Prospectus (4.96 Mb) - BlackRock International

EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS 

BlackRock Absolute Return Strategies Ltd 

Summary Note 

Prospectus consisting of a Summary Note, Registration 

Document and Securities Note relating to an Offer of 

US Dollar Shares, Euro Shares and Sterling Shares (at 

US$10 per US Dollar Share, €10 per Euro Share and 

£10 per Sterling Share) and admission of such Shares 

to the Official List of the UK Listing Authority and to 

trading on the London Stock Exchange’s main market.

BLACKROCK ABSOLUTE RETURN STRATEGIES LTD 

SUMMARY NOTE 

Prospectus relating to Offer of US Dollar Shares, Euro Shares and Sterling Shares (at US$10 per US Dollar Share, €10 per 

Euro Share, and £10 per Sterling Share) and admission to the Official List and to trading on the London Stock Exchange’s 

main market.

SUMMARY NOTE 

This Summary Note, the Registration Document and the Securities Note together comprise a prospectus (the 

“Prospectus”) relating to BlackRock Absolute Return Strategies Ltd (the “Company”) prepared in accordance with the 

Prospectus Rules of the Financial Services Authority (the “FSA”) made under section 73A of the Financial Services and 

Markets Act 2000 (“FSMA”) and approved by the FSA under section 87A of FSMA. The Prospectus has been filed with the 

FSA and made available to the public in accordance with rule 3.2 of the Prospectus Rules. 

The Prospectus relates to an Offer of US Dollar Shares, Euro Shares, and Sterling Shares (at US$10 per US Dollar 

Share, €10 per Euro Share and £10 per Sterling Share) (together, the “Shares”) and admission of such Shares to the 

official list of the UK Listing Authority (the “Official List”) and to trading on the London Stock Exchange’s main market 

for listed securities. 

The Prospectus does not constitute, and may not be used for the purposes of, an offer or an invitation to apply for any 

Shares by any person: (i) in any jurisdiction in which such offer or invitation is not authorised; or (ii) in any jurisdiction in 

which the person making such offer or invitation is not qualified to do so; or (iii) to any person to whom it is unlawful to 

make such offer or invitation. The distribution of this Prospectus and the offering of Shares in certain jurisdictions may 

be restricted and accordingly persons into whose possession this Prospectus comes are required to inform themselves 

about and observe such restrictions. 


(a registered closed-ended investment company incorporated with limited liability 

under the laws of Jersey with registered number 100291) 

Offer of US Dollar Shares, Euro Shares and Sterling Shares (the “Shares”) 

(at US$10 per US Dollar Share, €10 per Euro Share and £10 per Sterling Share) 

and admission to the Official List and to trading on the London Stock Exchange’s main market 

Investment Manager 

BlackRock Financial Management, Inc. 

Global Co-ordinator, Bookrunner and Sponsor 

UBS Investment Bank 

Dated 4 April 2008 

The Company is targeting a raising of US$500 million (subject to increase) through the Offer (excluding the Overallotment 

Option). 

This Summary Note should be read as an introduction to the Prospectus and any decision to invest in the Shares should 

be based on consideration of the Prospectus as a whole. Following the implementation of the relevant provisions of the 

Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”) in each member state of the European Economic 

Area (“EEA”), civil liability attaches to those persons responsible for the summary including any translation of the 

summary, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the 

Prospectus, namely the Registration Document and the Securities Note. Where a claim relating to the information 

contained in the Prospectus is brought before a court, a claimant investor may, under the national legislation of an EEA 

state, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. The full Prospectus 

may be obtained free of charge from the Company and the Administrator as set out in Part 4 of the Registration Document 

under the heading “Additional Information about the Company — Documents Available for Inspection”. 

This Summary Note includes particulars given in compliance with the Listing Rules and the Prospectus Rules for the 

purposes of giving information with regard to the Company. The information contained in this Summary Note should be 

read in the context of, and together with, the information contained in the Registration Document and the Securities Note 

and distribution of this Summary Note is not authorised unless accompanied by, or supplied in conjunction with, copies of 

the Registration Document and Securities Note. 

The Shares are only suitable for investors (i) who understand the potential risk of capital loss and that there may be 

limited liquidity in the Shares, (ii) for whom an investment in the Shares is part of a diversified investment programme and 

(iii) who fully understand and are willing to assume the risks involved in such an investment programme. The attention of 

potential investors is drawn to the Risk Factors set out in the Securities Note and the Registration Document. 

The Directors of the Company, whose names appear in the “Directors, Managers and Advisers” section of the Registration 

Document, and the Company itself, accept responsibility for the information contained in the Prospectus, which comprises 

this Summary Note, the Registration Document and the Securities Note. The Directors and the Company have taken all 

reasonable care to ensure that the information contained in the Prospectus is, to the best of their knowledge, in 

accordance with the facts and does not omit anything likely to affect the import of such information. 

1

The Company is a limited liability registered closed-ended investment company incorporated in Jersey. The Company is 

not an Authorised Person under FSMA and, accordingly, is not registered with the FSA. The Company has been 

established in Jersey as a listed fund under a fast-track authorisation process. It is suitable therefore only for 

professional or experienced investors, or those who have taken appropriate professional advice. Regulatory requirements 

which may be deemed necessary for the protection of retail or inexperienced investors, do not apply to listed funds. By 

investing in the Company you will be deemed to be acknowledging that you are a professional or experienced investor, or 

have taken appropriate professional advice, and accept the reduced requirements accordingly. 

The consent of the Jersey Financial Services Commission (“JFSC”) under the Control of Borrowing (Jersey) Order 1958 (as 

amended) has been obtained for the issue of an unlimited number of Shares and an unlimited number of C Shares. The 

JFSC is protected by the Control of Borrowing (Jersey) Law 1947 (as amended) against liability arising from the discharge 

of its functions under that law. 

The Company has received a permit under the Collective Investment Funds (Jersey) Law, 1988 (as amended) (the “CIF 

Law”) to carry out its functions but is not authorised or regulated in any other jurisdiction. The JFSC is protected by the 

CIF Law, against liability arising from its functions under that law. The Manager is licensed to conduct fund services 

business in respect of the Company under the Financial Services (Jersey) Law, 1988 (as amended) (the “FSL”). The JFSC is 

protected by the FSL against any liability arising from the discharge of its functions under the FSL. 

A copy of this document has been delivered to the Jersey registrar of companies in accordance with article 6 of the Companies 

(General Provisions) (Jersey) Order 1992 and the registrar has given, and has not withdrawn, his consent to its circulation. 

It must be distinctly understood that neither the Jersey registrar of companies nor the JFSC takes responsibility for the 

financial soundness of the Company or for the correctness of any statements made, or opinions expressed, with regard to it. 

Any change to the Company or amendment to the Prospectus which would not be in full compliance with the provisions 

set out in the Listed Fund Guide published by the JFSC from time to time requires the prior approval of the JFSC. 

Application has been made to the FSA for all of the Shares of the Company issued in connection with the Offer to be 

admitted to the Official List and to trading on the London Stock Exchange’s main market for listed securities. It is not 

intended that the Shares be admitted to listing in any other jurisdiction. Dealings in the Shares are expected to commence 

on a “when issued” basis at 8.00 am (London time) on or about 24 April 2008. It is expected that admission of such shares 

to the Official List will become effective and that unconditional dealings will commence at 8.00 am (London time) on 

29 April 2008 with delivery of such Shares expected to take place on or about 29 April 2008. Dealings on the London Stock 

Exchange before Admission will only be settled if Admission takes place. All dealings before the date of Admission will be 

of no effect if Admission does not take place and such dealings will be at the sole risk of the parties concerned. 

You are wholly responsible for ensuring that all aspects of this Company are acceptable to you. Investment in listed funds 

may involve special risks that could lead to a loss of all or a substantial portion of such investment. Unless you fully 

understand and accept the nature of this Company and the potential risks inherent in this Company you should not invest 

in this Company. Further information in relation to the regulatory treatment of listed funds domiciled in Jersey may be 

found on the website of the JFSC at www.jerseyfsc.org. 

If you are in any doubt about the contents of the Prospectus, you should seek advice from someone who is licensed 

under the Financial Services (Jersey) Law 1998 (as amended) to provide investment advice, or from your stockbroker, 

bank manager, solicitor, accountant or other financial adviser. 

The Shares have not been and will not be registered under the US Securities Act of 1933, as amended (“US Securities Act”) 

or any other applicable law of the United States. The Shares are being offered outside the United States to non-US 

persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act. The Shares may 

not be offered or sold within the United States, or to US Persons. The Company will not be registered under the US 

Investment Company Act, and investors will not be entitled to the benefits of such Act. 

In addition, prospective investors should note that the Shares may not be acquired by investors using assets of any 

employee benefit plan subject to Part 4 of Subtitle B of the Title I of the US Employee Retirement Income Security Act of 

1974, as amended (“ERISA”) or Section 4975 of the US Internal Revenue Code of 1986, as amended (the “US Internal 

Revenue Code”) or other federal, state, local or other law or regulation that is substantially similar to the prohibited 

transaction provisions of Section 406 of ERISA or Section 4975 of the US Internal Revenue Code. 

For additional offering and selling restrictions, see “The Offer” in Part 2 of the Securities Note and “Selling Restrictions” 

on page 35 of the Registration Document. 

The Investment Manager is currently registered with the US Commodity Futures Trading Commission (“CFTC”) as a 

commodity pool operator (“CPO”). However, with respect to the Company, the Investment Manager has filed with the US 

National Futures Association a claim pursuant to CFTC Rule 4.13(a)(4) for exemption from certain requirements 

applicable to a CPO. The Investment Manager is exempt from the CFTC requirements as a commodity pool operator with 

respect to the Company because participation in this pool is limited to non US investors. Therefore, the Investment 

Manager is not required to deliver a disclosure document and a certified annual report to participants in this pool. 

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UBS is acting for the Company and no one else in connection with the Offer and will not be responsible to anyone other 

than the Company in providing the protections afforded to its clients nor for providing advice in connection with the Offer, 

the contents in the Prospectus or any matters referred to herein. 

Each of BlackRock Financial Management, Inc. and BlackRock (Channel Islands) Ltd is acting for the Company and no one 

else in connection with the Offer and will not be responsible to anyone other than the Company in providing the 

protections afforded to its clients nor for providing advice in connection with the Offer, the contents of the Prospectus or 

any matters referred to herein. 

This Summary Note, the Registration Document and the Securities Note, which together comprise the Prospectus, 

should be read in their entirety before making any application for Shares. 

3

OVER-ALLOTMENT OPTION AND STABILISATION 

In connection with the Offer, UBS, as the stabilising manager (the “Stabilising Manager”), or any of its agents, may, to the 

extent permitted by applicable law, over-allot Shares with a value of up to a maximum of 15 per cent. of the total amount 

to be raised in the Offer and effect other transactions with a view to stabilising or maintaining the market price of the 

Shares at a level higher than that which might otherwise prevail in the open market. 

For the purposes of allowing the Stabilising Manager to cover short positions resulting from any such over-allotments by 

it during the stabilising period, the Company has granted the Stabilising Manager an over-allotment option (the “Overallotment 

Option”), pursuant to which the Stabilising Manager may require the Company to issue additional Shares with a 

value of up to a maximum of 15 per cent. of the total amount to be raised in the Offer (before exercise of the Overallotment 

Option) at the Offer Price. The Over-allotment Option is exercisable, in whole or in part, upon notice by the 

Stabilising Manager at any time on or after the date of commencement of conditional dealings on the London Stock 

Exchange and will expire no more than 30 days thereafter. Any Shares issued by the Company pursuant to the Overallotment 

Option will be issued on the same terms and conditions as the other Shares being issued under the Offer and 

will form the same classes for all purposes with all Shares issued under the Offer. 

The Stabilising Manager is not required to enter into such stabilising transactions. Such stabilising measures, if 

commenced, may be discontinued at any time and may only be taken up at any time on or after the date of 

commencement of conditional dealings in the Shares and will end no more than 30 days thereafter. Save as required by 

law or regulation, neither the Stabilising Manager nor any of its agents intend to disclose the extent of any over-allotments 

and/or stabilisation transactions under the Offer. 

4

THE COMPANY 

The Company is a newly-formed Jersey incorporated and registered closed-ended investment company to be listed on the 

London Stock Exchange which aims to generate a target net return of approximately 3-month LIBOR plus 6 per cent. per 

annum with a standard deviation of 8 per cent. 

INVESTMENT OBJECTIVE 

The Company’s investment objective is to generate absolute returns in excess of the yields on short-term LIBOR 

securities, while endeavouring to minimise the corresponding level of volatility. The Company seeks to generate these 

returns irrespective of the performance of any particular sector of the global capital markets. 

The Company will seek to achieve its investment objective primarily by allocating up to 100 per cent. of the Company’s 

capital to multiple External Investment Advisors pursuing a variety of “Absolute Return Strategies”. Absolute Return 

Strategies include non-traditional investment strategies that utilise a variety of securities and financial instruments and 

employ sophisticated trading and portfolio management techniques, and comprise “Relative-Value”, “Event-Driven”, 

“Fundamental Long-Short” and “Direct Sourcing” disciplines. 

The Company will, indirectly via the Fund Investments in its portfolio, be broadly diversified by securities or financial 

instruments and by geographic location. 

Derivative instruments may be used for both hedging and investment purposes (but not for direct leveraging by the 

Company) and the Investment Manager will take, at the time of entering into any derivative contracts, such steps as it 

considers necessary or appropriate to manage the associated risks. 

The Company will employ borrowings of up to 25 per cent of its Net Asset Value at the time of borrowing, which may be 

used for short term liquidity purposes and to fund share buy-backs and redemptions. 

The Company will not allocate more than 15 per cent. of its Net Asset Value, measured at cost at the time of investment, 

to any single Fund Investment (based on information received at that time). In the normal course, however, it is expected 

that the Company’s portfolio will include at least 20 Fund Investments. 

The Company will not allocate more than 15 per cent. of its Net Asset Value, in aggregate, measured at cost at the time of 

investment (based on information received at that time), to Direct Investments. 

The Company will not invest more than 15 per cent. of its total assets in other closed-ended investment funds listed on the 

Official List. 

HISTORICAL TRACK RECORD OF THE INVESTMENT MANAGER 

Since inception in August 1995 to 31 December 2007, the investment strategy to be used in managing the Company’s 

assets has never ended a year with a negative return and has delivered 12.7 per cent. annualised net performance, with a 

3.5 per cent. standard deviation, a Sharpe Ratio of approximately 2.0 and a beta to the FTSE All Share Index of 0.11 (based 

on QARS3-I Global (GBP blended – net). 

INVESTMENT HIGHLIGHTS 

The Directors believe that the principal advantages of an investment in the Shares are as follows: 

Strong performance track record in a variety of challenging market conditions — from inception in August 1995 to 

31 December 2007, the investment strategy to be used in managing the Company’s assets has never ended a year with a 

negative return and has delivered 12.7 per cent. annualised net performance, with a 3.5 per cent. standard deviation, a 

Sharpe Ratio of approximately 2.0 and a beta to the FTSE All Share Index of 0.11 (based on QARS3-I Global (GBP blended — 

net). 

Established investment manager — BAA has a track record of more than 12 years and provides an experienced and 

historically stable investment team. 

Alignment of incentives — BAA’s employees currently have invested or committed to invest, directly or indirectly, in excess 

of $400 million across the ARS, private capital and hybrid strategy funds managed by BAA. 

Access to External Investment Advisors — BAA has developed long-standing relationships and gained the respect of many 

External Investment Advisors and believes these relationships afford it a relative advantage in accessing talented External 

Investment Advisors. 

History of innovation — BAA’s depth of knowledge and a broad network of industry contacts facilitate early identification 

and pursuit of investment themes. 

Risk management and proprietary tools — BAA conducts ongoing risk assessment and External Investment Advisor 

evaluation that includes regular contact with External Investment Advisors and utilises a unique analytical platform 

specifically designed to manage the risks of alternative investments. Quasar, a proprietary relational database that 

facilitates a subjective, qualitative approach to External Investment Advisor evaluation and selection, features analytical 

tools that support qualitative and quantitative analysis. 

5

Advanced process engineering — BAA has developed a comprehensive technology platform that supports the informationintensive 

nature of alternative investment fund of funds management. BAA’s proprietary technology has been developed to 

facilitate the conversion of large amounts of data into more useful information, the institutionalisation of knowledge and 

an integration of systems and processes. 

Attractive fund structure — the closed-ended nature of the Company will provide greater flexibility to invest in attractive 

but less liquid Fund Investments than would be likely to be the case with an open-ended vehicle. Shares will be offered in 

three currency classes (denominated in US Dollars, Sterling and Euro) with at least quarterly conversions between 

currency classes permitted. 

Discount control — the Company, the Investment Manager and its affiliates will have the ability to purchase Shares in the 

secondary market at any time the Shares trade at a discount to NAV. In addition, the Company will consider commencing 

a share buy-back programme if the Shares should trade at or below 95 per cent. of NAV. Furthermore, at the discretion of 

the Directors, the Company expects to have a Redemption Facility pursuant to which the Shareholders would have the 

opportunity periodically to redeem some or all of their Shares at Net Asset Value (subject to certain restrictions including 

a maximum redemption on any Redemption Date of 20 per cent. of the Shares of any class then in issue). 

The Manager will bear all fees and expenses payable in respect of the Offer — all fees and expenses payable in respect of 

the Offer (including all costs related to the establishment of the Company) will be borne by the Manager (save if the 

Management Agreement is terminated in certain circumstances) such that the gross proceeds of the Offer, net of the 

Company’s short-term working capital requirements, will be available to the Company for investment following 

Admission. 

MANAGEMENT OF THE COMPANY 

DIRECTORS OF THE COMPANY 

The Directors have overall responsibility for the Company’s activities. The Board is composed of five directors, three of 

whom are Independent Directors who are not affiliates of the Investment Manager or the Manager. 

The Directors of the Company are Colin Maltby, John Siska, Philip Smith, Frank Le Feuvre and Jonathan Ruck Keene. 

THE INVESTMENT MANAGER 

BlackRock Financial Management, Inc., a Delaware corporation formed on 21 October 1994, is the investment manager of 

the Company, through its business unit, BlackRock Alternative Advisors. 

The Investment Manager is responsible for the management and investment of the Company’s assets on a discretionary 

basis in pursuit of the Company’s investment objective, subject to the control of the Company’s Board and certain 

borrowing and leverage restrictions. 

MANAGEMENT AND PERFORMANCE FEES 

The Investment Manger will be entitled to a management fee of 1.5 per cent. per annum of the NAV of the Company and a 

performance fee of 10 per cent. of the Company’s NAV growth, subject to a high water mark and related adjustments. 

DIVIDEND POLICY 

The Directors of the Company do not expect to declare any dividends with respect to the Shares in the foreseeable future. 

THE OFFER 

The Company is targeting a raising of US$500 million (subject to increase) through the Offer (excluding the Over-allotment 

Option) although the actual size of the Offer may differ. The quantum of the amount to be raised is indicative only. The 

actual number of Shares of each class issued pursuant to the Offer will only be determined by the Directors of the 

Company, the Investment Manager and the Global Co-ordinator after taking into account the demand for the Shares and 

the prevailing economic market conditions. 

The Offer consists of the Offer for Subscription in the United Kingdom and the Placing involving private placement in the 

United Kingdom and other countries to both professional investors and in some jurisdictions to high net worth individuals. 

Concurrent with an announcement of the basis of allocation of Shares in the Offer, the Company will publish an Offer 

Placing Statement that will contain details of the number of €10 Euro Shares, $10 US Dollar Shares and £10 Sterling 

Shares which are the subject of the Offer. 

Application has been made to the UK Listing Authority and the London Stock Exchange for all of the Shares issued and to 

be issued pursuant to the Offer to be admitted to the Official List and admitted to trading on the London Stock Exchange’s 

main market for listed securities. 

6

USE OF PROCEEDS 

The Company will invest the proceeds of the Offer in accordance with its investment objective. 

PROFILE OF TYPICAL INVESTOR 

Investment in the Company is only suitable for sophisticated or institutional investors seeking long-term capital 

appreciation who understand the risks involved in investing in the Company, including the risk of loss of all capital 

invested. 

RISK FACTORS 

RISKS RELATING TO THE COMPANY 

An investment in the Company involves a broad range of risks. A summary of some of these risks is set out below: 

The Company is a newly formed company with no separate operating history, and the historical results of the other 

investment vehicles managed by the Investment Manager and, in particular, QARS3-I, are not indicative of the Company’s 

future performance. 

No formal corporate governance code will apply to the Company. 

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect the Company’s 

business, investments and results of operations. 

The Company is not, and does not intend to become, regulated as an investment company under the US Investment 

Company Act and related rules. 

Failure by the Investment Manager or other third-party service providers to the Company to carry out its or their 

obligations could materially disrupt the business of the Company. 

The Directors and the Company’s service providers may have conflicts of interest in the course of their duties. 

The Company’s organisational, ownership and investment structure may create significant conflicts of interest that may 

be resolved in a manner that is not always in the best interests of the Company or the holders of the Shares. 

RISKS RELATING TO THE SHARES 

The value of a Share can go down as well as up and Shareholders may receive back less than the value of their initial 

investment and could lose all of their investment. 

Shareholders will have no right to have their Shares redeemed or repurchased by the Company at any time. 

The Shares have never been publicly traded on the London Stock Exchange. Even if the Company is successful in listing 

the Shares, an active and liquid trading market for the Shares may not develop. 

The price of the Shares may fluctuate significantly and potential investors could lose all or part of their investment. 

The Shares may trade at a discount to NAV. 

The rights of the Shareholders and the fiduciary duties owed by the Board of Directors to the Company will be governed by 

Jersey law and the Articles of Association of the Company and may differ from the rights and duties owed to companies 

under the laws of other countries. 

The Shares are subject to restrictions on transfers to US Persons, which may impact the price and liquidity of the Shares. 

The ability of potential investors to invest in the Shares or to transfer any Shares that they hold may be limited by the 

Articles of Association of the Company and tax considerations. 

Local laws or regulations may mean that the status of the Company or the Shares is uncertain or subject to change, which 

could adversely affect investors’ ability to hold the Shares. 

RISKS RELATING TO THE COMPANY’S INVESTMENT STRATEGY 

There is no guarantee that the Company or any Fund Investment will achieve their respective investment objectives. 

In general, neither the Company nor the Investment Manager will have the ability to direct or influence the management of 

the Company’s capital by the External Investment Advisors to whom the majority of the Company’s capital will be 

allocated. 

In the event that the Investment Management Agreement terminates for any reason, the Investment Manager may require 

the Company to transfer certain investments to one or more clients of the Investment Manager at a price which is 

consistent with the Company’s valuation policies. 

7

The Company is exposed to market risk and strategy risk. 

There can be no assurance that the trading strategies employed by an External Investment Advisor will be successful. 

The Company may not be successful in effectively utilising hedging and risk management transactions, which could 

subject its portfolio to increased risk or lower returns on its investments and cause the Shares to decrease in value. 

Fund Investments utilise high risk securities, including low credit quality and distressed securities, which may be illiquid, 

and may utilise highly speculative investment techniques. 

Fund Investments may engage in short sales of securities, which carries a greater degree of risk than cash investments in 

securities. 

Fund Investments may invest in companies experiencing significant business and financial distress, for which the level of 

analytical sophistication required for a successful investment is unusually high. 

Fund Investments may use various derivative instruments, including options and futures, as part of its investment 

strategy, which use of derivative instruments may involve additional risks. 

Fund Investments may invest in off-exchange transactions, including spot, forward and option contracts and swaps. 

Off-exchange contracts are not regulated and such contracts are not guaranteed by an exchange or clearing house. 

The use of leverage by Fund Investments could result in a substantial loss to the Company which would be greater than if 

the Fund Investments were not leveraged. 

Fund Investments may engage in risk arbitrage transactions, which carry a greater degree of risk than investments in 

securities. 

Fund Investments may invest in securities and currencies traded in emerging markets, where laws governing securities 

transactions are new and untested, and in countries which carry geopolitical risk. 

Fund Investments may be established in jurisdictions where no or limited supervision is exercised on such Fund 

Investments by regulators, and investor protection may therefore be less efficient in such jurisdictions. 

RISKS RELATING TO THE INVESTMENT MANAGER 

Indemnification provisions in the Management Agreement and Investment Management Agreement and performancebased 

compensation arrangements could encourage riskier investment choices that could cause significant losses for the 

Company. 

The Investment Manager is dependent on information technology systems and back office functions. 

The success of the investment policy of the Company will be significantly dependent upon the expertise of the Investment 

Manager and the External Investment Advisors and the loss of key people within the Investment Manager or the External 

Investment Advisors may adversely affect the Company. 

The identification of attractive investment opportunities is difficult and involves a high degree of uncertainty. 

RISKS RELATING TO TAXATION 

Changes to the tax laws of, or practice in, Jersey or any other tax jurisdiction affecting the Company or in which it may 

invest could adversely affect the value of the investments held by the Company and decrease the post-tax returns to 

Shareholders. 

8

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Printed by RR Donnelley 36267

lackrock.co.uk/its



Registration Document 








REGISTRATION DOCUMENT 

This Registration Document, the Summary Note and the Securities Note together comprise a prospectus (the 





The Prospectus relates to an Offer of US Dollar Shares, Euro Shares and Sterling Shares (at US$10 per US Dollar 







make such offer or invitation. The distribution of this Prospectus and the offering of Shares in certain jurisdictions may 

be restricted and accordingly persons into whose possession this Prospectus comes are required to inform themselves 

about and observe such restrictions. 













Option). 

This Registration Document includes particulars given in compliance with the Listing Rules and the Prospectus Rules for 

the purposes of giving information with regard to the Company. The information contained in this Registration Document 

should be read in the context of, and together with, the information contained in the Securities Note and the Summary 

Note and distribution of this Registration Document is not authorised unless accompanied by, or supplied in conjunction 

with, copies of the Securities Note and the Summary Note. 




potential investors is drawn to the Risk Factors set out in the Securities Note and in this Registration Document. 

The Directors of the Company, whose names appear in the “Directors, Managers and Advisers” section of this Registration 

Document, and the Company itself, accept responsibility for the information contained in the Prospectus, which comprises 

this Registration Document, the Securities Note and the Summary Note. The Directors and the Company have taken all 














1






A copy of this document has been delivered to the Jersey registrar of companies in accordance with article 5 of the 

Companies (General Provisions) (Jersey) Order 1992, as amended and the registrar has given, and has not withdrawn, his 

consent to its circulation. 


financial soundness of the Company or for the correctness of any statements made, or opinions expressed, with regard to it. 



































For additional offering and selling restrictions, see “The Offer” in Part 2 of the Securities Note and “Selling Restrictions” 

on page 35 of this Registration Document. 




Each of BlackRock Financial Management, Inc. and BlackRock (Channel Islands) Limited is acting for the Company and no 

one else in connection with the Offer and will not be responsible to anyone other than the Company in providing the 



This Registration Document, the Securities Note and the Summary Note, which together comprise the Prospectus, 


2

TABLE OF CONTENTS 

Headings 

Page 

RISK FACTORS .................................................................................... 4 

NOTICE TO INVESTORS ............................................................................. 31 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS .......................................... 34 

SELLING RESTRICTIONS ............................................................................ 35 

DIRECTORS, MANAGERS AND ADVISERS .............................................................. 42 

PART 1 THE COMPANY ............................................................................ 44 

PART 2 MANAGEMENT AND ADMINISTRATION OF THE COMPANY ....................................... 59 

PART 3 CERTAIN TAX CONSIDERATIONS ............................................................. 62 

PART 4 ADDITIONAL INFORMATION ABOUT THE COMPANY ............................................ 66 

DEFINITIONS AND GLOSSARY ....................................................................... 89 

3

RISK FACTORS 

Investors are referred to the risks set out below. Only those risks which are believed to be material and are currently 

known to the Company have been disclosed. No assurance can be given that Shareholders will realise a profit or will avoid 

a loss on their investment. Investment in the Company is suitable only for persons who can bear the economic risk of a 

substantial or entire loss of their investment and who can accept that there may be limited liquidity in the Shares. 

Additional risks and uncertainties not currently known to the Company, or that the Company deems to be immaterial, may 

also have an adverse effect on its business. Potential investors should review the Prospectus carefully and in its entirety 

and consult with their professional advisers before making an application for Shares. 


NO OPERATING HISTORY 

The Company is a recently established investment company and has no operating history. The Company does not have any 

historical financial statements or other meaningful operating or financial data on which potential investors may evaluate 

the Company and its performance. An investment in the Company is therefore subject to all of the risks and uncertainties 

associated with a new business, including the risk that the Company will not achieve its investment objective and that the 

value of any potential investment in the Shares could decline substantially as a consequence. 

NO RELIANCE ON PAST PERFORMANCE 

The Company has presented in the Prospectus certain information with respect to the historical investment performance 

of QARS3-I, an investment vehicle managed by the Investment Manager, and its predecessor funds. Such information is 

included, among other places, under “Historical Track Record of the Investment Manager” in Part 1 of this Registration 

Document. When considering this information potential investors should bear in mind that whilst each of QARS3-I and its 

predecessor funds has an investment policy and strategy, and employs portfolio construction techniques, which are 

substantially similar to those of the Company, the historical results of QARS3-I and its predecessor funds and any other 

investment vehicles managed by the Investment Manager are not indicative of the future results that they should expect 

from the Company or their investment in the Shares. In any event, past performance is not a guide to future performance. 

Furthermore, changes in investment strategy, market conditions and the performance of particular investments, among 

other factors, may negatively affect the Company’s future performance. 

LAWS AND REGULATIONS 

The Company, the Manager and the Investment Manager are subject to laws and regulations enacted by national, regional 

and local governments and institutions. In particular, the Company will be required to comply with certain licensing and 

regulatory requirements that are applicable to a Jersey investment company whose shares are listed on the Official List 

and traded on the London Stock Exchange’s main market for listed securities, including the Listing Rules, laws and 

regulations supervised by the Jersey Financial Services Commission and various EU Financial Services Action Plan 

Directives. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and 

costly. Those laws and regulations and their interpretation and application may also change from time to time and those 

changes could have a material adverse effect on the Company’s business, investments and results of operations. In 

addition, a failure to comply with any such applicable laws or regulations, as interpreted and applied, by the relevant 

regulatory authorities may have a material adverse effect on the Company’s business, investments and results of 

operations. 

The regulatory environment for investment funds and the managers of investment funds is evolving. Any change in the 

laws and regulations affecting the Company, or any change in the regulations affecting investment funds, funds of 

investment funds or investment fund managers generally may have a material adverse effect on the Company’s and the 

Investment Manager’s ability to carry on their businesses which in turn could have a material adverse effect on the 

Company’s performance and returns to Shareholders. 

NO FORMAL CORPORATE GOVERNANCE CODE 

There is no formal corporate governance code with which the Company must comply. Although the Directors have 

indicated that the Company will comply with the Combined Code to the extent they consider appropriate, having regard to 

the Company’s size, stage of development and resources, there can be no assurance that the Company will continue to 

comply with the governance standards contained in the Combined Code as they currently exist or as they may be revised 

going forward. Furthermore, no legal sanctions would apply to the Company if it failed to comply with such standards. 

US INVESTMENT COMPANY ACT AND RELATED RULES 

The Company is not, and does not intend to become, registered as an investment company under the US Investment 

Company Act and related rules. The US Investment Company Act provides certain protections to investors and imposes 

certain restrictions on registered investment companies (including limitations on the ability of registered investment 

companies to incur debt), none of which will be applicable to the Company. The United States Commodity Exchange Act of 

1974, as amended (the “US Commodity Exchange Act”) also provides certain protections to investors by imposing certain 

disclosure, reporting and record-keeping obligations on commodity pool operators; however, pursuant to the exemption 

contained in Rule 4.13(a)(4) promulgated under the US Commodity Exchange Act, the Investment Manager is exempt from 

the requirements of a commodity pool operator with respect to the Company. Accordingly, the protective provisions of the 

4

US Investment Company Act and the US Commodity Exchange Act will not be applicable to the Company. The Investment 

Manager is registered as an investment adviser under the US Advisers Act and is consequently subject to the recordkeeping, 

disclosure and other fiduciary obligations specified in the US Advisers Act. In addition, in order to avoid being 

required to register as an investment company under the US Investment Company Act and related rules, the Company has 

implemented restrictions on the ownership and transfer of the Shares, which may materially affect any potential 

investor’s ability to hold or transfer Shares. 

DEBT FINANCE 

The Company expects to agree prior to Admission terms for a credit facility which it may use to finance its short-term 

liquidity requirements and/or share buy-backs or redemptions. The Company expects that the credit facility provider will 

take security over the Company’s assets and the agreements governing any credit facility typically will give the lender the 

right to terminate the credit facility at will or upon the occurrence of certain termination events. Such events may include, 

among others, failure to pay amounts owed when due, the failure to provide required reports or financial statements, a 

decline in the value of the Fund Investments pledged as collateral, failure to maintain sufficient collateral coverage, 

failure to comply with investment guidelines, key changes in the Company’s management or the Investment Manager’s 

personnel, a significant reduction in the Company’s assets, material violations of the terms of, or representations, 

warranties or covenants under, the facility agreements as well as other events determined by the lender. If the Company 

were to fail to meet its obligations under any such credit facility and a termination event were to occur, the lender would 

be entitled, in its sole discretion and without regard to the Company’s investment objective, to realise and liquidate the 

Fund Investments pledged as security. This could have a material adverse effect on the Company and returns to 

Shareholders. Furthermore, in selecting Fund Investments for liquidation, a lender will realise the most liquid Fund 

Investments, which could result in the remaining portfolio of Fund Investments being less diverse in terms of investment 

strategies, number of investment managers or Fund Investments, liquidity or other investment considerations than would 

otherwise be the case. 

There is no guarantee that any such credit facility will be available to the Company on acceptable terms or at all or that, in 

the event that such facility terminates, an alternative facility will be available to the Company on acceptable terms or at 

all. Furthermore, it is possible that the amount of leverage available to the Company under any such credit facility may be 

limited due to other amounts borrowed from a lender from other funds or accounts managed by the Investment Manager. 

As a result, it is possible that the Company may be restricted from borrowing when it would otherwise like to borrow, even 

though it has a credit facility in place. 

Any debt finance employed by the Company is in addition to, and is not restricted by, use of leverage by Fund Investments. 

See Risk Factors — Risks relating to Absolute Return Strategies — Leveraging by Fund Investments. 

LIMITED LIABILITY AND INDEMNIFICATION OF THE INVESTMENT MANAGER 

The Investment Management Agreement contains provisions limiting the liability of the Investment Manager and 

indemnifying the Investment Manager from liabilities incurred in connection with the performance of obligations under 

the Investment Management Agreement under certain circumstances. See Part 4 of this Registration Document for 

further information. These protections from liability may result in the Investment Manager tolerating greater risks when 

making investment-related decisions than otherwise would be the case. 

RELIANCE ON THE INVESTMENT MANAGER AND PORTFOLIO MANAGERS 

The success of the Company is dependent on the expertise of the Investment Manager. The Investment Manager is not 

required to devote its full time to the business of the Company and there is no guarantee that any investment professional 

or other employee of the Investment Manager will allocate a substantial portion of their time to the Company. The loss of 

one or more individuals involved with the Investment Manager could have a material adverse effect on the performance or 

the continued operation of the Company. In addition, if the Investment Manager is removed, resigns or otherwise no 

longer serves as the Investment Manager of the Company, a large number of Fund Investments may be required to be 

realised or otherwise become unavailable to the Company, which may have an adverse impact on the Company’s 

investment performance. 

Portfolio managers are assigned to the Company and other funds or separate accounts for which the Investment Manager 

provides investment management or investment advisory services (collectively, “Other Clients”) by the BlackRock 

Alternative Advisors Investment Oversight Committee (the “Investment Committee”) from among the Investment 

Manager’s investment professionals. Portfolio composition decisions are the responsibility of the assigned portfolio 

manager, subject to the overall oversight of the Investment Committee. As such, even when the Company and Other 

Clients share the same or similar investment objectives, their individual portfolios may differ, in part based on the 

judgments of different portfolio managers, and for other reasons, such as those discussed under “Risk Factors — Risks 

Relating to Conflicts of Interest — Allocation of investment opportunities”. 

RELIANCE ON SERVICE PROVIDERS 

The Company has no employees and the Directors have all been appointed on a non-executive basis. The Company must 

therefore rely upon the performance of third party service providers to perform its executive functions. In particular, the 

Manager, the Investment Manager, the Sub-Administrator, the Registrar, the Custodian and their respective delegates, if 

any, will perform services that are integral to the Company’s operations and financial performance. Failure by any service 

provider to carry out its obligations to the Company in accordance with the terms of its appointment, to exercise due care 

5

and skill, or to perform its obligations to the Company at all as a result of insolvency, bankruptcy or other causes could 

have a material adverse effect on the Company’s performance and returns to Shareholders. The termination of the 

Company’s relationship with any third party service provider, or any delay in appointing a replacement for such service 

provider, could materially disrupt the business of the Company and could have a material adverse effect on the Company’s 

performance and returns to Shareholders. 

MISCONDUCT OF EMPLOYEES AND OF THIRD PARTY SERVICE PROVIDERS 

Misconduct or misrepresentations by employees of the Investment Manager, External Investment Advisors or third party 

service providers could cause significant losses to the Company. Employee misconduct may include binding the Company 

or a Fund Investment to transactions that exceed authorised limits or present unacceptable risks and unauthorised 

trading activities or concealing unsuccessful trading activities (which, in any case, may result in unknown and unmanaged 

risks or losses) or making misrepresentations regarding any of the foregoing. Losses could also result from actions by 

third party service providers, including, without limitation, failing to recognise trades and misappropriating assets. In 

addition, employees and third party service providers may improperly use or disclose confidential information, which 

could result in litigation or serious financial harm, including limiting the Company’s or a Fund Investment’s business 

prospects or future marketing activities. Despite the Investment Manager’s due diligence efforts, misconduct and 

intentional misrepresentations may be undetected or not fully comprehended, thereby potentially undermining the 

Investment Manager’s due diligence efforts. As a result, no assurances can be given that the due diligence performed by 

the Investment Manager will identify or prevent any such misconduct. 

COMPANY MAY INCUR COSTS OF THE OFFER IN CERTAIN CIRCUMSTANCES 

While all of the formation and initial expenses of the Company and the fees and expenses incurred in connection with the 

Offer (including all fees, commission and expenses paid to the Bookrunner) will initially be borne by the Manager or one of 

its affiliates, the Manager or its affiliate will be entitled to be reimbursed for a proportion of these fees and expenses of 

the Offer (not expected to exceed 2.5 per cent. of the gross proceeds of the Offer, assuming the target size for the Offer of 

US$500 million is achieved) by the Company if the Management Agreement is terminated by the Company without cause in 

the period ending on the seventh anniversary of the date of Admission. 

RISKS RELATING TO AN INVESTMENT IN THE SHARES 

GENERAL 

An investment in the Shares of the Company carries the risk of loss of capital. The value of a Share can go down as well as 

up and Shareholders may receive back less than the value of their initial investment and could lose all of their investment. 

LIQUIDITY OF SHARES 

The Company has been established as a closed-ended vehicle. Accordingly, Shareholders will have no right to have their 

Shares redeemed or repurchased by the Company at any time. While the Directors retain the right to effect repurchases 

of Shares and/or periodically to consider offering Shareholders the opportunity to redeem a proportion of their Shares 

pursuant to the Redemption Facility, in each case in the manner described in this Registration Document, they are under 

no obligation to use such powers at any time and Shareholders should not place any reliance on the willingness of the 

Directors so to act. Shareholders wishing to realise their investment in the Company will therefore be required to dispose 

of their Shares on the stock market. 

There has not to date been an active market for the Shares. The Company has applied for admission of the Shares to the 

Official List and to trading on the London Stock Exchange’s main market for listed securities. The Company cannot 

predict, however, the extent to which, even if admitted to trading, investor interest will lead to the development of an active 

and liquid trading market for the Shares or, if such a market develops, whether it will be maintained. There can be no 

guarantee that a liquid market in the Shares will develop or that the Shares will trade at prices close to their underlying 

Net Asset Value. Accordingly, Shareholders may be unable to realise their investment at Net Asset Value or at all. 

The number of US Dollar Shares, Euro Shares and Sterling Shares to be issued pursuant to the Offer is not yet known, and 

there may be a limited number of holders of one or more classes of such Shares. Limited numbers and/or holders of such 

Shares may mean that there is limited liquidity in such Shares which may affect (i) an investor’s ability to realise some or 

all of its investment and/or (ii) the price at which such investor can effect such realisation and/or (iii) the price at which 

such Shares trade in the secondary market. There can be no guarantee that each class of Shares will be equally liquid and 

one class of Shares may be materially less liquid than another. 

SHARE PRICE FLUCTUATION 

The market price of the Shares may fluctuate significantly and potential investors may not be able to resell their Shares at 

or above the price at which they acquired them. Factors that may cause the price of the Shares to vary include: 

• changes in the Company’s financial performance and prospects or in the financial performance and prospects of 

companies engaged in businesses that are similar to the Company’s business; 

• changes in the underlying values and trading volumes of the Fund Investments and other investments within the 

Company’s portfolio; 

• the termination of the Management Agreement or Investment Management Agreement or the departure of some or 

all of the Investment Manager’s investment professionals or an External Investment Advisors’ key individuals; 

6

• changes in laws or regulations, including tax laws, or new interpretations or applications of laws and regulations, that 

are applicable to the Company’s business; 

• sales of Shares; 

• general economic trends and other external factors, including those resulting from war, incidents of terrorism or 

responses to such events; 

• speculation in the press or investment community regarding the Investment Manager’s business or investments, or 

factors or events that may directly or indirectly affect its business or investments; 

• a loss of a major funding source; 

• a further issuance of Shares; and 

• lack of timely information concerning the performance of the Fund Investments and other investments within the 

Company’s portfolio. 

Securities markets in general have experienced extreme volatility that has often been unrelated to the operating 

performance of particular companies or partnerships. Any broad market fluctuations may adversely affect the trading 

price of the Shares. 

THE SHARES MAY TRADE AT A DISCOUNT TO NET ASSET VALUE 

The Shares may trade at a discount to their Net Asset Value for a variety of reasons, including due to market conditions, 

liquidity concerns or the actual or expected performance of the Company. There can be no guarantee that attempts by the 

Company to mitigate any such discount will be successful or that the use of discount control mechanisms will be possible 

or advisable. 

RIGHTS OF SHAREHOLDERS AND FIDUCIARY DUTIES 

The Company is an investment company that has been formed and registered under the laws of Jersey. The rights of the 

Shareholders and the fiduciary duties that its Board of Directors owes to the Company and Shareholders are governed by 

Jersey law and the Articles of Association. Such rights and duties may differ in material respects from the rights and 

duties that would be applicable if the Company were organised under the laws of a different jurisdiction. 

US DOLLAR EXCHANGE RATE FLUCTUATIONS 

The Shares in the Company will be denominated in US Dollars, Euro and Sterling. The financial statements of the 

Company will be prepared in US Dollars and the operational and accounting currency of the Company will be the US 

Dollar. Also, Fund Investments and other investments made by the Company typically will be denominated in US Dollars. 

Therefore, non-US Dollar subscription monies received by the Company under the Offer will be converted into US Dollars 

before being invested. Consequently, the holders of Euro Shares and Sterling Shares may be subject to foreign currency 

fluctuations between the Euro or Sterling, as the case may be, and the US Dollar. 

The Investment Manager generally will seek to hedge the exposure of such non-US Dollar denominated Shares against 

currency fluctuations, but only when suitable hedging contracts, such as currency swap agreements, futures contracts, 

options and forward currency exchange and other derivative contracts, are available in a timely manner and on terms 

acceptable to the Investment Manager, in its sole and absolute discretion. The Investment Manager may determine, in its 

sole and absolute discretion, not to, or may not be able economically, or at all, to hedge the currency exposure of 

redemption proceeds payable to a Shareholder in connection with the operation of the Redemption Facility, including any 

Hold-Back Amount (as described in Part 1 in the section headed “Redemption Facility”) following the applicable 

Redemption Date. In the event the Investment Manager seeks to hedge such exposure following the relevant Redemption 

Date, the profits, losses and expenses of such hedging transactions may be charged to the relevant Shareholder’s Hold- 

Back Amount. 

Furthermore, in connection with any currency hedging transactions, it is likely that the Company will be required to pledge 

all or a portion of its interests in the Fund Investments or other investments in the Company’s portfolio to the counterparty 

to such transactions as collateral. Moreover, the agreements related to the Company’s currency hedging transactions 

typically will give the counterparty the right to terminate the transactions upon the occurrence of certain termination 

events. Such events may include, among others, the failure to pay amounts owed when due, the failure to provide required 

reports or financial statements, a decline in the value of the Fund Investments or other investments pledged as collateral, 

the failure to maintain sufficient collateral coverage, the failure to comply with investment guidelines, key changes in the 

Company’s management or the Investment Manager’s personnel, a significant reduction in the Company’s assets, and 

material violations of the terms of, or representations, warranties or covenants under, the transaction agreements as well 

as other events determined by the counterparty. If a termination event were to occur, the counterparty would be entitled, 

in its sole discretion and without regard to the Company’s investment objective, to realise and liquidate the Fund 

Investments or other investments pledged as collateral, and as a result, the Company’s return could be materially 

adversely affected and the Company could incur significant losses. Furthermore, in selecting Fund Investments or other 

investments for liquidation, a counterparty will realise the most liquid investments, which could result in the remaining 

portfolio of investments being less diverse in terms of investment strategies, number of investment managers or 

investments, liquidity or other investment considerations than would otherwise be the case. 

7

In addition, as a result of currency exchange rate exposure and the profits, losses and expenses of hedging transactions 

borne by non-US Dollar denominated Shares, the performance of such Shares will differ from that of Shares that are 

denominated in US Dollars. Furthermore, while the profits, losses and expenses relating to currency hedging 

transactions, if any, will be specifically allocated to and paid by the class of Shares to which such transactions are related, 

under the laws of Jersey, were the assets of the Company attributable to such class of Shares insufficient to pay any of its 

specific liabilities, including without limitation, their specific hedging expenses, such liabilities would be borne by the 

Company as a whole. Further, the use of derivatives and other instruments to reduce risk involves costs. Consequently, 

the use of hedging transactions might result in lower performance for the hedged Shares than if the Company had not 

hedged such Shares’ exposure against foreign currency exchange risks. 

There can be no assurance that appropriate hedging transactions will be available to the Company or that any such 

hedging transactions will be successful in protecting against currency fluctuations or that the performance of the Shares 

will not be adversely affected by the currency exchange rate exposure. In addition, the Company may concentrate its 

hedging activities with one or a few counterparty(ies) and the Company is subject to the risk that a counterparty may fail to 

fulfil its obligations under a hedging contract. To the extent that a counterparty fails to fulfil its obligations, the relevant 

Share class, and potentially the Company as a whole, could suffer loss. 

