Ayers alliance quantum fund offering memorandum 2014 04-04

Offering Memorandum

QUANTUM FUND

AYERS ALLIANCE

OFFERING MEMORANDUM

A segregated portfolio of

AYERS ALLIANCE SPC

an exempted company incorporated with limited liability under the laws of

the Cayman Islands with registration number HS-281646

March 2014

AYERS ALLIANCE ASSET MANAGEMENT LIMITEDManager

STI ASSET MANAGEMENT LIMITEDHong Kong Investment Advisor

AYERS ALLIANCE LIMITEDAustralian Investment Advisor

AYERS ALLIANCE

QUANTUM FUND SP

2 Ayers Alliance SPCAYERS ALLIANCE QUANTUM FUND

IMPORTANT NOTICES TO POTENTIAL INVESTORS

The Company is an exempted company incorporated with limited liability and registered as

a segregated portfolio company under the Companies Law. This Memorandum relates to

the offering of shares attributable to the Fund, a segregated portfolio of the Company.

Responsibility statement The Directors, whose names appear in the Directory, accept responsibility for the information contained in this Memorandum. To the best of the knowledge and belief of the Directors who have taken reasonable care to ensure that the information contained in this Memorandum is in accordance with the facts and, contains such information as is necessary to enable a prospective investor to make an informed decision as to whether or not to subscribe for the Shares.

Reliance on this Memorandum The Shares are offered only on the basis of the information contained in this Memorandum. Any further information or representations given or made by any dealer, broker or other person should be disregarded and accordingly, should not be relied upon. No person has been authorised to give any information or to make any representations in connection with the offering of the Shares other than those contained in this Memorandum and, if given or made, such information or representations must not be relied on as having been authorised by the Directors.

Certain information contained in this Memorandum constitutes “forward-looking statements”, which can be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “believe”, the negatives thereof, other variations thereon or comparable terminology. Due to various risks and uncertainties, including those described in the sections headed “Risk Factors” and “Conflicts of Interest”, actual events or results or the actual performance of the Fund may differ materially from that anticipated in such forward-looking statements.

Statements in this Memorandum are based on the law and practice in force in the Cayman Islands at the date of this Memorandum and are therefore subject to change should that law or practice change. Neither the delivery of this Memorandum nor the issue of the Shares shall under any circumstances create any implication or constitute any representation that the affairs of the Company have not changed since the date of this Memorandum.


Regulation The Company is a “regulated mutual fund” for the purposes of the Mutual Funds Law and is registered with CIMA pursuant to section 4(3) of the Mutual Funds Law. This Memorandum has been filed with CIMA. Such registration does not imply that CIMA or any other regulatory authority in the Cayman Islands has approved this Memorandum or the offering of the Shares.

Distribution and selling Neither this Memorandum nor the Shares described in it have restrictions been qualified for offer, sale or distribution under the laws

of any jurisdiction governing the offer or sale of mutual fund equity interests or other securities. The distribution of this Memorandum and the offering or purchase of the Shares may be restricted in certain jurisdictions. This Memorandum does not constitute an offer, solicitation or invitation to subscribe for Shares in any jurisdiction in which such offer, solicitation or invitation is not authorised, or to any person to whom it would be unlawful to make such an offer, solicitation or invitation. It is the responsibility of any person in possession of this Memorandum, and any person wishing to apply for Shares pursuant to this Memorandum, to inform themselves of and to observe all applicable laws and regulations of any jurisdiction relevant to them.

Please review the selling restrictions set out in the Appendix.

Confidentiality This Memorandum is strictly confidential and is to be read only by the person to whom it has been delivered to enable that person to evaluate an investment in the Fund. It is not to be reproduced or distributed to any other persons except that a potential investor may provide a copy to its professional advisers.

Investor responsibility No representations or warranties of any kind are intended or should be inferred with respect to the economic return from, or the tax consequences of, an investment in the Fund. No assurance can be given that existing laws will not be changed or interpreted adversely. Potential investors should not construe this Memorandum as legal, tax or financial advice.

The above information is for general guidance only. Before making an investment in the Fund prospective investors should review this Memorandum carefully and in its entirety. Prospective investors should consult with their legal, tax and financial advisers as to any legal, tax, financial or other consequences of subscribing for, purchasing, holding, redeeming or disposing of Shares in their country of citizenship, residence and/or domicile.


Risks Investment in the Fund carries substantial risk. There can be no assurance that the Fund’s investment objective will be achieved and investment results may vary substantially over time. An investment in the Fund is only suitable for sophisticated investors who are able to bear the loss of a substantial portion or even all of their investment in the Fund. An investment in the Fund is not intended to be a complete investment programme for any investor.

There is no public market for the Shares, nor is a public market expected to develop in the future.

Potential investors should carefully consider the risk factors set out in the section headed “Risk Factors” when considering whether an investment in the Fund is suitable for them in light of their circumstances and financial resources. Investors are advised to seek independent professional advice on the implications of investing in the Fund.


DIRECTORY

AYERS ALLIANCE SPC

Registered Office4th Floor, Harbour Place103 South Church StreetPO Box 10240Grand Cayman KY1-1002Cayman Islands

DirectorsWen Cyrus Jun-MingLee Chin-Chang

ManagerAyers Alliance Asset Management Limited4th Floor, Harbour Place103 South Church StreetGrand Cayman KY1-1002Cayman Islands

Administrator and Transfer AgentCiti Fund Services (Asia) Limited50/F Citibank TowerCitibank Plaza, 3 Garden RoadCentralHong Kong

AuditorsDeloitte & ToucheOne Capital PlacePO Box 1787Grand Cayman KY1-1109Cayman Islands

Prime BrokerUBS AG, London Branch1 Finsbury AvenueLondonEC2M 2PP

Hong Kong Investment AdvisorSTI Asset Management Limited3rd Floor, QRC100100 Queen’s Road CentralCentralHong Kong

Australian Investment AdvisorAyers Alliance LimitedLevel 2, Exchange House10 Bridge StreetSydney NSW 2000Australia

Legal Adviser as to Cayman Islands lawHarney Westwood & Riegels3601 Two Exchange Square8 Connaught PlaceCentralHong Kong

Legal and Tax Adviser as to Australian lawDLA Piper Australia201 Elizabeth StreetSydney NSW 2000Australia


CONTENT

Definitions 9

Summary 13 The Company and the Fund 17Structure 17Shares 17Dealing currency 17Additional information 18

Investment Objective, Strategies and Restrictions 19Investment objective 19Investment strategies 19Investment restrictions 21Leverage 21Currency hedging and trading 22Distribution policy 22Changes to investment objective, investment strategies and restrictions 22

Side Pocket Investments 23

Management and Administration 25Board of Directors 25Manager 26Investment Advisors 27Administrator and Transfer Agent 29Prime Broker 30Distributor 31Change of service providers 31

Fees and Expenses 32Fees payable to the Manager 32Fees payable to the Investment Advisors 33Administration fees 33Prime brokerage fees 33Fees payable to the Directors 33Expenses 33

Subscriptions 35Offer 35Subscription price and issuance 35Subscription fee 35Minimum investment 35Eligible Investors 35Payment 36Non-cash subscriptions 36Subscription procedure 36Issue of Shares 37Prevention of money laundering 37


Form of Shares 38New issue securities 38

Redemption and Transfer 39Procedure for the redemption of Shares 39Redemption price and redemption proceeds 39Redemption fee 39Deferral of redemptions 40Settlement 40Prevention of money laundering 41Rights following the Redemption Day 41Compulsory redemption 41Transfer of Shares 41

Net Asset Value 43Determination of Net Asset Value 43Valuation of assets 43Suspensions 44

Risk Factors 46Risks associated with the structure of the Company and the Fund 46Risks associated with the investment strategies 48

Conflicts of Interest 57Manager and Investment Advisors 57Directors 57Soft dollar arrangements 58

Taxation 59General 59Cayman Islands 59Hong Kong 59Australia 62European Union Savings Directive 63US Foreign Account Tax Compliance Act 63Other jurisdictions 64

Financial Information and Reports 65Financial year 65Financial statements 65Auditors 65Reports to Shareholders 65

General 66The Company 66Share capital of the Company 66Segregated portfolios 66Rights of the Management Shares 67Rights of the Shares 67Rights of the side pocket shares 68Modification of rights attaching to a Class 68Side letters 69


Consolidation of series 69Amendments to the Articles 69Winding up and termination 69General meetings 70Directors’ report 70Regulation 70Material contracts 70Documents available for inspection 71Enquiries 71

APPENDIX – RESTRICTIONS ON DISTRIBUTION 72


DEFINITIONS

In this Memorandum capitalised terms have the meanings set out below unless the context otherwise requires:

Administrator Citi Fund Services (Asia) Limited, providing the services of fund administrator and transfer agent, and a reference to the Administrator in this Memorandum shall be deemed to be a reference to the Administrator either in its capacity as fund administrator or transfer agent, as the context requires.

Articles the memorandum and articles of association of the Company, as amended from time to time.

Auditors Deloitte & Touche.

Australian Investment Advisor Ayers Alliance Limited.

Australian Investment an agreement between the Manager and the Australian Advisory Agreement Investment Advisor pursuant to which the Australian

Investment Advisor will act as investment advisor to the Manager.

Business Day a day (other than a Saturday or a Sunday) on which banks in Hong Kong are authorised to open for normal banking business and/or such other day or days as the Directors may determine, either generally or in any particular case, provided that where, as a result of a typhoon signal number 8 or above, black rainstorm warning or similar event, the period during which banks in Hong Kong are open on any day are reduced, such day shall not be a Business Day.

Calculation Period a period of 12 months commencing on each 1 January, provided that the first Calculation Period in respect of any series will be the period commencing on the date such series is issued and ending on the next following 31 December.

CIMA the Cayman Islands Monetary Authority.

Class any class of Shares or Side Pocket Shares designated by the Directors pursuant to the Articles.

Class A Share a Share designated as a Class A Share.

Companies Law the Companies Law of the Cayman Islands, as amended or re-enacted from time to time.

Company Ayers Alliance SPC an exempted company incorporated with limited liability and registered as a segregated portfolio company under the Companies Law with registration number HS-281646.


Dealing Currency in respect of any Class, the currency determined by the Directors on the establishment of the Class as the currency in which the Subscription Price, Redemption Price and Net Asset Value per Share of such Class will be calculated.

Directors the directors of the Company from time to time.

Eligible Investor a person to whom the Company can lawfully make an invitation to subscribe for Shares without compliance with any registration or other legal requirements, who is able to acquire and hold Shares without breaching the law or requirements of any country, regulatory body or government authority and who satisfies such additional eligibility requirements as may be determined by the Directors from time to time.

Fund Ayers Alliance Quantum Fund SP, a segregated portfolio of the Company.

High Water Mark in relation to any series, the highest Net Asset Value of that series (after payment of any Performance Fees) as at the last Valuation Day in any previous Calculation Period or, if higher, the Net Asset Value of the relevant series immediately following the issue of such series.

Hong Kong Investment Advisor STI Asset Management Limited.

Hong Kong Investment an agreement between the Manager and the Hong Kong Advisory Agreement Investment Advisor pursuant to which the Hong Kong

Investment Advisor will act as investment advisor to the Manager.

Hurdle Rate in relation to any Share, the High Water Mark for that Share multiplied by 1.08.

IFRS International Financial Reporting Standards issued by the International Accounting Standards Board.

Initial Offer Period in relation to any Class, the period determined by the Directors during which Shares of that Class are first offered for subscription, which ended at 5:00 p.m. (Hong Kong time) on 28 January 2014.

Initial Series in relation to any Class, the series issued on the close of the Initial Offer Period or any series substituted for such series.

Investment Advisors the Hong Kong Investment Advisor and the Australian Investment Advisor and each, an Investment Advisor.

Investment Advisory Agreements the Hong Kong Investment Advisory Agreement and the Australian Investment Advisory Agreement and each, an Investment Advisory Agreement.


Lock-up Period in respect of a Class A Share, a period of 6 months commencing on the issue of such Share or such shorter period as the Directors may determine.

Management Agreement an agreement between the Fund and the Manager pursuant to which the Manager will provide investment management services.

Management Fee the management fee payable by the Company, out of the assets of the Fund, to the Manager pursuant to the Management Agreement.

Management Share a non-participating, non-redeemable, voting share of par value US$0.01 in the capital of the Company designated as a Management Share.

Manager Ayers Alliance Asset Management Limited.

Memorandum this offering memorandum, as amended or supplemented from time to time.

Minimum Holding Shares with an aggregate Net Asset Value of not less than US$100,000 or such lesser amount as the Directors may determine, either generally or in any particular case.

Mutual Funds Law the Mutual Funds Law of the Cayman Islands, as amended or re-enacted from time to time.

Net Asset Value the net asset value of the Fund, the relevant Class, the relevant series or a Share, as the case may be, determined as described in the section headed “Net Asset Value”.

Net Asset Value per Share in respect of a Share of any series, the Net Asset Value of the relevant series divided by the number of Shares of such series in issue.

Performance Fee the performance fee payable by the Company, out of the assets of the Fund, to the Manager pursuant to the Management Agreement.

Prime Broker one or more financial institutions that may be appointed as a prime broker in respect of the Fund from time to time.

Redemption Day the first Business Day of each month and/or such other day or days as the Directors may determine, either generally or in any particular case.

Redemption Gate Shares representing in aggregate 10 per cent or more (or such higher percentage as the Directors determine, either generally or in respect of any particular Redemption Day) of the Net Asset Value of the Fund.


Redemption Notice a request for the redemption of Shares which shall be in such form as the Directors may determine from time to time.

Redemption Price the price per Share at which Shares of the relevant Class may be redeemed, calculated in the manner described in the section headed “Redemption and Transfer”.

Share a participating, redeemable, non-voting share of par value US$0.01 in the capital of the Company attributable to the Fund and being offered for subscription under the terms of this Memorandum.

Shareholder a holder of one or more Shares or Side Pocket Shares.

Side Pocket Investment an asset which is determined by the Directors to be designated as a Side Pocket Investment, as more particularly described under “Side Pocket Investments” in this Memorandum.

Side Pocket Share a participating, non-redeemable, non-voting share of par value US$0.01 in the capital of the Company attributable to the Fund and designated as a Side Pocket Share.

Subscription Agreement an application to subscribe for Shares which shall be in such form as the Directors may determine from time to time.

Subscription Day the first Business Day of each month and/or such other day or days as the Directors may determine, either generally or in any particular case.

Subscription Price the price per Share at which Shares of the relevant Class may be issued, calculated in the manner described in the section headed “Subscriptions”.

United States or US the United States of America, its territories and possessions including the States and the District of Columbia.

US Dollar, USD or US$ the lawful currency of the United States.

US Person a citizen or resident of the United States, a corporation, partnership or other entity created or organised in or under the laws of the United States or any person falling within the definition of the term “United States Person” under Regulation S promulgated under the United States Securities Act of 1933, as amended.

Valuation Day in respect of each Class, the Business Day immediately preceding each Redemption Day and each Subscription Day and/or such other day or days as the Directors may determine, either generally or in any particular case.

Valuation Point the close of business in the last market relevant to the Fund to close on the relevant Valuation Day, or such other time as the Directors may determine.


SUMMARY

The following summary should be read in conjunction with the remainder of this Memorandum, the Articles and the other documents referred to in this Memorandum and is qualified in its entirety by reference to such documents.

The Company and the Fund Ayers Alliance SPC is an exempted company incorporated with limited liability and registered as a segregated portfolio company in the Cayman Islands under the Companies Law.

A segregated portfolio company is permitted to create one or more segregated portfolios in order to segregate the assets and liabilities of the company held in respect of one segregated portfolio from the assets and liabilities of the company held in respect of any other segregated portfolio and/or the general assets and liabilities of the company. Under Cayman Islands law, the assets of one segregated portfolio will not be available to meet the liabilities of another segregated portfolio. Notwithstanding the segregation of assets and liabilities between segregated portfolios, a segregated portfolio company is a single legal entity and no segregated portfolio constitutes a legal entity separate from the company itself.

This Memorandum relates only to Ayers Alliance Quantum Fund SP, a segregated portfolio of the Company. The Directors may at any time create additional segregated portfolios without notice to, or the consent of, the Shareholders. Each segregated portfolio may have, and is expected to have, different investment strategies from those of other segregated portfolios of the Company. The Company may issue participating shares of one or more classes in respect of a segregated portfolio.

The Shares The Directors have initially created and designated one Class in respect of the Fund, being Class A Shares, which are being offered under the terms of this Memorandum. At any time the Directors may establish and designate additional Classes without notice to, or the consent of, the Shareholders. The Directors may differentiate between Classes on various bases, including as to the Dealing Currency, the fees payable, the level of information provided and redemption rights.

Regulation The Company is registered with CIMA as a regulated mutual fund pursuant to section 4(3) of the Mutual Funds Law. Accordingly, the Company is subject to regulatory supervision by CIMA.


Investment objective and strategies The investment objective of the Fund is capital appreciation. There can be no assurance that the investment objective will be achieved.

The Manager will seek to achieve the investment objective of the Fund by utilising the investment strategies set out in the section headed “Investment Objective, Strategies and Restrictions”.

Management The Directors have overall responsibility for the management and administration of the Company. However, the Directors have delegated responsibility for day-to-day administrative functions to the Administrator and responsibility for making day-to-day investment decisions to the Manager.

Under Cayman Islands law, a person acting as an investment manager is not required to be licensed if it carries on such business exclusively for sophisticated persons or high net worth persons which the Manager intends to do.

The Manager has appointed or will appoint the Investment Advisors to provide investment advisory services to the Manager in relation to the management and investment of the assets of the Fund.

It is anticipated that the central management and control of the Company will be exercised by the Directors outside the jurisdictions in which the Investment Advisors operate.

Subscriptions Shares are available for subscription on each Subscription Day at the relevant Subscription Price.

Subscription fee A subscriber for Class A Shares may be required to pay a subscription fee of up to 5 per cent of the subscription amount.

Minimum subscription The minimum initial investment per subscriber is US$100,000, exclusive of any subscription fee). The Directors may waive or reduce the minimum initial investment either generally or in any particular case. However, for so long as the Company is registered under section 4(3) of the Mutual Funds Law, the minimum initial investment cannot be less than US$100,000 (or its equivalent in the relevant Dealing Currency) (exclusive of any subscription fee).

Redemptions Shares may be redeemed at the option of the Shareholder on any Redemption Day falling after the expiry of the relevant Lock-up Period.

A completed Redemption Notice must be received by the Administrator no later than 5:00 p.m. (Hong Kong time) on a Business Day falling at least 3 Business days (or such lesser period as the Directors may permit, either generally or in any particular case) before the relevant Redemption Day.


Restrictions on redemptions The Directors may temporarily suspend the redemption of Shares in certain circumstances.

If Redemption Notices are received in respect of any Redemption Day which, if satisfied in full, would result in redemptions in excess of the Redemption Gate, the Directors may limit redemptions to the Redemption Gate. Any such limitation will be applied on a pro rata basis amongst all Shareholders seeking to redeem Shares on the relevant Redemption Day. Redemption Notices which are not satisfied in full will be carried forward to the next Redemption Day.

Payment of redemption proceeds Redemption proceeds will normally be paid in cash by electronic transfer at the Shareholder’s risk and expense. However, in certain circumstances, the Company may effect the payment of redemption proceeds by way of a transfer of assets or partly in cash and partly by way of a transfer of assets.

Valuations The Net Asset Value and the Net Asset Value per Share of each Class will be calculated as at the Valuation Point on each Valuation Day.

The Directors may temporarily suspend the calculation of the Net Asset Value and/or the Net Asset Value per Share of any Class in certain circumstances.

Restrictions on sale and transfer Shares will only be issued to, and may only be transferred to, persons who are Eligible Investors. Shares may not be transferred without the prior written consent of the Directors.

Dividends It is not envisaged that any income or gains will be distributed by way of dividend. This does not preclude the Directors from declaring a dividend at any time in the future if they consider it appropriate to do so.

Management Fee The Company will pay the Manager a Management Fee, out of the assets of the Fund, in respect of each calendar quarter, of an amount equal to one quarter (1/4) of 2 per cent of the average Net Asset Value of each series of Class A Shares during the relevant quarter. The average Net Asset Value of a series will be determined by reference to the Net Asset Value of the relevant series (before making any deduction for any accrued Management Fee and Performance Fee) on the last Valuation Day in each month in the relevant quarter.


Performance Fee The Manager will also be entitled to receive a Performance Fee from the Fund in respect of each series of Shares in issue. For each Calculation Period, the Performance Fee in respect of each series will be equal to 20 per cent of the appreciation in the Net Asset Value of the series (adjusted for any redemptions and distributions) during the Calculation Period above the High Water Mark which is in excess of the Hurdle Rate. The Performance Fee will be calculated as at each Valuation Day in respect of each series by reference to the Net Asset Value of such series before deduction for any accrued Performance Fee.

