Diversified Portfolio of High Yield Lending & Investment · 2019-02-01 · US Pensions US Endowments Individual Investors 6 Institution vs Individual Alternative Asset Allocations

IDIFInvico Diversified

Income Fund

Diversified Portfolio of High Yield Lending & Investment Opportunities

An offering memorandum dated April 24, 2018 (the “Offering Memorandum”) containing important information relating to the securities described in this document has or will be filed with the securities regulatory authorities in each of the jurisdictions where a distribution has occurred or will occur pursuant to the Offering Memorandum. A copy of the Offering Memorandum is required to be delivered to you at the same time or before you sign the agreement to purchase the securities described in this document pursuant to the Offering Memorandum. This document does not provide disclosure of all information required for an investor to make an informed investment decision. Investors should read the Offering Memorandum of Invico Diversified Income Fund, especially the risk factors relating to the issuer and the securities offered, before making an investment decision.

2018: Celebrating Five Years of Delivering Results

DisclaimerForward-Looking Statements

The “Trust” means “Invico Diversified Income Fund”. Capitalized terms not defined in this presentation are defined as set forth in the Offering Memorandum.

No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this document. The securities referred to herein will only be offered and sold in such jurisdictions where they may be lawfully offered for sale and, in such jurisdictions, only by persons permitted to sell such securities.

There is no guarantee of performance and past or projected performance is not indicative of future results. Investors should review the Offering Memorandum in its entirety for a complete description of the Trust and its risks, and consult their registered dealers before making an investment.

The securities referred to herein may only be sold to prospective investors who reside in certain provinces of Canada and who meet certain eligibility criteria on a basis which is exempt from the prospectus requirements of applicable Canadian securities laws. The securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or the securities laws of any state of the United States and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons (as such term is defined in Regulation S under the U.S. Securities Act).

This document may contain statistical data, market research and industry forecasts that were obtained from government or other industry publications and reports are based on estimates derived from such publications and reports. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. While the Trust believes this data to be reliable, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. The Trust has not independently verified any of the data from independent third-party sources referred to in this document or ascertained the underlying assumptions relied upon by such sources.

Certain statements or information contained in this document constitute "forward-looking statements" within the meaning of that phrase under applicable Canadian securities laws. Any statements that express, or involve discussions as to, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, through the words or phrases such as "will likely result, "are expected to", "expects", "does not expect", "anticipates", "does not anticipate", "believe", "continue", "estimate", "intend", "plan", "potential", "predict", "project", "seek" or other similar words) are not statements of historical fact and may be forward-looking statements. Forward-looking statements involve the Trust’s internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, investment opportunities, future expenditures, plans for and results of investments, portfolio results, business prospects and opportunities. Although the Trust believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies which could cause the Trust's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Trust. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Forward-looking statements contained in this document include, but are not limited to, statements with respect to: the business to be conducted by the Trust; timing and payment of distributions; the Trust's investment objectives and investment strategies; the Trust’s active investment approach; the degree of control exerted over management of investee companies; anticipated investments; the assets to be held by the Trust; the process by which the Trust determines whether or not to make an investment; the responsibilities of the Independent Review Committee; anticipated terms of the Trust’s lending arrangements; the Trust’s strategies to manage defaults; expected investments and objectives with respect to Gator Energy Technologies, Pele Energy and Live Out There; financial and business prospects and financial outlook; and types of portfolio securities and results of investments, the timing thereof and the methods of funding.

In addition to other factors and assumptions which may be identified in this document, assumptions have been made by the Trust as set forth in the Offering Memorandum including those factors and assumptions set out under the heading “Forward-Looking Statements”.

The forward-looking statements contained in this document are subject to numerous risks and uncertainties, including those risks described under “Risk Factors” in the Offering Memorandum.

The Trust has included the above summary of forward-looking information in order to provide prospective purchasers with a more complete perspective on the Trust's current and future operations and such information may not be appropriate for other purposes. These forward-looking statements are made as of December, 2018 and the Trust disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws. Investors should read the entire Offering Memorandum and consult with their own professional advisors to ascertain and assess the income tax, legal, risks and other aspects of their investment in the Trust. The forward-looking statements contained in this document are expressly qualified by the foregoing cautionary statements.

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RisksStatements in this document are made as of the date hereof unless stated otherwise, and are subject to change without notice. The delivery of this document shall not under any circumstances create an implication that the information contained herein is correct as of any time subsequent to its date.

An investment in the Trust is speculative and contains certain risks. Prospective investors should carefully consider, among other factors, the matters described in the Offering Memorandum under the heading “Risk Factors”, each of which could have an adverse effect on the value of the Trust Units. As a result of these factors, as well as other risks inherent in any investment, there can be no assurance that the Trust will meet its investment objectives or otherwise be able to successfully carry out its investment program. The Trust's returns may be unpredictable and, accordingly, the Trust's investment program is not suitable as the sole investmentvehicle for an investor or for an investor that is looking for a predictable source of cash flow. An investor should only invest in the Trust as part of an overall investment strategy. Based on, among others, the factors described in the Offering Memorandum under the heading “Risk Factors”, the possibility of partial or total loss of capital will exist and investors should not subscribe unless they can readily bear the consequences of such loss.