Fluctuations in currency exchange rates will similarly affect the US Dollar equivalent of any interest, dividends or other 

payments made to the Company or Fund Investments denominated in a currency other than US Dollars. Among the 

factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative 

values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and 

political developments. 

TRANSFER RESTRICTIONS 

The Shares are subject to restrictions on transfers to any person located in the United States or who is a US person, which 

may impact the price and liquidity of the Shares. The Shares have not been registered in the United States under the US 

Securities Act or under any other applicable securities law and are subject to restrictions on transfer contained in such 

laws and under ERISA regulations. 

The Company intends to restrict the ownership and holding of its Shares so that none of its assets will constitute “plan 

assets” of any Plan. The Company intends to impose such restrictions based on deemed representations in the case of its 

Shares. If the Company’s assets were deemed to be “plan assets” of any Plan subject to Title I of ERISA or Section 4975 of 

the US Internal Revenue Code, pursuant to Section 3(42) of ERISA and US Department of Labour regulations promulgated 

under ERISA by the US Department of Labour and codified at 29 C.F.R. Section 2510.3-101 as they may be amended or 

modified from time to time (collectively, the “Plan Asset Regulations”), (i) the prudence and other fiduciary responsibility 

standards of ERISA would apply to investments made by the Company and (ii) certain transactions that the Company or a 

subsidiary of the Company may enter into, or may have entered into, in the ordinary course of business might constitute or 

result in non-exempt prohibited transactions under Section 406 of ERISA or Section 4975 of the US Internal Revenue Code 

and might have to be rescinded. Governmental plans and certain church plans, while not subject to Title I of ERISA or 

Section 4975 of the US Internal Revenue Code, may nevertheless be subject to other state, local or other laws or 

regulations that would have the same effect as the Plan Asset Regulations so as to cause the underlying assets of the 

Company to be treated as assets of an investing entity by virtue of its investment (or any beneficial interest) in the 

Company and thereby subject the Company or the Investment Manager (or other persons responsible for the investment 

and operation of the Company assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited 

transaction provisions contained in Title I of ERISA or Section 4975 of the US Internal Revenue Code. 

Each purchaser and subsequent transferee of the Shares will be deemed to represent and warrant that no portion of the 

assets used to acquire or hold its interest in the Shares constitutes or will constitute the assets of any Plan. The Articles 

of Association of the Company provide that the Board of Directors may refuse to register a transfer of Shares to any 

person they believe to be a Prohibited US Person or a Plan investor. If any Shares are owned directly or beneficially by a 

person believed by the Board of Directors to be a Prohibited US Person or a Plan investor, the Board of Directors may give 

notice to such person requiring him either (i) to provide the Board of Directors within 30 days of receipt of such notice with 

sufficient satisfactory documentary evidence to satisfy the Board of Directors that such person is not a Prohibited US 

Person or a Plan investor or (ii) to sell or transfer their Shares to a person qualified to own the same within 30 days and 

within such 30 days to provide the Board of Directors with satisfactory evidence of such sale or transfer. Where condition 

(i) or (ii) is not satisfied within 30 days after the serving of the notice, the person will be deemed, upon the expiration of 

such 30 days, to have forfeited their Shares. 

CHANGES IN LOCAL LAWS OR REGULATIONS 

For regulatory, tax and other purposes, the Company and the Shares may be treated differently in different jurisdictions. 

For instance, in certain jurisdictions and for certain purposes, the Shares may be treated as units in a collective 

investment scheme. Furthermore, in certain jurisdictions, the status of the Company and/or the Shares may be uncertain 

or subject to change, or it may differ depending on the availability of certain information or disclosures by the Company. 

The Company may be constrained from or may find it unduly onerous to disclose any or all of such information or to 

prepare or disclose such information in a form or manner which satisfies the regulatory, tax or other authorities in certain 

jurisdictions. Failure to disclose or make available information in the prescribed manner or format, or at all, may 

8

adversely impact investors in those jurisdictions. Changes in the status or treatment of the Company or the Shares may 

have unforeseen effects on the ability of investors to hold the Shares or the consequences of so doing. 

RISKS RELATING TO THE INVESTMENT STRATEGY 

GENERAL 

No guarantee or representation is made that the Company, any of the Absolute Return Strategy disciplines described 

herein or any Fund Investment will achieve their respective investment objectives. 

INVESTMENT DECISIONS 

The Company’s capital will be allocated primarily to External Investment Advisors and, in general and subject to the right of 

the Company and the Investment Manager to reallocate such capital, neither the Company nor the Investment Manager will 

have management discretion in respect of such capital for so long as it is allocated to such External Investment Advisors. 

TERMINATION OF THE INVESTMENT MANAGEMENT AGREEMENT 

In order to ensure that the capacity that the Investment Manager has negotiated with its underlying managers remains 

available for the Investment Manager’s clients, if the Company ceases to be a client of the Investment Manager the 

Company has agreed to transfer to one or more clients of the Investment Manager such of its investments as the 

Investment Manager in its reasonable discretion determines are limited as to capacity or other considerations that could 

limit access by outside investors. Any such transfer would be made at a price which is consistent with the Company’s 

valuation policies. 

CAPACITY LIMITATIONS OF EXTERNAL INVESTMENT ADVISORS 

External Investment Advisors may place limitations on the amount of, or number of persons whose, money they will 

manage. In addition, new rules and regulations may result in additional limitations or restrictions being placed by External 

Investment Advisors on the types of investors or assets that a Fund Investment may accept. Moreover, as a result of the 

convergence of the hedge fund and private equity markets and recent regulatory developments, many External Investment 

Advisors have lengthened liquidity terms, which may be more or less compatible with the liquidity requirements of the 

Company or Other Clients and therefore result in differences in portfolio composition. Any such restrictions or limitations 

could prevent the Investment Manager from allocating Company assets to certain External Investment Advisors and Fund 

Investments with which the Investment Manager would otherwise like to invest. In addition, when capacity is constrained, 

allocation decisions may be made on a non-pro rata basis among funds, for example, so as to avoid small allocations or to 

increase existing below-target allocations before building new positions. Moreover, in the case of Fund Investments that 

generally are not accepting new investments, if the Investment Manager determines, in the ordinary course of managing 

the Company’s assets, that it would be in the Company’s best interests to change the Company’s exposure to such Fund 

Investments, the Investment Manager may, in its sole and absolute discretion and subject to applicable law, reallocate 

such Fund Investments (in whole or in part) from or to, as the case may be, Other Clients. 

If the Investment Manager’s ability to make allocations to External Investment Advisors or Fund Investments is limited or 

restricted, the Company’s investment objective, and thus its returns, could be negatively impacted. Furthermore, because 

of these capacity limitations, it is likely that the Company’s portfolio and those of Other Clients will have differences in the 

specific investments held in their portfolios even when their investment objectives are the same or similar. These 

distinctions will result in differences in portfolio performance. 

MARKET RISK 

The Company is exposed to market risk. Market risk is risk associated with changes in, among other things, market prices 

of securities or commodities or foreign exchange or interest rates and there are certain general market conditions in 

which any investment strategy is unlikely to be profitable. The Investment Manager has no ability to control or predict 

such market conditions. 

The Company seeks to invest in accordance with its investment objective without specifying allocations to specific 

industries, and is not purposely diversified within maximum company and industry concentration guidelines. 

From time to time, multiple markets could move together against the Company’s investments, which could result in 

significant losses for the Company. Such movement would have a material adverse effect on the performance of the 

Company and the size of returns to Shareholders. 

General economic and market conditions, such as currency and interest rate fluctuations, availability of credit, inflation 

rates, economic uncertainty, changes in laws, trade barriers, currency exchange controls and national and international 

conflicts or political circumstances, as well as natural circumstances, may affect the price level, volatility and liquidity of 

securities. Economic and market conditions of this nature could result in significant losses for the Company, which would 

have a material adverse effect on the performance of the Company and returns to Shareholders. 

STRATEGY RISK 

Strategy risk is associated with the failure or deterioration of an entire strategy such that most or all investment 

managers employing that strategy suffer losses. Strategy specific losses may result from excessive concentration by 

9

multiple External Investment Advisors in the same investment or general economic or other events that adversely affect 

particular strategies (e.g. the disruption of historical pricing relationships). The strategies employed by the External 

Investment Advisors may be speculative and involve substantial risk of loss in the event of such failure or deterioration. 

USE OF MULTIPLE EXTERNAL INVESTMENT ADVISORS 

No assurance can be given that the collective performance of the External Investment Advisors will result in profitable 

returns or avoid losses for the Company as a whole. Positive performance achieved by one or more External Investment 

Advisors may be neutralised by negative performance experienced by other External Investment Advisors. 

EXTERNAL INVESTMENT ADVISORS’ TRADING STRATEGIES 

There can be no assurance that the trading strategies employed by an External Investment Advisor will be successful. For 

example, the proprietary models used by an External Investment Advisor may not function as anticipated during unusual 

market conditions. Furthermore, while each External Investment Advisor may have a performance record reflecting its 

prior experience, this performance cannot be used to predict future profitability. 

ACCESS TO INFORMATION FROM EXTERNAL INVESTMENT ADVISORS 

The Investment Manager will request information from External Investment Advisors regarding each External Investment 

Advisor’s historical performance and investment strategy. The Investment Manager will monitor the performance of 

underlying investments on a continuing basis as such information is made available to the Investment Manager by the 

External Investment Advisors. However, the Investment Manager may not always be provided with such information 

because certain of this information may be considered proprietary information by the particular External Investment 

Advisor or for other reasons. This lack of access to independent information is a significant investment risk. Furthermore, 

the net asset values received by, or on behalf of, the Company from each External Investment Advisor will typically be 

estimates only, subject to revision through the end of each Fund Investment’s annual audit, which may occur on a date 

other than 31 December. Revisions to the Company’s gain and loss calculations will be an ongoing process, and no 

appreciation or depreciation figure can be considered final until the Company’s annual audit is completed. 

POTENTIAL CONFLICTS OF INTEREST INVOLVING EXTERNAL INVESTMENT ADVISORS 

Certain of the External Investment Advisors may engage in other forms of related and unrelated activities in addition to 

advising a Fund Investment. They may also make investments in securities for their own account. Activities such as these 

could detract from the time an External Investment Advisor devotes to the affairs of a Fund Investment. In addition, certain 

of the External Investment Advisors may engage affiliated entities to furnish brokerage services to Fund Investments and 

may themselves provide market making services, including acting as a counterparty in stock and over-the-counter 

transactions. As a result, in such instances the choice of broker, market maker or counterparty and the level of 

commissions or other fees paid for such services (including the size of any mark-up imposed by a counterparty) may not 

have been made at arm’s length. 

EMERGING INVESTMENT ADVISORS 

The Company may invest in Fund Investments that are managed by investment managers that have managed ARS funds 

for a relatively short period of time (“Emerging Investment Advisors”). The previous experience of Emerging Investment 

Advisors is typically in trading proprietary accounts of financial institutions or managing unhedged accounts of 

institutional money managers or other investment firms. Because Emerging Investment Advisors may not have direct 

experience managing ARS funds, including experience with financial, legal or regulatory considerations unique to ARS 

management, and because there is generally less information available on which to base an opinion of such Emerging 

Investment Advisors’ investment and management expertise, investments with Emerging Investment Advisors may be 

subject to greater risk and uncertainty than investments with more experienced ARS advisors. 

RELIANCE ON KEY INDIVIDUALS 

The success of the investment policy of the Company will be significantly dependent upon the Investment Manager and 

External Investment Advisors and their expertise and ability to attract and retain suitable staff. The success of a particular 

Fund Investment will be dependent on the expertise of the External Investment Advisor for that Fund 

Investment. Incapacitation or loss of key people within an External Investment Advisor may adversely affect a Fund 

Investment and thereby the Company. Many External Investment Advisors may have only one or a limited number of 

key individuals. The loss of one or more individuals from an External Investment Advisor could have a material adverse 

effect on the performance of such Fund Investment which, in turn, could adversely affect the performance of 

the Company. 

MANAGER RISK 

Manager risk is the risk of loss due to fraud on the part of the Investment Manager or an External Investment Advisor, 

intentional or inadvertent deviations from their communicated investment strategy, including excessive concentration, 

directional investing outside pre-defined ranges or in new capital markets, excessive leverage and risk taking, or simply 

poor judgment. Although the Investment Manager will seek to allocate the Company’s assets to External Investment 

Advisors whom it believes will operate with integrity and sound operational and organisational standards, the Investment 

Manager may have no, or only limited, access to information regarding the activities of the External Investment Advisors 

and the Investment Manager cannot guarantee the accuracy or completeness of such information. As a consequence, although 

the Investment Manager will monitor the activities of the External Investment Advisors as described in this Registration 

10

Document, it may be difficult, if not impossible, for the Investment Manager to protect the Company from the risk of 

External Investment Advisor fraud, misrepresentation or material strategy alteration. The Investment Manager will have no 

control over the day-to-day operations of any of the Fund Investments managed by the External Investment Advisors. As a 

result, there can be no assurance that every such collective investment vehicle will conform its conduct to these standards. The 

failure of operations, IT systems or contingency/disaster recovery plans may result in significant losses for the collective 

investment vehicles managed by the External Investment Advisors. Shareholders themselves will have no direct dealings or 

contractual relationships with the External Investment Advisors. 

MONITORING OF ALLOCATIONS OF COMPANY’S CAPITAL TO FUND INVESTMENTS 

Although the Investment Manager attempts to monitor the performance of all of its Fund Investments, the Investment 

Manager must ultimately rely on (i) the External Investment Advisor of a Fund Investment to operate in accordance with 

the investment guidelines governing the Fund Investment, and (ii) the accuracy of the information provided to the 

Investment Manager by the External Investment Advisor of the Fund Investment. Any failure of the External Investment 

Advisor of a Fund Investment to operate within such guidelines or to provide accurate information with respect to such 

Fund Investment could subject the Company to losses. Moreover, many of the strategies implemented by the Fund 

Investments rely on the financial information made available by the issuers in which the Fund Investments invest. The 

Investment Manager has no ability to independently verify the financial information disseminated by the issuers in which 

the Fund Investments invest and is dependent upon the integrity of both the management of these issuers and the 

financial reporting process in general. 

PRIME BROKERS AND CUSTODIANS 

Under the arrangements between the Fund Investments and their prime brokers and custodians, the prime brokers and 

custodians will have rights to identify as collateral, to rehypothecate or to otherwise use for their own purposes assets 

held by them for the Fund Investments from time to time. Legal and beneficial title to such assets may therefore be 

transferred to the relevant prime broker and custodian. Similarly, any cash of the Fund Investments held or received by or 

on behalf of a prime broker or custodian may not be treated as client money and may not be subject to the client money 

protections conferred by the client rules of the FSA or equivalent rules of other regulators to which such prime broker or 

custodian may be subject. Accordingly, the cash of the Fund Investments may also constitute collateral and may not be 

segregated from the cash of the prime brokers and custodians. Consequently, a Fund Investment may rank as an 

unsecured creditor in respect of such assets and cash on the insolvency of a prime broker and custodian and might not be 

able to recover such assets and cash in full. The inability of a Fund Investment to recover such cash could have a material 

adverse effect on the Company’s performance and returns to Shareholders. 

SIDE LETTERS AND OTHER AGREEMENTS 

External Investment Advisors and Fund Investments may enter into separate agreements with certain of their investors, 

such as those affiliated with External Investment Advisors or Fund Investments or those deemed to involve a significant or 

strategic relationship. Such agreements may provide more beneficial terms to investors other than the Company by 

waiving certain terms or allowing such investors to invest on different terms than those on which the Company has 

invested, including, without limitation, with respect to fees, liquidity, changes in redemption terms, key man provisions, 

notification upon the occurrence of certain events (in some instances including the ability to redeem upon the occurrence 

of certain events), “most favoured nation” clauses and disclosure of certain information. Under certain circumstances, 

these agreements could create preferences or priorities for such investors. For example, a Fund Investment may offer 

certain of its investors additional or different information and reporting than that offered to the Company. Such 

information may provide the recipient greater insights into the Fund Investment’s activities as compared to the Company 

in its capacity as an investor in such Fund Investment, thereby enhancing the recipient’s ability to make investment 

decisions with respect to the Fund Investment and enabling such investor to make more informed decisions than the 

Company about redeeming from the Fund Investment. Any resulting redemption could force the Fund Investment to sell 

investments at a time when it might not otherwise have done so or for a price less than it deemed fair value which will 

adversely affect the Company as a remaining investor in the relevant Fund Investment. 

The Investment Manager will in certain circumstances attempt to negotiate separate agreements with External Investment 

Advisors or Fund Investments to which it allocates the Company’s capital. No assurance can be given that any such 

agreement, if entered into, will be respected by the applicable External Investment Advisor or Fund Investment or that such 

agreement would be enforceable in accordance with its terms. Further, there may be situations in which regulatory 

requirements, investment objectives, the timing of investments, historical relationships with an External Investment Advisor 

or other considerations will result in differences between the Company and an External Investment Advisor’s other clients 

in terms of the availability of the benefits of any such agreements. Furthermore, there may be circumstances where the 

benefit provided cannot be exercised by all clients simultaneously or where one client directly or indirectly receives a 

greater benefit due to the participation by another client. In addition, although the Investment Manager may negotiate terms 

that it considers more advantageous overall, concessions may be required to obtain such terms. 

PERFORMANCE FEES AND MANAGEMENT FEES 

External Investment Advisors may receive compensation calculated by reference to the performance of the Fund 

Investments managed by them. Such compensation arrangements may create an incentive to make investments that are 

11

iskier or more speculative than would be the case if such arrangements were not in effect. In addition, because 

performance-based compensation is calculated on a basis that includes unrealised appreciation of a Fund Investment’s 

assets, such performance-based compensation may be greater than if such compensation were based solely on realised 

gains. Furthermore, External Investment Advisors may receive compensation calculated by reference to their assets 

under management. Such compensation arrangements may create an incentive to increase their assets under 

management regardless of their ability to effectively and optimally invest them. 

MULTIPLE LEVELS OF EXPENSE 

Both the Company and Fund Investments impose management and performance fees. In addition to a fixed management 

fee, External Investment Advisors typically will also be paid or allocated amounts based upon a share of the profits of the 

Fund Investment. External Investment Advisors of such Fund Investments may receive substantially higher payments than 

would otherwise be the case under alternative arrangements. Other service providers of Fund Investments will normally 

be compensated or will receive allocations on terms that may include fixed and/or performance-based fees or allocations. 

As a result, the Company, and indirectly Shareholders, will pay multiple investment management and other service 

provider fees. In addition to the fees paid by the Company to the Manager, fees paid in relation to Fund Investments will 

generally, for fixed fees, if applicable, range from 1 per cent. to 2 per cent. per annum of the average net asset value of the 

Fund Investments and performance fees or allocations are likely to range from 20 per cent. to 25 per cent. of the net 

capital appreciation in the Fund Investments for the relevant performance fee measurement period. Performance figures 

issued by the Company and stated performance targets will be net of these. 

When the Company holds a Fund Investment through a conduit fund as described below under “Investment in conduit 

entities”, the “high water mark” for an investment in a Fund Investment may not correspond to the Company’s holding 

period in the conduit fund. Therefore, the Company may pay a performance fee to an External Investment Advisor when it 

has not received the same positive performance as a whole and it may benefit from a “loss carry forward” where the 

conduit fund incurred the loss prior to the Company’s investment in the conduit fund. 

EFFECT OF REDEMPTIONS AND BUY-BACKS ON DIVERSIFICATION 

Although the Company plans to seek diversification in the investment of its assets, if the Directors elect to operate the 

Redemption Facility and as a result a significant number of Shares are redeemed on the relevant Redemption Date, the 

Company may not be able to satisfy such redemption requests from a variety of its Fund Investments and be required to 

make disproportionate redemptions from select Fund Investments, resulting in a temporary imbalance in its 

diversification strategy. Similarly, if the Company executes a share buy-back, raising the necessary funds may adversely 

affect the diversification of the Company’s investments. 

EFFECT OF LIQUIDATION ON INVESTMENT GUIDELINES 

If the Company is in the process of a complete liquidation pursuant to its Articles of Association, in order to effect an 

orderly liquidation of the Company’s assets, the Company may not comply with the investment guidelines described in this 

Registration Document during liquidation. 

PORTFOLIO ADJUSTMENTS 

Redemption restrictions imposed by Fund Investments or the provisions of the governing documents of Fund Investments 

that permit suspension of redemptions may delay or preclude portfolio adjustments the Investment Manager would 

otherwise implement. Fund Investments could depreciate in value during the time a redemption is delayed, and the 

Company would be precluded from redeploying its capital to more advantageous investment opportunities. 

SECONDARY MARKET 

The Company may sell Fund Investments in the secondary market. This may include, at the discretion of the Investment 

Manager, selling such Fund Investments at a discount, thereby triggering the same economic effect as a redemption 

penalty. 

PORTFOLIO VALUATION 

The Company values its Fund Investments at fair value. Interests in Fund Investments generally will be valued at 

estimated prices provided to the Company by the External Investment Advisor (or administrator) of the relevant Fund 

Investment based on interim unaudited financial statements. Such estimates may be subject to little independent 

verification or other due diligence and may not comply with generally accepted accounting practices or other valuation 

principles. In addition, these entities may not provide estimates of the value of Fund Investments, or may do so irregularly, 

with the result that the values of such investments may be estimated by and at the discretion of the Sub-Administrator. 

Certain securities or investments, particularly those for which market quotations may not be readily available, may be 

difficult to value. Because of overall size, concentration in particular markets and maturities of positions held by the 

Company through the Fund Investments, the value at which its investments can be liquidated may differ, sometimes 

significantly, from the interim valuations obtained by the Company. In addition, the timing of liquidations may also affect 

the values obtained on liquidation. Securities held by Fund Investments may routinely trade with bid-offer spreads that 

may be significant. In addition, the Fund Investments may hold loans or privately placed securities for which no public 

market exists. Accordingly, the values of Fund Investments provided to the Company may be subject to an upward or 

downward adjustment based on information reasonably available at that time or following the auditing of a Fund 

Investment’s financial records. There can therefore be no guarantee that the Company’s investments could ultimately be 

realised at the Company’s valuation of such investments. 

12

Because of the inherent uncertainty of valuation, the estimated value of Fund Investments for which no ready market 

exists may differ significantly from the value that would be used had a ready market for the security existed, and the 

differences could be material. 

In the event that a price or valuation estimate accepted by the Company in relation to an underlying investment 

subsequently proves to be incorrect or varies from the final published price, no adjustment to any previously published 

Net Asset Value will be made. 

The Company will pay redemption proceeds in connection with the operation of the Redemption Facility, as well as 

calculate fees, on the basis of these net asset valuations. As a result, if a Shareholder redeems Shares from the Company, 

subsequent valuation adjustments to Fund Investments may occur and there is a risk that the redeeming Shareholder 

may receive an amount upon redemption which is greater or less than the amount such Shareholder would have been 

entitled to receive on the basis of the adjusted valuation. In such event, the Hold-Back Amount related to such redemption 

may be adjusted accordingly. In the event that the Hold-Back Amount is insufficient to cover any adjustment, or an 

adjustment occurs subsequent to complete payment to a redeeming Shareholder, the remaining Shareholders will be 

likely to bear the risk of such valuation adjustments. More specifically, to the extent such subsequently adjusted 

valuations from a Fund Investment adversely affect the Company’s Net Asset Value, or to the extent the Company is 

required to reimburse a Fund Investment for any overpayment with respect to redemption proceeds paid by the Fund 

Investment to the Company, the Company will be adversely affected to the benefit of Shareholders who had previously 

redeemed pursuant to the Redemption Facility. Conversely, any increases in the Net Asset Value per Share resulting from 

such subsequently adjusted valuations generally will be entirely for the benefit of current Shareholders of the and to the 

detriment of Shareholders who redeemed pursuant to the Redemption Facility at a Net Asset Value per Share lower than 

the adjusted amount. Finally, the fees payable to the Investment Manager, and the management and performance fees 

payable to the External Investment Advisor of a Fund Investment, generally will not be reduced or subject to rebate unless 

adjusted as the result of an audit. 

Fund Investments may include “side pockets” which the External Investment Advisor may not mark to market, but instead 

value at cost until realisation. To the extent such investments are held in a Fund Investment but not realised until after a 

Shareholder has redeemed Shares pursuant to the Redemption Facility, the redeeming Shareholder may not benefit from 

a “side pocket’s” full realised value, or conversely, the remaining Shareholders may bear some or all of the losses on a 

“side pocket” investment. 

Transactions between the Company and Other Clients may occur on a trade date which does not correspond to a valuation 

date with respect to the Fund Investment being traded. The Investment Manager may book such transactions as occurring 

on a particular trade date even though the relevant administrator or third party manager of the Fund Investment being 

traded may not settle such transaction until a later trade date. Thus, such transactions may occur at Net Asset Values that 

are estimated by the Investment Manager, the relevant administrator or the third party manager of the securities being 

traded, and the Investment Manager will then reconcile the differences between estimated and actual net asset values at 

a later date. 

RELIANCE ON VALUATION INFORMATION FROM EXTERNAL INVESTMENT ADVISORS AND THIRD PARTIES 

In order to value the assets and liabilities of the Company, the Company and/or the Investment Manager will rely on 

information provided by External Investment Advisors, their agents and/or outside parties. Such persons may provide 

inaccurate, incomplete, not current or otherwise unreliable information. Furthermore, some investments (for example, 

certain derivatives, distressed investments and other structured instruments), and as a result some Fund Investments, 

are complex and thus difficult to value. For these Fund Investments in particular, the Company places principal reliance 

on underlying Fund Investments, their administrators, auditors, general partners or investment advisors for net asset 

value and other valuations, and may not be able to independently assess the accuracy of such valuations. The Company 

has implemented procedures that endeavour to safeguard against the use of inaccurate information, but no assurances 

can be given that those procedures will identify material inaccuracies or permit the Company to avoid consequent losses. 

To the extent the information received by the Company is inaccurate or unreliable, the valuation of the Company’s assets 

and liabilities may be inaccurate. 

Furthermore, when market quotations may not be available, investments such as complex or unique financial instruments 

may be priced pursuant to a number of methodologies, such as computer-based analytical modelling or individual 

security evaluations. These methodologies generate approximations of market values, and there may be significant 

professional disagreement about the best methodology for a particular type of financial instrument or different 

methodologies that might be used under different circumstances. In the absence of an actual market transaction, reliance 

on such methodologies is essential, but may introduce significant variances in the ultimate valuation of a Fund 

Investment. 

Furthermore, the External Investment Advisors will generally face a conflict of interest in providing valuations to the 

Company since such valuations will affect the compensation of the External Investment Advisors. 

OWNERSHIP OF UNDERLYING INVESTMENTS 

When deciding whether to invest, or continue investing in, a Fund Investment the Investment Manager carries out no 

independent investigation of the ownership of the assets of the Fund Investment or the administrator to the Fund Investment. 

13

Instead the Investment Manager relies on audited accounts and other financial information provided to it by the Fund 

Investment. In the event that a Fund Investment does not own or there is a defect in the ownership of the underlying 

investments this could have an adverse impact on the ability of the Company to achieve its investment objective. 

DISPOSITION OF FUND INVESTMENTS 

In connection with the disposition of a Fund Investment, the Company may be required to make representations about the 

business and financial affairs of the relevant Fund Investment typical of those made in connection with the sale of any 

security or business. The Company may also be required to indemnify the purchasers of such Fund Investment to the 

extent that any such representation turns out to be inaccurate. These arrangements may result in contingent liabilities, 

which may ultimately have to be funded by the Company. 

INVESTMENT IN CONDUIT ENTITIES 

A substantial portion of the Company’s assets may be invested in one or more conduit funds, in which other investment 

funds and accounts managed by the Investment Manager also may invest. The primary purpose of a conduit fund 

structure is to consolidate the investments of clients of the Investment Manager or its affiliates into a single investment in 

one or more underlying Fund Investments. The Investment Manager believes that the Company’s investment through a 

conduit fund could enhance the Investment Manager’s ability to negotiate more advantageous terms and the structure 

should provide the Company a certain degree of efficiency and other potential benefits. However, since the investments in 

a conduit fund are commingled with investments from Other Clients, the specific terms and rights, including redemption 

rights, associated with the Company’s investment in a conduit fund will be aggregated with those of Other Clients holding 

investments in that conduit fund, rather than being tracked individually for the Company and each participating Other 

Client. Certain of the terms negotiated may have inherent limitations which may not result in all investors in such conduit 

fund, depending on a variety of circumstances, benefiting equally or at all from such terms. Generally, economic 

characteristics, such as expenses specific to a conduit fund, investment returns and fee rebates, are allocated among the 

funds invested in a conduit fund on a pro rata basis. However, certain economic characteristics, such as redemption fees, 

may be applied specifically to the Company or Other Clients when investment decisions are specific to the Company or 

Other Clients rather than being a consequence of change in the relevant portfolio manager’s assessment of the 

investment merits of the conduit fund’s investment(s). It should be noted that investment terms, restrictions and returns 

may be different for a particular investor in a conduit fund were it to invest in a Fund Investment directly rather than 

participating in a conduit fund. In some cases either the Company or Other Clients may not be eligible or permitted to 

invest in any particular conduit fund. The Company’s ability to redeem or liquidate from an investment could also be 

affected by the timing of its redemptions from any such conduit fund, and the investment activities of Other Clients. For 

example, if Other Clients redeem from a conduit fund, the remaining investors in the conduit fund, which may include the 

Company, may be subject to a longer lock-up or redemption period than if such remaining investors had invested directly 

in the conduit’s Fund Investment. Similarly, each investor in a conduit fund, will bear its pro rata share of expenses of 

such conduit fund, including any extraordinary expenses incurred in such conduit fund. It is possible that investors in a 

conduit fund, including the Company, could be subject to additional expenses or liabilities as a result of their investment in 

a conduit fund, as their assets will be commingled and creditors of a conduit fund may enforce claims against all assets of 

such conduit fund. 

In addition, the Investment Manager may, through a conduit fund or otherwise, specially allocate capacity with respect to 

some Fund Investments to clients or investors who desire increased exposure to certain Fund Investments. These 

allocations may be from capacity commitments obtained by the Investment Manager on behalf of its clients, and may be 

offered on fee, liquidity and other terms different from those applicable to an investment in the Company. 

HEDGING TRANSACTIONS 

External Investment Advisors may utilise financial instruments such as forward contracts, options and interest rate 

swaps, caps and floors to seek to hedge against declines in the values of portfolio positions (measured in terms of their 

base currencies) as a result of changes in currency exchange rates, certain changes in the equity markets and market 

interest rates and other events. 

The success of an External Investment Advisor’s hedging strategy will depend, in part, upon such External Investment Advisor’s 

ability to assess correctly the relationship between the performance of the instruments used in the hedging strategy and the 

performance of the portfolio investments being hedged. Since the characteristics of many securities change as markets 

change or time passes, the success of an External Investment Advisor’s hedging strategy will also be subject to such External 

Investment Advisor’s ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. While the 

External Investment Advisors may enter into hedging transactions to seek to reduce risk, such transactions may result in a 

poorer overall performance for the Company than if they had not engaged in such hedging transactions. The External 

Investment Advisors may not seek to establish a perfect correlation between the hedging instruments utilised and the portfolio 

holdings being hedged. Such an imperfect correlation may prevent a Fund Investment (and therefore the Company) from 

achieving the intended hedge or expose the Fund Investment (and therefore the Company) to a risk of loss. The External 

Investment Advisors may not hedge against a particular risk because it does not regard the probability of the risk occurring to 

be sufficiently high as to justify the cost of the hedge, or because it does not foresee the occurrence of the risk. It may not be 

possible for the External Investment Advisors to hedge against a change or event at attractive prices or at a price sufficient to 

protect the assets of the Company from the decline in value of the portfolio positions anticipated as a result of such change. In 

addition, it may not be possible to hedge against certain risks at all. 

14

CURRENCY HEDGING 

Where a Fund Investment offers shares denominated in currencies other than the US Dollar, the Fund Investment may 

endeavour to hedge its exposure to such currency. The Company will have no control over the manner in which such Fund 

Investment accounts for the profits, losses, and expenses associated with such hedging activities. It is possible that there 

could be cross liability among all classes of shares of such Fund Investment, and thus, the costs associated with such 

hedging activities may be allocated to the class of shares held by the Company, even when such hedging activities do not 

directly relate to such class in the event that the assets of the relevant class are insufficient to meet such losses and 

expenses. As a result, the performance of such Fund Investment (and, thus, the performance of the Company) could be 

adversely affected. 

COUNTERPARTY ARRANGEMENTS 

In selecting counterparties to transactions in which the Company will engage, including but not limited to, currency 

hedging transactions and borrowings under lines of credit it may have in place, the Investment Manager has the authority 

to and will consider a variety of factors in addition to the price associated with such transactions. Considerations may 

include, but are not limited to: (a) the ability of the counterparty to (i) provide other products and services, (ii) accept 

certain types of collateral and provide multiple products or services linked to such collateral or (iii) execute transactions 

efficiently, or (b) the counterparty’s facilities, reliability and financial responsibility. Such products and services generally 

may benefit both the Company and Other Clients, although not necessarily in relation to their relative participation in a 

particular transaction. If the Investment Manager determines that the counterparty’s transaction costs are reasonable 

overall, the Company may incur higher transaction costs than it would have paid had another counterparty been used. The 

Investment Manager will periodically re-evaluate its assessment of the selected counterparty. Subject to the any 

applicable regulatory frameworks and the terms of the Company’s governing documents, counterparties to such 

transactions may be affiliates of, or service providers to, the Company or the Investment Manager, and thus such 

transactions may be subject to a number of potential conflicts of interest. 

COUNTERPARTY RISK 

To the extent that the Company engages in principal transactions, including, but not limited to, forward currency 

transactions, swap transactions and the purchase and sale of bonds and other fixed income securities, it must rely on the 

creditworthiness of its counterparties under such transactions. In certain instances, the credit risk of a counterparty is 

increased by the lack of a central clearing house for certain transactions including swap contracts. In the event of the 

insolvency of a counterparty, the Company may not be able to recover its assets in full or at all, during the insolvency 

process. Counterparties to investments may have no obligation to make markets in such investments and may have the 

ability to apply essentially discretionary margin and credit requirements. Similarly, Fund Investments will be subject to the 

risk of bankruptcy of, or the inability or refusal to perform with respect to such investments by, the counterparties with 

which they deal. 

MATERIAL, NON-PUBLIC INFORMATION 

From time to time, the Investment Manager may come into possession of confidential or material, non-public information 

that would limit the ability of the Company to acquire or dispose of investments held by the Company. The Company’s 

investment flexibility may be constrained as a consequence of the inability of the Investment Manager to use such 

information for investment purposes. Moreover, External Investment Advisors may acquire confidential or material, 

non-public information or be restricted from initiating transactions in certain securities or liquidating or selling certain 

investments at a time when an External Investment Advisor would otherwise take such an action. 

INTEREST RATE FLUCTUATIONS 

The prices of several securities which may be held by the Company directly or indirectly through Fund Investments tend to 

be sensitive to interest rate fluctuations and unexpected fluctuations in interest rates could cause the corresponding 

prices of the long and short portions of a position to move in directions which were not initially anticipated. Interest rates 

are highly sensitive to factors beyond the Investment Manager’s and External Investment Advisors’ control, including, 

among others, governmental monetary and tax polices and domestic and international economic and political conditions. 

In the event of a significant rising interest rate environment and/or economic downturn, loan defaults may increase and 

result in credit losses that may be expected to affect adversely the Company’s and the Fund Investments’ liquidity and 

operating results. In addition, interest rate increases generally will increase the interest carrying costs to the Company 

and Fund Investments of borrowed securities and leveraged investments or the cost of leverage for the Company and the 

Fund Investments. Furthermore, to the extent that interest rate assumptions underlie the hedging of a particular position, 

fluctuations in interest rates could invalidate those underlying assumptions and expose the Fund Investments and the 

Company to losses. 

INCREASING SIZE AND MATURITY OF HEDGE FUND MARKETS 

The identification of attractive investment opportunities is difficult and involves a high degree of uncertainty. The growth in 

the number of hedge funds and assets managed by such funds, together with the increase in other market participants 

(such as the proprietary desks of investment banks) may reduce the opportunities available for the Investment Manager 

and the External Investment Advisors to make certain investments or adversely affect the terms upon which investments 

can be made. This could reduce the ability of the Company to generate returns and/or reduce the quantum of these 

returns. Historic opportunities for some or all hedge fund strategies may be eroded over time whilst structural and/or 

15

cyclical factors may reduce opportunities for the Investment Manager and the External Investment Advisors temporarily or 

permanently. 

In addition, it is possible that the Company may have exposure to the same investment or securities through more than 

one Fund Investment. Furthermore, the applicable External Investment Advisors could take opposing positions with 

respect to such securities and thus the Company’s exposure to such underlying security or investment could move against 

each other. 

INFORMATION TECHNOLOGY SYSTEMS 

The Company is dependent on the Investment Manager and the External Investment Advisors for investment 

management, operational and financial advisory services. The Company is also dependent on the Investment Manager for 

certain management services as well as back-office functions. The Investment Manager and the External Investment 

Advisors depend on information technology systems in order to assess investment opportunities, strategies and markets 

and to monitor and control risks for the Company and Fund Investments. Information technology systems are also used to 

trade in the underlying investments of the Fund Investments. 

It is possible that a failure of some kind which causes disruptions to these information technology systems could 

materially limit the Investment Manager’s or an External Investment Advisors’ ability to adequately assess and adjust 

investments, formulate strategies and provide adequate risk control. Any such information technology related difficulty 

could harm the performance of the Company. 

Further, failure of the back office functions of the Investment Manager to process trades in a timely fashion could 

prejudice the investment performance of the Company. 

SPECIFIC RISK FACTORS RELATING TO ABSOLUTE RETURN STRATEGIES 

The Company’s capital will primarily be allocated to External Investment Advisors pursuing a range of Absolute Return 

Strategies. Such strategies may involve investment in high risk securities including low credit quality and distressed 

securities, which may be illiquid, and use of highly speculative investment techniques including short-selling, investing in 

emerging market securities, high leverage, futures, swaps and notional principal contracts, currency speculation, shortsales 

and uncovered option transactions. 

CONCENTRATION OF INVESTMENT PORTFOLIO 

Because a Fund Investment may have the ability to concentrate its investments by investing an unlimited amount of its 

assets in a single issuer, sector, market, industry, strategy, country or geographic region, the overall adverse impact on 

such Fund Investment, and correspondingly on the Company, of adverse movements in the value of the securities of a 

single issuer, sector, market, industry, strategy, country or geographic region will be considerably greater than if such 

Fund Investment were not permitted to concentrate its investments to such an extent. By concentrating in a specific 

issuer, sector, market, industry, strategy, country or geographic region, a Fund Investment will be subject to the risks of 

that issuer, sector, market, industry, strategy, country or geographic region, such as rapid obsolescence of technology, 

sensitivity to regulatory changes, minimal barriers to entry and sensitivity to overall market swings, and may be more 

susceptible to risks associated with a single economic, political or regulatory circumstance or event than a more 

diversified portfolio might be. Moreover, a number of Fund Investments might accumulate positions in the same or related 

investment at the same time, compounding such risk. In addition, the Company is permitted to make direct investments, 

including, without limitation, in single security positions. It is possible for the Company to have a portion of its assets 

concentrated in a single issuer or security, and thus be subject to a similar concentration risk. 

SHORT-SELLING 

The Fund Investments may engage in short-selling. Short-selling involves selling securities which may or may not be 

owned and borrowing the same securities for delivery to the purchaser, with an obligation to replace the borrowed 

securities at a later date. Short-selling necessarily involves certain additional risks. However, if the short seller does not 

own the securities sold short (an uncovered short sale), the borrowed securities must be replaced by securities purchased 

at market prices in order to close out the short position, and any appreciation in the price of the borrowed securities 

would result in a loss. Uncovered short sales expose the Fund Investments to the risk of uncapped losses until a position 

can be closed out due to the lack of an upper limit on the price to which a security may rise. Purchasing securities to close 

out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss. There is the 

risk that the securities borrowed by a Fund Investment in connection with a short-sale must be returned to the securities 

lender on short notice. If a request for return of borrowed securities occurs at a time when other short-sellers of the 

security are receiving similar requests, a “short squeeze” can occur, and the Fund Investment may be compelled to 

replace borrowed securities previously sold short with purchases on the open market at the most disadvantageous time, 

possibly at prices significantly in excess of the proceeds received in originally selling the securities short. 

LOW CREDIT QUALITY SECURITIES 

Fund Investments may invest in particularly risky investments that also may offer the potential for correspondingly high 

returns. As a result, a Fund Investment may lose all or substantially all of its investment in any particular instance, which 

would have an adverse effect on the Company. In addition, there is no minimum credit standard which is a prerequisite to 

a Fund Investment’s acquisition of any security, and the debt securities in which a Fund Investment is permitted to invest 

16

will be less than investment grade and may be considered to be “junk bonds”. Securities in the non-investment grade 

categories are subject to greater risk of loss of principal and interest than higher rated securities and may be considered 

to be predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. They may also be 

considered to be subject to greater risk than securities with higher ratings in the case of deterioration of general 

economic conditions. Adverse publicity and negative investor perception about these lower-rated securities, whether or 

not based on an analysis of the fundamentals with respect to the relevant issuers, may contribute to a decrease in the 

value and liquidity of such securities. In addition, because investors generally perceive that there are greater risks 

associated with non-investment grade securities, the yields and prices of such securities may fluctuate more than those 

for higher-rated securities. The market for non-investment grade securities may be smaller and less active than that for 

higher-rated securities, which may adversely affect the prices at which these securities can be sold. In addition, Fund 

Investments may invest in debt securities which may be unrated by a recognised credit rating agency which are subject to 

greater risk of loss of principal and interest than higher-rated debt securities. 

Securities in which a Fund Investment may invest may rank junior to other outstanding securities and obligations of the 

issuer, all or a significant portion of whose debt securities may be secured by substantially all of the issuer’s assets. 

Moreover, Fund Investments may invest in debt securities which are not protected by financial covenants or limitations on 

additional indebtedness. Fund Investments may therefore be subject to credit, liquidity and interest rate risks. In addition, 

evaluating credit risk for debt securities involves uncertainty because credit rating agencies throughout the world have 

different standards, making comparison across countries difficult. Also, the market for credit spreads is often inefficient 

and illiquid, making it difficult to hedge such risk or to calculate accurately discounting spreads for valuing financial 

instruments. 

DISTRESSED SECURITIES 

Fund Investments may invest in securities of issuers in weak financial condition, experiencing poor operating results, 

having substantial financial needs or negative net worth, facing special competitive or product obsolescence problems, or 

issuers that are involved in bankruptcy or reorganisation proceedings. Investments of this type involve substantial 

financial and business risks that can result in substantial or total losses. Among the problems involved in investments in 

troubled issuers is the fact that frequently there may be a lack of information as to the conditions of such issuers. Such 

investments also face the risk of the effects of applicable federal and state bankruptcy laws. The market prices of such 

securities are also subject to abrupt and erratic market movements and above average price volatility and the spread 

between the bid and offer prices of such securities may be greater than normally expected. It may take a number of years 

for the market price of such securities to reflect their intrinsic value. Such securities are also more likely to be subject to 

trading restrictions or suspensions. It is anticipated that some of the portfolio securities held by Fund Investments may 

not be widely traded, and that a Fund Investment’s position in such securities may be substantial in relation to the market 

for those securities. 

“SPECIAL SITUATIONS” AND/OR “EVENTS” 

Fund Investments may invest in companies involved in (or which are the target of) acquisition attempts or takeover or 

tender offers or mergers or companies involved in work-outs, liquidations, demergers, spin-offs, reorganisations, 

bankruptcies, share buy-backs and other capital market transactions or “special situations”. The level of analytical 

sophistication, both financial and legal, necessary for a successful investment in companies experiencing significant 

business and financial distress is unusually high. There is no assurance that the Fund Investments will correctly evaluate 

the nature and magnitude of the various factors that could, for example, affect the prospects for a successful 

reorganisation or similar action. There exists the risk that the transaction in which such business enterprise is involved 

either will be unsuccessful, take considerable time or will result in a distribution of cash or a new security the value of 

which will be less than the purchase price of the security or other financial instrument in respect of which such 

distribution is received. Similarly, if an anticipated transaction does not in fact occur, or takes more time than anticipated, 

the Fund Investment may be required to sell its investment at a loss. As there may be uncertainty concerning the outcome 

of transactions involving financially troubled companies in which Fund Investments may invest, there is potential risk of 

loss by a Fund Investment of its entire investment in such companies. In some circumstances, investments may be 

relatively illiquid making it difficult to acquire or dispose of them at the prices quoted on the various exchanges. 

Accordingly, a Fund Investment’s ability to respond to market movements may be impaired and consequently such Fund 

Investment may experience adverse price movements upon liquidation of its investments which may in turn affect 

adversely the Company. Settlement of transactions may be subject to delay and administrative uncertainties. An 

investment in securities of a company involved in bankruptcy or other reorganisation and liquidation proceedings 

ordinarily remains unpaid unless and until such company successfully reorganises and/or emerges from bankruptcy, and 

Fund Investments may suffer a significant or total loss on any such investment during the relevant proceedings. 

Investments in securities of companies in a special situation or otherwise in distress require active monitoring by the 

investment manager of such companies and may, at times, require active participation by the Fund Investments (including 

by way of board membership or corporate governance oversight), in the management or in the bankruptcy or 

reorganisation proceedings of such companies. Such involvement may restrict a Fund Investment’s ability to trade in the 

securities of such companies. It may also prevent such Fund Investment from focusing on matters relating to other 

existing investments or potential future investments of the Fund Investment. In addition, as a result of its activities, a Fund 

Investment may incur additional legal or other expenses, including, but not limited to, costs associated with conducting 

17

proxy contests, public filings, litigation expenses and indemnification payments to the investment manager or persons 

serving at the investment manager’s request on the boards of directors of companies in which such Fund Investment has 

an interest. It should also be noted that any such board representatives have a fiduciary duty to act in the best interests of 

all shareholders, and not simply the Fund Investment, and thus may be obligated at times to act in a manner that is 

adverse to the Fund Investment’s interests. The occurrence of any of the above events may have a material adverse effect 

on the performance of the Fund Investments and consequently on the performance of the Company. 