Other fees and expenses All the costs of the operation and management of the Fund, including the organisational expenses, the fees and expenses payable to service providers and all expenses related to the investment programme will be paid out of the assets of the Fund.

To the extent that any fees and expenses incurred by the Company do not relate to a specific segregated portfolio, such fees and expenses will be apportioned to each segregated portfolio on a pro rata basis.

Risk factors and conflicts of interest An investment in the Fund entails risk. Potential investors should review carefully the discussions under the sections headed “Risk Factors” and “Conflicts of Interest”.

Reporting Each Shareholder will be provided with access to a copy of an annual report that will include audited financial statements within six months of the end of each financial year of the Fund. Shareholders will also be provided with access to a monthly report on the investment performance of the Fund. It is envisaged that access will be provided by uploading the relevant reports to an online facility such as a website.

The financial year of the Fund will end on 31 December in each year, with the first financial year ending on 31 December 2014.

Tax The Company is not subject to tax in the Cayman Islands (other than annual filing fees and an annual registration fee) under the current laws of the Cayman Islands. Potential investors should consult their own advisers as to the particular tax consequences to them of their proposed investment in the Fund.


THE COMPANY AND THE FUND

STRUCTUREThe Company is an exempted company incorporated with limited liability and registered as a segregated portfolio company in the Cayman Islands under the Companies Law. The Company was incorporated on 4 October 2013.

A segregated portfolio company is permitted to create one or more segregated portfolios in order to segregate the assets and liabilities of the company held in respect of one segregated portfolio from the assets and liabilities of the company held in respect of any other segregated portfolio and/or the general assets and liabilities of the company. Under Cayman Islands law, the assets of one segregated portfolio will not be available to meet the liabilities of another segregated portfolio. Notwithstanding the segregation of assets and liabilities between segregated portfolios, a segregated portfolio company is a single legal entity and no segregated portfolio constitutes a legal entity separate from the company itself.

This Memorandum relates only to the Fund, a segregated portfolio of the Company. The Directors may at any time created additional segregated portfolios without notice to, or the consent of, the Shareholders. Each segregated portfolio may have, and is expected to have, different investment strategies from those of other segregated portfolios of the Company. The Company may issue participating shares of one or more classes in respect of a segregated portfolio.

The Fund is open-ended and not structured as a closely held investment vehicle. The Fund was established with a view to accepting wide participation by Eligible Investors.

It is anticipated that the central management and control of the Company will be exercised by the Directors outside the jurisdictions in which the Investment Advisors operate.

SHARESThe Directors have initially created and designated one Class in respect of the Fund, being Class A Shares, which are being offered under the terms of this Memorandum. At any time the Directors may establish and designate additional Classes without notice to, or the consent of, the Shareholders. The Directors may differentiate between Classes on various bases, including as to the Dealing Currency, the fees payable, the level of information provided and redemption rights.

Shares do not carry voting rights except in relation to a modification of the rights attaching to a Class. The Management Shares, which are the voting shares in the Company, are held by the Manager.

DEALING CURRENCYThe base currency of the Fund is the US Dollar and the financial statements of the Fund will be presented in US Dollars.

The Directors may designate a Dealing Currency for any Class and in the absence of any such designation, the Dealing Currency will be the US Dollar. Subscriptions for, and redemptions of, Shares of a Class will be processed in the relevant Dealing Currency, and the Net Asset Value per Share of the Class will be calculated and quoted in such Dealing Currency. The Dealing Currency of the Class A Shares is the US Dollar.


ADDITIONAL INFORMATIONThis Memorandum does not purport to be and should not be construed as a complete description of the Articles, the Subscription Agreement or the contracts entered into by the Company in respect of the Fund. Before investing in the Fund each potential investor should examine this Memorandum, the Subscription Agreement and the Articles and satisfy itself that an investment in the Fund is appropriate. In the event that there is any conflict between this Memorandum and the Articles, the Articles shall prevail.

Additionally, and prior to a potential investor purchasing any Shares, the Company will make available to the potential investor the opportunity to ask questions of and receive written answers from representatives of the Company concerning the terms and conditions of an investment in the Fund.

An investment in the Fund may be considered speculative. It is not intended as a complete investment programme. It is designed only for experienced and sophisticated investors who are able to bear the risk that all or a substantial part of their investment in the Fund may be lost.


INVESTMENT OBJECTIVE, STRATEGIES AND RESTRICTIONS

INVESTMENT OBJECTIVEThe Fund is managed with the aim to deliver absolute returns for investors on a twelve month basis under any market conditions. The Fund primarily aims to systematically capture statistical arbitrage and market neutral arbitrage opportunities in the equity and currency markets. The Fund may use derivative instruments for risk management purposes and use leverage to enhance returns.

There can be no assurance that the investment objective will be achieved.

INVESTMENT STRATEGIES1 The Fund’s principal currency strategies include:

(a) Spot arbitrage strategy: the Fund’s system connects to different price feeds of banks and brokers and takes advantage of price discrepancies;

(b) Convergence strategy: the Fund’s system enters into trades when divergence is spotted between US Dollar Index futures and the spot prices of its underlying pairs, and takes profit when convergence occurs;

(c) Price action strategy: when FX pairs move irrationally due to position adjustments or sudden sizable trades, the Fund’s system enters into short-term trades in the opposite direction;

(d) Trend following strategy: when the Fund’s system detects a trend, the Fund’s system enters into a short-term position in the same direction, while longing options to protect its downside risks; and

(e) Dynamic option strategy: when the Fund’s system detects a consolidated market it will sell calls and puts and place spot stop orders to protect its downside risks.

2 The Fund’s principal equities strategies include:

(a) Cross listings and depositary receipts arbitrage

Opportunities: dual listed securities against each other and depositary receipts against the underlying securities

Dual or multiple listed securities: As many companies are traded on multiple markets there are times when trading happens

simultaneously on multiple markets on the same security and so it will be possible to buy the securities for one price in one market and sell the same security at a higher price in another market simultaneously and unwind the trades later.

Depositary receipts: A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent

a foreign company’s publicly traded securities. DRs make it easier to buy shares in foreign companies because the shares of the company do not have to leave the home jurisdiction.

Most DRs are exchangeable into the original security known as fungible and should have the same value as the underlying security. However, there are often spreads between the two where value can be extracted.


(b) Exchange traded fund (ETF) versus underlying arbitrage

Opportunities: ETFs versus their underlying securities

ETFs allow authorized participants to exchange back and forth between shares in underlying securities (ETF creation and redemption) held by the fund and shares in the fund itself, rather than allowing the buying and selling of shares in the ETF directly with the fund sponsor.

An ETF may trade at a premium or discount to the value of the underlying assets. When a significant enough premium appears, the Fund will buy the underlying securities, convert them to shares in the ETF through authorized participants (i.e. create an ETF), and sell the ETFs in the open market. When a discount appears the Fund will do the reverse, buy the ETF, convert them to shares of the underlying securities through authorized participants (i.e. redeem the ETF) and sell the underlying securities in open market.

(c) Single stock cash versus futures arbitrage

Opportunities: Futures versus underlying securities and futures versus underlying share options

The Fund takes profit between the difference of the futures price and cash price of a security.

Futures versus underlying securities: When a single security futures contract drops below the price of the underlying security, the Fund will long the single security futures and simultaneously short the security. The profit is the difference between the price of the futures contract purchased and the underlying security sold.

Futures versus underlying share option: If the Fund believes an option is overpriced or under-priced it will also establish positions in that option and simultaneously take an opposite position in the single security futures contract.

(d) Volatility arbitrage

Opportunities: Implied volatility of an option versus the future volatility of its underlying security

Since options pricing is determined by the volatility of the underlying security, if the forecasted and implied volatilities differ, there will be a discrepancy between the expected price of the option and the option’s actual market price.

When the Fund spots a higher volatility of the underlying security than the implied volatility of the option the Fund will buy the option and hedge its underlying security, the strategy becomes profitable if the underlying security’s realized volatility eventually proves to be higher than that of the option. In contrast, a short position in an option combined with a long position in the underlying security will be profitable if the realized volatility of the underlying security is lower than the option’s implied volatility.

(e) Risk arbitrage

Opportunities: Risk arbitrage (also known as merger arbitrage) tries to identify companies targeted for merger or acquisition.

Cash merger: the acquirer proposes to purchase the shares of the target for a certain price in cash. Until the acquisition is completed, the shares of the target trade below the purchase price. The Fund could buy the securities of the target and make a gain if the transaction completes.


Stock merger: the acquirer proposes to buy the target by exchanging its own shares for the shares of the target. The Fund could short sell the acquirer’s shares and buy the shares of the target. After the merger is completed, the target’s shares will be converted into shares of the acquirer based on the exchange ratio determined by the merger agreement. The Fund would then deliver the converted securities into its short position to complete the arbitrage.

The Fund may from time to time participate in risk-reward special situation opportunities which fall outside the above investment strategies. These include, but are not limited to private investments in public equities, special convertible issues and other privately negotiated or other less liquid transactions.

INVESTMENT RESTRICTIONSThe following investment restrictions will apply in respect of the investment of the assets of the Fund:

(a) in respect of its equities strategies the Fund will not invest in unlisted securities;

(b) not more than 15 per cent of the latest available Net Asset Value will be invested in special situation opportunities; and

(c) not more than 15 per cent of the latest available Net Asset Value will be invested in the securities of any one issuer.

The above restrictions will apply as at the date of the relevant transaction or commitment to invest. Accordingly the restrictions will not be breached, and changes in the portfolio of the Fund will not have to be effected if any limits are exceeded merely because of any appreciation or depreciation in the value of any investment or because of changes in exchange rates. However, no further relevant investments will be acquired until the limits are again complied with. In the event that the Manager breaches any of the above restrictions, the Manager will take such steps as it considers appropriate to rectify the breach, taking due account of the interests of the Shareholders, but shall not be under any further liability in respect of the breach.

Although the Company will generally make direct investments, the above restrictions will not prevent the Company from investing the assets of the Fund indirectly through one or more wholly-owned subsidiaries or other vehicles or through the use of swaps where the Manager considers that this would be commercially beneficial and/or tax efficient and/or provide the only practicable means of access to the relevant instrument or strategy.

LEVERAGEWhen deemed appropriate, the Company may employ leverage in respect of the Fund for working capital and/or as part of the investment strategies. Such leverage may include, without limitation, borrowing cash, securities and other instruments, purchasing futures and entering into derivative transactions and repurchase agreements. The Company may pledge assets of the Fund as security for borrowings. The use of leverage will increase the risk of an investment in the Fund. The total leverage in the Fund will not normally exceed 200 per cent of the latest Net Asset Value of the Fund.

The Company may borrow for the purposes of satisfying Redemption Notices or paying expenses, if required. The Company will not borrow for the purposes of on-lending.


CURRENCY HEDGING AND TRADINGThe Manager may seek to hedge the currency exposure of the Fund to currencies other than the US Dollar. The Manager may also seek to hedge the currency exposure between the Dealing Currency of any Class and the US Dollar. The Manager may use spot and forward foreign exchange contracts or other methods of reducing exposure to currency fluctuations.

DISTRIBUTION POLICYIt is not envisaged that any income or gains derived from investments will be distributed by way of dividend. However, this does not preclude the Directors from declaring a dividend at any time in the future if they consider it appropriate to do so. If a dividend is declared, the Directors will distribute it in compliance with applicable law.

CHANGES TO INVESTMENT OBJECTIVE, INVESTMENT STRATEGIES AND RESTRICTIONSThe investment objective, investment strategies, investment restrictions and limits on leverage summarised above represent the current intentions of the Company. Subject to any applicable law or regulation, the Directors may change the investment objective, investment strategies, investment restrictions and limits on leverage by giving Shareholders not less than 2 months’ prior written notice of the proposed changes and the Directors will use commercially reasonable efforts to formulate, review and make any such changes outside the jurisdictions in which the Investment Advisors operate.


SIDE POCKET INVESTMENTS

If an asset held or proposed to be acquired by the Fund becomes or is, in the opinion of the Directors, illiquid, the Directors may determine that such asset is to be designated a Side Pocket Investment. For this purpose an asset shall be considered illiquid if, in the opinion of the Directors, the asset is not freely traded on a regulated market or exchange, the asset is subject to legal or other restrictions on transfer, the asset is not readily realisable at a fair price or it is not reasonably practicable to determine a fair valuation of the asset. The Fund may invest in or hold a Side Pocket Investment directly or indirectly through a wholly owned special purpose vehicle established for such purpose.

EXCHANGE OF SHARES FOR SIDE POCKET SHARESOn the acquisition or designation of a Side Pocket Investment the Directors, in consultation with the Manager, will determine the Side Pocket Investment Cost of the Side Pocket Investment. The Side Pocket Investment Cost will be the fair market value of the relevant asset at the time it is designated a Side Pocket Investment or the cost of acquiring the relevant asset (including all transactional costs) if it is designated a Side Pocket Investment on acquisition. In determining the Side Pocket Investment Cost the Directors may also make provision for the fees and expenses which are likely to be incurred in relation to the Side Pocket Investment during the period for which the Side Pocket Investment is expected to be held.

Shares having an aggregate Net Asset Value (calculated as at the most recent Valuation Day) equal to the Side Pocket Investment Cost will then be exchanged for a new Class of Side Pocket Shares. The exchange will be made by way of redemption of Shares (and therefore will result in the payment of any Performance Fee accrued in respect of such Shares) and the simultaneous subscription for Side Pocket Shares at a subscription price determined by the Directors. Such exchange will be effected on a pro rata basis, based on the aggregate Net Asset Value of the Shares of each Class in issue at such time as a proportion of the total Net Asset Value of the Fund. Each Share to be exchanged will typically be exchanged for one Side Pocket Share of the new Class of Side Pocket Shares.

Only one Side Pocket Investment will be attributable to each Class of Side Pocket Shares. The holding of a particular Side Pocket Investment attributable to a particular Class of Side Pocket Shares will remain unchanged until the Side Pocket Investment is disposed of, or is determined by the Manager to have become freely tradable or have a readily ascertainable market value (each a Realisation Event). If a holding of a particular Side Pocket Investment is increased, the additional holding will be treated as a new Side Pocket Investment. Only Shareholders at the time a particular Side Pocket Investment is designated or acquired will participate in that Side Pocket Investment.

REALISATION OF SIDE POCKET INVESTMENTWhen a Realisation Event occurs, the Directors will determine the Side Pocket Net Proceeds of the relevant Class of Side Pocket Shares. The Side Pocket Net Proceeds will be the proceeds of realisation of the Side Pocket Investment (or its fair market value, as determined by the Directors, if the Side Pocket Investment is not disposed of) plus the value of any other assets attributable to the relevant Class (including any income received in respect of the Side Pocket Investment and any provision for fees and expenses which has not been used) less any accrued but unpaid fees and expenses relating to such Class.


If the Side Pocket Net Proceeds exceed the Side Pocket Investment Cost, an amount equal to 20 per cent of the amount which is in excess of the Side Pocket Hurdle Rate will be paid to the Manager as a Performance Fee. The Side Pocket Hurdle Rate will be the Side Pocket Investment Cost multiplied by 1.08. The balance of the Side Pocket Net Proceeds, or if the Side Pocket Net Proceeds are less than the Side Pocket Investment Cost, the entire Side Pocket Net Proceeds, will be applied in the compulsory redemption of Side Pocket Shares of the relevant Class and automatic subscription for additional Shares (typically of the same Class as the Shares that were originally exchanged into Side Pocket Shares). Such Shares will be issued at a Subscription Price equal to the Net Asset Value per Share of the original Class as at the most recent Valuation Day. Where a holder of redeemed Side Pocket Shares no longer holds any Shares, such Shareholder will receive a cash payment by way of redemption of Side Pocket Shares.

If the Side Pocket Net Proceeds are less than the Side Pocket Investment Cost (a Side Pocket Special Loss), the Performance Fee (if any) payable to the Manager as at the end of the Calculation Period in which the Side Pocket Shares are redeemed will be reduced by an amount equal to 20 per cent of the portion of the Side Pocket Special Loss attributable to each Shareholder who participated in the relevant Side Pocket Investment and remains a Shareholder at the end of the Calculation Period. The amount of any such reduction will be applied in subscribing for additional Shares to be issued to such Shareholder.

FEES AND EXPENSES APPLICABLE TO SIDE POCKET SHARESThe Manager will be entitled to a Management Fee in respect of each Class of Side Pocket Shares equivalent to 2 per cent per annum of the Net Asset Value of each such Class (before deduction of that month’s Management Fee).

The fees and expenses attributable to each Class of Side Pocket Shares, including the Management Fee, will accrue as liabilities attributable to such Class. Such liabilities shall be paid out of any cash or liquid assets attributable to the relevant Class. To the extent that such liabilities remain unpaid, they shall accrue until, and shall be paid on, the relevant Realisation Event.

VALUATIONSFor the purposes of determining the Net Asset Value of the Fund, Side-Pocket Investments will generally be ignored. For financial reporting purposes, Side-Pocket Investments will be valued at their estimated fair value, as determined by the Directors in consultation with the Manager.

REDEMPTION AND TRANSFER OF SIDE POCKET SHARESSide Pocket Shares are not redeemable at the option of the Shareholder and, unless the Directors determine otherwise, will be redeemed only on the occurrence of a Realisation Event.

If the Directors determine to compulsorily redeem Side Pocket Shares held by any Shareholder, the redemption price of the Side Pocket Shares so redeemed will be based on the estimated fair value of the relevant Side Pocket Investment less any accrued fees and expenses, as determined by the Directors. However, redemption proceeds will not be paid until the occurrence of the relevant Realisation Event.

Side Pocket Shares may not be transferred without the prior written consent of the Directors. The Directors may withhold their consent without giving any reason for doing so.


MANAGEMENT AND ADMINISTRATION

BOARD OF DIRECTORSThe Directors are responsible for the overall management and control of the Company in accordance with the Articles. However, the Directors have delegated responsibility for day-to-day administrative functions to the Administrator and responsibility for making day-to-day investment decisions to the Manager.

Under the Securities Investment Business Law of the Cayman Islands, a person acting as an investment manager is not required to be licensed if it carries on such business exclusively (whether directly or indirectly) for sophisticated persons or high net worth persons. The Manager intends to manage its business in such a way that it is not required to be licensed and accordingly is not subject to regulation by CIMA. The Manager will be provided with investment advisory services in respect of the Fund by the Hong Kong Investment Advisor and the Australian Investment Advisor.

The Directors will meet periodically outside the jurisdictions in which the Investment Advisors operate to review the operations and investment performance of the Fund. Save for these periodic reviews, the Directors will not have any responsibility for reviewing or approving any trade, investment, borrowing or other action of the Manager or any delegate of the Manager.

The current Directors are:

Wen Cyrus Jun-MingCyrus heads the proprietary trading desk, the structured finance unit, and the forex and futures brokerage unit of STI Financial Group. Prior to joining STI, Cyrus was in the structured finance unit of VMS Investment Group, with an estimated assets under management of approximately USD 2 billion, of which Cyrus participated in approximately USD 600 million of pre-IPO financings, merger and acquisition financings, asset based financings, and privatization financings. Prior to joining VMS, Cyrus was an investment associate at Kazakhstan Hong Kong Development Fund, a USD 400 million closed end private equity fund that made direct investments in oil and gas and metals and mining projects. Cyrus started his career as a management associate in the Institutional Clients Group at Citigroup and graduated from the Olin Business School at Washington University in St. Louis with a double major in finance and international business.

Lee Chin-ChangChin-Chang has over 15 years of experience in various leading asset management firms, investment trusts and securities brokerages in Taiwan and earned his master of business administration from the University of Wisconsin.

For the purposes of this Memorandum, the address of all the Directors is the registered office of the Company.

Retirement of DirectorsThe Articles do not stipulate a retirement age for the Directors nor do they provide for retirement of the Directors by rotation. The Directors may at any time elect to appoint another person to serve as a Director or to fill a vacancy.


Liability of DirectorsThe Articles provide that no Director will be liable to the Company for any loss or damage in carrying out his functions unless that loss or damage arises through the actual fraud, wilful default or gross negligence of such Director. Each Director is entitled to be indemnified out of the assets of the relevant segregated portfolio against any liability, action, proceeding, claim, demand, cost, damage or expense (including any legal expense) whatsoever incurred by him as a result of any act or failure to act in carrying out his functions other than such liability (if any) that he may incur by his own actual fraud, wilful default or gross negligence.

InsuranceThe Company may purchase and maintain insurance for the benefit of any person who is or was a Director.

MANAGERThe Company has appointed Ayers Alliance Asset Management Limited to act as manager of the Company pursuant to an agreement between the Company and the Manager (the Management Agreement). The Manager is an exempted company incorporated with limited liability in the Cayman Islands and is being managed, controlled and operated outside the jurisdictions in which the Investment Advisors operate.

