General Questions

How much I should invest with IndexBoss?
We believe you should set aside a “rainy day fund” in cash to handle any unforeseen emergencies that might arise in your life and if you are fortunate enough, a discretionary fund to invest in opportunities in which you have high conviction like a particular stock or bond. The rest of your money should be invested for the long term in responsible, diversified strategies. We recommend starting with no more than one third (1/3) of the value of your investment portfolio in conservative alternative investment funds that may outperform the overall markets, such as the ones offered by IndexBoss.

How are my assets protected?
Your assets are held in tier 1 prime brokerage accounts that IndexBoss has created at fully vetted, large institutionally focused brokerage partners. IndexBoss may only provide trading instructions for these accounts. It may not access your cash or securities. In the event that a brokerage partner goes bankrupt or no longer has sufficient funds to continue operating, your cash balance and equities will remain intact and can be transferred by our independent fund administrator to another custodian or broker/dealer. Our brokerage partners do not conduct proprietary trading, which was behind the commingling of client assets in recent news. These firms are highly regulated by several government agencies both nationally and internationally, and subject to regular routine audit inquiries from their various regulators. Since many of our employees may also have personal IndexBoss accounts, we place a professional, as well as a personal, vote of confidence in our prime brokerage partners.

What exactly does an Independent Fund Administrator do?
Independent Fund Administrator provides fund administration verifying all trades, positions and cash balances directly with our Prime Brokers and Custodians. Administrator completes and is the custodian of the fund’s books and records. Administrator uses independent services to evaluate portfolios and calculate Net Asset Values (NAVs). Independent Custodian receives subscriptions and Administrator has sole control of transferring funds to and from Prime Brokers for subscriptions, redemptions, and allocations. It is important that an independent, unbiased administrator is used that has no financial interest in the fund. Our independent fund administrator, Apex Fund Services (US) Inc., may be contacted by email or telephone for a professional reference for IndexBoss.

What exactly does a Prime Broker and fund Custodian do?
A Prime Broker and Custodian maintain accounts, execute trades and is custodian of securities and cash for the fund. Prime Brokers confirm cash balances, trades, settlements, and financings on a daily basis and together with fund Custodian integrate with Administrator, who confirms directly with the executing broker dealer. Independent Custodian receives subscriptions and Administrator has sole control of transferring funds to and from Prime Brokers for subscriptions, redemptions, and allocations. It is important that an independent, unbiased Prime Broker is used that has no financial interest in the fund.

What would happen to my account if IndexBoss were to go out of business?
In the unlikely event that IndexBoss were to cease doing business, our independent fund Administrator would give you the option to transfer your account to a new firm or to liquidate your holdings and wire back your account proceeds.

What does IndexBoss invest in?
IndexBoss invests in numerous relatively uncorrelated asset classes including US Stocks, US Bonds, International Stocks, Emerging Market Stocks, Real Estate and Natural Resources. IndexBoss’s approach is to create non correlated portfolios to generate superior returns and to control risk in the event of a volatile market event. Proper risk management should be one of your most important considerations when investing your money.

Why don’t you display reviews or testimonials?
IndexBoss is prohibited from posting on its website a client’s positive review or favorable statement (a “testimonial”) or even from linking to such a testimonial if one of our clients posts such an endorsement on another site. We are careful to comply with the regulations regarding this restriction, which is why you will not find a public section on our website asking for client feedback. You are always free to email us privately.

Subscription Document needed to Invest

How did you create the questionnaire on the Subscription Document to determine my acceptance into IndexBoss Funds?
IndexBoss designed its Subscription Document to ask questions to accurately determine an individual’s risk tolerance. Our final list of questions was developed after a comprehensive survey of the academic research on the topic and includes income, assets, experience, and levels of risk tolerance. All investors in IndexBoss’s Funds must be Accredited Investors. Some online free risk assessment questionnaires only look at subjective willingness to take risk. IndexBoss’s multi-tiered approach to assessing risk evaluates:

