LOTUS HALAL EQUITY ETF Prospectus.pdfMeans, in respect of Lotus Halal Equity ETF (at the date of issue of this Circular) 5,000,000 units of Lotus Halal Equity ETF (i.e. 25 Baskets)

YOU ARE ADVISED TO READ AND UNDERSTAND THE CONTENTS OF THIS PROSPECTUS. IF YOU ARE IN DOUBT ABOUT ITS CONTENTS OR THE

ACTION TO TAKE, PLEASE CONSULT YOUR STOCKBROKER, SOLICITOR, BANKER OR AN INDEPENDENT INVESTMENT ADVISER FOR GUIDANCE.

THIS PROSPECTUS HAS BEEN SEEN AND APPROVED BY THE DIRECTORS OF LOTUS CAPITAL LIMITED AND THEY JOINTLY AND INDIVIDUALLY

ACCEPT FULL RESPONSIBILITY FOR THE ACCURACY OF ALL INFORMATION GIVEN AND CONFIRM THAT, AFTER HAVING MADE ALL ENQUIRIES

WHICH ARE REASONABLE IN THE CIRCUMSTANCES, AND TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THERE ARE NO OTHER FACTS THE

OMISSION OF WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING.

FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, PLEASE REFER

TO “RISK FACTORS” ON PAGES [29] TO [ 30].

LOTUS HALAL EQUITY ETF (Authorized and Registered in Nigeria as an Exchange Traded Fund)

OFFER FOR SUBSCRIPTION

OF

100,000,000 UNITS OF

LOTUS HALAL EQUITY ETF *At an indicative unit price approximately equal to 1/200th of the value of the NSE-Lotus Islamic Index on the day preceding the

Subscription

PAYABLE IN FULL ON APPLICATION

FUND MANAGER:

ISSUING HOUSE:

APPLICATION LIST OPENS: 15

th August 2014

CLOSES: 11th

September 2014

THIS PROSPECTUS AND THE UNITS WHICH IT OFFERS HAVE BEEN REGISTERED BY THE SECURITIES & EXCHANGE COMMISSION. THE

INVESTMENTS AND SECURITIES ACT NO. 29 OF 2007 PROVIDES FOR CIVIL AND CRIMINAL LIABILITIES FOR THE ISSUE OF A PROSPECTUS

WHICH CONTAINS FALSE OR MISLEADING INFORMATION. REGISTRATION OF THIS PROSPECTUS AND THE UNITS WHICH IT OFFERS DOES NOT

RELIEVE THE PARTIES OF ANY LIABILITY ARISING UNDER THE ACT FOR FALSE OR MISLEADING STATEMENTS OR FOR ANY OMISSION OF A

MATERIAL FACT IN THE PROSPECTUS.

THE VALUATION APPROVED OR ACCEPTED BY THE COMMISSION SHALL ONLY BE UTILIZED FOR THE PURPOSE OF THE PROPOSAL SUBMITTED

TO AND APPROVED BY IT AND SHALL NOT BE CONSIDERED AS AN ENDORSEMENT BY THE COMMISSION OF THE VALUE OF THE SUBJECT FOR ANY

OTHER PURPOSE.

THIS PROSPECTUS IS DATED 18TH

JULY, 2014

RC: 600195

2

TABLE OF CONTENTS

1. DEFINITION OF TERMS .......................................................................................................................................... 4

2. IMPORTANT NOTICE ............................................................................................................................................. 9

1. FORWARD LOOKING STATEMENTS ................................................................................................................. 9

2. PRESENTATION OF INFORMATION ............................................................................................................... 10

3. DISCLAIMER (NIGERIAN STOCK EXCHANGE) ............................................................................................. 10

3. INDICATIVE TIMETABLE ..................................................................................................................................... 11

4. SUMMARY OF THE OFFER ................................................................................................................................... 12

5. THE OFFER .......................................................................................................................................................... 16

6. CORPORATE DIRECTORY OF THE FUND MANAGER .......................................................................................... 17

7. THE TRUSTEE AND PROFESSIONAL PARTIES TO THE OFFER ........................................................................... 19

8. INFORMATION ON THE LOTUS HALAL EQUITY ETF ......................................................................................... 20

1. LOTUS HALAL EQUITY EXCHANGE TRADED FUND ...................................................................................... 20

2. THE NSE-LOTUS ISLAMIC INDEX ................................................................................................................. 20

3. INVESTMENT OBJECTIVES ............................................................................................................................. 22

4. STRUCTURE ................................................................................................................................................... 22

5. INVESTMENT OBJECTIVE OF THE LHE ETF TRUST ....................................................................................... 23

6. INVESTMENT POLICIES OF THE LHE ETF TRUST .......................................................................................... 23

7. SUBSCRIPTION FOR UNITS IN THE INITIAL OFFER ......................................................................................... 23

8. LISTING OF THE LOTUS HALAL EQUITY ETF ................................................................................................ 25

9. SECONDARY MARKET ACQUISITION OF THE LOTUS HALAL EQUITY ETF ..................................................... 25

10. PRICING OF LOTUS HALAL EQUITY ETF ....................................................................................................... 25

11. POST-LISTING: SUBSCRIPTION AND REDEMPTION ........................................................................................ 25

12. REBALANCING OF THE PORTFOLIO OF SECURITIES HELD BY THE LHE ETF TRUST ...................................... 26

13. DISTRIBUTIONS ............................................................................................................................................. 27

14. MARKET MAKING PROCESS OF THE LOTUS HALAL EQUITY ETF .................................................................. 27

15. DETERMINATION OF NET ASSET VALUE ....................................................................................................... 27

16. FEES AND CHARGES (ON-GOING).................................................................................................................. 28

17. PUBLICATION OF NAV OF LOTUS HALAL EQUITY ETF ................................................................................ 28

18. INVESTOR PROFILE ....................................................................................................................................... 28

19. RISK FACTORS .............................................................................................................................................. 29

20. BENEFITS OF INVESTING IN THE LOTUS HALAL EQUITY ETF ....................................................................... 30

21. FUND REPORTING ......................................................................................................................................... 31

22. INFORMATION AVAILABLE TO THE PUBLIC ................................................................................................... 31

23. ISSUERS TRACK RECORD ............................................................................................................................... 32

24. PREMISES ...................................................................................................................................................... 32

9. FINANCIAL FORECAST ........................................................................................................................................ 33

LETTER FROM THE REPORTING ACCOUNTANTS .................................................................................................... 33

1 . MEMORANDUM ON THE PROFIT FORECAST FOR YEARS ENDING DECEMBER 2014, 2015 AND 2016 ............ 34

3. PROFIT FORECAST FOR THE YEARS ENDING DECEMBER 2014, 2015 AND 2016 ......................................... 36

4. FORECAST YIELDS FOR THE YEARS ENDING DECEMBER 2014, 2015 AND 2016 ......................................... 38

5. LETTER FROM ISSUING HOUSE ...................................................................................................................... 39

10. THREE– YEARS FINANCIAL SUMMARY .............................................................................................................. 40

11. INFORMATION ON THE FUND MANAGER AND THE TRUSTEE ............................................................................ 41

1. BRIEF PROFILE OF THE FUND MANAGER ...................................................................................................... 41

2. DIRECTORS OF THE FUND MANAGER ............................................................................................................ 41

3

3. PRINCIPAL OFFICERS OF THE FUND MANAGER ............................................................................................. 43

4. BRIEF PROFILE OF THE TRUSTEE ................................................................................................................... 44

5. DIRECTORS OF THE TRUSTEE ........................................................................................................................ 44

6. PRINCIPAL OFFICERS OF THE TRUSTEE ......................................................................................................... 45

12. STATUTORY & GENERAL INFORMATION ........................................................................................................... 47

1. EXTRACTS FROM THE TRUST DEED ............................................................................................................. 47

2. EXTRACTS FROM THE CUSTODY AGREEMENT ............................................................................................. 55

3. INDEBTEDNESS .............................................................................................................................................. 59

4. CLAIMS & LITIGATION ................................................................................................................................. 59

5. COSTS & EXPENSES ...................................................................................................................................... 59

6. MATERIAL CONTRACTS ............................................................................................................................... 60

7. CONSENTS ..................................................................................................................................................... 60

8. RELATIONSHIP BETWEEN THE FUND MANAGER, THE CUSTODIAN AND THE TRUSTEE .............................. 61

9. RELATIONSHIP BETWEEN THE FUND MANAGER AND ITS ADVISERS........................................................... 61

10. DOCUMENTS AVAILABLE FOR INSPECTION ................................................................................................. 61

13. NIGERIA ............................................................................................................................................................... 62

14. THE SECURITIES AT A GLANCE ......................................................................................................................... 65

15. SCHEDULE 1: COMPOSITION OF THE NSE LOTUS ISLAMIC INDEX .................................................................. 69

16. PROCEDURE FOR APPLICATION AND ALLOTMENT .......................................................................................... 70

17. RECEIVING AGENTS ............................................................................................................................................ 71

APPLICATION FORM ..................................................................................................................................................... 72

INSTRUCTIONS FOR COMPLETING THE APPLICATION................................................................................................... 75

INVESTOR DOCUMENTATION AND PARTICULARS GRID ............................................................................................... 79

4

1. DEFINITION OF TERMS

In this Prospectus, unless otherwise stated or clearly indicated by the context, the words in the first column shall

have meanings stated opposite them in the second column and words in the singular shall include the plural and

vice versa. Words importing natural persons shall include incorporated persons and an expression denoting any

gender shall include the other genders:

“Allotment Date”

Means the date of the SEC clearance of the basis of allotment in connection

with this Offer.

“Application Form” Means the form for the subscription of Units of the Fund attached hereto.

“Articles”

Means the articles of association of Lotus Capital Limited.

“Authorised Dealer Agreement”

Means the agreement between Lotus Capital Limited and Vetiva Securities

Limited, setting out the terms and procedures by which the authorized dealer

may request the creation or redemption of units.

“Authorised Dealer/Liquidity

Provider”

Means a broker dealer registered with the Commission who is a member of the

Nigerian Stock Exchange and is appointed by the Fund Manager to execute the

sale and purchase of Securities with retail investors.

“Basket of Shares” or “Basket

Means, in the context of Lotus Halal Equity ETF Securities, a portfolio of

shares/securities which comprises the minimum number of shares of each of

the Constituent Companies contained in the NSE-Lotus Islamic Index (in the

same weighting as they are included in the NSE-Lotus Islamic Index) that can

be acquired with an amount of money having a Naira value approximately

equal to 1,000 times the NSE-Lotus Islamic Index Level.

“Basket Price”

Means the aggregate quoted market price from time to time of the securities

contained in a Basket.

“Block” Means, in respect of Lotus Halal Equity ETF (at the date of issue of this

Circular) 5,000,000 units of Lotus Halal Equity ETF (i.e. 25 Baskets).

“Business Day”

Means, Monday to Friday excluding Saturdays, Sundays and any day

designated as public holidays by the Federal Government of Nigeria.

“Cash Subscription” Means Applications for the acquisition of new ETF units to be settled in cash.

“CBN”

Means, Central Bank of Nigeria.

“CCI”

Means, Certificate of Capital Importation, which is a certificate issued by an

Authorised Dealer that confirms an inflow of foreign currency in cash or goods

into the Federal Republic of Nigeria for the purpose of investment.

“Custodian” or “Citibank GTS”

Means, Citibank Nigeria Limited (Global Transaction Services).

“Custody Agreement” Means the agreement between Lotus Capital Limited, Citibank Nigeria Limited

(Global Transaction Services) and FBN Trustees Limited.

“Daily Official List”

Means the list of market prices of all securities quoted on The NSE and

published daily under the authority of the Council of The Exchange.

“Deposited Property” Means all assets (including cash) for the time being held or deemed to be held in

trust on behalf of the Fund by virtue of the Trust Deed.

5

“Directors” or “Board”

Means the Directors of the Fund Manager, who comprise those persons whose

names are set out on pages [17] to [18] as at the date of this document.

“Distribution Amount”

Means the amount of income, calculated at a particular date, received or

receivable by a Trust and available for distribution to holders of the relevant

class of Index Security (generally dividends less fees and expenses incurred

since the last distribution effected by that Trust).

“Distributions”

Means Income generated by the Fund and paid (less expenses and applicable

taxes) to Unitholders.

“Divisor” Means the number divided into the aggregate market value of the shares

included in an Index to calculate the Index Level.

“ETF Securities”

Means any securities issued by the Fund Manager from time to time in

accordance with this Prospectus.

“ETF” Means Exchange Traded Fund.

“FGN”

Means Federal Government of Nigeria.

“FMDA” Means Financial Markets Dealers Association (formerly Money Market

Association of Nigeria).

“FRC”

Means Financial Reporting Council of Nigeria (formerly Nigerian Accounting

Standards Board).

“Fund Manager” or “Manager” Means Lotus Capital Limited (“Lotus”).

“Fund” or “the ETF”

Means Lotus Halal Equity ETF.

“Holder(s)”or “Unitholder(s)”

Means the person(s) whose name(s) are for the time being entered in the

Register of Unitholders as holder(s) of Units of the Fund.

“In Kind Subscriptions” or “in

specie” Subscriptions”

Means the subscription for Lotus Halal Equity ETF units to be settled by the

delivery of one or more whole Basket of Shares subject to an obligation to

subscribe for a minimum of 5,000,000 ETF Securities.

“Index Level”

Means, the level of the NSE-Lotus Islamic Index calculated in near real time

during a Trading Day by dividing the Divisor into the aggregate market value

of the shares included in the NSE-Lotus Islamic Index.

“Index”

Means the NSE-Lotus Islamic Index (NSE-LII) or any other Index in respect of

which ETF Securities are issued by Lotus Capital Limited, or all or any of such

Indices, as the context may require.

“ISA”

Means Investments & Securities Act No. 29, 2007.

“LFN” Means Laws of the Federation of Nigeria.

“LHE ETF”

Means the Fund constituted by 100,000,000 units of the Lotus Halal Equity ETF

(in the first instance), of which its underlying portfolio are securities of the

Constituent Companies of the NSE-Lotus Islamic Index.

6

“LHE ETF Trust” Means the Trust established to hold the Underlying Portfolio in respect of the LHE

ETF.

“Listing Date” Means the date on which Lotus Halal Equity ETF issued to subscribers under

the Offer for Subscription are to be listed on the NSE.

“MPR”

Means Monetary Policy Rate, a mechanism used by the CBN to regulate

market interest rates and money supply.

“Naira” or “₦” Means the Nigerian Naira, the official currency of the Federal Republic

of Nigeria.

“NAV” or “Net Asset Value”

Means, the total value of the Fund’s underlying investment portfolio, less any

fees, charges, expenses and other liabilities accrued by the Fund.

“NAV per ETF Security”

Means the net asset value attributable to a particular ETF Security calculated

by dividing the Net Asset Value of the fund by the number of ETF Securities in

issue.

“NSE ASI”

Means the Nigerian Stock Exchange All-Share Index.

“Offer”

Means this offer for subscription of 100,000,000 Units of the Lotus Halal

Equity ETF.

“Offer Documents”

Means this document, advertisements, notices and any other document

registered by the Commission, which disclose relevant information in respect

of the Fund as required by the ISA and the SEC Rules and Regulations for the

purpose of inviting the general public to invest in the Fund.

“Open-ended Fund”

Means a fund that can create and offer additional units outside of its initial

offering on a continuous basis throughout its life. Units of such a fund can also

be redeemed in line with the provisions of the trust deed constituting the fund.

“OTC”

Means Over-The-Counter, a form of securities trading via a dealer network as

opposed to on a centralised exchange.

“PenCom”

Means National Pension Commission.

“PFAs”

Means Pension Fund Administrators.

“PRA” or “Pension Act”

Means Pension Reform Amendment Act, 2011.

“Prospectus”

Means this document, which is issued in accordance with the provisions of the

ISA and the SEC Rules and Regulations and which discloses relevant

information about the Fund and the Offer for Subscription.

“Ramp up period”

Means the period during which the manager/authorized dealer will procure the

acquisition of Baskets with the cash proceeds derived pursuant to the initial

offer or subsequent Cash Subscriptions, as the case may be, which in respect of

the initial offer, shall commence on the day immediately succeeding the closing date of the offer. The duration of this period will be variable,

depending on prevailing market liquidity, but shall not exceed –

7

(i) Seven Trading Days for Cash Subscriptions equal to or less than

₦1,000,000,000.00; and

(ii) Seven Trading Days for Cash Subscriptions for every ₦1,000,000,000.00

thereafter.

“Receiving Bank” or “Citibank” Means Citibank Nigeria Limited.

“Record Date” Means the date determined by Fund Manager/Trust for the purpose of

determining the holders who are entitled to receive a dividend or distribution.

“RTGS” Means Real Time Gross Settlement, the CBN electronic platform for inter-bank

transfer of funds.

“SEC Rules and Regulations”

Means the rules and regulations issued by the SEC pursuant to the ISA.

“SEC” or “Commission” Means Securities and Exchange Commission established pursuant to the

provisions of the ISA.

“Shari’ah Adviser”

Means a person or a corporation or board that advises the Fund Manager on

shari’ah related issues.

“Specified Cash Amount” or

“Appropriate Cash Amount” or

“Cash Component”

Means

• a pro rata portion of the income accruals in the portfolio up to and including

the subscription date; and

•transfer duties, charges and taxes arising on the acquisition by the portfolio of

the underlying Basket; and

• any other cost that may be determined by the manager from time to time.

“The Exchange” or “The NSE” Means The Nigerian Stock Exchange.

“TIA” Means Trustee Investments Act Cap T22, LFN 2004.

“Trading Day”

Means a day on which trading takes place on the NSE.

“Transfer Agent” Means Central Securities and Clearing Systems Plc. (“CSCS”).

“Trust Deed”

Means the Trust Deed constituting the Fund and any document supplemental

thereto or executed in pursuance thereof, a summary of which is set out on

pages [47] to [55] of this document.

“Trust”

Means the Trust as constituted by the Trust Deed to be called LHE ETF TRUST

(or such other name as the Trustee and Manager may determine) holding the

Underlying Portfolio/Securities in respect of a selected index (i.e. The NSE-Lotus

Islamic Index).

“Trustee” Means FBN Trustees Limited (FTL).

“Underlying Portfolio”

Means the underlying portfolio of securities held by a Trust consisting

substantially of securities of the Constituent Companies of the NSE-Lotus Islamic Index in substantially the same weightings.

8

“Unit(s)” Means an undivided share in the assets of the Fund.

“US$” or “USD” Means United States Dollars, the lawful currency of the United States of America.

“VCML” or “Issuing House”

Means Vetiva Capital Management Limited.

“Yield” Means the rate of income/loss generated from a unit of a fund through

distributions and/or capital appreciation/depreciation.

9

2. IMPORTANT NOTICE

This Prospectus has been registered by the SEC. No person has been authorised to give any information or to

make any representation other than those contained in this document in connection with the Offer and, if given or

made, such information or representations must not be relied upon as having been authorised by the Fund Manager

or the Issuing House or the Trustee.

Neither this Prospectus nor any other information supplied in connection with the Fund (i) is intended to provide

the basis of any subscription or other evaluation or (ii) should be considered as a recommendation by the Fund

Manager, the Issuing House or the Trustee that any recipient of this Prospectus or any other information supplied

in connection with the Offer or the Fund should purchase the Units of the Fund. It is the responsibility of a

prospective investor to make its own independent investigation of the financial condition and affairs, and its own

appraisal of the creditworthiness, of the Fund Manager.

Neither the delivery of this Prospectus nor the offering, sale or delivery of the Units shall in any circumstances

imply that the information contained herein concerning the Fund Manager is correct at any time subsequent to the

date hereof or that any other information supplied in connection with the Offer is correct as of any time subsequent

to the date indicated in the document containing the same. The Issuing House and the Trustee expressly do not

undertake to review the financial condition or affairs of the Fund Manager throughout the life of the Fund or to

advise any investor in the Fund of any information coming to their attention.

This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Units in any

jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The

distribution of this Prospectus and the offer or sale of Units may be restricted by law in certain jurisdictions. The

Fund Manager, the Issuing House and the Trustee do not represent that this Prospectus may be lawfully

distributed, or that any Units may be lawfully offered, in compliance with any applicable registration or other

requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any

responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Fund

Manager, the Issuing House or the Trustee which is intended to permit a public offering of the Fund or distribution

of this Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Fund may be

offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other offering material

may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with

any applicable laws and regulations. Persons into whose possession this Prospectus or the Units may come must

inform themselves about, and observe any such restrictions on the distribution of this Prospectus and the offering

and sale of the Units.

In making an investment decision, investors must rely on their own independent examination of the Fund Manager

and the terms of the Units being offered, including the merits and risks involved. None of the Fund Manager, the

Issuing House or the Trustee makes any representation to any investor regarding the legality of its investment

under any applicable laws. Any investor should be able to bear the economic risk of an investment in the Fund for

an indefinite period of time.

1. FORWARD LOOKING STATEMENTS

Certain statements included herein may constitute forward-looking statements that involve a number of risks and

uncertainties. Such forward-looking statements can be identified by the use of forward looking terminology such

as “estimates”, “believes”, “expects”, “may”, “are expected to”, “intents”, “will”, “will continue”, “should”,

“would be”, “seeks”, “approximately”, or “anticipates”, or similar expressions or the negative thereof or other

variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. These forward-

looking statements include all matters that are not historical facts. They appear in a number of places throughout

this Prospectus and include statements regarding the Fund Manager’s intentions, beliefs or current expectations

concerning, amongst other things, the Fund’s results of operations, financial condition, liquidity, prospects,

growth, strategies and the markets in which it operates. By their nature, forward-looking statements involve risks

and uncertainties because they relate to events and depend on circumstances that may or may not occur in the

future.

10

Prospective investors should be aware that forward-looking statements are not guarantees of future performance

and that the Fund’s actual results of operations, financial condition and liquidity and the development of the

market in which it invests may differ materially from those made in or suggested by the forward-looking

statements contained in this Prospectus. Such forward-looking statements are necessarily dependent on

assumptions, data or methods that may be incorrect or imprecise and that may be incapable of being realised.

The Fund Manager is not obliged to, and does not intend to, update or revise any forward-looking statements made

in this Prospectus whether as a result of new information, future events or otherwise. All subsequent written or

oral forward-looking statements attributed to the Fund Manager, or persons acting on the Fund Manager’s behalf,

are expressly qualified in their entirety by the cautionary statements contained throughout this Prospectus. A

prospective subscriber to the Fund should not place undue reliance on these forward-looking statements.

2. PRESENTATION OF INFORMATION

Third Party Information The Fund Manager has obtained certain statistical and market information that is presented in this Prospectus on such topics as the Nigerian economic landscape and related subjects from certain government and other third-party

sources described herein. The Fund Manager has accurately reproduced such information and, so far as the Fund

Manager is aware and is able to ascertain from information published by such third parties, no facts have been

omitted that would render the reproduced information inaccurate or misleading. Nevertheless, prospective

investors are advised to consider this data with caution. Prospective investors should note that some of the Fund

Manager’s estimates are based on such third-party information. Neither the Fund Manager nor the Issuing House

has independently verified the figures, market data or other information on which third parties have based their

studies.

Certain statistical information reported herein has been derived from official publications of, and information

supplied by, a number of Government agencies and ministries, including the Central Bank of Nigeria (CBN), the

Nigerian Debt Management Office (“DMO”) and the Nigerian National Bureau of Statistics (“NBS”). Official

data published by the Nigerian Government may be substantially less complete or researched than those of more

developed countries. Nigeria has attempted to address some inadequacies in its national statistics through the

adoption of the Statistics Act of 2007, which established the National Statistical System and created the NBS

(which came into existence as a result of the merger of the Federal Office of Statistics and the National Data

Bank) as its coordinator.

Rounding Certain figures included in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

3. DISCLAIMER (NIGERIAN STOCK EXCHANGE)

The Nigerian Stock Exchange in its capacity as joint owners of the NSE-Lotus Islamic Index, and its affiliates are

not affiliated with the Licensee or its affiliates and do not approve, endorse, review or recommend the Licensee or

the Lotus Halal Equity ETF. The Nigerian Stock Exchange and its affiliates make no warranty, express or implied,

as to results to be obtained by any person or entity from the use of the NSE Lotus Islamic Index or any data or

values included therein or in connection therewith, and expressly disclaim all warranties of merchantability or

fitness for a particular purpose with respect thereto. The Nigerian Stock Exchange and its affiliates and partners,

employees, subcontractors, agents, suppliers and vendors shall have no liability or responsibility, contingent or

otherwise, for any injury or damages, whether caused by any such party's negligence or otherwise, arising in

connection with the NSE Lotus Islamic Index or any data or values included therein or in connection therewith and

shall not be liable for any lost profits, losses, punitive, incidental or consequential damages.

