Investment Policy and Restrictions

Investment Objectives of the Fund

The primary objective of the Fund is to achieve long-term, risk adjusted capital appreciation mainly by investing its assets in 4 (four) different types of investment:

1. Diversified portfolios of common stocks of listed and unlisted companies.

2. Undertakings for collective investment schemes (UCIs) using traditional asset classes and conventional or alternative asset management strategies.

3. Securities such as equities, debt securities and private equity products. In seeking to meet its investment objective, the Fund may invest in any type of security or instrument (including hybrid instruments and other potentially high-risk derivatives) whose investment characteristics are consistent with its investment program.

4. Real estate investment trusts (REITs).

There can be no assurance that the Fund will achieve its objectives.

Investment Policy and Strategy of the Fund

The principal investment strategy of the Fund is to invest at least 60% (sixty percent) of its net assets (including any borrowings for investment purposes) in the common stocks of large and medium-sized blue chip growth companies. These are firms which, in the opinion of the Investment Adviser, are well established in their industries and have the potential for above-average earnings growth. The Fund focuses on companies with leading market positions, seasoned management, and strong financial fundamentals.

This investment approach reflects the adviser’s belief that solid company fundamentals (with an emphasis on the potential for strong growth in earnings per share or operating cash flow), combined with a positive outlook for a company’s industry, will ultimately reward investors with strong investment performance. Some of the companies targeted by the Investment Adviser should have good prospects for dividend growth, and the Fund may at times invest significantly in stocks of these companies.

The Fund’s portfolio is constructed based on proprietary investment research. This research is intended to enable the Fund to be invested in equities which offer superior fundamental value. Whether an equity offers superior fundamental value is determined by comparing the share price with an assessment of the equity’s intrinsic value. The lower the price of a share when compared to its assessed intrinsic value, the more attractive the equity’s fundamental value is considered to be. The Investment Manager’s view is that, over the long term, equity investing based on this approach offers superior returns and reduced risk of loss.

In the interests of efficient portfolio management, the Fund seeks exposure to African equity markets and may invest in a relatively focused portfolio of companies with significant business interests in Africa regardless of location or stock exchange listing. The equities will be selected for their perceived superior fundamental value relative to their share price. The Investment Manager is of the view that this investment approach delivers superior returns over the long term at a lower risk of loss as the Fund, making sure at all times that the approach is sensitive to the broader trends affecting Emerging and African stock market and currency returns. Selected equities from this group are combined into a focused portfolio, taking into account each equity’s perceived risk and reward as well as the correlations within the portfolio in order to further manage risk. The relative concentration of the Fund’s portfolio and the focus on intrinsic value may result in the returns of the Fund from the Africa investments differing markedly from the benchmark. Substantial investments are made in shares in which there is high conviction rather than many lukewarm purchases. Equally, shares which are found to be unattractive are avoided, irrespective of their weight in the benchmark.

In pursuing the investment objectives outlined above, the Fund has the discretion to deviate from its normal investment criteria. Such a change in approach might arise when the Investment Adviser believes that a security could increase in value for a variety of reasons,including an extraordinary corporate event, a new product introduction or innovation, a favourable competitive development, or a change in management.

The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, orre-deploy assets into more promising opportunities.

Rationale for Alternative Asset Management

Traditional asset management is based on the theory of market efficiency. Participation in the markets has a direct correlation to the economy at large. The ability to outperform markets, however, is contingent upon assuming additional risk. This is reflected through individual share volatility and general market behaviour which is defined as systemic risk. In contrast, alternative asset management assumes that markets are inherently inefficient over certain periods of time and attempts to capitalise on opportunities produced. The strategies used to do so attempt not to increase the overall risk profile and indeed in most cases strive to reduce it. Their ability to do so is predicated on many of the characteristics which clearly differentiate them from their traditional counterparts.

Traditional asset management focuses on the comparative performance of the long investment portfolio in relation to an appropriate index or benchmark. Portfolio indexation has led to a largely passive investment approach which is measured in relative terms. Alternative asset management is a much more dynamic approach as it seeks to outperform in all market conditions through its combined long and short exposure. These strategies seek to achieve absolute rather than index-related performance.

Alternative asset management strategies are not constrained to investing in, and maintaining only long positions in, equities and bonds. They have the distinct ability to use both long and short positions within their strategic constructs. Both traditional and alternative investment styles may use derivative instruments for hedging and position-building purposes. Outright and directional positions, however, may also be used to various degrees within alternative portfolios dependent on investment style. Leverage, while generally not being permitted in traditional strategies, may be used to a significant degree in certain alternative investment strategies. However, a hedge fund does not necessarily make use of leverage.