ILLIQUID INVESTMENTS AND MARKET CHARACTERISTICS 

Investments held by Fund Investments may be or become illiquid which may affect the ability of the Fund Investments to 

exit such investments, the returns made by those Fund Investments and in turn the Company. Such illiquidity may result 

from various factors, such as the nature of the instrument being traded, or the nature and/or maturity of the market in 

which it is being traded, the size of the position being traded, or because there is no established market for the relevant 

securities. Even where there is an established market, the price and/or liquidity of instruments in that market may be 

materially affected by certain factors. Securities and commodity exchanges typically have the right to suspend or limit 

trading in any instrument traded on that exchange. It is also possible that a governmental authority may suspend or 

restrict trading on an exchange or in particular securities or other instruments traded. A suspension could render it 

difficult for the Fund Investments to liquidate positions and thereby might expose the Company to losses. 

The market prices, if any, for such illiquid investments tend to be volatile and may not be readily ascertainable and the 

relevant Fund Investments may not be able to sell them when it desires to do so or to realise what it perceives to be their 

fair value in the event of a sale. Because of valuation uncertainty, the fair values of such illiquid investments reflected in 

the net asset value of a Fund Investment (and thereby in the Net Asset Value of the Company) attributable to such 

investment may not necessarily reflect the prices that would actually be obtained by the Fund Investment when such 

investments are realised. If the realisation occurs at a price that is significantly lower than the Net Asset Value 

attributable to such investment, the Company will suffer a loss. Moreover, securities in which the Fund Investments may 

invest include those that are not listed on a stock exchange or traded in an over-the-counter market. As a result of the 

absence of a public trading market for these securities, they may be less liquid than publicly traded securities. The size of 

the Fund Investments’ positions may magnify the effect of a decrease in market liquidity for such instruments. Changes in 

overall market leverage, deleveraging as a consequence of a decision by the counterparties with which the Fund 

Investments enter into repurchase/reverse repurchase agreements or derivative transactions to reduce the level of 

leverage available, or the liquidation by other market participants of the same or similar positions, may also adversely 

affect the Fund Investments’ portfolios. 

The sale of restricted and illiquid securities often requires more time and results in higher brokerage charges or dealer 

discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges 

or in the over-the-counter markets. Fund Investments may encounter substantial delays in attempting to sell non-publicly 

traded securities. Although these securities may be resold in privately negotiated transactions, the prices realised from 

these sales could be less than those originally paid by the Fund Investments. In some cases, Fund Investments may be 

contractually prohibited from disposing of investments for a specified period of time. Restricted securities may sell at a 

price lower than similar securities that are not subject to restrictions on resale. Further, companies whose securities are 

not publicly traded are not subject to the disclosure and other investor protection requirements which would be applicable 

if their securities were publicly traded. 

In addition, Fund Investments themselves may be or become illiquid, their marketability may be restricted and the 

realisation of investments from them may take a considerable time and/or be costly, in particular because Fund 

Investments may have restrictions that allow redemptions only at specific infrequent dates with considerable notice 

periods, and apply lock-ups and/or redemption fees. The Company’s ability to withdraw monies from or invest monies in 

Fund Investments with such restrictions will be limited and such restrictions will limit the Company’s flexibility to 

reallocate such assets among Fund Investments. In addition, Fund Investments may have the ability to temporarily 

suspend the right of their investors to redeem their investment during periods of exceptional market conditions. It may 

therefore be difficult for the Company to sell or realise its investments in the Fund Investments in whole or in part. In 

addition, liquidity may be subject to commitments made by the Investment Manager or the External Investment Advisors 

as to the frequency of redemptions and/or length of lock-up periods to secure capacity with such Fund Investments. 

In addition, the use of leverage by the Company may compound the risks associated with liquidity of investment assets, as 

the Company must maintain a certain degree of liquidity, based on its leveraged position, in order to service its debt. 

Failure to maintain such necessary liquidity may materially adversely affect the Company. 

NON-US EXCHANGE RISK EXPOSURE 

Although Fund Investments are typically denominated in US Dollars, certain Fund Investments may invest in securities 

denominated, and may receive a portion of their income and gains, in currencies other than the US Dollar. A reduction in 

the value of such other currencies relative to the US Dollar prior to conversion into US Dollars, as applicable, would 

adversely affect the net asset value of the Fund Investment and correspondingly, the Net Asset Value of the Company. The 

Company does not expect to hedge the exchange exposure related to any Fund Investments. To the extent that the 

External Investment Advisers themselves seek to hedge non-US exchange risk exposure, they may not be able to do so. 

See “Risks relating to the Investment Strategy — Currency hedging”. Also see “Risks relating to an investment in the 

18

Shares — US Dollar exchange rate fluctuations” for additional risks related to Shares that are not denominated in 

US Dollars. 

LEVERAGING BY FUND INVESTMENTS 

Fund Investments may engage in various forms of leverage, and the Company does not limit the use of leverage by 

individual Fund Investments or Fund Investments in the aggregate. Leverage can be employed in a variety of ways 

including direct borrowing, margining (an amount of cash or eligible securities an investor deposits with a broker when 

borrowing to buy securities), short selling and the use of futures, warrants, options and other derivative products. To the 

extent that a Fund Investment uses leverage, the value of its net assets will tend to increase or decrease at a greater rate 

than if no leverage were employed. If income and appreciation on investments made with borrowed funds are less than 

the required interest payments on the borrowings, the value of a Fund Investment’s (and therefore the Company’s) net 

assets will decrease. Accordingly, any event which adversely affects the value of an investment by a Fund Investment 

would be magnified to the extent that such investment is leveraged. Leverage has a similar effect on investments 

themselves, to the extent the issuer is leveraged, and can also affect their cash flow and operating results. 

The cumulative effect of the use of leverage by Fund Investments in a market that moves adversely to such Fund 

Investments could result in a substantial loss to the Company which would be greater than if the Fund Investments were 

not leveraged. As a result, if the Company’s losses with respect to any Fund Investment were to exceed the amount of 

capital invested in that Fund Investment, the Company could lose its entire investment. Leverage increases the risk and 

volatility of Fund Investments and, as a consequence the Company. To the extent that the External Investment Advisors or 

Fund Investments borrow funds, the rates at which they can borrow will affect their returns. In the event of a sudden, 

precipitous drop in value of a Fund Investments’ assets, the Fund Investment might not be able to liquidate assets quickly 

enough to repay its borrowings, further magnifying the losses incurred by the Fund Investment, and therefore the 

Company. 

In addition, the Company itself may enter into leverage transactions. Leverage transactions by the Company would be in 

addition to any leverage transactions of Fund Investments and is not limited by the amount, if any, by which Fund 

Investments are leveraged or by leverage incurred by the Company in connection with its currency hedging transactions, if 

any. 

USE OF FINANCING ARRANGEMENTS BY FUND INVESTMENTS 

A number of Fund Investments depend upon the availability of credit to finance their investment strategies. The prime 

brokers, banks and dealers that may provide financing to Fund Investments can apply essentially discretionary margin or 

other valuation policies. Changes by financing providers to these policies, or the imposition of other credit limitations or 

restrictions, may result in margin calls, loss of financing, forced liquidation of positions at disadvantageous prices or 

termination or cross defaults of transactions with the same or other dealers. These adverse effects may be compounded 

in the event that such limitations or restrictions are imposed suddenly and/or by multiple dealers or counterparties 

around the same time. 

COMMODITY AND FINANCIAL FUTURES CONTRACTS 

Fund Investments may invest in commodity and financial futures contracts and in options thereon. Commodity and 

financial markets are highly volatile because of the low margin deposits normally required in futures trading, and because 

a high degree of leverage is typical of a futures trading account. As a result, a relatively small price movement in a futures 

contract may result in substantial losses to the investor. In addition, commodity exchanges may limit fluctuations in 

commodity futures contract prices during a single day and thus during a single trading day no trades may be executed at 

prices beyond the “daily limit”. Once the price of a futures contract for a particular commodity has increased or decreased 

by an amount equal to the daily limit, positions in the commodity can be neither taken nor liquidated unless managers are 

willing to effect trades at or within the limit, which may hinder the ability of a Fund Investment to trade. 

The profitability of such an investment depends on the ability of the portfolio manager to analyse correctly the commodity 

markets, which are influenced by, among other things, changing supply and demand relationships, weather, changes in 

interest rates, trade policies, world political and economic events, and other unforeseen events. Such events could result 

in large market movements and volatile market conditions and create the risk of significant loss. A variety of possible 

actions by various government agencies can also inhibit profitability or can result in loss. In addition, activities by the 

major power producers can have a profound effect on spot prices which can, in turn, substantially affect derivative prices, 

as well as the liquidity of such markets. Moreover, investments in commodity and financial futures and options contracts 

involve additional risks including, without limitation, leverage (margin is usually only 5-15 per cent. of the face value of the 

contract and exposure can be nearly unlimited). The CFTC and futures exchanges have established limits referred to as 

“speculative position limits” on the maximum net long or net short position which any person may hold or control in 

particular commodity or financial futures contracts. All of the positions held by all accounts owned or controlled by a Fund 

Investment and its External Investment Advisor will be aggregated for the purposes of determining compliance with 

position limits. It is possible that positions held by the Fund Investment may have to be liquidated in order to avoid 

exceeding such limits. Such modification or liquidation, if required, could adversely affect the operations and profitability 

of the Fund Investment. 

19

FUTURES TRANSACTIONS 

Fund Investments may invest in commodity futures contracts and in options thereon in a variety of countries and 

exchanges including those in less established markets. This is the case even if the exchange is formally “linked” to a more 

established exchange, whereby a trade executed on one exchange liquidates or establishes a position on the other 

exchange. The activities of such exchanges, including the execution, delivery and clearing of transactions on such an 

exchange may be subject to a lesser degree of control and enforcement than more established markets. Moreover, such 

laws or regulations will vary depending on the country in which the transaction occurs. In addition, funds received from 

Fund Investments to margin futures transactions may not be provided the same protections as funds received to margin 

futures transactions on established exchanges. 

FAILURE OF FUTURES COMMISSION MERCHANTS 

Under the US Commodity Exchange Act, futures commission merchants are required to maintain customers’ assets in a 

segregated account. Such requirements may also be found in other jurisdictions in which Fund Investments are made. To 

the extent that a Fund Investment engages in futures and options contract trading and the futures commission merchants 

with whom the Fund Investment maintains accounts fail to so segregate the assets of the Fund Investment, the Fund 

Investment will be subject to a risk of loss in the event of the bankruptcy of any of its futures commission merchants. In 

certain circumstances, the Fund Investment might be able to recover, even in respect of property specifically traceable to 

the Fund Investment, only a pro rata share of all property available for distribution to a bankrupt futures commission 

merchant’s customers. 

OPTION TRANSACTIONS 

Fund Investments may engage in option transactions. The purchase or sale of an option involves the payment or receipt of 

a premium payment by the investor and the corresponding right or obligation, as the case may be, to either purchase or 

sell the underlying security or other instrument for a specific price at a certain time or during a certain period. Purchasing 

options involves the risk that the underlying instrument does not change price in the manner expected, so that the option 

expires worthless and the investor loses its premium. Selling options, on the other hand, involves potentially greater risk 

because the investor is exposed to the extent of the actual price movement in the underlying security in excess of the 

premium payment received. The writer of a covered call option also gives up the opportunity for gain on the underlying 

security above the exercise price of the call. The writer of a call option that is not covered assumes the additional risk that 

it will be required to satisfy its obligation to the buyer of the call option by making an open-market purchase of the 

underlying securities on unfavourable terms. Over-the-counter options also involve counterparty solvency risk. 

OFF-EXCHANGE TRANSACTIONS 

Fund Investments may enter into off-exchange transactions, including spot, forward and option contracts. They may also 

engage in swap transactions, consisting primarily of an exchange of a fixed price for an average floating price of a set 

quantity of a particular security or commodity or fixed income instrument over an agreed period of time and even 

purchase cash securities commodities if market conditions are believed to be warranted. Off-exchange contracts are not 

regulated and such contracts are not guaranteed by an exchange or clearing house. Consequently, trading in these 

contracts is subject to more risks than future or options trading on regulated exchanges, including, but not limited to, the 

risk that a counterparty will default on an obligation. The counterparties will typically not be required to post collateral. 

Off-exchange transactions are also subject to legal risks, such as the legal incapacity of counterparty to enter into a 

particular contract or the declaration of a class of contracts as being illegal or unenforceable. 

STOCK INDEX OPTIONS 

Fund Investments may purchase and sell call and put options on stock indices listed on exchanges or traded in the 

over-the-counter market for the purpose of realising their investment objectives or for the purpose of hedging their 

portfolios. Successful use by a Fund Investment of options on stock indices is subject to the relevant External Investment 

Advisor’s ability to predict correctly movements in the direction of a relevant stock market generally or of a particular 

industry or market segment. This requires different skills and techniques than predicting changes in the price of 

individual stocks. The effectiveness of purchasing or writing stock index options for hedging purposes will depend upon 

the extent to which price movements in the Fund Investment’s portfolio correlate with price movements of the stock 

indices selected. 

DERIVATIVE INSTRUMENTS 

In addition to exchange-traded commodity and financial futures contracts, options thereon and other option and index 

option transactions, certain of the risks of which are described above, Fund Investments may utilise other 

over-the-counter derivative instruments including, but not limited to, futures, forwards, swaps, options, contracts for 

differences, caps, floors, collars and other instruments which derive their value or payment streams by reference to 

commodities, currencies, interest rates or other financial instruments. These instruments can be highly volatile and 

expose investors to a high risk of loss. The low initial margin deposits normally required to establish a position in such 

instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small 

movement in the price of a contract or the underlying securities may result in a profit or a loss which is high in proportion 

to the amount of funds actually placed as initial margin and may result in further loss exceeding any margin deposited. 

In addition, such derivative instruments will likely be highly illiquid. Daily limits on price fluctuations and speculative 

position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses. It is 

20

possible that the Fund Investments will not be able to terminate derivative instruments prior to their expiration date or 

that the penalties associated with such a termination might impact the performance of a Fund Investment, and therefore 

the Company, in a material adverse manner. 

Furthermore, the use of derivative instruments involves certain special risks, including: (i) dependence on the underlying 

fund’s ability to predict movements in the price of underlying securities and movements in interest rates; (ii) when used 

for hedging purposes there may be an imperfect correlation between the returns on the derivative instruments used for 

hedging and the returns on the investments or market sectors being hedged; (iii) the fact that the skills needed to use 

these instruments may be different from those needed to select the underlying fund’s other investments and (iv) the 

possible impediments to effective portfolio management or the ability to meet repurchase requests or other short-term 

obligations attributable to the proportion of a Fund Investment’s assets segregated to cover its obligations. 

Certain derivative instruments are not traded on an exchange or subject to direct government regulation. Rather, these 

instruments, which may be bilateral and customised as to terms, are traded through an informal network of banks and 

other dealers, which have no obligation to make markets in these instruments and, in light of the unregulated nature of 

the agreements evidencing the transactions, can apply (and from time to time change) discretionary margin and credit 

requirements. Also, some instruments traded off market may have fewer market makers, wider spreads between their 

quoted bid and asked prices and lower trading volumes, resulting in comparatively greater price volatility and less liquidity 

than the securities of companies that have larger market capitalisations and/or that are traded on major stock, 

commodities, or options exchanges or the market in general. It may therefore be impossible to liquidate an existing 

position, to assess the value of a position or to assess the exposure to risk. 

Contractual asymmetries and inefficiencies can also increase risk, such as break clauses, whereby a counterparty can 

terminate a transaction on the basis of a certain reduction in net asset value of a Fund Investment, incorrect collateral 

calls or delays in collateral recovery. Derivative instruments also carry the risk of failure to perform by the counterparty to 

the transaction. The payment obligations with respect to derivative instruments are often based on a notional principal 

amount, which may result in a leveraged investment by the Fund Investments, with the attendant risks described above 

under “Leveraging by Fund Investments”. 

When a Fund Investment uses derivatives as an investment instrument rather than for hedging purposes, any loss on the 

derivative investment will not be offset by gains on another hedged investment. Therefore, such Fund Investment will be 

directly exposed to the risks of that derivative. While derivatives used for hedging purposes can reduce or eliminate 

losses, such use can also reduce or eliminate gains. 

The Fund Investments may also sell covered and uncovered options on securities and other assets. To the extent that such 

options are uncovered, a Fund Investment could incur an unlimited loss. Trading in derivatives markets may be 

unregulated or subject to less regulation than in other markets. Derivatives markets are, in general, relatively new 

markets and there are uncertainties as to how these markets will perform during periods of unusual price volatility or 

instability, market liquidity or credit distress. The Fund Investments could suffer substantial losses from their derivatives 

holdings in these or other situations. Moreover, the swaps market is a relatively new market and is largely unregulated. 

Documentation, clearance and settlement practices generally in the market have been the subject of regulatory and 

industry concerns. 

Where a Fund Investment utilises a derivative instrument on behalf of one or more classes of its shares, it is possible that 

there could be cross liability among all classes of shares of such Fund Investment. Thus, the Company may be exposed to 

counterparty risk with respect to a Fund Investment’s use of a derivative instrument even when the use of such derivative 

instrument does not directly relate to the class in which the Company has invested. 

LENDING PORTFOLIO SECURITIES 

Fund Investments may lend their portfolio securities to brokers, dealers and financial institutions. In general, these loans 

will be secured by collateral (consisting of cash, government securities or irrevocable letters of credit) maintained in an 

amount equal to at least 100 per cent. of the market value, determined daily, of the loaned securities. Fund Investments 

would be entitled to payments equal to the interest and dividends on the loaned security and could receive a premium for 

lending the securities. Lending portfolio securities would result in income to the Fund Investment, but could also involve 

certain risks in the event of the delay of return of the securities loaned or the default or insolvency of the borrower. 


Fund Investments are generally subject to counterparty risk with respect to the brokers, counterparties, clearing houses 

and exchanges with which they deal. Any default by one of these parties could result in material losses to a Fund 

Investment, and therefore the Company. The assets of Fund Investments held by brokers or counterparties are generally 

not held in segregated accounts, and accordingly, in the event of any such default a Fund Investment may only have the 

rights of a general creditor in the event any broker or counterparty dissolves or files for bankruptcy. In addition, the 

institutions, including brokerage firms and banks, with which a Fund Investment trades or invests may encounter financial 

difficulties that impair the operational capabilities or the capital position of such Fund Investment. Neither the Company 

nor the Investment Manager will have any control over the counterparties or brokers used by the Fund Investments. 

21

NEW ISSUE INVESTMENTS 

The rules of the United States National Association of Securities Dealers, Inc. (“NASD”) regulate securities firms’ activities 

related to the sale of “new issues” (as defined under applicable NASD rules) to investment funds if “restricted” persons 

(generally, people engaged in the securities industry) hold beneficial interests in such investment funds. As a result, to 

comply with NASD Rules, where a Fund Investment participates in new issues the Company may only invest in Fund 

Investments where restricted persons’ participation in the gains or losses from such investments is limited. Alternatively, 

the Company may, in the Investment Manager’s absolute discretion, elect not to participate in new issues. As a result, all 

of the Shareholders would be unable to participate in profits attributable to investments in new issues, even where certain 

Shareholders would not otherwise be so restricted. 

BROKERAGE COMMISSIONS AND TRANSACTION COSTS 

In selecting brokers or counterparties to effect portfolio transactions, Fund Investments will be likely to consider such 

factors as price, the ability to effect the transaction, the reliability and financial responsibility and any research products 

or services provided. Such products and services generally may be of benefit to the Fund Investment in question or to 

other clients of the relevant External Investment Advisor but may not directly relate to transactions executed on behalf of 

such Fund Investment. Accordingly, if the External Investment Advisor determines in good faith that the amount of 

commissions or transaction fees charged by the entity is reasonable in relation to the value provided, the relevant Fund 

Investments may pay an amount greater than that charged by another entity. Moreover, if an External Investment Advisor 

enters into “soft dollar” arrangements, there can be no assurance that such External Investment Advisor will comply with 

the safe harbour provided by Section 28(e) of the United States Securities Exchange Act of 1934, as amended (“Section 

28(e)”), which provides parameters for the use of soft or commission dollars to obtain “brokerage and research” services. 

Although disclosure of the use of “soft dollars” is generally sufficient to avoid legal risk under US federal law, there may 

still be legal risk to the External Investment Advisor under US state law if “soft dollars” are used to pay for services not 

covered under the Section 28(e) safe harbour. 

External Investment Advisors may use “soft dollars” to acquire a variety of research, brokerage and other investmentrelated 

services, for example, research on market trends, reports on the economy, industries, sectors and individual 

companies or issuers; credit analyses; technical and statistical studies and information; accounting and tax law 

interpretations; political analyses; reports on legal developments affecting Fund Investments; information on technical 

market actions; and financial and market database services. Some may acquire goods or services outside of Section 28(e) 

that others would otherwise be considered manager overhead. The use of “soft dollars” by External Investment Advisors 

to pay for items not covered under the Section 28(e) safe harbor creates a conflict of interest between the External 

Investment Advisor and the Fund Investment to the extent that such items benefits primarily or exclusively the External 

Investment Advisor or its other clients rather than the Fund Investment. In addition, the availability of non-monetary 

benefits not covered under the Section 28(e) safe harbor may influence the selection of brokers by the External Investment 

Advisor. These conflicts of interest may have a detrimental effect on the Fund Investment and ultimately the Company. 

PORTFOLIO TURNOVER 

Fund Investments may invest and trade their portfolio securities on the basis of certain short-term market considerations. 

Fund Investments are not generally restricted in effecting transactions by any limitation with regard to their respective 

portfolio turnover rates, and the turnover rate within these Fund Investments is expected to be significant, which will 

result in significant transaction costs and thereby reduce the investment performance of such Fund Investments, and 

therefore the Company. The Investment Manager will have no control over this turnover. 

EMERGING MARKETS 

Fund Investments may invest in securities and currencies traded in various markets throughout the world, including 

emerging or developing markets, some of which are highly controlled by governmental authorities. Particularly in 

developing countries, laws governing transactions in securities, commodities, derivatives and securities indices and other 

contractual relationships are new and largely untested. Investments in emerging markets may, among other things, carry 

the risks of less publicly available information, more volatile markets, less strict securities market regulation, less 

favourable tax provisions, a greater likelihood of severe inflation, unstable currency, war and expropriation of personal 

property, inadequate investor protection, contradictory legislation, incomplete, unclear and changing laws, ignorance or 

breaches of regulations on the part of market participants, lack of established or effective avenues for legal redress, lack 

of standard practices and confidentiality customs characteristic of developed markets, and lack of enforcement of existing 

regulations. Hence, it may be difficult to obtain and enforce a judgment in certain emerging countries. In addition, the 

Fund Investments’ investment opportunities in certain emerging markets may be restricted by legal limits on foreign 

investment in local securities. There can be no assurance that this difficulty in protecting and enforcing rights will not 

have a material adverse effect on the Fund Investments and their operations, and therefore on the Company. There is also 

the possibility of nationalisation, expropriation or confiscatory taxation, imposition of withholding or other taxes on 

dividends, interest, capital gains or other income, limitations on the removal of funds or other assets of the relevant Fund 

Investment or the Company, political changes, government regulation, social instability or diplomatic developments 

(including war) which could affect adversely the economies of such countries or the value of investments in those 

countries. In addition, regulatory controls and corporate governance of companies in emerging markets confer little 

protection on minority shareholders. Anti-fraud and anti-insider trading legislation is often rudimentary. The concept of 

fiduciary duty to shareholders by officers and directors is also limited when compared to such concepts in developed 

22

markets. In certain instances management may take significant actions without the consent of shareholders and antidilution 

protection also may be limited. The typically small or relatively small size of markets for securities of issuers 

located in emerging market countries and the possibility of a low or non-existent volume of trading in those securities 

may also result in a lack of liquidity and increased price volatility of those securities, which may reduce the return on such 

investments to the Fund Investments, and therefore to the Company. 

RISK ARBITRAGE TRANSACTIONS 

Fund Investments may engage in risk arbitrage transactions in which, in connection with a proposed merger, exchange 

offer, tender offer or other similar transaction, they will purchase securities of the relevant issuer at prices slightly below 

the anticipated value of the cash, securities or other consideration to be paid or exchanged for such securities in such 

transaction. Such purchase price may be substantially in excess of the market price of the securities prior to the 

announcement of the merger, exchange offer, tender offer or other similar transaction. If the proposed merger, takeover, 

exchange offer, tender offer or other similar transaction later appears not likely to be consummated or in fact is not 

consummated or is delayed, the market price of the securities purchased by a Fund Investment in anticipation of such 

transaction may decline sharply and result in losses to such Fund Investment. In addition, a Fund Investment may not 

hedge its positions against market fluctuations. This can result in losses to a Fund Investment even if the proposed 

transaction is ultimately consummated. Securities to be issued in a merger, takeover or exchange offer may also be sold 

short by a Fund Investment in the expectation that the short position will be covered by delivery of such securities when 

issued. If the merger, takeover or exchange offer is not consummated, the Fund Investment may be forced to cover its 

short position at a higher price than its short sale price, resulting in a loss to the Fund Investment and therefore to the 

Company. 

GEOPOLITICAL RISK 

Fund Investments may invest in markets that have been created to achieve specific policy objectives and where the 

connection to policy development carries considerable risks. The value of such Fund Investments could be adversely 

affected by abrogation of international agreements and national laws which have created the market instruments in which 

such Fund Investments will be investing, failure of the designated national and international authorities to enforce 

compliance with the same laws and agreements, failure of local, national and international organisation to carry out their 

duties prescribed to them under the relevant agreements, revisions of these laws and agreements which dilute their 

effectiveness or conflicting interpretation of provisions of the same laws and agreements. Fund Investments may be 

adversely affected by uncertainties such as terrorism, international political developments, changes in government 

policies, taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and other 

developments in the laws and regulations of the countries in which they are invested. 

BUSINESS AND REGULATORY RISK OF HEDGE FUNDS 


Investments by regulators. Investor protection may be less efficient than if supervision was exercised by a regulator. 

Legal, tax, and regulatory changes, as well as judicial decisions, could adversely affect the Company. In particular, the 

regulatory environment relevant to the Company, the Investment Manager and Fund Investment activities is evolving and 

may entail increased regulatory involvement in their businesses or result in ambiguity or conflict among legal or 

regulatory schemes applicable to their businesses, all of which could adversely affect the investment or trading strategies 

pursued by the Company or Fund Investments or the value of investments held by the Company or a Fund Investment. 

In addition, many Fund Investments invest in derivative transactions, and Fund Investments may also pursue certain other 

strategies or investment types, such as private financings of public companies, bank loans and participations. Such 

investment strategies may be subject to additional legal or regulatory risks, including changing applicable laws and 

regulations, developing or differing interpretations of such laws and regulations, and increased scrutiny by regulators and 

law enforcement authorities. The regulatory and tax environment for derivative and related instruments is evolving and 

may be subject to government or judicial action which may adversely affect the value of investments held by Fund 

Investments. The effect of any future regulatory or tax change on Fund Investments is impossible to predict but could be 

substantial and adverse. 

The regulatory or tax environment for derivative and related instruments is evolving and may be subject to government or 

judicial action which may adversely affect the value of investments held by Fund Investments. The effect of any future 

regulatory or tax change on Fund Investments is impossible to predict. 

Furthermore, new SEC rules that became effective on 1 February 2006 materially increased the regulation of certain 

External Investment Advisors and are likely to increase the expenses associated with regulatory compliance. These rules 

were challenged in court and vacated and remanded in June 2006 by the United States Court of Appeals for the District of 

Columbia in Goldstein v. SEC. However, during the interim period, the rules had the effect of requiring many External 

Investment Advisors to register with the SEC as investment advisers, or adopt policies that provided exemption from 

registration, primarily by adopting lock-ups of two years or more or complying with restrictions on non-US based 

managers. As a consequence of the court’s action and the current US and international regulatory focus on hedge funds, 

the regulatory environment is uncertain. In addition, alternative US or non-US rules or legislation regulating External 

Investment Advisors may be adopted, and the possible scope of any rules or legislation is unknown. It is also unclear what 

steps External Investment Advisors may take with respect to their registration or policies they may have adopted in 

23

esponse to the rules. There can be no assurances that the Company, the Investment Manager, or any External 

Investment Advisor or Fund Investment will not in the future be subject to regulatory review or discipline. 

SYNTHETIC PARTICIPATION IN ABSOLUTE RETURN STRATEGIES 

The Investment Manager may utilise customised derivative instruments, including swaps, options, forwards, notional 

principal contracts or other financial instruments, to replicate, modify or replace the economic attributes associated with 

a Fund Investment or Direct Investment. The Company may be exposed to certain additional risks should the Investment 

Manager use derivatives as a means to synthetically implement the Company’s investment strategies. If the Company 

enters into a derivative instrument whereby it agrees to receive the return of a security or financial instrument or a basket 

of securities or financial instruments, it typically will contract to receive such returns for a predetermined period of time. 

During such period, the Company may not have the ability to increase or decrease its exposure. In addition, such 

customised derivative instruments will likely be highly illiquid, and it is possible that the Company will not be able to 

terminate such derivative instruments prior to their expiration date or that the penalties associated with such a 

termination might impact the Company’s performance in a materially adverse manner. Furthermore, derivative 

instruments typically contain provisions giving the counterparty the right to terminate the contract upon the occurrence of 

certain events. Such events may include a decline in the value of the reference securities and material violations of the 

terms of the contract or the portfolio guidelines as well as other events determined by the counterparty. If a termination 

were to occur, the Company’s return could be adversely affected as it would lose the benefit of the indirect exposure to the 

reference securities, and it may incur significant termination expenses. 

In the event the Company seeks to participate in a Collective Investment Vehicle or other similar Fund Investment through 

the use of such synthetic derivative instruments, the Company will not acquire any voting interests or other shareholder 

rights that would be acquired with a direct investment in the underlying Fund Investment. Accordingly, the Company will 

not participate in matters submitted to a vote of the investors in such Fund Investment. In addition, the Company may not 

receive all of the information and reports to investors that the Company would receive with a direct investment in such 

Collective Investment Vehicle. Further, the Company will pay the counterparty to any such customised derivative 

instrument structuring fees and ongoing transaction fees, which will reduce the investment performance of the Company. 

Finally, certain tax aspects of such customised derivative instruments are uncertain and, if the Company’s tax treatment 

of such instruments is challenged successfully by tax or other regulatory authorities in the applicable country or 

jurisdiction, a Shareholder’s return could be adversely affected. The Company has not obtained any opinion or other advice 

with respect to tax consequences in the United States or any other jurisdiction relating to the Company or an investment 

therein with respect to such derivative instruments. 

Derivative instruments generally also involve counterparty risk, i.e., the risk that the counterparty fails to fulfil its 

contractual obligations under the terms of the instrument, and such instrument may not perform in the manner expected 

by the counterparties, thereby resulting in greater loss or gain to the investor. The Investment Manager will seek to 

minimise the Company’s exposure to counterparty risk by entering into such transactions with counterparties the 

Investment Manager believes to be creditworthy at the time it enters into the transaction. Certain transactions in such 

derivative instruments may require the Company to provide collateral to secure its performance obligations under a 

contract. 


CHANGES IN TAX LAWS OR REGULATION 


invest, including, for example, the imposition of withholding or other taxes on the Company’s investments, could adversely 

affect the value of the investments held by the Company and decrease the post-tax returns to Shareholders. Statements in 

this Registration Document concerning the taxation of Shareholders are based upon current tax law and practice in the 

jurisdictions covered, which law and practice is, in principle, subject to change that could adversely affect the ability of the 

Company to meet its investment objective and which could adversely affect the taxation of Shareholders. 

CHANGES TO TAX TREATMENT OF DERIVATIVE INSTRUMENTS 

The tax environment for derivative instruments is evolving, and changes in the taxation of derivative instruments may 

adversely affect the value of derivative instruments held by the Company and its ability to pursue its investment strategies. 

In addition, the Company may take positions with respect to certain tax issues which depend on legal conclusions not yet 

resolved by the courts. Should any such positions be successfully challenged by an applicable taxing authority, there could 

be a material adverse effect on the Company. 

CHANGES IN TAX RESIDENCE 

If the Company were treated as resident, or as having a permanent establishment, or as otherwise being engaged in a 

trade or business, in any country in which it invests or in which its investments are managed, all of its income or gains, or 

the part of such gain or income as is attributable to, or effectively connected with, such permanent establishment or trade 

or business, may be subject to tax in that country, which could have a material adverse effect on its performance and 

returns to Shareholders. 

To maintain its non-UK tax resident status, the Company must be managed and controlled outside the United Kingdom. 

The composition of the Board of Directors, the place of residence of the Board’s individual members and the location(s) in 

24

which the Board of Directors makes its decisions will be important factors in determining and maintaining the non-UK tax 

resident status of the Company. While the Company is incorporated in Jersey and the majority of the Directors reside 

outside the United Kingdom, the Company must pay continued attention to ensure that its decisions are not made in the 

United Kingdom or the Company may lose its non-UK tax resident status. The Company must similarly ensure that it does 

not become resident in the United States or other jurisdictions. 

CHANGES IN TAX LAWS OR REGULATION AFFECTING THE COMPANY 

The Company is not currently subject to tax on a net income basis in any country. There can be no assurance that the net 

income of the Company will not become subject to tax in one or more countries as a result of unanticipated activities 

performed by the Investment Manager or its affiliates, adverse developments or changes in law, contrary conclusions by 

the relevant tax authorities or other causes. The imposition of any such unanticipated net income taxes could materially 

reduce the Company’s after-tax returns, which could have a material adverse effect on the performance of the Company 

and returns to Shareholders. 

RISKS RELATING TO CONFLICTS OF INTEREST 

ORGANISATIONAL, OWNERSHIP AND INVESTMENT STRUCTURE 

The Company’s organisational, ownership and investment structure involves a number of relationships that may give rise 

to conflicts of interest between the Company and its Shareholders, on the one hand, and the Investment Manager and its 

affiliates, on the other hand. In certain instances, the interests of the Investment Manager and its affiliates, in their 

capacities as Shareholders and as investment manager of the Company and otherwise, may differ from the interests of 

the Company and the Company’s other Shareholders, including with respect to the types of investments made, the timing 

and method in which investments are exited, the reinvestment of returns generated by investments, the use of leverage 

when making investments, and others. Such conflicts of interest may not always be resolved in a manner that is in the 

best interests of the Company or Shareholders. 

The Directors and the service providers to the Company may, from time to time, provide services to, or be otherwise 

involved with, other investment vehicles established by parties other than the Company which may have similar objectives 

to those of the Company. It is therefore possible that any of them may, in the course of business, have potential conflicts of 

interest with the Company. 

OTHER BUSINESS ACTIVITIES 

The Investment Manager, its affiliates and each of their respective members, partners, officers and employees spend 

substantial time and attention on other business activities, including Other Clients. The terms relating to these Other 

Clients may differ materially from those applicable to an investment in the Shares, even though certain of these Other 

Clients pursue a similar or identical investment objective and strategy as the Company. The Directors may be subject to 

similar conflicts of interest in their provision of services to the Company. 

Shareholders may invest in the Company in connection with asset allocation or other investment advice received from the 

Investment Manager or one of its affiliates (the “Allocation Advisor”). In such cases, the investment advice with respect to 

the Company will be governed by an agreement negotiated between the Shareholder and the Allocation Advisor, and may 

include the payment of investment management or performance fees in addition to those charged in connection with an 

investment in the Company. The decision by the Allocation Advisor to invest in the Company may present a potential 

conflict of interest. 

Employees of the Investment Manager may, from time to time, become members of advisory committees, boards of 

directors or similar advisory or governance bodies to Fund Investments. Matters referred to those advisory boards may 

include a number of subjects, such as conflicts of interests involving the Fund Investment’s management; investment, 

pricing, and other investment-related policies; and general sharing of investment and market information or ideas. The 

Investment Manager believes that participation on these bodies provides an opportunity to better understand the relevant 

Fund Investment and its management. However, it is also possible that participation on these bodies could require or 

result in limitations on the investment decisions of the Company; for example, knowledge of material information not 

generally known to investors could limit redemptions by the Company. When considering whether to participate on a 

particular body, the Investment Manager will balance the known positive and negative aspects and determine whether to 

participate on that basis. 

ALLOCATION OF INVESTMENT OPPORTUNITIES 

The Investment Manager and its affiliates manage funds or accounts for Other Clients whose investment objectives and/or 

philosophies may overlap, or be complementary to, the investment strategies and/or philosophies pursued by the 

Company, and both the Company and Other Clients may be eligible to participate in the same investment opportunities. 

Additionally, Fund Investments are generally offered in private offerings and it is not uncommon for Fund Investments to 

become closed or limited with respect to new investments due to size constraints or other considerations. Moreover, the 

Company or Other Clients may not be eligible or appropriate investors in all potential Fund Investments. As a result of 

these and other factors, the Company may be precluded from making a specific investment or the Investment Manager 

may reallocate existing Fund Investments among Other Clients. Investment allocation decisions will be made by the 

Investment Manager, taking into consideration the respective investment guidelines, investment objectives, existing 

investments, liquidity, contractual commitments or regulatory obligations and other considerations applicable to the 

25

Company and Other Clients. However, there are likely to be circumstances where the Company is unable to participate, in 

whole or in part, in certain investments to the extent it would participate absent allocation of an investment opportunity 

among the Company and Other Clients. In addition, it is likely that the Company’s portfolio and those of Other Clients will 

have differences in the specific Fund Investments held in their portfolios even when their investment objectives are the 

same or similar. These distinctions will result in differences in portfolio performance between the Company and Other 

Clients. 






may themselves provide market making services, including those of counterparty in stock and OTC transactions. As a 

result, in such instances the choice of broker, market maker or counterparty and the level of commissions or other fees 

paid for such services (including the size of any mark-up imposed by a counterparty) may not have been made at arm’s 

length. 

INVESTMENT IN EXTERNAL INVESTMENT ADVISORS 

Other Clients, including those in which the Investment Manager, its affiliates and their employees may have invested, may 

acquire an ownership or other financial interest in certain of the External Investment Advisors of Fund Investments 

(a “Financial Interest”). The terms of any Financial Interest may include direct or indirect receipt of a portion of any 

management or performance-based fees paid by such Fund Investment to its External Investment Advisor. The 

Investment Manager or its affiliates will endeavour to negotiate such Financial Interest so as to permit a return to the 

Company of a share of management or performance-based fees paid by the Company with respect to such Fund 

Investment, but no assurances can be given that it will be able to do so. The Investment Manager expects to negotiate any 

such benefit within the parameters it generally uses in connection with negotiating agreements with such External 

Investment Advisors, and not based on the size or other terms related to the Financial Interest, with the proviso that any 

negotiated reduction in management or performance-based fees and allocation will be limited in terms of a stated 

maximum US Dollar amount in investments or a percentage of the capital base of a Fund Investment held by the Company 

and Other Clients, in the aggregate. To the extent Other Client investments in such a Fund Investment exceed this 

limitation, it is generally expected that the most recent investments by Other Clients would not participate in the fee 

reduction, unless the Investment Manager determines that a different allocation of the fee reduction is more reasonable 

or practicable. The Company generally would not participate in other aspects of any Financial Interest held in an External 

Investment Advisor. However, this relationship created by a Financial Interest could produce conflicts of interest as 

between the Company and the Investment Manager or Other Client that holds the Financial Interest. For example, 

withdrawing funds from a Fund Investment in which the Investment Manager, an affiliate or Other Clients hold a Financial 

Interest could adversely affect the value of such Financial Interest. The Investment Manager will endeavour to manage 

such conflicts equitably, subject to legal, regulatory, contractual or other applicable considerations. 

FEES PAID TO THE INVESTMENT MANAGER 

Fees paid to the Investment Manager at the Company level have not been established on the basis of an arm’s-length 

negotiation between the Company and the Investment Manager. Performance fees may create an incentive for the 

Investment Manager to approve and cause the Company to make more speculative investments than it would otherwise 

make in the absence of such performance-based compensation. 

ALLOCATION OF EXPENSES 

The Investment Manager and its affiliates may from time-to-time incur expenses on behalf of the Company and one or 

more Other Clients. Although the Investment Manager and its affiliates will attempt to allocate such expenses on a basis 

that they consider equitable, there can be no assurance that such expenses will in all cases be allocated appropriately. 

TRANSACTIONS BETWEEN THE COMPANY AND OTHER CLIENTS 

The Investment Manager may cause the Company to purchase securities from, or sell securities to, Other Clients when 

the Investment Manager believes such transactions are appropriate based on each party’s investment objective. Such 

transactions are expected to occur at the net asset value of such securities. 

SERVICES PROVIDED BY AFFILIATES 

Subject to the US Advisers Act, other applicable regulatory frameworks and the terms of the Company’s governing 

documents, services may be provided by entities related to the Investment Manager as described in this paragraph or 

otherwise. For example, the Investment Manager may utilise the personnel or services of one or more affiliates for 

investment advice, portfolio execution and trading and client servicing in their local or regional markets or their area of 

special expertise. Such services may include the affiliates acting as agent for the Company’s currency hedging 

transactions or derivative transactions, if any, and it may take a variety of forms, including dual employee or delegation 

arrangements or formal subadvisory or servicing agreements. In addition, affiliates of the Investment Manager may 

provide lines of credit or other forms of borrowings to the Company. It is possible that conflicts may arise in connection 

with the provision of any of these services. Where these services are provided, such affiliates may benefit from substantial 

commissions or markups from transactions with the Company and thus become subject to conflicts of interest. 

26

AFFILIATED INVESTORS; OTHER BUSINESS RELATIONSHIPS AND ACTIVITIES 

Investors in the Company may include the Investment Manager and its affiliates and employees, as well as Other Clients. 

Investments of such investors may be substantial in relation to the overall assets of the Company. To the extent that 

investments by the Investment Manager or its affiliates or employees are significant, the Company may be treated as a 

proprietary account and therefore may have different regulatory treatment than would otherwise be the case, for example 

with respect to trading with Other Client accounts. Also, External Investment Advisors, their employees or affiliates may 

be clients of the Investment Manager or its affiliates or investors in funds they manage. 

In addition, the Investment Manager or its affiliates have, and in the future may develop, business relationships that are 

independent of the investment management services provided to the Company by the Investment Manager. These may 

include, but are not limited to, lending, depository, brokerage, risk management, investment advisory, security distribution 

or banking relationships with counterparties to transactions with the Company or third parties that also provide investment 

management or other services to the Company. Any such relationships may involve potentially material conflicts of interest. 

The business activities of the Investment Manager and its affiliates are complex, and may give rise to direct or indirect 

interaction between or among the Investment Manager, External Investment Advisors, Fund Investments, Other Clients, 

and/or any of their respective affiliates, officers, directors, shareholders, members, partners or employees. The 

Investment Manager may recommend, facilitate, or otherwise assist with various investment or other business activities 

on behalf of such parties, and may receive separate compensation for such activities. Any such interaction or activities 

may involve potentially material conflicts of interest. 

PROXY VOTING POLICIES AND PROCEDURES 

The Investment Manager has policies and procedures related to the voting of proxies on behalf of the Company and other funds 

that are its clients (the “Proxy Policies and Procedures”). A summary of these policies and procedures is set forth below. 

When voting proxies for the Company, the Investment Manager’s primary objective is to make voting decisions solely in the 

best interests of the Company. In fulfilling its obligations to the Company, the Investment Manager will act in a manner 

which is intended to enhance the economic value of the underlying investments held by the Company. Thus, this process 

may include a cost-benefit analysis to determine whether the voting of a proxy on behalf of the Company is in the 

Company’s best interest. In addition, the Investment Manager will take steps to avoid material conflicts of interests 

between the interests of the Investment Manager and its affiliates on the one hand and the interests of the Company and 

Other Clients on the other and its policies and procedures include provisions to address potential conflicts of interest that 

arise in the course of voting proxies. 

The Investment Manager’s Investment Committee is responsible for approving the Proxy Policies and Procedures. The 

Proxy Policies and Procedures are implemented by the appropriate Portfolio Management Groups (“PMGs”), which are 

sub-committees of the Investment Committee. The Investment Manager’s Investment Operations Department coordinates 

the procedural aspects of the Policies and Procedures, including the communication of votes to third parties and the 

maintenance of all supporting documentation. The Investment Manager has established general voting guidelines (the 

“Proxy Voting Guidelines”), as well as procedures for identifying “exception” cases, including those for which a potential 

conflict of interest or unique circumstances exist. Such exception cases will be referred on a case-by-case basis for 

consideration and voting recommendation by the relevant portfolio manager, PMG or the Investment Manager’s legal 

department, as deemed appropriate. A portfolio manager may also recommend against the generally applicable voting 

procedure in a particular instance. In both cases, the PMG will review recommended proxy votes prior to voting. 

DIVERSE SHAREHOLDERS 

Shareholders in the Company may include persons or entities resident of or organised in various jurisdictions. As a result, 

conflicts of interest may arise in connection with decisions made by the Investment Manager that may be more beneficial 

for Shareholders from certain jurisdictions. In making such decisions, the Investment Manager intends to consider the 

investment objective of the Company as a whole, not the investment or other objectives of any Shareholder individually. 

CERTAIN CONFLICTS POTENTIALLY ARISING OUT OF BLACKROCK’S RELATIONSHIP WITH OTHER FINANCIAL 

SERVICES FIRMS 

BlackRock completed a combination with Merrill Lynch Investment Managers, LLC on 29 September 2006 (the “MLIM 

Transaction”). As a result of the MLIM Transaction, Merrill Lynch & Co., Inc. (“Merrill Lynch”) holds an approximately 

49 per cent. interest in BlackRock and The PNC Financial Services Group, Inc. (“PNC”) holds an approximately 34 per 

cent. stake in BlackRock. Both Merrill Lynch and PNC are holding companies that are affiliated with broker-dealers, 

banks, insurance companies and other subsidiaries involved in financial services. The relationship between BlackRock 

and each of Merrill Lynch and PNC may give rise to certain conflicts of interest in the ordinary course of business of each 

of Merrill Lynch, PNC, BlackRock and the investment activities of the Company and its Fund Investments. Subject to the 

US Advisers Act and other applicable laws, the Company and the Fund Investments generally will not be restricted from 

dealing through or with any Merrill Lynch or PNC affiliate because of the affiliation between the Investment Manager and 

such Merrill Lynch or PNC affiliate, and neither the Investment Manager nor any Merrill Lynch or PNC affiliate will be 

required to provide an accounting to share commission or other revenue with the Company or any Shareholder with 

respect to revenue derived from such activities. The following discussion enumerates, in a general way, certain potential 

and actual conflicts of interest arising out of the ownership interests of Merrill Lynch and PNC in BlackRock. 