11

3. INDICATIVE TIMETABLE

DATE ACTIVITY RESPONSIBILITY

15th

Aug. 2014 Application List opens. VCML/LOTUS

11th

Sept. 2014 Application List closes. VCML/LOTUS

12th

Sept. 2014 Receiving Agents make returns Receiving Agents

15th

Sept. 2014 Opening Date of Ramp-Up Period VSL/VCML/LOTUS

23th

Sept. 2014 Closing Date of Ramp-Up Period* VSL/VCML/LOTUS

23rd

Oct. 2014 Forward Basis of Allotment to SEC. VCML

30th

Oct. 2014 Obtain SEC clearance of Basis of Allotment. VCML

3rd

Nov. 2014 Publish Allotment Announcement in national newspapers. VCML

3rd

Nov. 2014 Return rejected applications (if any)/ E-Credit of

Units/Distribution of E-Certificates/Statements Transfer Agent

20th

Nov. 2014 Forward Report on completion of Offer to the SEC. VCML

28th

Nov. 2014 Listing of the Units VSL

*Please note that should there be Cash Subscriptions in excess of ₦1,000, 000,000.00, this date and other relevant dates

following this, may move out by seven Trading Days and seven Trading Days for every ₦1,000, 000,000.00 thereafter.

All dates following the opening and closing dates of the Application List are indicative only and, among other

things, are subject to all necessary approvals from the SEC. If any of these approvals is not received on the

date(s) specified; surrounding key events in the timetable will be subject to adjustments without prior notice.

12

4. SUMMARY OF THE OFFER

The following is a summary of the terms and conditions of an investment in the Lotus Halal Equity ETF.

This summary is qualified in its entirety by the detailed information contained in this Prospectus and the Trust

Deed constituting the Fund. Prospective investors are urged to read the entire Prospectus and to consult their own

professional advisers as to the tax and legal consequences of investing in the Fund. Also, there is no guarantee or

assurance of exact or identical replication of the performance of the index.

Investors are advised to seek information on the Fees, Charges & Operating Expenses before investing in the Fund.

1 FUND MANAGER Lotus Capital Limited.

2 ISSUING HOUSE Vetiva Capital Management Limited.

3 TRUSTEE TO THE FUND FBN Trustees Limited (FTL).

4 CUSTODIAN Citibank Nigeria Limited (Global Transaction Services).

5 AUTHORISED DEALER /

SPONSORING BROKER Vetiva Securities Limited (VSL).

6 TRANSFER AGENT Central Securities and Clearing Systems Plc.

7 THE OFFER

100,000,000 Units of Lotus Halal Equity ETF at an indicative unit price equal

to 1/200 of the value of the NSE-Lotus Islamic Index on the preceding day of

the Offer Subscription.

8 SUBSCRIPTION METHOD

Subscription for units in the initial offer may be via one of two ways:

1. By a payment in cash in Naira or

2. By the delivery of one or more Baskets (i.e. Securities for Units or in specie Subscriptions).

Offer for subscription on a “Securities for Units” basis means that an investor

will deliver a portfolio of securities of the NSE-LII constituent companies, in

exchange for units in the Lotus Halal Equity ETF.

Please refer to page [23-24] for more details on the subscription method and

process.

9 NATURE OF THE FUND

The Lotus Halal Equity Exchange Traded Fund “LHE ETF” is an open-ended

fund designed to enable Unitholders of the LHE ETF obtain market exposure

to the securities of the constituent companies of the NSE-Lotus Islamic Index

and to replicate, the price and yield performance of the Index. The investment

objective of the ETF is to track the NSE-LII. The Index is an adjusted market

capitalization weighted index currently comprising 15 Shari’ah compliant

equities listed on the floors of the Nigerian Stock Exchange.

The ETF Securities represent an agreement entered into between the

Unitholder and LHE ETF Trust, in terms of which the Trust holds a properly

weighted Basket of the NSE-LII shares (a “Basket”) on behalf of the

Unitholder, transfer and delivery of which is deferred until required by the

Unitholder and subject to minimum value thresholds. Unitholders will receive

distributions equal pro rata to the Fund Income (i.e. yield return) less accrued

expenses.

The Lotus Halal Equity ETF will be held in the LHE ETF Trust for the benefit

of Unitholders by the independent trustee, FBN Trustees Limited (FTL), who

shall have a fiduciary duty to protect the interest of investors at all times. This

secures the delivery of the constituents of the Basket to Unitholders at a later

13

date as will be agreed.

10 ISSUE PRICE

The issue price payable by an investor subscribing during the initial Offer are

as follows:

For In-specie subscriptions: the subscription price under the initial offer shall

be discharged by the delivery of 25 Baskets of the constituent securities,

entitling the investor to 5,000,000 units of the LHE ETF (i.e. the delivery of

one full Block of the constituent securities).

For Cash Subscriptions: the subscription price per unit during the initial offer

period will be based on 1/200 of the closing value of the NSE-LII on the

preceding day of the Subscription, subject to a minimum of one Basket.

Investors shall initially subscribe for units and deposit an estimated cash

consideration for the subscription. Assuming the index remains the same as is

on the 2nd December 2013 (i.e. 2,767.98); then the Unit price for depositing

will be ₦13.84. However, the final unit price in respect of a Basket will be

determined as the average consideration of the underlying securities of a

basket acquired over the ramp period.

11 MINIMUM

SUBSCRIPTION LIMIT

For Cash Subscriptions: A minimum of 200,000 Units (i.e. a Basket of Lotus

Halal Equity ETF).

For In-specie subscriptions A minimum of 5,000,000 Units (i.e. a Block or 25

Baskets).

Subsequent applications must be in multiples of 200,000 units (i.e. a Basket of

Lotus Halal Equity ETF) for both Cash Subscriptions and In-specie

Subscription.

12

MINIMUM REDEMPTION

DELIVERY VALUE

THRESHOLD

In addition to being able to sell Lotus Halal Equity ETF in the secondary

market through a trade on the NSE, Unitholders of one or more Blocks of the

Lotus Halal Equity ETF will be entitled to take delivery of the prescribed

number of Baskets on any Trading Day.

The minimum threshold to qualify for the delivery of the prescribed Baskets of

the securities to ETF Unitholders is a Block of the Lotus Halal Equity ETF

(i.e. 5,000,000 units of the Lotus Halal Equity ETF or 25 Baskets).

Subsequent delivery must be in multiples of 200,000 units (i.e. a Basket of

Lotus Halal Equity ETF).

13 ISSUE COST

The initial expenses of establishing the Fund (comprising the fees payable to

the SEC, professional fees, Receiving Agents, as well as printing, advertising

and all other related expenses) are estimated at 2.99% of the Offer proceeds

and amount to ₦41,393,750.00. These initial costs and expenses will be

deducted immediately from the Offer proceeds.

14 INVESTMENT

OBJECTIVE

The Lotus Halal Equity ETF is designed for and offered to investors seeking

market exposure to the constituents of the NSE-LII.

The investment objective of the Fund Manager in respect of the LHE ETF

securities is to mirror the performance of the NSE-Lotus Islamic Index.

15 POLICY ON

INVESTMENT INCOME

Investment income earned, if any, may be distributed to Unitholders quarterly,

less expenses.

16 STATUS

The units being offered for subscription shall rank pari-passu in all respects

14

with other future units

17 CREATION/

REDEMPTION OF UNITS

Investors, who choose not to trade on the secondary market, may purchase/sell

units of LHE ETF Securities through the process of creation/redemption,

subject to a minimum creation/redemption value threshold of a Block of ETF

units (i.e. 5,000,000 units of the Lotus Halal Equity ETF or 25 Baskets). This

allows investors to exchange Baskets of underlying shares for the relevant

equivalent number of securities of the Lotus Halal Equity ETF (and back

again).

18 TARGET INVESTORS

Investment in the Lotus Halal Equity ETF is open to individuals, companies

and societies. Lotus Capital also welcomes the participation of foreign and

non-resident investors. However, kindly note that this Offer for Subscription is

open to only to qualified institutional investors and high net worth individuals.

19 INVESTMENT STRATEGY The Fund intends to fully replicate the NSE-Lotus Islamic Index.

20 OPENING DATE 15th August 2014

21 CLOSING DATE 11th September 2014

22 DETERMINATION OF

IOPV

The Indicative Optimum Value (IOPV) is computed by dividing the assets of

the Fund, less its liabilities, by the number of units in issue in respect of the

Fund, adjusted to 2 decimal places or as may be subsequently determined by

the Fund Manager.

23 TAX STATUS

Withholding tax paid at source on dividends shall be treated as final tax.

Distributions of dividend to Unitholders of the Lotus Halal Equity ETF are not

subject to withholding tax. Income from capital appreciation shall not be

subject to tax. Please note that this information about the tax status of this

investment is meant only as a guide and that taxation-related issues are subject

to changes in legislation. Investors are advised to seek tax advice regarding

any investment in the ETF Securities from their professional tax advisers.

24 QUOTATION

An application has been made to the Council of The Nigerian Stock Exchange

(NSE) for the quotation and listing of the Lotus Halal Equity ETF and upon

approval, the Securities would be listed under the ETF sector of the Daily

Official List of the NSE. Once issued, the LHE ETF Securities will be traded

in the secondary market on the NSE in round lots of 1 unit.

25

CIRCUMSTANCES THAT

MAY LEAD TO

TRACKING ERRORS AND

STRATEGIES TO

MINIMISE SUCH ERRORS

The Fund is subject to tracking errors which are the risk that its returns may

not correlate exactly with those of the Index. Tracking errors can be caused by

the following: index changes, cash drag, fund expenses and trading fees. It is

expected that quarterly distribution will minimise tracking error caused by

cash drag.

26

WEIGHTING OF THE

MAJOR COMPONENT

SECURITIES OF THE

INDEX

The Top 3 (three) holdings are as follows: Dangote Cement (27.53%); Nestlé

Plc. (23.49%) and Wapco Plc. (9.08%).

27 INFORMATION ON THE

LHE ETF

Information on the LHE ETF would be published on the Fund Manager’s

website – www.lotuscapitallimited.com.

28 INVESTMENT RISKS The risks associated with an investment in the Fund are set out in the section

titled “Risks Factors” on pages [29] to [30].

29 OVERSUBSCRIPTION In the event of oversubscription, additional units will be registered with SEC and

allotted to subscribers subject to the approval of the Commission.

http://www.lotuscapitallimited.com/

15

30. FORECAST OFFER STATISTICS (Extracted From Reporting Accountants’ Report)

31. FORECAST YIELD

Year ending 2014 2015 2016

N N N

Net Asset Value at the beginning of year 1,384,000,000 1,625,694,778 5,603,272,030

Gross investment income 360,825,429 1,273,274,632 4,354,792,981

All Fees, Expenses and Tax 119,130,652 149,401,350 533,991,824

Net Asset Value at the end of year 1,625,694,778 5,603,272,030 19,250,811,509

Increase in Net Asset Value 241,694,778 3,977,577,252 13,647,539,479

Return on Investment (%) 17.5% 32.2% 36.9%

The effective yield on the Fund will be a function of the prices at which the underlying assets are acquired. The Fund cannot guarantee future returns and the value of its investments may rise and fall. The above forecast yield, therefore, should not be regarded by an investor as a promise or guarantee of returns, but is provided for indicative purposes. The actual future returns may be materially different from the forecast.

There is no guarantee or assurance of exact or identical replication of the performance of the index.

32. SELLING RESTRICTIONS Under no circumstances shall this Prospectus constitute an offer to sell or

the solicitation of an offer to buy or shall there be any sale of these Units in any jurisdiction in which such offer, solicitation or sale would be unlawful.

33. GOVERNING LAW The Offer Documents will be governed by and construed in accordance with

the laws of the Federal Republic of Nigeria.

STATEMENT OF COMPREHENSIVE INCOME - FORECAST 2014

₦

2015

₦

2016

₦

Dividends 114,121,531 138,184,056 476,278,123

TOTAL REVENUE 114,121,531 138,184,056 476,278,123

Management Fee 8,055,638 9,754,169 33,619,632

Other Consultant Fees 8,055,638 9,754,169 33,619,632

Issue cost 41,393,750 0 0

TOTAL EXPENSES 57,505,025 19,508,337 67,239,264

NET INCOME / (LOSS) FROM INVESTMENTS 56,616,506 118,675,719 409,038,858

NET REALISED GAIN/ (LOSS)

Net Realised gain / (loss) on investments 5,034,773 15,240,889 21,012,270

CHANGE IN NET UNREALISED GAIN/ (LOSS)

Change in Net Unrealised gain / (loss) on investments 241,669,125 1,119,849,687 3,857,502,588

303,320,405 1,253,766,294 4,287,553,717

Dividends due for distribution 61,625,627 129,893,013 466,752,560

NET INCREASE / (DECREASE) IN NET ASSETS 241,694,778 1,123,873,282 3,820,801,156

16

5. THE OFFER

A copy of this Prospectus together with the documents specified herein, having been approved by the Trustee, has

been delivered to the Securities and Exchange Commission for registration. This Prospectus is issued under the

provisions of the ISA and in compliance with the requirements of the SEC Rules and Regulations for the purpose

of giving information to the public with regard to the Offer for Subscription of 100,000,000 Units in the Lotus

Halal Equity Exchange Traded Fund to be managed by Lotus Capital Limited.

The Directors of the Fund Manager individually and collectively accept full responsibility for the accuracy of the

information contained in this Prospectus. The Directors have taken reasonable care to ensure that the facts

contained herein are true and accurate in all respects and confirm, having made all reasonable enquiries that to the

best of their knowledge and belief, there are no material facts the omission of which would make any statement

herein misleading or untrue.

on behalf of

LOTUS CAPITAL LIMITED

OFFERS FOR SUBSCRIPTION and is authorised to receive applications for

100,000,000 UNITS OF

LOTUS HALAL EQUITY ETF *( At an indicative unit price approximately equal to 1/200th of the value of the NSE-Lotus Islamic Index on the day

preceding the Offer Subscription)

Payable in full on Application

The Application List for the Units now being offered will open on 15th

Aug. 2014 and close on 11th

Sept. 2014

RC: 600195

17

6. CORPORATE DIRECTORY OF THE FUND MANAGER

LOTUS CAPITAL LIMITED: 1b Udi Street

Osborne Foreshore Estate

Osborne Road, Ikoyi, Lagos

Telephone: +234-1-271 3280-2

Email: [email protected]

Website: www.lotuscapitallimited.com

DIRECTORS OF THE FUND MANAGER: Mr. Fola Adeola (Chairman)

1b Udi Street



Mrs. Lateefah Okunnu

1b Udi Street



Mr. Muhammad Nuruddeen Lemu

1b Udi Street



Mrs. Amina Oyagbola

1b Udi Street



Mrs. Hajara Adeola (Managing Director/CEO)

1b Udi Street



COMPANY SECRETARY & REGISTERED Mr. Mas’ud Balogun

OFFICE: 1b Udi Street



PRINCIPAL OFFICERS OF THE FUND Mrs. Hajara Adeola (Managing Director/CEO)

MANAGER: Gregory Ogbebor (Fund Manager)

Kola Yaqub (Fund Manager)

Abdulrahman Olatunde (Business Development)

Omodayo Oduntan (Human Resources & Admin)


18

FINANCIAL SUMMARY: The Three Year Financial Summary is provided on pages

[40] of this document.

19

7. THE TRUSTEE AND PROFESSIONAL PARTIES TO THE OFFER

ISSUING HOUSE: Vetiva Capital Management Limited

266b Kofo Abayomi Street

Victoria Island

Lagos

TRUSTEE TO THE FUND: FBN Trustees Limited

16 Keffi Street

Off Awolowo Road, S.W. Ikoyi

Lagos

CUSTODIAN TO THE FUND: Citibank Nigeria Limited (Global Transaction

Services)

27 Kofo Abayomi Street

Victoria Island

Lagos

SOLICITORS TO THE OFFER: Kola Awodein & Co.

6th Floor, UBA House

57 Marina

Lagos

SOLICITORS TO THE TRUSTEE: Akindelano Legal Practitioners

21, Military Street

Onikan

Lagos

REPORTING ACCOUNTANTS: Ahmed Zakari & Co

175B Isale Eko Avenue

Dolphin Estate

Lagos

AUTHORISED DEALER / MARKET Vetiva Securities Limited

MAKER Plot 266B, Kofo Abayomi Street Victoria Island

Lagos

TRANSFER AGENT: Central Securities Clearing Systems Plc.

12

th Floor, NSE Building

2/4 Customs Street

Lagos

AUDITORS TO THE FUND: Horwath Dafinone & Co

16 Wharf Road

Apapa

Lagos

20

8. INFORMATION ON THE LOTUS HALAL EQUITY ETF

1. LOTUS HALAL EQUITY EXCHANGE TRADED FUND

Lotus Halal Equity ETF Securities (“LHE ETF”) are securities issued by Lotus Capital Limited (“Lotus” or “the

Fund Manager”). These securities will be listed and traded on the Daily Official List of The Nigerian Stock

Exchange (“NSE”) in much the same way as any listed share.

By owning an Index Security an investor will obtain market exposure to the constituent companies of an Index

(the “Index”). This will enable an investor to substantially replicate the price and yield performance of the Index.

The LHE ETF Securities are based on the NSE-Lotus Islamic Index. This means that the price of a LHE ETF

Security on the NSE should track the movements of the NSE-Lotus Islamic Index. In addition, a Unitholder

ought to receive distributions equal pro rata to the distributions (i.e. yield return) less expenses, which would be

earned if that Unitholder held the constituent shares comprising the NSE-Lotus Islamic Index directly.

A LHE ETF Security is an agreement entered into between the Unitholder and Lotus Capital Limited, in terms of

which the Fund Manager transfers a properly weighted Basket of the NSE-LII shares (a “Basket”) to the

Unitholder, delivery of which is deferred until required by the Unitholder and subject to minimum value

thresholds.

An application has been made to the Council of the NSE for the quotation and listing of the Lotus Halal Equity

ETF and upon approval, the Securities would be listed under the “Exchange Traded Fund (ETF)” sector of the

Daily Official List of the NSE. Once issued, the Lotus Halal Equity ETF will be traded in the secondary market

in a minimum of one unit.

2. THE NSE-LOTUS ISLAMIC INDEX

The NSE-Lotus Islamic Index (NSE-LII) is an equity index intended to track the performance of selected

Shari’ah compliant equities listed on the floor of the Nigerian Stock Exchange. The NSE-LII is an adjusted

market capitalization weighted index composed of 15 screened equities with weights applied to component

stocks and sub-sectors. The NSE LII is the first index created to track the performance of Shari’ah compliant

equities on the Nigerian Stock Exchange and presently comprises stocks which have met the eligibility

requirements of Shari’ah-based screening by Lotus Capital Limited.

Year NSE LII NSE All Share

Index

2009 22.53% (33.78%)

2010 41.98% 18.93%

2011 (13.60%) (16.31%)

2012 44.21% 35.45%

2013 61.84% 47.19%

Performance of the NSE-LII

21

COMPOSITION OF THE NSE-LOTUS ISLAMIC INDEX

The Composition of the NSE-Lotus Islamic Index is guided by the following rules:

The Equity Universe is based on the stocks listed on the Nigerian Stock Exchange that meet the

screening criteria:

1. Qualitative Screening: i.e. exclusion of unethical sub-sectors;

2. Quantitative Screening: i.e. use of financial ratios and factors certified by a Shari’ah Advisory

Board; and

3. Other Screening: Equity components in the index must rank top in terms of market

capitalisation and average volume traded daily over the last six months. This is to ensure that

only large cap, highly liquid, yet compliant stocks are selected

No Sector should have a weighting of more than 40%;

No individual listed equity can have a weighting of more than 30%.

The components of the Index are subjected to the above rules on a semi-annual basis and rebalanced

accordingly. Also, the index is adjusted to account for Corporate Actions distributions from the Constituent

Companies. (Please refer to Schedule I for the full list of the NSE-LII Constituent companies).

A. METHODOLOGY OF THE NSE-LOTUS ISLAMIC INDEX

In selecting eligible securities for the NSE Lotus Islamic Index, each company undergoes a 2-stage screening

which must be passed.

Qualitative screening: this stage eliminates any listed company that deals in alcoholic beverages,

tobacco, conventional financial services such as banks and insurance companies, gambling and adult

entertainment.

22

Quantitative Screening: the qualifying companies are then evaluated on the basis of Islamic financial

(quantitative) screens to eliminate those with unacceptable levels of debt, cash and interest income

based on standards and criteria by the Accounting and Auditing Organisation for Islamic Financial

Institutions (AAOIFI).

In addition to the foregoing, the liquidity and market capitalization of the companies are considered.

B. SHARI’AH ADVISERS FOR THE INDEX

The NSE-LII is certified by an internationally recognized Shari’ah Advisory Board comprised of

renowned Islamic Scholars.

3. INVESTMENT OBJECTIVES

Lotus Halal Equity ETF are designed to enable Unitholders to obtain market exposure to the Constituent

Companies comprising NSE-Lotus Islamic Index in an easily tradable form as listed securities tradable on

the NSE (or any other licensed exchange on which Lotus Halal Equity ETF may be listed) and to replicate,

so far as possible, the price and yield performance of the NSE-Lotus Islamic Index. This replication is

referred to as “tracking”.

4. STRUCTURE

Lotus Capital Limited is duly regulated and registered by the Securities & Exchange Commission (“SEC”)

to carry on business as a Fund/Portfolio Manager.

LHE ETF Trust is the entity with which the contracts comprising the Lotus Halal Equity ETF are concluded.

Lotus Halal Equity ETF securities enable the Unitholders thereof to track the NSE-Lotus Islamic Index. The

Underlying Portfolio in respect of the NSE-Lotus Islamic Index will be held within the LHE ETF Trust for

the benefit of Unitholders. The trustee of the LHE ETF Trust, FBN Trustees Limited, is an independent

trustee appointed by the Directors of Lotus Capital Limited.

The potential income beneficiaries of the LHE ETF Trust will comprise all Unitholders of Lotus Halal

Equity ETF securities. It is anticipated that the LHE ETF Trust will distribute quarterly any net income

available for distribution within the LHE ETF Trust and that Unitholders will participate on a pro rata basis

in such distributions. However, there can be no guarantee that Unitholders will receive quarterly

distributions.

23

5. INVESTMENT OBJECTIVE OF THE LHE ETF TRUST

The investment objective of the LHE ETF Trust is to track the NSE-Lotus Islamic Index and at all times to

match, as closely as possible, Lotus Capital Limited’s contractual obligations under the delivery rights

attaching to issued ETF Securities.

6. INVESTMENT POLICIES OF THE LHE ETF TRUST

The LHE ETF Trust will pursue the objective of replicating, as far as practicable, the price and yield

performance of the NSE-Lotus Islamic Index, by holding a portfolio of securities on behalf of Unitholders

that substantially represents all of the component securities of the NSE-Lotus Islamic Index in substantially

the same weighting as the NSE-Lotus Islamic Index. The composition of the LHE ETF Trust’s portfolio will

be adjusted periodically to conform to changes in the composition and weighting of the securities in the

NSE-Lotus Islamic Index so as to ensure that the composition and weighting of the LHE ETF Trust’s

portfolio is a reflection of the composition and weighting of the securities contained in the NSE-Lotus

Islamic Index. The LHE ETF Trust’s ability to replicate the price and yield performance of the NSE-Lotus

Islamic Index will be affected by the costs and expenses incurred by the LHE ETF Trust. It will not always

be possible for the LHE ETF Trust to replicate and maintain exactly the composition and weighting of the

NSE-Lotus Islamic Index because the LHE ETF Trust will have operating expenses which the NSE-Lotus

Islamic Index does not have.

The LHE ETF Trust will not be actively managed. The traditional method of active management involves

the buying and selling of securities based on economic, financial and market analysis and investing

judgment. The investment objective and style of the LHE ETF Trust will be a full replication of the NSE-

Lotus Islamic Index. As a result, the financial or other conditions of any Constituent Company will not

result in the elimination of its securities from the LHE ETF Trust’s portfolio unless the securities of that

company are removed from the NSE-Lotus Islamic Index.