The current directors of the Manager are Kong William Waileung and Lee Chin-Chang whose biographies are as follows:

Kong William WaileungWilliam, a CFA and CAIA charter holder, is the investment manager of STI Financial Group’s private equity team. Prior to STI, William previously co-managed approximately US$60 million of client assets at Saxo Capital Markets Australia in the FX and commodities markets. Prior to Saxo, he worked as an investment analyst at CP Retail Asset Management in Sydney. William graduated with a Bachelors of Commerce in Finance from University of Melbourne. William is responsible for the Company’s investment strategies.

Lee Chin-ChangChin-Chang has over 15 years of experience in various leading asset management firms, investment trusts and securities brokerages in Taiwan and earned his master of business administration from the University of Wisconsin.

Management AgreementPursuant to the Management Agreement, the Manager has full discretion to manage, invest and reinvest the assets of the Fund and to provide fund raising and marketing services for the Fund in pursuit of the investment objective and in accordance with the investment strategies and restrictions described in this Memorandum. The Manager may delegate any of its powers under the Management Agreement to any other person or persons as the Manager considers appropriate. The Manager may also engage agents to advise in relation to the performance by it of any of the services required to be performed or provided by it under the Management Agreement. The Manager has appointed the Investment Advisors to provide investment advisory services to the Manager in relation to the management and investment of the assets of the Fund. The Manager will pay the Investment Advisors’ advisory fees which will be calculated in accordance with the terms of the Investment Advisory Agreements.


The Management Agreement provides that neither the Manager nor any of its directors, officers, employees or shareholders shall be liable for any loss or damage arising directly or indirectly out of or in connection with the performance by the Manager of its duties and obligations under the Management Agreement unless such loss or damage is due to the gross negligence, wilful default or fraud of the Manager or its directors, officers, employees or shareholders. The Management Agreement provides further that the Company shall indemnify the Manager and each of its directors, officers, employees and shareholders, out of the assets of the Fund, against any and all liabilities, obligations, losses, damages, suits and expenses (each a loss) which may be incurred by or asserted against the Manager or any of its directors, officers, employees and shareholders in connection with the performance of any duty or obligation under the Management Agreement. However, the Company will not be obliged to indemnify the Manager or its directors, officers, employees or shareholders for any loss which is due to the gross negligence, wilful default or fraud of the person seeking to rely on the indemnity.

The Management Agreement may be terminated by any party on 90 days’ written notice and, in certain circumstances, may be terminated immediately. The Management Agreement is governed by the laws of the Cayman Islands.

INVESTMENT ADVISORSThe Manager has appointed each of STI Asset Management Limited (as the Hong Kong Investment Advisor) and will appoint Ayers Alliance Limited (as the Australian Investment Advisor) to provide investment advisory services in respect of the Fund.

Hong Kong Investment AdvisorThe Hong Kong Investment Advisor has been appointed pursuant to an agreement between the Company, the Manager and the Hong Kong Investment Advisor (the Hong Kong Investment Advisory Agreement). The Hong Kong Investment Advisor is a company incorporated with limited liability in Hong Kong.

The Hong Kong Investment Advisor is licensed for type 4 (advising on securities) and type 9 (asset management) regulated activities by the Securities and Futures Commission under the Securities and Futures Ordinance of Hong Kong (Ordinance) with CE number ARH514, subject to the conditions that it shall not hold client assets and shall not undertake discretionary management of any collective investment schemes (as defined under the Ordinance). The Hong Kong Investment Advisor is currently in the process of obtaining certain regulatory approvals in Hong Kong and the Fund will not engage in any equity trades until such approvals have been obtained.

Hong Kong Investment Advisory AgreementPursuant to the Hong Kong Investment Advisory Agreement, the Hong Kong Investment Advisor will advise the Manager on the management, investment and reinvestment of the assets of the Fund in pursuit of the investment objective and in accordance with the investment strategies and restrictions described in this Memorandum.

The Hong Kong Investment Advisory Agreement provides that neither the Hong Kong Investment Advisor nor any of its directors, officers, employees or shareholders shall be liable for any loss or damage arising directly or indirectly out of or in connection with the performance by the Hong Kong Investment Advisor of its duties and obligations under the Hong Kong Investment Advisory Agreement unless such loss or damage is due to the gross negligence, wilful default or fraud of the Hong Kong Investment Advisor or its directors, officers, employees or shareholders. The Hong Kong Investment Advisory Agreement provides further that the Manager and the Company, out of the assets of the Fund, shall indemnify the Hong Kong Investment Advisor and each of its directors, officers, employees


and shareholders against any and all liabilities, obligations, losses, damages, suits and expenses (each a loss) which may be incurred by or asserted against the Hong Kong Investment Advisor or any of its directors, officers, employees and shareholders in connection with the performance of any duty or obligation under the Hong Kong Investment Advisory Agreement. However, the Manager and the Company will not be obliged to indemnify the Hong Kong Investment Advisor or its directors, officers, employees or shareholders for any loss which is due to the gross negligence, wilful default or fraud of the person seeking to rely on the indemnity.

The Hong Kong Investment Advisory Agreement may be terminated by any party on 90 days’ written notice and in certain circumstances may be terminated immediately. If it is terminated by the Manager, the Hong Kong Investment Advisor will be entitled to receive a termination fee which will be calculated on any basis mutually agreed between the Manager and the Hong Kong Investment Advisor.

The Hong Kong Investment Advisory Agreement is governed by the laws of the Cayman Islands.

Australian Investment AdvisorThe Australian Investment Advisor will be appointed pursuant to an agreement between the Company, the Manager and the Australian Investment Advisor (the Australian Investment Advisory Agreement). The Australian Investment Advisor is a public company incorporated with limited liability in Australia.

The Australian Investment Advisor (Australian Financial Services Representative No. 382642) is also an authorised representative of Ayers Alliance Securities Pty Limited (ACN 149 475 105 who holds Australian Financial Services Licence No. 403070) and Ayers Alliance Financial Services Limited (ACN 134 959 818 who holds Australian Financial Services Licence No. 338241) and pursuant to such authorisations is permitted to provide the investment advisory services in respect of the Fund in accordance with the Australian Investment Advisory Agreement.

Australian Investment Advisory Agreement Pursuant to the Australian Investment Advisory Agreement, the Australian Investment Advisor will advise the Manager on the management, investment and reinvestment of the assets of the Fund in pursuit of the investment objective and in accordance with the investment strategies and restrictions described in this Memorandum.

The Australian Investment Advisory Agreement provides that neither the Australian Investment Advisor nor any of its directors, officers, employees or shareholders shall be liable for any loss or damage arising directly or indirectly out of or in connection with the performance by the Australian Investment Advisor of its duties and obligations under the Australian Investment Advisory Agreement unless such loss or damage is due to the gross negligence, wilful default or fraud of the Australian Investment Advisor or its directors, officers, employees or shareholders. The Australian Investment Advisory Agreement provides further that the Manager and the Company, out of the assets of the Fund, shall indemnify the Australian Investment Advisor and each of its directors, officers, employees and shareholders against any and all liabilities, obligations, losses, damages, suits and expenses (each a loss) which may be incurred by or asserted against the Australian Investment Advisor or any of its directors, officers, employees and shareholders in connection with the performance of any duty or obligation under the Australian Investment Advisory Agreement. However, the Manager and the Company will not be obliged to indemnify the Australian Investment Advisor or its directors, officers, employees or shareholders for any loss which is due to the gross negligence, wilful default or fraud of the person seeking to rely on the indemnity.


The Australian Investment Advisory Agreement may be terminated by any party on 90 days’ written notice and in certain circumstances may be terminated immediately. The Australian Investment Advisory Agreement is governed by the laws of the Cayman Islands.

ADMINISTRATOR AND TRANSFER AGENTThe Company has appointed Citi Fund Services (Asia) Limited to act as administrator of the Company pursuant to an agreement between the Company and the Administrator (the Administration Agreement).

The Company has appointed Citi Fund Services (Asia) Limited to act as transfer agent of the Company pursuant to an agreement between the Company and the Administrator (the Transfer Agency Agreement, and together with the Administration Agreement, the Administration Agreements).

The Administrator is a Hong Kong registered limited company and was incorporated on 25 April 2006. The Administrator is ultimately wholly-owned by Citigroup Inc.

Under the Administration Agreement the Administrator will be responsible for providing administration services to the Company including, but not limited to, the calculation of the Net Asset Value and the Net Asset Value per Share of each Class and series of Shares, arranging for the payment of expenses, maintaining books and records, and assisting the Auditors in preparing the accounts of the Company.

Under the Transfer Agency Agreement the Administrator will be responsible for providing transfer agency services to the Company including, but not limited to, processing applications for the subscription and redemption of Shares in compliance with applicable anti-money laundering legislation, maintaining the register of Shareholders and assisting in communications with Shareholders.

The Administrator is a service provider to the Company and has not been responsible for the preparation of this Memorandum, apart from this section entitled “Administrator and Transfer Agent”, and will not have any responsibility or authority to make investment decisions, nor render investment advice, with respect to the assets of the Company.

Both the Administration Agreements provide that the Administrator shall not be liable for any loss or damage arising directly or indirectly out of or in connection with the performance by the Administrator of its duties and obligations under either of the Administration Agreements unless such loss or damage is due to the gross negligence, wilful default or fraud of the Administrator. Furthermore, the liability of the Administrator for any such loss or damage shall not exceed the total amount of compensation paid to the Administrator during the previous 12 months immediately preceding the date on which the alleged loss or damages were purportedly incurred.

Both the Administration Agreements provide further that the Company, out of the assets of the Fund, shall indemnify the Administrator, its affiliates and each of their respective directors, officers, employees and agents against any and all liabilities, obligations, losses, damages, suits and expenses (each a loss) which may be incurred by or asserted against the Administrator, its affiliates or any of their respective directors, officers, employees and agents in connection with the performance of any duty or obligation under either of the Administration Agreements. However, the Company will not be obliged to indemnify the Administrator, its affiliates or any of their respective directors, officers, employees and agents for any loss which is due to the gross negligence, wilful default or fraud of the person seeking to rely on the indemnity.


Both the Administration Agreements may be terminated by any party on 90 days’ written notice and in certain circumstances may be terminated immediately. Both the Administration Agreements are governed by the laws of the country where the Administrator is located and performs its obligations thereunder.

PRIME BROKERThe Fund has appointed UBS AG, London Branch (UBS) as Prime Broker to the Fund with responsibility for custody of all the Fund’s assets. UBS provides prime brokerage services to the Fund under the terms of the Master Prime Brokerage Agreement between the Fund and UBS (the UBS Agreement).

These services may include providing the Fund with margin financing, clearing, settlement, stock borrowing and foreign exchange facilities. The Fund may also use UBS and other brokers and dealers to execute transactions for the Fund. UBS also provides a custody service for all the Fund’s investments held by UBS in accordance with the UBS Agreement. UBS is regulated by the Financial Market Supervisory Authority in Switzerland. It is authorised by the Prudential Regulation Authority (PRA) and subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA.

UBS may appoint sub-custodians of the Fund’s investments. UBS must exercise reasonable skill, care and diligence in the selection of any sub-custodian. UBS must satisfy itself of the ongoing suitability of the sub-custodian to provide custodial services to the Fund, maintain what UBS considers an appropriate level of supervision over the sub-custodian, and make what UBS considers appropriate periodic inquiries to confirm that the sub-custodian is competently discharging its obligations. In accordance with the rules of the PRA and/or FCA as applicable and in force from time to time (UK Rules), UBS must identify, record and hold the Fund’s investments held by UBS as custodian so that the identity and location of the investments can be identified at any time. The investments must be readily identifiable as belonging to a customer of UBS, separate from UBS’ own investments and so unavailable to creditors of UBS. The Fund’s investments may be registered in UBS’ name if it is in the Fund’s best interests or UBS cannot do otherwise due to law or practice, in which case the investments might not be segregated from UBS’s own investments, and if UBS defaults may not be as well protected.

As security for the payment and discharge of all liabilities of the Fund to UBS, all investments and cash held by UBS are charged by the Fund in UBS’ favour and constitute collateral for the purposes of the UK Rules. Investments and cash may also be deposited by the Fund with UBS as margin and constitute collateral for the purposes of the UK Rules.

UBS does not give client money protection under the UK Rules regarding client money to cash which UBS receives on the Fund’s behalf. The Fund’s cash is not segregated from UBS’ own cash and may be used by UBS in the course of its business. The Fund ranks as one of UBS’ general creditors for the cash balance.

The Fund’s investments may be borrowed, lent or otherwise used by UBS for its own purposes. These investments become the property of UBS and the Fund has a right against UBS for the return of equivalent assets. The Fund ranks as an unsecured creditor for the equivalent assets, and if UBS becomes insolvent the Fund may not be able to recover the equivalent assets in full.

No UBS group company is liable for any loss of the Fund resulting from any act or omission relating to the services provided under the terms of the UBS Agreement unless the loss results directly from the


negligence, wilful default or fraud of UBS’s group of companies. UBS is not liable for the solvency, acts or omissions of any sub-custodian which holds or controls any of the Fund’s investments or cash (other than UBS’ obligations of selection and suitability of the sub-custodian set out above). UBS accepts the same level of responsibility for nominee companies controlled by UBS as for UBS’ own acts. The Fund indemnifies UBS Group against any loss or claims arising out of the UBS Agreement, except to the extent that the losses or claims result from the negligence, wilful default or fraud of UBS Group.

The Fund (and not UBS) is responsible for ensuring that the Fund’s assets are delivered to UBS as prime broker and custodian (other than margin deposits). UBS is not responsible for monitoring the Fund’s compliance with this obligation.

UBS is a service provider to the Fund and is not responsible for the preparation of this document or the activities of the Fund. UBS accepts no responsibility for any information contained in this document. UBS will not participate in the Fund’s investment decision-making process.

The Fund reserves the right to change prime brokerage and custodian arrangements by agreement with UBS and to appoint additional or alternative prime brokers and custodians from time to time. The allocation of assets between the prime brokers (if any) will be determined by the Manager according to the nature and type of transaction.

DISTRIBUTORThe Manager may sub-delegate to one or more distributors or placement agents to solicit subscriptions for Shares. Such distributors or placement agents may charge a subscriber for Shares, whose subscription they have solicited, a fee of up to 5 per cent of the subscription amount or may share in the fees payable to the Manager. If any such distribution or placement fee is paid to the Company, the Company will pay it to the relevant distributor or placement agent.

CHANGE OF SERVICE PROVIDERSThe Directors may, at any time, change any of the service providers referred to above, agree different contractual terms with any of them, and/or appoint additional or alternative service providers, in each case without prior notice to, or the agreement of, Shareholders.


FEES AND EXPENSES

FEES PAYABLE TO THE MANAGERManagement FeeThe Company will pay the Manager a Management Fee out of the assets of the Fund, in respect of each calendar quarter, of an amount equal to one quarter (1/4) of 2 per cent of the average Net Asset Value of each series of Class A Shares during the relevant quarter. The average Net Asset Value of a series will be determined by reference to the Net Asset Value of the relevant series (before making any deduction for accrued Management Fee and Performance Fee) on the last Valuation Day in each month in the relevant quarter.

The Management Fee will be payable in US Dollars quarterly in arrears. If the Manager is not acting as Manager for an entire calendar quarter, the Management Fee payable for such calendar quarter will be prorated to reflect the portion of such calendar quarter in which the Manager is acting as such.

The Management Fee will be paid to the Manager within 30 days of the end of each quarter.

Performance FeeThe Manager will also be entitled to receive a Performance Fee from the Fund in respect of each series of Shares in issue. For each Calculation Period, the Performance Fee in respect of each series will be equal to 20 per cent of the appreciation in the Net Asset Value of the series (adjusted for any redemptions and distributions) during the Calculation Period above the High Water Mark which is in excess of the Hurdle Rate.

The Performance Fee will be calculated as at each Valuation Day in respect of each series by reference to the Net Asset Value of such series before deduction for any accrued Performance Fees.

The Performance Fee will be paid to the Manager in arrears as soon as reasonably practicable after the end of each Calculation Period and in any event, within 30 days of the finalisation of the Net Asset Value as at the last Valuation Day of each Calculation Period.

If Shares are redeemed during a Calculation Period, the Performance Fee in respect of such Shares will be calculated as though the relevant Redemption Day was the end of a Calculation Period. An amount equal to any Performance Fee in respect of such Shares will be paid to the Manager within 30 days of the relevant Redemption Day. In the event of a partial redemption, Shares will be treated as redeemed on a first in, first out basis for the purpose of calculating the Performance Fee.

If the Management Agreement is terminated during a Calculation Period, the Performance Fee in respect of the then current Calculation Period will be calculated and paid as though the date of termination were the end of the relevant Calculation Period.

GeneralThe Manager may waive, reduce or rebate the Management Fee and/or Performance Fee with regard to certain Shareholders that are directors, officers, employees, affiliates or connected persons of the Manager and/or the Investment Advisors or are deemed strategic investors. Any reduction of the Management Fee or Performance Fee, or both, may be effected by capitalising an amount equal to the amount of that reduction or rebate and applying that amount to purchase further Shares of the relevant Class for that Shareholder.


FEES PAYABLE TO THE INVESTMENT ADVISORSThe Manager will pay the Investment Advisors’ advisory fees which will be calculated in accordance with the terms of the Investment Advisory Agreements. The Investment Advisors will not receive any compensation out of the assets of the Fund.

ADMINISTRATION FEESThe Administrator will receive a fee out of the assets of the Fund for providing administration and transfer agency services calculated as at each Valuation Day and payable monthly in arrears up to 0.1 per cent per annum of the Net Asset Value of the Fund subject to a minimum monthly fee of US$5,500 in the first year and US$6,500 thereafter.

The Administrator will also be entitled to various transaction and processing fees and to be reimbursed for all out of pocket expenses properly incurred by it in the performance of its duties.

PRIME BROKERAGE FEESAny Prime Broker will receive such fees as may be agreed between the Company and the relevant Prime Broker from time to time. The fees charged by any Prime Broker for prime brokerage and custody services will not exceed commercial rates and will be based on a combination of transaction charges and interest costs.

FEES PAYABLE TO THE DIRECTORSThe remuneration of the Directors is determined by a resolution of the Directors. All the Directors have, however, waived their entitlement to directors’ fees until further notice. The Directors may be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the Directors or any committee of the Directors or general meetings of the Company, or in connection with the business of the Company.

EXPENSESPreliminary ExpensesThe Company will pay the costs and expenses of, and incidental to, the initial offering of Shares out of the proceeds of the initial issue of Shares. Such costs and expenses include those relating to the establishment of the Company in the Cayman Islands, the negotiation and preparation of the contracts to which the Company is a party and the fees and expenses of professional advisers.

These preliminary expenses are estimated to be approximately US$170,000 and will be amortised on a straight line basis over a period of five (5) years from the initial issue of Shares. The Directors may shorten the period over which such expenses are amortised. Under IFRS, establishment costs should be expensed as incurred and amortisation is not consistent with IFRS. However, the Directors believe that the amortisation of establishment costs is more equitable and are of the opinion that the departure from IFRS is unlikely to be material to the overall financial statements of the Fund. To the extent that the preliminary expenses policy adopted in respect of the Fund deviate from IFRS, certain adjustments may be made in the annual accounts of the Fund in order to comply with IFRS.


Operating ExpensesThe Fund will bear all expenses related to its investment programme, including (i) brokerage commissions, (ii) expenses related to buying and selling securities, including any issue or transfer taxes chargeable in connection with any securities transactions, (iii) interest on borrowings, including borrowings from any Prime Broker and borrowing charges on securities sold short, (iv) the costs and expenses of purchasing and maintaining all execution management systems, all order management systems and all financial data and analysis services necessary for the Fund to pursue its investment strategies, (v) expenses incurred by the Investment Advisors in connection with the Fund, and (vi) fees and expenses of any custodian, escrow agent and other investment related service providers appointed in respect of the Fund.

The Fund will also bear expenses incurred in connection with its operations including (i) fees and expenses of service providers, advisers and consultants, (ii) the Management Fee and Performance Fee, (iii) indemnification expenses and the cost of insurance against potential indemnification liabilities, (iv) legal, administrative, accounting, tax, audit and insurance expenses, (v) all registration fees, taxes and corporate fees payable to any relevant government, agency or regulatory authority, (vi) expenses with respect to investor communications, including marketing expenses, expenses of meetings of Shareholders and costs of preparing, printing and distributing financial statements and other documents, (vii) Directors’ fees (if any) and expenses, and (viii) litigation or other extraordinary expenses.

To the extent that any fees and expenses incurred by the Company do not relate to a specific segregated portfolio, such fees and expenses will be apportioned to each segregated portfolio on a pro rata basis.


SUBSCRIPTIONS

OFFERUp to 4,999,900 Shares will be available for issue. Management Shares and Side Pocket Shares are not being offered for subscription pursuant to this Memorandum.