27

Merrill Lynch’s ownership interest in BlackRock 

Merrill Lynch’s ownership of a significant amount of BlackRock’s outstanding common stock gives rise to a presumption 

that BlackRock is controlled by Merrill Lynch for purposes of certain laws and regulations governing BlackRock’s 

investment management activities. However, pursuant to contractual agreement between Merrill Lynch and BlackRock, 

Merrill Lynch’s right to vote BlackRock common stock is severely restricted and, among other things, Merrill Lynch is 

specifically prohibited from seeking to influence or control BlackRock. Accordingly, BlackRock does not believe that 

Merrill Lynch is in fact a controlling person of BlackRock. 

BlackRock has filed an application for an order of the US Securities and Exchange Commission determining that Merrill 

Lynch does not control BlackRock. There can be no assurance that the Commission will in fact grant such order. In the 

event that BlackRock obtains such an order, it will cease to subject client transactions with or involving Merrill Lynch to 

the restrictions and limitations applicable to client transactions with or involving BlackRock itself and BlackRock’s control 

persons to the extent permitted by law. With respect to the Company, this step will primarily have the effect of enabling 

BlackRock to trade on behalf of the Company with Merrill Lynch as a broker or dealer subject to normal principles of best 

execution and as an underwriter in public and private offerings, in each case without special consent by the Company. Due 

to the possibility that Merrill Lynch’s continuing economic interest in BlackRock would incentivise BlackRock to favour 

Merrill Lynch in some manner, BlackRock will utilise enhanced compliance procedures to govern and assess its use of 

Merrill Lynch on behalf of the Company and its other clients. 

Investment in entities advised, managed or offered by related entities 

The Company may invest in Fund Investments advised, managed or sold by the Investment Manager, Merrill Lynch, PNC 

or any of their respective affiliates. Such transactions are expected to occur at the relevant net asset value and otherwise 

in a manner substantially similar to an investment in a Fund Investment not involving an affiliate. Other than with respect 

to ARS Affiliated Funds and conduit funds, it is expected that management and/or performance fees will be charged to the 

Company by the Fund Investment and paid to the Fund Investment’s service providers, including the Investment Manager, 

Merrill Lynch, PNC or any of their respective affiliates, without offset to the management or performance fees paid to the 

Company’s Investment Manager or other service providers other than as an expense of the Company. 

Brokerage and other services and activities 

Each of Merrill Lynch and PNC may provide a variety of other services, including fund administration, valuation, research, 

advisory, brokerage or support services, to the Fund Investments or, to the extent permitted by applicable law, to the 

Company. Each of BlackRock, Merrill Lynch and PNC may also engage in proprietary investment activities from time to 

time. Subsidiaries and affiliates of BlackRock and Merrill Lynch, including Merrill Lynch Alternative Investments, LLC, 

may also sponsor and manage investment funds or other client accounts that compete directly or indirectly with the 

investment programme of the Company or the Fund Investments. Information obtained or used by the Investment 

Manager or its affiliates for proprietary investment activities, or investment activities on behalf of other client accounts, 

including investment strategies used for proprietary investing or other client accounts, may not be made available to 

persons involved in the management of the Company, nor is there an obligation to provide this information for the benefit 

of the Company. There can be no assurance that any of the foregoing arrangements will not, in whole or in part, give rise 

to conflicts of interest affecting the investment activities of the Company. 

In addition, situations may arise in which a Merrill Lynch counterparty believes that, to protect its own commercial 

interests, it may be necessary to take action with respect to the Company or a Fund Investment that may be detrimental to 

the Company (such as foreclosing on collateral in the event a Merrill Lynch counterparty is a lender or counterparty to the 

Company or a Fund Investment). The Company and each Fund Investment will not be entitled to, and may not receive, any 

special consideration or forbearance by a Merrill Lynch counterparty in the exercise of its rights as a result of the 

Investment Manager’s relationship with Merrill Lynch. 

Retail banking, investment services and other businesses of PNC 

PNC and its affiliates may provide deposit, lending, cash management, trust and investment services, brokerage, fund 

administration, valuation, financial advisory services and other commercial and private banking products to the Fund 

Investments as well as to Other Clients. PNC and its affiliates serve as investment managers and trustees for various 

employee benefit plans and charitable and endowment assets that could invest in the Fund Investments. PNC and its 

affiliates also engage in asset-based lending and real estate financing to the Fund Investments. PNC and its affiliates also 

provide fund accounting and administration, transfer agency services, global custody securities lending services, 

sub-accounting services, marketing and distribution services, managed account services, alternative investment services, 

banking transaction services and advanced output solutions. Through any of the foregoing, PNC and its affiliates may 

receive fees from the Fund Investments as well as Other Clients. 

Ownership interests in or by third party financial services firms 

In the event that BlackRock acquires an ownership interest in a third party financial services firm or acquires the business 

or operating assets of such firm or if a third party financial services firm acquires an ownership interest in BlackRock, 

each of the conflicts described above may be relevant. In addition, subject to all applicable laws, the Company may trade 

28

with funds managed by Merrill Lynch, PNC, other investment advisory subsidiaries of BlackRock or other financial 

services firms that have an ownership interest in BlackRock, or in which BlackRock has an ownership interest. Any such 

cross trades will generally be made in accordance with the Investment Manager’s cross trading policies and procedures 

and, in the case of any such cross trades of interests in Fund Investments, based on fair value information as required by 

such procedures. 

Other funds managed by Merrill Lynch, PNC, other investment advisory subsidiaries of BlackRock or other financial 

services firms that have an ownership interest in BlackRock, or in which BlackRock has an ownership interest, may also 

invest in Fund Investments on terms that are superior to the terms on which the Fund invests and may take actions that 

ultimately are prejudicial to a Fund Investment or the Company’s investment in a Fund Investment. 

Investment banking and other fees 

Merrill Lynch and its affiliates may receive investment banking fees from certain companies and other parties involved in 

transactions in which the Fund Investments may participate. Such fees could be paid for providing services in connection 

with: (i) equity or debt financings, (ii) the acquisition, disposal or sale of the securities or other assets of such companies, 

(iii) securities underwriting, (iv) prime brokerage services, (v) derivatives or (vi) other investment banking or financial 

advisory services. The Company will not participate in any such fees that may be paid by any such company and the return 

on investment in any such company may be diminished as a result. Under any of the foregoing arrangements, Merrill 

Lynch may have interests that conflict with those of the Company, the Fund Investments or the Shareholders. 

Services provided by related entities 

Subject to applicable legal and regulatory frameworks and to the Articles of Association, services may be provided by 

entities related to the Investment Manager as described in this paragraph or otherwise. For example, the Investment 

Manager may utilise the personnel or services of one or more affiliates for investment advice, portfolio execution and 

trading and client servicing in their local or regional markets or their area of special expertise. Such services may include 

the affiliates acting as agent for the Company’s currency hedging transactions or derivative transactions, if any, and it may 

take a variety of forms, including dual employee or delegation arrangements or formal subadvisory or servicing 

agreements. In addition, affiliates of the Investment Manager may provide lines of credit or other forms of borrowings to 

the Company. It is possible that conflicts may arise in connection with the provision of any of these services. Where these 

services are provided, such affiliates may benefit from substantial commissions or markups from transactions with the 

Company and thus become subject to conflicts of interest. 

In-sourcing or outsourcing 

Subject to applicable law, the Investment Manager may from time to time and without notice to the Company in-source or 

outsource to third parties certain processes or functions in connection with a variety of services that it provides to the 

Company. Such in-sourcing or outsourcing may give rise to additional conflicts of interest. 

Potential impact on the Company 

Please note that the above list is not an exhaustive list and other conflicts may arise from time to time. In addition, it is 

difficult to predict the circumstances under which one or more of the foregoing conflicts could become material, but it is 

possible that such relationships could require the Company to refrain from making all or a portion of any investment or a 

disposition in order for BlackRock to comply with its fiduciary duties, the US Advisers Act or other applicable laws. For 

example, the Investment Manager, Merrill Lynch, PNC, their affiliates and their respective investment professionals and 

other employees may come into possession of material non-public information. The possession of such information may 

potentially limit the ability of the Company to participate in an investment opportunity. Such relationships may also provide 

incentive for the Investment Manager, due to its relationship with Merrill Lynch, PNC or other firms, to allocate the 

Company’s assets to Fund Investments from which Merrill Lynch, PNC or such other firms earn fees. 

RISKS RELATING TO THE APPLICATION OF THE US BANK HOLDING COMPANY ACT OF 1956 

Each of BlackRock, the Manager and the Investment Manager is, for purposes of the US Bank Holding Company Act of 

1956, as amended (the “US BHC Act”), a subsidiary of PNC, which is subject to regulation as a “financial holding company” 

(an “FHC”) by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Because the Manager and 

the Investment Manager will exercise corporate control over the Company, each of the Company, the Manager, Investment 

Manager and BlackRock will be deemed to be controlled by PNC for purposes of the US BHC Act and must comply with 

the investment and activities restrictions applicable to PNC as an FHC. Under the US BHC Act, an FHC and its affiliates 

may engage in, and may acquire interests in, or control of, companies engaged in, among other things, a wide range of 

activities that are “financial in nature,” including certain banking, securities, investment management, merchant banking, 

and insurance activities. Other activities are prohibited or limited to activities that fall within certain defined authorisations 

(“Authorisations”). 

BlackRock is currently evaluating the status of Fund Investments in relation to various Authorisations, and currently 

anticipates that it and PNC generally will be able to treat the Company as making so-called “merchant banking” portfolio 

investments for purposes of the US BHC Act. Under the US BHC Act, an FHC or its affiliates may make a merchant 

banking investment in a non-financial portfolio company, which it may control but may not routinely manage or operate 

for such period of time as is necessary to enable disposition on a reasonable basis. The Federal Reserve’s current 

29

egulations governing the merchant banking activities of an FHC (i) restrict involvement by the Company, the Manager, the 

Investment Manager, BlackRock, or PNC in the routine management and operating of a Fund Investment through officer 

or employee interlocks, contractual provisions, or other means, (ii) impose a 15-year maximum term on the Company (or, 

if the Company fails to qualify for this 15-year term, impose a 10-year maximum holding period on each merchant banking 

portfolio investment by the Company), (iii) restrict lending by PNC’s subsidiary bank to the Company and to any Fund 

Investment, (iv) limit other transactions by PNC’s subsidiary bank with such Fund Investment, (v) limit cross-marketing 

between PNC’s subsidiary bank and such Fund Investment, and (vi) apply certain record-keeping and reporting and policy 

and procedural requirements to investments by the Company. 

To ensure compliance with the merchant banking requirements of the US BHC Act, none of the Manager, Investment 

Manager or the Company will be involved in the routine management and operation of Fund Investments. Given that the 

investment programme of the Company is anticipated to consist substantially of minority stakes, such level of 

management or control would not generally be available and no officer or employee of BlackRock, the Manager or the 

Investment Manager will be permitted to serve as an officer, manager or employee of any Fund Investment. In addition, 

the Investment Manager currently does not expect that any investment in Fund Investments would exceed the maximum 

holding periods for merchant banking investments. 

Aside from the authority to make merchant banking investments, the Manager, Investment Manager, BlackRock and the 

Company may be able to rely on other statutory and regulatory provisions in order to maintain compliance with the US 

BHC Act. The Investment Manager reserves the right to rely on any such applicable exemptions and to take all reasonable 

steps deemed necessary, advisable or appropriate to comply with the US BHC Act. The US BHC Act and Federal Reserve 

regulations and interpretations thereunder may be amended over the life of the Company. The Investment Manager does 

not expect the limitations of the merchant banking investment authority or other provisions of the US BHC Act to have a 

material adverse effect on the Company, its current investment strategy, or its operations. 

30

NOTICE TO INVESTORS 

The Prospectus has been produced for the purpose of the Offer and seeking admission of the Shares to the Official List 

and to trading of the Shares on the London Stock Exchange’s main market for listed securities. In making an investment 

decision regarding the Shares offered, investors must rely on their own examination of the Company, including the merits 

and risks involved in an investment in the Shares. The Offer is being made solely on the basis of the Prospectus. The 

Company and the Directors of the Company, whose names appear in the “Directors, Managers and Advisers” section of 

this Registration Document, accept responsibility for the information contained in the Prospectus which comprises this 

Registration Document, the Securities Note and the Summary Note. The contents of the Prospectus are not to be 

construed as legal, financial, business or tax advice. Prospective purchasers of the Shares offered should conduct their 

own due diligence on the Shares. Prospective investors should inform themselves as to: (a) the legal requirements within 

their own countries for the purchase, holding, transfer, redemption or other disposal of Shares; (b) any foreign exchange 

restrictions applicable to the purchase, holding, transfer, redemption or other disposal of Shares which they might 

encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the 

purchase, holding, transfer, redemption or other disposal of Shares. Prospective investors must rely upon their own 

representatives, including their own legal advisers and accountants, as to legal, tax, accounting, regulatory, investment or 

any other related matters concerning the Company and an investment therein. 

An investment in the Company should be regarded as a long-term investment. There can be no assurance that the 

Company’s investment objective will be achieved. 

It should be remembered that the price of the Shares, and the income from such Shares, can go down as well as up. 

The Prospectus constitutes a prospectus for the purposes of Article 3 of the Prospectus Directive. The Prospectus has 

been approved by and filed with the FSA. 

This Registration Document, the Securities Note and the Summary Note, which together comprise the Prospectus, should 

be read in their entirety before making any application for Shares. Prospective Shareholders should rely only on the 

information contained in the Prospectus of which this Registration Document forms a part. 

Neither the Shares nor the Company has been approved or disapproved by any governmental or regulatory authority of 

any country or jurisdiction, nor has any such governmental or regulatory authority passed upon or endorsed the merits of 

the Company or an investment in its Shares. The consent of the JFSC under the Control of Borrowing (Jersey) Order 1958 

(as amended) has been obtained for the issue of an unlimited number of Shares and an unlimited number of C Shares. 

The JFSC is protected by the Control of Borrowing (Jersey) Law 1947 (as amended) against liability arising from the 

discharge of its functions under that law. 

The Company has received a permit under the CIF Law to carry out its functions. The JFSC is protected by the CIF Law, 

against liability arising from its functions under that law. The Manager is licensed to conduct fund services business in 

respect of the Company under the FSL. The Commission is protected by the FSL against any liability arising from the 

discharge of its functions under the FSL. It must be distinctly understood that neither the Jersey registrar of companies 

nor the JFSC takes any responsibility for the financial soundness of the Company or for the correctness of any of the 

statements made, or opinions expressed, with regard to it. A copy of this document has been delivered to the Jersey 

registrar of companies in accordance with article 5 of the Companies (General Provisions) (Jersey) Order 1992, as 

amended and the registrar has given, and has not withdrawn, his consent to its circulation. 

Any change to the Company or amendment to this Prospectus which would not be in full compliance with the provisions 


Prospective investors should rely only on the information contained in the Prospectus. Neither the Company, the 

Investment Manager nor the Global Co-ordinator has authorised any other person to provide prospective investors with 

different information. No reliance should be placed on any different or inconsistent information provided by any person. 

Prospective investors should assume that the information appearing in the Prospectus is accurate only as of the date on 

the front cover of the Prospectus, regardless of the time of delivery of the Prospectus or of any offer or sale of Shares. The 

business, financial condition and prospects of the Company could have changed since that date. The Company expressly 

disclaims any duty to update the Prospectus except as required by applicable law. The Prospectus should be read in its 

entirety before making any application for Shares. In light of these risks, uncertainties and assumptions, the events 

described in the forward-looking statements in this Registration Document may not occur. All Shareholders are entitled 

to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Company’s Articles of Association, 

which investors should review. 

UBS is acting for the Company, and no one else, in connection with the Offer and will not be responsible to anyone other 

than the Company in providing the protections afforded to its clients nor for providing advice in connection with the Offer 

or Admission. BlackRock Financial Management, Inc. is acting for the Company and no-one else in connection with the 

Offer and will not be responsible to anyone other than the Company in providing the protections afforded to its clients nor 

for providing advice in connection with the Offer or Admission. 

31

UBS makes no representation, express or implied, nor does it accept any responsibility whatsoever for the contents of the 

Prospectus, including this Registration Document, nor for any other statement made or purported to be made by it or on 

its behalf in connection with the Company, the Shares or the Offer. UBS accordingly disclaims all and any liability (save for 

any statutory liability) whether arising in tort, contract or otherwise which it might otherwise have in respect of the 

Prospectus, including this Registration Document, or any other statement. 

Investors should note that the Global Co-ordinator and/or its affiliates are likely to have acted, and in some cases, 

continue to act, in various capacities in relation to the issuers of certain securities in which the Company invests, including 

as manager, servicer, security trustee, equity holder and/or secured lender to affiliates of the issuer of the relevant 

securities. The Global Co-ordinator and/or its affiliates, in their capacity as lenders to certain of the issuers of securities in 

which the Company or the Fund Investments invest may hold security interests in various of those issuers’ assets, some of 

which assets may also secure obligations owed to holders of the relevant issuer’s securities, which may include the 

Company. In addition, the Global Co-ordinator and/or its affiliates may act as lender to the Company, including any 

financing provided to the Company. Each role confers specific rights to, and obligations on, the Global Co-ordinator and/or 

its affiliates. In carrying out these rights and obligations, the interests of the Global Co-ordinator and/or its affiliates may 

not be aligned with the interests of a potential investor in the Shares. 

OVER-ALLOTMENT AND STABILISATION 

In connection with the Offer, UBS, as the Stabilising Manager, or any of its agents, may, to the extent permitted by 

applicable law, over-allot Shares with a value of up to a maximum of 15 per cent. of the total amount to be raised in the 

Offer and effect other transactions with a view to stabilising or maintaining the market price of the Shares at a level higher 

than that which might otherwise prevail in the open market. 






Stabilising Manager, at any time on or after the date of commencement of conditional dealings on the London Stock 





commenced, may be discontinued at any time, may only be taken up at any time on or after the date of commencement of 

conditional dealings in the Shares, and will end no more than 30 days thereafter. Save as required by law or regulation, 

neither the Stabilising Manager nor any of its agents intend to disclose the extent of any over-allotments and/or 

stabilisation transactions under the Offer. 

RESTRICTIONS ON DISTRIBUTION AND SALE 

The distribution of the Prospectus, the Offer and sale of the Shares offered thereby may be restricted by law in certain 

jurisdictions. Persons in possession of the Prospectus are required to inform themselves about and to observe any such 

restrictions. The Prospectus must not be used for, or in connection with, and does not constitute any offer to sell, or a 

solicitation to purchase, any such Shares in any jurisdiction in which such an offer or solicitation would be unlawful. 

Further details are set out in “Selling Restrictions” on pages 35 to 41 below. 

The Shares have not been and will not be registered under the US Securities Act or with any securities regulatory 

authority of any state or other jurisdiction in the United States nor is such registration contemplated. The Shares may not 

be offered, sold or delivered directly or indirectly within the United States or to, or for the account or benefit of, US 

Persons. The Directors reserve the right to offer Shares and/or C Shares to US Persons in the future. The Company has 

not been and will not be registered under the US Investment Company Act and investors will not be entitled to the benefits 

of the US Investment Company Act. The Shares have not been approved or disapproved by the SEC, any state securities 

commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed 

upon or endorsed the merits of the offering of Shares or the accuracy or adequacy of this prospectus. Any representation 

to the contrary is a criminal offence in the United States and re-offer or resale of any of the Shares in the United States or 

to US Persons may constitute a violation of US law or regulation. 

Shares may not be acquired by investors using assets of any employee benefit plan subject to Part 4 of Subtitle B of the 

Title I of ERISA or Section 4975 of the US Internal Revenue Code or other federal, state, local or other law or regulation 

that is substantially similar to the prohibited transaction provisions of Section 406 of ERISA or Section 4975 of the US 

Internal Revenue Code. 

Applicants for Shares in the Offer will be required to certify that they (and anyone for whose benefit or on whose behalf 

they are acting) (i) are not a “US person” within the meaning of Regulation S of the US Securities Act and (ii) are a “Non- 

United States person” within the meaning of the US Commodity Futures Trading Commission (“CFTC”) Rule 4.7(a)(I)(iv). 

Such persons failing to satisfy either of clause (i) or (ii) above are referred to herein as a “US Person”. Applicants for 

Shares will also be required to certify that they are not subscribing for Shares on behalf of a US Person. See “Selling 

32

Restrictions” on pages 35 to 41 for a further description on the restrictions on purchasers in the Offer as well as 

subsequent purchasers of the Shares. 

PRESENTATION OF INFORMATION 

Certain terms used in this Registration Document, including capitalised terms and certain technical and other terms, are 

explained in the section entitled “Definitions and Glossary”. 

33

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 

The Prospectus includes statements that are, or may be deemed to be, “forward-looking statements”. These forwardlooking 

statements can be identified by the use of forward-looking terminology, including the terms “believes”, 

“estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other 

variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. 

They appear in a number of places throughout this Registration Document and include statements regarding the 

intentions, beliefs or current expectations of the Company concerning, among other things, the investment objective, 

policy and strategy, financing strategies, financial condition, liquidity, prospects and dividend policy of the Company, the 

investment performance of other funds managed by the Investment Manager and the markets in which the Company 

expects to invest. By their nature, forward-looking statements involve risks and uncertainties because they relate to 

events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not 

guarantees of future performance. The Company’s actual investment performance, financial condition, liquidity, dividend 

policy and the development of its financing strategies may differ materially from the impression created by the forwardlooking 

statements contained in this Registration Document. In addition, even if the investment performance, financial 

condition, liquidity and dividend policy of the Company, and the development of its financing strategies, are consistent with 

the forward-looking statements contained in this Registration Document, those results or developments may not be 

indicative of results or developments in subsequent periods. Important factors that could cause these differences include, 

but are not limited to: 

• the risk factors set out above in the section entitled “Risk Factors” in this Registration Document; 

• changes in economic conditions generally and the equity markets specifically; 

• changes in the Company’s investment strategy; 

• changes in interest rates and/or credit spreads, as well as the success of the Company’s hedging strategy in relation 

to such changes; 

• impairments in the value of the Company’s investments; 

• legislative/regulatory changes; 

• changes in taxation regimes; and 

• the Company’s continued ability to invest the cash on its balance sheet and the proceeds of the Offer in suitable 

investments on a timely basis. 

Subject to its legal and regulatory obligations, the Company expressly disclaims any obligation to update or revise any 

forward-looking statement contained herein to reflect any change in expectation with regard thereto or any change in 

events, conditions or circumstances on which any statement is based. 

Potential investors are advised to read this Registration Document in its entirety before making any investment in Shares 

and, in particular, the sections of this Registration Document entitled “Risk Factors” and “Part 1 — The Company” for a 

further discussion of the factors that could affect the Company’s future performance. In light of these risks, uncertainties 

and assumptions, the events described in the forward-looking statements in this Registration Document may not occur. 

All Shareholders are entitled to the benefit of, are bound by, and are deemed to have notice of, the provisions of the 

Company’s Articles of Association, which investors should review. 

34

SELLING RESTRICTIONS 




make such offer or invitation. The distribution of the Prospectus, including this Registration Document, and the offering 

of Shares in certain jurisdictions may be restricted. Accordingly, persons into whose possession this Registration 

Document comes are required to inform themselves about and observe any restrictions as to the offer or sale of Shares 

and the distribution of this Registration Document under the laws and regulations of any jurisdiction in connection with 

any applications for Shares in the Company, including obtaining any requisite governmental or other consent and 

observing any other formality prescribed in such jurisdiction. No action has been taken or will be taken in any 

jurisdiction by the Company that would permit a public offering of Shares in any jurisdiction where action for that 

purpose is required, nor has any such action been taken with respect to the possession or distribution of this 

Registration Document other than in any jurisdiction where action for that purpose is required. 

UNITED STATES, CANADA, AUSTRALIA AND JAPAN 

The Shares have not been and will not be registered under the US Securities Act or any other applicable law of the United 

States or under the relevant securities laws of Canada, Australia or Japan. Accordingly, unless an exemption under such 

acts or laws is applicable, the Shares may not be offered, sold or delivered, directly or indirectly, in or into the United 

States, Canada, Australia or Japan. 

MEMBER STATES OF THE EUROPEAN ECONOMIC AREA 

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (as 

defined below) or where the Prospectus Directive is applied by the regulator (each, a “Relevant Member State”), an offer of 

the Shares to the public may only be made in the Relevant Member State after the publication of a prospectus in relation 

to the Shares has been approved by a competent authority in that Relevant Member State (or approved by a competent 

authority in another Relevant Member State and passported into such jurisdictions in accordance with the Prospectus 

Directive as implemented by such jurisdiction) except that an offer of the Shares to the public in a Relevant Member State 

may be made at any time: 

• to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or 

regulated, whose corporate purpose is solely to invest in securities; 

• to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year, (ii) a 

total balance sheet of more than €43,000,000 and (iii) an annual net turnover of more than €50,000,000, as shown in its 

last annual or consolidated accounts; 

• to fewer than 100 natural or legal persons per Relevant Member State (other than qualified investors as defined in the 

Prospectus Directive); or 

• in any other circumstances which do not require the publication of a prospectus pursuant to Article 3 of the 

Prospectus Directive. 

For the purposes of this provision, the expression an “offer of the Shares to the public” in relation to any Shares in any 

Relevant Member State means the communication in any form and by any means of sufficient information on the terms of 

the offer and the Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Shares, as the 

same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that 

Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant 

implementing measure in each Relevant Member State. 

AUSTRIA 

Prospective purchasers of the Company’s Shares should note that no prospectus pursuant to the Prospectus Directive 

(Directive 2003/71/EC) has been or will be approved by the Austrian Financial Market Authority (Finanzmarktaufsicht) or 

has been or will be passported into Austria and that the Company’s Shares will be offered in the Republic of Austria under 

circumstances which will not be considered as an offer to the public under the Austrian Capital Market Act 

(Kapitalmarktgesetz — KMG). Accordingly neither this document nor any other document in connection with the Company’s 

Shares is a prospectus according to the KMG or the Austrian Stock Exchange Act (Börsegesetz — BörseG) and has 

therefore not been drawn up, audited, approved, passported and/or published in accordance with the aforesaid acts. 

Subject to and in accordance with the provisions of the KMG, the Company’s Shares may therefore not be publicly offered 

or (re)sold in the Republic of Austria without a prospectus being published, or an applicable exemption from such 

requirement being relied upon. Each purchaser of the Company’s Shares represents to the Company that such purchaser 

will (i) only (re)sell, offer or transfer the Company’s Shares in accordance with applicable Austrian securities and capital 

markets legislation and that (ii) such purchaser will only distribute or publish this document and any advertising or other 

offer materials relating to the Company’s Shares in accordance with applicable Austrian securities and capital markets 

legislation, and in any case only in circumstances in which no obligation arises for the Company or the Global 

Co-ordinator to publish a prospectus pursuant to Article 4 of the Prospectus Directive or a supplement to a prospectus 

pursuant to Article 16 of the Prospectus Directive respectively. Because of the foregoing limitations, each investor 

undertakes to inform himself/herself about and to observe any such restrictions. 

35

This document is not intended to provide a basis of any credit or other evaluation of the Company and its business and 

should not be considered as a personal recommendation for any recipient of this document to purchase the Company’s 

Shares as it does not take into account the particular investment objective, financial situation or needs of any specific 

recipient. Each investor contemplating purchasing any of the Company’s Shares therefore represents to make its own 

independent investigation of the Company and of the suitability of an investment in the Company’s Shares in light of their 

particular circumstances and represents to seek independent professional advice, including tax advice, prior to investing 

in the Company’s Shares and to consult legal counsel prior to making any (re)sale of the Company’s Shares. 

This document is confidential and is being provided to its recipients who have been individually selected and are targeted 

exclusively on the basis of a private placement solely for the information of such recipients and must not be reproduced, 

distributed to any other person (including the press and any other media) or published, in whole or in part, for any 

purpose. 

This document is a marketing communication and has not been prepared in accordance with legal requirements designed 

to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the 

dissemination of investment research. 

This document is distributed under the condition that the above obligations and representations are accepted by the 

recipient and that the recipient undertakes to comply with the above restrictions. 

BAILIWICK OF GUERNSEY 

Shares will not be offered directly to members of the public within the Bailiwick of Guernsey, meaning any person who is 

not regulated under any of the financial services regulatory laws of the Bailiwick of Guernsey. 

BAILIWICK OF JERSEY 

Shares will not be offered directly to members of the public within the Bailiwick of Jersey, meaning any person who is not 

regulated under any of the financial services regulatory laws of the Bailiwick of Jersey. 

BELGIUM 

The Prospectus and related documents have not been approved in Belgium and are not intended to constitute, and may 

not be construed as, a public offering in the Kingdom of Belgium. Accordingly, these documents may not be distributed or 

circulated to, and the Shares may not be offered or sold to, any member of the public in the Kingdom of Belgium other 

than qualified investors listed in article 10 of the Belgium Law of 16 June 2006 on the public offering of investment 

instruments and the admission to trading of investment instruments on a regulated market, or investors subscribing for a 

minimum amount of €50,000 each for each separate offer and, provided any such investor qualifies as a consumer within 

the meaning of article 1.7 of the Law of 14 July 1991 on consumer protection and trade practices, such offer or sale is 

made in compliance with the provisions of the Law of 14 July 1991 on consumer protection and trade practices and its 

implementing legislation. 

FRANCE 

The Prospectus and related documents have not been approved by the competent regulatory authority in France and are 

not intended to constitute, and may not be construed as, a public offer in France. The Shares have not been offered or sold 

and will not been offered or sold, directly or indirectly, to the public in France, provided that offers, sales and distributions 

may be made in France only to: (a) providers of the investment service of portfolio management for the account of third 

parties; (b) qualified investors (investisseurs qualifiés); and/or (c) to a restricted circle of investors, all as defined in, and in 

accordance with, Articles L.411-1, L.411-2, D.411-1 and D.411-4 of the French Code monétaire et financier. 

The Shares may be resold directly or indirectly only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to 

L.621-8-3 of the French Code monétaire et financier. 

HONG KONG 

The contents of the Prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to 

exercise caution in relation to the Offer. If you are in any doubt about any of the contents of the Prospectus, you should 

obtain independent professional advice. 

Please note that (i) Shares may not be offered or sold in Hong Kong by means of the Prospectus or any other document 

other than to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of 

Hong Kong (Cap. 571) and any rules made thereunder, or in other circumstances which do not result in the Prospectus 

being a “prospectus” as defined in the Companies Ordinance of Hong Kong (Cap. 32) or which do not constitute an offer or 

invitation to the public for the purposes of the Companies Ordinance, and (ii) no person shall issue or possess for the 

purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to Shares 

which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if 

permitted to do so under the securities laws of Hong Kong) other than with respect to Shares which are or are intended to 

be disposed of only to persons outside Hong Kong or only to such professional investors within the meaning of Part I of 

Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571) and any rules made thereunder. 

36

LUXEMBOURG 

In addition to the cases described above in the European Economic Area selling restrictions in which the Company and the 

Global Co-ordinator can make an offer of Shares to the public in a Relevant Member State (including the Grand Duchy of 

Luxembourg), the Company and the Global Co-ordinator can also make an offer of Shares to the public in the Grand Duchy 

of Luxembourg: 

(a) 

(b) 

(c) 

at any time, to national and regional governments, central banks, international and supranational institutions 

(such as the International Monetary Fund, the European Central Bank, the European Investment Bank) and other 

similar international organisations; 

at any time, to legal entities which are authorised or regulated to operate in the financial markets (including, 

credit institutions, investment firms, other authorised or regulated financial institutions, insurance companies, 

undertakings for collective investment and their management companies, pension and investment funds and 

their management companies, commodity dealers) as well as entities not authorised or regulated whose 

corporate purpose is solely to invest in securities; and 

at any time, to certain natural persons or small and medium-sized enterprises (as defined in the Luxembourg act 

dated 10 July 2005 on prospectuses for securities implementing the Prospectus Directive into Luxembourg law) 

recorded in the register of natural persons or small and medium-sized enterprises considered as qualified 

investors as held by the Commission de Surveillance du Secteur Financier as competent authority in Luxembourg 

in accordance with the Prospectus Directive. 

NETHERLANDS 

The Shares will not be offered or sold, directly or indirectly, in the Netherlands, other than: (i) for a minimum 

consideration of €50,000 or the equivalent in another currency per investor; (ii) to fewer than 100 individuals or legal 

entities other than qualified investors; or (iii) solely to qualified investors, all within the meaning of article 4 of the 

Financial Supervision Act Exemption Regulation (Vrijstellingsregeling Wet op het financieel toezicht). 

In respect of the Offer, the Company is not required to obtain a license as a collective investment scheme pursuant to the 

Netherlands Financial Supervision Act (Wet op het financiële toezicht) and is not subject to supervision of the Netherlands 

Authority for the Financial Markets (Stichting Autoriteit Financiële Markten). 

PORTUGAL 

No offer or sale of Shares may be made in Portugal except under circumstances that will result in compliance with the 

rules concerning marketing of such Shares and with the laws of Portugal generally. 

No notification has been made nor has any been requested from the Securities Market Commission (Commissão do 

Mercado de Valores Mobiliários) for the marketing of the Shares referred to in the Prospectus of which this document 

forms a part, therefore the same cannot be offered to the public in Portugal. 

Accordingly, no Shares have been or may be offered or sold to unidentified addressees or to 100 or more non-qualified 

Portuguese resident investors and no offer has been preceded or followed by promotion or solicitation to unidentified 

investors, public advertisement, publication of any promotional material or in any similar manner. 

In particular, the Prospectus and the offer of the Shares is only intended for Qualified Investors acting as final investors. 

Qualified Investors within the meaning of the Securities Code (Código do Valores-Mobiliários) includes credit institutions, 

investment firms, insurance companies, collective investment institutions and their respective managing companies, 

pension funds and their respective pension fund-managing companies, other authorised or regulated financial 

institutions, notably securitisation funds and their respective management companies and all other financial companies, 

securitisation companies, venture capital companies, venture capital funds and their respective management companies, 

financial institutions incorporated in a state that is not a member state of the EU that carry out activities similar to those 

previously mentioned, entities trading in financial instruments related to commodities and regional and national 

governments, central banks and public bodies that manage debt, supranational or international institutions, namely the 

European Central Bank, the European Investment Bank, the International Monetary Fund and the World Bank, as well as 

entities whose corporate purpose is solely to invest in securities and any legal entity which has two or more of: (i) an 

average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and 

(iii) an annual net turnover of more than €50,000,000, all as shown in its last annual or consolidated accounts. 

REPUBLIC OF IRELAND 

The Offer is being effected in the Republic of Ireland by way of a private placement. Each addressee of the Offer in the 

Republic of Ireland shall be deemed to have acknowledged, represented and agreed that the Offer is open for acceptance 

by the offeree only and that the offeree will not pass a copy of the Prospectus and related documents on to any person 

other than the offeree’s professional advisers and that any Shares acquired by the offeree will not have been acquired with 

a view to offer or resale to persons in circumstances which may give rise to an offer to the public. The Company is not 

authorised or supervised by the Irish Financial Regulator. 

37

SINGAPORE 

The Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities 

and Futures Act, Chapter 289 of Singapore (the “Singapore Securities and Futures Act”). Accordingly, the Shares may not 

be offered or sold or made the subject of an invitation for subscription or purchase nor may the Prospectus or any other 

document or material in connection with the offer or sale or invitation for subscription or purchase of any Shares be 

circulated or distributed, whether directly or indirectly, to any person in Singapore other than: (a) to an institutional 

investor pursuant to Section 274 of the Singapore Securities and Futures Act; (b) to a relevant person, or any person 

pursuant to Section 275(1A) of the Singapore Securities and Futures Act, and in accordance with the conditions specified 

in Section 275 of the Singapore Securities and Futures Act; or (c) pursuant to, and in accordance with the conditions of, 

any other applicable provision of the Singapore Securities and Futures Act. 

Each of the following relevant persons specified in Section 275 of the Singapore Securities and Futures Act who has 

subscribed for or purchased Shares, namely a person who is: 

(a) 

(b) 

a corporation (which is not an accredited investor) the sole business of which is to hold investments and the 

entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or 

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each 

beneficiary is an accredited investor, 

should note that shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights 

and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the 

Shares under Section 275 of the Singapore Securities and Futures Act except: 

(1) to an institutional investor under Section 274 of the Singapore Securities and Futures Act or to a relevant person, 

or any person pursuant to Section 275(1A) of the Singapore Securities and Futures Act, and in accordance with 

the conditions, specified in Section 275 of the Singapore Securities and Futures Act; 

(2) where no consideration is given for the transfer; or 

(3) by operation of law. 

SPAIN 

The Shares may not be offered, sold or distributed in the Kingdom of Spain except in accordance with the requirements of 

Law 24/1988, of 28 July on the Securities Market (Ley 24/1988, de 28 de julio, del Mercado de Valores) as amended and 

restated, and Royal Decree 1310/2005, of 4 November 2005 partially developing Law 24/1988, of 28 July on the Securities 

Market in connection with listing of securities in secondary official markets, initial purchase offers, rights issues and the 

prospectus required in these cases (Real Decreto 1310/2005, de 4 de noviembre, por el que se dearrolla parcialmnete la Ley 

24/1988, de 28 Julio, del Mercado de Valores, en material de admision a negociación de valores en mercados secundarios 

oficiales, de ofertas publicas de venta o suscripción y del folleto exigible a tales efectos) and the decrees and regulations 

made thereunder. Neither the Shares nor the Prospectus have been verified or registered in the administrative registries 

of the National Stock Exchange Commission (Comisión Nacional de Mercado de Valores). 

SWITZERLAND 

The Prospectus may only be communicated in and from Switzerland to a limited number of investors who are qualified 

investors as defined in the Swiss Federal Act on Collective Investment Schemes (the “Swiss CIS Act “). 

The Company qualifies as a foreign closed-end collective investment scheme pursuant to art. 119 para. 2 Swiss CIS Act, 

which entered into force on 1 January 2007 and replaced the Swiss Federal Act on Investment Funds of 18 March 1994. 

The Shares will not be licensed for public distribution in and from Switzerland and they may only be offered and sold to 

so-called “qualified investors” as defined in, and in accordance with, the private placement requirements set forth by the 

new law (in particular art. 10 para. 3 Swiss CIS Act and art. 6 of the ordinance to Swiss CIS Act). The Shares have not been 

licensed for public distribution with the Swiss Federal Banking Commission and the Company is not subject to the 

supervision of the Swiss Federal Banking Commission. Therefore investors in the Shares do not benefit from the specific 

investor protection provided by Swiss CIS Act and the supervision by the Swiss Federal Banking Commission. 

TAIWAN 

The offer of the Shares has not been and will not be registered with or approved by the competent authorities of the 

Taiwan pursuant to relevant securities laws and regulations and the Shares may not be offered or sold within the Taiwan 

through a public offering or in circumstances which constitute an offer within the meaning of the securities law and 

regulations of Taiwan that requires a registration or approval of the competent authorities of Taiwan. 

Purchasers of Shares within Taiwan under the global offering may not resell such Shares except in accordance with 

applicable laws in Taiwan. 

UNITED ARAB EMIRATES AND THE DUBAI INTERNATIONAL FINANCE CENTRE 

In relation to the United Arab Emirates (“UAE”) excluding the Dubai International Finance Centre (“DIFC”), the Shares 

have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and 

Commodities Authority and Market or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities 

38

Market, any other UAE exchange, the Dubai International Financial Exchange or the Dubai Financial Services Authority 

(“DFSA”). The Offer and the Shares have not been approved or licensed by the UAE Central Bank, the Emirates Securities 

and Commodities Authority, the DFSA or any other relevant licensing authorities in the UAE or the DIFC, and do not 

constitute a public offer of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 

1984 (as amended) or otherwise. The Prospectus is strictly private and confidential and is being distributed to a limited 

number of investors and must not be provided to any person other than the original recipient, and may not be reproduced 

or used for any other purpose. Neither the Shares nor any interests in the Shares may be offered, sold, promoted or 

advertised directly or indirectly to the public in the UAE or the DIFC. 

In relation to the DIFC, this document relates to an Exempt Offer in accordance with the Offered Securities Rules of the 

DFSA. This document is intended for distribution only to persons of a type specified in those Rules. It must not be 

delivered to, or relied on, by any other person. The DFSA has no responsibility for reviewing or verifying any documents in 

connection with Exempt Offers. The DFSA has not approved this document nor taken steps to verify the information set out 

in it, and has no responsibility for it. The Shares may be illiquid and/or subject to restrictions on their re-sale. Prospective 

purchasers of the Shares offered should conduct their own due diligence on the Shares. If you do not understand the 

contents of this document you should consult an authorised financial adviser. 

UNITED STATES 

The Shares may not be offered, sold, pledged or otherwise transferred to a US Person or a person acting for the account 

of a US Person. The Directors reserve the right to offer Shares and/or C Shares to US Persons in the future. The Company 

has not been and will not be registered under the US Investment Company Act and the Shares have not been and will not 

be registered under the US Securities Act. 





The Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities 

commission in the United States or any other US regulatory authority, nor have any of the foregoing passed upon or 

endorsed the merits of the offering of the Shares or the adequacy of this prospectus. Any representation to the contrary is 

a criminal offence in the United States and the reoffer or resale of the Shares in the United States may constitute a 

violation of US law or regulation. 

REPRESENTATIONS AND WARRANTIES 

Each purchaser of the Shares pursuant to the Offer, and each subsequent purchaser of Shares, will be deemed to have 

represented, acknowledged to and agreed with the Company, the Global Co-ordinator, the Manager, the Investment 

Manager and the Registrar as follows (terms used below that are defined in Regulation S under the US Securities Act have 

the meanings given to them in Regulation S): 

1. It and the person, if any, for whose account it is acquiring the Shares are not US Persons (as defined in Rule 902 

of Regulation S under the US Securities Act) and are purchasing the Shares outside the United States in an 

offshore transaction meeting the requirements of Regulation S. A “US person” under Rule 902 of Regulation S 

includes the following: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

any natural person resident in the United States; 

any partnership or corporation organised or incorporated under the laws of the United States; 

any estate of which any executor or administrator is a US person; 

any trust of which any trustee is a US person; 

any agency or branch of a non-US entity located in the United States; 

any non-discretionary account or similar account (other than an estate or trust) held by a dealer or 

other fiduciary for the benefit or account of a US person; 

any discretionary account or similar account (other than an estate or trust) held by a dealer or other 

fiduciary organised, incorporated or (if an individual) resident in the United States; and 

any partnership or corporation if: 

(i) 

(ii) 

organised or incorporated under the laws of any non-US jurisdiction; and 

formed by a US person principally for the purpose of investing in securities not registered under 

the 1933 Act, unless it is organised or incorporated, and owned, by accredited investors (as defined 

in Rule 501(a) of Regulation D under the 1933 Act) who are not natural persons, estates or trusts. 

Notwithstanding the preceding paragraph, “US person” under Rule 902 does not include: (i) any discretionary 

account or similar account (other than an estate or trust) held for the benefit or account of a non-US person by a 

39

dealer or other professional fiduciary organised, incorporated, or (if an individual) resident in the United States; 

(ii) any estate of which any professional fiduciary acting as executor or administrator is a US person, if (A) an 

executor or administrator of the estate who is not a US person has sole or shared investment discretion with 

respect to the assets of the estate, and (B) the estate is governed by non-US law; (iii) any trust of which any 

professional fiduciary acting as trustee is a US person, if a trustee who is not a US person has sole or shared 

investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is 

revocable) is a US person; (iv) an employee benefit plan established and administered in accordance with the law 

of a country other than the United States and customary practices and documentation of such country; (v) any 

agency or branch of a US person located outside the United States if (A) the agency or branch operates for valid 

business reasons, and (B) the agency or branch is engaged in the business of insurance or banking and is 

subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located; and 

(vi) certain international organisations as specified in Rule 902(k)(2)(vi) of Regulation S, including their agencies, 

affiliates and pension plans. 

2. It and the person, if any, for whose account it is acquiring the Shares are Non-United States persons as defined 

in CFTC Rule 4.7(a)(1)(iv). Under CFTC Rule 4.7(a)(1)(iv) “Non-United States person” means: 

(A) 

(B) 

(C) 

(D) 

(E) 

a natural person who is not a resident of the United States or an enclave of the US government, its 

agencies or instrumentalities; 

a partnership, corporation or other entity, other than an entity organised principally for passive 

investment, organised under the laws of a non-US jurisdiction and which has its principal place of 

business in a non-US jurisdiction; 

an estate or trust, the income of which is not subject to United States income tax regardless of source; 

an entity organised principally for passive investment such as a pool, investment company or other similar 

entity; provided, that units of participation in the entity held by persons who do not qualify as Non-United 

States persons or otherwise as qualified eligible persons, as defined in CFTC Rule 4.7(a)(2) or (3), represent 

in the aggregate less than 10 per cent. of the beneficial interest in the entity, and that such entity was not 

formed principally for the purpose of facilitating investment by persons who do not qualify as Non-United 

States persons in a pool with respect to which the operator is exempt from certain requirements of Part 4 of 

the Commission’s regulations by virtue of its participants being Non-United States persons; or 

a pension plan for the employees, officers or principals of an entity organised and with its principal 

place of business outside the United States. 

3. The Shares have not been and will not be registered under the US Securities Act or with any state securities 

regulatory authority in the United States and may not be offered, resold, pledged or otherwise transferred except 

to (i) the Company (upon redemption of such Shares or otherwise) or (ii) in an offshore transaction in accordance 

with Rule 903 or Rule 904 of Regulation S. 

4. The Company has not registered and will not register under the US Investment Company Act and the Company 

has put in place restrictions for transactions not involving any public offering to ensure that the Company is not 

required and will not be required to be registered under the US Investment Company Act. 

5. It understands that each Share certificate will contain a legend substantially to the following effect unless 

otherwise agreed by the Company and the holder of the Share in accordance with applicable law: 

The Company has not been and will not be registered under the United States Investment Company Act of 1940, as 

amended (the “US Investment Company Act”). In addition, the Shares have not been and will not be registered 

under the United States Securities Act of 1933, as amended (the “Securities Act”). Each holder agrees for the 

benefit of the issuer, any distributors or dealers and any such persons’ affiliates that these shares may be offered, 

resold, pledged or otherwise transferred only (a) to the issuer (upon redemption of such shares or otherwise) or 

(b)inanoffshoretransactiontonon-USPersonsinaccordance with Rule 903 or 904 of Regulation S. The holder 

acknowledges that the issuer reserves the right to make enquiries of any holder of these shares or interests 

therein at any time as to such persons’ status under the US securities laws and to require any person that has not 

satisfied the issuer that such person is holding the shares or interests therein appropriately under the US 

securities laws to transfer such shares or interests therein immediately to the issuer or otherwise. The holder 

agrees to, and each subsequent holder is required to, notify any purchasers of these shares of the transfer 

restrictions referred to above. 