The Fund Manager is obliged to ensure tracking of the NSE-LII by purchasing and holding, in the requisite

quantities, insofar as possible, the actual underlying shares comprising the NSE-LII. However the Fund

Manager is entitled, in exceptional circumstances (for example to overcome liquidity problems in the

market) and on a temporary basis only, to employ such other investment techniques and acquire such other

instruments as will most efficiently give effect to the stated investment policies and objectives of the LHE

ETF Trust.

The investment policy of both Lotus Capital Limited and the LHE ETF Trust will at all times be the

establishment and maintenance of a “fully covered” position so far as possible, so that the LHE ETF Trust’s

assets should at all times at least equal the full extent of Lotus Halal Equity ETF’s liabilities under the terms

and conditions of the ETF. Regular returns as required by the regulators will be filed to confirm the “fully

covered” status of the LHE ETF Trust’s assets.

7. SUBSCRIPTION FOR UNITS IN THE INITIAL OFFER

The price payable by an investor who subscribes for units of the ETF Securities during the initial offer

period may be discharged in one of two ways: either by a payment in cash in Naira or by the delivery of

one or more Baskets (i.e. in specie subscriptions). Please note that no late applications will be accepted.

Cash Subscription:

The Fund allows cash purchases of Units of the Fund. The Investor indicates the amount of units

applied for and deposits an estimated cash consideration for the subscription based on 1/200 of the closing value of the NSE-LII of the preceding day.

On receipt of the Subscription, the Fund will arrange to buy the underlying portfolio securities over the

ramp-up period. Consequently, the final issue unit price, with respect to a Basket, for an Investor who

subscribed with cash in the Lotus Halal Equity ETF, will be determined as the average consideration of

24

the underlying securities of a basket acquired over the ramp period less relevant transaction costs.

If, after the issue of units of the ETF Securities under the Initial Offer, it transpires that an applicant's

Cash Subscription (net of the transaction costs and any other costs incurred in relation to the acquisition

of the Constituent) is not an exact multiple of the Offer Price under the Initial Offer, then the Applicant

will be issued with such units of the ETF Securities as may be fully paid-up out of his subscription

allocation (less the transaction costs and any other costs incurred in relation to the acquisition of the

Constituent Securities).

Accordingly, each Applicant must make arrangements to make necessary payments.

The portfolio deposit purchased will then be exchanged for the Units in the Fund.

“In specie” Subscriptions:

In respect of in specie subscriptions, the subscribers to the fund, will subscribe on a “Securities for

Units” basis. The minimum price payable by an investor, entitling the investor to 5,000,000 units of the

LHE ETF, is one full Block of constituent securities. The subscription price under the initial offer in

respect of 5,000,000 units of the LHE ETF shall be discharged by the delivery of 25 Baskets of the

constituent securities. In addition to the delivery of the relevant Baskets, an applicant shall be required

to pay, in cash, transactions costs (if any) payable on the transfer of the constituent securities to the

Fund Custodian account.

Investors are advised that Baskets relating to in specie subscriptions on the Initial Offer will only be

accepted if such Basket contains the specific number of Constituent Securities as specified by the

Manager. The Authorised Dealer will determine if such Basket or Baskets meets the relevant criteria

imposed by the Manager prior to delivery of such Basket or Baskets by the Investor.

Investors will then be informed of the number of units of the ETF Securities allocated to them based on

the number of the Baskets delivered by such Investor.

Investors wishing to subscribe in specie should deposit with their Stockbroker on or before the Offer

Closing Date, the relevant number of Constituent Securities and cash (to the extent required for costs)

to comprise one or more such Baskets. Investors must instruct their Stockbrokers to deliver to the

Manager one or more Baskets as is necessary to set-off against the subscription price (together with any

charges thereon, if applicable) to the Custodian Account of the Trustee/Fund.

Accordingly, each Investor must ensure that their Stockbroker is in a position to deal with the Central

Securities Clearing System (Depository) to receive units of the ETF Securities against confirmation of

the transfer of the Constituent Securities to the Trustee.

The fees may include Transfer fees (subject to a maximum of 100 basis points of consideration), Stamp

duty charges and or the relevant investor’s broker’s charges;

Subscribers under the Offer for Subscription should complete the application form accompanying this

Prospectus;

Schedule I hereto details the Constituent Company which the investor is required to deliver;

Delivery will be by detachments to the LHE ETF Trust special account subsequent to the execution of

the relevant documentation;

Lotus Halal Equity ETF Securities will be issued to subscribers on the Listing Date via the relevant

CSCS account specified by the Subscriber, except where a certificate is specifically requested for by

the subscriber.

25

8. LISTING OF THE LOTUS HALAL EQUITY ETF

An application has been submitted to the Council of the NSE for the quotation and listing of One Hundred

Million units of the LHE ETF Securities on the main board of the NSE. The purpose of the proposed listing

of the Lotus Halal Equity ETF on the NSE (and any other exchange on which Lotus Halal Equity ETF may

be listed) is to enable Unitholders to buy and sell Lotus Halal Equity ETF on a recognised stock exchange.

Lotus Halal Equity ETF shall still be an open ended fund, i.e. Investors will be able to subscribe for Units of

the ETF Securities for so long as LHE ETF remains listed on the NSE.

9. SECONDARY MARKET ACQUISITION OF THE LOTUS HALAL EQUITY ETF

An investor may buy or sell Lotus Halal Equity ETF on the NSE in the ordinary course.

As the units of the LHE ETF Securities will be listed on the NSE, purchases or sales of the ETF

Securities on the floors of the NSE must be made via a stockbroker. This entails that each Investor

must open a stockbroking account with a stockbroker of their choice, prior to being able to trade their

ETF Securities. Once appointed, such stockbroker will in turn execute such Investor's instructions in

the market or transact with the Authorised Dealer. The Manager has outsourced the function of

creation and redemption of the ETF Securities to the Authorised Dealer and therefore purchases and

sales of the ETF Securities may also be done through the Authorised Dealer.

As all the units of the LHE ETF Securities will be listed on the NSE, the securities may be freely

traded on the NSE on Trading Days during market trading hours. The purchase price for the

Securities will be the price of such ETF Securities as trading on the NSE, plus any brokerage fee that

may be payable to the Investor's stockbroker. Investors are advised that this price will not necessarily

be reflective of the net asset value of the ETF Securities. ETF Securities will only be issued in

dematerialised form. As such, all trades will be settled through the Central Securities Clearing

System. Investors can therefore acquire ETF Securities on the secondary market by purchasing

through a member of the NSE. There is no minimum trading value for trades made in the secondary

market.

10. PRICING OF LOTUS HALAL EQUITY ETF

The price that would be paid or received for the Lotus Halal Equity ETF Security will be determined by the

prevailing market price on the NSE at the time of the trade. The Lotus Halal Equity ETF are priced so as to

ensure that their NSE trading price remains equivalent to approximately 1/200th of the Index Level of the

NSE-Lotus Islamic Index plus an amount which represents a pro rata portion of any accrued net income

(income accruals less permissible expenses).

The actual market prices may be affected by supply and demand and other market variables. However, the

ability of a Unitholder to claim delivery of a block in terms of the agreements constituted by the Lotus Halal

Equity ETF, should substantially avoid or minimise any differential which may otherwise arise between the

price at which the Lotus Halal Equity ETF trade and the value of the underlying Basket of securities.

11. POST-LISTING: SUBSCRIPTION AND REDEMPTION

In addition to being able to purchase and sell Lotus Halal Equity ETF in the secondary market through a

trade on the NSE (as described above), Investors may directly subscribe or redeem units of the LHE ETF,

subject to a minimum creation/redemption value threshold of a Block of ETF unit (i.e. 5,000,000 units of the

Lotus Halal Equity ETF or 25 Baskets), as follows:

Subscriptions: Subsequent to the Listing Date, Investors will be able to acquire units of the LHE ETF Securities in the

following ways:

26

(i) In Specie Subscription

Subsequent to the Initial Offer, any Investor wishing to subscribe for units (one Block or more) of the

LHE ETF Securities should contact the Authorised Dealer. Applicants subscribing for units of the

LHE ETF Securities in-specie should follow the procedure set out under the sub-heading "In-Specie

Subscriptions" under subscription for units in the Initial Offer.

Furthermore, an investor will be required to deposit the cash component alongside the delivery of the

Basket of the constituent securities of the NSE-LII. The cash component represents accrued

dividends, accrued annual charges including management fees and residual cash in the Fund. In

addition the cash component will include transaction costs as charged by the Custodian, Transfer

Agent, equalization of Dividend and other incidental expenses for creating Units. The cash

component for creation will vary from time to time and will be decided and announced by the Fund

Manager on its website and other data providers and media at large.

(ii) Cash Subscriptions

Investors wishing to subscribe for one or more Block of the LHE ETF Securities in cash should

contact the Authorised Dealer. The procedure for Cash Subscriptions shall be as specified by the

Authorised Dealer and/or the Manager. However, the procedure for post-listing subscriptions by way

of Cash Subscriptions will not be materially different to the process set out under this Prospectus and

under the sub-heading "Cash Subscriptions".

Redemptions: In addition to being able to sell Lotus Halal Equity ETF in the secondary market through a trade on the NSE,

Unitholders of one or more Blocks of Lotus Halal Equity ETF will be entitled to take delivery of the

prescribed number of Baskets on any Trading Day.

For every Block of Lotus Halal Equity ETF in respect of which a Unitholder exercises the delivery rights,

that Unitholder will be entitled to take delivery of twenty-five Baskets of Shares. In addition to the delivery

of the Baskets of Shares, a Unitholder exercising its delivery rights will be entitled to receive from LHE ETF

Trust, an amount in cash representing a proportionate interest in any Distribution Amount within the LHE

ETF Trust which may be attributed to the Block(s) in respect of which the Unitholder is exercising its

delivery rights. The Lotus Halal Equity ETF comprising the Block in respect of which the Unitholder

exercises its delivery rights shall be cancelled against delivery of the prescribed number of Baskets (together

with the appropriate cash amount) to that Unitholder. The delivery rights attaching to Lotus Halal Equity

ETF may only be exercised in respect of one or more whole Blocks of Lotus Halal Equity ETF. A

transaction fee will be payable by a Unitholder exercising its delivery rights under Lotus Halal Equity ETF.

The fees may include transfer fees, stamp duty charges and or the relevant investor’s broker’s charges.

A Unitholder may exercise its delivery rights in respect of one or more whole Blocks of ETF Securities on

any Trading Day by forwarding a properly completed delivery notice to the Authorized Dealer for onward

delivery to the Fund Manager and subsequently the Custodians and Transfer Agent. Valid delivery notices

received during NSE trading hours on any Trading Day will, be dealt with using the composition of a Basket

of Shares representing the NSE-Lotus Islamic Index at close of business on the previous Trading Day. If a

delivery notice is received after close of trading on the relevant Trading Day, the delivery notice will

automatically be submitted for acceptance on the next succeeding Trading Day. If a delivery notice is

accepted, the relevant Unitholder will receive confirmation of such acceptance before close of business on

the Trading Day on which the delivery notice is received. In addition the Unitholder shall receive

confirmation of the number of shares of each of the Constituent Companies comprising the Basket(s) to be

delivered to that Unitholder, the amount of cash (if any) which will be paid to it (after taking into account

any stamp duty charges incurred in relation to the Basket or Baskets and any transaction fee which may be

charged, all of which will be for the account of the Unitholder) and details of the account into which such

payment shall be made. The cost of any settlement by electronic bank transfer will be passed on to the Unitholder.

12. REBALANCING OF THE PORTFOLIO OF SECURITIES HELD BY THE LHE ETF TRUST

As the investment objective of the LHE ETF Trust is to track the price and yield performance of the NSE-

27

Lotus Islamic Index, any change to the NSE-Lotus Islamic Index (for example a change in the composition

of the NSE-Lotus Islamic Index and/or in the weighting of the securities within the NSE-Lotus Islamic

Index) will require the LHE ETF Trust to make corresponding adjustments to its portfolio from time to time.

The Fund Manager may adjust the composition and/or weighting of the securities held in the LHE ETF

Trust’s portfolio from time to time and shall, to the maximum extent practicable, immediately conform to

changes in the composition and/or weighting of the securities within the NSE-Lotus Islamic Index.

Adjustments to the portfolio of securities held by the LHE ETF Trust will be made when, for example,

corporate events occur which result in a change in the composition and/or weighting of the NSE-LII.

Although the investment objective of the LHE ETF Trust is to provide investment results which track the

performance of the NSE-Lotus Islamic Index, it will not always be efficient to replicate the composition

and/or weighting of the NSE-Lotus Islamic Index precisely if the transaction costs incurred by the LHE ETF

Trust in adjusting its portfolio would exceed the expected mis-weighting. Accordingly, minor mis-

weightings will generally be permitted.

The Fund Manager will rely ultimately on the NSE for information as to the composition and/or weighting

of the NSE-Lotus Islamic Index. If the Fund Manager is unable to obtain such information on any business

day then the composition and/or weighting of the NSE-Lotus Islamic Index most recently published will be

used for the purposes of all adjustments.

13. DISTRIBUTIONS

It is anticipated that the LHE ETF Trust will effect quarterly distributions. All distributions will be paid out

of the LHE ETF Trust’s income (whether received in the form of dividends, profits or otherwise) net of

expenses, subject to the recommendation of the Manager. Distributions will be effected by the Transfer

agent on behalf of the LHE ETF Trust. The costs of effecting distributions will be deducted from the gross

income figure. Any distribution which is unclaimed twelve (12) years from the date it became payable shall

be forfeited and become the property of the LHE ETF Trust, and will be utilised to improve index-tracking

within the LHE ETF Trust. Notwithstanding the foregoing, it should be noted that though Unitholders are

beneficiaries of the LHE ETF Trust, there can be no guarantee that they will receive quarterly distributions.

14. MARKET MAKING PROCESS OF THE LOTUS HALAL EQUITY ETF

The Authorized Dealer has been appointed to provide market liquidity (execute the sale and purchase) to

investors on the floor of the NSE by continuously providing quotes on the floor of the Nigerian Stock

Exchange.

15. DETERMINATION OF NET ASSET VALUE

The Fund Manager shall ensure that the Net Asset Value per Security is determined at close of each Trading

Day. The Net Asset Value of each ETF Security shall be calculated by deducting the liabilities of the LHE

ETF Trust from the assets of the LHE ETF Trust (giving the Net Asset Value of the LHE ETF Trust) and

dividing the Net Asset Value of the LHE ETF Trust by the number of units of the Lotus Halal Equity ETF in

issue. The Net Asset Value per ETF Security may be adjusted to the nearest kobo at the discretion of the

Fund Manager. The value of the assets of the LHE ETF Trust shall be determined as set out below:

I. Assets listed or traded on a regulated market for which market quotations are readily available shall

be valued at the official closing price on the relevant market for such investment on the Trading Day

in respect of which the valuation is being effected.

II. If an asset is listed or traded on several regulated markets, the official closing trading price on the

NSE will be used.

III. In the event that on the relevant Trading Day any assets are not traded on any regulated market and

market quotations are not readily available, then such assets shall be valued at their last traded price

on the NSE.

IV. Cash and other liquid assets will be valued at their face value with income accrued thereon, where

28

applicable. Any Distribution Amount within the LHE ETF Trust shall form part of the assets of the

LHE ETF Trust for the purposes of calculating Net Asset Value of the LHE ETF Trust.

V. In the event of it being impossible or impractical to carry out a valuation of a specific

asset/investment in accordance with the valuation rules set out above, or if such valuation is not

representative of the fair market value in the context of marketability and such other considerations

which are deemed relevant, the Fund Manager (or its duly appointed agent, as the case may be) is

entitled to use other generally recognised valuation methods in order to reach a proper valuation of

that specific asset/investment.

16. FEES AND CHARGES (ON-GOING)

The LHE ETF Trust is responsible for all of its fees, costs and expenses and any costs and expenses of Lotus

Capital Limited in respect of the Fund which may be allocated to it. These fees, costs and expenses may

include the fees, costs and expenses of: (i) management, administration, advisory and other third party

services; (ii) taxes (including Value-Added Tax, stamp duty); (iii) commissions and brokerage fees; (iv)

auditing and legal fees, (v) the costs and expenses of maintaining a listing of Lotus Halal Equity ETF on

stock exchanges and (vi) certain other operating expenses.

The fees, costs and expenses of the LHE ETF Trust will be paid by the Fund. The LHE ETF Trust will pay

the Fund Manager an annual Management fee of 0.60% of the Net Asset Value of the ETF payable out of

the income of the ETF, quarterly in arrears, covering the actual quarterly Management expenses of the

Manager during the preceding quarter including the costs of subcontracting certain of the management

services.

“Annual expenses” means all fees, costs and expenses connected with the establishment, management and

operation of Lotus Halal Equity ETF Trust and the assets within the LHE ETF Trust, including, but not

limited to, the fees of the Fund Manager, the costs and expenses of maintaining a listing of the Lotus Halal

Equity ETF on any stock exchange on which Lotus Halal Equity ETF are listed, professional fees and

expenses, annual audit fees, marketing expenses and trustee fees.

All operating expenses incurred in connection with the Fund plus annual fees payable to the Fund Manager,

Trustee, Registrar, Auditors and Custodian shall be payable by the Fund and shall not exceed 5% of the

NAV of the Fund.

17. PUBLICATION OF NAV OF LOTUS HALAL EQUITY ETF

Except where the determination of the Net Asset Value has been suspended, in the circumstances described

in page 29, the Net Asset Value per LHE ETF security shall be made available on a daily basis on the Lotus

Capital Limited website. Such information shall relate to the Net Asset Value per ETF Security for the

previous Trading Day and is published for information purposes only. Such information shall not constitute

an invitation to subscribe for or convert Lotus Halal Equity ETF at that Net Asset Value.

18. INVESTOR PROFILE

Investment in Lotus Halal Equity ETF is open to individuals, companies, societies, institutional investors,

employee schemes and any interested body or organisation. Foreign and non-resident investors are also

welcome to participate.

Foreign currency subscriptions shall be processed at the autonomous exchange rate advised by the Fund

Manager. Certificate of Capital Importation should be issued by the receiving local bank to foreign currency

subscribers as it will be required for subsequent repatriation in freely convertible currency of proceeds from redemption of the ETF Securities (in cash) or from any distribution of income.

29

19. RISK FACTORS

It is important to note that like any other investment, investments in LHE ETF Securities are subject to

certain risks. The risks associated with the investment may be divided into the following types:

(a) Investment Risk (b) Index Risk (c) Secondary Trading risk (d) Operational Risk.

a) INVESTMENT RISK

There can be no assurance that the LHE ETF Trust will achieve its investment objective (as set out in the

section entitled “Investment objectives and policies”).

The Net Asset Value of Lotus Halal Equity ETF will rise and fall as the capital value of the Underlying

Portfolio held by the LHE ETF Trust fluctuates.

The total return achieved on Lotus Halal Equity ETF will be impacted upon by the total return achieved

on the Underlying Portfolio held by the LHE ETF Trust and the return achievable on Lotus Halal Equity

ETF can be expected to fluctuate in response to changes in the total return achieved by the Underlying

Portfolio. The total return achieved will also be impacted upon by distributions, if any, that Unitholders

may or may not receive. It is to be noted that the ambition of the structure is to provide Unitholders of

Lotus Halal Equity ETF with a price and yield return substantially equal to the price and yield return on a

pro rata portion of a Basket.

The LHE ETF Trust may not be able to replicate exactly the performance of the NSE-LII because the

total return generated by the Underlying Portfolio held by the LHE ETF Trust will be reduced by certain

costs and expenses incurred by the LHE ETF Trust. Such costs and expenses are not incurred in the

calculation of the NSE-LII.

The LHE ETF Trust may also not fully replicate the performance of the NSE-Lotus Islamic Index owing

to the temporary unavailability of certain securities in the secondary market or owing to other

extraordinary circumstances and, accordingly, there may be a deviation from the precise weighting of the

NSE-LII.

Where securities comprising the NSE-Lotus Islamic Index are suspended from trading or where other

market disrupting events occur it may not be possible to immediately rebalance the portfolio of securities

held by the LHE ETF Trust and this may lead to a tracking error.

There is a risk that Lotus Capital Limited will exercise its right to place a temporary moratorium on the

exercise by Unitholders of the delivery rights attaching to Lotus Halal Equity ETF. In any given year

Lotus Capital Limited shall not suspend the delivery rights attaching to Lotus Halal Equity ETF for more

than 90 Trading Days, in aggregate, provided that the approval of the Trustee and the Commission is

obtained before any such suspension. The imposition of any such moratorium shall not affect the

tradability of Lotus Halal Equity ETF on the NSE. A temporary moratorium may be placed if:

pursuant to a request by an investor for delivery of one or more Baskets, the manager is unable to

deliver any of the constituent securities to an investor due to the fact that trading in any one or more

of the NSE-Lotus Halal Equity ETF Securities is restricted, terminated or suspended and/or assets

are not at the manager’s disposal as a result of a suspension or de-listing of any of the Index

constituents or for any other reason (in which event, such security or securities shall be excluded

from the portfolio and delivered to the investor after the suspension is lifted or after the de-listed

securities become available, as the case may be); or

the computer or other facilities of the NSE malfunctions, calculation of the NSE-Lotus Islamic

Index Level may be delayed and trading in Lotus Halal Equity ETF may be suspended for a period

of time.

A Block, in respect of Lotus Halal Equity ETF, means (at the date of this Prospectus) 5,000,000 units of

Lotus Halal Equity ETF. Unitholders holding less than a Block of Lotus Halal Equity ETF may not

demand delivery by Lotus Capital Limited of the prescribed Basket(s) of shares and, if it is the intention

of such Unitholders to reduce their holding of Lotus Halal Equity ETF they may have to do so by selling

or otherwise disposing of such Lotus Halal Equity ETF in the secondary market.

30

It is anticipated that the LHE-ETF Trust will distribute quarterly net income available for distribution

within the LHE ETF Trust. However, there can be no guarantee that Unitholders will receive quarterly

distributions and Unitholders will have no right to require the Fund Manager or the Trustee of the LHE

ETF Trust to effect quarterly distributions.

b) INDEX RISK

There is no assurance that the NSE-Lotus Islamic Index (“The Index”) will continue to be calculated and

published on the same or a similar basis indefinitely. The Index was created by a partnership arrangement

between the NSE and Lotus Capital Limited, as a measure of market performance and not for the purpose

of trading in Lotus Halal Equity ETF. Accordingly, the NSE, as proprietor of The Index may adjust or

withdraw The Index without regard to the particular interests of Unitholders.

The past performance of The Index is not necessarily a guide to its future performance.

If for any reason The Index ceases to exist then if, in the reasonable opinion of the Directors, there is a

successor Index composed and weighted according to substantially similar criteria as are applied with

respect to The Index, the portfolio of securities held by the LHE ETF Trust shall be adjusted to track the

agreed successor Index.

If in the reasonable opinion of the Directors there is not an appropriate successor to The Index, then the

LHE ETF Trust will continue to hold the portfolio of securities which it held at close of trading on the last

day on which The Index was in existence. Lotus Halal Equity ETF will thereafter track the price and yield

performance of that particular portfolio, which portfolio will thereafter cease to be adjusted. Exercise of

the delivery rights attaching to a Block of Lotus Halal Equity ETF will, in these circumstances, give rise

to the right to claim delivery of a Basket as constituted on the last day on which The Index was in

existence.

c) SECONDARY TRADING RISK

The LHE ETF securities have not previously been traded on the NSE. There can be no certainty as

regards the liquidity in Lotus Halal Equity ETF on the NSE or that the market price of a LHE ETF

security will be the same (or substantially the same) as its Net Asset Value.

There can be no guarantee that, once Lotus Halal Equity ETF are listed on a stock exchange, they will

remain listed.

d) OPERATIONAL RISK

If shares in Constituent Companies are suspended or cease trading for any reason, the suspended shares

will not be delivered to a Unitholder exercising its right to take delivery of a Basket of Shares until the

suspension on trading in respect of those shares is lifted.

If the computer or other facilities of the NSE malfunction, calculation of the NSE-Lotus Islamic Index

Level may be delayed and trading in Lotus Halal Equity ETF may be suspended for a period of time.