SUBSCRIPTION PRICE AND ISSUANCEShares are available for subscription on each Subscription Day at the relevant Subscription Price. A new series of Shares of each Class will be issued on each Subscription Day on which Shares of that Class are issued.

The Subscription Price will be equal to the Net Asset Value per Share (before deduction of any accrued Performance Fee) of the Initial Series of the relevant Class as at the Valuation Day immediately preceding the Subscription Day on which the application is effective (and is exclusive of any Subscription Fee). If all Shares of the Initial Series are redeemed, the Directors may substitute another series as the Initial Series and may make such adjustments as they consider necessary to ensure that each series bears its proper proportion of the liabilities of the Fund.

SUBSCRIPTION FEEA subscriber for Class A Shares may be required to pay a subscription fee of up to 5 per cent of the subscription amount. The subscription fee will be paid to the Manager. The Manager may waive or reduce such subscription fee, either generally or in any particular case.

MINIMUM INVESTMENTThe minimum initial investment per subscriber is US$100,000, exclusive of any subscription fee). The Directors may waive or reduce the minimum initial investment either generally or in any particular case. However, for so long as the Company is registered under section 4(3) of the Mutual Funds Law, the minimum initial investment cannot be less than US$100,000 (or its equivalent in the relevant Dealing Currency) (exclusive of any subscription fee).

The minimum amount of any subsequent subscription is US$10,000 (exclusive of any subscription fee) or such lesser amount as the Directors may determine, either generally or in any particular case. Subsequent subscriptions must be made in multiples of US$10,000 or such lesser amount as the Directors may determine, either generally or in any particular case.

ELIGIBLE INVESTORSEach subscriber for Shares will be required to represent and warrant that, amongst other things (i) it is able to acquire and hold Shares without breaching the law or requirements of any country, regulatory body or government authority, (ii) it has the knowledge, expertise and experience in financial matters to evaluate the risks associated with investing in the Fund, (iii) it is aware of the risks inherent in investing in the types of assets in which the Fund will invest and the method by which these assets will be held and/or traded, and (iv) it can bear the loss of its entire investment in the Fund.


Shares will not be issued or transferred to any person in circumstances which, in the opinion of the Directors, would or may cause an undue risk of adverse tax, regulatory or other consequences to the Company or any Shareholders.

Shares will not be issued to, and may not be transferred to, any US Person.

PAYMENTUnless otherwise agreed by the Directors, payment for Shares must be made in cash, by electronic transfer, in the Dealing Currency of the Class being subscribed for. If a subscriber wishes to make payment in any currency other than the relevant Dealing Currency, conversion into the relevant Dealing Currency must be effected by, and at the risk and expense of, the subscriber prior to payment being made. Any bank charges incurred in respect of electronic transfers will be deducted from the subscription monies and only the net amount will be invested in Shares.

All subscription monies must originate from an account held in the name of the subscriber. No third party payment will be permitted. Interest on subscription monies will accrue to the Fund.

NON-CASH SUBSCRIPTIONSShares may be issued in exchange for assets or other property (non-cash consideration) at the discretion of and on terms agreed by the Directors. Any non-cash consideration will be valued by reference to the valuation principles applied in the calculation of the Net Asset Value. The Company may deduct from the value of any non-cash consideration such sum, if any, as the Directors consider represents an appropriate provision for any costs that will be incurred by the Company in accepting the non-cash consideration. Such costs may include stamp duty, transfer fees, registration fees or other charges, fees or duties associated with the transfer of the non-cash consideration to the Company. No non-cash consideration will be accepted unless the Directors are satisfied that the terms of the transfer do not materially prejudice the existing Shareholders.

SUBSCRIPTION PROCEDURESubscribers for Shares and Shareholders wishing to apply for additional Shares must send their completed Subscription Agreement, together with any supporting documents, so as to be received by the Administrator by no later than 5:00 p.m. (Hong Kong time) on the Business Day which is three (3) Business Days before the applicable Subscription Day. Subscription monies must be sent by electronic transfer so that cleared funds are received in the bank account of the Fund by no later than 5:00 p.m. (Hong Kong time) on the Business Day which is three (3) Business Days before the applicable Subscription Day.

If the completed Subscription Agreement, all documents required for the purposes of verifying the identity of the subscriber and source of the subscriber’s funds and subscription monies in cleared funds are not received by the applicable time referred to above, the application will be held over to the Subscription Day following receipt of the outstanding documentation and/or subscription monies, as the case may be. Shares will then be issued at the relevant Subscription Price on that Subscription Day. The Directors may waive the requirements specified above, either generally or in any particular case.

Subscription Agreements may be sent by facsimile provided the original follows promptly. None of the Directors, the Company or the Administrator accept any responsibility for any loss arising from the non-receipt or illegibility of any Subscription Agreement sent by facsimile, or for any loss caused by or as a result of any action taken in connection with facsimile instructions believed in good faith to have originated from properly authorised persons.


Once a completed Subscription Agreement has been received by the Administrator it is irrevocable.

The Company may reject any application in whole or part and without giving any reason for doing so. If an application is rejected, the subscription monies paid, or the balance thereof in the case of a partial rejection, will be returned (without interest) as soon as practicable to the account from which the subscription monies were originally remitted, at the risk and cost of the subscriber.

ISSUE OF SHARESWritten confirmation detailing the Shares which have been issued will be sent to successful subscribers as soon as practicable after the relevant Subscription Day.

Shares subscribed are deemed to be issued on the relevant Subscription Day.

Shares will be issued to 2 decimal places. Any smaller fraction of a Share that would otherwise arise will be rounded down, with the relevant subscription monies being retained for the benefit of the Fund.

PREVENTION OF MONEY LAUNDERINGTo ensure compliance with applicable requirements relating to anti-money laundering and anti-terrorism initiatives, the Company, or the Administrator on behalf of the Company, will require such information and documentation as it considers necessary to verify the identity and/or source of funds of each subscriber. In the event of delay or failure by the subscriber to produce any information required for verification purposes, the application may be refused or there may be a delay in processing the application. None of the Company, the Manager, the Investment Advisors, the Administrator or their respective delegates, agents and affiliates will be liable for any loss suffered by a subscriber arising as a result of any such refusal or a delay.

By subscribing for Shares, a subscriber consents to the disclosure of any information provided by the subscriber to government agencies, regulatory bodies and other relevant persons in connection with anti-money laundering requirements and similar matters. Such disclosure may be made by the Company, the Manager, the Investment Advisors, the Administrator or their delegates, agents or affiliates.

Each subscriber will be required to make such representations as may be required by the Company in connection with its anti-money laundering programmes. Such representations will include representations that the subscriber is not a prohibited country, territory, individual or entity listed on the United States Department of Treasury’s Office of Foreign Assets Control (OFAC) website and that it is not directly or indirectly affiliated with any country, territory, individual or entity named on an OFAC list or prohibited by any OFAC sanctions programmes. Each subscriber will also be required to represent that subscription monies are not directly or indirectly derived from activities that may contravene relevant laws and regulations, including anti-money laundering laws and regulations.

If, as a result of any information or other matter which comes to his or her attention during the course of his or her business, trade, profession or employment, any person resident in the Cayman Islands (including the Company) knows or suspects that a payment to the Company (by way of subscription or otherwise) constitutes or is derived from the proceeds of crime, such person is required to report such knowledge or suspicion pursuant to the Proceeds of Crime Law, 2008 of the Cayman Islands. Such a report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise.


FORM OF SHARESAll Shares will be issued in registered form, meaning that a Shareholder’s entitlement will be evidenced by an entry in the register of members of the Company and not by a certificate. No certificates will be issued unless the Directors determine otherwise.

A Share may be registered in a single name or in up to two joint names. Where Shares are registered in joint names, the joint holders may authorise the Company to act upon the sole written instructions of any one of the joint holders in respect of the transfer or redemption of all or any of such Shares. Unless so authorised, the Company will only act upon the written instruction of all the joint holders.

NEW ISSUE SECURITIESThe assets of the Fund may, from time to time, be used to purchase New Issue securities. A New Issue is an initial public offering of an equity security which is subject to the provisions of Rule 5130 and 5131 of the Rules of the United States Financial Industry Regulatory Authority (FINRA), as amended, extended, consolidated, substituted or re-enacted from time to time, and includes any initial public offering of an equity security as defined in Section 3(a)(11) of the United States Securities Exchange Act 1934, as amended. Under the Rules of FINRA, members of FINRA may not sell such securities to an account beneficially owned by broker/dealers, employees, owners and affiliates of broker/dealers, certain other classes of persons including portfolio managers and certain family members of those persons (each such person, a Restricted Person). Additionally, members of FINRA may not allocate New Issue securities to executive officers and/or directors, and materially supported persons thereof, of certain public or private companies (each such person, a Restricted Investor) that have an investment banking relationship with such FINRA member or where such FINRA member expects to establish an investment banking relationship with any such company.

Subscribers for, and transferees of, Shares will be required to provide such representations, warranties or documentation as the Company may require to determine whether they are Restricted Persons and/or Restricted Investors.

To enable the Fund to participate in New Issues, the Directors may, in respect of each existing Class, establish a corresponding new Class (each a class of Restricted Shares) that will not participate in any investments in New Issue securities. The same investment objective, strategies and restrictions will be applied to all Class save that profits and losses in respect of investments in New Issue securities will not be allocated to Restricted Shares. In such event the Company may compel the conversion of Shares held by Restricted Persons and Restricted Investors into Restricted Shares of the corresponding new Class. References in this Memorandum to a particular Class include the corresponding Class of Restricted Shares.

The Company may rely on a “de minimis” exemption pursuant to which the Directors may from time to time (but shall not be under any duty to) allocate any profits or losses arising directly or indirectly from New Issue securities to the Restricted Shares in the circumstances and to the extent permitted by the Rules of FINRA in respect of New Issues. Any such allocation made by the Directors may be amended by the Directors from time to time to the extent required to ensure compliance with the Rules of FINRA in respect of New Issues.

The Company may compulsorily convert non-Restricted Shares into the corresponding Class of Restricted Shares in the event that a holder of non-Restricted Shares becomes ineligible to participate in New Issue securities due to a change in the Shareholder’s status, any changes to the Rules of FINRA or as otherwise required by law or regulation.


REDEMPTION AND TRANSFER

PROCEDURE FOR THE REDEMPTION OF SHARESSubject to any restrictions set out in this section and under “Net Asset Value – Suspensions” below, Shares may be redeemed at the option of the Shareholder on any Redemption Day falling after the expiry of the Lock-up Period.

A Shareholder wishing to redeem its Shares must send a completed Redemption Notice to the Administrator at the address specified in the Redemption Notice. The completed Redemption Notice must be received by no later than 5:00 p.m. (Hong Kong time) on a Business Day falling at least 3 Business days (or such shorter period as the Directors may permit, either generally or in any particular case) before the relevant Redemption Day. Unless the Directors agree otherwise, any Redemption Notice received after this time will be held over and dealt with on the next relevant Redemption Day.

A Redemption Notice may be sent by facsimile but redemption proceeds will not be paid until the Administrator has received the original Redemption Notice. None of the Directors, the Company or the Administrator accept any responsibility for any loss arising from the non-receipt or illegibility of any Redemption Notice sent by facsimile, or for any loss caused by or as a result of any action taken in connection with facsimile instructions believed in good faith to have originated from properly authorised persons.

If a Redemption Notice is received which would, if satisfied, result in the Shareholder retaining less than the Minimum Holding, the Directors may treat such Redemption Notice as a request for a partial redemption only up to the Minimum Holding or may redeem the Shareholder’s entire holding of Shares. A request for a redemption of Shares with an aggregate Net Asset Value of less than US$10,000 (or such lesser amount as the Directors may determine, either generally or in any particular case) will be refused. Shares of the relevant Class will be redeemed on a “first issued, first redeemed” basis.

If a redeeming Shareholder owns Shares of more than one series, Shares will be redeemed on a “first in-first out” basis for the purpose of determining the Redemption Price. Accordingly, Shares of the earliest issued series held by the Shareholder will be redeemed first, at the Redemption Price of Shares of such series until the redeeming Shareholder no longer owns any Shares of such series.

Once a Redemption Notice has been received by the Administrator it may not be revoked by the Shareholder unless redemptions have been suspended in the circumstances set out in “Net Asset Value – Suspensions” below or the Directors otherwise agree.

REDEMPTION PRICE AND REDEMPTION PROCEEDSThe Redemption Price of a Share will be equal to the Net Asset Value per Share of the relevant series as at the Valuation Day immediately preceding the relevant Redemption Day.

REDEMPTION FEENo redemption fee will be charged on the redemption of Shares.


DEFERRAL OF REDEMPTIONSIf Redemption Notices are received in respect of any Redemption Day which, if satisfied in full, would result in redemptions in excess of the Redemption Gate, the Directors may limit redemptions to the Redemption Gate. Any such limitation will be applied on a pro rata basis amongst all Shareholders seeking to redeem Shares on the relevant Redemption Day. Redemption Notices which are not satisfied in full will be carried forward to the next Redemption Day and will have priority over Redemption Notices received in respect of such Redemption Day. Shares will be redeemed at the Redemption Price prevailing on the Redemption Day on which they are redeemed.

SETTLEMENTPayment of redemption proceeds will normally be made within 15 Business Days of the later of (i) the finalisation of the Redemption Price for the relevant Redemption Day, and (ii) the date on which the Administrator has received the original of the Redemption Notice and such other information and documentation as may be required. Payment will be made in the Dealing Currency of the Shares being redeemed by direct transfer to an account in the name of the Shareholder. Any costs incurred in making the transfer will be borne by the Shareholder. No redemption proceeds will be paid to a third party. No interest will be paid to the Shareholder in respect of redemption proceeds.

A Shareholder may request that payment may of redemption proceeds be made in a currency other than the relevant Dealing Currency. If the Directors permit payment in a currency other than the relevant Dealing Currency, conversion into the requested currency will be arranged by the Administrator and the cost of conversion will be deducted from the redemption proceeds.

If a Shareholder redeems 90 per cent or more of its Shares, the Company may hold back up to 10 per cent of the redemption proceeds pending completion of the next occurring annual audit. Promptly after completion of the audit, the Company will pay to such Shareholder the balance, if any, of the amount to which such Shareholder is entitled after taking account of any adjustment made to the relevant Redemption Price as a result of the audit. No interest will be paid in respect of redemption proceeds held back.

The Company aims to effect the payment of all redemption proceeds in cash. However, under circumstances of low liquidity or adverse market conditions, the Directors may effect the payment of the redemption proceeds in whole or in part by the transfer of assets. The assets to be transferred will be valued as at the relevant Redemption Day, by reference to the valuation principles applied in the calculation of the Net Asset Value. Assets will not be transferred to a redeeming Shareholder unless the Directors are satisfied that the terms of any such transfer will not materially prejudice the interests of the remaining Shareholders as a whole. The redemption proceeds may be reduced by such sum, if any, as the Directors determine represents an appropriate provision for any fiscal, transfer, registration or other charges, fees or duties (including stamp duties) associated with the transfer of the assets to the Shareholder.

Assets may be transferred directly to the redeeming Shareholder or may be transferred to a liquidating trust, account or entity and sold or otherwise realised for the benefit of the redeeming Shareholder. If assets are transferred to a liquidating trust, account or entity, the cash proceeds received by a redeeming Shareholder will reflect the value of the assets on the date on which they are sold or realised. The cost of operating the liquidating trust, account or entity and managing, selling or otherwise realising the assets will be deducted from the proceeds paid to the redeeming Shareholder.


PREVENTION OF MONEY LAUNDERINGRedemption proceeds will not be paid to a Shareholder until the Company has received any outstanding information or documentation requested in connection with any applicable anti-money laundering requirements or similar matters. None of the Directors, the Manager, either Investment Advisor or the Administrator will be liable for any loss arising as a result of any delay in payment of any redemption proceeds if such information and documentation has not been provided by the Shareholder.

The Company may refuse to pay redemption proceeds to a Shareholder if the Directors, the Manager, either Investment Advisor or the Administrator suspects or is advised that the payment of the redemption proceeds may result in a breach of any applicable laws or regulations in any relevant jurisdiction.

RIGHTS FOLLOWING THE REDEMPTION DAYFrom the relevant Redemption Day, a redeeming Shareholder will be treated as a creditor for the redemption proceeds of the Shares being redeemed (rather than a Shareholder) and will rank accordingly in the priority of the Fund’s creditors. After the relevant Redemption Day, the redeeming Shareholder will have no rights as a Shareholder in respect of the Shares being redeemed save for the right to receive the redemption proceeds and any dividend which has been declared in respect of the relevant Shares prior to the relevant Redemption Day.

COMPULSORY REDEMPTIONThe Company may, with or without cause and without giving any reason, redeem all or any of the Shares held by a Shareholder on any day designated by the Directors by giving prior written notice to such Shareholder.

In particular, the Company may redeem the Shares held by a Shareholder if the Directors become aware that (i) the Shareholder has ceased to be an Eligible Investor, (ii) the Shareholder is holding Shares in breach of any law or requirements of any country, regulatory body or government authority, or (ii) the continued holding of Shares by the Shareholder would or may, in the opinion of the Directors, cause an undue risk of adverse tax, regulatory or other consequences to the Fund or any other Shareholders. Shareholders are required to notify the Company and the Administrator immediately if at any time they become aware that any of the above circumstances apply to them.

Where any fees, payment, withholding or deduction becomes payable out of the assets of the Fund because of a particular Shareholder, the Company may redeem a portion of such Shareholder’s Shares in order to pay such amount. In such circumstances, the redemption proceeds may be paid directly by the Company to the relevant third party and not paid to the Shareholder.

TRANSFER OF SHARESShares may not be transferred without the prior written consent of the Directors. The Directors may withhold their consent without giving any reason for doing so.

Shareholders wishing to transfer Shares must complete a transfer request, which shall be in such form as the Directors may from time to time approve. The completed transfer request, duly stamped, if applicable, together with such evidence as the Directors may require to show the right of the transferor to make the transfer, must be sent to the Administrator. If the transferee is not already a Shareholder, it will be required to complete a Subscription Agreement and comply with all eligibility and identification requirements for a subscriber for Shares.


The transfer will take effect upon the registration of the transferee in the register of Shareholders maintained by the Administrator.

The Directors may suspend the registration of transfers for not more than a total of 30 days in any year. No transfer will be registered if, as a consequence of such transfer, the Shares retained by the transferor or registered in the name of the transferee would be less than the Minimum Holding.

The transferor and transferee will be responsible for paying any taxes, duties, imposts or levies payable on, or in consequence of, a transfer of Shares.


NET ASSET VALUE

DETERMINATION OF NET ASSET VALUEThe Net Asset Value and the Net Asset Value per Share of each series will be calculated as at the Valuation Point on each Valuation Day.

For the purposes of determining the Net Asset Value of a Class, a separate accounting record will be established in the books of the Company in respect of each Class and each series. An amount equal to the proceeds of issue of each Share will be credited to the record for the relevant Class an series. Any increase or decrease in the Net Asset Value (disregarding for these purposes (i) any changes in the Net Asset Value due to subscriptions, redemptions or the payment of dividends and (ii) any designated adjustments (as described below)) will be allocated pro rata to the record for each Class based on the previous Net Asset Value of each Class. Those costs, expenses, losses, dividends, profits, gains and income which the Directors determine relate solely to a particular Class or series (the designated adjustments) will then be allocated to the record of the relevant Class or series.

Each series of each Class will typically have a different Net Asset Value per Share. Any Management Fees and Performance Fees calculated in respect of a series will be deducted from the Net Asset Value of that series. Fees and expenses which relate to a particular series will be charged against that series when calculating its Net Asset Value. Other fees and expenses will be allocated pro rata between the series in accordance with their respective Net Asset Values or by such other method as the Directors consider equitable.

The Net Asset Value per Share on any Valuation Day will be calculated by dividing the Net Asset Value of the relevant series by the number of Shares of such series in issue, the resulting amount being rounded to 2 decimal places.