6. It is not, and is not holding on behalf of, an employee benefit plan (as described in Section 3(3) of the US 

Employment Retirement Income Security Act of 1974 (“ERISA”)), other than a plan maintained outside the United 

States and described in Section 4(b)(4) of ERISA. 

7. It is purchasing the Shares for its own account or for one or more investment accounts for which it is acting as a 

fiduciary or agent, in each case for investment only, and not with a view to or for sale or other transfer in 

40

connection with any distribution of the Shares in any manner that would violate the US Securities Act, the US 

Investment Company Act or any other applicable securities laws. 

8. It has received (outside the United States), carefully read and understands this Prospectus, and has not 

distributed, forwarded, transferred or otherwise transmitted this Prospectus or any other presentation or 

offering materials concerning the Shares to any persons within the United States or to any US Persons, nor will it 

do any of the foregoing and that it understands that this Prospectus is subject to the requirements of the 

Prospectus Directive and all rules promulgated thereunder and the information therein, including any financial 

information, may be materially different from the disclosure that would be provided in a US offering. 

9. It agrees that it will inform each subsequent purchaser of the Shares from it of these transfer restrictions and 

that if in the future it decides to offer, resell, pledge or otherwise transfer such Shares, any offer, resale or 

transfer will be made in compliance with the US Securities Act, the US Investment Company Act and any 

applicable US securities laws. 

10. (i) At the time the Shares are acquired, it is not an affiliate of the Company or a person acting on behalf of such 

an affiliate; and (ii) it is not acquiring the Shares for the account of an affiliate of the Company or of a person 

acting on behalf of such affiliate. 

11. It acknowledges that the Company reserves the right to make inquiries of any holder of the Shares or interests 

therein at any time as to such person’s status under US securities laws, and to require any such person that has 

not satisfied the Company that such person is holding appropriately under US securities laws to transfer such 

Shares or interests immediately under the direction of the Company. 

12. It acknowledges that the Company may receive a list of participants holding positions in its securities from one or 

more book-entry depositories. 

13. The Company may require a certification from the transferee in support of any transfer, in form and substance 

satisfactory to the Company and agrees that the Company, the Registrar or any transfer agent may reasonably 

require additional evidence or documentation supporting compliance with applicable securities laws and prior to 

the registration of any transfer the Directors may require of a proposed transferee or transferor such 

certifications, notifications, agreements and warranties and legal opinions of duly qualified counsel as they may 

reasonably require (including but not limited to that the transferees are not US Persons as defined in this 

Prospectus) to ensure the proposed transferee would be entitled to hold the same in accordance with these 

provisions and that all applicable laws will be or would have been complied with. 

14. It is entitled to subscribe for the Shares comprised in the Offer under the laws of all relevant jurisdictions which 

apply to it, that it has fully observed such laws and obtained all governmental and other consents which may be 

required thereunder and complied with all necessary formalities and it has paid any issue, transfer or other 

taxes due in connection with its acceptance in any jurisdiction and that it has not taken any action or omitted to 

take any action which will or may result in the Global Co-ordinator or the Company or any of their respective 

directors, officers, agents, employees or advisers acting in breach of the legal and regulatory requirements of 

any jurisdiction in connection with the Offer or its acceptance of participation in the Offer. 

15. The Company, the Global Co-ordinator, the Registrar, any transfer agent, any distributors or dealers or their 

affiliates and others will rely upon the truth and accuracy of the foregoing representations, acknowledgements 

and agreements and agrees that if any of the acknowledgements, representations or agreements made by it are 

no longer accurate or have not been complied with, it will immediately notify the Company and, if it is acquiring 

any Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion 

with respect to each such account and that it has full power to make such foregoing acknowledgements, 

representations and agreements on behalf of each such account. 

41

DIRECTORS, MANAGERS AND ADVISERS 

Directors 


Manager 

Sub-Administrator and Custodian 

Company Secretary 


Legal Advisers to the Company as to English law 

Legal Advisers to the Company as to Jersey law 

Legal Advisers to the Global Co-ordinator 

Colin Maltby — Chairman 

Frank Le Feuvre 

Jonathan Ruck Keene 

John Siska 

Philip Smith 

BlackRock Alternative Advisors 

BlackRock, Inc. 

601 Union Street, 56th floor 

Seattle 

WA 98101 

USA 

BlackRock (Channel Islands) Limited 

Forum House 

Grenville Street 

Jersey 

Channel Islands 

JE1 0BR 

UBS Fund Services (Cayman) Limited 

PO Box 852 

UBS House 

227 Elgin Avenue 

Grand Cayman 

KY1-1103 

Cayman Islands 


Forum House 


Jersey 


JE1 0BR 

UBS Limited 

1 Finsbury Avenue 

London 

EC2M 2PP 

Herbert Smith LLP 

Exchange House 

Primrose Street 

London EC2A 2HS 

Bedell Cristin 

26 New Street 

St Helier 

Jersey 

JE4 8PP 

Simmons & Simmons 

CityPoint 

One Ropemaker Street 

London 

EC2Y 9SS 

42

Receiving Agent 

CREST Service Provider and Registrar 

Auditors 

Computershare Investor Services PLC 

Corporate Actions Projects 

Bristol 

BS99 6AH 

Computershare Investor Services (Channel Islands) 

Limited 

Ordnance House 

31 Pier Road 

St. Helier 

Jersey 

Deloitte & Touche LLP 

Lord Coutanche House 

66-68 Esplanade 

St. Helier 

Jersey 

JE4 8WA 

43

PART 1 

THE COMPANY 

INTRODUCTION 

The Company is a newly-formed Jersey incorporated and registered closed-ended investment company with an 

investment objective to generate absolute returns in excess of the yields on short-term LIBOR securities, while 

endeavouring to minimise the corresponding level of volatility. The Company has been established with an unlimited life 

and its Board of Directors is independent of the Investment Manager. 

INVESTMENT POLICY 

Investment Objective 

The Company’s investment objective will be to generate absolute returns in excess of the yields on short-term LIBOR 

securities, while endeavouring to minimise the corresponding level of volatility. The Company will seek to generate these 


Asset Allocation 



Strategies (“ARS”) include non-traditional investment strategies that utilise a variety of securities and financial 

instruments and employ sophisticated trading and portfolio management techniques, and comprise “Relative-Value”, 

“Event-Driven”, “Fundamental Long-Short” and “Direct Sourcing” disciplines. 

To participate in the returns generated by these External Investment Advisors, the Company may: (1) invest in collective 

entities managed by such External Investment Advisors, such as partnerships, limited liability companies, investment 

funds, common trusts and similar collective entities (“Collective Investment Vehicles”); (2) invest in derivative instruments 

or participate in contractual relationships (including swaps, options, forwards, notional principal contracts or other similar 

financial instruments) whereby any associated payments or receipts may be based on some or all of the change in value of 

one or more Collective Investment Vehicles; or (3) delegate investment authority over the relevant portion of its assets to 

External Investment Advisers (by establishing separate discretionary accounts to be managed by such External 

Investment Advisors or other forms of investment discretion delegation) ((1), (2) and (3) together being referred to as 

“Fund Investments”). The Company may also make direct investments in a wide range of securities, financial instruments 

or non-traditional structures (including any new financial instruments or structures which may be developed in the future) 

that provide exposure, typically, to single positions, for example through co-investments with an External Investment 

Advisor in single positions, bridge loans or other financings related to a Fund Investment (“Direct Investments”). 

The Company may invest in Fund Investments or Direct Investments alongside other BlackRock managed funds of hedge 

funds via conduit funds. The allocation of any Fund Investment or Direct Investment held by a conduit fund between the 

various BlackRock funds of hedge funds will be determined by the Investment Manager. 

Through its investment in Fund Investments and Direct Investments, the Company may invest in a wide variety of 

securities and financial instruments. These securities and financial instruments may or may not be publicly traded and 

may include shares, units, bonds, debentures, notes, preferred or preference stock, common stock, certificates of 

beneficial interest, participations, warrants, partnership interests, currencies, certificates of deposit, repurchase and 

reverse repurchase agreements, swap agreements, notional principal contracts, cap, collar and floor agreements, voting 

trust certificates, put and call options, commodity or spot commodity contracts, forward or future contracts or any option 

with respect thereto, and such other new or modified financial instruments as may be developed and introduced from 

time to time. 

Diversification 






Borrowings 

The Company may employ borrowings of up to 25 per cent. of its Net Asset Value at the time of borrowing, which may be 

used for short-term liquidity purposes and to fund share buy-backs and redemptions. 

Investment Restrictions 

The Company will not allocate more than 15 per cent. of its Net Asset Value, measured at cost at the time of investment 

(based on information received at that time), to any single Fund Investment. In the normal course, however, it is expected 


44



The foregoing investment restrictions (which will not apply to investments in cash or other cash equivalent investments) 

will be monitored on a quarterly basis, and the portfolio may be adjusted as deemed appropriate by the Investment 

Manager. To the extent the Company pursues its investment programme through indirect or synthetic exposure to 

Absolute Return Strategies (such as through derivative financial instruments), such investment restrictions will be 

measured with respect to the investments underlying such indirect or synthetic investments. Accordingly, the Company is 

not limited as to a percentage of its assets that may be committed to the derivative financial instruments through which 

the Company achieves such indirect or synthetic exposure to Absolute Return Strategies. 



CHANGES TO THE INVESTMENT POLICY 

Any material change to the Company’s investment policy will be made only with the approval of Shareholders. 


BlackRock Financial Management Inc., a Delaware corporation, serves as the Company’s investment manager. The 

Company will be managed through its business unit, BlackRock Alternative Advisors (“BAA”), which is responsible for 

investment management decisions, the selection of External Investment Advisors and the determination of the structure 

or method of investing in a Fund Investment or Direct Investment. The Investment Manager is registered as an investment 

adviser with the SEC. 

The Directors believe that the principal advantages of an investment in the Shares of the Company are as follows: 

• Strong performance track record in a variety of challenging market conditions — from inception in August 1995 to 

31 December 2007, the investment strategy to be used in managing the Company’s assets has never ended a year 

with a negative return and has delivered 12.7 per cent. annualised net performance, with a 3.5 per cent. standard 

deviation, a Sharpe Ratio greater than 2.0 and a beta to the FTSE All Share Index of 0.11. For further information see 

“Historical Track Record of the Investment Manager” below. 

• Established investment manager — BAA has a track record of more than 12 years and provides an experienced and 


• Alignment of incentives — BAA’s employees currently have invested or committed to invest, directly or indirectly, in 

excess of US$400 million across the ARS, private capital and hybrid strategy funds managed by BAA. 

• Access to External Investment Advisors — BAA has developed long-standing relationships and gained the respect of 

many External Investment Advisors and believes these relationships afford it a relative advantage in accessing 

talented External Investment Advisors. 

• History of innovation — BAA’s depth of knowledge and a broad network of industry contacts facilitate early 

identification and pursuit of investment themes. 

• Risk management and proprietary tools — BAA conducts ongoing risk assessment and External Investment Advisor 



facilitates a subjective, qualitative approach to External Investment Advisor evaluation and selection, features 

analytical tools that support qualitative and quantitative analysis. 

• Advanced process engineering — BAA has developed a comprehensive technology platform that supports the 

information-intensive nature of alternative investment fund of funds management. BAA’s proprietary technology has 

been developed to facilitate the conversion of large amounts of data into more useful information, the 

institutionalisation of knowledge and an integration of systems and processes. 

• Attractive fund structure — the closed-ended nature of the Company will provide greater flexibility to invest in 

attractive but less liquid Fund Investments than would be likely to be the case with an open-ended vehicle. Shares 

will be offered in three currency classes (denominated in US Dollars, Sterling and Euro) with at least quarterly 

conversions between currency classes permitted. 

• Discount control — the Company, the Investment Manager and its affiliates will have the ability to purchase Shares in 

the secondary market at any time the Shares trade at a discount to NAV. In addition, the Company will consider 

commencing a share buy-back programme if the Shares should trade at or below 95 per cent. of NAV. Furthermore, 

at the discretion of the Directors, the Company expects to have a Redemption Facility pursuant to which the 

Shareholders would have the opportunity periodically to redeem some or all of their Shares (subject to certain 

restrictions including a maximum redemption on any Redemption Date of 20 per cent. of the Shares of any class then 

in issue) at Net Asset Value less costs. Further details of the Redemption Facility are set out under “Redemption 

Facility” below. 

45

• The Manager will bear all fees and expenses payable in respect of the Offer — all fees and expenses payable in respect 

of the Offer (including all costs related to the establishment of the Company) will be borne by the Manager or its 

affiliates (save if the Management Agreement is terminated in certain circumstances) such that the gross proceeds of 

the Offer, net of the Company’s short-term working capital requirements, will be available to the Company for 

investment following Admission. 

TARGET RETURN 

The Company aims to generate a target net return of approximately 3-month LIBOR plus 6 per cent. per annum with a 

standard deviation of 8 per cent. Targets are not predictions or projections. 

Past or targeted performance is no indication of current or future performance or results. Return figures are targets only 

and are based over the long term. 

There is no guarantee that the target return of the Company can be achieved and it should not be seen as an indication 

of expected or actual return. Accordingly, investors should not place any reliance on such a return target in deciding 

whether to invest in Shares. 

Furthermore, the future performance of the Company may be materially detrimentally affected by the risks discussed in 

the section of this Registration Document headed “Risk Factors”. 




3.5 per cent. standard deviation, a Sharpe Ratio of approximately 2.0 and a beta to the FTSE All Share Index of 0.11. See 

“Important Information” below. 

Performance Comparison and Summary for the Period Ended 31 December 2007 – Annualised Since Inception 

Return Std. Dev. Sharpe Correl. 

QARS3-I Global (GBP blended-net) ................................. 12.7% 3.5% 2.06% 1.00 

FTSE All-Share Index (GBP) ....................................... 8.5% 12.8% 0.23 0.40 

ML GBP-3 Month LIBOR (GBP) ..................................... 5.6% 0.4% — 0.11 

QARS3-I Global (USD blended-net) ................................. 11.5% 3.6% 2.08 1.00 

S&P 500 Index (USD) ............................................. 9.9% 14.4% 0.41 0.42 

MSCI World Index (USD) .......................................... 8.4% 13.5% 0.32 0.44 

ML-T-Bills (USD) ................................................ 4.0% 0.5% — 0.31 

HFRI Conservative Index (USD) ..................................... 8.1% 3.3% 1.22 0.78 

1-Year 

Annualised 

3-Year 

Annualised 

5-Year 

Annualised 

10-Year 

Annualised 

QARS3-I Global (GBP blended-net) ................................. 12.8% 10.0% 10.3% 11.3% 

FTSE All-Share Index (GBP) ....................................... 5.6% 14.9% 15.8% 6.6% 

ML GBP-3 Month LIBOR (GBP) ..................................... 5.9% 5.2% 4.8% 5.3% 

QARS3-I Global (USD blended-net) ................................. 12.6% 9.7% 8.9% 10.0% 

S&P 500 Index (USD) ............................................. 5.5% 8.6% 12.8% 5.9% 

MSCI World Index (USD) .......................................... 9.0% 12.8% 17.0% 7.0% 

ML-T-Bills (USD) ................................................ 4.7% 4.4% 3.1% 3.7% 

HFRI Conservative Index (USD) ..................................... 7.7% 7.3% 7.4% 6.5% 

For the period ended 31 December 

2008* 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 

QARS3-I Global (GBP blended-net) . . . (0.5)% 12.8% 10.9% 6.5% 9.0% 12.6% 6.4% 8.0% 19.8% 22.8% 5.2% 

FTSE All-Share Index (GPB) ......... (7.9)% 5.6% 17.1% 22.6% 13.3% 21.3% -22.3% -12.9% -5.6% 24.4% 14.7% 

ML GBP 3-Month LIBOR (GBP) ...... 1.0% 5.9% 4.7% 4.9% 4.5% 3.8% 4.1% 5.6% 6.3% 5.7% 7.9% 

QARS3-I Global (USD blended-net) . . . (0.6)% 12.6% 11.7% 4.8% 5.8% 10.0% 4.1% 6.9% 20.1% 22.5% 3.1% 

S&P 500 Index (USD) ............... (9.0)% 5.5% 15.8% 4.9% 10.9% 28.7% -22.1% -11.9% -9.1% 21.0% 28.6% 

MSCI World Index (USD) ............ (8.2)% 9.0% 20.1% 9.5% 14.7% 33.1% -19.9% -16.8% -13.2% 24.9% 24.3% 

ML T-Bills (USD) .................. 0.4% 4.7% 5.1% 3.4% 1.4% 1.1% 1.7% 3.6% 6.4% 5.0% 5.2% 

HFRI Conservative Index (USD) ...... (0.8)% 7.7% 9.2% 5.1% 5.8% 9.0% 3.6% 3.1% 5.8% 18.9% -1.6% 

Source: QARS3-I Global (GBP blended-net)/ QARS3-I Global (USD blended-net) — BlackRock (unaudited). Indices as noted under 

the heading “Definitions”. 

* Estimated performance for 1 January 2008 to 29 February 2008 — See “Important Information” below. 

IMPORTANT INFORMATION 

The Prospectus contains performance track record and portfolio composition data relating to Q-BLK ARS III — Institutional, Ltd. 

(“QARS3-I”) and its predecessor funds, each of which has a substantially similar investment objective and strategy to that of the 

Company and seeks to generate a total annualised net return of 6 per cent. above the annual yield for 90-day US Treasury Bills, 

with an 8 per cent. annualised standard deviation. In comparing QARS3-I’s performance relative to its objectives, it should be 

noted that QARS3-I’s risk and return objectives were lowered as of 1 August 2005. 

In considering such performance track record data, potential investors in the Company should note that although the Company, 

QARS3-I and its predecessor funds have substantially similar investment objectives and strategies and may initially have similar 

46

portfolios, the portfolios and performance of the Company, QARS3-I and its predecessor funds may differ over time due to cash 

flows and other investment considerations and guidelines, including underlying fund capacity and liquidity characteristics. 

Historic returns of QARS3-I and its predecessor funds are not a guarantee of future performance of the Company. In any event, 

past performance is not a guide to future performance. Historically, funds of funds and hedge funds have produced gains and 

losses due to changes within the equity, interest rate, credit, currency, commodity and related derivative markets. Additionally, 

gains and losses are impacted to varying degrees by investment acumen, market volatility, corporate activity, securities 

selections, regulatory oversight, trading volume and money flows. These elements and/or their rate of change may not be present 

in the future, and thus future performance may be impacted. Any investment in a fund involves a high degree of risk. 

Inclusion of information concerning QARS3-I in this Prospectus does not constitute an offer or a solicitation to purchase its 

shares, which shares can only be purchased by qualified investors by way of QARS3-I’s Confidential Private Offering 

Memorandum. 

The information concerning the investment strategy to be used in managing the Company’s assets under the headings “Historical 

Track Record of the Investment Manager” and “Investment Highlights — Strong performance track record in a variety of 

challenging market conditions” is based on QARS3-I Global (GBP blended — net). 

QARS3-I — Global (USD Blended — net) performance represents the weighted average gross performance (net of expenses other 

than management and performance fees) of Q-BLK Appreciation Fund, L.P. and Q-BLK Appreciation Fund, Inc. (prior to 1 April 

1998), Q-BLK Strategic Partners, Inc. (from 1 April 1998 to 31 October 2001) and QIP, Ltd. (from 1 November 2001 to 31 July 2004) 

(all of which have substantially similar investment objectives and strategies as the Company) and QARS3-I (from 1 August 2004 to 

31 December 2007) (together the “Track Record Funds”). The gross returns are then adjusted to reflect the management fee 

(equal to 1 per cent. per annum of net asset value) and the performance fee (equal to 10 per cent. of any appreciation in net asset 

value (after deduction of the management fee and subject to a high watermark) payable in respect of QARS3-I to its investment 

manager (the “QARS3-I Fees”). Certain of the Track Record Funds may offer share classes denominated in a non-US currency 

which are not included in the calculation of such Track Record Funds’ performance; these share classes generally incur 

additional expenses to hedge against the US Dollar. All performance numbers are estimates calculated on an accrual basis 

during the accounting close process for the Track Record Funds and are based on estimated returns provided by each underlying 

fund manager. These calculations are based on estimated returns rather than final reported information in order to provide timely 

performances return information to investors. As a result, the performance numbers shown may differ from performance 

numbers based on the final financial information for each underlying fund. For the monthly returns in January and February 2008, 

performance is calculated based on estimates provided by underlying managers to the extent available for reporting on the fifth 

business day of the following month. If no estimate is available from a small number of underlying funds, a return of zero for the 

month is assumed. Actual returns may be higher or lower once the Fund Investment statements are ultimately received and 

reconciled. QARS3-I is audited annually (and since June 2007, semi-annually) by an independent public accounting firm. 

Therefore, the performance information presented herein will contain unaudited net asset value information for periods that have 

not yet been audited. Performance results reflect the inclusion of all realised and unrealised gains and losses and the 

reinvestment of earnings. Risk is computed as the annualised standard deviation of monthly returns. For this share class, the 

Sharpe Ratio measures the return earned over 3-Month US Treasury Bills per unit of risk taken. 

QARS3-I — Global (GBP Blended — net) is a share class that was first issued on 1 March 2006. For periods prior to 1 March 2006, 

performance for this share class is that of the Track Record Funds noted for QARS3-I — Global (USD Blended – net) and 

converted to GBP using relevant one month GBP/USD spot rates and then using forward rates to hedge currency risk, each as 

supplied by Bloomberg L.P. In addition, neither the costs of currency hedging nor any potential profits on hedging have been 

included in the performance calculation. Following the 1 March 2006 launch of the GBP denominated share class, actual 

performance includes hedging costs. For the period from 1 March 2006 to 31 December 2007, QARS3-I — Global (Blended — net) 

(GBP) represents the actual performance of the GBP denominated share class in QARS3-I, including hedging costs. For this share 

class, the Sharpe Ratio measures the return earned over ML GBP 3-Month LIBOR per unit of risk taken. 

In considering the performance track record data relating to the Track Record Funds, potential investors in the Company should 

bear in mind that the manager of the Company will receive from the Company a Management Fee equal to 1.5 per cent. per 

annum of the net asset value of the Company (which is greater than the 1 per cent. management fee applicable to QARS3-I) and a 

Performance Fee equal to 10 per cent. of any appreciation in the Net Asset Value of the Company (after deduction of the 

Management Fee and subject to certain adjustments as described in more detail in this Part 1 under the heading “Fees and 

Expenses — Fees Payable to the Manager — Performance Fee”) subject to a high watermark. 

Performance information was prepared by BFM based on information believed to be reliable. However, no assurance of its 

completeness or accuracy can be made. Fund investments are categorised among disciplines, strategies or geographic 

allocations by BFM in accordance with its internal definitions. Minor variances in column, row and sectional totals are the result 

of rounding and have been allowed to maintain the integrity of the underlying financial data. 

Index performance is taken from Bloomberg Financial Markets or the index’s proprietary website and is included for comparison 

only, and, although useful for general observations, differences between the composition and construction of such indices and the 

Track Record Funds’ portfolios may limit their usefulness for direct comparisons. For example, it should be noted that hedge fund 

indices will vary, in some cases significantly, from the composition of the Track Record Funds’ portfolios in terms of the number 

of positions, types of hedge fund strategies included and distribution within such hedge fund strategies and other characteristics. 

Comparison of the Track Record Funds’ results to indices that represent asset classes other than hedge funds or funds of hedge 

funds are further limited by the significant inherent differences among such asset classes, for example in terms of risk/return, 

correlations and other characteristics. Moreover, index information may or may not reflect the deduction of fees and expenses 

(refer to specific definitions), which could further limit the comparative value of such information relative to the Track Record 

Fund data. 

47

Characteristics of securities included within the indices are subject to change between rebalancing periods. These 

characteristics are applicable when securities are evaluated at rebalancing points but may be higher or lower during 

interim periods. Additionally, index providers may have varying methodologies for measuring and implementing 

constituent changes and differing rebalancing periods. 

PORTFOLIO CHARACTERISTICS 

The information below relates to the composition of QARS3-I’s portfolio as at 1 January 2008. Although the Company and 

QARS3-I have substantially similar investment objectives and strategies and initially may have similar portfolios, the 

portfolios of the Company and QARS3-I may differ over time due to cash flows and other investment considerations and 

guidelines, including underlying fund capacity and liquidity characteristics. 

Investment Allocation as of 1 January 2008 

Discipline and strategy 

Volatility 

Statistical 

Rates 

1.7% 

2.7% 

5.0% 

Convergence 14.1% 

Capital 

Structure 

6.1% 

0 10 20 30 40 

% 

Relative-Value 29.7% 

Distressed 

Merger/ 

Acquisition 

6.7% 

16.0% 

Corporate 

Actions 

8.9% 

0 10 20 30 40 

% 

Event-Driven 31.6% 

Credit 

Equity Active 

Value 

Equity 

Selection 

2.8% 

6.7% 

18.2% 

0 10 20 30 40 

% 

Fundamental Long/Short 27.8% 

Insurance 

Real Estate 

Structured 

Equity 

Lending 

1.6% 

1.6% 

1.6% 

6.2% 

0 10 20 30 40 

% 

Direct Sourcing 11.0% 

Geographic Allocation as of 1 January 2008 

Western 

Europe 23.1% 

As at 1 January 2008 

Number of Investment Holdings 45 

Percentage Held by Top 15 Investment Holdings 56.4% 

Appreciation Strategy AUM 

US$10.8 billion 

Developed 

Asia 9.5% 

Emerging 

Markets 12.9% 

North America 

54.6% 

INVESTMENT PHILOSOPHY OF ABSOLUTE RETURN STRATEGIES 

One of the distinguishing features of Absolute Return Strategies is their focus on absolute performance objectives, as 

compared with more traditional investment programmes that tend to measure performance on a relative basis. As a 

result of this focus on absolute performance objectives, Absolute Return Strategies seek to generate returns that are 

uncorrelated with traditional performance benchmarks and seek to achieve positive returns even in declining market 

conditions. 

Absolute Return Strategies include investment strategies that utilise a variety of securities and financial instruments and 

employ trading and portfolio management techniques that can differ markedly from traditional investments. A 

distinguishing characteristic of Absolute Return Strategies is their flexibility to use the full range of investment tools and 

techniques, including leverage and derivatives, to seek to reduce risk and enhance returns. This flexibility sharply 

contrasts with traditional investment strategies, which may be subject to rigid investment constraints and restrictions. 

The Company anticipates allocating assets to four primary disciplines of Absolute Return Strategies: the Relative-Value 

Discipline, the Event-Driven Discipline, the Fundamental Long-Short Discipline and the Direct Sourcing Discipline, each of 

which can be further divided into a number of strategies, as shown in the diagram and described in more detail below. No 

assurance can be given that the Company’s investment objective will be achieved. 

48

Absolute Return Strategies 

Disciplines 

Relative Value 

Event Driven 

Fundamental 

Long / Short 

Direct Sourcing 

Strategies 

Capital 

Structure 

Distressed 

Equity Selection 

Lending 

Convergence 

Mergers/ 

Acquisitions 

Equity Active 

Value 

Equity Financing 

Rates 

Corporate 

Actions 

Credit 

Real Estate 

Statistical 

Insurance 

Volatility 

Relative-Value Discipline 

Investment strategies within the Relative-Value Discipline seek to profit from the mispricing of related financial 

instruments. Managers pursuing this discipline utilise quantitative and qualitative analysis to identify securities or spreads 

between securities that deviate from their theoretical fair value and/or historical norms. Relative Value strategies seek to 

profit if and when a particular instrument or spread returns to its theoretical fair value and generally avoid taking a 

directional bias with regard to the price movement of a specific company or market. Investment strategies within the 

Relative-Value Discipline include: capital structure strategies that focus on instruments issued by a single entity; 

convergence strategies such as convertible and basis arbitrage; rates strategies such as yield curve and swap spread 

positions; statistical strategies that exclusively utilise quantitative models to identify attractive positions; and volatility 

strategies such as positions across maturity and strike of a single issuer. 

To concentrate on capturing these mispricings, Relative Value strategies often attempt to eliminate exposure to general 

market risks so that profits may be realised if and when the securities or instruments converge toward their theoretical 

fair value. This strategy will typically attempt to isolate a specific mispricing by holding both long and short positions in 

related securities. In many cases, investment strategies within the Relative-Value Discipline will seek to hedge exposure 

to risks such as price movements of underlying securities, market interest rates, non-US currencies and the movement of 

broad market indices. 

Event-Driven Discipline 

Investment strategies within the Event-Driven Discipline concentrate on companies that are, or may be, subject to 

extraordinary corporate events such as restructurings, takeovers, mergers, liquidations, bankruptcies or other corporate 

actions. Investment strategies within the Event-Driven Discipline include: mergers/acquisitions strategies, including 

friendly and unfriendly takeovers; distressed strategies, including debt, equity or other obligations of distressed or 

bankrupt companies; and other corporate activity such as spin-offs, litigation, liquidations and share repurchases. The 

prices of securities of the companies involved in these events are typically influenced more by the dynamics of the 

particular event or situation. For example, the result and timing of factors such as legal decisions and deal negotiations 

play a key element in the success of any Event-Driven Discipline. Typically, these strategies rely on fundamental research 

that extends beyond the evaluation of the issues affecting a single company to include an assessment of the legal and 

structural issues surrounding the extraordinary event or transaction. In some cases, such as corporate reorganisations, 

the relevant External Investment Advisor may actually take an active role in determining the event’s outcome. 

The goal of the investment strategies within the Event-Driven Discipline is to profit when the price of a security changes to 

reflect more accurately the likelihood and potential impact of the occurrence, or non-occurrence, of the extraordinary event. 

Fundamental Long-Short Discipline 

Investment strategies within the Fundamental Long-Short Discipline involve buying and/or selling a security or financial 

instrument believed to be significantly under-priced or over-priced by the market in relation to its potential value. 

Investment strategies within the Fundamental Long-Short Discipline include: long and short equity-based or credit-based 

strategies that emphasise a fundamental valuation framework; and activist strategies where an active role is taken to 

enhance corporate value. 

49

Fundamental Long-Short managers typically employ fundamental analysis which evaluates the underlying determinants 

that affect the price of securities. Factors within such analysis include both microeconomic and macroeconomic variables 

that can influence the price of a given security or set of securities. Many investment strategies within the Fundamental 

Long-Short Discipline will incorporate elements of both fundamental and technical analysis. The actual research process 

can be based on a bottom-up approach that first examines the factors affecting a single company or marketplace, or a 

top-down approach that first analyses the macroeconomic trends affecting a market or industry. 

Direct Sourcing Discipline 

Investment strategies within the Direct Sourcing Discipline seek to profit from the increasing disintermediation of the 

financial services sector by entering into direct transactions with corporations, other institutions or individuals. The goal of 

the Direct Sourcing Discipline is to garner profits from areas of the market that are under-served by larger financial 

institutions. Investment strategies within the Direct Sourcing Discipline include: lending strategies including corporate 

and asset-backed loans; equity financing strategies such as private investment in public equity positions; real estate 

strategies; and insurance underwriting strategies. 

Typically, these strategies rely on an External Investment Advisor’s ability to source privately-structured deals, as well as 

fundamental research specific to each respective deal. Direct Sourcing deals may offer more attractive terms than similar 

investments available through financial intermediaries or through public markets. However, Direct Sourcing investments 

may also exhibit more limited liquidity and other risk relative to publicly-sourced investments. 

THE USE OF EXTERNAL INVESTMENT ADVISORS 

The Company seeks to generate investment returns primarily by participating in Absolute Return Strategies through 

investment in Fund Investments that are managed by a diverse group of External Investment Advisors. The Investment 

Manager believes that relying on multiple investment managers is a prudent way to seek to achieve the Company’s 

investment objective because the Investment Manager believes that it is unrealistic to assume that a single investment 

manager will have the resources or expertise to efficiently exploit the many worthwhile opportunities. By assembling this 

portfolio of External Investment Advisors, the Company should be able to participate with investment managers who the 

Investment Manager believes have distinct expertise. 

Manager Identification 

The first step in a multi-manager investment approach is to identify the universe of potential investment managers. 

Manager identification requires a substantial proactive effort due, in part, to the industry’s regulatory structure. Further, 

the best investment managers are often the most difficult to identify, since they are usually adequately capitalised and 

tend to focus on performance-related issues rather than marketing. To avoid any adverse selection bias, the Investment 

Manager does not rely exclusively on published databases or other information provided by marketing personnel. The 

Investment Manager seeks out and approaches ARS managers and potential ARS managers, and identifies all types of 

industry participants (investment managers, proprietary traders and investment service providers). 

The manager identification process is broadened to search actively for External Investment Advisors who fall under the 

category of “Emerging Investment Advisors”. This category of investment manager refers to those individuals who are in 

the process of establishing or have recently established their own investment firms. Generally, these managers have 

excelled on a proprietary trading desk, with another investment boutique, or as part of an institutional money 

management firm, and have elected to pursue similar activities independently. Identifying Emerging Investment Advisors 

is considerably more difficult since they are often associated with organisations that do not allow direct investment of 

outside capital. The Investment Manager believes that this expanded universe of potential managers will enable the 

Company to better pursue its investment objective. 

Manager Evaluation 

Manager evaluation focuses on the existence and sustainability of an External Investment Adviser’s investment edge, 

which provides the Investment Manager with the basis for its evaluation decisions. The Investment Manager’s ability to 

analyse and assess this investment edge is supported by: 

• an information system utilised to monitor qualitative and quantitative information about External Investment Advisors; 

• experience in the evaluation of investment decision making, research files, risk management, back-office systems 

and human resource staffing; 

• portfolio management experience in the markets and instruments utilised by the External Investment Advisors, as 

well as experience in managing multi-manager funds; and 

• an ongoing dialogue with other market participants. 

Evaluation of a manager’s investment edge is analogous to uncovering its competitive advantage. An investment edge 

might be created by the use of superior proprietary quantitative models, favourable operational cost advantages, superior 

market knowledge or the lack of formidable competition. Examining an External Investment Advisor’s current and future 

edge reduces or eliminates the need to rely on historical performance as the primary criteria for selecting or terminating 

managers. If the Investment Manager believes that changes within an External Investment Advisor’s organisation or 

50

changes in the capital markets inhibit or eliminate exploitation of the External Investment Advisor’s investment edge, the 

Investment Manager will seek to liquidate the particular Fund Investment, subject to the governing documents of such 

Fund Investment relating to redemptions or other structural terms of the Fund Investment. 

The existence of an investment edge, whether qualitative or quantitative, is not the sole determinant for allocating money 

to an External Investment Advisor. Ultimately, the task of managing money lies with people. The Investment Manager 

believes that there is no substitute for knowing the people associated with an External Investment Advisor and evaluating 

their underlying motivation, commitment, experience and integrity. Additionally, it is important to understand the 

accounting, operational and administrative controls which an External Investment Adviser has in place. 

The primary emphasis of the evaluation process is to form an opinion of an External Investment Advisor’s investment edge 

and personal character and to determine whether these can add value in the form of superior risk-adjusted returns. This 

evaluation is conducted by the Investment Manager through on-site visits, analysis of investments and/or discussions with 

the investment personnel associated with an External Investment Advisor and by maintaining a dialogue with independent 

academic and financial industry specialists worldwide. 

In addition, when evaluating External Investment Advisors, there are certain business standards that are sought in each 

External Investment Advisor. Generally, the Company will seek to allocate its assets to External Investment Advisors who: 

• invest substantial personal assets in the Absolute Return Strategy being pursued on behalf of the Fund Investment or 

have significant personal career and financial risk associated with their investment management activities; 

• utilise an investment fee that is dependent on investment performance; 

• provide annual audited financial statements from an independent public accountant; 

• devote their primary business activities to investment management and generate the majority of their business 

income from such activities; and 

• have specific and relevant experience managing assets. 

PORTFOLIO STRUCTURING 

General 

The Company will seek to allocate its assets primarily to a diversified group of External Investment Advisors. This process 

is dynamic, reflecting the Investment Manager’s view on the relative attractiveness of different strategies utilised among 

and within the four broad disciplines of ARS in which the Company invests. The allocation process is designed to allow the 

Company to maintain the flexibility to redeploy assets as investment opportunities change. The Company’s specific 

portfolio composition will be influenced by a number of factors, including, but not limited to, the Company’s investment 

guidelines, the Company’s specific terms and conditions and the investment judgment of the portfolio manager assigned 

to the Company by the BAA Investment Oversight Committee (the “Investment Committee”). Specific portfolio structuring 

decisions are affected by factors such as the availability or capacity constraints of potential Fund Investments, structural 

considerations such as the liquidity terms of potential Fund Investments alone or in the aggregate compared to the 

Company’s structural characteristics, the level of fees of potential Fund Investments, and other considerations. Such 

considerations will most likely result in differences in composition and performance among other investment fund 

portfolios or separate accounts managed by the Investment Manager, even when overall investment or performance 

objectives are similar. 

Affiliated Funds 

The Investment Manager and its affiliates act and intend to continue to act as investment manager, general partner, 

managing member or in a similar capacity for other investment funds with investment objectives and/or philosophies 

similar to that of the Company (the “ARS Affiliated Funds”). In pursuing the Company’s investment objective and in 

connection with the Company’s diversification guidelines, the Investment Manager may allocate a portion of the 

Company’s capital to direct and indirect investments with such ARS Affiliated Funds. 

The Investment Manager may create one or more conduit funds (together with any ARS Affiliated Funds, the “Affiliated 

Funds”) through which the Company, certain ARS Affiliated Funds and other accounts managed by the Investment 

Manager or its affiliates may invest for the primary purpose of consolidating investments by these accounts into a single 

investment in one or more underlying Fund Investments. Although consolidating the assets of the Company and those of 

other investment funds and accounts managed by the Investment Manager should provide the Company a certain degree 

of efficiency and other potential benefits, there are additional costs and risks associated with an Affiliated Fund or similar 

structure. See “Risk Factors — Risks Relating to the Investment Strategy — Investment in conduit entities”. 







51

these and other factors, the Company may be precluded from making a specific investment or the Investment Manager may 

reallocate existing Fund Investments among Other Clients. Investment allocation decisions will be made by the Investment 

Manager, taking into consideration the respective investment guidelines, investment objectives, existing investments, 

liquidity, contractual commitments or regulatory obligations and other considerations applicable to the Company and Other 

Clients. However, there are likely to be circumstances where the Company is unable to participate, in whole or in part, in 

certain investments to the extent it would participate absent allocation of an investment opportunity among the Company 

and Other Clients. In addition, it is likely that the Company’s portfolio and those of Other Clients will have differences in the 

specific Fund Investments held in their portfolios even when their investment objectives are the same or similar. These 

distinctions will result in differences in portfolio performance between the Company and Other Clients. 

MONITORING AND RISK MANAGEMENT 

A key element in the management of the Company’s portfolio of Fund Investments involves the monitoring and ongoing 

evaluation of External Investment Advisors who may be, or have been, allocated a portion of the Company’s capital. The 

goal of this ongoing analysis is to provide the Investment Manager with information to evaluate an External Investment 

Advisor’s ability to implement its strategy successfully and, when necessary, to adapt its investment programme to 

changes within the financial markets. It is this ongoing evaluation process, and not simply the External Investment 

Advisor’s performance, that will ultimately influence the Investment Manager’s decision as to when it is appropriate to 

maintain, increase or terminate an External Investment Advisor’s allocation. 

HEDGING 

As Fund Investments typically will be denominated in US Dollars, non-US Dollar denominated Shares of the Company will 

be subject to the risk of fluctuations in the exchange rates between the US Dollar and the currency in which such Shares 

are denominated. The Investment Manager generally will seek to hedge the exposure of such non-US Dollar denominated 

Shares against currency fluctuations, but only when suitable hedging contracts, such as currency swap agreements, 

futures contracts, options and forward currency exchange and other derivative contracts, are available in a timely manner 

and on acceptable terms. The profits, losses and expenses of such hedging transactions, if any, will be specifically 

allocated to and paid by the relevant non-US Dollar denominated Shares, rather than the Company as a whole, and will be 

deducted after the calculation of any applicable Management Fee and Performance Fee. Moreover, the Investment 

Manager may determine, in its sole and absolute discretion, not to seek to hedge the currency exposure of redemption 

proceeds payable to a Shareholder, including any Hold-Back Amount (as described below under the section headed 

“Redemption Facility”) following the applicable Redemption Date. In the event the Investment Manager seeks to hedge 

such exposure following the relevant Redemption Date, the profits, losses and expenses of such hedging transactions may 

be deducted from the relevant Shareholder’s redemption proceeds (or charged to the relevant Shareholder’s Hold-Back 

Amount). There can be no assurance that appropriate hedging transactions will be available to the Company or that any 

such hedging transactions will be successful in protecting against currency fluctuations or that the performance of the 

Shares will not be adversely affected by the currency exchange rate exposure. In addition, the Company may concentrate 

its hedging activities with one or a few counterparty(ies) and the Company is subject to the risk that a counterparty may 

fail to fulfill its obligations under a hedging contract. To the extent that a counterparty fails to fulfill its obligations, the 

relevant Share class, and potentially the Company, could suffer loss. 

FEES AND EXPENSES 

Formation and Initial Expenses 

All of the formation and initial expenses of the Company and the fees and expenses incurred in connection with the Offer 

(including all fees, commission and expenses paid to the Bookrunner) will be paid by the Manager or its affiliates. In 

aggregate, it is expected that such fees and expenses will not exceed 2.5 per cent. of the gross proceeds of the Offer, 

assuming the target size for the Offer of US$500 million is achieved. Where the Management Agreement is terminated on 

certain grounds during the period ending on the seventh anniversary of Admission, a proportion of such fees and expenses 

will be reimbursed to the Investment Manager by the Company. The provisions for such reimbursement are summarised 

in Part 4 of this Registration Document. 

Fees Payable to the Manager 

Management Fee 

The Management Fee, which will be payable in respect of each class of Shares quarterly in arrear within 90 days of the 

end of each calendar quarter, will be equal to one-fourth of 1.5 per cent. of the Net Asset Value of the relevant class of 

Shares as at the last Valuation Date in the relevant quarter (prior to the deduction of the Management Fee payable in 

respect of that quarter and any accrued Performance Fee). The Management Fee will be calculated prior to any 

adjustments to the Company’s Net Asset Value for the relevant quarter related to the profits, losses and expenses of any 

currency hedging undertaken by the Company. 

Performance Fee 

In addition, the Company will pay an annual Performance Fee in respect of each class of Shares equal to 10 per cent. of 

the amount, if any, by which the Net Asset Value of such class of Shares (after deduction of the Management Fee payable, 

but before deduction of any Performance Fee accrued, in respect of the relevant period and as adjusted for any increases 

52

or decreases in Net Asset Value arising from issues, repurchases or redemptions of Shares of the relevant class or any 

conversions of Shares from one class to another) as at the last Valuation Date in each 12 month period ending on 

31 December each year and the period from Admission to 31 December 2008 (each a “Calculation Period”) exceeds the 

Reference Amount (as defined below). Any Performance Fee will be payable in arrear within 90 days of the end of each 

Calculation Period and will be calculated prior to any adjustments to the Net Asset Value of the relevant class of Shares 

for the relevant Calculation Period related to the profits, losses and expenses of any currency hedging undertaken by the 

Company. 

With respect to each class of Shares, the Reference Amount shall mean an amount equal to the highest Net Asset Value 

of such class of Shares as at (i) the end of any previous Calculation Period and (ii) the Admission Date. 

The Performance Fee will be payable on both realised and unrealised appreciation. Once a Performance Fee is paid to the 

Manager in respect of a class of Shares, it will not be rebated to the Company or to Shareholders should the Net Asset 

Value of that class of Shares (adjusted as described above) subsequently decline; however, future Performance Fees 

would be paid only in the event that the Net Asset Value of the relevant class of Shares (adjusted as described above) 

again exceeds the highest historical Net Asset Value of the relevant class as at the end of any Calculation Period. 


No management or performance-based fees will be charged to the Company directly or indirectly by any Affiliated Fund in 

which the Company invests. However, the value of the Company’s investments in any Affiliated Fund will be included in the 

calculation and assessment of the Company’s Management Fees and Performance Fees, as described above. 

Ongoing Expenses 

The Company will pay, or reimburse the Manager for, to the extent paid by it or its affiliates on behalf of the Company, all 

operating expenses incurred, paid or accrued by the Company in its ordinary and usual course of business, including, but 

not limited to, interest on borrowed funds, auditing expenses, legal expenses, insurance, licensing, accounting, brokerage 

and other commissions, margin, premium and interest expenses, fees and disbursements of Directors, administrators, 

transfer agents, registrars, custodians, sub-custodians and escrow agents, any expense or professional fees incurred in 

connection with structuring the acquisition or disposition of Fund Investments, and all other investment related expenses. 

The Company also will pay all extraordinary expenses relating to the operation of the Company, including, without 

limitation, litigation or extraordinary regulatory expenses. In addition, to the extent that it invests in an Affiliated Fund, the 

Company, along with each investor invested in such Affiliated Fund, will pay its pro rata share of the expenses of such 

Affiliated Fund, including such Affiliated Fund’s organisational, operating and investment expenses as well as its pro rata 

share of any extraordinary expenses incurred by such Affiliated Fund. Expenses that are common to the various classes of 

Shares of the Company outstanding at any time will be allocated pro rata among such classes, based upon the relative 

Net Asset Value of the Company attributable to each class of Shares as at the beginning of the relevant period; expenses 

that are specific to a particular class of Shares will be allocated to, and borne solely by, that class of Shares. 

The Manager will be responsible for paying from its own assets the fees and expenses of the Investment Manager and the 

Company Secretary. In addition, the Manager may compensate, from its own assets, an affiliate or third party for certain 

other non-advisory services which may be rendered to the Company. 


The Directors intend that all income received by the Company from its investments will be used first to meet the 

Company’s expenses, with the balance being reinvested in accordance with the Company’s investment strategy. 

Consequently, the Company is not expected to declare any dividends with respect to the Shares. This does not, however, 

prevent the Directors from declaring a dividend at any time in the future if the Directors consider payment of a dividend to 

be appropriate in the circumstances. 

GEARING 

The Company may borrow money to finance its short-term liquidity requirements and/or share buy-backs or redemptions 

provided that such borrowings shall be limited to no more than 25 per cent. of the Company’s Net Asset Value at the time 

such borrowings are incurred. The Company expects to agree prior to Admission terms for a credit facility for this 

purpose. 

NAV PUBLICATION AND CALCULATION 

Publication 

The Company currently intends to publish the Net Asset Value per Share of each class on at least a monthly basis. The 

Investment Manager intends to publish an estimated Net Asset Value per Share of each class within ten Business Days 

after the end of each month. The Company will also publish the confirmed Net Asset Value per Share of each class within, 

in normal circumstances, 30 days after the end of each month. All such announcements will be made through a 

Regulatory Information Service. Where the Company publishes the Net Asset Value per Share on a more frequently than 

monthly basis, in the event that an estimated valuation subsequently proves to be incorrect no adjustment will be made 

and no compensation will be payable by the Company. 