Adjustments to the portfolio held by the LHE ETF Trust (necessitated by adjustments to the NSE-LII)

could affect the underlying market in shares of Constituent Companies which, in turn, would be reflected

in the NSE-LII Level and the Basket Price. Similarly, issues of Lotus Halal Equity ETF may result in an

impact on the market for shares of a Constituent Company caused by buying of shares of a Constituent

Company to constitute Baskets of Shares for deposit with the LHE ETF Trust, or by virtue of the LHE

ETF Trust purchasing shares in Constituent Companies in acquiring its Underlying Portfolio.

20. BENEFITS OF INVESTING IN THE LOTUS HALAL EQUITY ETF

Shari’ah compliant diversification: LHE ETF will serve as an important diversification tool for

pension fund administrators, funds of funds, individual investors, foreign investors and all portfolio

managers, amongst others who seek to profitably invest in emerging African equities markets in

accordance with the principles of the Shari’ah. Furthermore, as a result of the Islamic financial

31

benchmarks, selected companies also have limited risk exposure making them more sustainable and

conservative investments.

Professional Management: The Fund will offer investors the opportunity to gain from a

professional portfolio management and advisory team with experience in successfully managing

investment portfolios similar to the Fund through different market cycles.

Accessibility: Tracking an index through a direct investment in its constituents is very difficult,

particularly for a small investor. To track the Index effectively, investors need to monitor the Index

and any index developments on a daily basis. All constituents of the Index have to be traded

individually and dividends have to be managed whenever paid. LHE ETF Securities confer on the

Unitholder of one security a proportionate share in the economic benefits of all of the securities

issued by the constituent companies comprising the Index. The LHE ETF securities are attractive to

professional investors, providing a useful asset allocation and cash management tool.

Excellent Fund Structure: The structure of the Fund shall promote good governance, enhanced

investor protection and successful investment outcomes. The Fund structure separates fund

management functions from asset custody, in line with recommended best practice.

Economies of Scale: The Fund Manager aims to use the advantage of the Fund size and the ETF

platform to reduce transaction costs and consequently enhance portfolio returns.

Liquidity: The LHE ETF is a fast, liquid, convenient and cost-effective way to invest in the NSE

Lotus Islamic Index, as a single security purchase gives exposure to the index.

Administration: The role of the Manager in effectively coordinating and managing the Fund will

ensure that Unitholders are freed from the day-to-day administration of their investments. Investing

in the ETF reduces the cost and time required by an investor to independently create a Shari’ah

compliant equity portfolio.

Lower Transaction Costs: As a passive fund, the ETF would have much lower transaction costs and

fees when compared to typical mutual funds.

21. FUND REPORTING

The Fund Manager shall take steps to ensure that the quarterly reports of the ETF are published on its

website. Such quarterly reports shall be published within a period of one month of the period to which each

quarterly report relates. The Fund Manager shall also file periodic returns /reports with the Commission, the

Trustees and Unitholders, as may be required under applicable law.

The Custodian shall carry out a reconciliation of all the Units of the ETF and its underlying assets on a

quarterly basis and submit such reports to the Commission.

22. INFORMATION AVAILABLE TO THE PUBLIC

The following details would be made available to the Public via the Fund Manager’s website

(www.lotuscapitallimited.com):

The portfolio deposit and NAV per unit at end of the trading day, daily;

The number of units in circulation, monthly.

Index level for the preceding day;

The constituent stocks of the Index (NSE-LII) on a quarterly basis.

Furthermore, the indicative optimised portfolio value (IOPV) per unit, will be made available on the

Automated Trading System (ATS) of the Nigerian Stock Exchange on a daily basis.


32

23. FUND MANAGER’S TRACK RECORD

In 2008, Lotus Capital launched the first Islamic Mutual Fund, ‘Halal Fund’ in Nigeria to raise N1 Billion and

recorded a subscription level of 278% with 21,000 initial subscribers. The benchmark of the Halal Fund, the

NSE All Share Index, declined by 26% over the subsequent 64-month period, from 52,641.55 points on

August 1st, 2008 to 38,738.15 on December 6th

, 2013. However, due to the Fund Manager’s unique investment

strategy, the Halal Fund declined by 10%, out-performing its benchmark by almost 16%. This was an

impressive performance when compared with other public managed Funds and the NSE All Share Index.

As a balanced fund, Halal Fund yields stable returns over a period of time and it is less volatile than the

market. This means that when the market goes down, the fund will not fall by as much as the market.

Likewise, when the market goes up, the fund will not rise by as much. The Fund is designed for, and offered to

investors seeking stable attractive returns through a broadly diversified portfolio of equity, asset-backed

investments and real estate investments in compliance with Islamic law.

24. PREMISES

Lotus Capital Limited has its offices at the following locations:

Lagos: 1b Udi Street, Osborne Foreshore Estate, Osborne Road, Ikoyi, Lagos.

Abuja: No. 2 Malanje Street, Wuse Zone 4, Abuja

Kano: 1st Floor, UBN Property Company Ltd, 37 Niger Street Kano, Kano State.

HalalNSEASI

IBTC_Ethical

Returns -10% -26%

-30%

-25%

-20%

-15%

-10%

-5%

0%

30405060708090

100

01

/08

/20

08

01

/04

/20

09

01

/12

/20

09

01

/08

/20

10

01

/04

/20

11

01

/12

/20

11

01

/08

/20

12

01

/04

/20

13

01

/12

/20

13

Halal Fund NSE ASI

33

9. FINANCIAL FORECAST

LETTER FROM THE REPORTING ACCOUNTANTS

The following is a copy of the letter on the Financial Forecast by Ahmed Zakari & Co., the Reporting Accountants to the

Offer:

December 19, 2013

The Directors

Lotus Capital Limited

1B Udi Street


Osborne Road

Ikoyi, Lagos

And

The Directors,

Vetiva Capital Management Limited

Plot 266b Kofo Abayomi Street

Victoria Island, Lagos

MEMORANDUM ON THE FINANCIAL FORECAST FOR THE THREE YEARS ENDING DECEMBER 2016

We have reviewed the accounting bases and calculations for the financial forecast of Lotus Halal Equity Exchange

Traded Fund (for which the directors of Lotus Capital Limited are solely responsible) for the years ending 31 December

2014, 2015, 2016.

In our opinion, the annexed forecast, so far as the accounting policies and calculations are concerned, has been properly

compiled based on the assumptions made by the Directors of the Fund Manager as set out on pages 34 to 35 and based on

the NSE Lotus Islamic Index Methodology and are presented on a basis consistent with the accounting policies normally

adopted by the Fund Manager and in accordance with International Financial Reporting Standard (IFRS) applicable in

Nigeria.

However, there will usually be differences between forecast and actual results because events and circumstances frequently

do not occur as expected and these differences may be material.

We have no responsibility to update this report for events and circumstances occurring after the date of this report.

Yours faithfully,

Tajudeen Adetokunbo Oni

Partner (FRC/2013/ICAN/00000000749)

_________________________________________________________________________________________________

Partners: Shuaibu A. Ahmed | Isma’ila M. Zakari | Tajudeen Adetokunbo Oni

Central Office: 5th Floor, African Alliance House, F1Sani Abacha Way, P.O. Box 6500, Kano, Nigeria. Tel: +234-64-892448, +234-64-892449

Lagos Office: 175B Isale Eko Avenue, Dolphin Estate, P.O. Box 54478, Falomo, Ikoyi, Lagos. Tel: +234-1-7431279, +234-1-7431280.

Abuja Office: 2nd

Floor, Akintola Williams House, Plot 2048 Michael Opara way, Wuse Zone 7, Abuja.

Email: [email protected] Url: www.ahmedzakari.com

34

1 . MEMORANDUM ON THE PROFIT FORECAST FOR YEARS ENDING DECEMBER 2014, 2015 AND 2016

INTRODUCTION

a. This memorandum has been prepared to summarise and outline the information available to the Directors

and their basic assumptions at the time of their forecast for the years ending 31 December 2014, 2015 and

2016.

b. The Directors’ forecast which is made for the purpose of a proposed public offer of 100,000,000 Units in

LOTUS HALAL EQUITY EXCHANGE TRADED FUND is as follows:

“The Directors are of the opinion that subject to unforeseen circumstances, the net increase in net assets before

dividend distribution for the years ending 31 December 2014, 2015 and 2016 after allowing for contingencies

will be approximately ₦241.69 million, ₦1,123.877 million and ₦3,820.80 million, respectively.”

2. BASES AND ASSUMPTIONS

The forecast has been arrived at on the following bases and assumptions which are expected to remain in operation

throughout the forecast period:

2.1 Bases

(a) Subscription to the Offer The 100,000,000 units of the Fund will be fully subscribed within the initial subscription period under the

terms and conditions of the offer at an indicative offer price of ₦13.84.

(b) Initial Cost of the Offer

All charges and fees for establishing the fund, including fees payable to receiving agents, The Nigerian

Stock Exchange, The Securities and Exchange Commission, legal and all other related expenses are

estimated at 2.99% (₦41,393,750.00) of the gross proceeds, all of which shall be borne by Unitholders

accordingly.

(c) The ETF is shari’ah compliant and is based on the NSE LOTUS ISLAMIC INDEX.

(d) Investment of Funds

The net assets of the Fund after deducting cost of the issue will be invested in NSE Lotus Islamic Index

constituent’s equities.

(e) Fund Management Fees

Fund management Fees are charged as at 0.6% of the opening Net Asset Value of the Fund. The fund

management fee of 0.6% p.a. would be applied on the daily Net asset Value of the fund using the daily

rate of the fee and this may vary proportionately.

(f) Basis of Presentation

The financial forecast for the years ending 31 December 2014, 2015 and 2016 have been prepared on a

basis consistent with the company’s accounting policies.

35

2.2 Assumptions

The following assumptions have been made, and are expected to remain in operation throughout the forecast

period:

(a) Political and Economic Factors

There will be no significant changes in Federal Government’s fiscal and monetary policies that will

adversely affect the operations of the fund. Also, there will be no significant change in the political and

economic environment that will adversely affect the operations of the Fund.

(b) The annual inflation rate is estimated at an average of 10% over the three year period.

(c) Dividend income is estimated at 8.5% of Net Asset Value at the beginning of the year over the projected

three years.

(d) Capital appreciation of stock is estimated to be 18%, 25% and 30% of the closing Net Asset Value for

2014, 2015 and 2016 respectively.

(e) ROI on disposal of shares in line with rebalanced Index is estimated at 5%, 12.5% and 12.5% for 2014,

2015 and 2016 respectively

(f) Stocks estimated to be disposed is put at 7.5% of the opening Net Asset Value for the three years in

projection.

(g) Dividend payout ratio is estimated as 54% in 2014 and 94% in 2015 and 98% in 2016.

(h) Other Consultants’ fees are estimated to be 0.6% of the opening Net Asset Value for the three years.

(i) Dividend payments received is estimated to be 82%, 75% and 76.5% of the estimated dividend declared

during the three years under review, the balance being dividend income receivable in the relevant year.

(j) Dividend paid to investors as a percentage of dividend distributed is put at 92%, 91% and 83% for 2014,

2015 and 2016 respectively, the balance being dividend payable to investors in the relevant year.

36

3. PROFIT FORECAST FOR THE YEARS ENDING DECEMBER 2014, 2015 AND 2016

The Fund Manager is of the opinion that subject to unforeseen circumstances, the net increase in net assets before

dividend distribution for the years ending 31 December 2014, 2015 and 2016 after allowing for contingencies will be

approximately ₦241.69 million, ₦1,123.877 million and ₦3,820.80 million, respectivel”:

STATEMENT OF COMPREHENSIVE INCOME - FORECAST 2014

₦

2015

₦

2016

₦

Dividends 114,121,531 138,184,056 476,278,123

TOTAL REVENUE 114,121,531 138,184,056 476,278,123

Management Fee 8,055,638 9,754,169 33,619,632

Other Consultant Fees 8,055,638 9,754,169 33,619,632

Issue cost 41,393,750 0 0

TOTAL EXPENSES 57,505,025 19,508,337 67,239,264

NET INCOME / (LOSS) FROM INVESTMENTS 56,616,506 118,675,719 409,038,858

NET REALISED GAIN/ (LOSS)

Net realised gain / (loss) on investments 5,034,773 15,240,889 21,012,270

CHANGE IN NET UNREALISED GAIN/ (LOSS)

Change in Net Unrealised gain / (loss) on investments 241,669,125 1,119,849,687 3,857,502,588

303,320,405 1,253,766,294 4,287,553,717

Dividends due for distribution 61,625,627 129,893,013 466,752,560

NET INCREASE / (DECREASE) IN NET ASSETS 241,694,778 1,123,873,282 3,820,801,156

STATEMENT OF NET ASSET - FORECAST 2014

₦

2015

₦

2016

₦

ASSETS

Financial Asset Held-for-Trading 1,625,669,125 5,599,222,783 19,283,463,694

Cash at bank 525,102 701,942 2,009,656

Dividends receivable 20,541,876 34,546,014 111,925,359

TOTAL ASSETS 1,646,736,103 5,634,470,739 19,397,398,709

LIABILITIES

Payable for Dividend Distributed to the investor 4,930,050 11,690,371 79,347,935

Accrued Expenses 16,111,275 19,508,337 67,239,264

TOTAL LIABILITIES 21,041,325 31,198,708 146,587,200

TOTAL NET ASSETS 1,625,694,778 5,603,272,030 19,250,811,509

EQUITY

Investor Deposit 1,384,000,000 4,237,703,971 14,064,442,293

Capital Reserve 241,694,778 1,365,568,059 5,186,369,216

TOTAL EQUITY 1,625,694,778 5,603,272,030 19,250,811,509

37

CASH FLOW STATEMENT - FORECAST 2014

₦

2015

₦

2016

₦

CASH FLOW FROM OPERATING ACTIVITIES

Payment of Fund manager fee

(8,055,638) (9,754,169)

Payment of other Consultant Fees

(8,055,638) (9,754,169)

NET CASH GENERATED BY OPERATING ACTIVITIES 0 (16,111,275) (19,508,337)

CASH FLOW FROM INVESTING ACTIVITIES

Payment to acquire ETF underlying equities (1,384,000,000) (3,649,075,141) (12,586,349,798)

Net Proceeds from the disposal of equities of ETF units 5,034,773 15,240,889 21,012,270

Dividend Received from the underlying equities for ETF 93,579,656 124,179,918 398,898,778

NET CASH (USED IN )/ GENERATED BY INVESTING

ACTIVITIES (1,285,385,571) (3,509,654,334) (12,166,438,750)

CASH FLOW FROM FINANCING ACTIVITIES

Issuing cost (41,393,750) 0 0

Dividend Distributed to the investor (56,695,577) (123,132,692) (399,094,996)

Subscription to ETF 1,384,000,000 3,251,389,556 11,206,544,060

Redemption from ETF

397,685,585 1,379,805,737

NET CASH USED IN FINANCING ACTIVITIES 1,285,910,673 3,525,942,449 12,187,254,802

Net increase in Cash & Cash equivalent 525,102 176,840 1,307,715

Balance at the beginning of the year 0 525,102 701,942

BALANCE AT THE END OF THE YEAR 525,102 701,942 2,009,656

38

4. FORECAST YIELDS FOR THE YEARS ENDING DECEMBER 2014, 2015 AND 2016

INDICATORS 2014 2015 2016

Return on Investment 17.50% 32.2% 36.9%

Average Dividend yield 8.50% 8.50% 8.50%

Capital Appreciation of stock as a % of Closing NAV 18.00% 25.00% 30.00%

ROI on disposal of shares in line with rebalanced Index 5.0% 12.5% 12.5%

% of Subscription on opening NAV

200.00% 200.00%

% of Redemption on opening NAV 0.0% 24.5% 24.6%

Growth Rate 0.00% 86.00% 125.00%

Dividend Pay-out Ratio 54.00% 94.00% 98.00%

Dividend Received as a % of dividend earned during the

year 82.0% 75.0% 76.5%

Dividend Receivable as a % of dividend earned during

the year 18.00% 25.00% 23.50%

Dividend received to be paid to Investors as a % of

Dividend distributed to the investors 92.00% 91.00% 83.00%

Dividend Payable as a % of Dividend distributed to the

investor 8.00% 9.00% 17.00%

39

5. LETTER FROM ISSUING HOUSE

The following is a copy of the letter from the Issuing House on the Financial Forecast:

Wednesday, 12 March 2014 THE DIRECTORS Lotus Capital Limited 1B Udi Street Osborne Foreshore Estate Osborne Road

Ikoyi, Lagos Dear Sirs, OFFER FOR SUBSCRIPTION OF 100,000,000 UNITS IN THE LOTUS HALAL EQUITY EXCHANGE TRADED FUND We write further to the Prospectus issued in respect of the Offer for Subscription of 100,000,000 Units in the Lotus Halal Equity Exchange Traded Fund (“the Fund”), the draft of which we have had the privilege of reviewing. The Prospectus contains financial forecasts of the Fund for the years ending 31 December 2014, 2015 and 2016. We have discussed the bases and assumptions upon which the forecasts were made

with you and with Messrs. Ahmed Zakari & Co., the Reporting Accountants. We have also considered the letter dated 19th December 2013 from the Reporting Accountants regarding the accounting bases and calculations upon which the forecasts were compiled. Having considered the assumptions made by you as well as the accounting bases and calculations reviewed by Messrs. Ahmed Zakari & Co., we consider that the forecasts

(for which you as Directors are solely responsible) have been made by you after due and careful enquiry. Yours faithfully For: Vetiva Capital Management Limited

CHUKA ESEKA Managing Director/CEO

40

10. THREE– YEARS FINANCIAL SUMMARY

THREE YEAR FINANCIAL SUMMARY (LOTUS CAPITAL LIMITED) FOR THE YEAR ENDED 30 APRIL 2013

Balance Sheet

Financial Summary For the year ended 30 April 2013

Statement of financial position In Nigerian Naira 30-Apr-13 30-Apr-12 30-Apr-11 Assets: Cash and cash equivalents 337,085,590 539,398,534 10,312,424

Financial assets:

Fair value through profit or loss 96,111,881 151,085,893 236,640,599

Investment Securities 224,157,483 254,930,670 262,103,689

Prepayments 15,987,917 53,569,352 25,870,582

Trade and other receivables 99,450,063 265,311,547 153,126,323

Property and equipment 9,445,540 8,808,968 13,185,249

Intangible assets 5,663,515 6,440,535 7,094,992

Deferred tax assets 25,603,228 67,095,141 65,878,535

Total assets 813,505,217 1,346,640,640 774,212,393

Liabilities: Current tax liabilities 9,793,918 14,472,496 9,690,746

Other liabilities 63,504,480 673,794,377 107,413,167

Total liabilities 73,298,398 688,266,873 117,103,913

Net Assets 740,206,819 658,373,767 657,108,480

Equity Share capital 505,000,000 505,000,000 505,000,000

Retained earnings 232,768,001 151,993,439 146,796,615

Fair value reserves 2,438,818 1,380,328 5,311,865

Total equity 740,206,819 658,373,767 657,108,480

Statement of comprehensive income Gross earnings 438,459,276 334,169,105 333,491,050

Profit/(Loss) before tax 130,977,784 23,911,968 25,211,636

Taxation (45,743,823.00) 979,856 (4,920,689)

Profit/(Loss) after tax 85,233,961 24,891,824 20,290,947

Earnings/(loss) per Share -basic

(kobo)

16 3 168

The financial information presented above reflects historical summaries based on International Financial Reporting

Standards. Information related to prior periods has not been presented as it is based on a different financial reporting

framework (Nigerian GAAP) and is therefore not directly comparable

41

11. INFORMATION ON THE FUND MANAGER AND THE TRUSTEE

ORMN ON THE FUND MANAGER, FUND SPONSOR AND THE TRUSTEE

1. BRIEF PROFILE OF THE FUND MANAGER

Lotus Capital is an Investment Management company specializing in Asset Management according to the Islamic

system of Financial Management. Lotus Capital was founded in June 2004 with the objective of providing cost –

effective ethical financial solutions to individuals, businesses and organizations across West Africa. The company

is duly registered with the Securities & Exchange Commission (SEC) as a Fund Manager.

Lotus Capital is a Nigerian pioneer in this emerging financial niche with a unique equitable interest-free solution

for personal and business needs. Interest-Free Financial Services, primarily known as “Islamic Finance” is the

world’s fastest growing financial sector with over USD$1.067 trillion in assets worldwide growing at 14-20% per

annum and is virtually untapped in Nigeria. Lotus Capital provides value–added alternative financial solution in

line with principles that most ethical investors share. It offers investors a convenient way to link their money with

their values in a competitively performing portfolio.

The company is dedicated to supporting individuals and independent businesses with honest, fair and equitable

solutions. It adheres to a strict code of ethics and does not deal in unethical businesses such as alcohol, casinos,

internet based business, adult-entertainment, tobacco etc.

Lotus Capital manages financial assets for individual, institutional, retail and corporate clients. It offers investment

strategies in vehicles ranging from collective investments to institutional portfolios. As at June 30 2013, the

company has assets worth N9.1billion under its management.

Lotus Capital is managed by experienced and knowledgeable professionals who have global exposure in the

professional management of Funds. In addition, the members of the Fund Manager’s Board of Directors are highly

respected professionals with strong backgrounds in finance, asset management and capital markets.

2. DIRECTORS OF THE FUND MANAGER

The Board of Directors of the Fund Manager is constituted of as follows:

Fola Adeola (Chairman)

Fola Adeola is the Founder and Chairman of Fate Foundation, a non-governmental organization in Nigeria which

is dedicated to encouraging the creation of wealth through entrepreneurship. Mr. Adeola is also the founder and

first Managing Director/CEO of Guaranty Trust Bank Plc. He ran the bank from inception until March 2003,

during which period he firmly established the institution as a strong and credible bank. Guaranty Trust Bank is

quoted on the Nigerian Stock Exchange and has grown to become one of Nigeria's largest and most profitable

international financial institutions.

In 2004, he was appointed the pioneer Chairman of the National Pension Commission following the promulgation

into law the Pension Bill (principally authored by him). He was a Council member, and is a Fellow of the Institute

of Chartered Accountants of Nigeria; member of the Institute of Directors of Nigeria. Mr. Fola Adeola is also a

Director of UTC Plc., a retail food manufacturing company. Internationally, he serves as a member of the Global

Advisory Committee on Philanthropy at the World Economic Forum. From 2004-2005, Mr. Adeola was also a

Commissioner on the Commission for Africa established by the erstwhile British Prime Minister, Mr. Tony Blair.

42

Mrs. Lateefah Okunnu (Director)

Mrs. Lateefah Okunnu is a retired Civil Servant with a wealth of administrative experience. After a fulfilling career

in both the Lagos State and the Federal Civil Service, Mrs. Okunnu reached the pinnacle of her career in 1986

when she was appointed a Permanent Secretary and later Director General in the Political Affairs Office of the

Cabinet Office. In 1990, she was appointed Deputy Governor of Lagos State and later Chairman Caretaker

Committee of the National Republic Convention (NRC) till 1993 when the Party's Executive Council took over.

She retired from the Federal Civil Service in 1994.

Mrs. Okunnu is a founding member and one time National Amirah of the Federation of Muslim Women's

Associations in Nigeria (FOMWAN). She is presently the Assistant Secretary General for Africa of the newly

established International Muslim Women's Union as well as the National Coordinator of Muslim League for

Accountability (MULAC), a body established for championing transparency and accountability in the private and

public lives of Muslims and in the Nigeria society at large. Mrs. Okunnu holds a Diploma in Education (University

of Lagos, 1968) and a B.A (Hons.) Geography (University College London, 1964).

Mr. Muhammad Nuruddeen Lemu (Director)

Mr. Lemu is the Assistant Admin Secretary and Welfare Projects Inspector of Islamic Education Trust, Minna,

Niger State. He is also Assistant Director and Research Supervisor, Dawah Institute of Nigeria. Mr. Lemu is the

Technical Adviser, Nigerian Environmental Society, Niger State branch and Adviser to the Voice of the Voiceless

Network, Minna. Also, Mr. Lemu is the Patron and Co-Patron of the Survival Club and Charity Club respectively,

New Horizons College, Minna.

Mr. Lemu is a Director of several organizations. He has been engaged in inter-faith dialogue all over the world

including Liberia, UK, Gambia, Australia, Philippines, New Zealand, Sri Lanka, Bahrain and Nigeria. He has been

a frequent guest speaker on radio programs both domestically and abroad and moderated television programs.

Mr. Lemu is a prolific writer with numerous published works in the area of religion and inter-faith understanding

and dialogue. Mr. Lemu is proficient in English, Arabic, Hausa and Nupe. Mr. Lemu holds an MSc. Resource

Management from Edinburgh University, U.K (1996) and a B.A Agriculture from Ahmadu Bello University Zaria,

Nigeria (1993).