Hedge Fund Strategies and Definitions

Hedge fund strategies in the traditional sense seek to reduce systemic or market risk in investment portfolios through offsetting long and short positions. Alternative asset management is simply the expansion of the traditional hedge fund definition by means of more diverse strategies and methodologies. A wide range of investment disciplines are represented which vary both in nature, risk and performance attributes. In general terms, the alternative asset management strategies include the following:

Convertible Arbitrage: The Sub-managers try to capture inefficiencies in the pricing of convertible securities and underlying stocks by isolating the yield earned on the debt portion of the convertible bonds or preferred stocks. The strategy entails purchasing a convertible bond while simultaneously hedging a portion of the equity risk by selling short the underlying common stock and/or buying puts or option combinations on underlying stock. This strategy is often leveraged in order to enhance returns.

Fixed Income Arbitrage: Sub-managers employing this strategy seek profits by exploiting pricing inefficiencies between related fixed-income securities while often neutralising exposure to interest rate risk. This strategy is often leveraged in order to enhance returns.

Statistical Arbitrage: Sub-managers in this category attempt to benefit from pricing inefficiencies that are identified using mathematical models. Statistical arbitrage strategy is based on the premise that prices will trend toward their historical norms. This strategy is often leveraged in order to enhance returns.

Merger Arbitrage: also known as risk arbitrage, this strategy involves investing in event-driven situations. The classic merger arbitrage strategy consists in acquiring the stock of the targeted company while simultaneously selling short the stock of the predator company.

Distressed Securities: this investment strategy consists in buying or selling short securities of companies affected by bankruptcy or in the process of restructuring the debt portion of their balance sheets. The complexity of such operations often creates mispricing opportunities hence high potential returns, and also a limited liquidity.

Special Situations: also known as corporate life cycle, this strategy focuses on opportunities created by significant transactional events, such as division spin-offs, mergers and acquisitions, bankruptcies, reorganisations, share buybacks and management changes. Arbitrage between common and preferred shares would fall under this special situation strategy.

Equity Long-Short: this directional strategy combines both long and short positions in equity and equity-related securities. Net market exposure is adjusted opportunistically. This style accounts for the majority of the strategies used today. The Sub-manager can trade on one or more dimensions such as Geography, Industry and Market Capitalisation.

Short Sellers: the short selling approach seeks to profit from declines in the value of stocks. The strategy is to borrow a stock and sell it on the market with the intention of buying it back at a lower price. By selling the stock short, the seller receives interest on the cash proceeds resulting from the sale. In the event the stock trends higher, the short seller will take a loss when paying back the security to the lender.

Market Neutral: this strategy is designed to exploit equity market inefficiencies by trying to remove systematic risk and extract stock-specific returns. Portfolios are constructed in attempt to remove the market risk and usually involve being simultaneously long and short matched equity positions.

Macro: macro managers make in-depth analyses of macro-economic trends and formulate their investment strategy based on these, taking out positions on the fixed income, currency and equity markets through either direct investments or futures and other derivative products. Commodity Trading Advisor: also known as Managed Futures, this strategy essentially invests in futures contracts on financial, commodity, and currency markets around the world. Trading decisions are often based on proprietary quantitative models and technical analysis. These portfolios have embedded leverage through the derivative contracts employed.

The Board of Directors of the Fund intends to invest the assets of the various Sub-Funds in a variety of UCIs pursuing alternative strategies including some or all of the above.

Co-management and pooling

To increase effective investment management, the Management Company, with the agreement of the Board of Directors may, in accordance with the Bye-laws of the Company, decide to manage all or part of the assets of one or more Sub-Funds with those of other Sub- Funds in the Company (also called a ‘pooling technique’); or, where applicable, may decide to co-manage all or part of the assets, except for a reserve of liquid assets, if necessary, of one or more Sub-Funds of the Company with the assets of other investment funds or of one or more Sub-Funds (hereinafter referred to as the “Party(ies) to the co-managed assets”) for which the Company’s Custodian is the appointed Custodian.

The co-managed assets will be formed by the transfer of cash or, where applicable, other assets from each of the Parties to the co-managed assets. Thereafter, subject to the agreement of the Board of Directors, the Management Company may regularly make subsequent transfers to the co-managed assets. The assets can also be transferred back to a Party to the co-managed assets for an amount not exceeding the participation of the said Party to the co-managed assets.

Assets that are co-managed will be referred to using the term “pool”, which term will be used only for internal management purposes. They do not constitute distinct legal entities and will not be directly accessible to investors. Each co-managed Sub-Fund will have its own assets allocated to it. The rights of each Party to the co-managed assets apply to each line of investment in the said co-managed assets.

The pooled assets will be managed in accordance with the respective investment policies of the Parties to the co-managed assets, each of which is pursuing identical or comparable objectives. Parties to the co-managed assets will only participate in co-managed assets authorised by their respective Prospectuses and in accordance with their respective investment restrictions.