– An individual’s subjective willingness to take risk

– An individual’s consistency in response to subjective risk assessment

– questions An individual’s objective ability to take risk based on his or her projected retirement income compared to her projected retirement spending needs

We ask subjective risk questions to both determine the level of risk an individual is willing to take and the consistency among their answers. For example, if an individual is willing to take a lot of risk in one case and very little in another, then he or she is inconsistent and is therefore assigned a lower risk tolerance score than the simple weighted average of her answers. Among our subjective questions we ask two that are likely to be extremely relevant to our accredited investor audience: whether they own stock options or have made investments in alternative investment funds before. We believe the answers to these two questions are critical to an accurate assessment of an individual’s willingness to take risk. We ask objective questions in order to estimate with as few questions as possible whether the individual is likely to have enough money saved at retirement to afford her likely spending needs. The greater the excess income, the more risk the client is able to take. We believe that our focused, short list of questions is far more effective in identifying an individual’s true risk tolerance than some longer lists of questions that we have seen other financial advisors use.

How do you pick Stocks and other Assets in the fund?
We look for Stocks that have accelerating EPS growth, while having to meet other criteria that are proprietary to IndexBoss. This can generate a return regardless whether the broader markets are up or down. Among others, targeted assets in question must meet certain liquidity and sufficient volume constraints. Poor liquidity can create real problems when it comes time to buy a house or pay for your kids’ college.

Why do you recommend IndexBoss’s Funds over buying and holding Stocks with my broker?
The greatest fear for investors these days is investing in good stocks or good stock funds only to have another string of bad news come out of Europe, China, Japan, or the U.S. and cause most markets to drop faster than they went up. As we all know, stocks seem to take the escalator up and the elevator down (think of patterns on stock charts). These crashes have never been more frequent and more severe than during the past few years. In 2011 for example, it took the first 8 months to accumulate some pretty great returns in stocks only to have them vanish into thin air during August’s market drop. Here’s an interesting fact: The Dow Jones (DJIA) traded at a high of 11723 in January, 2000. Surprisingly the DJIA traded at that same level in early 2012. So every $1.00 placed in good stocks or good stock funds in year 2000 that closely tracked the broader markets would still be worth $1.00 12 years later. This example doesn’t take in to consideration inflation, commissions, fees and other costs, making the value of this dollar even less. Because of this, many have unnecessarily avoided the stock market lately. Conversely, IndexBoss actively manages your funds and employs strategies that can generate greater returns than a typical buy and hold strategy.

We ask subjective risk questions to both determine the level of risk an individual is willing to take and the consistency among their answers. For example, if an individual is willing to take a lot of risk in one case and very little in another, then he or she is inconsistent and is therefore assigned a lower risk tolerance score than the simple weighted average of her answers. Among our subjective questions we ask two that are likely to be extremely relevant to our accredited investor audience: whether they own stock options or have made investments in alternative investment funds before. We believe the answers to these two questions are critical to an accurate assessment of an individual’s willingness to take risk. We ask objective questions in order to estimate with as few questions as possible whether the individual is likely to have enough money fees and other costs, making the value of this dollar even less. Because of this, many have unnecessarily avoided the stock market lately. Conversely, IndexBoss actively manages your funds and employs strategies that can generate greater returns than a typical buy and hold strategy.

Does IndexBoss invest my funds all at once or do dollar cost averaging?
IndexBoss invests your money all at once. The benefit of investing in a portfolio of relatively uncorrelated asset classes is that when one asset class is up, it is likely that others are down. Therefore timing of when you invest is relatively unimportant.

How often do you rebalance the fund?
Research has shown that rebalancing a portfolio’s holdings makes more sense when each asset class has drifted from its target allocation by a certain percentage (i.e., threshold based) rather than on a set time basis (e.g., quarterly or semiannually). Therefore, we continuously monitor the fund and periodically rebalance it back to its target mix. We are not able to predict when we are likely to rebalance because it depends on the performance of each of the asset classes. We also use deposits, withdrawals and reinvestment of dividends as opportunities for interim rebalancing to minimize the taxable gains that can arise from threshold-based rebalancing.