Mrs. Amina Oyagbola (Director)

Mrs. Oyagbola serves as the Human Resource Executive of MTN Nigeria Communications Limited. Prior to her

recent post, she was the Corporate Services Executive of MTN Nigeria Communications Limited where she had

oversight responsibility for Government and Regulatory Affairs, Commercial/Legal, the Company Secretariat and

Corporate Communications. Her long and distinguished career spans legal practice with Chief FRA Williams

Chambers, Banking with Crystal Bank and UBA where she was successively Legal Adviser, Head, Human Capital

Division, before setting up and heading the Private Banking Division; and finally the Oil sector with Shell

Petroleum Development Company as Head, HR Strategy, Standards and Business Planning prior to her current

position with MTN. She is also an Executive Director of the MTN Nigeria Foundation, which is a non-profit

organization set up by MTN to drive its aggressive Corporate Social Responsibility agenda.

She obtained an LL.B (Hons) from Ahmadu Bello University, Zaria, Nigeria (1982), an LL.M from Cambridge

University, UK (1985), and also holds an MBA from Lancaster University Management School, UK (2000).

43


Mrs. Hajara Adeola is the Managing Director of Lotus Capital Limited, a Nigerian pioneer in Shari’ah compliant

Asset Management, Private Wealth Management Advisory Services and Financial Advisory Services. She comes

to Lotus Capital from UBS Warburg where she was a Director heading their London Islamic Finance Desk. Her

responsibilities included structuring and trading Islamic Finance investment instruments for European private

clients and multi-currency money market instruments for institutional clients (UK private banks). She was also

responsible for structuring innovative Islamic Finance instruments to meet evolving client requirements and

liaising with the Shari’ah consultants for approval.

Prior to joining UBS, she was a Convertible Bond Research Analyst at BNP Paribas, London where her primary

responsibility was to analyze, write and publish daily and quarterly research on European convertible bonds. This

research was published on Bloomberg and distributed to BNP Paribas’ worldwide institutional convertible client

base daily. In addition, she structured and priced primary convertible bond issues for corporate clients and gained

invaluable experience in the over the counter structured finance field.

Mrs. Hajara Adeola began her career as a consultant at Andersen Consulting (now Accenture). From then, she

joined ARM Investment Managers as a pioneer staff and rose to Vice-President and Head of the Research and

Financial Advisory Units. Her responsibilities included equity research, trading and investment management of

global equity portfolios and financial advisory assignments (feasibility reports, business plans, project management

and fund raising). In all, she has over 20 years of international experience in research and analysis, investment

management and corporate finance.

She holds an M.Sc in Finance (1st Class honours) from Durham University (2000) where she specialized in

Islamic Finance. She also holds an MBA in International Management from Exeter University (1993) and a BSc in

Pharmacology from King’s College, London (1992). Hajara Adeola was the first President of the Fund Manager’s

Association of Nigeria (FMAN) and a West African Fellow of the Aspen Leadership Initiative.

3. PRINCIPAL OFFICERS OF THE FUND MANAGER

Mrs. Hajara Adeola (Please refer to page [43] for Mrs. Adeola’s profile)

Gregory Ogbebor (Fund Manager)

Gregory Ogbebor is a pioneer staff of Lotus Capital Limited. He is a graduate of Banking & Finance from

University of Benin (2004). He is presently running a Master degree in Finance programme in the University of

Lagos, Akoka. He is also an associate member of the Chartered Institute of Loan and Risk Management (2011).

His responsibilities include Credit Analysis, Risk Management and Portfolio Management.

Kolawole Yaqub (Fund Manager)

Kola Yaqub is a 2006 graduate of Accounting from the University of Lagos, Akoka, Lagos. He holds a Masters

degree in Finance also from the University of Lagos, Akoka (2014). He is a final level candidate in the Chartered

Financial Analyst (CFA) and the Chartered Institute of Stockbrokers (CIS), Nigeria examinations.

Kola has over 6years experience covering investment and research, portfolio management, company valuation,

internal control and relationship management. Prior to joining Lotus Capital Ltd in 2014, Kolawole worked at

Meristem Securities Ltd as an Internal Control Officer and Investment and Research Analyst.

44

Abdulrahman Olatunde (Business Development)

Abdulrahman Olatunde is a graduate of Accounting from Obafemi Awolowo University Ile Ife (2000). He holds an

MBA from Ladoke Akintola University of Technology, Oyo State (2010). Abdulrahman has over 13 years’

experience spanning several areas of banking including corporate banking, retail banking, banking operations and

public sector business development amongst others.

He began his career at Midas Merchant Bank Plc. From there he joined Finbank Plc. and GT bank Plc. Prior to

joining Lotus Capital, he was head of public sector, Lagos State in Access Bank Plc.

4. BRIEF PROFILE OF THE TRUSTEE

FBN Trustees is a leading trusteeship company, offering innovative products and services to clients in and around

Nigeria and have successfully managed client’s businesses and wealth in the last 30 years. The combination of

brand strength, intellectual capacity and character stands the company out as an industry leader.

A member of the FBN Holdings Group and a subsidiary of FBN Capital Limited, FBN Trustees was incorporated

on 8th August 1979 as a private limited liability company to render nonbanking financial services, which includes:

Trusteeship – Public, Corporate and Private

Wealth Management

As a company, FBN Trustees has grown through internal development, selecting those companies and partners that

demonstrate the drive for innovation, excellence and customer focus.

5. DIRECTORS OF THE TRUSTEE

Taiwo Okeowo – Chairman

Mr. Taiwo Okeowo joined FBN Capital Limited in 2006 from First Bank Nigeria Plc. where he was Head of the

Corporate Finance Group. A seasoned professional with over 23 years' experience in investment banking, Taiwo

held principal responsibility for the advisory business of FBN Capital covering Debt and Equity Capital Markets

and the Financial Advisory practice before being appointed Deputy Managing Director.

Taiwo was a pioneer staff of IBTC (now Stanbic IBTC) and has considerable experience in project finance,

mergers, acquisitions, restructuring, and securities underwriting. He advised on the two largest non-oil transactions

to date in Nigeria namely the US$1.2 billion acquisition of V-Mobile by MTC/Celtel, and the US$480 million

project financing of Obajana Cement.

Qualifications: Sloan Masters - CFA Charterholder (2009), MSc Management (London Business School, 2001),

Fellow of the Institute of Chartered Accountants of Nigeria (2000), BSc Computer Science (University of Ibadan,

1981).

Patrick Mgbenwelu – Director

Mr. Patrick Mgbenwelu is a Director and Head of Project and Structured Finance for FBN Capital. Until his

appointment in December 2011, he worked with Stanbic IBTC Bank Plc. where he was a Director within the

Standard Bank Group leading the deal team originating, structuring and closing of project financings in Nigeria.

Patrick has over 20 years' banking experience, with a primary focus on financial advisory, structuring, debt arranging/lending and closing of PPP/project finance transactions in the United Kingdom, Portugal, Saudi Arabia,

Qatar, Oman, Kuwait, U.A.E, other GCC countries, and most recently in Nigeria. In the course of his career,

Patrick worked on PPPs/project financings in excess of US$72 billion, and was involved in a number of notable

transactions at Stanbic such as FHN 26 Reserve Base Lending, Lagos State Blue Line Railway Project, Lagos State

45

Lekki-Epe International Airport and financial adviser to NNPC on their Greenfield Refinery projects.

Qualifications: Associate of the Chartered Institute of Bankers (London, 1993), MSc Finance & Investment

(Middlesex University Business School, United Kingdom, 1996) MBA (South Bank University, London).

Awojobi Adekunle – Ag. Managing Director/CEO

Mr. Awojobi is a Fellow of the Institute of Chartered Accountants of Nigeria (November, 2007), an Associate of

the Chartered Institute of Taxation (November, 2007), a Certified Fraud examiner (March, 2000), a Member of the

Institute of Internal Auditors (April, 1999) and an Associate member of the Nigeria Institute of Management

(1997). He also holds a Bachelor of Science degree in Economics with First Class Honours from Ogun State

University (Olabisi Onabanjo University) Ago-Iwoye, Ogun state (August, 1989). Prior to joining FBN Trustees

Nigeria Limited in 2002, he was an Audit senior with KPMG audit (1996 - 1997); Internal Auditor

CarnaudMetalbox (Now Nampak) Nigeria Plc. (2000 - 2002).

On joining FBN Trustees he was employed as a Manager, Operations Department and later promoted to Senior

Manager, Operations based on outstanding performance. He was then moved to head the Capital Markets &

Projects Unit of the Investment Department. In February 2007, he was appointed Head, Operations & IT and

promoted to Assistant General Manager. In 2012, he was appointed the Ag. Managing Director/CEO and he holds

that position till date.

Kunle has attended various courses including Euromoney Bond & Fixed Income Academy (UK), Fundamentals of

Real Estate Finance Programme (UK); Corporate Finance Programme (Lagos) and The Bond Programme (Lagos)

all organized by Euromoney. He also attended trustees Essentials Course by the Associate Pension Fund and

Investment Managers, United Kingdom.

6. PRINCIPAL OFFICERS OF THE TRUSTEE

Babajide Fetuga –Head, Marketing & Business Development

Mr. Fetuga is a seasoned sales and marketing professional and a graduate of the department of Economics from the

University of Ibadan (1997). His work experience spans over 10 years cutting across the banking and financial

services and telecommunication industries.

Prior to joining FBN Trustees, he worked with Celtel Nigeria (now Zain Nigeria) as the regional corporate sales

manager covering the whole of the South-South region, holding briefs for the company in large corporates like

Schlumberger, Halliburton, Shell Petroleum Development Company etc.

His experience in banking was gained from Ecobank Nigeria Plc. where his career began and he also had brief

stints at Capital Bank International (formerly known as Commercial Bank Credit Lyonnais) and also Standard

Chartered Bank Ltd. He has vast experience in retail and commercial banking as well as branch development.

He has gained in depth knowledge in Sales & Marketing from attending and participating in courses such as

Marketing for Results (Lagos Business School), Face to Face selling skills (MacTay Resources), Establishment of

Leadership Position (Financial Derivatives Company) and a host of other courses both local and regional.

Frederick Obodozie: Head, Trust Services

Frederick Obodozie is a Law graduate of University of Lagos (2002). He further obtained a Barrister at Law from

Nigerian Law School, Lagos (2003). He started his career with Ajumogobia and Okeke in 2003 and worked there

for over four years as an Associate, Counsel and Solicitor during which he participated and was actively involved in several transactions.

Frederick joined FBN Trustees in 2007 and worked for about two years as the Unit head, Corporate Trust Unit.

Frederick and his team members have been able to close big ticket transactions relating to syndicated lending and a

46

few corporate bonds issue.

In 2010, Frederick, based on his level of enthusiasm and enterprise, was appointed as Head, Trust Services.

Frederick is currently pursuing an MBA from the University of Wales, UK. He has attended several trainings in the

course of his career.

Fasiu Adenekan: Head, Finance & Operations

Fasiu Adenekan graduated with a Higher National Diploma from Federal Polytechnic, Ilaro (1993) and he further

obtained an MBA with a focus on Finance from the Lagos State University (2004).

He has worked in several sectors of the economy and he has held several positions. He joined FBN Trustees in

2002 and he has worked in various capacities. Fasiu currently heads the Finance & Operations Department.

He is a Fellow of the Institute of Chartered Accountants of Nigeria (2006), an Associate Chartered Institute of

Taxation and a Graduate Member, Nigeria Institute of Management. He has also attended several trainings and

seminar that has given him a wide exposure to best practices in the financial world.

47

12. STATUTORY & GENERAL INFORMATION

1. EXTRACTS FROM THE TRUST DEED

Below are the relevant extracts from the Trust Deed

4. The Trust Deed

The provisions of this Trust Deed shall be binding on the Trustee, the Manager, the Unitholders and on all

persons claiming through them respectively as if such persons were parties to the Trust Deed.

5. Nature and Type of the Fund

5.1 The LOTUS HALAL EQUITY ETF is an exchange traded fund listed and traded on the NSE and

designed to enable Unitholders obtain market exposure to the Constituent Companies comprised in the

NSE Lotus Islamic Index and to substantially replicate the price and yield performance of the NSE

Lotus Islamic Index.

5.2 The investment objective of the ETF is to track the NSE Lotus Islamic Index.

5.3 The portfolio of securities consisting of the securities of the Constituent Companies in the NSE Lotus

Islamic Index (in substantially the same weightings as the Index) will be held by the Fund.

5.4 The ETF aims to operate in accordance with Shariah principles.

6. Subscription

6.1 Subscription will be done through either of two methods: -

6.1.1 On a ‘Securities for Units’ basis i.e. Subscribers will exchange shares of companies comprised

in the NSE Lotus Islamic Index for Units of the ETF.

6.1.2 On a ‘Cash Subscription’ basis i.e. Subscribers pay cash with which the securities of the

Constituent Companies are acquired during the Ramp up Period less transaction costs.

6.2 The subscription price for the ‘Securities for Units’ basis during the initial subscription in respect of one

Block of Lotus Halal Equity ETF Securities shall be discharged by the delivery of twenty five (25)

Basket of Shares. In addition to the delivery of the Basket of Shares, an applicant would be required to

pay the applicable transaction fees in cash to the Manager.

6.3 The subscription price for the ‘Cash Subscription’ basis during the Initial Offer will be based on 1/200

of the closing value of the NSE-LII on the preceding day of the Subscription, subject to a minimum of

one Basket. However, the final Unit price in respect of a basket will be determined as the average

consideration of the underlying securities of a basket acquired over the ramp period less transaction

charges.

7 Offer of Units

7.1 The Manager shall subscribe to a minimum of 5% of the initial subscription of Units.

7.2 Subsequent offers of Units in the ETF may be made to a select investor group or to the public, and the offer may be made of such number of Units and of such value as may be determined by the Manager.

48

8 Financial Year

The financial year of the ETF shall be from January to December of every year.

9 Appointment of a Custodian

The Trustee and Manager shall jointly appoint a Custodian to provide custodial services to the ETF.

12. Rights of Holders

12.1 The Holders shall not have or acquire any right against the Manager or the Trustee in respect of their

investments except such rights as are expressly conferred upon them by this Deed or by any law,

subsidiary legislation, regulation or any order of Court.

12.2 The Underlying Portfolio shall be held as a single common fund and no Unit of the ETF shall confer on

any Holder thereof any interest or share in any particular part of the Underlying Portfolio.

12.3 A Holder shall be able to sell Units in the Secondary Market through a trader on the NSE and shall also

have the right to take delivery of the prescribed number of Baskets on any Trading Day.

12.4 Holders may be paid distributions quarterly from the income of the ETF, if any, subject to the

recommendation of the Manager.

12.5 The Manager shall not be treated as the Holder of any Unit during such time as neither the Manager nor

any other person is registered or entitled to be registered as the Holder but nothing herein contained shall

prevent the Manager from subscribing for and becoming a registered holder of Units in the ETF.

12.6 A Holder shall have the right to pledge, charge, mortgage, or otherwise offer his Units to secure a debt, a

loan or an obligation and in any such case shall notify the Manager of the pledge, charge, mortgage or

obligation and comply with any applicable guidelines issued by the Transfer Agent from time to time.

13. Delivery Rights

13.1 In addition to being able to sell the Units on the NSE, Holders of Blocks of the ETF will be entitled to

take delivery of the prescribed number of Baskets on any Trading Day.

13.2 In the unlikely event that the Manager will not be able to meet the delivery obligations attaching to any

Delivery Notice received by it, the Manager shall be entitled to place a moratorium on the exercise by

the Holders of the delivery rights attaching to issued Units provided the approval of the Trustee is

obtained and SEC is duly notified.

13.3 The Manager shall not, in any given year, suspend the right to exercise such delivery rights for more

than ninety (90) Trading Days in the aggregate. It is anticipated that such a moratorium will not affect

the tradability of the Units in the ordinary course of trading on the NSE.

13.4 As at the date of setting up the Trust, for every Block in respect of which a Holder exercises delivery

rights, the Holder shall be entitled to take delivery of the minimum of twenty five (25) Basket of Shares.

13.5 In addition to the delivery of the Baskets of Shares, a Holder exercising his Delivery Rights shall be

entitled to receive from the Fund within five (5) Business Days an amount in cash representing a

proportionate interest in any Distribution Amount which may be attributed to the Block(s) in respect of which the Holder is exercising his Delivery Rights.

13.6 The Units comprising the Block in respect of which a Holder exercises his Delivery Rights shall be

cancelled against delivery of the prescribed number of Baskets (together with the appropriate cash

amount) to that Holder.

49

13.7 The Delivery Right attaching to Units may only be exercised in respect of one or more whole Blocks.

13.8 A transaction fee as published on the Manager’s website or otherwise notified to the Holder will be

payable by a Holder exercising his Delivery Rights.

13.9 A Holder may exercise his Delivery Rights in respect of one or more whole Blocks on any Trading Day

by forwarding a properly completed delivery notice to his Stockbroker, the Authorized Dealer or the

Manager.

13.10 Delivery notices received during NSE trading hours on any Trading Day will, if accepted, be dealt with

on the basis of the composition of a Basket of Shares representing the NSE Lotus Islamic Index at close

of business on the previous Trading Day.

13.11 If a delivery notice is received after close of trading on the relevant Trading Day, the delivery notice will

automatically be deemed as submitted for acceptance on the next succeeding Trading Day. If a delivery

notice is accepted, the relevant Holder will receive confirmation of such acceptance before close of

business on the Trading Day on which the delivery notice is received.

13.12 The Holder shall also receive a confirmation of the number of shares of each of the Constituent

Companies comprising the Baskets to be delivered to that Holder, the amount of cash (if any) which will

be paid to it (after taking into account any stamp duty charges incurred in relation to the Basket or

Baskets and any transaction fee which may be charged, all of which will be for the account of the

Holder) and details of the account into which such payment shall be made. The cost of any settlement by

electronic bank transfer will be passed on to the Holder.

14. Transfer of Units

14.1 Every Holder shall be entitled to transfer the Units held by him.

14.2 The transferor shall be deemed to remain the holder of the Units transferred until the name of the

transferee is entered in the Register in respect thereof.

14.3 All instruments of transfer may be retained by the Manager or by the Transfer Agent on behalf of the

Manager.

14.4 A reasonable fee of such amount as the Manager and the Trustee may from time to time agree may be

charged by the Manager upon any transfer of Units. Where the transfer relates to part of the Units of a

Holder, the Transfer Agent shall credit the CSCS Account of the transferee with the number of Units

transferred to it.

14.5 A receipt signed by the Holder in respect of any monies payable or a Basket receivable in respect of the

Units or a Block of Units represented by any Certificate or any suitable electronic confirmation shall be

a good discharge to the Trustee and the Manager and if several persons are registered as joint Holders or

in consequence of the death of a Holder, are entitled so to be registered, any one of them may give an

effectual receipt for any such monies.

15. Investment Policy

15.1 Subject to the provisions of this Trust Deed, the ETF will substantially replicate the price and yield

performance of the NSE Lotus Islamic Index by holding a portfolio of securities that substantially represent

the component securities of the NSE Lotus Islamic Index in substantially the same weighting as the NSE

Lotus Islamic Index.

15.2 The financial condition of any Constituent Company will not result in the elimination of its securities from

the ETF’s portfolio unless the securities of the Company are removed from the NSE Lotus Islamic Index.

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15.3 The Manager shall not alter the Investment Policy of the ETF without the consent of the Trustee and the

prior approval of the Commission.

15.4 In the event of a change in the Investment Policy and objectives of the ETF, reasonable notice will be given

by the Manager to Holders to enable Holders elect whether to request delivery of the prescribed number of

Baskets of Shares of the Constituent Companies or to continue to hold their Units of the ETF.

19. Registration of Holders

19.1 A Register of Holders shall be kept by the Transfer Agent.

19.2 The Register shall contain the names of Holders, the respective number of Units held, the nominal value

of the Units, the date of purchase, the certificate number (if applicable) and any other information that

may be deemed necessary by the Manager and the Trustee.

19.3 The Holder shall notify the Transfer Agent immediately in writing of any change of name or address of

such Holder and upon the Transfer Agent’s satisfaction that the Holder has complied with all such

formalities as the Transfer Agent may require, cause the Register to be altered or the change to be

registered accordingly.

19.4 The Register shall be conclusive evidence of the persons entitled to the Units stated in it and no notice of

any trust, express, implied or constructive shall be entered upon the Register in respect of any such

Units. PROVIDED that any person claiming to be interested in any Units or the distribution derived

therefrom may protect his interest by serving on the Manager a notice and an affidavit of interest

whereupon the Transfer Agent shall cause to be entered on the Register the existence of such notice and

shall not register, transfer or make a payment or return(s) in respect of the relevant Units contrary to the

terms of the notice until the expiration of thirty (30) days notice to the Holder of the proposed transfer or

payment.

19.5 A body corporate may be registered as a Holder or one of joint Holders.

19.6 In the event of the death of a Holder, only the legally appointed executors or administrators of the estate

of the deceased Holder (not being one of joint Holders) or the surviving Holder(s) of joint Holders shall

be recognised by the Transfer Agent as having any title to or interest in the Units of the deceased

Holder.

19.7 Any person becoming legally entitled to any Units in consequence of the death or bankruptcy or

dissolution or winding up of any Holder or upon the order of a court or upon a declaration that a Holder

is a lunatic shall upon producing such evidence to the satisfaction of the Transfer Agent be registered or

to have some other persons nominated by him registered as the holder of such Unit(s) and to have his

CSCS account credited accordingly.

19.8 The number of Units held by a Holder shall be registered and recorded by the Transfer Agent as a book

entry.

19.9 The Manager may, upon giving notice to the Holders by advertisement in one or more of the following:

a daily newspaper, its website or by e-mail notification to Holders close the Register. Such periods of

closure shall not, in aggregate, exceed sixty (60) days in a year.

20. Voting Rights on Underlying Portfolio

20.1 All rights of voting conferred by any investments forming part of the Underlying Portfolio shall be exercised

by the Trustee in the best interest of the Unitholders. Upon written request and at the expense of the Manager, the Trustee shall from time to time execute and deliver or cause to be executed or delivered to the Manager or

its nominees such powers of attorney or proxies in such names as the Manager may request authorising such

attorneys and proxies to vote, consent or otherwise act in respect of all or any part of the Underlying

Portfolio.

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20.2 The Trustee shall exercise the said rights in what it considers to be the best interest of the Holders. Subject to

Section 168 of the Investments and Securities Act, neither the Trustee or the Manager shall be under any

liability or responsibility in respect of the management of the investment in question nor in respect of any

vote, action or consent given or taken or not given or taken by the Trustee whether in person or by proxy and

neither the Trustee, the Manager or the Holder or any such proxy or attorney shall incur any liability or

responsibility by reason of any error of law or mistake of fact or any matter or thing done or omitted or

approval given or withheld by the Trustee and the Trustee shall be under no obligation to anyone with respect

to any action taken or caused to be taken or omitted by the Trustee or the Manager or by any such proxy or

attorney.

20.3 The phrase “right of voting” or the word “vote” used in this Clause shall be deemed to include not only a vote

at a meeting but any consent to or approval of any arrangement, scheme or resolution or any alteration in or

abandonment of any rights attaching to any part of the Underlying Portfolio and the right to requisition or

join in a requisition to convene any meeting or to give notice of any resolution or to circulate any statement.

20.4 The Trustee shall, when necessary forward to the Manager, all notices of meetings, reports, circulars and

other documents of a like nature received by it or its nominee with regard to any investment of the ETF.

21. Evidence of Unitholding

21.1 Except where a certificate is specifically requested, Holders will have their CSCS accounts credited with

the number of Units held by them.

21.2 Joint Holders shall provide a Joint CSCS account into which Units shall be credited.

21.3 Holders shall be notified of their initial holding by an electronic email, text message or any other

electronic form of communication. Holders shall also be able to view their holdings at any particular time

by logging on to their CSCS Accounts.

22. Income Distribution

22.1 It is anticipated that the Trust will effect quarterly distributions of any net income. All distributions will

be paid out of the ETF’s income (whether received in the form of dividends, profits or otherwise) net of

expenses, subject to the recommendation of the Manager.

22.2 Distribution will be effected by the Transfer Agent and the cost of distribution will be borne by the ETF.

22.3 Any distribution which is unclaimed will be forfeited after twelve (12) years to the Lotus Halal Equity

Exchange Traded Fund.