53

Calculation 

The Net Asset Value per Share of each class is calculated by dividing (i) the value of the Company’s assets attributable to 

the relevant class less the value of all liabilities attributable to such class by (ii) the total number of Shares of the relevant 

class in issue at the relevant time. In calculating the Net Asset Value per Share of any class that is not denominated in US 

Dollars, the costs (as well as the gains or losses) of any hedging transactions will be allocated specifically to the currency 

class to which such expense, gain or loss relates. The Net Asset Value per Share will be expressed in the currency in 

which such class is denominated. 

Suspension of Valuations 

The Directors may temporarily suspend the calculation, and publication, of Net Asset Value during a period when in the 

opinion of the Directors: 

• as a result of political, economic, military or monetary events or any circumstances outside the control, responsibility 

or power of the Board, disposal or valuation of investments held by the Company or other transactions in the ordinary 

course of the Company’s business is not reasonably practicable without this being materially detrimental to the 

interests of Shareholders or if, in the opinion of the Board, the Net Asset Value cannot be fairly calculated; 

• one or more External Investment Advisor(s) suspend their valuation of Fund Investments; 

• there is a breakdown of the means of communication normally employed in determining the calculation of Net Asset 

Value; or 

• it is not reasonably practicable to determine the Net Asset Value of the Company on an accurate and timely basis. 

Valuation of Investments 

Fund Investments, securities and other property held by the Company will be valued by either External Investment 

Advisors or other service providers contracted by a Fund Investment in accordance with generally accepted accounting 

principles and, as a general matter, according to the parameters described below, subject to the overall supervision and 

control of the Board of Directors. 

Any Fund Investment in the form of a limited partnership interest or other collective investment fund will be valued at an 

amount equal to the Company’s capital account in such limited partnership or collective investment fund, as determined 

by such limited partnership or collective investment fund and communicated to the Company, as at the close of the latest 

fiscal period of such vehicle ending immediately prior to or simultaneously with the date as at which such value is being 

determined by the Company and for which the Company has received sufficient final or estimated financial information to 

make such a determination. 

Any Fund Investment in the form of a shareholder’s interest will be valued at an amount equal to the number of shares 

owned by the Company, multiplied by the net asset value ascribed to such shares as determined by such entity and 

communicated to the Company, as at the close of the latest fiscal period of such entity ending immediately prior to or 

simultaneously with the date as at which such value is being determined by the Company and for which the Company has 

received sufficient final or estimated financial information to make such a determination. 

Any Fund Investment in the form of a segregated account will be valued at an amount equal to the account equity reported 

by the investment manager or clearing broker thereof, as at the close of the latest reporting period of such investment 

manager or clearing broker ending immediately prior to or simultaneously with the date as at which such value is being 



As an alternative to the valuation for a segregated account, or for any other securities or other property held by the 

Company, the valuation will be as follows: (i) securities that are publicly traded in US Dollars will be valued at the bid price 

for long and the offer price for short, based on information obtained from an independent pricing source; (ii) securities 

that are publicly traded in non-US Dollars will be valued at the bid price for long and offer price for short, based on 

information obtained from an independent pricing source, and the value will be converted to US Dollars based on the 

mid-spot foreign exchange rate from the independent pricing source; and (iii) securities that are not listed or quoted on a 

securities, commodities or futures exchange or market will be valued at their fair value as determined by the Investment 

Manager in its sole and absolute discretion. 

Over-the-counter derivative instruments held by the Company, such as equity swaps, will be valued at fair market value 

based upon the value of the underlying investment or reference index, as provided by an independent pricing source as of 

the relevant valuation date. 

Furthermore, investments such as complex or unique financial instruments may be priced pursuant to a number of 

methodologies, such as computer-based analytical modeling or individual security evaluations. These methodologies 

generate approximations of market values, and there may be significant professional disagreement about the best 

methodology for a particular type of financial instrument or different methodologies that might be used under different 

54

circumstances. In the absence of an actual market transaction, reliance on such methodologies is essential, but may 

introduce significant variances in the ultimate valuation of a Company asset. 

The Management Fee and Performance Fee are determined on the basis of the Net Asset Value calculated using the 

foregoing methodology. This methodology is used to value Fund Investments for the purposes of the Net Asset Value of all 

Share classes. 

Where an External Investment Advisor or third party contracted by a Fund Investment cannot provide a valuation of a Fund 

Investment or if the Directors reasonably determine, in their sole and absolute discretion, that the foregoing valuation 

methodology results in an incorrect determination of fair value for a Fund Investment or security, or the otherwise 

applicable source of valuation is unavailable, the Directors, with approval of the Sub-Administrator, may utilise any other 

reasonable valuation methodology to determine the fair value of such Fund Investment. 

Expenses, including the Management Fee and Performance Fee and the costs of any borrowings, are accrued on a 

monthly basis and are taken into account for the purpose of determining the Net Asset Value. 

It should be noted that situations involving uncertainties as to the valuation of Fund Investments could have an adverse 

impact on the Company’s Net Asset Value if the Company’s judgments regarding appropriate valuations should prove 

incorrect. Because the values assigned to one or more Fund Investments may be subject to later adjustment, the 

Company’s issuance or redemption of Shares at the Net Asset Value may have the effect of reducing or increasing the 

economic interest of existing Shareholders, as well as those Shareholders who purchased and/or redeemed Shares. See 

“Risk Factors — Risks relating to the Investment Strategy — Portfolio valuation”. 

FURTHER ISSUES OF SHARES 

The Directors will have authority to allot the authorised but unissued share capital of the Company at such times as they 

may determine and to designate such Shares as US Dollar Shares, Euro Shares, or Sterling Shares, or as Shares of any 

other class. Save with the prior approval of Shareholders, or where the Directors elect to offer Shares first to existing 

Shareholders pro rata to their holdings, such authority shall only be exercised if the price at which any such Shares are 

issued is not less than the estimated prevailing Net Asset Value per Share of the relevant class. 

As an alternative to issuing further Shares, the Company’s Articles of Association empower the directors to elect to 

conduct any future fundraising by issuing C Shares. C Shares may be issued as US Dollar C Shares, Euro C Shares or 

Sterling C Shares, or C Shares of any other class corresponding to a class of Shares. The assets attributable to a class of 

C Shares will be accounted for separately from those attributable to the corresponding class of Shares (and any other 

class of C Shares) until such time as the net proceeds of the issue of such C Shares are substantially invested in 

accordance with the Company’s investment policy or a specified back stop date is reached, at which point the C Shares 

will convert into Shares of the relevant class, based on the relative NAV of the respective Shares and C Shares. The ability 

to issue C Shares therefore allows the Company to raise further funds whilst limiting the impact on the investment 

returns of existing Shareholders which would otherwise result from exposure to a portfolio containing substantial 

un-invested cash and avoiding dilution of the Net Asset Value per Share of the existing Shares by the expenses associated 

with any C Share issue which will be borne only by subscribers for C Shares. Further details of the provisions of the 

Company’s Articles of Association relating to C Shares are contained in Part 4 of this Registration Document. 

There are no requirements under Jersey law requiring any further Shares or C Shares to be issued only on a pre-emptive 

basis. However, the Articles of Association provide that the Company is not permitted to allot (for cash) equity securities 

(being Shares or C Shares or rights to subscribe for, or convert securities into, Shares or C Shares) or sell (for cash) any 

Shares held in treasury, unless it has first offered existing holders of Shares and/or C Shares the opportunity to acquire 

such equity securities on the same or more favourable terms on a pro rata basis. These pre-emption rights have been 

excluded and disapplied for the period from Admission to the Company’s first annual general meeting by special 

resolution of the subscribers to the Company’s Articles of Association and it is expected that the Company will seek 

annual disapplication of such pre-emption rights at each subsequent annual general meeting of the Company. 

SHARE PURCHASES AND DISCOUNT CONTROL 

The Directors have general shareholder authority to purchase in the market up to 14.99 per cent. of each class of Shares 

in issue immediately following admission of the Shares issued under the Offer to the Official List and to trading on the 

London Stock Exchange. The Directors intend to seek annual renewal of this authority from Shareholders at each annual 

general meeting of the Company. 

The Company may purchase Shares in the market on an ongoing basis with a view to addressing any imbalance between 

the supply of and demand for any class of Shares, thereby increasing the Net Asset Value per Share (on the basis 

described below) and assisting in controlling the discount to Net Asset Value per Share in relation to the price at which 

such Shares may be trading. 

The Company, the Investment Manager and its affiliates will have the ability to purchase Shares of any class in the aftermarket 

at any time if Shares of the relevant class trade at a discount to the estimated prevailing Net Asset Value per 

Share of such class. In addition, the Company will consider commencing a Share buy-back programme if the Shares of 

any class should trade at or below 95 per cent. of the Net Asset Value per Share of the relevant class. 

55

Purchases by the Company will only be made in the market at prices below the estimated prevailing Net Asset Value per 

Share where the Directors believe such purchases will result in an increase in the Net Asset Value per Share of the 

remaining Shares of a particular class and as a means of addressing any imbalance between the supply of, and demand 

for, such Shares. Such purchases will only be made in accordance with applicable law at the relevant time, currently 

including Article 57 of the Companies (Jersey) Law 1991, Listing Rules 12.4.1 and 12.4.2 and the Disclosure and 

Transparency Rules. Shares purchased by the Company may be cancelled or held in treasury. 

Current Listing Rule 12.4.1 provides that, unless a tender offer is made to all the holders of the relevant class of Shares, 

the maximum price to be paid per Share pursuant to a general authority granted by Shareholders (excluding any Shares of 

that class held in treasury by the Company) must not be more than the higher of (i) 5 per cent. above the average market 

value of the Shares for the five business days before the purchase is made; and (ii) the higher of the price of the last 

independent trade and the highest current independent bid on the regulated market where the purchase is carried out. 

Current Listing Rule 12.4.2 requires any repurchase by the Company of 15 per cent. or more of any class of its Shares 

(excluding Shares of that class held in treasury) to be effected by way of a tender offer to all Shareholders of that class. 

The minimum price payable by the Company for any Share buy-back will be for each US Dollar Share, US$0.01, for each 

Euro Share, €0.01, and for each Sterling Share, £0.01. 

The Company may borrow in order to finance such Share purchases. 

Shares may be repurchased by the Company out of any stated capital account without the need for a reduction of capital 

or court approval, pursuant to Article 55(7) of the Companies (Jersey) Law. 

REDEMPTION FACILITY 

It is expected that the Directors will, in their discretion, at half-yearly intervals consider making a Share redemption 

facility available to Shareholders (the “Redemption Facility”). Subject to certain limitations and the Directors exercising 

their discretion to operate the Redemption Facility on any relevant occasion, Shareholders may request the redemption of 

all or part of their holdings of Shares for cash. Redemption will be effected at the prevailing Net Asset Value of the 

relevant class of Shares on the Redemption Date (less the costs of redemption which may include early redemption 

penalties in respect of the Company’s underlying investments). Notice of intention to redeem must be delivered to the 

Company by Shareholders no later than the 95th day prior to the Redemption Date (or such other day as the Directors 

may, in their absolute discretion, determine), or, if such 95th day (or such other day as may be determined by the 

Directors) is not a Business Day, then the immediately preceding Business Day. 

90 per cent. (or such lower percentage as the Directors may in their absolute discretion determine to be in the best 

interests of the Company and its Shareholders as a whole) of the proceeds of any such redemptions are expected to be 

paid (at the recipient’s risk) within 30 Business Days after the completion of the calculation of the Net Asset Value per 

Share as at the Redemption Date. The remaining 10 per cent. (the “Hold-Back Amount”) will be retained by the Company 

until completion of the Company’s audit for the then current financial year, following which the Hold-Back Amount will be 

(a) increased or reduced (but not below zero) as necessary to reflect any difference between the Net Asset Value per 

Share at which such redemption was effected and the audited Net Asset Value per Share as at the Redemption Date and 

(b) where the Shares redeemed were denominated otherwise than in US Dollars, adjusted to reflect the costs, and any 

gains or losses, resulting from any currency hedging activities conducted by the Investment Manager in respect of the 

Hold-Back Amount (the resulting amount, the “Adjusted Hold-Back Amount”). The Adjusted Hold-Back Amount (if any), 

will be paid to Shareholders in the same manner as described above (together with interest accruing after 60 days at a 

rate equal to one quarter of the annualised yield for 90 day United States Treasury bills, which rate will be determined by 

the Investment Manager and fixed as of the last Business Day prior to each applicable Fiscal Quarter) within 30 Business 

Days of the completion of the Company’s audit for the relevant year (which could, in the absence of a semi-annual audit, 

be as long as ten months following the Redemption Date in the case of Shares redeemed on 30 June). 

Redemptions on any Redemption Date will be restricted to such proportion of the Shares of the relevant class as the 

Directors may decide, not exceeding 20 per cent. in aggregate of the Shares of the relevant class of Shares then in issue, 

with any redemption requests in excess of such limit being scaled back on a pro rata basis. 

Subject to the above limitations and the Directors’ discretion being exercised on any relevant occasion, the Redemption 

Facility will operate on 30 June and 31 December of each year or, if such dates are not Business Days, on the immediately 

preceding Business Day. 

Shareholders and prospective Shareholders should note that the operation of the Redemption Facility is entirely 

discretionary and they should place no expectation or reliance on the Directors exercising such discretion on any one or 

more occasions in respect of any class of Shares or the proportion of Shares that may be redeemed. 

Further details of the Redemption Facility are set out in Part 4 of this Registration Document. 

CONVERSION OF SHARES 

The Articles of Association incorporate provisions to enable Shareholders of any one class of Shares to convert all or part 

of their holding into any other class of Shares on a quarterly basis in accordance with the detailed provisions of the 

Articles of Association. 

56

At the Valuation Dates referable to the months of March, June, September and December in each year (commencing in 

June 2008) (each a “Currency Conversion Calculation Date”) Shareholders may convert Shares of any class into Shares of 

any other class (of which Shares are in issue at the relevant time) by giving not less than 10 Business Days’ notice to the 

Company in advance of such Currency Conversion Calculation Date, either through submission of the relevant instruction 

mechanism (for Shareholders holding Shares in uncertificated form) or through submission of a conversion notice and the 

return of the relevant share certificate to the Registrar. Such conversion will be effected on the basis of the ratio of the last 

reported Net Asset Value per Share of the class of Shares held (calculated in US Dollars less the costs of effecting such 

conversion and as adjusted to reflect the impact of adjusting any currency hedging arrangements), to the last reported Net 

Asset Value per Share of the class of Shares into which they will be converted (each as at the relevant Currency Conversion 

Calculation Date). Shareholders should note, however, that fractions of Shares arising on conversion will be rounded down 

and hence the aggregate Net Asset Value of those Shares held after conversion may be less than before such conversion. 

Shareholders should also note that if they elect to convert Shares they will be unable to deal in those Shares in the period 

between giving notice of conversion and the actual date of conversion which will not be until the Net Asset Value per Share 

as at the relevant Currency Conversion Date has been determined, which may take up to 30 days. 

Should the aggregate Net Asset Value of the Shares of any class as at any Valuation Date fall below US$40 million (or the 

equivalent in the relevant currency), the Directors, in accordance with the Articles of Association, have the right, in their 

discretion, to compulsorily convert the Shares of such class into Shares of the class then in issue with the greatest 

aggregate Net Asset Value in US Dollar terms as at the corresponding Valuation Date. 

A summary of the Articles of Association is contained in Part 4 of this Registration Document and includes a description of 

the mechanism for conversion of Shares from one currency class to another. 

SUBSCRIPTIONS AND PURCHASES OF SHARES BY THE OTHER FUNDS MANAGED BY THE INVESTMENT MANAGER OR 

ITS AFFILIATES 

The Investment Manager may, from time to time in its discretion, enter into transactions in relation to Shares and/or 

derivatives of Shares in the Company as principal and/or on behalf of other funds managed by the Investment Manager or 

its affiliates. 

Any such transactions would only be carried out to the extent permissible under, and in accordance with, all relevant law 

and regulations. 

SHARE CAPITAL AND RIGHTS 

Share Capital 

At the date of this Registration Document, the authorised share capital of the Company is an unlimited number of Shares 

of no par value (which upon issue the Directors may classify as US Dollar Shares, Euro Shares or Sterling Shares or 

Shares of such other classes as the Directors may determine), an unlimited number of C Shares of no par value (which 

may be classified as C Shares of such classes as the Directors may determine) and 100 Management Shares of no par 

value. Shares will be issued to investors subscribing in the Offer. Shareholders have the right to receive notice of and to 

attend and vote at general meetings of the Company. C Shares carry no right to distribution of profits or to vote at general 

meetings of the Company (although they will receive notice of such meetings). Management Shares carry no right to 

distribution of profits or, except when there are no Shares in issue, to receive notices of or vote at general meetings of the 

Company. 

The Shares and C Shares are being issued in the form of redeemable participating preference shares in order to provide 

flexibility to the Directors in relation to the conversion, repurchase and redemption of such shares. Shareholders and 

holders of C Shares have no right to have their shares redeemed. 

The Shares which are successfully subscribed under the Offer will be allotted immediately prior to the Settlement Date, 

conditional upon Admission, pursuant to a resolution of the Board of Directors in accordance with the power granted to 

the Directors by the Articles of Association. 

Any unallotted Shares will remain authorised but unissued. 

Dividends 

Shareholders are entitled to receive, and participate in, any dividends or other distributions out of the profits of the 

Company available for dividend and resolved to be distributed in respect of any accounting period or other income or right 

to participate therein. Holders of C Shares have no such entitlement. 

Voting 

Shareholders shall have the right to receive notice of and to attend and vote at general meetings of the Company. Each 

Shareholder being present in person or by proxy or by a duly authorised representative (if a corporation) at a meeting shall 

57

upon a show of hands have one vote and upon a poll each such holder present in person or by proxy or by a duly 

authorised representative (if a corporation) shall, in the case of a separate class meeting, have one vote in respect of each 

Share held by him and, in the case of a general meeting of all Shareholders, have one vote in respect of each US Dollar 

Share held by him and such number of votes (a) in respect of each Euro Share held by him as shall be equal to the Net 

Asset Value per Euro Share (calculated in US Dollars) divided by the Net Asset Value per US Dollar Share, and (b) in 

respect of each Sterling Share held by him as shall be equal to the Net Asset Value per Sterling Share (calculated in US 

Dollars) divided by the Net Asset Value per US Dollar Share, in each case either as at Admission or, with effect from 

1 January 2009, the last Valuation Date of the immediately preceding calendar year. 

All holders of Shares and C Shares will have the right to vote on all material changes to the Company’s investment policy. 

Further information is set out in section 3.4 of Part 4 of this Registration Document. 

Winding-up 

On a winding-up, the surplus assets remaining after payment of all creditors will be divided among the classes of Shares 

and C Shares on the basis described in section 3.7 of Part 4 of this Registration Document. 

Variation of Share Rights 

The rights attaching to the Shares of each class may be varied with the consent in writing of the holders of two-thirds of 

the issued Shares of the relevant class or with the sanction of a special resolution of Shareholders of the relevant class 

passed at a general meeting of that class. 

Meetings and Reports to Shareholders 

The Company will hold an annual general meeting each year, with the first meeting to be held in 2009. 

The Company’s audited annual report and accounts will be prepared to 31 December of each year, commencing with its 

first financial period ending 31 December 2008, and copies of the annual report will be made public by 30 April each year, 

or earlier if possible. Shareholders will also receive an unaudited half-yearly report each year, commencing in respect of 

the six-month period ending on 30 June 2009, despatched by 31 August each year, or earlier if possible. The Company will 

also issue interim management statements within the meaning of the Disclosure and Transparency Rules during the 

period commencing ten weeks after the beginning and six weeks before the end of the first six-month period and the 

second six-month period of each financial year. As an alternative to issuing interim management statements, the 

Company may choose (but is not obliged) to issue unaudited quarterly financial reports. The Company is not required to 

issue preliminary profit statements. 

The Company’s audited annual report and accounts will be available through a Regulatory Information Service authorised 

by the London Stock Exchange. 

The Company’s accounts will be drawn up in US Dollars in compliance with US GAAP and the Companies Laws. 

TAXATION 

Information concerning the tax status of the Company is set out in Part 3 of this Registration Document entitled “Certain 

Tax Considerations”. If any potential investor is in any doubt about the taxation consequences of acquiring, holding or 

disposing of Shares, they should seek advice from their independent professional adviser. 

58

PART 2 

MANAGEMENT AND ADMINISTRATION 

BOARD OF DIRECTORS 

The Company’s Articles of Association provide that the Company’s Board of Directors shall be composed of any number of 

directors, a majority of whom must be Independent Directors. The Directors will meet on a regular basis to review and 

assess the investment policy and performance of the Company and generally to supervise the conduct of its affairs. 

The Independent Directors and their business experience are as follows: 

Colin Maltby (British) aged 57, Chairman of the Company, is a resident of Switzerland and has over 30 years’ experience in 

the investment management industry. He retired as Head of Investments at BP plc and Chief Executive of BP Investment 

Management Limited in 2007. He was previously Chief Investment Officer at Equitas Limited (1996 to 2000) and he held 

various senior positions including Group Chief Executive (investment management) at Kleinwort Benson Group (1980 to 

1995). He is currently Chairman of Princess Private Equity Holding Limited and Investment Adviser to the British Coal Staff 

Superannuation Scheme and formerly to the British Airways Pension Schemes. He was previously Chairman of Kleinwort 

Overseas Investment Trust plc and CCLA Investment Management Limited, a director of H. Young Holdings plc and RM plc 

and a member of the Funding Agency for Schools Finance Committee and the Central Board of Finance (Church of 

England) Investment Committee. He holds a first class degree in physics from Christ Church, Oxford and is a member of 

the Securities Institute. 

Philip Smith (British) aged 63, is a Jersey resident and retired as Executive Chairman of Deutsche Bank International Ltd, 

headquartered in Jersey, in March 2002 after 29 years of service, having been Chairman since 1993 and a director since 

1981. He was also the Chief Executive Officer of the Deutsche Bank Offshore Group and Global Head of Fiduciary Services 

within the Deutsche Bank group with directorships of subsidiary companies in Ireland, the Cayman Islands, Guernsey, 

Holland, Switzerland and Mauritius. He was responsible for corporate governance throughout the offshore group of 

companies and all aspects of business development. Philip is a career banker principally with Morgan Grenfell and then 

with Deutsche Bank after the takeover of the former in 1989. He is a trustee of the Deutsche Bank Overseas Pension 

Fund. 

John Siska (US), Chairman of the Audit and Management Engagement Committee, is a resident of Spain. He has been a 

Chartered Financial Analyst since 1987 and is a past board member of the International Society of Financial Analysts and the 

CFA Institute’s International Council. John’s previous assignments include joining Banco Santander (and associated 

companies) in 1991 where he became Chief Investment Officer — Head of Equities. In October 1998 he moved to ABN AMRO as 

Director General and Head of Iberian Equities before heading up European Client Account Management in London. In London, 

he also spent a year at Instinet from 2002 as Head of Institutional Equities (UK). He founded Familyoffice Solutions, a Madrid 

based multi family office business, and joined as President in 2004. John holds a Bachelor’s Degree in Economics and 

Business Administration from ICADE — Madrid, and is a Master of Science in Finance (Northern Illinois University, USA). He 

was the Founding President of the Spanish Association of Investment Professionals. 

The BlackRock Directors and their business experience are as follows: 

Frank Le Feuvre (British) aged 60, is a Jersey resident and has been with the BlackRock Group (formerly the Merrill 

Lynch Investment Managers group and the Mercury Asset Management group) for over 35 years and managed SG 

Warburg & Co. (Jersey) Ltd’s banking business in Jersey for many years. He became a director of BlackRock (Channel 

Islands) Limited (formerly Merrill Lynch Investment Managers (Channel Islands) Limited and Mercury Asset Management 

Channel Islands Ltd) in 1987 and Managing Director of the Merrill Lynch Channel Islands business in 1997. His 

directorships include Merrill Lynch International Investment Funds and a number of BlackRock managed hedge funds. 

Jonathan Ruck Keene (British) aged 54, is a UK resident and is a managing director of BlackRock Investment 

Management (UK) Limited with over 30 years’ experience in the financial sector. He joined the BlackRock group in 1986 

through one of its predecessor companies, Mercury Asset Management, where he was a fund manager until 1997. 

Following senior management roles in communications and marketing, he was appointed to his current position as Head 

of Investment Companies in 2004. 

The summary of the Company’s Articles of Association in Part 4 of this Registration Document contains further 

information about the structure and practices of the Company’s Board of Directors. 

CORPORATE GOVERNANCE 

There is no published corporate governance regime equivalent to the Combined Code with which the Company is required 

to comply in Jersey. However, the Directors acknowledge the importance of sound corporate governance and the 

Company complies with the Combined Code to the extent that the Directors consider appropriate having regard to the 

Company’s size, stage of development and resources. 

AUDIT AND MANAGEMENT ENGAGEMENT COMMITTEE 

The Company’s Board of Directors has established and will maintain at all times after the closing of the Offer an Audit and 

Management Engagement Committee that operates pursuant to written terms of reference. The Audit and Management 

Engagement Committee will consist solely of Independent Directors and will have at least one member who has sufficient 

recent and relevant financial experience to enable the Audit and Management Engagement Committee to discharge its 

59

functions effectively. The Audit and Management Engagement Committee will initially consist of Colin Maltby, John Siska 

and Philip Smith, and John Siska will serve as Chairman. 

The Audit and Management Engagement Committee will be responsible for assisting and advising the Company’s Board of 

Directors on matters relating to: 

• the Company’s accounting and financial reporting processes; 

• the integrity and audits of the Company’s financial statements; 

• the Company’s compliance with legal and regulatory requirements; 

• the qualifications, performance and independence of the Company‘s independent auditors; 

• the qualifications, performance and independence of any third party that provides valuations for the Company’s 

investments; and 

• the performance of the Manager and the Investment Manager. 

The Audit and Management Engagement Committee will also be responsible for engaging the Company’s independent 

accountants, reviewing the plans and results of each audit engagement with the Company’s independent accountants, 

approving professional services provided by the Company’s independent accountants, considering the range of audit and 

non-audit fees charged by the Company’s independent accountants and reviewing the adequacy of the Company’s internal 

accounting controls. 

THE COMPANY’S INVESTMENT MANAGER 

BlackRock Financial Management, Inc., a Delaware corporation formed on 21 October 1994, has been appointed by the 

Manager to manage the assets of the Company, and manages the Company through its business unit, BlackRock 

Alternative Advisors (the “Investment Manager”). The Investment Manager will be responsible for investment 

management and related decisions, including, without limitation, the selection of External Investment Advisors. The 

Investment Manager is registered as an investment adviser with the United States Securities and Exchange Commission 

(“SEC”). The Investment Manager is an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”). 

The Investment Manager is responsible for all investment activities with respect to the Company. This process includes 

identifying, evaluating, and monitoring External Investment Advisors, as well as determining how the assets of the 

Company are to be allocated among External Investment Advisors. The Investment Manager will, when it deems 

appropriate, make periodic changes in the allocation of assets among strategies, as well as to either existing or new 

External Investment Advisors. Pending allocation of the Company’s assets to External Investment Advisors, the 

Investment Manager may invest the Company’s assets in short-term interest-bearing securities and financial 

instruments, including, without limitation, money market and cash management funds managed or serviced by affiliates 

or subsidiaries of BlackRock. See “Risk Factors — Conflicts of Interest” regarding certain potential conflicts of interest 

involved in the management of the Company. 

KEY INVESTMENT MANAGEMENT PROFESSIONALS 

All investment decisions for the Company are made by professionals of the Investment Manager. Recognising the 

importance of the different elements of the investment process, the Investment Manager relies on the experience and 

background of its key investment professionals whose efforts are coordinated by Bryan White. 

The BAA Investment Oversight Committee (the “Investment Committee”) appoints the investment professionals who have 

primary responsibility for overseeing the Company’s investments, which may include individuals who are members of the 

Investment Committee as well as other investment professionals employed by the Investment Manager. 

The backgrounds and business experience of certain senior officers of the Investment Manager who are members of the 

Oversight Committee are provided below: 

Norm Bontje, CFA, Managing Director, serves as the Chief Operating Officer for BlackRock Alternative Advisors. 

Mr. Bontje oversees operations of the fund of funds business on the BlackRock Alternative Advisors platform. 

Mr. Bontje joined BlackRock in 2007 following the acquisition of the investment management business of Quellos Group, 

LLC (“Quellos”). From 1994 to 2007, Mr. Bontje served as a Principal and Chief Financial Officer at Quellos. In 1994, 

Mr. Bontje was a Senior Financial Analyst at Great Northern Annuity Insurance, a subsidiary of GE Capital Corp. From 

1989 to 1994 Mr. Bontje was with Deloitte & Touche and performed audit and other attestation services primarily to the 

financial services industry and investment funds located in the Pacific Northwest. 

Mr. Bontje earned a BA degree cum laude in Accounting from the University of Washington in 1989. 

Charles Clarvit, Managing Director, is a member of the Account Management Group within BlackRock Alternative 

Advisors. Mr. Clarvit has significant portfolio management responsibilities and oversees marketing strategy and client 

service for the fund of funds business on the BlackRock Alternative Advisors platform. 

Mr. Clarvit joined BlackRock in 2007 following the acquisition of the investment management business of Quellos. At 

Quellos, Mr. Clarvit served as a Principal. He oversaw the Quellos Client Group and held significant portfolio management 

60

esponsibilities. From 1985 to 1998, Mr. Clarvit was a Managing Director with CIBC Oppenheimer & Co., responsible for 

alternative investment strategies and private equity advisory services for US pensions, endowments, offshore institutions 

and high net worth families. From 1978 to 1985 he was with IBM Corporation in a system engineer and marketing capacity. 

Mr. Clarvit also serves on the Johns Hopkins University Board of Trustees and the Advisory Board of the Martin J. 

Whitman School of Management at Syracuse University. 

He earned a BA degree in Social and Behavioral Sciences with a concentration in Economics and Statistics from Johns 

Hopkins University in 1978. 

David Matter, CFA, Managing Director, is a member of the Manager Research group within BlackRock Alternative 

Advisors. Mr. Matter is a Portfolio Manager and is responsible for overseeing the sourcing, performance of due diligence 

on and monitoring of hedge fund managers. 

Mr. Matter joined BlackRock in 2007 following the acquisition of the investment management business of Quellos. At 

Quellos, Mr. Matter served as a Principal responsible for management of Absolute Return Strategy portfolios and 

overseeing underlying manager due diligence. From 1994 to 1998, Mr. Matter consulted with management and 

participated in operations for Redmond Brewing and Hometown Brewing Companies (“Redmond and Hometown”). At 

Redmond and Hometown, Mr. Matter participated in the funding and operation of four start-up microbreweries. From 

1992 to 1994, Mr. Matter was a Financial Analyst with Bankers Trust and a Marketing Representative with the American 

Funds-Capital Group. 

Mr. Matter earned a BA degree with a concentration in International Relations from the University of Pennsylvania in 1991, 

an MBA degree with honors, and an MA degree in International Studies, both from the University of Washington in 1998. 

Bryan White, Managing Director, is head of BlackRock Alternative Advisors. Mr. White has significant portfolio 

management responsibilities and serves as a member of BlackRock’s Executive Committee. He also serves as a member 

of BlackRock’s Operating Committee and the BlackRock Capital Committee. 

Mr. White joined BlackRock in 2007 following the acquisition of the investment management business of Quellos. He 

co-founded Quellos in 1994, and served as Chief Investment Officer. In addition, he served as a member of the Quellos 

Executive Committee and Chairman of the Quellos Investment Committee. From 1988 to 1994, Mr. White was Portfolio 

Manager for International Strategies and Director of Research at Collins Associates (“Collins”) where he managed multimanager 

funds, designed Collins’ research systems and coordinated emerging manager evaluation. Before joining Collins 

in 1988, Mr. White was a consultant with Price Waterhouse and a sole proprietor of his own independent consulting firm. 

Mr. White earned a BA degree with a concentration in Mathematical Economics from Pomona College in 1984, and an 

MBA degree with honors from the University of Chicago in 1989. 

THE COMPANY’S MANAGER 

BlackRock (Channel Islands) Limited (the “Manager”) has been appointed as manager of the Company pursuant to a 

Management Agreement. Under the terms of the Management Agreement, the Manager is responsible for the provision to the 

Company of investment management services (which it has delegated to the Investment Manager pursuant to the Investment 

Management Agreement); certain administration services; and company secretarial services (which it has delegated to 

BlackRock Investment Management (UK) Limited pursuant to a secretarial delegation agreement). The Manager is licensed by 

the Jersey Financial Services Commission under the FSL to conduct fund services business including the provision of 

investment management services to closed-ended investment funds and collective investment schemes. 

THE COMPANY’S SUB-ADMINISTRATOR 

UBS Fund Services (Cayman) Ltd. (the “Sub-Administrator”) has been appointed under the Sub-Administration Agreement 

between the Company, the Manager and the Sub-Administrator, to provide the Company with administration services, 

including, inter alia, calculation of the NAV and maintenance of accounting records. 

THE COMPANY’S CUSTODIAN 

UBS Fund Services (Cayman) Ltd. (the “Custodian”) has been appointed by the Company pursuant to the Custody 

Agreement to provide the Company with custody services in respect of the Company’s assets. 

THE COMPANY’S REGISTRAR 

Computershare Investor Services (Channel Islands) Limited (the “Registrar”) has been appointed as registrar of the Company 

pursuant to the Registrar Agreement. Under the terms of this agreement, the Registrar is responsible for the maintenance of 

the register of the Company’s Shareholders and for the processing of issues, redemptions and transfers of Shares. 

THE COMPANY’S SECRETARY 

BlackRock (Channel Islands) Limited has been appointed as company secretary by the Company pursuant to the Company 

Secretarial Agreement, pursuant to which it is responsible for the provision of company secretarial services (which it has 

delegated to the Investment Manager pursuant to a secretarial delegation agreement). 

Further details of the Management Agreement, Investment Management Agreement, Administration Agreement, Custody 

Agreement, Company Secretarial Agreement and Registrar Agreement are set out in Part 4 of this Registration 

Document. 

61

PART 3 

CERTAIN TAX CONSIDERATIONS 

The following summary discusses certain Jersey and United Kingdom tax considerations relating to the Company and the 

purchase, ownership and disposition of the Shares and certain US tax considerations relating to the Company based on the 

applicable law as in effect on the date hereof and current published revenue practice. This summary is intended as a 

general guide only and does not address all the considerations that may be relevant to purchasers of the Shares. Certain 

Shareholders, such as dealers in securities, collective investment schemes, insurance companies and persons acquiring 

their Shares in connection with their employment may be taxed differently and are not considered. Prospective purchasers 

of the Shares are advised to consult with their own tax advisers concerning the consequences of an investment in the 

Shares under the tax laws of the country in which they are resident and other relevant jurisdictions. 

JERSEY TAX CONSIDERATIONS 

THE COMPANY 

The Company is an ‘exempt company’ within the meaning of the Income Tax (Jersey) Law 1961 (as amended) and 

accordingly the Company’s total liability to Jersey tax should, in normal circumstances, be limited to the exempt company 

fee currently fixed at a rate of £600 per annum. 

The Comptroller of Income Tax in Jersey has confirmed that income of the Company arising outside Jersey (and bank 

interest arising in Jersey) is exempt from Jersey income tax and that if dividends are paid by the Company they may be paid 

to Shareholders not resident in Jersey for Jersey income tax purposes without any deductions or withholdings for any taxes. 

SHAREHOLDERS 

No death duties, capital gains tax, gift, inheritance or capital transfer taxes are levied in Jersey. No stamp duty is levied in 

Jersey on the issue, transfer or redemption of Shares, but probate stamp fees may be payable at the rate of up to 0.75 per 

cent. of the value of the Jersey estate in the event of the death of the holder of Shares. 

If dividends are declared by the Company, holders of Shares who are treated as Jersey resident for Jersey income tax 

purposes will suffer deduction of tax on payments of dividends by the Company at the standard rate of Jersey income 

tax for the time being. 

The attention of Jersey residents is drawn to the provisions of Article 134A of the Income Tax (Jersey) Law 1961 (as 

amended) which may in certain circumstances render such a resident liable to income tax on any undistributed income or 

profits of the Company. 

On 3 June 2003, the European Union Council of Economic and Finance Ministers reached political agreement on the 

adoption of a Code of Conduct on Business Taxation. Jersey is not a member of the European Union (“EU”) but is a 

dependent territory of the United Kingdom. The Income Tax (Amendment No. 28) (Jersey) Law 2007 provides for the 

replacement of the Jersey exempt company regime with a general zero rate of corporate tax (subject to certain limited 

exceptions) with effect from the year of assessment 2009. 

On 3 June 2003, the European Union Council of Economic and Finance Ministers also adopted a directive on the taxation of 

savings income in the form of interest payments (the “EU Savings Tax Directive”). From 1 July 2005, each EU Member 

State is required to provide to the tax authorities of another EU Member State details of payments of interest (or other 

similar income) paid by a person within its jurisdiction to or for the benefit of an individual resident in that other EU 

Member State; however, Austria, Belgium and Luxembourg will instead apply a withholding tax system for a transitional 

period in relation to such payments. 

Jersey is not subject to the EU Savings Tax Directive. However, in keeping with Jersey’s policy of constructive international 

engagement the States of Jersey has introduced a retention tax system in respect of payments of interest (or other similar 

income) made to an individual beneficial owner resident in an EU Member State by a paying agent situate in Jersey (the 

terms “beneficial owner” and “paying agent” are defined in the EU Savings Tax Directive). The retention tax system will 

apply for a transitional period prior to the implementation of a system of automatic communication of information 

regarding such payments to EU Member States. The transitional period will end only after all EU Member States apply 

automatic exchange of information and the EU Member States unanimously agree that the United States of America has 

committed to exchange of information upon request. During this transitional period, an individual beneficial owner 

resident in an EU Member State will be entitled to request a paying agent not to retain tax from such payments but instead 

to apply a system by which the details of such payments are communicated to the tax authorities of the EU Member State 

in which the beneficial owner is resident. The proposals do not apply to interest (or other similar income) payments to 

bodies corporate or non-EU Member State residents. 

UNITED KINGDOM TAXATION 

THE COMPANY 

The Directors intend to manage the affairs of the Company so that for United Kingdom corporation tax purposes, the 

central management and control of the Company is not exercised in the United Kingdom, and so that the Company does 

not carry on a trade in the United Kingdom (whether or not through a permanent establishment situated therein). 

Accordingly, the Company should not be subject to UK corporation tax on income and capital gains arising to it other than 

on any United Kingdom source income. 

62

SHAREHOLDERS 

(i) 

Disposal of Shares 

The Directors have been advised that, under current law, the offshore fund rules in Chapter V Part XVII of the Income and 

Corporation Taxes Act 1988 (the “Taxes Act”) should not apply to Shareholders who subscribe for Shares in the Company. 

Accordingly, any disposal of Shares by a Shareholder might, depending on their circumstances, give rise to a chargeable 

gain for UK tax purposes, as described below. However, the UK government has published a consultation document on the 

reform of the offshore fund rules with the intention of changing the definition of an offshore fund in the Finance Bill 2009. 

(a) 

UK Resident Shareholders 

A disposal of Shares by a Shareholder who is resident or, in the case of an individual, ordinarily resident 

in the United Kingdom for United Kingdom tax purposes may give rise to a chargeable gain or an 

allowable loss for the purposes of UK taxation on chargeable gains, depending on the Shareholder’s 

circumstances and subject to any available exemption or relief. 

Legislation proposed to have effect from 6 April 2008 would, if enacted, abolish taper relief which 

reduces the amount of the chargeable gain according to how long, measured in years, the Shares have 

been held by an individual Shareholder. Instead, a single rate of capital gains of 18 per cent. would apply 

to a disposal (which includes a redemption) after 5 April 2008 by an individual Shareholder who is 

resident or ordinarily resident in the United Kingdom for taxation purposes. Holders of Shares who are 

bodies corporate resident in the United Kingdom for taxation purposes will benefit from indexation 

allowance which, in general terms, increases the capital gains tax base cost of an asset in accordance 

with the rise in the retail prices index. 

The conversion of Shares of one currency class into Shares of another currency class will not result in a 

disposal for the purposes of UK taxation of chargeable gains. Instead, the redesignated Shares will be 

treated as the same asset as the original holding of Shares, acquired at the same time and for the same 

chargeable gains tax base cost as the original holding. 

(b) 

Non-UK Resident Shareholders 

An individual Shareholder who is not resident in the United Kingdom for tax purposes but who carries 

on a trade in the United Kingdom through a branch or agency may be subject to UK taxation on 

chargeable gains on a disposal of Shares which are acquired for use by or for the purposes of the 

branch or agency. A Shareholder who is an individual who has ceased to be resident or ordinarily 

resident in the United Kingdom for tax purposes for a period of less than five years of assessment and 

who disposes of Shares during that period may also be liable, on his return to the United Kingdom, to 

UK taxation on chargeable gains (subject to any available exemption or relief). 

(ii) 

Distributions by the Company 

Shareholders resident in the United Kingdom for tax purposes will be liable to UK income tax or corporation tax, as 

applicable, in respect of dividend or other income distributions of the Company. However, legislation proposed to have 

effect from 6 April 2008 would, if enacted, entitle an individual Shareholder resident in the UK for tax purposes who 

receives a dividend from the Company to claim a tax credit equal to 1/9 of the cash dividend paid. This tax credit will only 

be available if the individual owns less than a 10 per cent. holding in the Company. Where investments of the Company are 

distributed in specie to Shareholders other than by way of dividend, such distributions may represent a part-disposal of 

Shares for UK tax purposes. 

(iii) 

Anti-Avoidance 

The attention of individuals ordinarily resident in the United Kingdom for UK tax purposes is drawn to the provisions of 

Chapter 2 of Part 13 of the Income Tax Act 2007. Those provisions are aimed at preventing the avoidance of income tax by 

individuals through transactions resulting in the transfer of assets or income to persons (including companies) resident or 

domiciled abroad and may render them liable to taxation in respect of undistributed income and profits of the Company on 

an annual basis. 

More generally, the attention of corporate Shareholders is drawn to the provisions of Sections 703 to 709 of the Taxes Act 

and the attention of individual Shareholders is drawn to Chapter I of Part 13 of the Income Tax Act 2007, which give powers 

to HM Revenue & Customs to cancel tax advantages derived from certain transactions in shares. 

The Taxes Act also contains provisions in Sections 747 to 756 that may subject certain UK resident companies under the 

“controlled foreign companies” rules, to UK corporation tax on the undistributed income and profits of the Company. The 

provisions may affect UK resident companies which have an interest (together with any connected or associated 

companies) such that at least 25 per cent. of the Company’s profits for an accounting period could be apportioned to them 

if, at the time, the Company is controlled by residents of the United Kingdom. The UK government has published a 

consultation document on the reform of the foreign profits of companies, including the controlled foreign companies 

63

legislation and has stated that the most likely date for the implementation of any reform would be the Finance Bill 2009. 

The UK government has indicated that it considers that it would be more appropriate to reduce the trigger for the 

application of the controlled foreign companies legislation to 10 per cent. rather than 25 per cent. 

If the ownership of the Company were to be such that it would be a close company if it were resident in the United 

Kingdom, certain adverse tax consequences could result including the chargeable gains accruing to it may be apportioned 

to a Shareholder who is resident or ordinarily resident and, if an individual, domiciled in the United Kingdom who holds, 

alone or together with associated persons, more than 10 per cent. of the Shares as a result of the provisions of Section 13 

of the Taxation of Chargeable Gains Act 1992. Legislation proposed to have effect from 6 April 2008 would, if enacted, 

mean that Section 13 will apply to Shareholders resident or ordinarily resident in the UK for tax purposes regardless of 

where they are domiciled unless: (i) they are not domiciled in the UK; (ii) the chargeable gain of the company relates to 

non-UK assets; and (iii) they have elected for the remittance basis of taxation. 

(iv) 

Stamp Duty and Stamp Duty Reserve Tax (“SDRT”) 

The following comments are intended as a guide to the general stamp duty and SDRT position and do not relate to 

persons such as market makers, brokers, dealers or intermediaries or where the Shares are issued to a depositary, or 

clearing system, or nominees or agents. No UK stamp duty or SDRT will be payable on the issue of the Shares. On the 

basis that the Company’s register of shareholders is kept and maintained outside the United Kingdom, uncertificated 

transfers of Shares and agreements to transfer Shares within CREST will not be liable to stamp duty or stamp duty 

reserve tax and transfers of Shares in certificated form should not, in practice, be liable to stamp duty. 

(v) 

ISAs/PEPs and SIPPs/SSASs 

Investors resident in the United Kingdom are recommended to consult their tax and/or investment advisers in relation to 

the eligibility of the Shares for savings schemes (for example ISAs, SIPPs and SSASs). 

Shares allotted under the Offer for Subscription or subsequently acquired in the secondary market may be eligible for 

inclusion in a stocks and shares ISA although the account manager should be asked to confirm ISA eligibility. From 6 April 

2008, maxi- and mini-ISAs no longer exist. Instead, investors are able to invest in two separate ISAs each year, a cash ISA 

and a stocks and shares ISA. Up to half the subscription limit, currently £7,200, will be available for investment as cash. 

The remainder may be invested in a stocks and shares ISA with the same or different provider. 

From 6 April 2008, all PEPs will automatically become stocks and shares ISAs. 

The Shares acquired under the Offer for Subscription are expected to be eligible for inclusion in SIPPs and SSASs, 

although this should be confirmed independently by investors with their professional tax or financial advisers before 

investment. 

UNITED STATES TAXATION 

The discussion contained below as to US federal tax considerations is not intended or written to be used, and cannot be 

used, for the purpose of avoiding penalties. Such discussion is written to support the promotion or marketing of the 

transactions or matters addressed in this document. Each taxpayer should seek federal tax advice based on the 

taxpayer’s particular circumstances from an independent tax advisor. 

For US federal income tax purposes, the Company is treated as a corporation. The Company intends to conduct its affairs 

such that income realised by it will not be effectively connected with the conduct of a US trade or business or otherwise 

subject to regular US federal income taxation on a net income basis. As a result, it is anticipated that no gains realised by 

the Company (other than gains, if any, realised on the disposition of US real property interests) will be subject to US 

federal income taxation, but generally certain dividend and interest income may be subject to US federal withholding tax 

as discussed further below. If, contrary to the intended method of operation, the Company is considered to be engaged in 

a US trade or business, the Company’s share of any income that is effectively connected with such US trade or business 

will be subject to regular US federal income taxation (currently imposed at a maximum rate of 35 per cent.) on a net 

income basis and an additional 30 per cent. US “branch profits” tax. In addition, it is possible that the Company would be 

subject to taxation on a net income basis by state or local jurisdictions within the United States. 