In the case of an infringement of the investment restrictions affecting a Sub-Fund of the Company, when such a Sub-Fund takes part in co-management and even if the Management Company has complied with the investment restrictions applicable to the co-managed assets in question, the Company’s Board of Directors shall request the Management Company to reduce the investment in question in proportion to the participation of the Sub-Fund concerned in the co-managed assets or, where applicable, reduce its participation in the co-managed assets to a level that complies with the investment restrictions of the Sub-Fund.

When the assets of a Sub-Fund are managed using this technique, the assets initially attributable to each co-managed Sub-Fund will be determined according to the Sub-Fund’s initial participation in the pool. Thereafter, the composition of the assets will vary according to contributions or withdrawals made by the Sub-Funds. This apportionment system applies to each investment line of the pool. Additional investments made on be-half of the co-managed Sub-Funds will therefore be allocated to these Sub-Funds according to their respective entitlements, while assets sold will be similarly deducted from the assets attributable to each of the co-managed Sub-Funds.

The assets and liabilities attributable to each Sub-Fund will be identifiable at any given moment.

Dividends, interest and other distributions deriving from income generated by the co-managed assets will accrue to each Party to the co-managed assets in proportion to its respective investment. Such income may be kept by the Party to the co-managed assets or reinvested in the co-managed assets. All charges and expenses incurred in respect of the co-managed assets will be paid out of these assets. Such charges and expenses will be allocated to each Party to the co-managed assets in proportion to its respective entitlements to the co-managed assets.

When the Company is liquidated or when the Management Company, with the agreement of the Board of Directors of the Company decides, without prior notice, to withdraw the participation of the Company or a Sub-Fund of the Company from co-managed assets, the co-managed assets will be allocated to the Parties to the co-managed assets in proportion to their respective participation in the co-managed assets.

The investor must be aware of the fact that such co-managed assets are employed solely to ensure effective management inasmuch as all Parties to the co-managed assets have the same custodian. Co-managed assets are not distinct legal entities and are not directly accessible to investors. This notwithstanding, the assets and liabilities of each Sub-Fund of the Company will be constantly separated and identifiable.

Investment restrictions

With respect to the objectives and investment policy of the Fund and each Sub-Fund, the Company shall observe certain investment restrictions.

The maximum level of leverage that the Sub-Fund may employ, calculated using the gross method or the commitment method, is that given for each Sub-Fund in the relevant Data Sheet. In addition, the total amount of leverage employed by a Sub-Fund will be outlined in the Company’s annual report. The level of leverage calculated using the commitment method includes provisions for compensation, adds the value of physical positions, and notionals of all derivatives, and takes into account all leverage generated through securities loan, borrowing or repurchase agreements, but excludes derivative products that are used in hedging or derivatives transactions which do not generate any additional leverage. The level of leverage calculated using the gross method does not include provisions for compensation or hedging, adds the value of physical positions, and notionals of all derivatives, takes into account all leverage generated through securities loan, borrowing or repurchase agreements, but excludes cash and cash equivalents held in the reference currency of the Sub-Fund.

The Company may not:

• Invest more than 10% (ten percent) of the net assets of the Fund in other Funds of Funds.

• Borrow or make use of leverage in any other way for more than 25% (twenty-five percent) of the net assets in each Sub-Fund. Nonetheless, it is understood that UCIs in which the Company invests on behalf of Sub-Funds may, where applicable, borrow or make use of higher leverage in any other way.

• Grant loans or issue guarantees on behalf of third parties.

• Take part in investments involving a risk of unlimited commitments or obligations.

• Invest in goods, commercial contracts, real estate or commodities, unless investment in one of these types of asset is clearly indicated in the Data Sheet of the Sub-Fund concerned. Nonetheless, it is understood that UCIs in which the Company invests on behalf of Alternative Management Sub-Funds may, where applicable, invest in goods, commercial contracts, real estate or commodities. In addition, this restriction shall not prevent some Sub-Funds from investing in futures contracts on commodities and goods as specified in their relevant Data Sheets.

• Engage in short sales of securities, except for Sub-Funds whose Data Sheets clearly include this possibility (and the corresponding limits). Nonetheless, it is understood that the UCIs in which the Company invests on behalf of its Sub-Funds, may, where applicable, effect such sales.

• Give as collateral or otherwise pledge as guarantees of third parties’ debts any part of its assets, or transfer or assign them as guarantees of third parties’ debts; it being understood that, pledging the assets of a Sub-Fund to guarantee that Sub-Fund’s debts (for example, following a loan contracted), is authorised provided the pledge concerns no more than 60% of its net assets for a traditional Sub-Fund and up to 100% of its net assets for a Sub-Fund involving special risks.