32. Removal, Retirement and Appointment of Manager

32.1 In the event of the Manager desiring to retire, the Trustee shall use its best endeavours to replace the

Manager in accordance with the provisions of this Trust Deed. If within the six (6) months notice by the

Manager seeking to retire no suitable replacement is identified, the Trustee may terminate the Trust by

giving six (6) months notice to the Holders, the Manager and the Commission.

32.2 The Manager shall be subject to removal by notice in writing given by the Trustee in any of the following

circumstances PROVIDED THAT in every case the proposed removal has been approved by the

Commission or one (1) month has passed since notice was served on the Commission without the

Commission having notified the Trustee that the proposed removal is not approved before service on the

Manager:

32.2.1 if the Holders representing more than 75% of the Units for the time being outstanding of the ETF

deliver to the Trustee a request in writing that the Manager should retire or;

32.2.2 if the Manager goes into liquidation (except for a voluntary liquidation for the purpose of

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reconstruction or amalgamation upon terms previously approved in writing by the Trustee) or if

a receiver is appointed over any of its assets or if it shall cease to carry on business; or

32.2.3 if the Trustee certifies and provides evidence to the satisfaction of the Commission to the effect

that the Manager has been fraudulent or has acted with gross misconduct in its management of

the ETF or if in the opinion of the Trustee, the Manager has become incapable of performing or

has in fact failed to perform its duties satisfactorily or has done any other thing which in the

opinion of the Trustee is calculated to bring the Trust into disrepute or to be harmful to the best

interests of the Holders.

32.3 In any of the cases, provided in Clause 33.2 above, the Manager shall upon notice by the Trustee

immediately cease to be the manager of the ETF and the Trustee shall by writing under its seal subject to

approval by the Commission appoint some other qualified Fund Manager to be the manager of the ETF.

Such Fund Manager shall enter into such Deed or Deeds as the Trustee may advise is necessary or

desirable to secure the due performance of its duties as manager, PROVIDED THAT the ETF shall as

soon as practicable cease to use the phrase “Lotus Halal” in its name and that neither the Trustee nor the

new manager shall hold themselves out as being connected with the retiring manager in any way.

33. Removal, Retirement and Appointment of Trustee

33.1 In the event of the Trustee desiring to retire, it shall give not less than six (6) month’s notice in writing to

the Manager and the Commission of its desire to retire, and the Manager shall use its best endeavours to

appoint a new trustee to the ETF within the six (6) months notice period given by the Trustee . The new

Trustee shall be an incorporated company registered with the Commission as a Corporate Trustee. If no

new Trustee can be identified within that period the Manager may terminate the Trust.

33.2 The Trustee may be removed by notice in writing from the Manager in any of the following

circumstances PROVIDED THAT in either case the Manager and the Trustee shall first notify the

Commission and give reasons for the withdrawal or removal as well as the suitability of the new trustee

to be appointed and the notice of proposed removal shall be approved by the Commission. The approval

of the Commission shall be deemed after the expiration of one (1) month of service of notice on the

Commission without the Commission having notified the Manager that the proposed removal is not

approved:

33.2.1 if Holders holding not less than 75% of the Units outstanding of the ETF deliver to the Manager

a request in writing that the Trustee should retire;

33.2.2 if the Trustee goes into liquidation (except for a voluntary liquidation for the purpose of

reconstruction or amalgamation upon terms previously approved in writing by the Manager) or

if a receiver is appointed over any of its assets;

33.2.3 if in the opinion of the Manager, which opinion is confirmed by Holders holding a simple

majority of the Units outstanding attending the meeting in person or by proxy, the Trustee has

become incapable of performing or has in fact failed to perform its duties satisfactorily or shall

have done any other thing which is calculated to bring the ETF into disrepute or be harmful to

the best interests of the Holders or is a breach of the Trustees’ fiduciary duties to the ETF. Upon

removal of the Trustee, the Manager shall by writing under its seal subject to the approval of the

Commission appoint some other qualified corporation to be the trustee and such corporation

shall enter such Deed or Deeds as the Manager deems necessary or desirable to secure the due

performance of its duties as trustee.

33.3 The new Trustee taking the place of the Trustee retiring pursuant to Clause 33.1 or removed pursuant to

Clause 33.2 above shall sign a Deed of Accession in terms set out in the Third Schedule.

33.4 Where the Trustee retires pursuant to Clause 33.1 or where the appointment of the Trustee is terminated

pursuant to Clause 33.2, the Trustee shall within seven (7) days submit a report to the Commission stating

the following:

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a) the assets and liabilities of the ETF;

b) whether any irregularity or undesirable practice has taken place or is taking place in the conduct

of the affairs of the ETF which has caused or is likely to cause financial loss to investors in the

ETF;

c) particulars of any such irregularity or undesirable practice; and

d) the reason, if known, for the termination of the appointment.

33.5 The retiring trustee shall, within 14 days, hand over all properties and documents of the ETF in its

possession to the new trustee.

35. Audit of the ETF’s Accounts

35.1 Within three (3) months from the end of every financial year, the Manager shall cause to be audited and

certified by the Auditors, the accounts of the ETF and a copy of the audited accounts of the ETF shall be

signed by the Manager and the Trustee. The audited accounts of the ETF shall be forwarded to the

Commission.

35.2 The audited accounts shall be posted on the Fund Manager’s website within three (3) months after

approval has been received from the Commission in respect of the Accounts for each financial year.

35.3 The Manager may appoint tax consultants or such other accounting or tax professionals as it may

determine from time to time.

36. Auditor

36.1 The Auditor shall be appointed by the Manager in consultation with the Trustee. The Auditor shall be a

person who is qualified for appointment as an auditor of a Company under Section 315 and 184(1) of the

Investments and Securities Act and shall be duly registered with the Commission.

36.2 Within thirty (30) days of the date of appointment of the Auditor, the Manager shall apply to the

Commission for approval of the appointment of the Auditor; and the Commission may at any time

withdraw its approval of the appointment of an Auditor.

36.3 Any Auditor appointed may be removed by the Manager in consultation with the Trustee by notice

thereof to the Auditor.

36.4 The remuneration of the Auditor shall be fixed by the Manager.

36.5 The Auditor of the ETF may resign their office by serving a notice in writing to that effect at the

registered office of the Manager and any such notice shall operate to determine their office on the date on

which notice is received or on such later date as may be specified therein.

36.6 The Auditor’s notice of resignation shall not be effective unless it contains either:

36.6.1 a statement to the effect that there are no circumstances connected with their resignation which

they consider should be brought to the notice of the Holders of the ETF; or

36.6.2 a statement setting out the circumstances connected with their resignation which they consider

should be brought to the notice of the Holders of the ETF.

36.7 Where a notice under this Clause is served at the Manager’s registered office, the Manager shall within

fourteen (14) days send a copy of the notice to the Trustee.

36.8 The Manager shall inform the Commission of the removal or resignation of the Auditors.

36.9 The Auditors shall have the following obligations amongst others

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36.9.1 audit the financial statements of the ETF at the end of its financial year in accordance with the

approved accounting standards, the ISA 2007 and the provisions of this Trust Deed.

36.9.2 report to the Manager, any irregularity or undesirable practice in the administration of the ETF

which has come to his notice in the ordinary course of fulfilling its audit obligations or

performing other functions under this Trust Deed, the ISA 2007 and the SEC Rules and

Regulations.

36.9.3 submit a copy of the report in Clause 37.9.2 to the Commission if they have reasonable cause to

believe that such report is or might be of material significance to the Commission.

37. Duration and Termination of the Trust

37.1 The Trust constituted by this Deed shall be for a period of 30 years subject only to the provisions for

termination as are herein contained. The provisions of the Trust shall be renewed upon reaching its

duration by mutual consent of the Manager and the Trustee subject to the approval of the Commission.

37.2 The Trustee or Manager shall have absolute discretion to terminate the Trust by issuing no less than six

(6) months notice thereof in writing to the other as well as to the Holders of the ETF and the Commission.

37.3 The Trust may be terminated upon no less than six (6) months notice by the Trustee in writing to the

Manager, Holders of the ETF and the Commission if the Trust becomes illegal or if in the opinion of the

Trustee it is impracticable or inadvisable to continue the Trust.

37.4 The Trust may at any time be terminated by a Special Resolution of the Holders at a meeting of the ETF

duly convened and held in accordance with the provisions herein contained in respect of the ETF

regarding meetings and such termination shall take effect no less than six (6) months from the date on

which the said Special Resolution is passed or on such later date (if any) as the said Special Resolution

may provide.

37.5 The Trust may be duly terminated by the Commission where any of the activities of the Trust is outside

the ambit of permissible activities as provided for by the Investments and Securities Act, any relevant

regulations enacted thereunder and/or any other applicable laws or where the Commission’s approval of

the ETF is withdrawn.

37.6 The Manager may, by notice to the Commission, Holders and the Trustee terminate the ETF if in the

opinion of the Manager the value of the Underlying Portfolio is insufficient to justify the continued

operation of the ETF or if, due to a change in law or other circumstance deemed appropriate by the

Manager, the continued operation of the ETF is no longer justified.

38. Procedure after Termination of the Trust

Upon the termination of the Trust, the Trustee shall proceed as follows:

38.1 To effect delivery of the prescribed number of Baskets represented by the number of Units of the ETF,

such delivery shall be carried out in such a manner and within such a period after the termination of the

Trust as the Trustee thinks advisable PROVIDED THAT where the ETF is unable to meet delivery

obligations attaching to all the Units in issue at the relevant time of termination, the Manager subject to

the prior approval of the Trustee and the Commission, will be entitled to place a moratorium, for not more

than ninety (90) Trading Days in the aggregate, on the exercise by Holders of the delivery rights attached

to issued the Units.

38.2 Every such delivery shall be made on the condition of lodging such form of delivery notice that the

Trustee may in its absolute discretion require PROVIDED THAT the Manager and the Trustee shall be entitled to retain out of any monies standing to the credit of the distribution account, a provision for all

costs, charges, expenses, claims and demands reasonably incurred or made by the Trustee in connection

with or arising out of the termination of this Trust and out of the monies so retained to be indemnified

against any such costs, charges, expenses, claims and demands.

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42. Copies of Trust Deed to be Made Available

42.1 A copy of this Deed and of any Deed supplemental hereto shall, at all times, during usual business hours

be made available by the Manager and the Trustee at their respective head offices for inspection by

Holders and any Holder shall be entitled to receive from the Manager a copy of such Deed(s) as aforesaid

on production of his Certificate(s) or current electronic Statement and making payment to the Manager of

the prescribed amount for each copy of the document.

42.2 The Trustee shall keep a counterpart copy of the Trust Deed.

44. Power of Modification by Supplemental Deed

44.1 The Trustee and Manager shall be entitled by supplemental deed to consolidate, modify, alter or add to

the provisions of this Deed in such manner and to such extent as they may consider necessary or

expedient having regard to any issues that they may consider relevant PROVIDED THAT the Trustee

shall certify in writing that in its opinion such consolidation, modification, alteration or addition does not

prejudice the interests of the Holders and that in its opinion, such consolidation, modification, alteration

or addition does not operate to release the Trustee or Manager from any responsibility to the Holders. No

such consolidation, modification, alteration or addition shall be made without the sanction of a Special

Resolution passed at a Meeting of Holders duly convened and held. No such consolidation, modification,

alteration or addition shall impose any further payment on the Holder in respect of his Units or any

liability in respect thereof, except if such a change is required by law.

PROVIDED ALWAYS THAT, notwithstanding Clause 44.1 above, the Manager and the Trustee shall

seek the approval of the Commission for any proposed modification to the Trust Deed by service of

notice on the Commission. Such proposed change shall not be given effect until the proposed change has

been approved by the Commission or until a period of one month has elapsed since the date the notice

was given to the Commission without the Commission having notified the Trustee or Manager that it

does not approve the modification.

2. EXTRACTS FROM THE CUSTODY AGREEMENT

Below are the relevant extracts from the Custody Agreement

CLAUSE 2

REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

2.1 General The Trustee, the Manager and the Custodian each represent that at the date this Agreement is entered into

and any custodial service is used or provided;

a. It is duly organised and in good standing in every jurisdiction where it is required so to be;

b. It has the power and authority to sign and to perform its obligations under this Agreement;

c. This Agreement is duly authorised and signed and it is a legal, valid and binding obligation;

d. Any consent, authorisation or instruction required in connection with this Agreement has been

provided by any relevant third party;

e. Any act required by any relevant governmental or other authority to be done in connection with this

Agreement has been or will be done (and will be renewed if necessary); and

f. Its performance of this Agreement will not violate or breach any applicable law, regulation, contract or

other requirement.

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2.2 The Trustee and the Manager The Trustee and the Manager represent that at the date this Agreement is entered into and any custodial

service is used or provided;

a. It has authority to deposit the Property received in the Custody Account and the Cash Account and

there is no claim or encumbrance that adversely affects any delivery or payment of Property made in

accordance with this Agreement; and

b. It has not relied on any oral or written representation made by the Custodian or any person on its

behalf and acknowledges that this Agreement, including the fee schedule, sets out to the fullest extent

the duties of the Custodian.

2.3 The Custodian The Custodian represents that at the date this Agreement is entered into and any custodial service is used or

provided;

a. It is a bank, duly incorporated or organised under the laws of the Federal Republic of Nigeria and is

licensed to carry on banking business under the Banks and Other Financial Institutions Act 1991.

b. It is an authorised dealer of foreign exchange under the provisions of the Foreign Exchange

Monitoring and Miscellaneous Provisions Act 1995.

CLAUSE 3

ESTABLISHMENT OF ACCOUNTS

3.1 Accounts

The Trustee and the Manager authorise the Custodian to establish on its books, pursuant to the terms of this

Agreement:

a. A Custody account or accounts (the “Custody Account”); and,

b. A Cash account or accounts (the “Cash Account”) together both jointly known as “the Accounts”).

3.1.1 The Custody Account will be an account for the receipt, safekeeping and maintenance of Securities

and the Cash Account will be a current account for cash.

3.1.2 The Custodian shall hold the Cash Account separate from any other Cash Account including that of

the Custodian, Manager and Trustee.

3.1.3 The Custody Account and the Cash Account will be in the name of the Trustee/Fund or such other

name as the Commission may advise in the future.

3.2 Acceptance of Property

The Custodian shall:

a. accept for custody in the Custody Account all Securities, being authorised investments purchased for

the Fund in line with the Trust Deed constituting the Fund.

b. accept for deposit in the Cash Account, cash in any currency in respect of the Property of the Fund.

3.3 Performance Subject to Laws

The Trustee and the Manager understand and agree that the Custodian’s performance of this Agreement is

subject to the relevant local laws, regulations, decrees, orders, government acts, customs, procedures and

practices to which the Custodian is subject and as exist in Nigeria including the opening of, the holding of

57

all or any part of the Property in, and the delivery of any Property to or from the Custody Account or the

Cash Account and the performance of any other activities contemplated in this Agreement by the Custodian

(including acting on any Instructions).

3.4 Sole Obligations of the Custodian

3.4.1 The Trustee and the Manager understand and agree that:

a. the obligations and duties of the Custodian will be performed only by such Custodian and are not

obligations or duties of any other Custodian or other member of the Citigroup Organisation and,

b. the rights of the Trustee and the Manager with respect to the Custodian extend only to the Custodian

and do not extend to any other Custodian or to any other member of the Citigroup Organisation.

c. The Fund Manager agrees and understands that any member of the Citigroup Organisation can engage

as principal or otherwise in any transaction effected by the Fund Manager or by any person for its

account and benefit, or by or on behalf of any counterparty or issuer. When instructed to buy or sell

any Security or effect any transaction, the Custodian is entitled to effect any transaction by or with

itself or any member of the Citigroup Organisation and to pay or keep any fee, commissions or

compensation as specified in the Fund Manager’s Instruction or, if no specification is provided, any

charges, fees, commissions or similar payments generally in effect from time to time with regard to

such or similar transactions.

3.5 Use of Clearance Systems

The Custodian may deposit the Property with any Clearance System deemed appropriate by the Custodian.

Deposited Property will be subject to the rules, terms and conditions of such Clearance System. The

Property will be held as provided in this Agreement.

3.6 Further Information

The Trustee and the Manager agree to execute further documents and provide materials and information as

may be reasonably requested by the Custodian to enable it to perform its duties and obligations under this

Agreement.

CLAUSE 9

RECORDS AND ACCESS

9.1 Examination of Statements

The Manager shall examine each statement sent by the Custodian and notify the Custodian in writing within

thirty (30) days of receipt of such statement of any discrepancy between Instructions given and the situation

shown in the statement and of any other errors known to the Manager. Except as provided in such notice,

the Manager agrees that each statement will be binding on the Manager after the thirty (30) days as

aforementioned, and the Manager shall be deemed to have approved the statement.

9.2 Access to Records

The Custodian shall allow the Trustee and the Manager and their independent public accountants, agents or

regulators access to the records of the Custodian relating to the Property as is required by the Trustee and

the Manager in connection with an examination of the books and records pertaining to the affairs of the

Fund and will seek to obtain such access from each Clearance System. The Custodian has no obligation to require any Clearance System to maintain records for any specified period of time.

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CLAUSE 17

CONFIDENTIALITY

17.1 The Custodian will treat information related to the Fund as well as Parties to the Fund as confidential but,

unless prohibited by law, the Manager authorises the transfer or disclosure of any information relating to

the Fund to and between the branches, subsidiaries, representative offices, affiliates and agents of the

Custodian and third parties selected by any of them (altogether referred to as “Connected Persons”),

wherever situated, for confidential use in connection with the provision of services to the Fund (including

for data processing, statistical and risk analysis purposes), and further acknowledges that any such branch,

subsidiary, representative office, affiliate, agent or third party may transfer or disclose any such information

as required by any law, court, regulator or legal process. The Custodian shall undertake reasonable

measures to ensure that the Connected Persons abide by the confidentiality obligations imposed hereunder.

17.2 The Manager will treat the terms of this Agreement, including any fee schedule, as confidential.

CLAUSE 20

TERMINATION

20.1 Effect

Any of the Parties may terminate this Agreement in whole or as between itself and the other Parties hereto

by giving not less than sixty (60) days prior written notice to such other Parties. The Manager and or

Trustee may terminate this Agreement with immediate effect if the Custodian is in breach of its duties

hereunder and the Custodian has failed to remedy such breach after a notice period at the sole discretion of

the Manager and or Trustee has been given to it to remedy the breach.

20.2 Termination on bankruptcy or insolvency

Notwithstanding the provisions of Clause 20.1 above, this Agreement shall terminate upon notice upon the

bankruptcy or insolvency of any of the Parties.

20.3 Delivery of Property

Upon termination, the Custodian shall deliver the Property to the Trustee at its address specified for notices

or deliver by electronic transfers according to the Manager’s instructions unless within sixty (60) days

following the termination notice referred to above, the Manager gives the Custodian Instructions specifying

the person (including appropriate delivery address) to whom such Custodian shall deliver the Property.

20.4 Surviving Terms

The rights and obligations contained in Clauses 11, 13, 14, 15, 16 and 20 of this Agreement shall survive

the termination of this Agreement.

20.5 Cost of Termination

The cost(s) of termination of the Agreement shall be met by the Party in breach, in all other cases the costs

shall be met by the Party giving notice of the termination of the Agreement. The Custodian shall be entitled

to receive all fees due until the date of such termination.

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CLAUSE 22

MISCELLANEOUS

22.1 Amendments

Except as specified in this Agreement, this Agreement may only be modified by written agreement of the

Trustee, the Manager and the Custodian.

22.2 Severability

If any provision of this Agreement is or becomes illegal, invalid or unenforceable under any applicable law,

the remaining provisions shall remain in full force and effect (as shall that provision under any other law).

22.3 Cumulative Rights

No failure or delay of the Trustee, Manager or the Custodian in exercising any right or remedy under this

Agreement shall constitute a waiver of that right. Any waiver of any right will be limited to the specific

instance.

22.4 Recordings

Parties consent to telephonic or electronic recordings for security and quality of service purposes and agree

that any of them may produce telephonic or electronic recordings or computer records as evidence in any

proceedings brought in connection with this Agreement.

22.5 Notices

Written notice shall be effective if delivered to the Manager’s principal business address specified in

writing below, to the Custodian’s address specified in writing below or to the Trustee’s address specified

below (or any other addresses they may provide by written notice for this purpose). Any method used to

communicate Instructions may be used to give any notice. Notices shall be in English unless otherwise

agreed.

3. INDEBTEDNESS

As of the date of this Prospectus, the Fund Manager has no outstanding debentures, mortgages, loans, charges or

similar indebtedness, except in the ordinary course of business.

4. CLAIMS & LITIGATION

As at the date of this prospectus, the Fund Manager is involved in 1 (One) adverse law suit. The total monetary claim jointly against the Fund Manager is not material with respect to the Fund. In the Solicitor to the offer’s opinion, the Fund Manager has a good defence to the adverse litigation and the claim is unlikely to have any material or adverse effect on the finances of the Fund Manager with respect to the Fund.

5. COSTS & EXPENSES

The initial expenses of establishing the Fund, comprising the fees payable to the SEC, professional fees, Receiving

Agents, Registrar as well as printing, advertising and all other related expenses, which are estimated at 2.99% of

the gross offer proceeds and amount to ₦41,393,750.00, are payable by the Fund and deductible from the amount

raised by the Fund. These initial costs and expenses will be deducted immediately from the Offer proceeds.

60

6. MATERIAL CONTRACTS

The following agreements have been entered into and are considered material to this Offer:

1. A Trust Deed dated 18th

July, 2014 between Lotus Capital Limited and FBN Trustees Limited under which

the Fund was constituted.

2. An Authorised Dealer Agreement dated 18th

July, 2014 between Lotus Capital Limited, FBN Trustees

Limited and Vetiva Securities Limited.

3. An Index License Agreement dated 18th

July, 2014 between Lotus Capital Limited, The Nigerian Stock

Exchange and Lotus Capital Limited.

4. A Vending Agreement dated 18th

July, 2014 between Lotus Capital Limited and Vetiva Capital

Management Limited under the terms of which Vetiva Capital Management Limited has agreed to offer

100,000,000 Units of the Lotus Halal Equity ETF by way of an offer for subscription.

5. A Custody Agreement dated 18th

July, 2014 between Lotus Capital Limited, FBN Trustees Limited and

Citibank Nigeria Limited (Global Transaction Services) pursuant to which the Fund Manager and the

Trustees have appointed Citibank Nigeria Limited (Global Transaction Services) to act as custodian of the

Fund’s investments, cash and other assets and to accept responsibility for the safe custody of the Deposited

Property which is delivered to and accepted by the Custodian.

6. A Transfer Agent Service Level Agreement dated 18th

July, 2014 between Lotus Capital Limited, FBN

Trustees Limited and the Central Securities Clearing System Plc.

Other than as stated above, the Fund Manager has not entered into any material contracts except in the ordinary

course of business.

7. CONSENTS

The following have given and not withdrawn their written consents to the issue of this Prospectus with their names

and reports (where applicable) included in the form and context in which they appear:

Directors of the Fund Manager: Mr. Fola Adeola (Chairman)

Mrs. Lateefah Okunnu

Mr. Muhammad Nuruddeen Lemu

Mrs. Amina Oyagbola


Company Secretary: Mas’ud Balogun

Issuing House: Vetiva Capital Management Limited

Trustee to the Fund: FBN Trustees Limited

Custodian: Citibank Nigeria Limited (Global Transaction Services)

Solicitors to the Offer: Kola Awodein & Co.

Solicitors to the Trustee: Akin Delano Legal Practitioners

Reporting Accountants: Ahmed Zakari & Co.

Stockbroker to the Offer: Vetiva Securities Limited

Transfer Agent: Central Securities and Clearing Systems Plc.

61

8. RELATIONSHIP BETWEEN THE FUND MANAGER, THE CUSTODIAN AND THE TRUSTEE

The Fund Manager, the Custodian and the Trustee do not have any common shareholder and neither is any a

subsidiary or holding company of another. They do not have common Directors.

9. RELATIONSHIP BETWEEN THE FUND MANAGER AND ITS ADVISERS

The Fund Manager and the Issuing House do not have any common shareholder and neither one is a subsidiary or

holding company of the other. They do not have common Directors.

