge funds for
potential inclusion in fund of
hedge fund (FoHF) portfolios,
first at Dexion Capital where he also held in the region of
1,000 meetings with FoHFs and for the past three years at
Hilltop. This has given him tremendous insight into the hedge
fund industry. During this time Rory has demonstrated a
talent for recognising exceptional investment managers and
strategies, for example 12 of the 13 funds he was associated
with during the credit crisis (Jul ‘07 to Feb ‘09), either to
represent to investors and/or for personal investment, were
up in the period - half of them by more than 30%.
This combination of long-standing experience in respect of
understanding asset management strategies; a real appreciation
of what does and does not work within FoHFs; together with
a proven ability to identify distinctive, value-added hedge fund
strategies, is the ideal grounding for managing the Hilltop
Decorrelated Fund.
Investment thesis
Investment approach
Who are Hilltop, and why listen?
Most liquid investments (and plenty that are illiquid too) are heavily
influenced by how “risk assets” are performing (for which the
MSCI World Index is an excellent proxy) and consequently tend
to be highly correlated to one another. The obvious exception is
‘highly rated’ government bonds but these look expensive, yield
almost nothing and what can be considered ‘highly rated’ is a
moveable feast creating a ‘credit’ element to owning government
bonds which previously did not exist.
By investing in a range of ‘low correlation’ strategies (those
seeking to deliver returns independent of market directionality),
the Hilltop Decorrelated Fund has been designed to deliver the
stable, decorrelated return profile sought by so many investors.
To achieve its targets Hilltop adopts a multi-manager approach
investing in ten to 15 hedge fund strategies, across the globe,
which we are convinced can deliver decorrelated returns on a
sustainable basis. It is an important feature of our approach that
we are not making any ‘macro calls’ and – with rare exceptions
– neither are the managers we are investing with. This is partly
because we do not believe anyone has an edge in making
such calls and partly because even if they did, they would wish
to be highly correlated in a bull market which runs counter to
our ambition of being decorrelated at all times (it is entirely
possible to be up in a bull market without being correlated).
Our preference is for managers pursuing a clearly defined
opportunity set and with the requisite investment skills to exploit
it. Whilst, on occasion, this could include managers operating in
unconventional areas the primary focus is on managers operating
in mainstream asset classes (equities, fixed income, FX and
commodities) but in unusual and/or distinctive ways. The fund
will not invest in managers with less than a 2 ½ year track record.
27 yrs’
dialogue
with fund
managers
11 yrs’
hedge fund
experience
c.1,800
single
managers
reviewed
c.1,000
meetings
with
FoHFs
Optimal background for a FoHF manager
Rory Hills’ key highlights
Target investor audience
The Hilltop Decorrelated Fund is
targeted at investors seeking consistent
returns with low volatility, very limited
drawdowns and which are genuinely
decorrelated to equity markets even in
moments of financial crisis.
Whilst Hilltop believes this return
profile is attractive at any point in
the investment cycle, the current
environment of low interest rates and
increased correlations amongst asset
classes makes it particularly compelling.
The pro forma results presented overleaf need to be properly
qualified because, although the results of the underlying funds
are real and reflect the actual mix that the invested portfolio will
have at inception, the portfolio was not in existence prior to its
launch on 1 October 2012. Its selection is inevitably influenced,
at least to some degree, by past performance. Nonetheless,
there are useful interpretations which we can draw from the data
though it is important to understand which type of metrics may
provide a reasonable guide to future performance and which
may not. Return metrics should be most significantly discounted
as it is these which are most heavily affected by the benefit of
performance hindsight and it is inevitable that some funds will
fail to deliver in the future the returns they have delivered in the
past. However, we can say from the data that as a combination,
this group of funds is very capable of delivering excellent returns.
In respect of ‘risk’ metrics, we do believe quite a lot can be read
into the volatility of the pro forma results because, whilst future
performance at the sub-fund level may look different from how
it did in the past, the range of monthly returns should not (this
being a core part of Hilltop’s analysis). Similarly, we believe a good
deal can be garnered from the pro forma in respect of the future
correlation profile of this portfolio. It is a central part of our analysis
that these funds are able to deliver returns uncorrelated to each
other as well as risk assets in general and we expect this portfolio
to exhibit the same level of low correlation in the future as the pro
forma has shown in the past. Of particular note is that this data
categorically disproves the fallacy that a portfolio of non‑correlated
funds will ‘cancel each other out’.
How to interpret the pro forma results in this document
This document does not constitute or form part of, and may not be used for
the purpose of, an offer or solicitation to anyone in any jurisdiction in which
such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such offer or solicitation. Shares in the Hilltop Decorrelated
Fund (the “Fund”) will not be offered to the general public. This document
may not be distributed in any jurisdiction where it is unlawful to do so. A
subscription for shares in the Fund may only be made in reliance on the private
placement memorandum and relevant supplement of Hilltop Funds PCC
Limited by persons who are eligible to subscribe as set out in such documents.
While the information in this document has been prepared in good faith,
no representation or warranty, express or implied, is or will be made and
no responsibility or liability is or will be accepted by the Fund or Hilltop
Fund Management LLP (“Hilltop”) or by any of their respective members,
officers, employees or agents in relation to the accuracy or completeness of
the information contained in this document and any such liability is expressly
disclaimed. In particular, but without prejudice to the generality of the
foregoing, no representation or warranty is given as to the achievement or
reasonableness of any future projections, management estimates, prospects
or returns contained in this document. Actual results may vary from estimates.
Hilltop is not acting for any recipient of this document. Hilltop is not responsible
to such a recipient for providing protections afforded to clients of Hilltop and
Hilltop is not advising such a recipient in respect of investing in Hilltop Funds
PCC Limited. Past performance is not a guide to future performance.
The ‘pro-forma’ results in this document are calculated by the retroactive
application of a model constructed on the basis of the historical data of the
intended underlying fund investments utilised by the Fund at its inception and
in the same mix at the launch date of the Fund. There is no assurance that the
Fund will be able to invest in the intended underlying funds at launch and/or
at the level intended. There is also no assurance that the Fund would have
achieved the returns shown prior to August 2012 and the pro-forma returns
are shown for illustrative and informational purposes only and should not be
construed as an indicator of future performance of the Fund or any other fund
managed by Hilltop. Pro-forma returns do not represent actual trading and
may not reflect the impact that material economic and market factors might
have had on any decision-making if the portfolio were actually being managed.
The pro-forma returns also assume that the Fund would have been able to
purchase the securities recommended by the model and that the markets
were sufficiently liquid to permit this trading. Hilltop has clients other than the
Fund and results across clients may differ materially.
Disclaimer