ayers alliance quantum fund offering memorandum

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 Funds 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 Queens 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 Shareholders 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 Funds principal currency strategies include:

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

(b) Convergence strategy: the Funds 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 Funds system enters into short-term trades in the opposite direction;

(d) Trend following strategy: when the Funds system detects a trend, the Funds 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 Funds system detects a consolidated market it will sell calls and puts and place spot stop orders to protect its downside risks.

2 The Funds 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 companys 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 options 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 securitys 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 options 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 acquirers shares and buy the shares of the target. After the merger is completed, the targets 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 months 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 Groups 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 Companys 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 Funds 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 Funds 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 Funds 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 Funds 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 Funds investments may be registered in UBS name if it is in the Funds best interests or UBS cannot do otherwise due to law or practice, in which case the investments might not be segregated from UBSs 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 Funds behalf. The Funds 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 Funds 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 UBSs group of companies. UBS is not liable for the solvency, acts or omissions of any sub-custodian which holds or controls any of the Funds 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 Funds assets are delivered to UBS as prime broker and custodian (other than margin deposits). UBS is not responsible for monitoring the Funds 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 Funds 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 subscribers 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