Except as disclosed, there is no relationship between the Fund Manager and any of its advisers except in the

ordinary course of business.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the offices of the Issuing House at its business address

during normal working hours on any Business Day during the Offer Period:

1. Certificates of Incorporation of the Fund Manager, the Custodian and the Trustee;

2. Memoranda and Articles of Association of the Fund Manager, the Custodian and the Trustee;

3. The resolution of the Board of Directors of the Fund Manager authorising the creation of the Fund and the

issuance of 100,000,000 Units of the Fund;

4. The duly executed Prospectus issued in respect of the Offer;

5. The Memorandum of Ahmed Zakari & Co. on the Financial Forecast of the Fund for the years ending 31st

December 2014, 2015 and 2016;

6. The 5-Year audited financial summary of the Fund Manager;

7. The negative statement issued by the Solicitors to the Offer;

8. The material contracts referred to above;

9. The written consents referred to above;

10. The letter of authorisation of the Fund and registration of the Units by the SEC; and

11. The agreement between the NSE and Lotus Capital Limited to use the NSE LII.

62

13. NIGERIA

The information in this section has been extracted from documents and other publications released by various officials and other public and private sources, including the CBN and the International Monetary Fund (“IMF”), as indicated below. There is not necessarily any uniformity of views among such sources as to such information provided. The Fund Manager has accurately summarised such information and, so far as the Manager is aware

and is able to ascertain, no facts have been omitted that would render the reproduced information inaccurate or misleading. The Fund Manager has relied on the accuracy of this information without independent verification.

In this section, Nigeria and its Capital Market, in which the Fund will invest, are described in detail. The section

focuses on the country profile, local market trends, impact of the global economy on the market, and prevailing

market conditions.

Brief Profile - Nigeria Nigeria is the largest economy in the West African sub-region and the second largest on the continent with a Gross

Domestic Product estimated at US$272 billion in 2012 according to the IMF. Data from the United States Energy

Information Administration shows that, Nigeria was the 12th largest producer of crude oil in world with 2.52 million

barrels per day (mbpd) and 5th biggest exporter. Nigeria is also a significant exporter of cocoa and rubber and has

solid mineral deposits such as coal, tin, columbine, iron ore, limestone and bitumen.

Economy

The Nigerian economy has consistently grown in recent years. Nigeria’s Average Annual GDP Growth Rate from

2005 until 2013 stands at 6.78%, reaching an all-time high of 8.60% in December of 2010 and a record low of

4.50% in March of 2009. The Economy grew by 6.58% in 2012, a slowdown as the floods took a toll on the

heavyweight Agriculture sector (38.2% of GDP). Also the oil sector slipped back to the negative territory

contracting 0.79% in the fourth quarter of 2012, though domestic demand remained resilient, with real growth in

the sector advancing 11.19% (vs. 8.42% Q1’12). As at September 2013, the National Bureau of Statistics (NBS)

released GDP data for Q3’13 showing a real GDP growth of 6.81% y/y, stronger than 6.18% in Q2’13, and 6.48%

recorded in the corresponding quarter of 2012.

The Federal Government of Nigeria has committed to and already started investments in the country’s

infrastructure to address the significant infrastructural challenges with regard to power supply, roads, railway and

other key infrastructure deficits in the country, and the government sees a role for both the private and public

sectors in addressing the infrastructure deficit in the country.

As with most developing frontier economies, Nigeria has not been left out on the inflation front. Nigeria Inflation

Rate averaged 10.56% from 2006 until 2013, reaching an all-time high of 15.60% in February of 2010 and a record

low of 3.00% in July of 2006. In June of 2013, Nigeria's annual inflation rate dropped to 8.4%, from 9% in May,

the lowest rate since April of 2008, as non-food prices slowed down. Due to base effects, it is expected that core

inflation will likely remain subdued.

8

10

12

14

16

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov

Headline Inflation Food Inflation Core Inflation

63

Interest rates remained stable and within market expectations, supporting positive and high interest rate

differentials. The currency market stabilized with convergence among the Central Bank, Interbank and Parallel

market rates, supported by an accumulation in foreign reserves to 23 - month high of US$44Bn. Steady accretion in

reserves has continued to increase investor confidence, and provide firmness for the currency.

NIGERIAN EQUITIES MARKET

The Nigerian equities market is one of the leading markets in Sub-Saharan Africa. Trading in the Nigerian equity

capital market commenced formally in 1960 when the Nigerian Stock Exchange was established. The Exchange is

the pivot of the Nigerian capital market and has 14 branches including in Lagos, Kaduna, Port Harcourt, Kano,

Onitsha, Ibadan and Abuja. The Securities and Exchange Commission is the regulatory of the Nigerian Capital

market and oversees the activities of operators in the market including The Exchange, stock brokers, trustees,

issuing houses, registrars and fund/portfolio managers.

Recovering strongly from its 2011 oversold level (when the NSE Index lost 16.3%), Nigerian equity market

benchmark posted a 35.5% return in 2012, defying the weak economic growth and tight monetary policy

environment. With a 3.8% appreciation in the local currency (Naira) against the US Dollars, the NSE Index gained

39.5% in dollar terms, ranking third best performing equity market in Africa. Interestingly, the rally on the Bourse

was largely buoyed by the steady portfolio inflow (an estimated net inflow of N155 billion or 18% of total turnover)

as fund managers sought increased exposure to growth markets to hedge the risk of weakening developed

economies’ fundamentals.

Notwithstanding national and market-specific challenges in 2013, the NSE ASI closed the year with its strongest

performance since 2008 closing with a positive performance of 47.19%. The NSE Lotus Islamic Index which tracks

the performance of the Shari’ah compliant large cap equities listed on the floors of the Nigerian Stock Exchange

posted a return of 44.21% in 2012 and 61.84% in 2013, outperforming the NSE ALSI by 8.76% and 14.65%

respectively.

In 2013, all sector indices posted gains, led by the Oil & Gas Basket with gains of 122.26%, followed by Industrials

with a positive performance of 81.43%; Banking (31.86%) and Consumer Goods (31.14%). Apparently, the

impelling consumer growth story in Nigeria remains an investment case; especially as brewing fiscal reforms

gradually unlock latent demand growth in key necessities and luxuries. The huge infrastructural gap reflects the

prospect of the Industrials, especially as the government increases its expenditure allocation towards development-

focused capital projects.

Equities Market Outlook

We believe the following factors will dictate the direction of the equities market in 2014:

Sustained rebound in global economies;

Pace of the FGN economic reforms;

Macroeconomic stability and fiscal consolidation;

Improvement in private sector credit; and

Corporate earnings of listed companies.

GLOBAL ECONOMIC IMPACT ON THE EQUITY MARKET

With 60% foreign investor participation in the Nigerian equity market, the risk of portfolio reversals cannot be

overemphasised, especially as weak global economic outlook heightens concerns on portfolio flows. Would a

slowing global economy mean less foreign inflows to Sub-Saharan Africa and consequently Nigeria? Would

investors begin portfolio reversals or be willing to take more risks in emerging markets to hedge the risk of a

weakening global economy, emanating from the developed markets.

There are a number of risks to the macro view on Nigeria from the global front. Among the most prominent:

More aggressive US Fed tapering schedule;

Election risks as a number of emerging and developing economies are faced with elections in 2014;

Geopolitical risk: The most recent spike in risk perception was related to Syria. Should Middle East tensions

escalate again, we may see significant pressure on markets.

64

These looming risks heighten concerns on the fragile labour and property markets, and eventually, growth. If

household income falls below subsistence levels, it may trigger redemption of funds and thus a reversal of portfolio

flows.

IMPACT ON THE FUND

The NSE Lotus Islamic Index tracks 15 selected Shari’ah compliant stocks on the Nigerian Stock Exchange. Being

c.40% of market capitalization, key equity market movements going forward will have a significant impact on the

fund.

Our equities market prognosis over the medium and long term is subject to key factors already highlighted above

which should be taken into consideration prior to investing in the fund.

Source: NSE, Vetiva Research, Bloomberg

65

14. THE SECURITIES AT A GLANCE

1. WHAT IS THE NSE LOTUS ISLAMIC INDEX?

The NSE-Lotus Islamic Index (NSE-LII) is an equity index intended to track the performance of selected Shari’ah

compliant equities listed on the floor of the Nigerian Stock Exchange. A relatively small proportion of the total

number of securities listed on the NSE are incorporated into the index on the basis that movements in the share

prices of those Constituent Companies can be said to represent the movement of the key Shari’ah compliant large

cap equities. (The current composition of the NSE Lotus Islamic Index is set out in Schedule I.) The NSE-LII is an

Adjusted Market Capitalization Weighted Index composed of 15 screened equities with weights applied to

component stocks and sub-sectors.

The NSE has granted Lotus Capital Limited and the LHE ETF Trust permission to use the name “LHE ETF” and

to track the NSE Lotus Islamic Index.

2. WHAT IS THE LOTUS HALAL EQUITY ETF? Lotus Halal Equity ETF (held under the LHE ETF Trust) is an Exchange Traded Fund. They are listed securities

which trade on the floors of the NSE. Lotus Halal Equity ETF are securities intended to enable an investor, in a

single, affordable instrument, to substantially replicate the price and yield performance of the NSE Lotus Islamic

Index and, in one convenient security, to share economic benefits similar to those obtained through holding

directly a Basket of Shares replicating the NSE LII.

The LHE ETF Securities are Exchange Traded securities designed to enable Unitholders obtain market exposure to

the Constituent Companies comprised in the NSE Lotus Islamic Index and to replicate, the price and yield

performance of the NSE LII.

The investment objective of the ETF is to track the NSE LII.

A Holder of Lotus Halal Equity ETF will:

- Be entitled to sell the Lotus Halal Equity ETF for cash on any stock exchange on which the Security is listed, at

the current market price thereof;

- Be entitled to physical delivery of one or more Block of the Lotus Halal Equity ETF, subject to the Holder

complying with the procedure for taking delivery of a Block;

- Subject to the LHE ETF Trust effecting a distribution (which it is anticipated it may do on a quarterly basis),

receive income flows arising from the LHE ETF Trust.

3. WHO SHOULD INVEST?

Lotus Capital Limited welcomes the participation of foreign and non-resident investors.

(i) Nigerian citizens and Associations (including those based abroad)

(ii) Nigerian Banks and other Financial Institutions

(iii) Insurance Companies

(iv) Pension Fund Administrators (PFAs)

(v) Government Parastatals

(vi) Companies, Societies, Institutional investors, Employee schemes; and

(vii) any interested body or organisation.

4. HOW WILL THE MARKET VALUE OF LOTUS HALAL EQUITY ETF BE DETERMINED?

At any point in time the market value of an LHE ETF security may be expected to reflect 1/200th of the Basket

Price of a Basket representing the NSE Lotus Islamic Index or 1/200th of the NSE Lotus Islamic Index Level, plus

an amount which reflects a pro rata portion of any Distribution Amount within the LHE ETF Trust. Actual market

values may be affected by supply and demand and other market factors, but the ability of a Holder to “switch out”

of Lotus Halal Equity ETF by exercising the delivery rights attaching thereto, should operate to substantially avoid

or minimise any differential which may otherwise arise between the relevant Basket Price/Index Level and the

value at which the Lotus Halal Equity ETF trade on the NSE from time to time.

66

5. HOW DOES AN INVESTOR BUY OR SELL THE LOTUS HALAL EQUITY ETF?

Subscription during the Offer:

An investor can subscribe to the Fund during the offer period by completing the application form accompanying

this Prospectus.

The investor can subscribe either via Cash Subscription or on a “Securities for Units” basis (i.e. in-specie

subscription)

o Cash Subscription: The issue price of a unit of the Lotus Halal Equity ETF will, during the initial

offer period, be 1/200th of the average price at which the Baskets of constituent securities are acquired

during the Ramp up period less transaction costs.

o In-specie subscription (i.e. “Securities for Units” basis): The investor will subscribe on a “Securities

for Units” basis i.e. deliver Baskets of the NSE Lotus Islamic Index Portfolio in exchange for units in

the Lotus Halal Equity ETF;

The minimum delivery threshold for subscribing under the Offer for Subscription is one Block of Lotus Halal

Equity ETF which can be discharged by the delivery of Twenty Five (25) Baskets.

Schedule I hereto details the Constituent Company which the investor is required to deliver;

The applicable unit price will be equal to 1/200th of the value of the NSE Lotus Islamic Index. For example, the

NSE Lotus Islamic Index value as at 2nd

December 2013 was 2,767.98. Assuming that the index remains the

same on the offer date, then the unit price will be ₦13.84. During the Offer period, the price will change daily

in line with movements in the NSE Lotus Islamic Index.

In addition, an applicant may be required to pay, in cash, any applicable fee for the purchase of the constituent

securities or for the transfer of the Baskets to the custodian.

Delivery of Basket(s) will be by detachments to the LHE ETF Trust special account subsequent to the execution

of the relevant documentation;

Lotus Halal Equity ETF will be issued to subscribers on the Listing Date via the relevant CSCS account

specified by the Subscriber.

Subsequent Purchase or Sale:

An investor may buy or sell units of LHE ETF on the floor of the NSE through any registered member of the

NSE. An investor may also forward a subscription request to purchase one or more whole blocks of ETF units

through the Authorized Dealer.

6. HOW DOES AN INVESTOR FIND OUT THE PRICE AND OTHER INFORMATION RELATING TO THE

LOTUS HALAL EQUITY ETF? On each Trading Day the Manager will publish the NAV per security, the distributable amount within the LHE

ETF Trust, the appropriate cash amount which an investor wishing to subscribe in kind must deliver on the

following Trading Day and the cash amount which a Holder wishing to exercise his delivery rights in respect of a

Block of Lotus Halal Equity ETF must submit on the following Trading Day. Such information will be made

available on the Fund Manager’s website.

67

7. WHAT IS THE LHE ETF TRUST? The LHE ETF Trust is a registered trust constituted by the Trust Deed holding the Underlying Portfolio/Securities

in respect of the Lotus Halal Equity ETF.

The trustee of the LHE ETF Trust, FBN Trustees Limited, is an independent trustee appointed by the Directors of

Lotus Capital Limited.

The LHE ETF Trust holds the Underlying Portfolio representing the NSE Lotus Islamic Index. Potential income

beneficiaries of the ETF are all the Holders of Lotus Halal Equity ETF. It is anticipated that the net income of the

LHE ETF Trust (comprising dividend income and other investment income less expenses) may be distributed

quarterly to Holders of Lotus Halal Equity ETF, pro rata according to the number of Lotus Halal Equity ETF held

by each Holder.

8. WHAT DISTRIBUTION WILL BE EFFECTED BY THE LHE ETF TRUST? It is anticipated that the LHE ETF Trust may effect quarterly distributions of its net income (i.e. its income

comprising dividends and other income less expenditure) to registered Holders on the relevant Record Dates.

Distributions will be effected proportionately (according to the number of Lotus Halal Equity ETF held by each

registered Holder on the relevant Record Date).

9. WHAT HAPPENS IF THE NSE LOTUS ISLAMIC INDEX IS ADJUSTED?

The NSE Lotus Islamic Index may be adjusted from time to time if they fail the Islamic screening criteria, or

because of mergers, amalgamations, re-organisations, unbundlings, changes in liquidity and market capitalisation

and the like involving Constituent Companies. These adjustments may require removing a Constituent Company

from the NSE Lotus Islamic Index and substituting a new Constituent Company or a change in the weighting of the

shares in the Constituent Companies. The Fund Manager will use its best endeavours to ensure that the portfolio of

securities held by the LHE ETF Trust is adjusted to reflect any such adjustments to the NSE Lotus Islamic Index.

Certain events, such as share splits or consolidations by a Constituent Company, will result in an automatic

adjustment to the number of shares of that Constituent Company included in the portfolio of shares held by the

LHE ETF Trust. In other circumstances, whenever there is a re-weighting of the Constituent Companies within the

NSE-LII, the LHE ETF Trust will acquire or dispose of the appropriate number of shares of the applicable

Constituent Company.

10. WHAT HAPPENS IF A CORPORATE ACTION TAKES PLACE IN A CONSTITUENT COMPANY?

If there is a corporate action involving take-over bid for shares of a Constituent Company included in the NSE

Lotus Islamic Index, the LHE ETF Trust will not tender shares in respect thereof. Shares in the Trust which are

subject to a takeover bid will only be surrendered if such surrender is mandatory in terms of the Act or other

applicable legislation.

If a corporate action results in a Constituent Company no longer qualifying for inclusion in the Index, it will be

removed from the NSE Lotus Islamic Index and another company substituted. Any shares of the Constituent

Company still held by the LHE ETF Trust after the corporate action will be disposed of by the Trust and the

proceeds will be applied in effecting the appropriate adjustments to the Underlying Portfolio.

11. DO HOLDERS HAVE VOTING RIGHTS IN RESPECT OF THE SHARES HELD BY THE LHE ETF TRUST?

Holders do not have any voting rights over shares in the Constituent Companies held by the LHE ETF Trust.

However, all rights of voting conferred by any investments forming part of the Underlying Portfolio shall be

exercised by the Trustee, who is entitled to exercise the said rights in what it considers to be the best interest of

Unitholders.

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12. HOW ARE SHAREHOLDER DECISIONS CONCERNING CONSTITUENT COMPANIES MADE?

The Manager shall have the right to purchase, sell or alter any investments under the provisions of the Trust Deed

to reflect the investment objectives and policy of the ETF, with prior notification to the Trustee before investments

are finalized.

The Trustee shall upon written request by and at the expense of the Manager from time to time execute and deliver

to the Manager or their nominees such powers of attorney or proxies in such name and names as the Manager may

request authorizing such attorneys and proxies to vote consent or otherwise act in respect of all or any part of the

Underlying Portfolio.

13. WHAT ARE THE COSTS AND EXPENSES OF THE LHE ETF TRUST?

The principal expenses of the LHE ETF Trust are statutory audit and filing fees, listing fees payable to any

exchange on which Lotus Halal Equity ETF are listed, management fees and fees payable for administrative

expenses, stamp duty, professional expenses and advertising and promotional expenses.

69

15. SCHEDULE 1: COMPOSITION OF THE NSE LOTUS ISLAMIC INDEX

NSE LOTUS ISLAMIC INDEX CONSTITUENTS – H1 2014

NSE LII WEIGHTS

COMPANIES/STOCKS TICKER 2-JAN-2014 28-FEB-2014

Agriculture

1 Okomu Oil Palm Plc. OKOMUOIL 3.53% 3.27%

2 Presco Plc. PRESCO 3.23% 3.85%

Construction/Real Estate

3 Julius Berger Nig. Plc. JBERGER 7.18% 7.53%

Consumer Goods

4 Nascon Plc. NASCON 1.03% 0.92%

5 Cadbury Nigeria Plc. CADBURY 4.79% 4.28%

6 Nestle Nigeria Plc. NESTLE 24.11% 22.68%

7 PZ Cussons Nigeria Plc. PZ 3.90% 3.98%

8 Unilever Nigeria Plc. UNILEVER 5.32% 4.70%

Healthcare

9 GlaxoSmithKline Consumer Nig. Plc. GLAXOSMITH 5.39% 5.53%

Industrial Goods

10 Ashaka Cement Plc. ASHAKACEM 1.42% 1.19%

11 CAP Plc. CAP 0.98% 0.95%

12 CCNN Plc. CCNN 0.43% 0.34%

13 Dangote Cement Plc. DANGCEM 27.93% 30.80%

14 Lafarge Wapco Plc. WAPCO 9.99% 9.27%

Services

15 NAHCO Plc. NAHCO 0.78% 0.70%

Kindly note that the above are constituents of the Index for H1 2014. The index is rebalanced semi-annually (i.e. June

and December of every year) therefore the composition of the index is subject to change. Also, please note that as share

prices change on a daily basis, the weights of securities in the Index are subject to change caused by daily price

movements.

70

16. PROCEDURE FOR APPLICATION AND ALLOTMENT

The process for participating in this offering involves the key steps discussed below:

1. APPLICATION FOR UNITS

1.1 Prospective investors to whom this prospectus has been addressed are hereby invited to apply for the

units of the Lotus Halal Equity ETF through Lotus Capital Limited.

1.2 Applications for the ETF Securities must be made in accordance with the instructions set out at the back

of the application form. Care must be taken to follow these instructions, as applications which do not

comply will be rejected.

1.3 The Application List for the ETF Securities will be open from the 15th August 2014 to 11

th September

2014. Applications must be for a minimum of 200,000 units (for Cash Subscriptions) and 5,000,000 (for

in-specie subscription) and subsequent multiples of 200,000 units. The number of units for which an

application is made and number of Baskets of securities tendered should be entered in the boxes

provided.

1.4 Applicants should sign the form; write their names, address, daytime telephone number, email, CSCS

number, bank account and other information as indicated in the boxes provided. A corporate applicant

should affix its seal and state its Incorporation (RC) Number in the boxes provided.

2. ALLOTMENT OF UNITS

Lotus Capital Limited reserves the right to accept or reject any application in whole or in part for not meeting

the conditions of the Offer. The allotment proposal will be subject to the clearance of the Board of Lotus

Capital Limited. Please note that the Directors reserve the right to allot the units on a “first come first serve”

basis. The basis of allotment will be subject to the approval of the Commission.

71

17. RECEIVING AGENTS

15. RECEIVING AGENTS

Application Forms may be obtained free of charge from any of the following Receiving Agents registered as market

operators by the SEC, to whom a brokerage of 0.50% will be paid on the value of allotted Units in respect of

applications bearing the Receiving Agent’s official stamp.

The Issuing House, Receiving Bank and Fund Manager cannot accept responsibility for the conduct of any Receiving Agent. Investors

are therefore advised to conduct their own independent enquiries before choosing an agent to act on their behalf. Evidence of deposit of

securities or lodgement of funds with any Receiving Agent, in the absence of corresponding evidence of receipt by the Issuing

House/Fund Manager, cannot give rise to a liability on the part of the Issuing House/Fund Manager under any circumstances.