Account-Related

What is the Procedure for Investing in IndexBoss’s Funds?
In order to open an account, a prospective investor should complete and execute the Subscription Agreement. Once complete, it must be faxed to Investor Relations at 1 (888) 878-3042 or scanned and emailed to [email protected]. Two forms of identification should be included, preferably a government issued form of ID as well as a utility bill confirming your address.

What types of accounts does IndexBoss currently support?
IndexBoss currently supports taxable accounts, including institutional, commercial and individual investment, joint and trust accounts. We also support Traditional IRAs, Roth IRAs and Simplified Employee Pension (SEP) IRAs. Please email us at [email protected] to open an account type not listed.

Who may open an account on IndexBoss?
Institutional investors, corporate retirement plan sponsors and certain qualified individuals may open an IndexBoss account.

What is the minimum amount required to invest on IndexBoss?
The minimum to open a corporate account is $10,000,000 and $100,000 for an individual account (manager may approve less on a case by case basis).

Where is my money held?
We have accounts with several Prime Brokers and Fund Custodians, such as Citigroup Global Securities and Morgan Stanley. IndexBoss does not have the ability to move funds in or out of these accounts, with the exception of our management and incentive fees. Only you have the ability to deposit or withdraw funds from your IndexBoss Funds account through our independent fund administrator, so you are protected in the unlikely event that IndexBoss is no longer able to provide services to you.

Can I transfer my existing IRA to IndexBoss?
Yes. Please let us know that it will be an IRA account and we will assist in the transfer of an existing account. Once completed, your IRA will automatically transfer in 5-8 business days.

Can I roll over a 401(k) into an IRA?
Yes. To roll over a 401(k) into an IRA, open an IRA account with IndexBoss and let us know you would like to “rollover” during the application process. Once your IRA account is open, you should contact your 401(k) provider and instruct them to send a check for the entire value of your 401(k). The check should be made payable to IndexBoss Funds and should reference your account name and your IRA account number. The check should be sent to:

IndexBoss
Corporate and Individual Accounts
620 Newport Center Drive
Eleventh Floor
Newport Beach, CA 92660
(949) 496-6000

Although the rollover is not a taxable event, your 401(k) provider will issue you a 1099. If you would like to roll over to a Roth IRA, this is a two-step process: first you will open a Traditional IRA account with IndexBoss and then contact us to convert to a Roth IRA.

Can I open multiple accounts?
You are welcome to open as many accounts as you would like as long as each has a minimum of $100,000. Many of our clients like to open dedicated accounts for each of their savings needs such as buying a house, financing their kids’ college, and saving for retirement.

Can I hold my account at another brokerage firm and still have IndexBoss trade it?
IndexBoss’s Funds are only available with accounts opened at our brokerage partners. In order to provide our service, IndexBoss must have the ability to electronically place trades for all of its accounts, which is not currently available at a reasonable price from any of the consumer-focused brokerage firms.

How do I find my account number and username to access the website?
To access your Net Asset Value (NAV) and account information, log in to our corporate website and click My Account at the top of the page.

Funding

How do I fund my account?
Capital contributions may be made by wire transfer or by check. When the funds arrive, we will send you an email confirming receipt. The independent fund administrator will notify each new investor of their value date (the day they are active in the fund) and will send a confirmation of documents and funds receipt. Monthly Statements of Net Asset Value (NAV) are emailed to all investors by the 15th of the following month. Additionally, Statements and NAV can always be accessed at the administrator’s website.

How do I deposit additional funds into my account?
To deposit additional funds to your account you may use the same wire instructions as your original account opening deposit. When the funds arrive, we will send you an email confirming receipt. The independent fund administrator will send a confirmation of the funds receipt.

May I transfer an existing securities portfolio to my account?
Before transfer, you will need to sell all mutual funds, bonds and/or equity holdings.

Who should I contact if I am having trouble funding my account?
Please contact us by email ([email protected]) or phone (800) 496-6000 with any account-related question, problem or suggestion.