VALUATION OF ASSETSFor the purposes of calculating the Net Asset Value, assets of the Fund will be valued in accordance with the following principles:

(a) any security which is listed or quoted on any securities exchange or similar electronic system and regularly traded thereon will be valued at its last traded price as at the Valuation Point or, if no trades occurred on such day, at the closing bid price if held long and at the closing offer price if sold short, on the relevant Valuation Day, and as adjusted in such manner as the Directors think fit, having regard to the size of the holding. Where prices are available on more than one exchange or system for a particular security the price will be the last traded price or closing bid or offer price, as the case may be, on the exchange which constitutes the main market for such security or the one which the Directors determine provides the fairest criteria in ascribing a value to such security;

(b) any security which is not listed or quoted on any securities exchange or similar electronic system or if, being so listed or quoted, is not regularly traded thereon or in respect of which no prices as described above are available will be valued at its probable realisation value as at the Valuation Point, as determined by the Directors having regard to its cost price, the price at which any recent transaction in the security may have been effected, the size of the holding having regard to the total amount of such security in issue, and such other factors as the Directors deem relevant in considering a positive or negative adjustment to the valuation;


(c) investments, other than securities, which are dealt in or traded through a clearing house or exchange or through a financial institution will be valued as at the Valuation Point by reference to the most recent official settlement price quoted by that clearing house, exchange or financial institution. If there is no such price, then the average will be taken between the lowest offer price and the highest bid price as at the Valuation Point on any market on which such investments are or can be dealt in or traded, provided that where such investments are dealt in or traded on more than one market, the Directors may determine which market shall prevail;

(d) investments, other than securities, including over-the-counter derivative contracts, which are not dealt in or traded through a clearing firm or an exchange or through a financial institution will be valued by reference to the valuation obtained from an independent pricing source, but where no such valuation is available for a particular investment, the investment will be valued by comparing the latest available valuation provided by the relevant counterparty against the valuation provided by such other counterparties as the Directors deem appropriate. In the event that the valuations provided respectively by the relevant counterparty and the other counterparties differ to an extent that the Directors consider to be material, the investment shall be valued on the basis of the average of all of the valuations but otherwise will be valued on the basis of the valuation provided by the relevant counterparty;

(e) deposits will be valued at their cost plus accrued interest; and

(f) any value (whether of a security or cash) which is not in US Dollars will be converted into US Dollars at the rate (whether official or otherwise) which the Administrator deem appropriate to the circumstances having regard, inter alia, to any premium or discount which it considers may be relevant and to costs of exchange.

The Directors may permit any other method of valuation to be used if they consider that such method of valuation better reflects fair value generally or in particular markets or market conditions.

The annual accounts of the Fund will be drawn up in accordance with IFRS. However, the valuation policies described above may not comply with IFRS. To the extent that the valuation basis deviates from IFRS, the Directors may make necessary adjustments in the annual financial statements in order to comply with IFRS. If relevant, a reconciliation note may be included in the annual financial statements to reconcile values shown in the annual accounts determined under IFRS to those arrived at by applying the valuation policies described above.

Subject to the discretions set out above, the Directors have delegated to the Administrator the calculation of the Net Asset Value and the Net Asset Value per Share.

SUSPENSIONSThe Directors may declare a temporary suspension of (i) the determination of Net Asset Value per Share of one or more Classes (ii) the redemption of Shares of one or more Classes and/or (iii) the payment of redemption proceeds. The Directors may declare any such suspension in such circumstances as they may deem appropriate, including:

(a) any period (other than customary closings) during which any securities exchange or similar electronic system on which a substantial part of the assets of the Fund are traded is closed or dealings are otherwise restricted or suspended;

(b) any period when, due to conditions of market turmoil or market illiquidity, it is not possible to determine the fair value of a substantial portion of the assets of the Fund or during which the disposal of a substantial part of the assets of the Fund would not be reasonably practicable;


(c) any period during which redemption proceeds cannot lawfully be paid in the Dealing Currency of the relevant Class;

(d) any period when, due to a breakdown in the systems normally used to determine the Net Asset Value or for any other reason, it is not reasonably practicable to accurately determine the Net Asset Value;

(e) any period during which the business operations of the Manager, either Investment Advisor, Administrator or Prime Broker (if any) in respect of the Fund are substantially interrupted or closed due to pestilence, acts of war, terrorism, insurrection, revolution, civil unrest, riot, strikes or similar events;

(f) any period during which the proceeds of the sale or redemption of Shares cannot be transmitted to or from the Fund’s account;

(g) after the passing of a resolution to wind-up the Company.

Any suspension will take effect at the time the Directors specify in their declaration. The suspension will continue until the Directors declare that it has ended. The holders of Shares of the affected Class or Classes will be notified of any suspension as soon as practicable after the declaration of such suspension. Such Shareholders will also be notified when the period of such suspension has ended.

Applications for Shares for a Subscription Day falling within a period when the issue of Shares of the relevant Class is suspended will be acted upon on the first Subscription Day after the suspension has ended. A subscriber may withdraw his application for Shares during a period of suspension provided that a withdrawal notice is actually received by the Administrator before the suspension has ended.

Redemption Notices received prior to the commencement of a period of suspension will be carried forward to the next earliest relevant Redemption Day occurring after the suspension has ended. A Shareholder may withdraw his Redemption Notice during a period of suspension provided that a withdrawal notice is actually received by the Administrator before the suspension has ended.

While such suspensions may be temporary, the circumstances giving rise to the decision to suspend may continue for a prolonged period of time such that the Directors, in consultation with the Investment Advisors, consider that it is appropriate that the suspension be declared permanent and the investments of the Fund be managed for the sole purpose of realising all investments in anticipation of the termination of the business of the Fund.


RISK FACTORS

An investment in the Fund entails substantial risk. The nature of the investments of the Fund involves certain risks including, but not limited to, those listed below and the Manager may utilise investment techniques which carry additional risks. Potential investors should carefully consider the following factors, amongst others, in determining whether an investment in the Fund is suitable for them.

RISKS ASSOCIATED WITH THE STRUCTURE OF THE COMPANY AND THE FUNDAbsence of regulatory oversight. Although the Company is a regulated mutual fund under the Mutual Funds Law it is not required to, nor does it intend to, register under the laws of any other jurisdiction. As a consequence, the securities laws of other jurisdictions (which may provide certain regulatory safeguards to investors) generally will not apply. In addition, the Manager intends to manage its business in such a way that it is not required to be licensed by, and accordingly is not subject to regulation by, CIMA. Accordingly Shareholders may not have the benefit of all the protections afforded to them by the securities laws of their home jurisdiction or other relevant jurisdictions.

Business and regulatory risks of investment funds. The regulatory environment for hedge funds is evolving and any changes may adversely affect the Fund. Regulatory changes may adversely affect the Manager’s ability to pursue trading strategies or obtain the leverage it might otherwise have obtained. In addition, securities and futures markets are subject to comprehensive laws, regulations and margin requirements. Regulators and self-regulating organisations and exchanges are authorised to take extraordinary actions in cases of market emergencies. The regulation of derivative transactions and funds that engage in those transactions is an evolving area of law and is subject to modification by government and judicial actions. The effect of any future regulatory change on the Fund could be substantial and adverse.

Cross Class liability. Separate records will be established in the books of the Fund for each Class for the purpose of allocating assets and liabilities of the Fund to the relevant Class. However, if the liabilities attributable to a Class exceed its assets, creditors of the Fund will have recourse to the assets attributable to other Classes.

Dependence on key personnel. The investment performance of the Fund will be substantially dependent on the expertise of the Manager, the Investment Advisors, their principals and employees. In particular, the departure for any reason of the key individuals who will be primarily responsible for managing the investment of the assets of the Fund may have a material adverse affect on the performance of the Fund.

Illiquidity of Shares. It is not anticipated that there will be an active secondary market for the Shares and it is not expected that such a market will develop. Shares are not transferable without the approval of the Directors. Consequently, Shareholders may not be able to dispose of their Shares except by means of redemption. Redemptions may be suspended in certain circumstances. The Company may effect redemptions in specie or may establish a liquidating trust, account or entity to hold the relevant investments until they are liquidated at a later date. As such, a Shareholder may not receive cash proceeds on redemption or in the event that the Fund is terminated or may not receive cash proceeds in a timely manner.


In-kind distributions. A redeeming Shareholder may, at the discretion of the Directors, receive securities which form part of the assets of the Fund in lieu of or in combination with cash. The value of securities distributed may decrease before the securities can be sold and the redeeming Shareholder will incur transaction costs in connection with the sale of those securities. Additionally, securities distributed to a Shareholder in connection with a redemption may not be readily marketable. The redeeming Shareholder bears the risk of loss and delay in liquidating those securities, with the result that it may ultimately receive less cash than it would otherwise have received if it had been paid in cash alone for its Shares on the date of redemption.

Lack of operating history. The Fund is a newly established entity. As such there is no operating history that a prospective investor can evaluate before making an investment in the Fund. The investment results of the Fund are reliant upon the success of the Manager acting on the advice of the Investment Advisors and no guarantee or representation is made in this regard. There can be no assurance that the Fund will achieve its investment objective.

Limited rights of holders of Shares. An investment in the Fund should be regarded as a passive investment. Shareholders have no right to participate in the day-to-day operations of the Fund. Nor are Shareholders entitled to receive notice of, attend or vote at general meetings of the Company, other than a general meeting to vote on a proposed variation of the rights attaching to their Shares. Consequently, Shareholders have no control over the management of the Fund or over the appointment and removal of its Directors and service providers. As holder of the Management Shares, the Manager controls all of the voting interests in the Company, other than in respect of a proposal to vary the rights attaching to the Shares. Consequently, the Manager may make any changes to the Articles that it considers appropriate, including increasing the share capital, consolidating the shares and sub-dividing the shares. Only the Manager can appoint and remove the Directors and, in turn, only the Directors can terminate the services of the service providers, including the Manager.

No separate counsel; No independent verification. Harney Westwood & Riegels acts as legal counsel to the Manager, the Hong Kong Investment Advisor and the Company as to matters of Cayman Islands laws. DLA Piper Australia acts as legal counsel to the Manager, the Australian Investment Advisor and the Company as to matters of Australian law. The Directors and the Company do not have independent counsel. Harney Westwood & Riegels and DLA Piper Australia do not represent investors in the Fund, and no independent counsel has been retained to act on behalf of the Shareholders. This Memorandum is based on information furnished by the Directors, the Manager and the Hong Kong Investment Advisor. Harney Westwood & Riegels has not independently verified such information.

Possible effect of substantial redemptions. Substantial redemptions by one or more investors in the Fund at any one time could require the liquidation of positions more rapidly than otherwise desired in order to raise the cash necessary to fund those redemptions. The Manager may find it difficult to liquidate its positions on favourable terms in such a situation, possibly reducing the value of the assets of the Fund and/or disrupting the investment strategies. The Company is permitted to borrow for the purposes of redeeming Shares and may pledge assets as collateral security for the repayment of that borrowing. In such circumstances, the continuing Shareholders will bear the cost and risk of any such borrowing.

Receipt of non-public information. From time to time, the Manager may come into possession of non-public information concerning specific companies although internal structures are in place to prevent the receipt of such information. Under applicable securities laws, this may limit the Manager’s flexibility to buy or sell securities issued by such companies which may have an impact on the investment strategies of the Fund.


Segregated Portfolio Companies. The Company is established as an exempted segregated portfolio company under Cayman Islands law. As a matter of Cayman Islands law, the assets of one segregated portfolio will not be available to meet the liabilities of another segregated portfolio. Although not judicially tested, the principal advantage of a segregated portfolio is that it protects the assets of one segregated portfolio from the liabilities of the other segregated portfolios under the law of the Cayman Islands. However, the Company is a single legal entity that may operate or have assets held on its behalf or be subject to claims in other jurisdictions, which may not necessarily recognize such segregation. There is no guarantee that the courts of any jurisdiction outside of the Cayman Islands will respect the limitations of liability associated with segregated portfolio companies and if such a situation should arise, it may be the case that the assets of one segregated portfolio may be exposed to the liabilities of another segregated portfolio within the Company. However, the Directors are not aware of any circumstances in which such segregation has been upset or not recognised.

Side letters. From time to time the Company may enter into agreements (Side Letters) with certain prospective or existing holders of Shares which provide such Shareholders with rights which are additional to and/or different from, the rights provided to other Shareholders. Such rights may include rights with respect to access to information and preferential redemption rights. In general, the Company will not be required to notify any other Shareholders of any such Side Letters or any of the rights and/or terms or provisions thereof. Nor will the Company be required to offer such additional and/or different rights and/or terms to any or all of the other Shareholders.

Valuation of the investments. Valuation of the securities and other investments of the Fund may involve uncertainties and judgmental determinations. Independent pricing information about some of the securities and other investments of the Fund may not always be available. If a valuation is incorrect, the Net Asset Value per Share, and consequently the Subscription Price and the Redemption Price, may be overstated or understated. As a consequence a redeeming Shareholder may, in effect, be overpaid or underpaid and a new Shareholder could underpay or overpay for Shares. Additionally, as the fees of a number of the service providers to the Fund are tied to the Net Asset Value, any discrepancy in valuation may result in overpayment or underpayment to those service providers. None of the Company, the Directors or the Administrator will be liable if a price or valuation used in good faith in the calculation of the Net Asset Value later proves to be incorrect or inaccurate. In the absence of manifest error, the Company does not intend to adjust the Net Asset Value per Share retroactively.

RISKS ASSOCIATED WITH THE INVESTMENT STRATEGIESOverall investment risk. All investments in securities risk the loss of capital. There may be increased risk due to the nature of the securities to be purchased and traded by the Fund and the investment techniques and strategies used to try to increase profits. While the Manager will devote its best efforts to the management of the Fund’s portfolio, it cannot give an assurance that the Fund will not incur losses. Many unforeseeable events, including actions by various government agencies and domestic and international political events, may cause sharp market fluctuations.

Proprietary investment strategies. The Manager uses proprietary quantitative investment strategies that are based on considerations and factors that are confidential to the Manager. These strategies may involve risks under some market conditions that are not anticipated by the Manager. The Manager may use investment strategies that differ from those typically employed by traditional managers of portfolios of stocks and bonds. The strategies employed by the Manager may involve significantly more risk and higher transaction costs than more traditional investment methods. There is no guarantee that quantitative trading models and strategies that have been profitable in markets will continue to be so as the volatility, liquidity and trends observed historically in a particular market may change over time.


Availability of investment strategies. The success of the Fund’s investment activities will depend on the ability of the Manager to identify overvalued and undervalued investment opportunities and to exploit price discrepancies in the financial markets, as well as to assess the import of news and events that may affect the financial markets. Identification and exploitation of the investment strategies to be pursued by the Fund involves a high degree of uncertainty. No assurance can be given that the Manager will be able to locate suitable investment opportunities in which to deploy all of the Fund’s assets or to exploit discrepancies in the securities and derivatives markets. Market factors including, but not limited to, a reduction in market liquidity or the pricing inefficiency of the markets in which the Fund will seek to invest, may reduce the scope for the Fund’s investment strategies.

The Fund may be adversely affected by unforeseen events involving, without limitation, such matters as changes in interest rates or the credit status of an issuer, forced redemptions of securities or acquisition proposals, break-up of planned mergers, unexpected changes in relative value, short squeezes, inability to short stock or changes in tax treatment.

Equity securities. The Fund may invest in equity securities and equity derivatives. The value of these financial instruments generally will vary with the performance of the issuer and movements in the equity markets. As a result, the Fund may suffer losses if the Fund invests in equity instruments of issuers whose performance diverges from the Manager’s expectations or if equity markets generally move in a single direction and the Manager has not hedged against such a general move. The Fund also may be exposed to risks that issuers will not fulfill contractual obligations, such as, in the case of convertible securities or private placements, delivering marketable common stock upon conversions of convertible securities and registering restricted securities for public resale.

Currencies. The market for a particular forward currency contract held by the Fund may be limited. Trading in the foreign currency exchange market is speculative and volatile; should interest or exchange rates move in an unexpected manner, the Fund may not achieve the anticipated benefits of forward currency contracts or could realise losses. Forward currency contracts are generally not subject to daily price fluctuation limits so that adverse market movements could continue with respect to those contracts to an unlimited extent over a period of time.

The Fund’s ability to dispose of its positions in forward currency contracts will depend on the availability of active markets in those instruments. As a result, no assurance can be given that the Fund will be able to utilise these contracts effectively for the purposes described above. Forward currency contracts can expose the Fund to unlimited liability due to the volatility of the currency markets and the leverage factors associated with the contracts.

Trading in indices, financial Instruments and currencies. The Manager may trade indices, financial instruments and currencies. The effect of governmental intervention may be particularly significant at certain times in currency and financial instrument futures and options markets. Such intervention (as well as other factors) may cause all of these markets to move rapidly in the same or varying directions which may result in sudden and significant losses.

Risks of arbitrage and speculative securities transactions. The Fund may make investments in securities of companies that the Manager believes may be the subject of an acquisition. Because of the inherently speculative nature of this activity, the results of the Fund’s operations may fluctuate significantly.


In merger arbitrage, when the Manager determines that it is probable that a transaction will be consummated, the Fund may purchase securities at prices often only slightly below the anticipated value to be paid or exchanged for such securities in the merger, exchange offer or cash tender offer (and substantially above the price at which such securities traded immediately prior to the announcement of the merger, exchange offer or cash tender offer). If the proposed merger, exchange offer or cash tender offer appears likely not to be consummated or in fact is not consummated or is delayed, the market price of the security to be tendered or exchanged will usually decline sharply, resulting in a loss to the Fund. In addition, where a security to be issued in a merger or exchange offer has been sold short in the expectation that the short position will be covered by delivery of such security when issued, failure of the merger or exchange offer to be consummated may force the Fund to cover its short position in the market at higher price than its short sale, with a resulting loss.

In addition, the Fund may determine that the offer price for a security which is the subject of a tender offer is likely to be increased, either by the original bidder or by another party. In those circumstances, the Fund may purchase securities above the offer price, thereby exposing the Fund to an even greater degree of risk and loss to the Fund.

When the Fund determines that it is probable that a transaction will not be consummated, the Fund may sell the securities of the target company short, at times significantly below the announced price for the securities in the transaction. If the transaction (or other transaction, such as a defensive merger or a friendly tender offer) is consummated at the announced price or a higher price, the Fund may be forced to cover the short position in the market at a higher price than the short sale price, with a resulting loss.

The consummation of mergers, exchange offers and cash tender offers can be prevented or delayed by a variety of factors. Offerors in tender or exchange offers customarily reserve the right to cancel such offers in a variety of circumstances, including, but not limited to, an insufficient response from shareholders of the target company. Even if the defensive activities of a target company or the actions of regulatory authorities fail to defeat an acquisition, they may result in significant delays, during which the Fund’s capital will be committed to the transaction and interest charges may be incurred on funds borrowed to finance its arbitrage activities in connection with the transaction.

Exchange offers or cash tender offers are often made for less than all of the outstanding securities of an issuer, with the provision that, if a greater number is tendered, securities will be accepted on a pro rata basis. Thus, after the completion of a tender offer, and at a time when the market price of the securities has declined below its cost, the Fund may have returned to it, and be forced to sell at a loss, a portion of the securities it had previously tendered.

The Fund may make certain speculative purchases of securities. Such purchases may include securities of companies that are involved in, or which the Manager believes will be involved in, corporate restructurings, that the Manager believes are misvalued because of an extraordinary event, or that are expected to undergo a change in value because of an expected occurrence. The Fund may also, together with the affiliates of the Manager, make concentrated investments in securities of companies that may be or may become targets for takeovers. If the Fund purchases securities in anticipation of an acquisition attempt or reorganisation or with the intention to influence the management and policies of the issuer of the securities, and an acquisition attempt or reorganisation does not in fact occur or the Fund is not able to so influence the issuer of the securities, the Fund may sell the securities at a material loss.

In most forms of corporate reorganisation, there exists the risk that the reorganisation either will be unsuccessful (for example, for failure to obtain requisite approvals), will be delayed (for example, until various liabilities, actual or contingent, have been satisfied) or will result in a distribution of cash or a new security the value of which will be less than the purchase price to the Fund of the security in respect of which such distribution was made.


In certain transactions, the Fund may not be hedged against market fluctuations or, in liquidation situations, may not accurately value the assets of the company being liquidated. This may result in losses, even if the proposed transaction is consummated.

The Fund may invest in securities of issuers in weak financial condition, experiencing poor operating results, having substantial capital needs or negative net worth, confronting significant legal or regulatory problems, or that are involved in bankruptcy or reorganisation proceedings. Investments of this type may involve substantial financial and business risks that can result in substantial or at times even total losses. Among the risks inherent in investments in troubled entities is the fact that it frequently may be difficult to obtain information as to the true condition of such issuers. Such investments also may be adversely affected by laws relating to, among other things, fraudulent transfers and other voidable transfers or payments, lender liability and the courts’ power to disallow, reduce, subordinate or disenfranchise particular claims. The market prices of such securities are also subject to abrupt and erratic market movements and above-average price volatility, and the spread between the bid and asked prices of such securities may be greater than those prevailing in other securities markets. It may take a number of years for the market price of such securities to reflect their intrinsic value. In addition, because fewer bidders for securities of financially troubled companies exist, such securities may become illiquid.