AAA Stockbrokers Limited

Adamawa Securities Limited

Adonai Stockbrokers Limited

Afrinvest (West Africa) Limited

AIL Securities Limited

Alangrange Securities Limited

Alliance Capital Management Limited

AMYN Investments Limited

Anchoria Investment & Securities Limited

Apel Asset & Trust Limited

APT Securities & Fund Limited

Aquila Capital Limited

Asset Resource & Management Limited

Associated Asset Managers Limited

Atlast Portfolio Limited

Belfry Invest. & Sec. Limited

Best Link Investment Limited

Bestworth Assets & Trust Limited

BFCL Assets & Securities Limited

BGL Securities Limited

BIC Securities Limited

BSD Securities Limited

Bytofel Trust & Securities Limited

C & I Heritage Limited

Calyx Securities Limited

Camry Securities Limited

Capital Assets Limited

Capital Bancorp Limited

Capital Express Sec. Limited

Capital Trust Brokers Limited

Cash Craft Asset Management Limited

Centre-Point Investment Limited

Century Securities Limited

Chapel Hill Advisory Partners Limited

Citi Investment Capital Limited

City Investment Management. Limited

Clearview Investment Company Limited

Compass Investment & Sec. Limited

Core Trust & Investment Limited

Cowry Asset Management Limited

Cradle Trust Finance & Sec. Limited

Crownwealth Assets Management Limited

CSL Stockbrokers Limited

De-Canon Investments Limited

Deep Trust Investment Limited

De-Lords Securities Limited

Denham Management Limited

Dependable Securities Limited

Diamond Securities Limited

EBN Securities Limited

Emerging Capital Limited

EMI Capital Resources Limited

Empire Securities Limited

Enterprise Stockbrokers Plc

Epic Investment & Trust Limited

Equity Capital Solutions Limited

ESL Securities Limited

Eurocomm Securities Limited

Excel Securities Limited

Express Discount Asset Mgt. Limited

Express Portfolio Services Limited

F& C Securities Limited

Falcon Securities Limited

FBC Trust and Securities Limited

FBN Securities Limited

FCMB Capital Markets Limited

Fidelity Finance Co. Plc

Fidelity Union Securities Limited

Financial Derivatives Company Limited

Finmal Finance Securities Limited

First Equities Securities Limited

First Stockbrokers Limited

FIS Securities Limited

Foresight Securities & Investment Limited

Forte Asset Management Limited

Forthright Securities & Investment Limited

Fountain Securities Limited

Futureview Financial Services Limited

Gidauniya Investment & Securities Limited

Global Asset Management (Nigeria) Limited

Golden Securities Limited

Greenwich Trust Limited

GTB Asset Management Limited

GTB Securities Limited

GTI Capital Limited

Heartbeat Investments Limited

Hedge Securities & Investment Company Limited

Horizon Stockbrokers Limited

Stanbic IBTC Asset Management Limited

ICMG Securities Limited

ICON Stockbrokers Limited

Independent Securities Limited

Intercontinental Securities Limited

International Standard Securities Limited

Interstate Securities Limited

Investment Centre Limited

Investment Masters & Trust Limited

Jamkol Investments Limited

Kapital Care Trust & Securities Limited

Kundila Finance Services Limited

Lambeth Trust & Investment Company Limited

LB Securities Limited

Lead Capital Limited

Lighthouse Asset Management Limited

Maclaize Trust & Securities Limited

Mainland Trust Limited

Mainvest Asset Management Limited

Marimpex Finance & Investment Limited

Marina Securities Limited

Marriot Securities Limited

Maven Asset Management Limited

Maxifund Invest & Securities Limited

MBC Securities Limited

MBL Financial Services Limited

Mega Equities Limited

Mercov Securities Limited

Meristem Securities Limited

Metropolitan Trust Nigeria Limited

Midland Capital Markets Limited

Molten Trust Limited

Mountain Investment & Securities Limited

Mutual Alliance Investment & Securities Limited

Networth Securities & Finance Limited

Newdevco Investment & Securities Limited

Nigerian International Securities Limited

Nigerian Stockbrokers Limited

Nova Finance & Securities Limited

Oasis Capital Limited

Omas Investment & Trust Limited

Options Securities Limited

P.S.I. Securities Limited

Peninsula Asset Management Limited

Pilot Securities Limited

Pinefields Investment Services Limited

PML Securities Company Limited

Professional Stockbrokers Limited

Pivot Trust & Investment Limited

Profund Securities Limited

Prominent Securities Limited

PSL Securities Limited

PSI Securities Limited

Pyramid Securities Limited

Quantum Securities Limited

Rainbow Securities & Investment Limited

Reading Investment Limited

Regency Assets Management Limited

Resano Securities Limited

Resort Securities and Trust Limited

Reward Investment & Securities Limited

Rivtrust Securities Limited

Rolex Securities Limited

Rostrum Investment & Securities Limited

Royal Crest Finance Limited

Santrust Securities Limited

Securities Trading & Investment Limited

Securities Solutions Limited

Security Swaps Limited

Shelong Investment Limited

Sigma Securities Limited

Signet Investments & Securities Limited

Smadac Securities Limited

Solid-Rock Securities & Investment Limited

Spring Capital Markets Limited

Spring Trust & Securities Limited

Springboard Trust & Investment Limited

Stanwal Securities Limited

Sterling Capital Markets Limited

Strategy and Arbitrage Limited

Summa Guaranty & Trust Company Limited

Summit Finance Company Limited

Supra Commercial Trust Limited

TFS Securities and Investment Company Limited

The Bridge Securities Limited

Tiddo Securities Limited

Tomil Trust Limited

Topmost Finance & Investment Limited

Tower Asset Management Limited

Tower Securities & Investment Company Limited

Traders Trust & Inv. Co. Limited

Trans Africa Fin. Services Limited

Transworld Investment & Finance Company Limited

Tropics Securities Limited

Trust Yields Securities Limited

Trusthouse Investment Limited

TRW Stockbrokers Limited

UBA Capital Limited

UBA Stockbrokers Limited

UIDC Securities Limited

UNEX Securities & Investment Limited

Union Capital Markets Limited

Valmon Securities Limited

Valueline Securities & Investment Limited

Vetiva Capital Management Limited

Vision Trust and Investment Limited

Viva Securities Limited

Wizatrade Capital Asset Management Limited

WSTC Financial Services Limited

Yobe Investment and Sec. Limited

Yuderb Investment & Securities Limited

Zenith Securities Limited

Zuma Securities Limited

72

APPLICATION FORM 1

APPLICATION LIST OPENS

15th August 2014

OFFER FOR SUBSCRIPTION

100,000,000 UNITS

IN THE

LOTUS HALAL EQUITY ETF

(Authorised and registered in Nigeria)

PAYABLE IN FULL ON APPLICATION

APPLICATION LIST CLOSES

11th September 2014

Fund Manager:

Issuing House:

Applications must be made in accordance with the instructions set out on the reverse

side of this Application Form. Care must be taken to follow these instructions as

applications that do not comply may be rejected. If you are in doubt as to the action to

take, please consult your Stockbroker, Accountant, Banker, Solicitor or any other professional adviser for guidance immediately.

MINIMUM SUBSCRIPTION SIZE AMOUNT PAYABLE

Cash Subscription - 200,000 units minimum and subsequently multiples of 200,000

units

At the provisional offer price of 1/200 of the closing value of the NSE-LII of

the preceding day over the offer period.

In-Specie Subscription - 5,000,000 units minimum

Subsequent multiples - 200,000 units

25 Baskets of components of the NSE Lotus Islamic Index

1 Basket of components of the NSE Lotus Islamic Index

UNITS APPLIED

DECLARATION

I/We agree to accept the same or any smaller number of units in respect of which

allotment may be made upon the terms of the Prospectus dated 18th July 2014 and

subject to the Trust Deed constituting the LHE ETF Trust.

I/We authorise you to credit our CSCS account with the applicable ETF units, credit

my/our bank account detailed below for any amount overpaid and to procure

registration in my/our name as the holder(s) of such number of Units or such smaller

number, as aforesaid.

I am not a U.S. Citizen.

DATE

/ / 2 0 1

CONTROL NO: (FOR TRANSFER AGENT'S USE ONLY)

APPLICANT’S DETAILS (INDIVIDUAL/CORPORATE/JOINT) (Please use one box for one alphabet leaving one box blank between words)

SURNAME/CORPORATE NAME

FIRST NAME (FOR INDIVIDUALS ONLY) OTHER NAMES (FOR INDIVIDUALS ONLY)

JOINT APPLICANT’S FIRST NAME (IF APPLICABLE) OTHER NAMES (FOR JOINT APPLICANT ONLY)

DATE OF BIRTH (DD/MM/YYYY) GENDER: MALE FEMALE

/ /

ADDRESS IN FULL (PLEASE DO NOT REPEAT APPLICANT(S)’ NAME. POST BOX NO. ALONE IS NOT SUFFICIENT)

TEL.

CITY STATE E-MAIL

CONTACT PERSON (FOR CORPORATE APPLICANT) / NEXT OF KIN (FOR INDIVIDUAL APPLICANT)

CONTACT ADDRESS OF NEXT OF KIN IN FULL (POST BOX NO. ALONE IS NOT SUFFICIENT)

TEL.

CITY STATE E-MAIL APPLICANT’S DETAILS (for Minors) – (Please complete this section if this application is being made on behalf of a minor)

SURNAME OF MINOR OTHER NAMES

DATE OF BIRTH (DD/MM/YYYY) NATURE OF RELATIONSHIP (PARENT/GUARDIAN)

/ /

GENDER MALE FEMALE

RC: 600195

73

APPLICATION FORM 2

ADDRESS IN FULL (PLEASE DO NOT REPEAT APPLICANT(S)’ NAME. POST BOX NO. ALONE IS NOT SUFFICIENT)

CITY STATE E-MAIL CONTACT DETAILS – (to be filled by all applicants)

OFFICE TEL.: RESIDENCE TEL.:

MOBILE: FAX:

EMAIL ADDRESS:

FAX:

KNOW – YOUR – CUSTOMER DOCUMENTATION (All Investors should provide attested KYC documents. Please see instruction for requirements)

Please tick in the box to indicate that KYC documents are attached

OCCUPATION

� Professional � Business � Housewife � Retired � Student � Public Sector/ Government Service � Private Sector Service

� Proprietorship � Others (please specify) _________________________________________________________________________

Is any person associated with this account a current/former head of state, senior official in any government, senior executive of state-owned enterprise or senior

politician in/outside of Nigeria; or an immediate family member or close advisor of such an individual; or is this account held by an organization controlled by

such an individual? (Please ) � Yes � No

BANK ACCOUNT DETAILS FOR E-DISTRIBUTIONS (Please refer to instructions)

NUBAN Account No.:

Account Name: ________________________________________________________________________________________________________________

Bank Name: _____________________________________________

State: _____________________________________________

Bank Branch: _______________________________________________

Sort Code: _______________________________________________

Account Type: � Savings � Current � Others (please specify) ____________________________________________________________________________________________________________________

INVESTMENT DETAILS: (PLEASE TICK APPROPRIATE BOX)

□ CASH SUBSCRIPTION □ IN- SPECIE SUBSCRIPTION (BASKET DELIVERY)

No. of Units ____________________________________________ (in words) _________________________________________________ _______

(Please include the number of Units you wish to Subscribe for/ Redeem. Please refer to Instruction)

PAYMENT DETAILS:

Direct transfer � Cheque/Bank Draft �

Cheque No./ DD No. Cheque./ Bank Draft Date

Bank Name

Amount in figures (₦) Bank Branch

Amount in words

CENTRAL SECURITIES CLEARING SYSTEM ACCOUNT DETAILS:

Name of Stockbroker ___________________________________________________________________________________________________________

CSCS A/C No. ___________________________________________________________________________________________________________

CHN A/C No. ___________________________________________________________________________________________________________

* Investors must ensure that the sequence of names as mentioned in this Application Form matches that of the account held by the Investor with the CSCS.

74

APPLICATION FORM 3

SECURITIES TENDERED (FOR IN-SPECIE SUBSCRIPTION):

NUMBER OF BASKET(S) TENDERED

S/No. SECURITIES WEIGHTS (%) NUMBER OF SHARES

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

CASH COMPONENT (if applicable) ₦

CONFIRMATION, AUTHORISATION AND SIGNATURE(S)

SIGNATURE 2ND

SIGNATURE (Corporate/Joint) OFFICIAL SEAL/RC. NO.

OR *THUMBPRINT* (For Illiterates only)

NAME OF AUTHORISED SIGNATORY

(Corporate only) NAME OF AUTHORISED SIGNATORY

(Corporate/Joint)

DESIGNATION (Corporate only) DESIGNATION (Corporate only)

Please note that by signing this Application Form, the Investors also give the Important Declarations set out in the instructions section of the Application Form. I/We hereby apply for the allotment / Purchase of Units of the ETF, as indicated in this form and confirm that I/we have read, understood and are bound by the terms and conditions of this Application Form, including the Important Declarations in the instructions to the Application Form, the contents of the Prospectus for the Offer, and am/are fully capable of assessing and bearing the risks involved in purchasing the Units, and agree to abide by the terms, conditions, rules and regulations of the ETF. I /We hereby authorise Lotus Capital Limited and its agents to disclose personal data / details of my investment to anyone as may be necessary or expedient for the purposes of administration of investments in the Units of the ETF.

I/We hereby undertake to pay the required money/payment towards Subscription of the Units of the ETF made through this Application Form within one day of making such application or within such time as directed by Lotus Capital Limited.

FORM OF ATTESTATION (Compulsory requirement for a witness of a thumbprint impression only) I, [please insert full name of person attesting] of [insert address]

hereby testify that the above *thumbprint* was affixed in my presence this.......day of......................201…., and is the true right thumb print of

[insert name of person executing] who has acknowledged to me after due explanation of the Application Form in the language understandable to him

that (i) he/she has voluntarily executed this instrument and (ii) he/she understands the contents and effect thereof.

As witness my hand this........day of........................ 201…. Witness Signature:

75

INSTRUCTIONS FOR COMPLETING THE APPLICATION

1. GENERAL:

a. Applications must be made only on this Application Form, or photocopy, downloaded or scanned copy of the Application Form.

b. The Application List for the Units will be open to prospective investors for the duration specified in the Prospectus.

c. Please refer to the Prospectus carefully before filling the Application Form. All Investors are deemed to have read and accep ted the terms

in this Offering Documents and instructions in this Application Form subject to which this offer is being made and bind thems elves to

the terms thereof upon signing the Application Form and tendering the payment.

d. The Units of the ETF may be bought / sold like any other stock on the NSE. Alternatively, the Authorised Dealer can directly buy/sell

Units with the Fund in Creation Unit size. Please refer to the Prospectus for definitions of Authorised Dealer and details regarding

Subscription / Redemption of Units of the ETF.

e. All applications are subject to detailed scrutiny and verification. Applications which are incomplete, invalid or ambiguous in any respect

are liable to be rejected after acceptance and verification. Application Form may be accepted or rejected at the sole and absolute

discretion of the Trustees / Fund Manager. Please refer to the Prospectus for further details on rejection of applications.

f. Investors shall ensure that any overwriting or correction shall be countersigned by the Investors, failing which the Fund Manager /

Trustees may at its sole discretion reject such application.

g. Irrespective of mode of holding, all communication and payments shall be made by the Fund only in the name of and favouring the main

applicant, including all transaction advices, Dividend or Redemption payments, and all other relevant correspondence.

2. CSCS DETAILS:

a. The Units of the ETF are issued / repurchased and traded compulsorily in dematerialized form. As the Units of the ETF will be issued in

dematerialized form, relevant details of the Central Securities Clearing System (CSCS) and the beneficiary account should be provided

in the “CSCS Account Details” section in the Application Form.

b. Investors must ensure that the sequence of names as mentioned in the Application Form matches that of the account held by the Investor

with the CSCS and are required to indicate in the application the relevant account numbers of the Investor.

c. Only those applications where the details are matched with the CSCS data will be treated as valid applications. If the details mentioned

in the application are incomplete, incorrect, and not matched with the CSCS data, the application shall be treated as invalid and shall be

liable to be rejected.

3. APPLICANT INFORMATION:

a. An application for a minor must include the full names and date of birth of the minor, as well as the full names and address of the adult

(Parent or Guardian) making the application on such minor’s behalf.

b. An application from a corporate body must bear the corporate body’s common seal and be completed under the hand of a

duly authorised official.

c. Name of the contact person with designation should be mentioned in case of investments by a company, body corporate, partner ship,

society, mutual fund, trust and other non-individual Investors. Further, a document providing evidence of the authority of the

organisation to invest in the Fund, along with the updated specimen signature list of authorised signatories and a certified copy of

memorandum and articles of association and / or bye-laws and / or trust deed and / or partnership deed and certificate of registration or

any other documents as the case may be shall be furnished along with the Application Form. In case of a trus t / fund, it shall submit a

certified true copy of the resolution from trustee(s) authorising such Purchases. The officials should sign the application under their

official designation and furnish the list of authorised signatories. Please refer to the ‘Investor’s Documentation and Particulars Grid’,

provided in this Prospectus and also available on our website www.lotuscapitallimited.com for further details on supporting documents

to be provided along with the Application Form.

d. Joint applicants must all sign the Application Form.

e. An application by an illiterate should bear his right thumbprint on the Application Form and be witnessed by an official of t he Receiving

Agent at which the application is lodged who must have first explained the meaning and effect of the Application Form to the illiterate

in his own language. Above the thumb print of the illiterate, the witness must record in writing that he has given this explanation to the

illiterate in a language understandable to him and that the illiterate appeared to have understood same before affixing h is

thumb impression. An applicant should not print his signature. If he is unable to sign in the normal manner he should be treated for the

purpose of this Offer as an illiterate and his right thumbprint should be clearly impressed on the Application Form.

4. KNOW YOUR CUSTOMER (“KYC”):

a. KYC is mandatory, under the Money Laundering (Prohibition) Act (MLPA), 2011, SEC Rules and Regulations and Anti-Money

Laundering /Combating Financing of Terrorism (AML/CFT) Compliance Manual (developed by the SEC), for all applications/

investments in mutual funds (fresh Purchases / additional Purchases). Each Investor (including joint Unitholder, guardian, minor,

institutional investors, other non-institutional investors) who wishes to invest any amount in the ETF, needs to submit the relevant KYC

documents as set out in the ‘Investor’s Documentation and Particulars Grid’, provided in this Prospectus and also available on our

website www.lotuscapitallimited.com.



76

b. Applications where KYC is not completed will be rejected. All documents submitted should be in original along with a self -attested

copy. The original will be returned after verification. Alternatively, Investors may submit copies duly attested by a manager of a

scheduled commercial bank (the designation seal should be affixed), notary public or gazetted officer.

c. In case the Investor/Unitholder is a minor, then the KYC documents of both the minor and the guardian shall be submitted.

5. BANK ACCOUNT DETAILS

a. Investors should provide the name of their bank, branch address, account type and account number. Applications without complete bank

details shall be treated as incomplete and may be rejected.

b. By default, all Dividend and Redemption proceeds will be electronically credited directly into your bank account. However, if we do not

have the required information to do the credit electronically, we may make the payment by cheque.

6. MINIMUM APPLICATION

Applications must be for a minimum of 200,000 Units for Cash Subscriptions and 5,000,000 for in -specie subscription. Applications must

be in multiples of 200,000 units. The number of Units for which an application is made should be entered in the boxes provided.

7. INVESTMENT DETAILS

a. Investors should select either Cash Subscription or In-specie subscription by ticking against the relevant boxes of the Application Form

and should furnish the other requisite details request in this section.

b. Subscription:

(i) Cash Subscription (i.e. Subscription by paying the Subscription amount to the Fund):

a. The Investor will have to calculate the amount payable for Subscription applications based on latest available Index value. In

addition, the Investor should also give due consideration to costs of purchasing the Basket of securities, market movement

from the time of application to actual purchase of securities by the Fund during the ramp-up period etc. The final issue price of

a unit of the Lotus Halal Equity ETF will be 1/200th of the average price at which the Baskets of constituent securities are

acquired during the ramp up period less transaction costs. Any excess amount paid on application will be refunded to the

Investor immediately on allotment of Units.

b. All cheques/bank drafts/transfers should be made in favour of the Fund’s account name “FBN Trustees /Lotus Halal Equity

ETF”. The cheque or draft must be drawn on a bank in the same town or city in which the Receiving Agent is located and

crossed “Lotus Halal Equity ETF” with the name, address and daytime telephone number of the applicant written on the back.

All bank commissions and transfer charges must be prepaid by the applicant. All cheques and drafts will be presented upon

receipt and all applications in respect of which cheques are returned unpaid will be rejected and returned through the post at

the applicant’s risk.

c. In case of Cash Subscription, Investors can also directly transfer the Subscription amount to the Fund Issue Proceeds Account,

details of which are mentioned below:

Bank Name: CitiBank Nigeria Limited (Nigeria International Bank)

Bank Branch 27 Kofo Abayomi Street, Victoria Island, Lagos

Account Name: FBN Trustees/Lotus Halal Equity ETF

Account Number: 0011612048

Reference: Indicate Subscriber Name as

is on the application form.

d. Applications in Naira above N10 million should be transferred via RTGS into the Fund Issue Proceeds Account detailed

above.

e. All foreign currency subscriptions should be credited to any of the correspondent bank accounts specified below. Request

may be made to the receiving bank for the issuance of a Certificate of Capital Importation (CCI). CCIs are required to enable

subsequent repatriation of the dividends or proceeds of any future sale of the Units acquired.

USD TRANSFER GBP TRANSFER EURO TRANSFER

Intermediary Bank

Swift Code

Correspondent Bank

Swift Code

ABA No.

Sort Code

For Credit of:

Swift Code:

77

Account No.

IBAN No.

For Final Credit: FBN Trustees/Lotus Halal Equity ETF Account No:

Reference: Indicate

Subscriber Name as is on the

application form

f. The applicable Basket of securities will be purchased within 5 Working Days following the Initial Offer or subsequent Cash

Subscriptions. All actual costs incurred by the Fund in connection with the purchase will be borne by the Investor.

(ii) In Specie Subscription (i.e. Subscription of Creation Unit by providing the Portfolio Deposit and paying the Cash Component to the

Fund)

a. Portfolio Deposit

Portfolio Deposit means a pre-defined Basket of Securities that represent the underlying index and will be defined and

announced by the Fund on a daily basis and can change from time to time. Please refer to our website,

www.lotuscapitallimited.com, for the latest underlying index before investing in the ETF.

The Portfolio Deposit will only be accepted in electronic form (dematerialised mode) and the stocks will have to be credited to

the CSCS account of the Fund. Details of the Portfolio Deposit to be submitted are available at our website,

www.lotuscapitallimited.com. The CSCS account details of the Fund are as follows:

Account Name:

CSCS Account No:

CHN No: FBN Trustees/Lotus Halal Equity ETF Issue Account

b. Cash Component

The Cash Component represents the difference between the Applicable NAV of a Creation Unit and the market value of the

Portfolio Deposit (the cash component will be nil during the initial offer) .The Cash Component for creation will vary from

time to time and will be decided and announced by the Fund Manager on its website and other data providers and media at

large. Please refer to our website (www.lotuscapitallimited.com) for details on the Cash Component.

For Cash Component all cheques and bank drafts should be drawn in favour of the Fund’s account name “FBN Trustees/Lotus

Halal Equity ETF” and marked “Account Payee only”. Please also refer to the table below for details of the respective Fund

A/C name and account number, for direct transfers:

Bank Name: CitiBank Nigeria Limited (Nigeria International Bank)

Bank Branch 27 Kofo Abayomi Street, Victoria Island, Lagos

Account Name: FBN Trustees/Lotus Halal Equity ETF

Account Number: 0011612048

Reference: Indicate Subscriber Name as is on the application

form.

c. The Investor is required to transfer the requisite Securities constituting the Portfolio Deposit to the Fund’s CSCS account

while the Cash Component has to be paid to the Custodian. On confirmation of the same by the Custodian, the Fund Manager

will transfer the respective number of Units of the ETF into the Investor’s CSCS account.

c. Allotment of Units:

The Units will be issued in dematerialized form in multiples of the Creation Unit and credited to the CSCS account of the Investor stated

in the form.

8. PAYMENT DETAILS

a. Investors may make the payment by cheque / bank drafts payable locally via any Receiving Agent. The Fund Manager will not accept

any request for refund of bank draft charges. All cheques and bank drafts must be crossed "Account Payee only" and drawn in favour of

the name of the Fund.

Note: Returned cheque(s) will not be presented again for collection and the accompanying Application Form shall not be considered

again for allotment. In case the returned cheque(s) are presented again, the necessary charges are liable to be debited to the Investor.

b. Payment should be made by cheque or bank draft drawn on any bank which is in the same town or city in which the Receiving Agent is

located or via electronic instructions (to the Fund’s bank account, details of which are provided in above), which is evidenced by receipt

of credit in a bank account of the Fund.




78

9. CANCELLATION

Please note that application once submitted cannot be cancelled under any circumstances. Once an application for Subscription is

submitted, the Investor will have to either sell the units on the floors of the Exchange or submit a Redemption request for redeeming the

Units (where applicable).

79

INVESTOR DOCUMENTATION AND PARTICULARS GRID

Reference Yes/No N/A

The following documents / information are required in addition to executing the duly completed

application/subscription forms

A Individuals

1 Personal Identity (e.g. International Passport, National ID Card, Drivers' Licence, INEC Voters

Card or any other Government issued ID bearing the Unitholders name and photograph

2 Public Utility Receipt -PHCN, NITEL, Bank Statement etc

3 One Passport sized photograph of the signatory (ies)

B Corporate Bodies/Institutional Investors

1 Copy of Certificate of Incorporation or its equivalent

2 Copy of Memorandum and Articles of Association or its equivalent

3 Copy of Certified True Copy of Form C07 (Particulars of Directors) or its equivalent

4 Copy of Certified True Copy of Form C02 or its equivalent

5 A document providing evidence of the authority of the organisation to invest in the Fund

6 A specimen signature list of authorised signatories

C Trustees

1 Copy of Trust Deed or any other documents creating the Trust

2 Valid Personal Identification of the each of the trustees/authorised signatories

3 Signature mandate duly executed by the trustees/signatories

D Deceased/Executorship Accounts

1 Copy of Grant of probate/ letter of administration (whichever is applicable)

2 Valid Personal Identification of the executor/administrator

3 Public Utility Receipt -NEPA, NITEL, Tax Clearance etc, of the executor/administrator, issued

within the last three months

4 One passport sized photographs of the executor/administrator

Please list any additional information/documentation submitted

1. ________________________________________

2. ________________________________________

The Investor Name: __________________________

(Signature) __________________________

(Date) __________________________

FOR OFFICIAL USE ONLY

Verified by & signed off by: ________________________________________________________________________

Comments (if any): ________________________________________________________________________________

Signed off by Lotus Capital Limited: _______________________________________________________________

Comments (if any): ________________________________________________________________________________

_________________________________________________________________________________________________

80

APPLICATION FORM

LOTUS HALAL EQUITY ETF