Withdrawals

How do I make a partial withdrawal from my account?
To withdraw some of the funds in your account, send us an email with your instructions. There is no penalty to withdraw and with 30 days’ notice funds will be wired back to your originating account at the end of the month

How do I withdraw all the funds in my account?
To withdraw all of the funds in your account, send us an email with your instructions. There is no penalty to withdraw and with 30 days’ notice funds will be wired back to your originating account at the end of the month. After the withdrawal is complete, we will close your account, as we do not maintain accounts with a zero balance.

Does IndexBoss charge fees to withdraw funds?
IndexBoss does not charge fees when you withdraw funds or close your account.

Fees & Commissions

What are IndexBoss’s Fees?
IndexBoss does not charge brokerage fees. Instead IndexBoss charges a performance fee of 25% and a management fee of 3%. It is noteworthy that performance of the fund is reported as “net” of both fees after they have been subtracted. A performance fee is a fee that an alternative investment fund is charged by the investment manager that manages its assets, calculated by reference to the increase in the fund’s net asset value (or “NAV”), which represents the value of the fund’s investments. Performance fees are widely used by the investment managers of alternative investment funds, which typically charge a performance fee of 25% of the increase in the NAV of the fund. An example might be as follows: An investor subscribes for shares worth $50,000,000 in a fund. Over the next year the NAV of the fund increases by 10%, making the investor’s shares worth $55,000,000. Of the $5,000,000 increase, 25% (i.e. $1,250,000) will be paid to the investment manager, thereby reducing the NAV of the fund by that amount and leaving the investor with shares worth $53,750,000, giving a return of 7.5% before deduction of any other fees. As well as a performance fee, an alternative investment fund will charge a management fee, typically calculated as 3% of the NAV of the fund, regardless of whether the fund has generated any returns for the investor. This fee is based on the assets under management and is charged 1/12th of the 3% monthly, or .25%.

Tax-Related

Does IndexBoss help clients report taxes?
Your tax documents are provided by IndexBoss’s independent fund administrator and/or tax advisor. IndexBoss t does not provide individual tax advice, and you should consult your tax advisor regarding any questions you may have specific to your personal taxes and financial situation. IndexBoss assumes no responsibility to any client for the tax consequences of any transaction.

What are the differences between a Traditional and Roth IRA?
The main difference between a Traditional and a Roth IRA is when you pay income taxes on the money you put in the plans. With a Traditional IRA, your contribution is tax deductible and you don’t pay taxes on the contribution amount until you later withdraw it (either upon retirement or early with a penalty). A contribution to a Roth IRA is not tax deductible; you pay taxes before the contribution, but you do not pay taxes later on the amount you withdraw. In addition, with a Roth IRA, you can leave the money in for as long as you want, letting it grow as you continue to age. With a Traditional IRA, by contrast, you must start withdrawing the money when you reach age 70½. Roth IRA contributions are limited by income level. In general, you can contribute to a Roth IRA for 2012 if you have taxable income and your modified adjusted gross income is either:

– Less than $173,000 if you are married filing jointly;

– Less than $110,000 if you are single, head of household, or married filing separately (if you did not live with your spouse at any time during the previous year); or

– Less than $10,000 if you’re married filing separately and you lived with your spouse at any time during the previous year.

When is it appropriate to use a Traditional vs. a Roth IRA?
A Roth IRA is more appropriate when you are younger since you have a longer time for tax-free accumulation. Most studies suggest that the cutoff age is around 50. However, a Roth IRA is not appropriate for people who will be in a zero or very low tax bracket when they retire. If you do not foresee the need to draw on your IRA in retirement then you will want to fund a Roth IRA. Of course, none of us have a crystal ball, so you may want to hedge by splitting your contributions across both a Roth and a Traditional IRA (say 50/50) if you don’t know what your income is likely to be upon retirement. If you’re a young professional who has a high potential upside to your income, then you’re probably better off with a Roth. If you expect your income to only grow with inflation then you’re probably better off with a 50/50 split until the future starts to become clearer and then adjust accordingly. Please consult your tax advisor to determine what is best for you.