Because the Company is organised under the laws of Jersey, it will be considered to be a non-US person for purposes of 

US tax laws. As a result, any dividends received by the Company from US sources will be subject to US withholding tax at a 

rate of 30 per cent. However, US source interest income received by the Company generally will be exempt from US 

federal income and withholding tax under the exemption for “portfolio interest” or under another statutory exemption. 

Interest on corporate obligations will not qualify as “portfolio interest” to a non-US person that owns (directly and under 

certain constructive ownership rules) 10 per cent. or more of the total combined voting power of the corporation paying 

the interest, or, with respect to certain obligations issued after 7 April 1993, if and to the extent the interest is determined 

by reference to certain economic attributes of the debtor (or a person related thereto). In addition, interest on US bank 

deposits, certificates of deposit and certain obligations with maturities of 183 days or less (from original issuance) will not 

be subject to withholding tax. Any interest (including original issue discount) derived by the Company from US sources not 

qualifying as “portfolio interest” or not otherwise exempt under US law will be subject to US withholding tax at a rate of 

30 per cent. 

64

Reportable Transactions 

Treasury Regulations that govern potentially tax-motivated transactions (the “Reportable Transaction Regulations”) 

provide that certain taxpayers (including certain US persons owning shares in a non-US corporation) participating, directly 

or indirectly, in a “reportable transaction” must disclose such participation to the Internal Revenue Service (the “IRS”). 

The scope and application of the Reportable Transaction Regulations is not entirely clear. If a US person invests, or if the 

Company were considered to be engaged in a US trade or business, it is possible that the Reportable Transaction 

Regulations could apply. An investment in the Company may result in a Shareholder’s participation in a “reportable 

transaction” if, for example, the Company recognises certain types of losses in the future (potentially including losses 

recognised by Company investments), or if the Company (or a Company investment) utilises certain investment strategies 

and, in each case, the Company does not otherwise meet certain applicable exemptions. If an investment in the Company 

results in participation in one or more “reportable transactions,” the Company and potentially each Shareholder may be 

required to disclose such participation to the IRS. Significant penalties may apply to taxpayers who fail to properly disclose 

a “reportable transaction.” The Company also may be required to make separate disclosures to the IRS. Significant 

penalties may apply to taxpayers who fail to properly disclose their participation in a “reportable transaction.” Prospective 

investors are urged to consult their own tax advisors regarding the applicability of these rules to an investment in the 

Fund. 

Treasury Regulations additionally require “material advisors” with respect to any “reportable transaction” to make a 

return (in such form as the IRS may prescribe) setting forth certain information regarding such “reportable transaction.” 

The IRS will issue a “reportable transaction number” to be associated with such “reportable transactions.” Material 

advisors are required to maintain lists that identify these “reportable transactions” and their participants. Material 

advisors may be required to furnish such lists to the IRS, upon request. The Company and/or its advisors may be 

considered a “material advisor” with respect to one or more “reportable transactions,” and as such, would be required to 

follow the above described procedures. To the extent the Company is involved in a “reportable transaction,” the Company 

and its Shareholders may be required to report the applicable “reportable transaction number” to the IRS as part of its 

disclosure obligation discussed above. Prospective investors are urged to consult their own tax advisors regarding their 

potential responsibility to furnish the aforementioned reportable transaction number(s) to the IRS. 

Notwithstanding anything expressed or implied to the contrary, the tax treatment and tax structure of the transaction (as 

defined in 26 CFR Sec. 1.6011-4) may be disclosed to any and all persons, without limitation of any kind. 

TAXATION OF RESIDENTS OF OTHER COUNTRIES 

The receipt of dividends by Shareholders, the redemption or transfer of Shares and any distribution on a winding-up of the 

Company may result in a tax liability for the Shareholders according to the tax regime applicable in their various countries 

of residence, citizenship or domicile. Shareholders resident in or citizens of certain countries which have anti-offshore 

fund legislation may have a current liability to tax on the undistributed income and gains of the Company. The Directors, 

the Company and each of the Company’s agents shall have no liability in respect of the individual tax affairs of 

Shareholders. Shareholders are urged to consult with their tax advisers about the implications of an investment in the 

Company in their home countries. 

65

PART 4 

ADDITIONAL INFORMATION ABOUT THE COMPANY 

1. INCORPORATION AND ADMINISTRATION 

1.1 The Company is a registered closed-ended investment company incorporated in Jersey with limited liability on 

18 March 2008 under the provisions of the Companies (Jersey) Law 1991 (as amended), with registered number 

100291. The Company continues to be registered and domiciled in Jersey. Its registered office is at Forum House, 

Grenville Street, Jersey, Channel Islands JE1 0BR and its telephone number is +44 (0)1534 600800. The Company 

operates under, and will issue Shares in accordance with, the Companies (Jersey) Law 1991 (as amended) and 

ordinances and regulations made thereunder and has no subsidiaries or employees. 

1.2 The Directors confirm that the Company has not traded and that no accounts of the Company have been made up 

since its incorporation on 18 March 2008. The Company’s accounting period will end on 31 December of each 

year, with the first set of audited accounts being for the period from incorporation to 31 December 2008. 

1.3 Save for its entry into the material contracts summarised in section 6 of this Part 4 and certain non-material 

contracts, the Company has not since its incorporation carried on business nor incurred borrowings. 

1.4 Changes in the authorised and issued share capital of the Company since incorporation are summarised in 

section 2 below. 

1.5 Deloitte and Touche LLP has been the only auditor of the Company since its incorporation. Deloitte and Touche 

LLP is a member of the Institute of Chartered Accountants in England and Wales. The annual report and 

accounts will be prepared according to US GAAP. 

1.6 There has been no significant change in the trading or financial position of the Company since its incorporation. 

2. SHARE CAPITAL 

2.1 At the date of this Registration Document, the authorised share capital of the Company is an unlimited number of 

Shares of no par value (which upon issue the Directors may classify as US Dollar Shares, Euro Shares or Sterling 

Shares or as Shares of such other classes as the Directors may determine), an unlimited number of C Shares of 

no par value (which may be classified as C Shares of such classes as the Directors may determine) and 100 

Management Shares of no par value. As at the date of this document, the issued share capital of the Company 

comprises two Management Shares which are held (one each) by Premier Circle Limited and Second Circle 

Limited (two nominee companies associated with Bedell Cristin, the Company’s Jersey counsel). It is expected 

that these two Management Shares will be transferred to the Manager following Admission. The Management 

Shares have been issued for organisational purposes only and confer no dividend or other economic rights. The 

Shares and C Shares are being issued in the form of redeemable participating preference shares in order to 

provide flexibility to the Directors in relation to the conversion, repurchase and redemption of such shares. 

Shareholders and holders of C Shares have no right to have their shares redeemed. 

2.2 The consent of the JFSC under the Control of Borrowing (Jersey) Order 1958 (as amended) has been obtained for 

the issue of an unlimited number of Shares and an unlimited number of C Shares. The JFSC is protected by the 

Control of Borrowing (Jersey) Law 1947 (as amended) against liability arising from the discharge of its functions 

under that law. 

2.3 C Shares of the relevant class will convert into Shares of the corresponding class on the relevant Conversion 

Date according to the Conversion Ratio. The net proceeds of the issue of any class of C Shares will be accounted 

for as a separate pool of assets until the Conversion Date. 

2.4 The maximum issued share capital of the Company (all of which will be fully paid) immediately following the Offer 

will consist of a maximum of two Management Shares and US$750 million worth of Shares (including Shares 

issued pursuant to the Over-allotment Option), whether issued as US Dollar Shares, Euro Shares or Sterling 

Shares. The Company will be able to effect purchases of its own Shares subject to compliance with the 

requirements of the Companies (Jersey) Law 1991 (as amended) and all other applicable laws and regulations. 

Any Shares purchased by the Company may be cancelled or held in treasury. 

2.5 The Directors are entitled to allot Shares for cash or otherwise and classify such Shares as US Dollar Shares, 

Euro Shares or Sterling Shares or as Shares of such other classes as they may determine. The Directors are 

also entitled to allot C Shares for cash or otherwise and to classify such C Shares as C Shares of such class or 

classes as the Directors may determine. However, the Articles of Association provide that the Company is not 

permitted to allot (for cash) equity securities (being Shares or C Shares or rights to subscribe for, or convert 

securities into, Shares or C Shares) or sell (for cash) any Shares held in treasury, unless it shall first have offered 

to allot to each existing holder of Shares or C Shares a proportion of those Shares or C Shares the aggregate 

value of which (at the proposed issued price) is as nearly as practicable equal to the proportion of the total Net 

Asset Value of the Company represented by the Shares and/or C Shares held by such holder on the same or 

more favourable terms. These pre-emption rights may be excluded and disapplied or modified by special 

resolution of the Shareholders. The pre-emption rights have been excluded and disapplied for the period from 

Admission to the Company’s first annual general meeting by special resolution of the subscribers to the 

66

Company’s Articles of Association and it is expected that the Company will seek annual disapplication of such 

pre-emption rights at each subsequent annual general meeting of the Company. 

2.6 Under the Articles of Association, the Directors have the right to create new classes of Shares or C Shares in the 

Company, including Shares or C Shares or other securities convertible into the existing classes of Shares or C 

Shares and to determine the assets, liabilities, costs and expenses of the Company allocable to any classes of 

Shares or C Shares or other securities convertible into the existing classes of Shares or C Shares, without 

Shareholder approval provided that such shares or securities are issued on terms which do not, and any such 

allocation does not, adversely affect the interests of existing holders of Shares or C Shares. 

2.7 Subject to the exceptions set out in section 3.13 of this Part 4 under the heading “Transfer of Shares”, Shares 

and C Shares are freely transferable. 

2.8 Holders of Shares and C Shares are entitled to participate (in accordance with the rights specified in the Articles 

of Association) in the assets of the Company attributable to their Shares and C Shares in a winding-up of the 

Company or a winding-up of the business of the Company. 

2.9 All of the Shares and C Shares will be in registered form and eligible for settlement in CREST. Temporary 

documents of title will not be issued. 

3. SUMMARY OF THE COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION 

The Articles of Association of the Company, copies of which are available for inspection at the addresses 

specified in section 15 of Part 4 of this Registration Document, provide (in paragraph 4 of the memorandum of 

association) that the Company has unrestricted corporate capacity. 

3.1 Definitions 

The following definitions apply for the purposes of the Company’s Articles of Association: 

Back Stop Date 

C Share Issue Date 

C Share Surplus 

Calculation Date 

Such date as determined by the Directors and set out in the Specified 

Conversion Criteria 

The date on which the Company receives the net proceeds of the issue of the 

relevant class of C Shares 

The net assets of the Company attributable to the relevant C Share class 

(including, for the avoidance of doubt, any income and/or revenue (net of 

expenses) arising from or relating to such assets) less such proportion of the 

Company’s liabilities as shall reasonably be allocated by the Directors to the 

assets of the Company attributable to that C Share class 

The earliest of: 

(a) 

(b) 

(c) 

(d) 

the close of business on a date specified by the Directors occurring on 

or after the day on which the Manager shall have given notice to the 

Directors, and the Directors agree, that the Specified Proportion of the 

assets attributable to the relevant C Share class has been invested in 

accordance with the investment policy of the Company; 

the close of business on such date as the Directors may decide is 

necessary to enable the Company to comply with its obligations in 

respect of Conversion of the relevant C Share class; 

the close of business on the Back Stop Date; and 

the close of business on the date specified by the Directors falling 

after the date on which the Directors resolve that any Early Investment 

Condition in respect of a particular class of C Shares has been 

satisfied 

For the purposes of paragraph (a) of the definition of Calculation Date, the 

assets attributable to a relevant C Share class shall be treated as having been 

“invested” if they have been expended by or on behalf of the Company in the 

acquisition or making of an investment (whether by subscription or purchase) 

or if an obligation to make such payment has arisen or crystallised (in each 

case unconditionally or subject only to the satisfaction of normal pre-issue 

conditions) in relation to which the consideration amount has been determined 

or is capable of being determined by operation of an agreed contractual 

mechanic 

67

Conversion 

Conversion Date 

Conversion Ratio 

In relation to any class of C Shares, conversion of that class of C Shares in 

accordance with the Articles of Association 

In relation to any class of C Shares, a time falling after the Calculation Date at 

which the admission of the Shares arising on Conversion to listing on the 

Official List of the UK Listing Authority becomes effective and which is the 

opening of business on such Business Day as is selected by the Directors for 

the purpose 

A divided by B calculated to four decimal places (with 0.00005 being rounded 

upwards) where: 

A = C-D 

E 

and 

B = F-G 

H 

and where: 

“C” is the aggregate of: 

(a) 

the value of any investments of the Company attributable to a relevant 

C Share class which are listed or dealt on a stock exchange or on a 

similar market: 

(i) 

(ii) 

calculated by reference to (a) in the case of investments that 

are publicly traded in US dollars, the bid price for long and 

the offer price for short, based on information obtained from 

an independent pricing source and (b) in the case of 

investments that are publicly traded other than in US dollars, 

the bid price for long and the offer price for short, based on 

information obtained from an independent pricing source 

and converted to US dollars based on the mid-spot foreign 

exchange rate from the independent pricing source, in each 

case as at the Calculation Date; or 

where such prices are not available from an independent 

pricing source, calculated by reference to the Directors’ 

belief as to a fair current trading price for those investments; 

(b) 

(c) 

all other investments of the Company attributable to a relevant C 

Share class as reflected in the most recently published audited annual 

accounts of the Company, or, at the Directors’ discretion, in such 

other audited or unaudited accounts (drawn up as at such date as may 

be specified by the Directors) as the Directors may determine subject 

to such adjustments as the Directors may deem appropriate to be 

made for any variations in the value of such investments between the 

date of acquisition and the Calculation Date; and 

the amount which, in the Directors’ opinion, fairly reflects, at the 

Calculation Date, the value of the other assets of the Company 

attributable to a relevant C Share class (including cash and deposits 

with or balances at bank and including any accrued income and other 

items of a revenue nature less accrued expenses); 

“D” is the amount (to the extent not otherwise deduced in the calculation of “C”) 

which, in the Directors’ opinion, fairly reflects the amount of the liabilities 

attributable to a relevant C Share class at the Calculation Date (including, for the 

avoidance of doubt, the costs of acquisition of the relevant C Share class 

investments or assets referred to above); 

“E” is the number of C Shares of the relevant class in issue at the Calculation 

Date; 

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“F” is the aggregate of: 

(d) 

the value of any investments of the Company attributable to the 

Shares of the relevant class which are listed or dealt in on a stock 

exchange or on a similar market: 

(i) 

(ii) 














(e) 

the value of all other investments of the Company as reflected in the 

most recently published audited annual accounts of the Company or, 

at the Directors’ discretion, in such other audited or unaudited 

accounts (drawn up as at such date as may be specified by the 

Directors) as the Directors may determine, attributable to the Shares 

of the relevant class, subject to such adjustments as the Directors 

may deem appropriate to be made for any variations in the value of 

such investments between the date of acquisition and the Calculation 

Date; and 

(f) the amount which, in the Directors’ opinion, fairly reflects, at the 


(including cash and deposits with or balances at bank and including 

any accrued income or other items of a revenue nature less accrued 

expenses), attributable to the Shares of the relevant class; 

“G” is the amount (to the extent not otherwise deducted in the calculation of 

“F”) which, in the Directors’ opinion, fairly reflects the amount of the liabilities 

of the Company attributable to Shares of the relevant class and the full amount 

of all dividends declared but not paid on such class of the Shares, at the 

Calculation Date; and 

“H” is the number of Shares of the relevant class in issue at the Calculation 

Date 

Disclosure Document 

Early Investment Condition 

Share Surplus 

Specified Conversion Criteria 

Specified Proportion 

Any relevant disclosure document, or prospectus (as the case may be) issued 

by the Company from time to time in connection with the issue of C Shares 

Any such condition specified in the Specified Conversion Criteria 

The net assets of the Company attributable to the Shares less the C Share 

Surplus of all C Share classes 

In respect of any issue of C Shares, such criteria as may be determined by the 

Directors and announced by the Company through a RIS, setting out, among 

other things, the Specified Proportion, the Back Stop Date, any post-Conversion 

dividend limitations and any Early Investment Condition 

A specified percentage of the assets attributable to the C Shares of the relevant 

class as determined by the Directors and set out in the Specified Conversion 

Criteria 

The Articles of Association contain provisions, among others, to the following effect: 

3.2 Shares generally 

The Company’s share capital is represented by an unlimited number of Shares of no par value (which upon issue the 

Directors may classify as US Dollar Shares, Euro Shares or Sterling Shares or as Shares of such other classes as the 

69

Directors may determine), an unlimited number of C Shares of no par value (which may be classified as C Shares of such 

classes as the Directors may determine) and 100 Management Shares of no par value. 

Shareholders shall have the following rights: 

3.3 C Shares 

The Articles of Association provide as follows in relation to C Shares: 

3.3.1 General 

For the purposes of these provisions, other than in relation to “Rights as to Capital”, assets or investments 

attributable to the C Shares of a particular class or the C Share holders of a particular class shall mean the net 

cash proceeds (after all expenses relating thereto) of the issue of such C Shares as invested in or represented by 

investments or cash or other assets from time to time. 

3.3.2 Issue of C Shares 

Subject to the Companies Laws, the Directors are authorised to issue C Shares of such classes, of such number 

of tranches and on such terms as they determine provided that such terms are consistent with the provisions of 

the Articles of Association. 

If there are in issue at the same time C Shares carrying different rights, each shall be deemed to be a separate 

class of shares. The Directors may, if they so decide, designate each class of C Shares in such manner as they 

see fit in order that each class of C Shares can be separately identified. 

3.3.3 Dividends and pari passu ranking of Shares post Conversion 

Pending Conversion, the holders of C Shares of a particular class shall not be entitled to receive any dividends or 

other distributions in respect of the assets attributable to that class of C Shares. 

The new Shares of the relevant class arising on Conversion shall rank in full for all dividends and other 

distributions declared, made or paid after the Conversion Date and otherwise rank pari passu with the Shares of 

the relevant class in issue at the Conversion Date, save to the extent of any post-Conversion dividend limitation 

which may be specified by the Directors in the Specified Conversion Criteria. 

3.3.4 Rights as to Capital 

See “Distribution on winding-up” below for further details. 

3.3.5 Voting and Transfer 

Except as provided under “Class Consents and Variation Rights”, C Shares shall not have the right to attend, but 

shall receive notices of, any general meetings of the Company. 

C Shares are transferable in the same manner as Shares. 

3.3.6 Class Consents and Variation Rights 

Until Conversion the consent of the holders of the relevant C Shares as a class shall be required for and, 

accordingly, the special rights attached to any class of C Shares shall be deemed to be varied inter alia, by: 

(a) 

(b) 

(c) 

(d) 

(e) 

any alteration to the Articles of Association; or 

any alteration, increase, consolidation, division, sub-division, cancellation, reduction or purchase by the 

Company of any share capital of the Company (other than on the issue of further C Shares of the same 

or any other class, or on Conversion or on the issue of further Shares or classes of Shares on terms 

which do not adversely affect the interests of the holders of the C Shares, or on the purchase of any 

Shares by the Company at a discount to their estimated prevailing Net Asset Value per Share); or 

the passing of any resolution to wind up the Company; or 

the selection of any accounting reference date other than that declared in the Disclosure Document; or 

any material change to the investment policy of the Company. 

In respect of such matters, holders of C Shares shall have the right to attend, receive notice of and vote at a 

separate general meeting of the holders of C Shares of all classes meeting as a single body and in respect of 

voting at such general meetings: 

(a) 

(b) 

each holder of C Shares shall, on a show of hands, have one vote; and 

on a poll, each holder of C Shares attending in person, by proxy or by corporate representative shall 

have one vote in respect of each C Share denominated in US Dollars held by him and such number of 

votes: (a) in respect of each C Share denominated in Euro held by him as shall be equal to the Net Asset 

Value of such C Share (calculated in US Dollars) divided by the Net Asset Value per C Share 

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3.3.7. Undertakings 

denominated in US Dollars; (b) in respect of each C Share denominated in Sterling held by him as shall 

be equal to the Net Asset Value of such C Share (calculated in US Dollars) divided by the Net Asset 

Value per C Share denominated in US Dollars; and (c) in respect of a C Share denominated in any 

currency other than US Dollars, Sterling or Euro held by him as shall be equal to the Net Asset Value of 

such share (calculated in US Dollars) divided by the Net Asset Value per C Share denominated in US 

Dollars (rounded to one decimal place with 0.05 being rounded upwards), in each case as at the date of 

issue of the relevant class of C Share. 

Until Conversion, and without prejudice to its obligations under the Companies Laws, the Company undertakes in 

relation to each class of C Shares to: 

(a) 

(b) 

(c) 

procure that the Company’s records and bank accounts shall be operated so that the assets 

attributable to the C Shares of the relevant class can, at all times, be separately identified and, in 

particular but without prejudice to the generality of the foregoing, the Company shall procure that 

separate cash accounts shall be created and maintained in the books of the Company for the assets 

attributable to the C Shares of the relevant class; 

allocate to the assets attributable to the C Shares such proportion of the expenses or liabilities of the 

Company incurred or accrued between the C Share Issue Date and the Calculation Date (both dates 

inclusive) as the Directors fairly consider to be attributable to the C Shares of the relevant class 

including, without prejudice to the generality of the foregoing, those liabilities specifically identified in 

the definition of “Conversion Ratio” above; and 

give appropriate instructions to the Manager to manage the Company’s assets so that such 

undertakings can be complied with by the Company. 

3.3.8 Conversion 

The Directors shall procure that: 

(a) 

(b) 

the Sub-Administrator shall be requested to calculate, within ten Business Days after the Calculation 

Date, the Conversion Ratio as at the Calculation Date and the number of Shares of the relevant class to 

which each holder of C Shares of the relevant class shall be entitled on Conversion. For the avoidance 

of doubt C Shares designated in a particular currency shall convert into Shares of the same currency; 

and 

the Auditor, or failing which an independent accountant selected for the purpose by the Directors, shall 

be requested to report, within 15 Business Days after the date on which the Conversion Ratio has been 

calculated, that such calculations: 

(i) 

(ii) 

have been performed in accordance with the Articles of Association; and 

are arithmetically accurate, 

whereupon such calculations shall become final and binding on the Company and all holders of Shares 

of the relevant class and the relevant C Share class. 

The Directors shall further procure that, as soon as practicable following such certification, a RIS announcement 

is made advising holders of C Shares of that class of the Conversion Date, the Conversion Ratio and the 

aggregate number of new Shares of the relevant class to which holders of C Shares of that class are entitled on 

Conversion. 

The Shares of the relevant class arising upon Conversion shall be divided amongst the former holders of the C 

Shares of the relevant class pro rata according to their respective former holdings of C Shares of the relevant 

class (provided always that the Directors may deal in such manner as they think fit with fractional entitlements to 

Shares of the relevant class including, without prejudice to the generality of the foregoing, selling any such 

Shares representing such fractional entitlements and retaining the proceeds for the benefit of the Company) and 

for such purposes any Director is hereby authorised as agent on behalf of the former holders of C Shares, in the 

case of a share in certificated form, to execute any stock transfer and to do any other act or thing as may be 

required to give effect to the same including, in the case of a share in uncertificated form, the giving of directions 

to or on behalf of the former C Share holder who shall be bound by them. 

Forthwith upon Conversion, any certificates relating to the C Shares of the relevant class shall be cancelled and 

the Company shall issue to each such former C Share holder new certificates in respect of the Shares of the 

relevant class which have arisen upon Conversion unless such former C Share holder elects to hold their Shares 

of the relevant class in uncertificated form. 

The Company will use its reasonable endeavours to procure that upon Conversion the new Shares are admitted 

to the Official List of the UK Listing Authority. 

71

In connection with any issue of a C Share class, the Directors shall state the Specified Conversion Criteria in: 

(a) 

(b) 

any relevant Disclosure Document or press announcement published; and 

in a RIS release, 

at the time of offer of such C Shares for subscription. 

3.4 Voting 

Subject to any special rights, restrictions or prohibitions as regards voting for the time being attached to any Shares (e.g. as 

set out in section 3.11 below), holders of Shares shall have the right to receive notice of and to attend and vote at general 

meetings of the Company. Each Shareholder being present in person or by proxy or by a duly authorised representative (if a 

corporation) at a meeting shall upon a show of hands have one vote and upon a poll each such holder present in person or 

by proxy or by a duly authorised representative (if a corporation) shall, in the case of a separate class meeting, have one 

vote in respect of each Share held by him and, in the case of a general meeting of all Shareholders, have one vote in respect 

of each US Dollar Share held by him and such number of votes: (a) in respect of each Euro Share held by him as shall be 

equal to the Net Asset Value per Euro Share (calculated in US Dollars) divided by the Net Asset Value per US Dollar Share; 

(b) in respect of each Sterling Share held by him as shall be equal to the Net Asset Value per Sterling Share (calculated in 

US Dollars) divided by the Net Asset Value per US Dollar Share; and (c) in respect of a share denominated in any currency 

other than US Dollars, Sterling or Euro held by him as shall be equal to the Net Asset Value of such share (calculated in US 

Dollars) divided by the Net Asset Value per US Dollar Share (rounded to one decimal place with 0.05 being rounded 

upwards), in each case either as at Admission or, with effect from 1 January 2009, the last Valuation Date of the immediately 

preceding calendar year or, in respect of any class of shares not in issue as at Admission or such Valuation Date, as at the 

date of issue of such shares. 

Shareholders will have the right to vote on all material changes to the Company’s investment policy. Any such changes 

may be made only with the prior consent of the holders of the C Shares as described in section 3.3.6 above. 

Save as described in section 3.3.6 above, C Shares will not carry the right to attend and receive notice of any general 

meetings of the Company, nor will they carry the right to vote at such meetings. 

3.5 Dividends 

(a) 

(b) 

(c) 

(d) 

The Company may, by ordinary resolution, declare dividends in respect of the Shares but no dividend shall 

exceed the amount recommended by the Directors. No dividend will be paid other than out of the profits of the 

business of the Company and the declaration of the Directors as to the amount of the profits shall be conclusive. 

The Directors may at from time to time declare and pay such interim dividends as appear to be justified by the 


All unclaimed dividends may be invested or otherwise used by the Board of Directors for the benefit of the 

Company until claimed and the Company will not be constituted a trustee in respect thereof. No dividend will 

bear interest against the Company. Any dividend unclaimed after a period of 12 years from the date of declaration 

of such dividend will be forfeited and revert to the Company. 

The Board of Directors may before recommending any dividend set aside out of the profits of the Company such 

sums as they think proper as a reserve or reserves which shall at the discretion at their discretion be applicable 

for any purpose to which the profits of the Company may properly be applied and pending such application may 

at the like discretion either be employed in the business of the Company or be invested in such investments as 

the Directors may from time to time think fit. The Board of Directors may also without placing the same to 

reserve carry forward any profits which they may think prudent not to distribute. 

3.6 Capital 

On a winding-up of the Company, after paying all the debts attributable to and satisfying all the liabilities of the Company, 

Shareholders and C Share holders will be entitled to receive by way of capital any surplus assets of the Company 

attributable to the Shares and C Shares of the relevant class (as applicable) as a class in proportion to their holdings. 


3.7 Distribution on winding-up 

(a) 

On a winding-up the surplus assets remaining after payment of all creditors will be divided among the classes of 

Shares and C Shares then in issue (if more than one) on the basis that the Share Surplus shall be divided 

amongst Shareholders of the relevant classes and the C Share Surplus shall be divided amongst the holders of 

the relevant classes of C Shares in reflection of the pools of assets attributable to such Shares and C Shares in 

the books and records of the Company at the relevant winding up date as calculated by the Board of Directors or 

the liquidator in their discretion. 

Within each such class, such assets will be divided pari passu among the Shareholders and holders of C Shares 

of that class in proportion to the number of Shares or C Shares (as may be) of that class held at the 

72

commencement of the winding-up, subject in any such case to the rights of any Shares or C Shares (as the case 

may be) which may be issued with special rights or privileges. Holders of the two Management Shares will be 

entitled to receive the amount of capital paid up on such shares. 

(b) 

(c) 

On a winding-up the liquidator may, with the authority of a special resolution, divide amongst the Shareholders or 

holders of C Shares, or different classes of Shareholders or holders of C Shares, in specie the whole or any part 

of the assets of the Company and may set such value as they deem fair upon any one or more class or classes of 

property and may determine the method of division of such assets between Shareholders or holders of C Shares, 

or different classes of Shareholders or holders of C Shares. The liquidator may, with like authority, vest any part 

of the assets in trustees upon such trusts for the benefit of Shareholders or holders of C Shares as they deem fit 

but no Shareholder or holder of C Shares will be compelled to accept any assets in respect of which there is any 

outstanding liability. 

Where the Company is proposed to be or is in the course of being wound-up and the whole or part of its business 

or property is proposed to be transferred or sold to another company the liquidator may, with the sanction of an 

ordinary resolution, receive in compensation or part compensation for the transfer or sale of assets, shares, 

policies or other like interests for distribution among the Shareholders or holders of C Shares or may enter into 

any other arrangements whereby the Shareholders, or holders of C Shares (as applicable), may, in lieu of 

receiving cash, shares, policies, or other like interests in the transferee, participate in the profits of or receive 

any other benefit from the transferee. 

3.8 Redemption Facility 

(a) 

(b) 

(c) 

(d) 

Each holder of Shares may, where, at the sole option of the Directors, the Directors opt to give effect to 

redemption requests on any Redemption Date in the manner and subject to the provisions of the Articles of 

Association request the redemption of the whole or any number of Shares comprised in their holding of Shares 

at the prevailing Net Asset Value of the relevant class of Shares (less the costs of redemption and, as determined 

by the Directors, any penalty charges resulting from the realisation of underlying investments in order to fund 

such redemptions) as at the Redemption Date. 

On any Redemption Date on which the Directors at their sole discretion opt to give effect to redemption requests, 

the Company will not give effect to redemption requests in respect of more than 20 per cent. in aggregate of the 

Shares of the relevant class of Shares in issue, or such lesser percentage of Shares in respect of which the 

Directors decide to give effect to redemption requests. If on any Redemption Date the number of Shares of a 

class for which valid redemption requests have been delivered (accompanied by any relevant documents) would, 

if the same were given effect to, cause the limit described in this paragraph to be exceeded, the number of 

Shares of that class to be redeemed on such Redemption Date will be reduced pro rata according to the number 

of Shares of that class to which each redemption request relates and each such redemption request will be 

deemed not to apply to the balance of the Shares of that class to which it would otherwise apply. 

The ability to redeem Shares in certificated form may be exercised by the holder delivering to the Company at its 

registered office (or to such other address or such other person as the Directors may designate for the purpose) 

a duly completed Redemption Notice no later than the 95th day prior to the relevant Redemption Date (or such 

other day as the Directors may, in their absolute discretion, determine), or, if such 95th day (or such other day as 

may be determined by the Directors) is not a Business Day, then the immediately preceding Business Day (the 

“Notification Date”), together with the certificate(s) (if any have been issued) in respect of the Shares to be 

redeemed and such other evidence as the Directors may reasonably require to prove the title of the holder and 

the due execution by him of the Redemption Notice or, if the Redemption Notice is executed by some other 

person on their behalf, the authority of that other person to do so. The ability to redeem Shares in uncertificated 

form may be exercised by delivery to the Company (or such other person as the Directors may designate for the 

purpose) of a Redemption Notice no later than the Notification Date in accordance with the procedures 

prescribed by the Directors. For the purposes of the provisions of the Articles of Association described in this 

paragraph, the expression “Redemption Notice” means a notice of redemption in such form as the Directors may 

from time to time prescribe and may in the case of Shares in uncertificated form means an instruction sent by 

means of a relevant system in such form as the Directors may from time to time prescribe. The Directors may in 

their absolute discretion reject any Redemption Notice in respect of a Redemption Date given at any time on or 

prior to the relevant Notification Date and/or given otherwise than in accordance with the Articles of Association. 

A Redemption Notice once given may not be withdrawn without the consent of the Company. The Directors may, 

at their sole discretion, give effect to any or all redemption requests received after the Notification Date and may 

set a redemption notice period which is greater or lesser than 95 days prior to a Redemption Date. 

Redemption will become effective on the Redemption Date. In the case of certificated Shares, cheques for 90 per 

cent. (or such lower percentage as the Directors may in their absolute discretion determine to be in the best 

interests of the Company and its Shareholders as a whole) of the proceeds of any such redemptions will be sent 

to the holder (or, in the case of joint holders to all holders but sent, to the holder whose name stands first in the 

register in respect of the Shares) at their own risk within 30 Business Days of the completion of the calculation of 

the Net Asset Value of the Company as at the Redemption Date (or as soon as practicable) or, if later, within five 

73

Business Days of the receipt of the certificate(s) (if any have been issued) or an indemnity in a form satisfactory to the 

Directors in lieu of the certificate(s) in respect of the Shares being redeemed. If a certificate includes Shares not 

redeemable on that occasion, a new certificate for the balance of the certificated Shares shall be issued to the holder 

without charge. If a holder whose certificated Shares are to be redeemed fails to deliver the certificate(s) (if issued) for 

those Shares to the Company, the Company may retain the redemption proceeds until such certificate is delivered. In 

the case of uncertificated Shares, 90 per cent. (or such lower percentage as the Directors may in their absolute 

discretion determine to be in the best interests of the Company and its Shareholders as a whole) of the proceeds of 

any such redemptions will be paid within 30 Business Days of the completion of the calculations of the Net Asset 

Value of the Company as at the Redemption Date (or as soon as practicable) to the holder by such method as may be 

determined by the Directors. Other than as provided below, no interest will be payable on redemption monies during 

the period from the relevant Redemption Date to the date of payment. The remaining 10 per cent. of such redemption 

proceeds (the “Hold-Back Amount”) shall be retained by the Company until completion of the Company’s audit for the 

then current financial year, following which the Hold-Back Amount will be (a) increased or reduced (but not below 

zero) as necessary to reflect any difference between the Net Asset Value per Share at which such redemption was 

effected and the audited Net Asset Value per Share as at the Redemption Date and (b) where the Shares redeemed 

were denominated otherwise than in US Dollars, adjusted to reflect the costs, and any gains or losses, resulting from 

any currency hedging activities conducted by the Investment Manager in respect of the Hold-Back Amount (the 

resulting amount, the “Adjusted Hold-Back Amount”). The Adjusted Hold-Back Amount (if any), will be paid to 

Shareholders in the same manner as described above (together with interest accruing after 60 days at a rate equal to 

one quarter of the annualised yield for 90 day United States Treasury bills, which rate will be determined by the 

Investment Manager and fixed as of the last Business Day prior to each applicable Fiscal Quarter) within 30 Business 

Days of the completion of the Company’s audit for the relevant year. The Redemption Facility is not available in 

respect of the C Shares as a whole or any class thereof. 

(e) If the calculation and publication of the Net Asset Value per Share is suspended on any Redemption Date, the 

Directors may delay any redemptions otherwise due to take place on such date until a substitute date selected by 

the Directors following the cessation of such suspension. 

(f) The Company shall not be liable for any loss or damage suffered or incurred by any holder of Shares or any other 

person as a result of or arising out of late settlement, howsoever such loss or damage may arise. 

3.9 Conversion of Shares 

(a) At the Valuation Dates referable to the months of March, June, September and December in each year 

(commencing in June 2008) (each a “Currency Conversion Calculation Date”) Shareholders may convert Shares 

of any class into Shares of any other class (of which Shares are in issue at the relevant time) by giving not less 

than 10 Business Days’ notice to the Company in advance of such Currency Conversion Calculation Date, either 

through submission of the relevant instruction mechanism (for Shareholders holding Shares in uncertificated 

form) or through submission of a conversion notice and the return of the relevant share certificate to the 

Registrars. Such conversion will be effected on the basis of the ratio of the last reported Net Asset Value per 

Share of the class of Shares held (calculated in US Dollars less the costs of effecting such conversion and as 

adjusted to reflect the impact of adjusting any currency hedging arrangements), to the last reported Net Asset 

Value per Share of the class of Shares into which they will be converted (each as at the relevant Currency 

Conversion Calculation Date). Shareholders should note, however, that fractions of Shares arising on conversion 

will be rounded down and hence the aggregate Net Asset Value of those Shares held after conversion may be 

less than before such conversion. Shareholders who elect to convert Shares will be unable to deal in those 

Shares in the period between giving notice of conversion and the actual date of conversion. 

(b) The Directors may amend the process for conversion (including the frequency of currency class conversions and 

the procedure for giving notice of conversion) in such manner as they see fit including, without limitation, for the 

purposes of facilitating conversions of Shares in uncertificated or certificated form or to facilitate electronic 

communications. Any conversion notice once given shall be irrevocable without the consent of the Directors. The 

date on which conversion shall take place shall be a date determined by the Board of Directors being not more 

than 30 days after the relevant Currency Conversion Calculation Date. 

(c) Conversion shall be effected by way of redesignation of Shares of one currency class into Shares of another 

currency class or in any such other manner as the Board of Directors may determine. Fractions of Shares arising 

on such conversion will be rounded down to the nearest whole Share. 

(d) The ability to convert Shares from one class into Shares of any other class may be suspended at any time that the 

calculation and publication of the Net Asset Value per Shares is suspended. 

(e) Should either: (i) the aggregate Net Asset Value of the Shares of any class as at any Valuation Date fall below 

US$40 million, (or the equivalent in the relevant currency); or (ii) the number of Shares in any class held in public 

hands (as such phrase is used in current Listing Rule 6.1.19(4)R) fall below 25 per cent. of the total number of issued 

Shares of that class, the Directors, in accordance with the Articles of Association, have the right, at their discretion, to 

compulsorily convert the Shares of such class into Shares of the class then in issue with the greatest aggregate Net 

Asset Value in US Dollar terms as at the corresponding Valuation Date. Any such compulsory conversion will take 

place in substantially the same manner specified for voluntary conversion in paragraphs (a) to (c) above. 

74

3.10 Variation of Share Rights and issue of new classes of shares 

The rights attached to any class of Shares or C Shares (unless otherwise provided by the terms of issue of the shares of 

that class) may be varied or abrogated at any time with the consent in writing of the holders of two-thirds of the issued 

shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares 

of that class. 

The Directors may create new classes of Shares or C Shares, including securities convertible into existing classes of 

Shares or C Shares, and may determine the assets or investments, liabilities, costs and expenses of the Company 

allocable to any classes of Shares or C Shares or other securities convertible into existing classes of Shares or C Shares, 

without shareholder approval provided that such shares or securities are issued on terms which do not, and any such 

allocation does not, adversely affect the interests of existing shareholders. 

The quorum for a meeting to vary or abrogate the rights attaching to any class of Shares or C Shares shall be persons 

holding or representing by proxy at least one-third in number of the issued shares of the relevant class (but so that if at 

any adjourned meeting of such holders a quorum as above defined is not present one person present holding shares of 

that class or their proxy shall be a quorum). Holders of shares of the class or their duly appointed proxies shall on a poll 

have one vote in respect of every share of that class held by them respectively. 

3.11 Notice requiring disclosure of interests in Shares or C Shares 

(a) The Directors have power by notice in writing to require any Shareholder or holder of C Shares to disclose to the 

Company the identity of any person other than the Shareholder or holder of C Shares (an “interested party”) who 

has any interest in the Shares or C Shares held by such Shareholder or holder of C Shares and the nature of 

such interest. Any such notice shall require any information in response to such notice to be given in writing 

within such reasonable time as the Directors shall determine. 

(b) The Directors may be required to exercise their power to require disclosure of interested parties on a requisition 

of Shareholders holding not less than 1/10 th of the total voting rights attaching to the Shares in issue at the 

relevant time. 

(c) If any Shareholder or holder of C Shares is in default in supplying to the Company the information required by the 

Company within the prescribed period, the Directors in their absolute discretion may serve a direction notice on 

that Shareholder or holder of C Shares. 

(d) The direction notice may direct that in relation to the Shares or C Shares in respect of which the default has 

occurred (“default shares”) and any other Shares or C Shares held by such Shareholder or holder of C Shares, 

the Shareholder or holder of C Shares will not be entitled to vote in general meetings or class meetings. Where 

the default shares represent at least 0.25 per cent. of the class of Shares or C Shares concerned, the direction 

notice may additionally direct that dividends on such Shares be retained by the Company (without interest) and 

that no transfer of the default shares (other than a transfer authorised under the Articles of Association) will be 

registered until the default is rectified. 

3.12 Commission 

The Company may pay commission in money, Shares or C Shares to any person in consideration for their subscribing or 

agreeing to subscribe whether absolutely or conditionally for any Shares or C Shares in the Company or procuring or 

agreeing to procure subscriptions whether absolute or conditional for any Shares or C Shares in the Company provided 

that the rate or amount of commission will be fixed by the Board of Directors. The Company may also pay brokerage fees. 

3.13 Transfer of Shares 

(a) The Articles of Association provide that the Board of Directors may permit the holding in uncertificated form of 

one or more classes of Shares and/or C Shares determined for this purpose in order than the transfer of title to 

any such Shares or C Shares may be effected by means of a computer system (including the CREST system) in 

accordance with the Jersey Regulations. If the Board of Directors implement any such arrangements, no 

provision of the Articles of Association will apply or have effect to the extent that it is in any respect inconsistent 

with: 

(i) the holding of Shares or C Shares of the relevant class in uncertificated form; 

(ii) the transfer of title to Shares or C Shares of the relevant class by means of the CREST system; or 

(iii) the Jersey Regulations. 

(b) Where any class of Shares or C Shares is, for the time being, admitted to settlement by means of the CREST 

system such securities may be issued in uncertificated form in accordance with and subject to the CREST 

Regulations. Unless the Board of Directors otherwise determine, Shares or C Shares held by the same holder or 

joint holders in certificated form and uncertificated form will be treated as separate holdings. Shares and C 

Shares may be changed from uncertificated to certificated form, and from certificated to uncertificated form, in 

accordance with and subject to the CREST Regulations. Title to such of the Shares or C Shares as are recorded 

on the register as being held in uncertificated form may be transferred only by means of the relevant system. 

75

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

Subject to such of the restrictions of the Articles of Association as may be applicable, any instrument of transfer of 

a Share or C Share shall be in writing in any form which the Board of Directors may approve (which shall specify 

the full name and address of the transferee) and shall be signed by or on behalf of the transferor (and, in the case 

of a partly paid Share or C Share, by or on behalf of the transferee) and the transferor shall be deemed to remain 

the holder of the Share or C Share until the name of the transferee is entered into the register of shareholders in 

respect thereof. Subject to the requirements of the Listing Rules, the Board of Directors may decline to register a 

transfer of any Share or C Share in certificated form or uncertificated form unless (a) it is fully paid up, (b) the 

instrument of transfer is left at the registered office of the Company, or at such other place as the Directors may 

determine, for registration, (c) the instrument of transfer is accompanied by the certificate for the Shares or C 

Shares to be transferred (if the Shares or C Shares are held in certificated form) and such other evidence (if any) 

as the Directors may reasonably require to prove the title of the intending transferor or their right to transfer the 

Shares or C Shares, (d) the instrument of transfer is duly stamped (if so required), (e) it is in respect of only one 

class of Shares or C Shares, (f) it is in favour of not more than four transferees jointly, and (g) it is not in favour of a 

minor, infant, bankrupt or person with a mental disorder, provided in each case such refusal would not prevent 

dealings from taking place on an open and proper basis on any relevant stock exchange. 

If the Directors decline to register a transfer of any Share or C Share, they shall, within two months after the date 

on which the transfer was lodged with the Company, send to the transferee notice of the refusal. 

No purchase or other acquisition of Shares or C Shares may be made by any entity that is (i) an “employee benefit 

plan” (within the meaning of Section 3(3) of ERISA) that is subject to Part 4 of Title 1 of ERISA, (ii) a plan, 

individual retirement account or other arrangement that is subject to Section 4975 of the US Internal Revenue 

Code or any other state, local laws or regulations that would have the same effect as regulations promulgated 

under ERISA by the US Department of Labor and codified at 29 C.F.R. Section 2510.3-101 to cause the underlying 

assets of the Company to be treated as assets of that investing entity by virtue of its investment (or any beneficial 

interest) in the Company and thereby subject the Company and its investment manager (or other persons 

responsible for the investment and operation of the Company’s assets) to laws or regulations that are similar to 

the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the 

US Internal Revenue Code, or (iii) an entity whose underlying assets are considered to include “plan assets” of 

any such plan, account or arrangement (each of (i), (ii) and (iii), a “Plan”) or (iv) a US Person in circumstances 

where the holding of Shares or C Shares by such person would (a) give rise to an obligation on the Company to 

register as an “investment company” under the Investment Company Act; (b) preclude the Company from relying 

on the exception to the definition of “investment company” contained in section 3(c)(7) of the Investment 

Company Act; (c) give rise to an obligation on the Company to register under the Securities Exchange Act of 1934, 

as amended; or (d) give rise to an obligation on the Manager or the Investment Manager to register as a 

commodity pool operator or commodity trading advisor under the US Commodity Exchange Act of 1974, as 

amended (each such US Person, a “Prohibited US Person”). If any Shares or C Shares are owned directly or 

beneficially by a person believed by the Board of Directors to be a Prohibited US Person or a Plan investor, the 

Board of Directors may give notice to such person requiring him either (i) to provide the Board of Directors within 

30 days of receipt of such notice with sufficient satisfactory documentary evidence to satisfy the Board of 

Directors that such person is not a Prohibited US Person or a Plan investor or (ii) to sell or transfer their Shares 

or C Shares to a person qualified to own the same within 30 days and within such 30 days to provide the Board of 

Directors with satisfactory evidence of such sale or transfer. Where condition (i) or (ii) is not satisfied within 30 

days after the serving of the notice, the person will be deemed, upon the expiration of such 30 days, to have 

forfeited their Shares or C Shares. 

The Board of Directors may, in its absolute discretion, refuse to register a transfer of any Share or C Share to any 

person it has reason to believe is a Prohibited US Person or Plan investor or, provided that the Board of Directors will 

not exercise this discretion if to do so would prevent dealings in Shares from taking place on an open and proper 

basis on the London Stock Exchange. Each person acquiring Shares and/or C Shares shall by virtue of such 

acquisition be deemed to have represented to the Company that he is not a Plan investor or a Prohibited US Person. 