Derivatives. The Fund may utilise both exchange-traded and over-the-counter derivatives, including, but not limited to, futures, forwards, swaps, options and contracts for differences, as part of its investment policy and for hedging purposes. These instruments can be highly volatile and expose investors to a high risk of loss. The low initial margin deposits normally required to establish a position in such instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small movement in the price of a contract may result in a profit or a loss which is high in proportion to the amount of funds actually placed as initial margin and may result in unquantifiable further loss exceeding any margin deposited. In the event that a call for further margin exceeds the amount of cash available in the Fund, the Fund will be required to close out the relevant contract. In addition, daily limits on price fluctuations and speculative position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses. Further, when used for hedging purposes there may be an imperfect correlation between these instruments and the investments or market sectors being hedged. Transactions in over-the-counter contracts may involve additional risk as there is no exchange market on which to close out an open position. It may be impossible to liquidate an existing position, to assess the value of a position or to assess the exposure to risk. Contractual asymmetries and inefficiencies can also increase risk, such as break clauses, whereby a counterparty can terminate a transaction on the basis of a certain reduction in Net Asset Value, incorrect collateral calls or delays in collateral recovery. The Fund may also sell covered and uncovered options on securities and other assets. To the extent that such options are uncovered, the Fund could incur an unlimited loss.

Highly volatile markets. The prices of derivative instruments, including options prices, are highly volatile. Price movements of forward contracts and other derivative contracts in which the Fund may invest are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary, and exchange control programs and policies of governments, and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets. Such intervention is often intended directly to influence prices and may, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations. The Fund is also subject to the risk of the failure of any of the exchanges on which its positions trade or of their clearing houses.


Leverage, borrowings and creditors. The Fund will employ leverage, including through borrowing, for the purpose of making investments. The use of leverage creates special risks and may significantly increase the Fund’s investment risk. Leverage creates an opportunity for greater yield and total return but, at the same time, will increase the Fund’s exposure to capital risk. Any investment income and gains earned on investments made through the use of leverage that are in excess of the associated costs may cause the Net Asset Value per Share to increase more rapidly than would otherwise be the case. Conversely, where the associated costs are greater than such income and gains, the Net Asset Value per Share may decrease more rapidly than would otherwise be the case. As the Shares rank for repayment after all other creditors of the Fund, holders of Shares may not get back their full investment if there are insufficient funds to discharge creditors (including such Shareholders who have redeemed their Shares but have not been paid their redemption proceeds) in full.

Global market exposure. The Fund invests on a global basis in both developed and emerging markets. In doing so, the Fund is subject to (i) currency exchange-rate risk, (ii) the possible imposition of withholding, income or excise taxes, (iii) the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and little or potentially biased government supervision and regulation, and (iv) economic and political risks, including expropriation, currency exchange control and potential restrictions on investment and repatriation of capital.

Emerging markets. Investment in the securities of issuers based in emerging markets involves a greater degree of risk than an investment in securities of issuers based in more developed countries. Among other things, emerging market securities investment may carry the risks of less publicly available information, more volatile markets, less strict securities market regulation, less favourable tax provisions, and a greater likelihood of severe inflation, unstable or not freely convertible currency, war and expropriation of personal property than investments in securities of issuers based in more developed countries. In addition, the Fund’s investment opportunities in certain emerging markets may be restricted by legal limits on foreign investment in local securities.

Emerging markets generally are not as efficient as those in more developed countries. In some cases, a market for the security may not exist locally, and transactions will need to be made on a neighbouring exchange. Volume and liquidity levels in emerging markets are lower than in developed countries. When seeking to sell emerging market securities, little or no market may exist for the securities. In addition, issuers based in emerging markets are not generally subject to uniform accounting and financial reporting standards, practices and requirements comparable to those applicable to issuers based in more developed countries, thereby potentially increasing the risk of fraud or other deceptive practices. Furthermore, the quality and reliability of official data published by the government or securities exchanges in emerging markets may not accurately reflect the actual circumstances being reported.

Some emerging markets securities may be subject to brokerage or stock transfer taxes levied by governments, which would have the effect of increasing the cost of investment and which may reduce the realised gain or increase the loss on such securities at the time of sale. The issuers of some of these securities, such as banks and other financial institutions, may be subject to less stringent regulations than would be the case for issuers in more developed countries and therefore potentially carry greater risk. In addition, settlement of trades in some emerging markets is much slower and subject to a greater risk of failure than in markets in developed countries. Custodians are not able to offer the level of service and safe-keeping, settlement and administration of securities that is customary in more developed markets and there is a risk that the Fund will not be recognised as the owner of securities held on its behalf by a sub-custodian.

With respect to any emerging market country, there is the possibility of nationalisation, expropriation or confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains or other income, limitations on the removal of funds or other assets of the Fund, political changes, government regulation, social instability or diplomatic developments (including war) which could affect adversely the economies of such countries or the value of the Fund’s investments in those countries.


The economies of individual emerging countries may differ favourably or unfavourably from the economy of a developed country in such respects as growth of gross domestic product, rate of inflation, currency depreciation, asset reinvestment, resource self-sufficiency and balance of payments position. The economies of emerging countries generally are heavily dependent upon international trade and, accordingly, have been, and may continue to be adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be adversely affected by economic conditions in the countries with which they trade. The economies of certain of these countries may be based, predominantly, on only a few industries and may be vulnerable to changes in trade conditions and may have higher levels of debt or inflation.

Many emerging markets have underdeveloped capital market structures where the risks associated with holding currency are significantly greater than in other, less inflationary markets. Currency exchange rates are highly volatile and subject to severe event risks, as the political situation with regard to the relevant foreign government may itself be volatile. Moreover, if the cash flow of the assets is contingent, it may be difficult to quantify the attendant cross-currency risk, compounding the risk of changes in underlying currencies by the other risks in the portfolio. Correlations between these risks are difficult to quantify and, therefore, difficult to hedge. An inaccurate estimation of the correlation may lead to a faulty hedge and a consequent loss in the portfolio. In highly volatile markets, predictions of correlation based on historical data can diverge dramatically from observed market moves.

The Fund may invest in unlisted emerging market securities and may be exposed to emerging market currencies, which may involve a high degree of business and financial risk that could result in substantial losses. Because of the relative absence of any trading market for these investments, it may take longer to liquidate, or it may not be possible to liquidate, these positions than would be the case for listed securities. Although these securities may be resold in privately negotiated transactions, the prices realised on these sales could be less than those originally paid by the Fund. Companies whose securities are not listed will generally not be subject to public disclosure and other investor protection requirements applicable to listed securities.

Concentration of investments. In attempting to maximise the Fund’s returns, the Manager may, subject to the investment restrictions specified in this Memorandum, concentrate the holdings of the Fund in those issuers, sectors, companies, instruments or markets which, in the judgment of the Manager, provide the best profit opportunity in view of the Fund’s investment objective. Such concentration increases the risk of an investment in the Fund by increasing the relative impact of changes in the market, economic or political environment affecting particular countries, sectors, markets and issuers.

Counterparty risk. The Fund is subject to the risk of the inability of any counterparty (including any Prime Broker) to perform with respect to transactions, whether due to insolvency, bankruptcy or other circumstances. The Fund is subject to the risk that counterparties may not have access to finance and/or assets at the relevant time and may fail to comply with their obligations under the relevant sale and repurchase agreements. Recent well-publicised weaknesses in certain financial institutions may be indicative of increased counterparty risk. In the event of any counterparty (including a Prime Broker) entering an insolvency procedure, the Fund could experience delays in liquidating its positions and incur significant losses, including the loss of that portion of the Fund’s portfolio financed through such a transaction, a decline in value of its investment during the period in which the Fund seeks to enforce its rights, an inability to realise any gains on its investment during such period and fees and expenses incurred in enforcing its rights. During an insolvency procedure (which may last many years) the use by the Fund of assets held by or on behalf of any relevant Prime Broker or counterparty may be restricted and accordingly (a) the ability of the Manager to fulfil the investment objective may be severely constrained, (b) the Fund may be required to suspend the calculation of the Net Asset Value and as a


result subscriptions for and redemptions of Shares, and/or (c) the Net Asset Value may be otherwise affected. During such a procedure, the Fund is likely to be an unsecured creditor in relation to certain assets (including those in respect of which it had previously been a secured creditor) and accordingly the Fund may be unable to recover such assets from the insolvent estate of any relevant Prime Broker or counterparty in full, or at all.

Currency exposure. Assets of the Fund may be invested in securities and other investments which are denominated in currencies other than the currency or currencies in which Shares are denominated. Accordingly, the value of such assets may be affected favourably or unfavourably by fluctuations in currency rates. The Fund may seek to hedge its foreign currency exposure but will necessarily be subject to foreign exchange risks and there can be no assurance that any hedges which are put in place will be effective. Prospective investors whose assets and liabilities are predominantly in currencies other than the currency in which their Shares will be denominated should take into account the potential risk of loss arising from fluctuations in value between the currency in which their Shares will be denominated, the currency of investment and the currencies of their assets and liabilities.

Market disruptions. The Fund may incur major losses in the event of disrupted markets and other extraordinary events which may affect markets in a way that is not consistent with historical pricing relationships. The risk of loss from a disconnect with historical prices is compounded by the fact that in disrupted markets many positions become illiquid, making it difficult or impossible to close out positions against which the markets are moving. The financing available to the Fund from its banks, dealers and other counterparties will typically be reduced in disrupted markets. Such a reduction may result in substantial losses to the Fund. A sudden restriction of credit by the dealer community has resulted in forced liquidations and major losses for a number of investment funds and other vehicles. Because market disruptions and losses in one sector can cause ripple effects in other sectors, many investment funds and other vehicles have suffered heavy losses even though they were not necessarily heavily invested in credit-related investments. In addition, market disruptions caused by unexpected political, military and terrorist events may from time to time cause dramatic losses for the Fund and such events can result in otherwise historically low-risk strategies performing with unprecedented volatility and risk. A financial exchange may from time to time suspend or limit trading. Such a suspension could render it difficult or impossible for the Fund to liquidate affected positions and thereby expose it to losses. There is also no assurance that off-exchange markets will remain liquid enough for the Fund to close out positions.

Global financial market crisis and governmental intervention. The global financial markets are currently undergoing pervasive and fundamental disruptions and dramatic instability. The extent to which the underlying causes of instability are pervasive throughout global financial markets and have the potential to cause further instability is not yet clear but these underlying causes have led to extensive and unprecedented governmental intervention. Regulators in many jurisdictions have implemented or proposed a number of wide-ranging emergency regulatory measures, including a proposed “bailout fund” in the United States and restrictions on the short selling of financial and other stocks in many jurisdictions. Such intervention has in certain cases been implemented on an emergency basis without much or any notice with the consequence that some market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions has been suddenly and/or substantially eliminated. In addition, due to the uncertain stability of global financial institutions, the security of assets held by any financial institution cannot be guaranteed, notwithstanding the terms of any agreement with such institution. Given the complexities of the global financial markets and the limited time frame within which governments have been able to take action, these interventions have sometimes been unclear in scope and application, resulting in confusion and uncertainty which in itself has been materially detrimental to the efficient functioning of such markets as well as previously successful investment strategies.


It is impossible to predict with certainty what additional interim or permanent governmental restrictions may be imposed on the markets and/or the effect of such restrictions on the Manager’s ability to implement the Fund’s investment objective. However, the Manager believes that there is a likelihood of increased regulation of the global financial markets, and that such increased regulation could be materially detrimental to the performance of the Fund’s portfolio.

Illiquid investments. The Fund may make investments that are subject to legal or other restrictions on transfer or for which no liquid market exists or where investments held by the Fund are the subject of anticipated disposals or restructuring. The market prices, if any, of such investments tend to be more volatile and it may not be possible to sell such investments when desired or to realise their fair value in the event of a sale. Moreover, securities in which the Fund may invest include those that are not listed on a stock exchange or traded in an over-the-counter market. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. There may be substantial delays in attempting to sell non-publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realised from these sales could be less than those originally paid. Further, companies whose securities are not publicly traded are not subject to the disclosure and other investor protection requirements that would be applicable if their securities were publicly traded.

Information technology systems. The Manager depends on information technology systems in order to assess investment opportunities, strategies and markets and to monitor and control risks for the Fund. A failure of some kind which causes disruptions to these information technology systems could materially limit the Manager’s ability to adequately assess and adjust the investments of the Fund, formulate strategies and provide adequate risk control, any of which could harm the performance of the Fund.

Legal risks. The Fund may make investments based on, or enter into contracts described by, significant legal documents. Such documents may include, without limitation, prospectuses and other offering documents as well as over-the-counter derivative contracts, including contracts for differences and credit default swaps. Whilst the Fund will generally seek advice on material matters, there can be no guarantee that any advice given will be accurate, that a contract will be validly executed by the relevant counterparty or that a contract will ultimately prove to be enforceable against the relevant counterparty. Furthermore, the expected outcome of these contracts or investments may not be realised in practice. If these contracts or investments do not produce the expected result, the Fund could suffer significant losses.

Litigation. The Fund’s investment activities are subject to the normal risks of becoming involved in litigation by third parties. This risk is somewhat greater because the Fund will often hold substantial stakes in listed companies which could be considered to give rise to the exercise of control or significant influence over a company’s direction. Furthermore, many of the exchanges on which the Fund invests impose reporting and other obligations which, if not met, could lead to fines and other sanctions against the Fund or the Manager. The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgements may have to be borne by the Fund. The Directors and service providers may be entitled to be indemnified by the Fund in connection with any such litigation which relates to the activities of the Fund, subject to certain conditions. In addition, certain of the Fund’s strategies may be subject to claims for the return of profits or the recovery of losses on the basis of certain statutory, regulatory or administrative entitlements or prohibitions.


Profit sharing. In addition to receiving a Management Fee, the Manager may also receive a Performance Fee based on the appreciation in the Net Asset Value per Share. The Performance Fee will increase with regard to unrealised appreciation, as well as realised gains and accordingly a Performance Fee may be paid on unrealised gains which may subsequently never be realised. The Performance Fee may create an incentive for the Manager to make investments for the Fund which are riskier than would be the case in the absence of a fee based on the performance of the Fund.

This list of risk factors does not purport to be complete. Nor does it purport to be an entire explanation of the risks involved in an investment in the Fund. A potential investor should read this Memorandum in its entirety as well as consult with its own legal, tax and financial advisers before deciding to invest in the Fund.


CONFLICTS OF INTEREST

The Directors, the Manager, the Investment Advisors, the Administrator, any Prime Broker, any custodian, any broker and their respective directors, officers and employees appointed by the Company in respect of the Fund may, from time to time, act as director, promoter, manager, investment manager, investment advisor, registrar, administrator, transfer agent, trustee, custodian, broker, distributor or placing agent to, or be otherwise involved in, other collective investment schemes which have similar investment objectives to those of the Fund. Similarly, one or more of them may provide discretionary fund management or ancillary administration, custodian or brokerage services to investors with similar investment objectives to those of the Fund. Consequently, any of them may, in the course of their business, have potential conflicts of interests with respect to the Fund. Each will at all times have regard to its obligations in respect of the Fund and will endeavour to resolve such conflicts fairly.

MANAGER AND INVESTMENT ADVISORSThe Manager is engaged in the business of providing discretionary management services to clients and the Investment Advisors are engaged in the business of advising clients. These businesses may include advising or exercising investment discretion for other investment vehicles, in respect of the purchase and sale of securities and financial instruments. In managing other clients’ assets or advising other clients, the Manager and/or the Investment Advisors may use the information and trading strategies which they obtain, produce or utilise in the performance of services in respect of the Fund.

The Manager and/or the Investment Advisors may have conflicts of interest in managing and/or advising the Fund because their compensation for managing and/or advising other investment vehicles or accounts may exceed their compensation for managing and/or advising the Fund, thus providing an incentive to prefer such other investment vehicles or accounts. Moreover, if the Manager makes trading decisions in respect of such investment vehicles or accounts and in respect of the Fund at or about the same time, the Fund may be competing with such other investment funds or accounts for the same or similar positions. The Manager will endeavour to allocate all investment opportunities on a fair and equitable basis between the Fund and those other investment vehicles and accounts.

The Manager, the Investment Advisors and/or any of their associates may invest, directly or indirectly, in assets which may also be purchased or sold for the account of the Fund. None of the Manager, the Investment Advisors or any of their associates shall be under any obligation to account to the Fund in respect of (or share with the Company or inform the Company of) any such transaction or any benefit received by any of them from any such transaction.

DIRECTORSLee Chin-Chang is a director of the Manager which receives a Management Fee and may receive a Performance Fee in respect of its services as Manager of the Fund. The fiduciary duties of the Directors may compete with or be different from the interests of the Manager. At all times, so far as practicable, the Directors will have regard to their obligations to act in the best interests of the Fund and will seek to ensure that any conflict of interest is resolved fairly.

A Director may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested. The Director will not be liable to account to the Company for any profit he derives from such a transaction or arrangement provided the nature and extent of any material interest has been disclosed to the other Directors.


A Director who has an interest in any particular business to be considered at a meeting of the Directors may be counted for the purpose of determining whether the meeting is duly constituted and may vote at such meeting provided that the interest has been disclosed.

Save as disclosed in this Memorandum, no Director has any interest, direct or indirect, in the promotion of, or in any assets which are proposed to be acquired, disposed of by or leased to, the Company. Save as disclosed in this Memorandum, no Director has a material interest in any contract or arrangement entered into by the Company which is unusual in nature or conditions or significant in relation to the business of the Company, nor has any Director had such an interest since the Company was incorporated.

SOFT DOLLAR ARRANGEMENTSThe Manager may receive goods or services from a broker or a dealer in consideration for directing transaction business for the account of the Fund to such broker or dealer provided that (i) the goods or services are of demonstrable benefit to the Fund, and (ii) the transaction execution is consistent with best execution standards and the brokerage rates are not in excess of customary full service brokerage rates.

Goods and services may include research and advisory services, economic and political analysis, portfolio analysis (including valuation and performance measurement), market analysis, data and quotation services, clearing and custodian services and investment-related publications. The goods and services which the Manager receives will not include any goods and services prohibited from time to time by any code or guidelines issued by any relevant regulatory authority.

The Fund may be deemed to be paying for these services with “soft” dollars. Although the Manager believe that the Fund will demonstrably benefit from the services obtained with soft dollars generated by trades, the Fund does not benefit from all of these soft dollar services. The Manager and other accounts managed by the Manager or its affiliates also derive substantial direct or indirect benefits from these services, particularly to the extent that the Manager uses soft dollars to pay for expenses the Manager would otherwise be required to pay itself.

The relationships with brokerage firms that provide soft dollar services to the Manager may influence the Manager’s judgement in allocating brokerage business and create a conflict of interest in using the services of those brokers to execute transactions. The brokerage commissions paid to those firms, will not, however, differ materially from, nor will they be in excess of, customary full brokerage commissions payable to other firms for comparable services.


TAXATION

GENERALThe following is based on the Company’s understanding of certain aspects of the law and practice currently in force in the Cayman Islands, Hong Kong and Australia. The comments below are based on laws, regulations, guidelines, published administrative rulings and judicial decisions currently in effect, all of which may change or be subject to different interpretations, possibly with retroactive effect. Any such changes could adversely affect the comments made below. There can be no guarantee that the tax position at the date of this Memorandum or at the time of an investment will endure indefinitely.

In view of the number of different jurisdictions where local laws may apply to Shareholders, the comments below do not address the tax consequences to potential investors of the purchase, ownership and disposition of Shares. Prospective investors are urged to consult their own tax advisers in determining the possible tax consequences to them under the laws of the jurisdictions of which they are citizens, residents or domiciliaries, jurisdictions in which they conduct business and jurisdictions in which they purchase, hold, redeem or dispose of Shares. The comments below do not constitute tax advice.

CAYMAN ISLANDSThe Company is not subject to any income, withholding or capital gains taxes in the Cayman Islands.

The Company is registered as an exempted company, limited by shares, under Cayman Islands law. As such, it has obtained an undertaking from the Governor-in-Cabinet that, for a period of 20 years from the date of the undertaking, no law subsequently enacted in the Cayman Islands that imposes any tax to be levied on profits, income, gains or appreciations will apply to the Company or its operations.

Shareholders will not be subject to any income, withholding or capital gains taxes in the Cayman Islands with respect to their Shares and dividends received on those Shares, nor will they be subject to any estate or inheritance taxes in the Cayman Islands. There are no exchange controls in the Cayman Islands.

HONG KONGAt Company level

Profits TaxProfits Tax is charged on profits from a trade, profession or business carried on in Hong Kong in respect of profits arising in or derived from Hong Kong (Hong Kong Sourced Profits). Hong Kong does not levy capital gains tax nor is there any general turnover, sales or value added tax.

In general, the Company’s exposure to Hong Kong profits tax will only arise if it is considered as carrying on a trade or business in Hong Kong either by itself or through an agent in Hong Kong. If the Company is treated as carrying on a trade or business in Hong Kong, the Company will be liable to Hong Kong profits tax at the current rate of 16.5% on its Hong Kong Sourced Profits, excluding capital gains.