There is no assurance that investors will receive any return or repayment of their capital contributions to the Trust. An investment in Trust Units is appropriate only for subscribers who have the capacity to absorb a total loss of their investment. Subscribers who are not willing to rely on the sole and exclusive discretion and judgment of the Administrator and the Portfolio Manager should not subscribe for Trust Units.

No person has been authorized to give any information or to make any representation not contained in this document or the Offering Memorandum.

It is important for an investor to consider the particular risk factors that may affect the industry in which it is investing and therefore the stability of the distributions that it receives. The risks involved in this type of investment may be greater than those associated with other types of investments. Please refer to the Offering Memorandum for a further discussion of the risks of purchasing Trust Units and more specifically to the “Risk Factors” section, which section also describes the Trust’s assessment of those risk factors, as well as the potential consequences to a Unitholder if the events contemplated by a particular risk factor should occur.

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Table of Contents1. Alternative Investments

i. Traditional vs Alternatives

ii. Institutional Allocation of Alternatives

iii. Why Alternatives

2. Invico Diversified Income Fund

i. The Offering

ii. Performance

iii. Case Studies

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Traditional vs Alternative Investments 1

1 2017 Blackstone Seeking an Alternative: Understanding and Allocating to Alternative Investments

Traditional Alternative

28%

52%

5%

0%

10%

20%

30%

40%

50%

60%

US Pensions US Endowments Individual Investors

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Institution vs Individual Alternative Asset Allocations 1

1 Willis Towers Watson, “Global Pension Assets Study.” 2018; National Association and University Business Officers, “Commonfund Study of Endowments,” 2017; Money Management Institute, ‘Retail Distribution of Alternative Investments,” 2017. Averages provided are dollar-weighted.2 2017 CPPIB Annual Report

Canadian Comparative:Growth of CPP Alternative

Asset Allocation 2

2005: 4% → 2018: 51%

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Advisors Need Greater Familiarity 1


24%

37%

18%

28%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Have a Lack of Clarity on How Strategy Works Feels Benefits Are Uncertain

Advisors Institutions

The

“Education Gap”

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The Investment Continuum 1

Traditional, Public Markets Alternative, Private Markets


9




10




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Alternative Investment Expansion 1

Within North America the industry holds $8.8 billion of alternative assets, which is forecasted to expand ~ 60% by 2023

1 Artemis . Alternative investments to expand. October 2018

Hedge Funds Commodities Real Estate

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Volatility is Certainly There

1 2018 YahooFiannce. Past performance is no guarantee of future results.

-15%

-10%

-5%

0%

5%

10%

15%

TSX Market Performance

Max Min Average

2014 2015 2016 2017 2018

Why Alternatives

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1 2 3

Alternatives have low correlation to the market and

tend to reduce the risk associated with a traditional

portfolio

Alternatives may offer higher yields and monthly income

opportunities

Provides access to a more diversified set of investments,

allowing portfolio growth

The Fund1 . Th e O ffer in g

2 . Per forman c e

The Offering

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The Opportunityo 2019 Financial goal to raise $40 – 50mmo Direct-ownership in US oil and gas assetso Strong pipeline of bridge lending and

factoring opportunities

Cash0-10%

Energy Working Interests25% - 40%

Lending Strategies60% - 75%

Target Asset Allocation: Please refer to Offering Memorandum for actual April 24, 2018 allocation

Relative Performance

161 S&P Dow Jones Indices Disclaimer: Past fund performance is not an indicator of future performance. Special distribution for 2018 is not included

2.43%

3.37%

11.65%

8.50%

4.06%

2%

4%

6%

8%

10%

12%

14%

16%

CAD Bond USD Bond IDIF Class F S&P 500 US Equity S&P TSX Composite

Five Year Annualized Return, Dec. 31 / 18 1

Case Studies1 . O ff M arket

2 . Rest ru c tu r in g

3 . E n erg y P ivot to USA

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Off Market Example

❖ Acquisition of 3rd party senior and subordinate debt

❖ Limited competitive tension, senior note was $US 6.5MM

❖ Follow-on acquisition of sub debt and leased equipment at ~30% of face value, allowing control over BIA process

❖ Equity assignment to IDIF at nominal value

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Restructuring Example

❖ Invico first position loan in protracted default by Q1 2016 and was called

❖ Positive monthly income by YE17

❖ Additional capital investment & management team appointments approved

❖ Market expansion to Texas Permian

❖ Performing loan by YE18

❖ Company positioned for senior bank refinancing in 2019 and potential sale

Energy Risk Mitigation – Pivot to USA

o At Trust inception, IDIF had US exposure of approximately 5% - 10%

2013

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2014/2015o Acquired US energy

assets from distressed Vendor– US non-operated production of oil and gas (Denver, Co)

o IDIF discontinued lending to Canadian oil and gas production companies

2015 - 2018o Ceased lending on

Canadian E&Po Gator Technologies

(Houston, TX)o Restructured to Texas

focused energy serviceso Repositioned energy

bridge book to US focuso Exit 83% of energy

assets based in US

Key Takeaway:IDIF US based assets are 60% of the portfolio and performed at record levels in 2018 and has diversified the Trust away from the flat Canadian energy market.

