Again, whoever is writing the Havelock response to these legitimate and IMPORTANT concerns is more than a little tone-deaf, and in my estimation you are proving that every time you ignore, duck, try to rationalize, and in some cases just fabricate a non-answer you show that Havelock either doesn't KNOW how to communicate honestly and effectively with its investor base or, worse, you just don't CARE.  But I do--it's my cash on the line with this investment!  We are not nearly as dumb as you seem to think we are--we follow the Bitcoin markets too.

The relationship between Havelock's revenue and expense streams and the US dollar is NOT mentioned in your Prospectus, either as a risk factor or anywhere else.  If you think it is please cite the page and paragraph in your Prospectus where you discuss this connection, because I can't find it.  The only factor which is relevant is that you state that your growth and investor demand for your services is important.  I have absolutely no way of knowing from your first quarterly report how, or even if, HIF is seeing any real growth.  It seems not.  Investor demand for your services (funds) is going to dry up real quick if you don't do a much better job communicating openly and honestly with us.  Immediately.

I compared Havelock's daily total 24-hour volume in BTC for the past six weeks (February 22 to April 10) to the US$ price of Bitcoin.  The correlation coefficient is 0.13 and insignificant, which means that there IS no demonstrated relationship between these two data series.  Your last lame explanation is simply wrong--whatever problems HIF is having with sales or expenses has nothing to do with the US$ price.  You have failed to answer every one of the "trend" questions I posed earlier, but they won't go away just because Havelock is choosing to ignore them.

I know that startups are very risky, and I expected this investment to have some unanticipated problems.  But I never thought that the sponsor--Havelock--would itself become one of the worst risk factors by deliberately failing to supply important information and in some cases actually obfuscating its own message.  I actually believed that you would follow   the communication model set by your sister fund, HMF,  with monthly reporting.  Any way to get the manager for HMF to assume responsibility for communicating with HIF investors???  We would all be better off. 

In comparing the actual figures reported for this 4-month period with those projected in the Prospectus, the projected profit for the year is 5,870 BTC/year.  Dividing by 12 to get a monthly average and then multiplying by 4 for this initial reporting period, the profit was projected to be 1,956 BTC and was actually only 37 BTC.  This miss of 1,919 BTC when priced at $425 (US) is about $816,000!  Havelock, you simply have to do a much better job reporting and explaining these results.  This report won't do.  Simply unacceptable.  Not gonna happen to me again because I will sell out completely within three months unless you give us the detailed information YOU PROMISED in the November Prospectus.  I urge you to rethink this failed communication strategy and do what you should have done in the first place.  Specifically, I want you to amend these vague figures so that your MONTHLY  income statement looks like this:

Revenues:  From Prospectus
>>Listing Fees
>>Maintenance Fees
>>Exchange Fees
>>     Total Revenues

Expenses:  From Prospectus
>>Office
>>Law
>>Accounting
>>Compliance
>>Miscellaneous
>>     Total Expenses

You do report the monthly totals, so we have 8 of the 32 figures we need.  That is 25% of the level of detail which I think you should provide.  Remember, those categories listed above are taken DIRECTLY FROM YOUR OWN PROSPECTUS!!!  I note that today's market price for HIF is .00015, and the estimated figure provided in the prospectus was .00066--23% ratio.  Could these two numbers be connected?

You need to also improve management's discussion of these results so you can answer some basic questions like:
Why is Feb revenue less than Jan, and March less than Feb?  Is this revenue slide temporary, or is it likely to continue?  Which revenue item is so much lower than you expected and why?  Monthly expenses for Feb/Mar are more than twice as high as they  were for the Dec/Jan period.  What expense item is so out-of-control as to cause this trend?  Will the trend of increasing expenses continue?

I realize that Havelock management will probably ignore my suggestions.  Do so at your peril.  I have close to US$10k invested in all HL funds, and I am so disgusted by this pathetic attempt to "communicate" with us I am sorely tempted to just cash out at a huge (US tax deductible) loss and move my funds elsewhere.  I'm not angry because the financial results are so much worse than projected in the Prospectus.  I'm angry because you have a clear and now articulated policy of WITHHOLDING  data from the very people you need most to thrive--your investors. 