For the purpose of the Company, Hong Kong Sourced Profits may generally include:

(a) profits arising from the disposal of securities (except those held as capital assets) listed on the Hong Kong Stock Exchange;

(b) profits arising from the disposal of non-publicly listed securities (except those held as capital assets) where the contracts of purchase and/or sales are effected in Hong Kong; (the term “effected” in this context refers not only to the execution of contracts but also the negotiation and all steps leading to the final conclusion of contracts); or

(c) interest income arising from certain debt instruments where the loan proceeds were first made available to the issuer in Hong Kong, on the basis that the Company is not considered as engaging in a money-lending business.

Dividends received by the Company from its investments (whether located within or outside Hong Kong) would generally not be chargeable to tax in Hong Kong (whether by way of withholding or otherwise) under the current law.

Moreover, Eligible Investors should note that under Section 20AC of the Inland Revenue Ordinance (the Offshore Funds Ordinance), profits earned by a non-Hong Kong resident will be exempt from Hong Kong profits tax if certain conditions can be satisfied (the Exemption Provision) even though the profits may otherwise be treated as taxable under the general rules described above. In particular, the Exemption Provision provides that if the central management and control of a fund is not exercised in Hong Kong and the fund does not carry on any other business in Hong Kong, its profits derived from “specified transactions” and transactions incidental thereto carried out or arranged by “specified persons” (e.g. a corporation licensed under the Securities and Futures Ordinance (SFO) for carrying on a business in any regulated activity within the meaning of the SFO.) will be exempt from profits tax. “Specified transactions” are defined in the Offshore Funds Ordinance to include transactions in securities, transactions in futures contracts, transactions in foreign exchange contracts, transactions consisting in the making of deposits other than by way of a money-lending business, transactions in foreign currencies and transactions in exchange-traded commodities. “Securities” is widely defined but does not include shares or debentures of a private company within the meaning of section 29 of the Hong Kong Companies Ordinance.

During the Hong Kong Budget Speech 2013/14, the Financial Secretary announced that the scope of the Offshore Funds Ordinance may be expanded to include “transactions in private companies which are incorporated or registered outside Hong Kong and do not hold any Hong Kong properties nor carry out any business in Hong Kong” and that the Hong Kong Government will conduct consultation on the amendments to relevant tax legislation. Hence, prospective investors should closely monitor developments in this regard and assess the impact, if any, in relation to a potential investment in the Company.

The Directors and the Manager will use their best endeavours to manage the Company in such a way as to minimise the risk of the Company being subject to profits tax in Hong Kong. However, no assurance can be given that profits derived by the Company will not give rise to a Hong Kong profits tax liability.

Withholding TaxDividends paid by the Company to its Shareholders will not be subject to any withholding tax in Hong Kong.


Stamp DutyIf the Company acquires or disposes of any Hong Kong stock as defined under the Hong Kong Stamp Duty Ordinance, Hong Kong stamp duty will generally be imposed at the current rate of 0.2% on the consideration or the fair market value of the stock, whichever is the higher. The purchaser and the seller will each be liable for one-half of the amount of the Hong Kong stamp duty upon such transfer.

At Shareholder level

Profits TaxDividends received by the Shareholders from the Company would generally not be subject to tax in Hong Kong (whether by way of withholding or otherwise).

Hong Kong does not tax capital gains arising from the sale or other disposal of the Shares of the Company by its Shareholders in general. However, in the case of certain Shareholders (for example, dealers in securities, financial institutions and insurance companies carrying on a trade or business in Hong Kong), such gains may be considered to be trading gains rather than capital gains and hence, subject to Hong Kong profits tax (which is generally imposed at the rate of 16.5% on corporations, and at the rate of 15% on individuals), if the gains are considered Hong Kong Sourced Profits.

Under the Offshore Funds Ordinance, any tax-exempt profits earned by a non-Hong Kong resident fund that meet the prescribed conditions under the Exemption Provision may be treated as taxable in the hands of Hong Kong resident investors (even if the profits have not been distributed to the Hong Kong resident investors) who hold a direct or indirect beneficial interest in the non-Hong Kong resident fund (the Deeming Provision).

The Deeming Provision will apply if:

(a) the Hong Kong resident, together with its associates, hold 30% or more of the beneficial interests in a tax-exempt non-Hong Kong resident fund; or

(b) the Hong Kong resident holds a beneficial interest in a tax-exempt non-Hong Kong resident fund that is an associate of the Hong Kong resident.

The above Deeming Provision does not apply to a Hong Kong resident if the Commissioner of the Inland Revenue is satisfied that the non-Hong Kong resident fund is “bona fide widely held”.

Stamp DutyThe registers of shareholders of the Company will be maintained outside Hong Kong. Accordingly the Shares will not constitute Hong Kong stock for the purposes of the Stamp Duty Ordinance of Hong Kong and a charge to Hong Kong stamp duty should not arise on the redemption or transfer of any Shares.

Also, the initial allotments of the Shares to the Shareholders by the Company are not subject to Hong Kong stamp duty.

Eligible Investors should consult with their own independent professional tax advisers on the possible taxation consequences in Hong Kong and other jurisdictions of their subscribing for, buying, holding, transferring, selling, redeeming or otherwise disposal of Shares in the context of their particular situation before investing in the Company.


AUSTRALIATaxation of the CompanyThe Company does not propose to carry on business in Australia, or have its central management and control in Australia, or have the voting power in the Company controlled by shareholders who are residents in Australia. Accordingly, the Company should not become a resident of Australia for Australian income tax purposes. The Company should, therefore, not be subject to Australian income tax on its worldwide sourced income as a resident of Australia.

As a non-resident of Australia, the Company should only be subject to income tax in Australia to the extent that:

a CGT event (as defined for the purposes of Australia’s capital gains tax provisions) occurs in relation to an asset it holds that is “taxable Australian property” (as defined for Australian income tax purposes);

it derives Australian source income; or

it receives dividends, interest and royalties that are subject to Australian withholding tax.

It is intended that the Fund will operate in a way that the Fund should not derive income from sources in Australia, and as a result, the Fund should not be subject to Australian income tax on any Australian sourced income.

Australian withholding tax could, however, be withheld at source from any dividends, interest and royalties paid to the Fund by Australian resident entities (or that are paid from a permanent establishment of a non-resident entity that is located in Australia) pursuant to Australia’s withholding tax provisions. However, it is not intended that the Fund will receive any dividend, interest or royalties from Australian resident entities (or that are paid from a permanent establishment of a non-resident entity that is located in Australia).

Taxation of Australian InvestorsThe Company will be a Controlled Foreign Company (CFC) where any of the following are satisfied:

If 5 or fewer Australian entities together hold 50% or more of the interests in the Company;

A single Australian entity holds 40% or more of the interests in the Company and the Company is not controlled by another entity; or

5 or fewer Australian entities actually control the Company.

If the Company is a CFC, then the CFC rules provide for accruals taxation and may impose tax on a yearly basis on the Australian investors who are attributable taxpayers in relation to the Company in respect of realized gains of the Company that is a CFC even where these gains have not been distributed by the Company. An attributable taxpayer is an Australian investor who (together with its associates) holds a direct or indirect interest of 10% or more in the Company. If you notify us that you are an Australian investor and if the Manager becomes aware that the Company has become a CFC, the Manager will arrange for you to be notified.

The Company is not a CFC as at the date of the Memorandum and it is not expected that the Company will be considered a CFC over the long term as it is expected that the majority of investors in the Company will be non-Australian.


EUROPEAN UNION SAVINGS DIRECTIVEThe member states of the European Union (the EU) have adopted a Savings Directive (2003/48/EC) (the Directive), which came into effect on 1 July 2005. The Directive requires that “paying agents” in one member state provide to the tax authorities of another member state details of payments of interest or other similar income (including income, by way of distribution or redemption, made by or on behalf of certain investment funds) paid by them to or for the benefit of an individual resident in that other member state. Instead of providing that information, certain states operate a withholding system in relation to payments of that kind.

The implementation of the Directive affects certain dependencies and territories of EU member states, including the Cayman Islands, which have voluntarily agreed to apply the same or equivalent measures to those contained in the Directive. In the Cayman Islands, those measures came into effect on 1 July 2005. In common with the Directive, the Cayman Islands legislation applies to “interest payments” made by a “paying agent” to an individual resident in the EU. Under the Cayman Islands legislation, “interest payment” includes income paid (by way of distribution or redemption) by or on behalf of certain funds regulated under the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) or “equivalent undertakings for collective investment established in the Cayman Islands” (called a UCITS equivalent).

The Company is not a licensed fund under Section 5 of the Mutual Funds Law. As such, for the purpose of the Cayman Islands legislation, it is not a UCITS equivalent and, accordingly, is “out of scope”.

For the purpose of the Directive, the Administrator will make the payments to Shareholders and will usually be the paying agent. The Administrator is located outside the EU and is therefore outside the scope of the Directive. However, a Shareholder may become a paying agent for purpose of the Directive if:

(a) that Shareholder is based in the EU or certain states that have agreed to implement measures equivalent to those contained in the Directive (including Switzerland, the Channel Islands and Monaco); and

(b) that Shareholder makes an investment in the Fund on behalf of other underlying investors who are individuals or certain unincorporated entities resident in the EU.

In those circumstances, under implementing legislation in that Shareholder’s country of residence, the Shareholder may be required to (i) obtain all relevant information relating to its underlying investors and their indirect investment in the Fund and (ii) make returns to the appropriate tax authorities, or withhold tax at applicable rates from any distribution made to underlying investors in respect of a payment received from the Fund.

US FOREIGN ACCOUNT TAX COMPLIANCE ACTSections 1471 through 1474 of the US Internal Revenue Code (referred to as FATCA) will impose a withholding tax of 30 per cent on certain US-sourced gross amounts not effectively connected with a US trade or business paid to certain “Foreign Financial Institutions”, including the Company, unless various information reporting requirements are satisfied. Amounts subject to withholding under these rules generally include gross US-source dividend and interest income paid on or after 1 July 2014, gross proceeds from the sale of property that produces US-source dividend or interest income paid on or after 1 January 2017 and certain other payments made by “Participating Foreign Financial Institutions” to “recalcitrant account holders” on or after 1 January 2017 (so called foreign pass thru payments).


The Government of the Cayman Islands has elected to adopt a Model 1 intergovernmental agreement (IGA) with the United States to facilitate compliance with FATCA. The IGA terms were finalised and adopted on 29 November 2013 and in broad terms the Company will be required to report FATCA information to the Cayman Islands Tax Information Authority which in turn will report relevant information to the United States Internal Revenue Service (IRS). As the Company is not offering Shares to US Persons, FATCA information disclosure requirements (which are primarily designed to identify US Persons participating in Foreign Financial Institutions) should be limited. However, to avoid withholding under FATCA, the Company may request additional information from each investor and its beneficial owners (that may be disclosed to the Cayman Islands Tax Information Authority and the IRS) demonstrating that such investor is not a US Person. If the Company is not able to comply with reporting requirements under the IGA (whether due to a failure of one or more Shareholders to provide adequate information or otherwise), the 30 per cent withholding tax under FATCA could apply to the Company. In addition, certain non-US Shareholders will also be required to enter into an agreement with the IRS and disclose certain information regarding their beneficial owners to the IRS. If such non-US Shareholders fail to provide such information or enter into such an agreement with the IRS as required under FATCA, the Company may be required to impose a withholding tax of 30 per cent on certain payments made to such non-US Shareholders and also may be required to terminate such non-US Shareholder’s investment in the Fund.

Shareholders are encouraged to consult their own advisors regarding the possible application of FATCA, the IGA and the proposed regulations to be issued thereunder to the Company, and regarding the potential impact of the same, on any Shareholder’s investment in the Fund.

OTHER JURISDICTIONSIt is possible that certain dividends, interest and other income received in respect of the Fund from sources within certain countries may be subject to withholding taxes imposed by such countries. The Company may also be subject to capital gains taxes or other taxes in some of the countries where it purchases and sells securities or otherwise conducts business. It is impossible to predict in advance the rate of tax that will be paid since the amount of the assets of the Fund to be invested in various countries is uncertain.


FINANCIAL INFORMATION AND REPORTS

FINANCIAL YEARThe financial year of the Fund will end on 31 December in each year. The first financial year of the Fund will end on 31 December 2014.

FINANCIAL STATEMENTSThe books and records of the Fund will be audited as at the end of each financial year by the Auditors. The first audit will be for the period beginning on the commencement of the Fund’s operations and ending on 31 December 2014. The financial statements of the Fund will be presented in US Dollars and prepared in accordance with IFRS, unless the Directors otherwise deem appropriate.

As a regulated mutual fund, the Company is required to file copies of the audited financial statements of the Fund with CIMA within six months of the end of each financial year.

AUDITORSDeloitte & Touche will act as auditors for the Company and have consented in writing to their appointment as such. The Directors may replace the Auditors without prior notice to the Shareholders.

REPORTS TO SHAREHOLDERSEach Shareholder will be provided with access to a copy of an annual report that will include audited financial statements within six months of the end of each financial year of the Fund. Shareholders will also be provided with access to a monthly report on the investment performance of the Fund. It is envisaged that access will be provided by uploading the relevant reports to an online facility such as a website.


GENERAL

THE COMPANYThe Company is an exempted company incorporated with limited liability and registered as a segregated portfolio company under the Companies Law. Its constitution is defined in the Articles. The Company’s objects, as set out in clause 3 of its memorandum of association, are unrestricted and so include the carrying on of the business of an investment company.

All Shareholders are entitled to the benefit of, are bound by and are deemed to have notice of, the memorandum of association and articles of association of the Company. The liability of a Shareholder is limited to the amount, if any, unpaid on its Shares. As Shares may only be issued if they are fully paid, a Shareholder will not be liable for any debt, obligation or default of the Company beyond its investment in the Company.

SHARE CAPITAL OF THE COMPANYThe Company has an authorised share capital of US$50,000 which is made up of 100 Management Shares of US$0.01 par value each and 4,999,900 participating shares of US$0.01 par value each which may be issued in respect of different segregated portfolios and in different classes.

The Directors are authorised under the Articles to resolve from time to time the segregated portfolio to which participating shares are attributable and the class to which participating shares are to be designated.

Subject to the provisions of the Articles and the Companies Law, the Company may increase or reduce its authorised share capital, divide all or any of its share capital into participating shares of a smaller amount or combine all or any of its share capital into participating shares of a larger amount.

The Articles provide that unissued participating shares are at the disposal of the Directors who may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as the Directors may determine. All participating shares will be issued in registered form only.

There are no provisions under the laws of the Cayman Islands or under the Articles conferring pre-emption rights on the holders of participating shares or Management Shares. No capital of the Company is under option or agreed conditionally or unconditionally to be put under option.

SEGREGATED PORTFOLIOSThe Articles provide that the Directors shall from time to time establish one or more segregated portfolios. Each segregated portfolio shall be separately designated by reference to a name that includes the words “Segregated Portfolio” or the letters “SP”. The Directors shall identify:

(a) each asset as either a general asset or a portfolio asset and, in the case of a portfolio asset, the segregated portfolio to which it is attributed;

(b) each liability as being that of a creditor in respect of a particular segregated portfolio (a portfolio creditor) or a general creditor and in the case of a portfolio creditor, the segregated portfolio of which such person is a creditor.


The proceeds from the issue of participating shares of any class shall be applied to the segregated portfolio in respect of which the relevant class is issued. The assets and liabilities and income and expenditure attributable to that segregated portfolio shall be applied to such segregated portfolio and, subject to the provisions of the Articles, to no other segregated portfolio.

The assets held in each segregated portfolio shall be applied solely in respect of the liabilities of such segregated portfolio in accordance with the provisions of the Companies Law. Any surplus in a segregated portfolio shall be held, subject to the provisions of the Companies Law and the Articles, for the benefit of holders of participating shares attributable to such segregated portfolio.

Income, receipts and other property acquired by the Company and not otherwise attributable to a particular segregated portfolio shall be applied to and comprise the general assets of the Company. Liabilities of the Company which are not attributable to a particular segregated portfolio will be discharged from the general assets.

The Directors may transfer portfolio assets to the general assets in order to discharge the following liabilities: establishment costs and expenses of the Company, government registration fees, annual return fees, professional fees, service provider fees, the cost of insurance for the Directors, taxes, fines and penalties and any other liabilities necessarily incurred in maintaining the continued existence and good standing of the Company. If more than one segregated portfolio is in existence, portfolio assets will be transferred pro rata in proportion to the net asset value of each segregated portfolio or in such other proportions as the Directors may determine.

RIGHTS OF THE MANAGEMENT SHARESThe Management Shares are held by the Manager.

The Management Shares do not participate in the profits and losses of the Company and carry no right to dividends. On the winding up of the Company, the holder of a Management Share is only entitled to receive its paid-up capital of US$0.01 per Management Share. Management Shares are not redeemable.

Except as described under “Modification of rights attaching to a Class” below, the holders of the Management Shares have the right to vote (to the exclusion of the holders of the Shares) in respect of all matters relating to the Company. However, the holder of the Management Shares may, at any time, resolve to relinquish irrevocably its right to appoint and remove Directors and in that event, such right will vest in the holders of the Shares to be exercised by ordinary resolution (being a resolution passed by a majority of votes cast).

RIGHTS OF THE SHARESShares confer the following rights on Shareholders:

As to voting. The holders of Shares have no right to vote except as described under “Modification of rights attaching to a Class” below and, if the holder of the Management Shares resolves to relinquish its right to appoint and remove the Directors, on any resolution to appoint or remove a Director.

As to income. The holders of Shares have the right to receive dividends declared by the Company in respect of the relevant Class. Shares within each Class carry an equal right to such dividends as the Directors may declare.


As to redemption. The holders of Shares have the right to redeem the Share on the terms set out in this Memorandum and the Articles.

As to capital. The holders of Shares have the right on the winding up or dissolution of the Company, to participate in the surplus assets of the Company attributable to the Fund. The surplus assets attributable to each Class will be distributed pro rata among the holders of Shares of that Class according to the number of such Shares held by each of them.

RIGHTS OF THE SIDE POCKET SHARESSide Pocket Shares confer the following rights on Shareholders:

As to voting. The holders of Side Pocket Shares have no right to vote except as described under “Modification of rights attaching to a Class” below and, if the holder of the Management Shares resolves to relinquish its right to appoint and remove the Directors, on any resolution to appoint or remove a Director.

As to income. The holders of Side Pocket Shares have the right to receive dividends declared by the Fund in respect of the relevant Class. Shares within each Class carry an equal right to such dividends as the Directors may declare.

As to redemption. The holders of Side Pocket Shares have no right to redeem the Side Pocket Shares.

As to capital. The holders of Side Pocket Shares have the right on the winding up or dissolution of the Company, to participate in the surplus assets of the Company attributable to the Fund. The surplus assets attributable to each Class of Side Pocket Shares will be distributed pro rata among the holders of Side Pocket Shares of that Class according to the number of such Side Pocket Shares held by each of them.

MODIFICATION OF RIGHTS ATTACHING TO A CLASSThe rights attaching to Shares of any Class, as described above, may only be modified with the consent in writing of Shareholders holding two-thirds of the Shares of the Class affected by the proposed modification or with the sanction of a resolution passed at a meeting of the holders of Shares of the Class affected by not less than two-thirds of the votes cast.

Seven days’ prior notice will be given of any meeting of the holders of Shares of the relevant Class. The quorum will be one or more persons holding (or representing by proxy) not less than one-third of the issued Shares of the relevant Class. The Directors may treat two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration. At any meeting, all voting will be on a poll and each holder who is present in person or by proxy will have one vote for every $1.00 of the aggregate Net Asset Value of the Shares held.

Any resolution by the holder of the Management Shares to relinquish its right to appoint and remove Directors will not be deemed to modify the rights attaching to any Class.


SIDE LETTERSThe Company may enter into side letters with certain prospective or existing Shareholders whereby such Shareholders may be subject to terms and conditions that are more advantageous than those set out in this Memorandum. Such terms and conditions may, for example, provide for special rights to make future investments in the Fund; special redemption rights (whether relating to frequency, notice, a reduction or rebate in fees or otherwise) and/or rights to receive reports in relation to the Fund on a more frequent basis and such other rights as may be agreed with such Shareholders. The modifications are solely at the discretion of the Directors and may, amongst other things, be based on the size of the relevant Shareholder’s investment in the Fund or affiliated investment entity, an agreement by the Shareholder to maintain such investment in the Fund for a significant period of time or other commitment by the Shareholder.

CONSOLIDATION OF SERIESA new series of Shares of each Class will be issued on each Subscription Day on which Shares of that Class are issued. As soon as practicable after the last Valuation Day in each Calculation Period, the Shares of each series of each Class whose performance has given rise to a Performance Fee in respect of the relevant Calculation Period will be consolidated into a single series of the relevant Class, being the oldest series in respect of which a Performance Fee is payable for the relevant Calculation Period (the Original Series). The High Water Mark for the consolidated series will be based on the Net Asset Value of the Original Series as at the last Valuation Day in the relevant Calculation Period, after payment of the Performance Fee. Such consolidation shall take place by way of the compulsory redemption of Shares of the series to be consolidated and an issue of an appropriate number of Shares of the Original Series.