Fund Inception Energy Downturn US Repositioning

across Energy book

Summary

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The Alternative Advantageo Beneficial to trade daily liquidity for stability

and consistent returno Managers add value by focusing on inefficient

areas outside of the traditional marketso Advisor can pivot away from fee narrative

against the race to the bottom in traditional asset classes

o Demonstrated value add to investors for Advisor’s sophisticated with alternative strategies

The Invico Advantageo True alternative strategy focused on

exploiting unique nicheso 5 year track record o Retail friendly product with quarterly

redemptionso Potential for 65% - 75% Annual Profit

Sharingo Diverse portfolio of loanso Pivot to USA driving returns on energy

portfolioo Invests direct in alternatives not via a

“liquid” wrap

Forecast

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Gold WTI DOWCDN$S&P TSX

Purchasers RightsSecurities legislation in certain of the provinces and territories of Canada provides purchasers with a statutory right of action for damages or rescission in cases where an offering memorandum or any amendment thereto contains an untrue statement of a material fact or omits to state a material fact that is required to be stated or is necessary to make any statement contained therein notmisleading in light of the circumstances in which it was made (a “misrepresentation”). These rights, or notice with respect thereto, must be exercised or delivered, as the case may be, by purchasers within the time limits prescribed and are subject to the defenses and limitations contained under the applicable securities legislation. The following summary is subject to the express provisions ofapplicable securities legislation and the regulations, rules and policy statements thereunder. Purchasers should refer to the securities legislation applicable in their province or territory along with the regulations, rules and policy statements thereunder for the complete text of these provisions or should consult with their legal advisor. The statutory rights of action described below are in addition to and without derogation from any other right or remedy that purchasers may have at law.

If you are subject to the laws of Ontario, Saskatchewan, Nova Scotia or New Brunswick, those laws provide, in part, that if there is a misrepresentation in an offering memorandum, which was a misrepresentation at the time that you subscribed for the securities, then you will be deemed to have relied upon the misrepresentation and will, as provided below, have a right of action against the issuer of the securities (and, in certain instances, other persons) in respect of the securities purchased by you for damages or, alternatively, while still the owner of any of the securities purchased, for rescission, in which case, if you elect to exercise the right of rescission, you will have no right of action for damages against the issuer of the securities, provided that: (1) no person or company will be liable if it proves that you purchased the securities with knowledge of the misrepresentation; (2) in the case of an action for damages, the defendant will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation; and (3) in no case will the amount recoverable in any action exceed the price at which the securities were purchased by you. In Ontario, Saskatchewan or New Brunswick, in the case of an action for rescission, no action may be commenced more than 180 days after the date of the transaction that gave rise to the cause of action. In the case of any action other than an action for rescission, (A) in Ontario, no action may be commenced later than the earlier of (i) 180 days after you first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause of action, and (B) in Saskatchewan or New Brunswick, no action may be commenced later than the earlier of (i) one year after you first had knowledge of the facts giving rise to the cause of action; or (ii) six years after the date of the transaction that gave rise to the cause of action. In Nova Scotia, no action (for rescission or otherwise) may be commenced later than 120 days after the date on which payment was made for the securities.

If you are subject to the laws of any other province or territory, reference should be made to the full text of the applicable provisions of the securities legislation in such provinces or territories or consultation should be undertaken with professional advisors.

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IDIFInvico Diversified

Income Fund

Diversified Portfolio of High Yield Lending & Investment Opportunities

A private investment offering focused on generating

monthly income through a diversified portfolio with asset

collateralization or direct ownership in private assets.

8% - 10% target preferred return plus potential profit

sharing.

An offering memorandum dated April 24, 2018 (the “Offering Memorandum”) containing important information relating to the securities described in this document has or will be filed with the securities regulatory authorities in each of the jurisdictions where a distribution has occurred or will occur pursuant to the Offering Memorandum. A copy of the Offering Memorandum is required to be delivered to you at the same time or before you sign the agreement to purchase the securities described in this document pursuant to the Offering Memorandum. This document does not provide disclosure of all information required for an investor to make an informed investment decision. Investors should read the Offering Memorandum of Invico Diversified Income Fund, especially the risk factors relating to the issuer and the securities offered, before making an investment decision.

2018: Celebrating Five Years of Delivering Results

Documents

Diversified Portfolio of High Yield Lending & Investment · 2019-02-01 · US Pensions US Endowments Individual Investors 6 Institution vs Individual Alternative Asset Allocations