I know very well that Havelock is neither a casino nor a mining operation.  You are a financial services company.  It's not possible for your investors to know what the number of funds listed is (who pay a monthly fee!) nor the number of funds in the pipeline unless you disclose this information.  A key part of your Prospectus makes clear that growth in a vital part of your plans, and I want to know how the actual results you have experienced in this first quarter compare with the projections you made in the Prospectus.

The whole reason I bring this up is that I tried to develop a spreadsheet model of your revenues and expenses.  I have a good handle on the expenses assuming that the Prospectus projections are accurate.  But I simply can't generate any monthly (or quarterly) revenue projections because they depend on information that Havelock is yet to publicly disclose.  Come on --this is a whole week after Q1 ended, and if several of your existing funds issue monthly reports--including HMF--then so can HIF.  Havelock can and should be a best practices  model for the funds you manage, especially in the communications department.

I do hope that when the first quarterly report is distributed your investors get this detailed information.  We need it to make informed decisions about our investment in HIF.  And since we trade much more frequently than quarterly, I believe that monthly updates from Havelock  are important.  Thank you!

Several of the funds listed on the Havelock website publish reports/updates on a monthly basis, such as CBTC, HMF, and KCIM. BDD reports daily! I commend their managements for their professionalism.   I think that it's important for the company to issue monthly reports for the Havelock Investments Fund, just as they already do for their Havelock Mining Fund.  It's now been almost 6 months since the first listing of the fund back in November 2013.  They indicate that they will issue their first report presumably 10 business days from 3/31, which would be April 14.  Why this news blackout?

I am investor in HIF.  If the fund has nothing to report on a monthly basis that suggests to me that what news there is, is probably bad for investors.    The fund's success depends on some basic metrics such as the # of funds, trading volume, monthly fees charged to funds, and # of new funds in the pipeline.  These are all listed and explained in the Prospectus.  The monthly reports I want should update this data on a monthly basis.  It's not that hard to do. If the actual results are not as favorable as the assumed results mentioned in the Prospectus, the sooner I know about any gap the better.  Havelock should set the standard for communicating to its investors proactively, and not be one of the worst funds in terms of disclosure.

I won't be making any additional investments in HIF until a clear and timely communication policy is formulated, communicated to investors, and actually implemented consistently (monthly at least).  We DO have a right to know!

I support your proposal to add the 2% management fee.  It works out to only about $2/new EXCH share.  And the only ones affected are arbitrageurs who want to profit from various price discrepancies.  To them, it's just another cost of doing business.  All of us benefit from  the liquidity they provide.  You have committed to daily management of these funds for at least the next 6 months.  I want you to continue to administer for the long haul, and to feel that you are being adequately compensated for your time and trouble.  Your proposal is transparent and easy to understand by all.  Anyone who feels it's not worth it can just take their investment funds to another Havelock offering.  Go for it!

Hello:

Another newbie question:

You consistently inform us that the value of B.SELL falls by exactly the amount of the B.SELL dividend paid on the difficulty change date.  I see that its market price fluctuates, as one would expect.  But how do B.SELL holders make any profit if its value only falls and never rises?  For example, if the issuing  price is 0.12 and if dividends are exactly 0.02 each period, in 6 periods SELL would become worthless, and I presume its market price would then approach zero.  What am I missing here?  Obviously some of the NAV/unit for B.EXCH must be transferred from B.MINE shares (if B.MINE holders make a poor bet)  to B.SELL shares, but how? 

Many thanks!

Two suggestions:

First, you have a report (thank you!) for Period 2 Day 4 on February 8, and also another Perod 2 Day 4 on February 9.  If this is a typo, please edit.