AMENDMENTS TO THE ARTICLESExcept as described under “Modification of rights attaching to a Class” above, the holder of the Management Shares may, by special resolution, amend the Articles.

WINDING UP AND TERMINATIONThe Company may voluntarily commence to wind up and dissolve by a special resolution of the holder of the Management Shares.

The Articles provide that the Company’s business shall continue for so long as the Company holds assets, irrespective of whether the Directors have determined that the Company shall not acquire any further investments. Accordingly, the investments of the Company may be managed for the sole purpose of realising all investments in anticipation of the termination of the business of the Company (the Realisation). Unless the Directors consider it is in the best interests of the Company that it be placed into liquidation under the Companies Law, the Realisation shall be managed by the Directors, together with, if the Directors so determine, the Manager. If the Directors determine that the Manager is to manage the Realisation, the appointment of the Manager will continue on the terms of the agreement then in force unless the Directors determine otherwise.


GENERAL MEETINGSAs a Cayman Islands exempted company, the Company is not required to hold annual general meetings of Shareholders.

DIRECTORS’ REPORTThe Company has not, since its incorporation, commenced operations, declared any dividends or made up any accounts. The Company does not have, nor since its incorporation has it had, any employees, nor is it expected to have any in the future.

Since its incorporation the Company has not been, nor is it currently, engaged in any litigation or arbitration. So far as the Directors are aware, no litigation or claim is pending or threatened against the Company.

REGULATIONThe Company is registered as a mutual fund under section 4(3) of the Mutual Funds Law and is therefore regulated under that law. In connection with its initial registration under the Mutual Funds Law, the Company has filed with CIMA a copy of this Memorandum and certain details of this Memorandum, as required by the Mutual Funds Law. The Company has also paid the prescribed initial registration fee.

The Company’s continuing obligations under the Mutual Funds Law are (i) to file with CIMA prescribed details of any changes to this Memorandum, (ii) to file annually with CIMA accounts audited by an approved auditor and an annual return containing certain key statistical data, and (iii) to pay the prescribed annual fee.

As a regulated mutual fund, the Company is subject to the supervision of CIMA. At any time, CIMA may instruct the Company to have its accounts audited and to submit them to CIMA within a specified time. Failure to comply with any supervisory request by CIMA may result in substantial fines. CIMA has wide powers to take certain actions if certain events occur. For instance, it has wide powers to take action if it is satisfied that a regulated mutual fund (i) is or is likely to become unable to meet its obligations as they fall due, or (ii) is carrying on or is attempting to carry on business or is winding up its business voluntarily in a manner that is prejudicial to its investors or creditors.

The powers of CIMA include (i) the power to require a Director to be replaced, (ii) the power to appoint a person, at the expense of the Company to advise the Company on the proper conduct of its affairs, and (iii) the power to appoint a person, at the expense of the Company to assume control of the affairs of the Company, including for the purpose of terminating the business of the Company. CIMA also has other remedies available to it including applying to the courts of the Cayman Islands for approval of other actions, and requiring the Company to re-organise its affairs in a manner specified by CIMA.

MATERIAL CONTRACTSThe following contracts, which are or may be material, have been entered into in respect of the Fund:

(a) a management agreement between the Company and the Manager pursuant to which the Manager was appointed to provide certain management services in respect of the Fund;

(b) an investment advisory agreement between the Company, the Manager and the Hong Kong Investment Advisor pursuant to which the Hong Kong Investment Advisor was appointed to provide certain investment advisory services in respect of the Fund;


(c) an investment advisory agreement between the Company, the Manager and the Australian Investment Advisor pursuant to which the Australian Investment Advisor will be appointed to provide certain investment advisory services in respect of the Fund;

(d) a fund administration agreement between the Company and the Administrator pursuant to which the Administrator was appointed to provide administration services in respect of the Fund; and

(e) a transfer agency agreement between the Company and the Administrator pursuant to which the Administrator was appointed to provide transfer agency services in respect of the Fund.

These contracts are summarised in the section headed “Management and Administration” above.

DOCUMENTS AVAILABLE FOR INSPECTIONSubject to any applicable confidentiality provisions, the following documents are available for inspection during normal business hours, on any day (except Saturdays, Sundays and public holidays) at the registered office of the Company:

(a) the Articles;

(b) the Companies Law and the Mutual Funds Law;

(c) the material contracts described above; and

(d) the most recent audited financial statements of the Fund.

Copies of these documents may be obtained free of charge from the Hong Kong Investment Advisor.

ENQUIRIESEnquiries concerning the Fund and this offering (including information concerning subscription procedures) should be directed to the Manager at the address set out in the Directory.


APPENDIX – RESTRICTIONS ON DISTRIBUTION

Australia: This Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be circulated or distributed, nor may Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Australia or to Australian domiciled persons except where such persons are “wholesale clients” as defined in section 761G of the Corporations Act 2001 (Cth) and where disclosure would not be required under Chapter 6D or Part 7.9 of the Corporations Act 2001 (Cth).

Austria: This Memorandum has been produced for the purpose of providing information about the Shares and will be provided only to qualified investors as defined in s1 para 1 subpara 5a of the Austrian Capital Market Act 1991 (Kapitalmarktgesetz) in the course of a private placement in Austria. All these qualified investors will be individually known in advance and individually selected by, or on behalf of, the Fund in Austria. This Memorandum is made available on the condition that it is for the use only by the recipient and may not be passed on to any other person or be reproduced in any part. The Shares have not been and will not be offered in the course of a public offering or of equivalent marketing in Austria and therefore, the provisions of the Austrian Investment Fund Act 1993 (Investmentfondsgesetz 1993), as amended, and the provisions of the Austrian Capital Market Act 1991, as amended, relating to registration requirements and to prospectus requirements do not apply. The Shares have thus neither been registered for public distribution in Austria with the Austrian Financial Market Authority nor been the subject matter of a prospectus compliant with the Austrian Investment Fund Act or the Austrian Capital Market Act. Any subscription application by any person other than the initial recipient of the Memorandum will be rejected.

Belgium: The offering of Shares has not been and will not be notified to the Belgian Banking, Finance and Insurance Commission (Commissie Voor Het Bank, Financie-en Assurantiewezen/Commission Bancaire, Financière et des Assurances) nor has this Memorandum been, nor will it be, approved by the Belgian Banking, Finance and Insurance Commission. The Shares may be offered in Belgium only to a maximum of 99 investors or to investors investing a minimum of €250,000 or to institutional or professional investors, in reliance on Article 5 of the Law of July 20, 2004. This Memorandum may be distributed in Belgium only to such investors for their personal use and exclusively for the purposes of this offering of Shares. Accordingly, this Memorandum may not be used for any other purpose nor passed on to any other investor in Belgium.

Cayman Islands: No invitation may be made to the public in the Cayman Islands to subscribe for the Shares.

Denmark: The Fund has not applied for or obtained a licence under the Danish Act on Investment Associations and Special-Purpose Associations as well as other Collective Investment Schemes etc. (Act No. 1499 of 12 December 2007) (the Act) and the Executive Order on Foreign Collective Investment Institutions’ Marketing in Denmark (Executive Order No. 1445 of 21 December 2005) (the Order) from the Danish Financial Supervisory Authority. The Shares in the Fund may only be offered or marketed in Denmark in compliance with the Act and the Order as well as any other provisions of Danish law applicable to the offering or marketing of investment products to investors located in Denmark. This implies, inter alia, that the shares in the Fund may not be offered or marketed to potential investors in Denmark unless an approval from the Danish Financial Supervisory Authorities in accordance with Section 16, Sub-Section 1 of the Act has been obtained, or unless the group of potential investors located in Denmark to whom the Shares in the Fund shall be offered or marketed is of such character that it does not fall within the scope of the Act.


Finland: This Memorandum does not constitute an offer to the public in Finland. The Shares cannot be offered or sold in Finland by means of any document to any persons other than “Professional Investors” as defined by the Finnish Mutual Funds Act (Sijoitusrahastolaki 29.1.1999/48), as amended. No action has been taken to authorize an offering of the Shares to the public in Finland and the distribution of this Memorandum is not authorized by the Financial Supervision Authority in Finland. This Memorandum is strictly for private use by its holder and may not be passed on to third parties or otherwise publicly distributed. Subscriptions will not be accepted from any persons other than the person to whom this Memorandum has been delivered by the Fund or its representative. This Memorandum may not include all the information that is required to be included in a prospectus in connection with an offering to the public.

France: The Shares may not be offered or sold directly or indirectly in the Republic of France and neither this Memorandum, which has not been submitted to the Autorité des Marchés Financiers, nor any offering material or information contained therein relating to the Fund, may be supplied in the Republic of France nor used in connection with any offer for subscription or sale of the Shares to the public in the Republic of France.

Germany: Each purchaser of Shares acknowledges that the Fund is not and will not be registered for public distribution in Germany. Accordingly, no offer of the Shares may be made to the public in Germany except pursuant to any of the exemptions set out in section 2 paragraph 11 of the German Investment Act including but not limited to if the Shares are distributed exclusively to credit institutions and financial services providers as defined in the German Banking Act, private or public insurance companies, investment companies and their investment managers as well as pension funds and their administrators.

Hong Kong: WARNING: The contents of this Memorandum have not been reviewed by the Securities and Futures Commission (SFC) or any other regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document you should obtain independent professional advice.

Neither the Company nor this Memorandum have been authorised by the SFC. This Memorandum and its contents may only be published, distributed, circulated, issued or otherwise disseminated to a person in Hong Kong on the basis that (i) any offer of Shares for subscription or purchase for cash or other consideration is made only to, and is only capable of acceptance by, and (ii) any invitation to make an offer to subscribe for or purchase for cash or other consideration any Shares is made only to, and any such offer will only be accepted from, persons who are “professional investors” within the meaning of the Securities and Futures Ordinance or in other circumstances which (x) do not result in an offer to the public of Shares for subscription or purchase for cash or other consideration, and (y) are not calculated to invite offers by the public for or purchase any Shares for cash or other consideration.

Italy: The Shares may not be offered, sold or delivered and this Memorandum, or any circular, advertisement or other document or offering material relating to the Shares, may not be published, distributed or made available in the Republic of Italy unless: (i) the Shares have been previously registered with the Bank of Italy and, as appropriate, with the Italian Securities and Exchange Commission; and (ii) the offering, sale or delivery of the Shares and publication or distribution of this Memorandum or of any other document or offering material is made in accordance with relevant Italian laws and regulations.


Japan: The Shares have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law no. 25 of 1948, as amended) and, accordingly, none of the Shares nor any interest in them may be offered or sold, directly or indirectly, in Japan or to, or for the benefit, of any Japanese person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese person except under circumstances which will result in compliance with all applicable laws, regulations and guidelines promulgated by the relevant Japanese governmental and regulatory authorities and in effect at the relevant time. For this purpose, a “Japanese person” means any person resident in Japan, including any corporation or other entity organised under the laws of Japan.

Korea: The Shares have not been registered under the Securities and Exchange Act of Korea and none of the Shares may be offered, sold or delivered, directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to applicable laws and regulations of Korea.

Netherlands: This document is not addressed to or intended for any individual or legal entity in the Netherlands except (a) individuals or legal entities who qualify as qualified investors as defined by article 2 paragraph 1(e) of the Prospectus Directive (2003/71/EC), as amended or (b) other persons to whom, or in circumstances where, an exemption or exception to the offering of interests in collective investment schemes (beleggingsinstellingen) applies pursuant to the Act on Financial Supervision (Wet op het financieel toezicht), and the rules and regulations promulgated pursuant thereto, as amended. Distribution of this document does not trigger a licence requirement for the Fund in the Netherlands and consequently no supervision will be exercised over the Fund by the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten).

People’s Republic of China: The Memorandum does not constitute a public offer of the Shares, whether by sale or subscription, in the People’s Republic of China. The Shares are not being offered or sold directly or indirectly in the People’s Republic of China to or for the benefit of, legal or natural persons of the People’s Republic of China.

Portugal: The Fund has not been registered with the Comissão do Mercado dos Valores Mobiliários (the CMVM) as a foreign collective investment scheme and this Memorandum (or any other agreement, document or material in relation to the Fund) has not been approved by the CMVM pursuant to Decree-Law 252/2003 of 17 October, as amended from time to time (the Decree-Law). Therefore: (i) the Shares may not be advertised, offered or sold; and (ii) this Memorandum or any other offering material, may not be distributed or caused to be distributed to the public in circumstances which could qualify as the marketing of Shares in the Republic of Portugal pursuant to the Decree-Law and the Portuguese Securities Code without prior registration of the Fund with the CMVM and all such documentation and marketing material being approved by the CMVM.

Republic of China (Taiwan): The Shares may not be sold, issued or offered in Taiwan. No person or entity in Taiwan has been authorised to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the Shares.

Republic of Ireland: The distribution of this Memorandum and the offering or purchase of Shares is restricted to the individual to whom this Memorandum is addressed. Accordingly, it may not be reproduced in whole or in part, nor may its contents be distributed in writing or orally to any third party and it may be read solely by the person to whom it is addressed and his/her professional advisers. The Shares will not be offered or sold otherwise than in conformity with the provisions of the European Communities (Markets in Financial Instruments) Regulations 2007 (as amended). Shares in the Fund will not in any event be publicly marketed in Ireland except in accordance with the requirements of the Irish Financial Services Regulatory Authority.


Singapore: The offer or invitation which is the subject of this Memorandum does not relate to a collective investment scheme which is authorised under Section 286 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA) or recognised under Section 287 of the SFA. The Fund is not authorised or recognised by the Monetary Authority of Singapore (MAS) and shares are not allowed to be offered to the retail public. Each of this Memorandum and any other document or material issued in connection with the offer or sale is not a prospectus as defined in the SFA. Accordingly, statutory liability under that Act in relation to the content of prospectuses would not apply. You should consider carefully whether the investment is suitable for you.

This Memorandum has not been registered as a prospectus with MAS. Accordingly, this Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be circulated or distributed, nor may Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 304 of the SFA, (ii) to a relevant person pursuant to Section 305(1), or any person pursuant to Section 305(2), and in accordance with the conditions, specified in Section 305 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Spain: The Fund has not been authorised by or registered with the Spanish Securities Market Commission as a foreign collective investment scheme in accordance with section 15.2 of Law 35/2003 of 4 November 2003 on Collective Investment Schemes. Accordingly, the Shares may not be offered or sold in Spain by means of any marketing activities as defined in section 2 of Law 35/2003, as amended by Law 25/2005, of 24 November 2005.

Sweden: This Memorandum has not been approved by or registered with the Swedish Financial Supervisory Authority (Finansinspektionen) pursuant to the Swedish Financial Instruments Trading Act (lagen (1991:980) om handel med finansiella instrument). Accordingly, the Shares may only be offered in Sweden in circumstances that will not result in a requirement to prepare a prospectus pursuant to the Swedish Financial Instruments Trading Act. The Fund is not an Investment Fund (fondföretag) for the purpose of the Swedish Investment Funds Act (lag (2004:46) om investeringsfonder) and has therefore not been, nor will it be, approved or registered by the Swedish Financial Supervisory Authority pursuant to the Swedish Investment Funds Act.

Switzerland: The Fund has not been authorised for public distribution in or from Switzerland pursuant to the Swiss Collective Investment Schemes Act of 23 June 2006 (the CISA) and its implementing regulations. Accordingly, the Shares may only be offered and this Memorandum may only be distributed in or from Switzerland to “qualified investors” (as this term is defined in the CISA and its implementing regulations).

United Kingdom: The Fund is an unrecognised collective investment scheme for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (the Act). The promotion of the Fund and the distribution of this Memorandum in the United Kingdom is accordingly restricted by law.

This Memorandum is being issued in the United Kingdom by the Fund to, and/or is directed at, persons to whom it may lawfully be issued or directed at under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 including persons who are authorised under the Act (authorised persons), certain persons having professional experience in matters relating to investments, high net worth companies, high net worth unincorporated associations or partnerships, trustees of high value trusts and persons who qualify as certified sophisticated investors. The Shares are only available to such persons in the United Kingdom and this Memorandum must not be relied or acted upon by any other persons in the United Kingdom. In order to qualify as a certified sophisticated investor a person must (a) have a certificate in writing or other legible form signed by an authorised person to


the effect that he is sufficiently knowledgeable to understand the risks associated with participating in unrecognised collective investment schemes and (b) have signed, within the last 12 months, a statement in a prescribed form declaring, amongst other things, that he qualifies as a sophisticated investor in relation to such investments. This Memorandum is exempt from the general restriction in Section 21 of the Act on the communication of invitations or inducements to engage in investment activity on the grounds that it is being issued to and/or directed at only the types of person referred to above.

The content of this Memorandum has not been approved by an authorised person and such approval is, save where this Memorandum is directed at or issued to the types of person referred to above, required by Section 21 of the Act. Acquiring Shares may expose an investor to a significant risk of losing all of the amount invested. Any person who is in any doubt about investing in the Fund should consult an authorised person specialising in advising on such investments.

United States: The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the 1933 Act) or the securities laws of any of the states of the United States. The Shares may not be offered, sold or delivered directly or indirectly in the United States or to or for the account or benefit of any “US Person” except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and any applicable state laws. The Shares are being offered outside the United States pursuant to the exemption from registration under Regulation S under the 1933 Act and inside the United States in reliance on Regulation D promulgated under the 1933 Act and Section 4(2) thereof.

The Fund has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the 1940 Act) since Shares will only be sold to US Persons who are “qualified purchasers”, as defined in the 1940 Act. Each subscriber for Shares that is a US Person will be required to certify that it is an “accredited investor” and a “qualified purchaser”, in each case as defined under applicable US federal securities laws, thereby also qualifying as a “qualified eligible person” as defined in Rule 4.7 under the United States Commodity Exchange Act, as amended (the CEA).

Pursuant to an exemption from registration as a commodity pool operator set forth in United States Commodity Futures Trading Commission (the CFTC) Rule 4.13(a)(4), neither the Manager nor the Investment Advisors are required to register, and are not registered, as commodity pool operators under the CEA. Consequently, unlike a registered commodity pool operator, neither the Manager nor the Investment Advisors are required to provide subscribers for Shares with a disclosure document or certified annual report meeting the requirements of the CFTC Rules otherwise applicable to registered commodity pool operators. This Memorandum has not been, and is not required to be, filed with the CFTC, and the CFTC has not reviewed or approved this Memorandum or the offering of Shares.

The Shares are suitable only for sophisticated investors who do not require immediate liquidity for their investments, for whom an investment in the Fund does not constitute a complete investment program and who fully understand and are willing to assume the risks involved in the Fund’s investment program. The Fund’s investment practices, by their nature, may be considered to involve a substantial degree of risk. Subscribers for Shares must represent that they are acquiring the Shares for investment.

The Shares have not been filed with or approved or disapproved by any regulatory authority of the United States or any state thereof, nor has any such regulatory authority passed upon or endorsed the merits of this offering or the accuracy or adequacy of this Memorandum. Any representation to the contrary is unlawful. There will be no public offering of the Shares in the United States.


This Memorandum has been prepared solely for the information of the person to whom it has been delivered by or on behalf of the Fund, and should not be reproduced or used for any other purpose.

The Fund may accept investments from employee benefit plans subject to Part 4 of Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA), plans or accounts subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the Code), insurance company general and separate accounts and entities the underlying assets of which include plan assets (i.e. “Benefit Plan Investors” as defined under ERISA). However, the Fund does not anticipate that its assets will be subject to Title I of ERISA or Section 4975 of the Code, because it intends to limit investments in the Fund by Benefit Plan Investors. Generally, assets of an entity like the Fund will not be subject to Title I of ERISA or section 4975 of the Code, if Benefit Plan Investors own less than 25 per cent of the value of any Class of equity interests in the Fund, excluding from this calculation any non-Benefit Plan Investor interests held by the Investment Advisors and certain affiliated persons or entities. No subscriptions for Shares made by Benefit Plan Investors will be accepted and no transfers of Shares will be permitted to the extent that the investment or transfer would result in the Fund’s assets becoming subject to Title I of ERISA or section 4975 of the Code. In addition, because the 25 per cent limit is to be calculated upon every subscription to or redemption from the Fund, the Fund has the authority to require the compulsory redemption of Shares of any Class to ensure that the Fund is not subject to Title I of ERISA or section 4975 of the Code.

Generally: The distribution of this Memorandum and the offering of Shares may be restricted in certain jurisdictions. The above information is for general guidance only, and it is the responsibility of any person or persons in possession of this Memorandum and wishing to make application for Shares to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Prospective applicants for Shares should inform themselves as to legal requirements also applying and any applicable exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile.

This Memorandum does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it would be unlawful to make such offer or solicitation.