Second, it irks me that my investment in your fund is priced by Havelock with 4 significant digits on the Accounts tab.  On their Browse Funds tab, the much more accurate 8 significant digits are given.  Could you please work with Havelock to increase the number of significant digits in their price reporting to a uniform 8 digits, at least for your 3 funds?  It would save your investors some time and hassle constantly using two pages when one can do the job with minimal marginal cost to Havelock.    I have called them three times over the past 6 weeks with this suggestion myself, and nothing has been done about this issue.  You correctly emphasize the importance of accurately calculating all the per-share data items in your own reporting, and then Havelock introduces error just because they won't improve their own price report accuracy.  Many thanks!

Hello Again All:

Many thanks for your explanations and information.  I view these 3 funds as a package which should in fact behave as a set of interlocked derivatives, as your name implies.  One of the best things about derivatives in general is that they can represent excellent ways to manage risk in the underlying asset.  All Things Bitcoin is nothing if not risky!  You have given us a tool to help transfer risk from those who don't want it to those who do, for a price.  Unfortunately, derivatives have a well-deserved reputation for being complicated and difficult to understand.  Now that you have provided this additional info I think that you have reduced the confusion to its lowest realistic level.  Best Wishes to you and to BDD!

Hello Folks:

Many thanks for your considerate and informative responses to my 7 questions yesterday.  I just have a few additional questions and comments:

1.  Is it correct to assume that you will always value MINE at the stated 200 days of dividends, no matter where in the cycle we are?  For example, after a typical 14-day cycle will dividends be based on 200 days or on 186 days?

2.  I understand where the 1% fee goes much better now.  But I don't see how the Issuer of the fund makes any BTC.  If that fee is just enough to pay HL their fee and to provide a small buffer then how does the Issuer get rewarded for all of the quality time, energy, and ongoing management work necessary to bring this innovative concept to market and to make it a success?  The Issuer deserves compensation for all this work and hassle!

4.  I got the 2,514,532 Difficulty number from the IPO Prospectus on p. 4.  Many thanks for the link to the actual data--it really helps to clear up this issue.  Might I suggest that you include this link directly in future communications with investors, especially those of us who are kind of hazy on the nuts and bolts of how hashing & mining works?

 I assume that you set the penalty at 1/2 % per day for MINE transactions because it reflects the shorter remaining life of the fund, at 1 day less/ 200 days standard.  So in this way it's like the situation with ex-dividend valuation of shares of common stock, where the market price of the stock falls by the $ amount of the quarterly  dividend on the ex date.  Since you pay dividends each day this adjustment makes sense.

In sum, if I get your plan correctly now the 0.2431 BTC for EXCH is ultimately  divided between MINE and SELL holders depending on whether the difficulty increases rapidly (favoring SELL) or slowly/as expected (favoring MINE).  So it really IS a zero-sum game!  In  effect your derivative functions as a LEAP where the time frame is several months, MINE represents a call option for those bullish on mining investments, and SELL represents a put option for those bearish on mining investments.  I really like this concept!

I have a few questions about BDD, being new to these derivatives:

1.  Does the difficulty reset every 10 days on average?

2.  At the posted BDD.EXCH price of 0.24310364, if this price includes the 1% fee, then is the NAV/U actually 0.24069666?

3.  If this 0.24310364 does in fact represent 210 days of daily dividends, then is this daily dividend = 0.00114617?

4.  Using the formula in the prospectus (5,000,000,000*25*86,400*65,535/2^48/2,514,532)  the daily dividend computes to 0.00000023.  Why the difference?  Does it imply 5,000 shares outstanding? (0.00114617/0.00000023)

5.  About how much time will each cycle (intro to end game) represent?  Do you intend to restart the derivative funds anew after the end game has concluded?

6.  Since you are not actually mining for BTC, where do the BTC you need to pay those daily dividends come from?  In other words, is there an independent source of income using cash flows not provided by your investors?

7.  I get the impression that the way you have designed the BDD pairs it's a zero sum game--if difficulty increases the BDD.Mine will get most of the 0.24 initial cash flow and if difficulty decreases then BDD.Sell will get the majority of the cash flow.  Is this inference accurate, and if not why not?

Thanks in advance for your help.  I am seriously considering investing in BDD but I need some answers to these questions before I commit BTC, and I can't find simple explanations in the Prospectus.