If any Shares or C Shares are owned directly or beneficially by a person believed by the Board of Directors to be a 

Prohibited US Person or a Plan investor, the Board of Directors may give notice to such person requiring him 

either (i) to provide the Board of Directors within 30 days of receipt of such notice with sufficient satisfactory 

documentary evidence to satisfy the Board of Directors that such person is not a Prohibited US Person or a Plan 

investor or (ii) to sell or transfer their Shares or C Shares to a person qualified to own the same within 30 days 

and within such 30 days to provide the Board of Directors with satisfactory evidence of such sale or transfer. 

Where condition (i) or (ii) is not satisfied within 30 days after the serving of the notice, the person will be deemed, 

upon the expiration of such 30 days, to have forfeited their Shares or C Shares. 

A forfeited Share or C Share will be deemed to be the property of the Company and may be sold, re- allotted or 

otherwise disposed of on such terms as the Board of Directors thinks fit, including (if applicable) with or without 

all or any part of the amount previously paid on the Share or C Share being credited as paid. At any time before 

such a sale or disposition the forfeiture process may be cancelled. No proceeds of any forfeiture will be paid to 

any person whose Shares or C Shares have been forfeited. 

76

(i) 

(j) 

(k) 

(l) 

(m) 

A person whose Shares or C Shares have been forfeited will cease to be a shareholder in respect of the forfeited 

Shares or C Shares but will, notwithstanding the forfeiture and if applicable, remain liable to pay to the Company 

all monies which at the date of the forfeiture were payable by them to the Company in respect of the Shares or C 

Shares with interest thereon from the date of forfeiture until payment at such rate (not exceeding 15 per cent. 

per annum) as the Board of Directors determines and the Board of Directors may enforce payment without any 

allowance for the value of the Shares or C Shares at the time of forfeiture. 

The Board of Directors may accept from any shareholder on such terms as agreed a surrender of any Shares or 

C Shares in respect of which there is a liability for calls or in circumstances where a US Person determines that 

they are not qualified to hold the Shares or C Shares. Any surrendered Share or C Share may be disposed of in 

the same manner as a forfeited Share or C Share. 

The registration of transfers of Shares or C Shares or of transfers of any class of Shares or C Shares may be 

suspended at such times and for such periods as the Directors may determine provided always that such 

registration shall not be suspended, either generally or otherwise, for more than 30 days in any year. 

No fee shall be charged for the registration of any instrument of transfer or other document relating to or 

affecting the title to any Share or C Share. 

The Company shall be entitled to retain any instrument of transfer of any Share or C Share which is registered, 

but any instrument of transfer of any Share or C Share which the Directors refuse to register (except in the case 

of fraud) shall be returned to the person lodging it when notice of the refusal is given. 

3.14 Alteration of Capital 

The Company may by special resolution altering its Memorandum increase or reduce the number of Shares and/or 

C Shares which it is authorised to issue or consolidate or divide all or any of its Shares and/or C Shares (whether issued or 

not) into fewer Shares and/or C Shares. 

Subject to the provisions of the Companies Law (including confirmation by the court, if required) the Company may by 

special resolution reduce its capital account in any way. 

3.15 Notices 

(a) 

(b) 

(c) 

(d) 

A notice may be given by the Company to any holder of Shares or C Shares either personally or by sending it by 

post in a pre-paid envelope addressed to the relevant holder at their registered address. A notice sent by post 

will be deemed to have been served 24 hours after the time when the notice was posted. Any document or notice 

that may be sent by the Company by electronic communication will be deemed to be received 24 hours after the 

time at which it was sent. 

A notice may be given by the Company to the joint holders of Shares or C Shares by giving the notice to the joint 

holder first named in respect of the relevant Shares or C Shares in the register of members. 

Notice for any general meeting held to pass a special resolution and for the annual general meeting must be 

sent not less than 21 days before the meeting and notice for any other general meeting must be sent not less 

than 14 days before the meeting, provided that, with the written consent of shareholders entitled to receive notice 

of such meetings, a meeting may be convened by shorter notice or no notice at all and in any manner they think 

fit. 

The notice must specify the time and place of the general meeting and, in the case of any special business, the 

general nature of the business to be transacted. The accidental omission to give notice of any meeting or the 

non-receipt of such notice by any shareholder will not invalidate any resolution, or any proposed resolution 

otherwise duly approved, passed or proceeding at any meeting. 

3.16 Pre-emption Rights 

There are no provisions of Jersey law which confer rights of pre-emption in respect of the allotment of the Shares or 

C Shares. However, the Articles of Association provide that the Company is not permitted to allot (for cash) equity 

securities (being Shares or C Shares or rights to subscribe for, or convert securities into, Shares or C Shares) or sell (for 

cash) any Shares held in treasury, unless it shall first have offered to allot to each existing holder of Shares and/or C 

Shares on the same or more favourable terms a proportion of those Shares or C Shares the aggregate value of which (at 

the proposed issue price) is as nearly as practicable equal to the proportion of the total Net Asset Value of the Company 

represented by the Shares and/or C Shares held by such holder. These pre-emption rights may be excluded and 

disapplied or modified by special resolution of the Shareholders. 

The pre-emption rights have been excluded and disapplied for the period from Admission to the Company’s first annual 

general meeting by special resolution of the subscribers to the Company’s Articles of Association and it is expected that 

the Company will seek annual disapplication of such pre-emption rights at each subsequent annual general meeting of 

the Company. 

77

4. BOARD OF DIRECTORS 

The Company’s Articles of Association provide that the Board of Directors shall be composed of at least two directors and 

shall not be subject to any maximum unless otherwise determined by a resolution of the Shareholders. The Directors 

meet on a regular basis to review and assess the investment policy and performance of the Company and generally to 

supervise the conduct of its affairs. 

4.1 Board Structure, Practices and Committees 

The structure, practices and committees of the Company’s Board of Directors, including matters relating to the size, 

independence and composition of the Board of Directors, the election and removal of directors, requirements relating to 

Board of Directors action, and the powers delegated to Board of Directors committees are governed by the Company’s 

Articles of Association and the Listing Rules. The following is a summary of certain provisions of those Articles of 

Association and the Listing Rules that affect the Company’s corporate governance. This summary is qualified in its 

entirety by reference to all of the provisions of the Articles of Association. Because this description is only a summary of 

certain of the Articles of Association, it does not necessarily contain all of the information that potential Shareholder may 

find useful. The Company therefore urges potential Shareholder to review the Articles of Association in their entirety. 

4.2 Size, Independence and Composition of the Board of Directors 

The Company’s Board of Directors, which upon completion of the Offer will have five members, shall not be subject to any 

maximum unless otherwise determined by a resolution of Shareholders. 

The first Directors have been appointed in writing by the subscribers to the Articles of Association and, in accordance with 

Jersey regulatory requirements applicable to the Company, there shall be at least two Jersey-resident Directors. 

The Listing Rules provide that the Board of Directors must be able to act independently of the Investment Manager and 

that at least a majority of the Directors holding office (including the chairman) must be independent of the Investment 

Manager and its affiliates. If the death, resignation or removal of an Independent Director results in the Board of Directors 

having less than a majority of Independent Directors, the remaining Directors will endeavour to ensure that the vacancy is 

filled promptly. Pending the filling of such vacancy, the Board of Directors may temporarily consist of less than a majority 

of Independent Directors and those Directors who do not meet the standards for independence may continue to hold 

office. 

In addition, the Company’s Articles of Association prohibit the Board of Directors from consisting either of a majority of 

Directors who are residents of the United Kingdom or a majority of Directors who are citizens or residents of the United 

States, and if, as a result of the relocation, removal, death or resignation of a Director, a majority of the Directors would be 

residents of the United Kingdom or citizens or residents of the United States, one or more Directors who is UK resident or 

a United States citizen or resident, as appropriate, shall be deemed to have resigned concurrently with such relocation, 

death or resignation in order to ensure that a majority of the Directors are neither UK residents nor United States citizens 

or residents. 

4.3 Election and Removal of Directors 

At the first annual general meeting and at each annual general meeting thereafter (a) any Director who is not an 

Independent Director must retire, (b) any Director, other than a Director who is not an Independent Director, who was 

elected or last re-elected a Director at or before the annual general meeting held in the third calendar year before the 

current year must retire by rotation; and (c) such further Directors (if any) must retire by rotation as would bring the 

number retiring by rotation up to one-third of the number of Directors in office at the date of the notice of the meeting. 

Retiring Directors may be presented for re-election at the same annual general meeting. Vacancies on the Board of 

Directors may be filled, and additional Directors may be added, by a resolution of Shareholders or a vote of the Directors 

then in office, provided that any new Director is approved by the JFSC and that following such appointment the Board of 

Directors remains in compliance with the conditions referred to in section 4.2 above. 

A Director may be removed from office for any reason by a written resolution requesting his resignation signed by all other 

Directors then holding office or by a resolution duly passed by Shareholders. A Director will be automatically removed 

from the Board of Directors if he or she becomes bankrupt, insolvent or makes any arrangements with his or her 

creditors generally, if he or she becomes resident in the United Kingdom or a citizen or resident of the United States and 

such residency or citizenship results in a majority of the Board of Directors being either resident in the United Kingdom or 

citizens or residents of the United States or if he or she becomes prohibited by law from acting as a Director. 

A Director is not required to retire upon reaching a certain age. 

4.4 Action by the Board of Directors 

The Company’s Board of Directors may take action in a duly convened meeting in which a quorum is present or by a 

written resolution signed by all Directors then holding office. When action is to be taken at a meeting of the Board of 

Directors, the affirmative vote of a majority of the Directors then holding office is required for any action to be taken. In the 

event that an equal number of votes is cast, the Chairman will have the casting vote. The Directors may exercise all the 

powers of the Company to borrow money, to give guarantees and to mortgage, pledge or charge all or part of its property 

or assets as security for any liability or obligation of the Company or any third party. 

78

4.5 Transactions in which a Director has an Interest 

A Director who, directly or indirectly, has an interest in a contract, transaction or arrangement with the Company or any 

subsidiary of the Company which to a material extent conflicts or may conflict with the interests of the Company and of 

which he has actual knowledge is required to disclose the nature and extent of his or her interest to the full Board of 

Directors. Subject thereto, any such Director shall not be liable to account to the Company for any profit or gain realised 

by him on such transaction. Such disclosure may generally take the form of a general notice given to the Board of 

Directors to the effect that the Director has an interest in a specified company or firm and is to be regarded as interested 

in any contract, transaction or arrangement which may after the date of the notice be made with that company, firm or 

affiliates thereof. A Director may participate in any meeting called to discuss or any vote called to approve the transaction 

in which the Director has an interest and any transaction approved by the Board of Directors will not be void or voidable 

solely because the Director was present at or participates or votes in the meeting in which the approval was given; 

provided that the Board of Directors or a board committee authorises the transaction in good faith after the Director’s 

interest has been disclosed or the transaction is fair to the Company at the time it is approved. 

Where proposals are under consideration concerning the appointment of two or more Directors to offices or employment 

with the Company or any company in which the Company is interested, such proposals shall be divided and considered in 

relation to each Director separately, and in such case each of the Directors concerned shall be entitled to vote and be 

counted in the quorum in respect of each resolution except that concerning his own appointment. None of the Directors 

has, or has had since incorporation, any interest, direct or indirect, in any transactions which are unusual in their nature 

or significant to the business of the Company. See the section headed “Potential Conflicts of Interest”. 

4.6 Directors’ Remuneration 

The annual aggregate remuneration of the Directors shall not exceed £200,000 or such higher amount as may be 

approved by ordinary resolution of Shareholders. The Directors are entitled to be repaid by the Company all travelling and 

reasonable out-of-pocket expenses properly and necessarily incurred by them in or with a view to the performance of 

their duties or in attending meetings of the Directors or of committees of the Directors or general meetings of the 

Company’s Shareholders. If any Director, having been requested, shall render or perform extra or special services, he 

may be paid such remuneration as the Directors think fit either as a lump sum or as a salary or by way of commission or 

otherwise in addition to, or in substitution for, his ordinary remuneration as Director. 

4.7 Borrowing Powers 

The Directors may exercise all the powers of the Company to borrow money and to give guarantees, mortgage, 

hypothecate, pledge or charge all or part of its undertaking, property or assets (both present and future) and uncalled 

capital, or any part thereof, to enter into options, futures, options on futures, swaps and other synthetic or derivative 

financial instruments and/or to issue debentures, loan stock and other securities whether outright or as collateral 

security for any debt, liability or obligation of the Company or of any third party. 

4.8 Indemnities 

The Articles of Association contain provisions indemnifying every Director, the Secretary and every other servant and 

employee of the Company, save for any person employed by the Company as auditor, against all costs, charges, losses, 

liabilities, damages and expenses which any such person may incur in the course of the discharge of his duties otherwise 

than through his own fraud, wilful misconduct or gross negligence. 

The Directors are empowered to arrange for the purchase and maintenance in the name of and at the expense of the 

Company of insurance cover for the benefit of any officer or former officer of the Company. 

5. DIRECTORS’ AND OTHER INTERESTS 

5.1 No Director of the Company has in respect of the five years preceding the date of this Registration Document: 

(a) 

(b) 

(c) 

(d) 

any convictions in relation to indictable offences or convictions in relation to fraudulent offences; 

received any official public incrimination and/or sanctions by any statutory or regulatory authorities 

(including designated professional bodies) or ever been disqualified by a court from acting as a member 

of the administrative, management or supervisory bodies of a company or from acting in the 

management or conduct of the affairs of any company; or 

been associated with any bankruptcy, receivership or liquidation in which such person acted in the 

capacity of a member of an administrative, management or supervisory body or senior manager; or 

save as set out in section 5.5 below, been a member of the administrative, management or supervisory 

bodies or partner of any companies or partnership. 

5.2 There are no outstanding loans granted by the Company to Directors or principals, nor are there any guarantees 

provided by the Company for the benefit of any Director or principal. 

5.3 No Director has any potential conflicts of interests between any duties the Director owes to the Company and any 

private interests and/or other duties, except to the extent that Frank Le Feuvre and Jonathan Ruck Keene are not 

independent of BlackRock. 

79

5.4 No Director or principal has had any interest, direct or indirect, in any transaction which is or was unusual in its 

nature or conditions or significant to the business of the Company and which was effected by the Company since 

its incorporation. 

The services of the Directors are provided under the terms of letters of appointment between the Company and each 

Director dated 4 April 2008 subject to termination in accordance with the Articles of Association. Each Director other than 

the Chairman and the Chairman of the Audit and Management Engagement Committee will be paid an initial annual fee of 

£25,000. The Chairman of the Audit and Management Engagement Committee will receive an initial annual fee of £27,000. 

The Chairman will receive an initial annual fee of £35,000. These fees may be waived at the discretion of each Director. 

The BlackRock Directors have each waived their entitlement to a fee. 

There are no service contracts in existence between the Company and any of its Directors, nor are any such contracts 

proposed. 

There are no arrangements between the Company and the Directors providing for benefits upon termination of 

employment. 

Pursuant to an instrument of indemnity entered into between the Company and each Director, the Company has 

undertaken, subject to certain limitations, to indemnify each Director out of the assets and profits of the Company against 

all costs, charges, losses, damages, expenses and liabilities arising out of any claims made against him in connection with 

the performance of his duties as a Director of the Company. 

5.5 Over the five years preceding the date of this Registration Document, the Directors hold or have held the 

following directorships (apart from their directorships of the Company) or memberships of administrative, 

management or supervisory bodies and/or partnerships: 

Name Current directorships/partnerships Previous directorships/partnerships 

Colin Maltby Princess Private Equity Holding Limited BP Investment Management Limited 

Peter Kirk Memorial Fund 

CCLA Investment Management Limited 

Church of England Nominees Limited 

The Estate, Knightsbridge Limited 

Ropemaker Heywood Limited 

Ropemaker Stratton (No.1) Limited 

Ropemaker Properties Limited 

Ropemaker Maidenhead Limited 

Ropemaker Hams Hall Limited 

Ropemaker Gilston Limited 

Ropemaker Stockley Limited 

Ropemaker Deansgate Limited 


Ropemaker Nottingham Limited 

Frank Le Feuvre St Albans House Nominees (Jersey) Ltd Blackrock European Equity Hedge Fund 

Limited 

Merrill Lynch International Investment 

Funds SICAV 

BlackRock (Luxembourg) SA 

BlackRock First Partner Limited 

Merrill Lynch Taurus 2000 UK Fund Limited 

Mercury Private Equity MUST 3 (Jersey) 

Limited 


BlackRock UK Equity Hedge Fund Limited 

BlackRock Natural Resources Hedge Fund 

BlackRock UK Emerging Companies Hedge 

Fund 

Community Care Investment Group Limited 

Community Care Holdings Limited 

Merrill Lynch Offshore Sterling Trust 

Mercury World Bond Fund 

Munich London Investment Management 

(Jersey) Limited 

Mercury Balanced Fund Limited 

Merrill Lynch Fund Managers (CI) Ltd 

Merrill Lynch European Equity Hedge Fund 

USD Ltd 


Euro Ltd 

Merrill Lynch Active Sterling Trust 

Merrill Lynch Specialist Investment Funds 

Merrill Lynch Fixed Income Multi Strategy 

Hedge Fund Limited 

80


Premier Marinas Jersey Limited 

Premier Marinas Jersey Holdings Limited 

Merrill Lynch Master Series 

Merrill Lynch India Equities Fund 

(Mauritius) Ltd 

BlackRock European Opportunities Hedge 

Fund 

BlackRock Eurasian Frontiers Fund 

Limited 

BlackRock Second Partner Limited 

BlackRock Strategic Funds SICAV 

BlackRock Middle East & Africa 

Opportunities Fund Limited 

BlackRock Aletsch Fund Limited 

BlackRock Global Macro Hedge Fund 

Limited 

BlackRock Agriculture Fund Farm ICC 

Philip Smith Aejis Limited Deutsche International Holdings B.V. 

Deutsche Bank Overseas Pension Fund 

(trustee) 

Deutsche Asset Management Holdings B.V. 

Alpine Limited 

Novaya Investments Ltd 

Jonathan Ruck 

Keene 

John Siska 

Merrill Lynch Commodities Income 

Investment Trust plc (alternate director) 

Familyoffice Solutions SL 

Eccleston Partners SL 

5.6 Based on information provided to the Board of Directors by the individual Directors and principals, the none of 

the Directors or principals are expected to have any ownership interests in the Shares of the Company 

immediately following the Offer, save as disclosed immediately below. 

Name of Director 

Sterling value subscribed 

Colin Maltby ............................................................... £35,000 

Jonathan Ruck Keene ....................................................... £50,000 

John Siska ................................................................ £50,000 

5.7 The Company is not aware of any party that, immediately following the closing of the Offer, would, directly or 

indirectly, jointly or severally, exercise control over the Board of Directors of the Company. The Company is not 

aware of any arrangements the operation of which may at a subsequent date result in a change of control over 

the Company. 

5.8 As at the date of this document Premier Circle Limited and Second Circle limited each own 50 per cent. of the 

Company. The Management Shares currently owned by Premier Circle Limited and Second Circle Limited carry 

no right to vote at general meetings of the Company, except when there are no Shares in issue. Other than in 

relation to the Shares to be acquired by the Cornerstone Investor under the Offer as described on page 60 of the 

Securities Note, the Company is not aware of any persons that will, immediately following Admission directly or 

indirectly, have an ownership interest of 5 per cent. or more of the share capital of the Company. 

5.9 The Company will maintain Directors’ and Officers’ liability insurance on behalf of the Directors at the expense of 

the Company to the extent that the Company is able to obtain such insurance. 

6. MATERIAL CONTRACTS 

The following contracts (not being contracts entered into in the ordinary course of business) are contracts which have 

been entered into by the Company since incorporation, and which are or may be material or are contracts entered into by 

the Company which contain any provisions under which the Company has any obligation or entitlement which is or may be 

material to the Company at the date of this Registration Document: 

81

6.1 Placing Agreement 

A placing agreement dated 4 April 2008 between the Company, the Manager, the Investment Manager and the Global 

Co-ordinator (the “Placing Agreement”), pursuant to which, subject to certain conditions, the Global Co-ordinator has 

agreed to procure purchasers for, failing which to purchase, the Shares, in each case at the Offer Price. 

The Placing Agreement also contains terms including: 

• The Company has appointed UBS as Global Co-ordinator, Bookrunner and Sponsor to the Offer. 

• The obligation of the Company to issue the Shares and the obligation of the Global Co-ordinator to procure subscribers 

for, or failing which to subscribe for, the Shares is conditional upon certain conditions that are typical for an agreement of 

this nature. These conditions include, amongst others: (i) the execution of a purchase memorandum between the Global 

Co-ordinator, the Investment Manager and the Company setting out the number of Shares of each class to be issued 

pursuant to the Offer; (ii) that Admission occurs not later than 8.00 am on 29 April 2008 or such later date as the Company 

and the Global Co-ordinator may agree, not being later than close of business on 9 May 2008; and (iii) the aggregate value 

of the Shares subscribed for under the Offer (at the Offer Price) exceeding US$100 million (or such other amount as may 

be agreed between the Company and the Global Co-ordinator). 

• The commission payable to the Global Co-ordinator under the Placing Agreement is payable by the Manager. 

• The Manager has agreed to pay or cause to be paid (together with any applicable value added tax) certain costs, 

charges, fees and expenses of, or in connection with, or incidental to, amongst other things, the admission of the 

Shares to the Official List of the UK Listing Authority and admission to trading on the London Stock Exchange, all of 

the Global Co-ordinator’s properly incurred out-of-pocket expenses and the fees and disbursements of the Global 

Co-ordinator’s counsel in connection with the transactions contemplated in the Placing Agreement. In addition, the 

Company has, in certain circumstances and subject to certain exceptions, agreed to pay to and reimburse the Global 

Co-ordinator in respect of all and any SDRT and any other similar tax charge or duty and any related costs, fines, 

penalties or interest. 

• The Company and the Investment Manager have given certain customary warranties to the Global Co-ordinator 

including, amongst others, warranties in relation to the business, the accounting records and the legal compliance of 

the Company and the Investment Manager and in relation to the information contained in the Prospectus. The 

Company, the Investment Manager and the Manager (severally, not jointly and severally) have agreed to indemnify the 

Global Co-ordinator against certain liabilities, including in respect of the accuracy of the information contained in this 

Prospectus, losses arising from a breach of the Placing Agreement and certain other losses suffered or incurred in 

connection with the Offer. 

• The Company, the Investment Manager and the Manager have agreed that, during the period ending 90 days after 

Admission, none of the Company’s securities or those of any subsidiary will be offered by the Company without 

consultation with, and the prior consent of, the Global Co-ordinator. 

• The Placing Agreement is governed by English law. 

6.2 Management Agreement 

A management agreement dated 4 April 2008 between the Company and the Manager (the “Management Agreement”) 

pursuant to which the Company has appointed the Manager to provide certain investment management services to the 

Company, including providing investment advice, recommendations and execution services to the Company and 

supervising the investment programme of the Company and the composition of the investment portfolio. The Manger has 

full discretion with respect to the purchase, sale or other disposition of securities, commodities, derivatives, swaps, 

forwards and all other assets of the Company. The Manager may also negotiate and implement borrowing arrangements 

on behalf of the Company (unless the Directors determine otherwise). 

The Management Agreement also contains terms including: 

• The Manager shall give the Company the benefit of its reasonable efforts and judgment, but shall not be liable to the 

Company for any act or omission, error of judgment or mistake of law or for any loss suffered by the Company in 

connection with the Management Agreement, except to the extent that the act or omission, error of judgment, mistake of 

law or loss results from the wilful misfeasance, bad faith or gross negligence of the Manager in the performance of its 

duties, or by reason of the Manager’s reckless disregard of its obligations and duties under the Management Agreement. 

• The Company indemnifies and holds harmless each “Indemnified Person” from and against any loss, expense, 

judgment, settlement cost, fee related expenses (including reasonable solicitors’ fees and expenses), costs or 

damages suffered or sustained by the Indemnified Person arising out of or in connection with any breach by the 

Company of the terms of the Management Agreement or any act or failure to act on the part of the Indemnified 

Person with respect to the Company. 

82

• The indemnity by the Company does not apply where the act or failure to act on the part of the Indemnified Person 

was the result of: (a) the wilful misfeasance, bad faith or gross negligence of the Indemnified Person; or (b) the 

reckless disregard of the Indemnified Person in relation to an Indemnified Person’s obligations and duties. 

• An “Indemnified Person” for the purposes of the indemnity provided by the Company under the Management 

Agreement means the Manager and its affiliates, and any of the Manager’s or its affiliates’ officers, directors, 

partners, employees or agents (or their legal representatives or controlling persons). 

• The Company is to promptly reimburse (or advance to the extent reasonably required) each Indemnified Person for 

reasonable legal or other expenses (as incurred) in connection with investigating, preparing to defend or defending 

any claim, lawsuit or other proceeding relating to any liabilities for which the Indemnified Person may be indemnified. 

However, the Indemnified Person must undertake to repay the Company for such reimbursed or advanced expenses if 

it is judicially determined that the Indemnified Person is not entitled to the indemnification provided. 

• The Manager indemnifies the Company against any loss suffered by the Company to the extent that such loss arises 

from the wilful misfeasance, bad faith or gross negligence of the Manager in the performance of its duties, or by 

reason of the Manager’s reckless disregard of its obligations and duties. 

• The Company will reimburse the Manager for, to the extent that the Manager pays on behalf of the Company, all 

operating expenses incurred, paid or accrued by the Company in the Company’s ordinary and usual course of 

business. Without limitation, such operating expenses include interest on borrowed funds, auditing expenses and all 

other investment related expenses. 

• The Management Agreement may be terminated by the Company or the Manager with not less than 24 months’ 

written notice. However, the Company may terminate the Management Agreement immediately by notice in writing 

under certain conditions, including, amongst others: any material breach by the Manager of the Management 

Agreement which, if remediable, the Manager fails to remedy within a certain period; paying to the Manager an 

amount equal to the Management Fee which would otherwise have been payable during the 24 months following the 

date on which notice to terminate the Management Agreement is provided (calculated on the basis of the Net Asset 

Value of the Company as at the Valuation Date immediately preceding termination); or if there has been fraud or 

gross negligence on the part of the Manager or any person to which the Manager has delegated any of its duties. 

• The Manager is entitled at the reasonable expense of the Company to obtain legal advice from its lawyers or the 

opinion of counsel on any matter relating to the Company or the Management Agreement. 

• If the Management Agreement is terminated without cause by the Company before the seventh anniversary of Admission, 

the Manager is entitled to be reimbursed by the Company for that portion of reasonable costs and expenses borne by the 

Manager or its associates in connection with the establishment of the Company and Admission, determined by dividing the 

unexpired portion of seven years from the date of Admission to the date of termination by 2,555 days. 

• The Management Agreement is governed by the laws of the State of Delaware. 

The Manager, subject to exercising due care and having regard to the outsourcing policies of the JFSC, is permitted to 

delegate its investment management functions under the Management Agreement to BlackRock Financial Management, 

Inc., the Investment Manager. If the Manager ceases to be authorised by the relevant authority to perform its duties, the 

Management Agreement may be terminated immediately by the Company in writing. The Management Agreement may 

also be terminated by the Company immediately by notice in writing where the Investment Manager, or another party to 

which investment management services are delegated in accordance with the Management Agreement, ceases to provide 

investment management services in respect of the Company’s assets. 

6.3 Investment Management Agreement 

An investment management agreement dated 4 April 2008 between the Manager, the Company and the Investment 

Manager (the “Investment Management Agreement”) pursuant to which the Investment Manager has been appointed to 

manage and invest the assets of the Company in accordance with the Company’s investment objective and policy. 

The Investment Management Agreement also contains terms including: 

• The Investment Manager is to give the Company and the Manager the benefit of its reasonable efforts and judgement. 

However, the Investment Manager is not liable for any act or omission, error of judgment or mistake of law or for any loss 

suffered by the Company or the Manager in connection with matters to which the Investment Management Agreement 

relates, except to the extent that the act or omission, error of judgment, mistake of law or loss results from the wilful 

misfeasance, bad faith or gross negligence of the Investment Manager in the performance of its duties, or by reason of the 

Investment Manager’s reckless disregard of its obligations and duties under the Investment Management Agreement. 

• The Manager indemnifies and holds harmless each “Indemnified Person” from and against any loss, expense, judgment, 

settlement cost, fee related expenses (including reasonable solicitors’ fees and expenses), costs or damages suffered or 

sustained by the Indemnified Person arising out of or in connection with any breach by the Manager of the terms of the 

83

Investment Management Agreement or any act or failure to act on the part of the Indemnified Person with respect to the 

Company. 

• The indemnity by the Manager does not apply where the act or failure to act on the part of the Indemnified Person was 

the result of: (a) the wilful misfeasance, bad faith or gross negligence of the Indemnified Person; or (b) the reckless 

disregard of the Indemnified Person in relation to an Indemnified Person’s obligations and duties. 

• An “Indemnified Person” for the purposes of the indemnity provided by the Manager under the Investment 

Management Agreement means the Investment Manager and its affiliates, the Company and any of the Company’s or 

the Investment Manager’s or its affiliates’ officers, directors, partners, employees or agents (or the legal 

representatives or controlling persons of any of them). 

• The Manager is to promptly reimburse (or advance to the extent reasonably required) each Indemnified Person for 



However, the Indemnified Person must undertake to repay the Manager for such reimbursed or advanced expenses if 


• The Investment Manager indemnifies the Manager against any loss suffered by the Manager to the extent that such 

loss arises from the wilful misfeasance, bad faith or gross negligence of the Investment Manager in the performance 

of its duties, or by reason of the Investment Manager’s reckless disregard of its obligations and duties. 

• The Manager shall reimburse to the Investment Manager all reasonable out-of-pocket expenses incurred by it in the 

performance of its services under the Investment Management Agreement and all reasonable fees, expenses, costs 

and charges properly incurred in connection with the discharge of its duties under the Investment Management 

Agreement provided that the Investment Manager shall on request from the Manager provide reasonable 

documentary evidence of such disbursements. 

• The Investment Management Agreement may be terminated by the Company, the Manager or the Investment 

Manager with not less than 24 months’ written notice. However, the Company or the Manager may terminate the 

Investment Management Agreement immediately by notice in writing under certain conditions, including, amongst 

others: any material breach by the Investment Manager of the Investment Management Agreement which if 

remediable the Investment Manager fails to remedy within a certain period; or if there has been fraud or gross 

negligence on the part of the Investment Manager or any person to which the Investment Manager has delegated any 

of its duties. 

• The Company may give notice immediately to terminate the Investment Management Agreement if notice of 

termination is given under the Management Agreement. However, such termination by the Company is effective not 

earlier than the effective date of termination of the Management Agreement. 

• In the event the Investment Management Agreement is terminated, the Company agrees to transfer to one or more 

clients of the Investment Manager as requested by the Investment Manager such of the Company’s investments as 

the Investment Manager in its reasonable discretion determines are limited as to capacity or other considerations 

that could limit access by outside investors. Any such transfer would be made at a price which is consistent with the 

Company’s valuation policies. 

• The Investment Management Agreement is governed by the laws of the State of Delaware. 

6.4 Administration Agreement 

An administration agreement dated 4 April 2008 between the Company and the Manager (the “Administration Agreement”) 

pursuant to which, subject to certain conditions and the overall supervision and control of the Directors, the Company has 

appointed the Manager to provide the Company with certain administrative services, including attending to regulatory 

filings and notices, the maintenance of records and accounts, the preparation of annual accounts, procuring that the 

annual report and accounts are audited and the calculation of the Net Asset Value of the Shares as well as the working 

capital of the Company. 

The Administration Agreement also contains terms including: 

• The Manager shall not be liable for any damage, loss, costs or expenses to or of the Company from any cause except 

the Manager’s or its directors’, officers’, employees’ or agents’ negligence, dishonesty, fraud or wilful default. 

• The Company indemnifies the Manager and its directors, officers and employees against any liability, actions, 

proceedings, claims, demands, costs or expenses which such a person may incur or become subject to in 

consequence of the Administration Agreement or as a result of the performance of the functions and services 

provided for under the Administration Agreement, or the performance of any functions or services delegated or subcontracted, 

except as a result of the negligence, wilful default, dishonesty or fraud of the Manager or its directors, 

officers, employees or agents. 

84

• The Manager indemnifies the Company and its directors, officers and employees for all liability, actions, proceedings, 

claims, demands, costs or expenses whatsoever which it or any of them may incur or be subject to in consequence of 

the Administration Agreement as a result of the performance of the functions and services provided for under the 

Administration Agreement or as a result of the performance of any functions and services delegated or subcontracted 

in accordance with the Administration Agreement, to the extent that such liability, actions, proceedings, claims, 

demands, costs or expenses arise from any breach of the Administration Agreement by or from the negligence, 

willful default, dishonesty or fraud of the Manager or any of its directors, officers, employees or agents in the 

performance or non-performance of their duties under the Administration Agreement. 

• The Administration Agreement is governed by English law and may not be assigned without prior written consent. 

• The Administration Agreement may be terminated by either party upon 90 days’ notice, without prior notice if a party 

breaches its obligations under the Administration Agreement, or immediately upon notice if notice of termination is 

given under the Management Agreement. 

6.5 Sub-Administration Agreement 

A sub-administration agreement dated 4 April 2008 between the Company, the Manager and the Sub-Administrator (the 

“Sub-Administration Agreement”) pursuant to which the Sub-Administrator has agreed to perform certain of the 

administrative obligations set out under the Administration Agreement in accordance with applicable law. 

The Sub-Administration Agreement also contains terms including: 

• The Manager and the Company have agreed to indemnify the Sub-Administrator and its directors, officers, and employees 

against any liability, actions, proceedings, claims, demands, costs or expenses which the Sub-Administrator or its 

directors, officers or employees incur or are subject to in consequence of the Sub-Administration Agreement or as a 

result of the performance of the functions or services delegated or sub-contracted, unless resulting from the negligence, 

wilful default, dishonesty or fraud of the Sub-Administrator or its directors, officers, employees, sub-contractors, 

delegates or agents. 

• The Sub-Administration Agreement may be terminated by either party upon 90 days’ notice, immediately upon notice 

if a party breaches its obligations under the Sub-Administration Agreement, or immediately upon notice if notice of 

termination is given under the Administration Agreement. 

• The Sub-Administration Agreement is governed by the laws of the Cayman Islands and may not be assigned without 

consent. 

• Fees will be payable on a sliding scale basis, based on NAV. The minimum fee under the Sub-Administration 

Agreement is US$24,000 per annum. In the first calendar quarter, based on an expected capital raising of 

US$500 million, fees under the Sub-Administration Agreement are expected to be US$21,000. Fees are subject to 

change. 

• The Manager is to reimburse the Sub-Administrator for certain fees and charges levied on or in respect of the 

Company or the business of the Company. 

6.6 Custody Agreement 

A custody agreement dated 4 April 2008 between the Company and the Custodian (the “Custody Agreement”) pursuant to which 

the Company has appointed the Custodian to provide the Company with custody services in respect of the Company’s assets, 

including the maintenance of books, records and statements relating to the transactions carried out by the Custodian. 

The Custody Agreement also contains terms including: 

• The Custodian shall not be liable for any damage, loss, costs or expenses to or of the Company from any cause except 

the Custodian’s negligence, dishonesty, fraud or wilful default or that of its directors, officers, employees or agents. 

• The Company indemnifies the Custodian, its directors, officers and employees against any liability, actions, 

proceedings, claims, demands, costs or expenses which such a person may incur or become subject to in consequence 

of the Custody Agreement, or as a result of the performance of the functions and services provided for under the 

Custody Agreement, except as a result of the negligence, wilful default, dishonesty or fraud of any such person. 

• The Custody Agreement may be terminated by either the Company or the Custodian giving to the other 90 days’ 

written notice, or immediately upon written notice if a party is found to be in breach of the terms of the Custody 

Agreement or if notice of termination is given under the Management Agreement. 

• The Custody Agreement is governed by the laws of the Cayman Islands and may not be assigned without prior written 

consent. 

• Fees will be payable on a sliding scale basis, based on NAV. The minimum fee under the Custody Agreement is 

US$24,000 per annum. In the first calendar quarter, based on an expected capital raising of US$500 million, fees 

under the Custody Agreement are expected to be US$21,000. Fees are subject to change. 

85

• The Company is to reimburse the Custodian for certain fees and charges levied on or in respect of the Company or 

business of the Company. 

6.7 Company Secretarial Agreement 

A secretarial services agreement dated 4 April 2008 between the Company and the Manager (the “Company Secretarial 

Agreement”) pursuant to which, subject to certain conditions, the Manager has agreed to provide such duties as are 

normally performed by a secretary of a company. These duties include preparing all necessary papers for meetings of 

Directors, ensuring the composition and proceeding of Directors’ meetings comply with the Articles and notifications of 

appointments or resignations of the Directors to the London Stock Exchange or as requested by the Directors. 

The Company Secretarial Agreement also contains terms including: 

• The Manager shall not, in the absence of its wilful misfeasance, bad faith or negligence in the performance of its duties, or 

by reason of its reckless disregard of its obligations and duties under the Company Secretarial Agreement, be liable to the 

Company, to any Shareholder, to any other service provider who may be appointed to provide services to the Company 

from time to time or to any other third party for any act or omission in the course of or in connection with its obligations 

and duties under the Company Secretarial Agreement or for any loss or damage which the Company may sustain or suffer 

as the result or in the course of the discharge by the Manager of its duties and functions. 

• The Company agrees to indemnify the Manager in respect of any and all liabilities, obligations and duties, losses, 

damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature 

whatsoever (other than those resulting from the Manager’s wilful misfeasance, bad faith or negligence in the 

performance of its duties, or by reason of its reckless disregard of its obligations and duties under the Company 

Secretarial Agreement) which may be imposed upon, incurred by or asserted against the Manager in connection with 

the proper performance of its duties or functions. 

• The Manager and its delegates are to be reimbursed by the Company for all other reasonable out-of-pocket expenses 

properly paid by the Manager or its delegate (as applicable) on the Company’s behalf in the course of the Manager 

carrying out its functions under the Company Secretarial Agreement, or a delegate carrying out the functions under 

the Company Secretarial Agreement that are delegated to it by the Manager (as the case may be). 

• The Company Secretarial Agreement may be terminated by either party on 90 days’ written notice or immediately 

upon notice where a party goes into liquidation (other than voluntary liquidation for the purpose of reconstruction or 

amalgamation), is declared bankrupt, or if a receiver or administrator is appointed to that party. The Company 

Secretarial Agreement may also be terminated immediately upon notice where a party commits a serious breach 

which is capable of remedy but is not remedied within a certain time period, or if notice of termination is given under 

the Management Agreement. 

• The Company Secretarial Agreement may not be assigned with prior written consent and is governed by English law. 

6.8 Registrar Agreement 

A registrar agreement between the Company and Computershare Investor Services (Channel Islands) Limited (the 

“Registrar”) dated 27 March 2008 (the “Registrar Agreement”), pursuant to which the Registrar has agreed to act as 

registrar and paying agent of the Company for a minimum annual fee payable by the Company of £5,500 per annum (plus 

out-of-pocket expenses) for registers with less than 500 members. 

The Registrar Agreement also contains terms including: 

• The Company shall pay the Registrar additional fees in respect of the performance by the Registrar of other tasks 

requested of it by the Company upon submission by the Registrar of invoices in respect of such additional fees at the 

end of each month. 

• The Registrar shall be entitled to reimbursement by the Company of any other fees and expenses reasonably 

disbursed by it in connection with the performance of its services under the Registrar Agreement. 

• Subject to earlier termination under the Registrar Agreement, the Registrar Agreement shall continue until 

terminated by the Company giving to the Registrar not less than six months’ notice, such notice not to expire prior to 

the first anniversary of Admission. 

• Further, the Registrar shall be entitled to resign its appointment: (a) by notice in writing to the Company if the 

Company goes into liquidation (subject to exceptions); (b) by notice in writing to the Company if the Company commits 

any material breach of its obligations under the Registrar Agreement (which is not made good within 30 days); (c) if 

the Registrar ceases to hold the necessary licence, authorisation or approval to provide the services under the 

Registrar Agreement; or (d) by giving three months’ notice in writing to the Company. 

• The Company may terminate the appointment of the Registrar: (a) by notice in writing to the Registrar if the Registrar 

goes into liquidation (subject to exceptions); (b) by notice in writing to the Registrar if the Registrar commits any 

material breach of its obligations under the Registrar Agreement (which is not made good within 30 days); or (c) by 

giving six months’ notice in writing to the Registrar. 

86

• The Registrar Agreement contains an indemnity in favour of the Registrar against all claims brought by a third party 

against the Registrar in the course of carrying out its duties under the Registrar Agreement except where such 

claims arise from the negligence, fraud or wilful default of the Registrar. 

• The Registrar shall provide a web-based service to all members to enable them to view their holdings of shares in the 

Company via its agent’s service at www.computershare.com. 

• The Registrar shall take out insurance cover on a “claims made basis”. 

• The liability of the Registrar is four times the annual fees of the Registrar or £1million (whichever is lower). 

• The Registrar may resign its appointment under the Registrar Agreement at any time by notice to the Company, if the 

Company commits a material breach and fails to make good within 30 days of receipt of notice in writing or by giving 

three months’ written notice to the Registrar. The Company may terminate the appointment of the Registrar at any 

time if the Registrar commits a material breach or by giving six months’ written notice. 

• The Registrar Agreement is governed by Jersey law. 

6.9 Receiving Agent Agreement 

A receiving agent agreement between the Company and Computershare Investor Services PLC (the “Receiving Agent”) 

dated 27 March 2008 (the “Receiving Agent Agreement”). 

The Receiving Agent Agreement also contains terms including: 

• The Receiving Agent shall provide receiving agent duties and services to the Company in accordance with the terms 

and conditions of the Receiving Agent Agreement. 

• The Company shall pay the Receiving Agent a management fee of £5,000 to include the management of the Offer and 

the initial set-up of the quarterly conversion programme. The Receiving Agent shall also receive activity fees and 

reimbursement for reasonable disbursements and out-of-pocket expenses. 

• The Receiving Agent will receive applications for shares and monies and ensure that applications comply with the 

terms of the Offer as set out in the Prospectus. The Receiving Agent will provide daily figures of acceptances and hold 

application cheques in a secure area pending instructions from the Company or its advisers. 

• The Company will indemnify the Receiving Agent against all actions, proceedings, liability, claims, damages, costs, 

losses and expenses whether brought by the Company or any third party in relation to the Receiving Agent acting 

properly upon the Company’s instructions in relation to the Offer, unless such claims arise out of or are attributable 

to the wilful default, negligence, bad faith or breach of the Receiving Agent Agreement on the part of the Receiving 

Agent. 

• The liability of the Receiving Agent is four times the amount of the fees payable under the Receiving Agent Agreement 

or £1million (whichever is lower). 

• The Receiving Agent Agreement is governed by English law. 

7. RELATED PARTY TRANSACTIONS 

No member of the Company has entered into any related party transaction since incorporation. 

8. LITIGATION 

Since its incorporation the Company is not, nor has been, involved in any governmental, legal or arbitration proceedings 

nor, so far as the Company is aware, are there any governmental, legal or arbitration proceedings pending or threatened 

by or against the Company which may have, or have since incorporation had, a significant effect on the Company’s 

financial position or profitability. 

9. THIRD PARTY INFORMATION 

Where information contained in this document has been sourced from third parties, the Company confirms that such 

information has been accurately reproduced and that such information has been accurately reproduced and, that as far as 

the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted 

which would render the reproduced information inaccurate or misleading. 

10. NO SIGNIFICANT CHANGE 

There has been no significant change in the trading or financial position of the Company since its incorporation. 

11. EFFECT OF THE OFFER ON THE COMPANY 

As at the date hereof the Company’s issued and fully paid share capital is nil representing the issue of two Management 

Shares of no par value. The Company is targeting to raise US$500 million through the Offer (excluding the Over-allotment 

Option) but in any event the total amount raised under the Offer will not exceed US$750 million (including the Overallotment 

Option). The gross proceeds of the Offer, less an amount reflecting the Company’s short-term working capital 

requirements, will be invested in accordance with the Company’s investment policy. 

87

12. WORKING CAPITAL 

The Company is of the opinion that it has sufficient working capital for its present requirements, that is for at least the 

next 12 months from the date of the Prospectus. 

13. CITY CODE ON TAKEOVERS AND MERGERS 

The City Code on Takeovers and Mergers applies to the Company. 

14. INVESTMENT RESTRICTIONS 

For so long as the Listing Rules require, the Company will: 

(a) 

(b) 

(c) 

at all times, invest and manage its assets in a way which is consistent with its object of spreading investment risk 

and in accordance with the investment policy set out on pages 44 to 45; 

not conduct any trading activity which is significant in the context of the Company and its group as a whole; and 

not invest more than 10 per cent., in aggregate, of the value of its total assets, at the time of investment, in other 

listed closed-ended investment funds (other than other listed closed-ended investment funds which themselves 

have published investment policies to invest no more than 15 per cent. of their total assets in other listed closedended 

investment funds). 

15. DOCUMENTS AVAILABLE FOR INSPECTION 

Copies of the following documents will be available for inspection at the offices of Herbert Smith LLP, legal counsel to the 

Company, during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted), until the date 

of Admission: 

(a) 

(c) 

the Memorandum and Articles of Association of the Company; and 

the Prospectus. 

In addition, copies of the Prospectus are available free of charge from the registered office of the Company and the 

registered office of BlackRock Investment Management (UK) Limited. Copies of the Prospectus are also available from the 

Document Viewing Facility, UK Listing Authority, The Financial Services Authority, 25 The North Colonnade, Canary Wharf, 

London E14 5HS. 

88

Absolute Return Strategies or ARS 

Administration Agreement 


Admission 

Application Form 

ARS Affiliated Funds 

Articles of Association or Articles 

Auditor 

BAA 

BlackRock 

BlackRock Directors 

Bookrunner 

British Pounds, Sterling or £ 

Business Day 

DEFINITIONS AND GLOSSARY 

Refers to the non-traditional investment strategies described in Part 1 of this 

Registration Document (including the Relative-Value, Event-Driven, 

Fundamental Long-Short and Direct Sourcing disciplines) 

The administration agreement entered into between the Company and the 

Manager, brief details of which are contained in Part 4 of this Registration 

Document 

As defined on in Part 1 of this Registration Document under the heading 

“Affiliated Funds” 

Admission of the Shares to the Official List of the UK Listing Authority and to 

trading on the London Stock Exchange’s main market for listed securities 

becoming effective, which is expected to occur on 29 April 2008 

The application form accompanying the Securities Note for use, where 

permissible, in connection with the Offer for Subscription 

As defined on in Part 1 of this Registration Document under the heading 

“Affiliated Funds” 

The memorandum and/or articles of association of the Company in force from 

time to time as the context requires 


BlackRock Alternative Advisors, a business division of BlackRock Financial 

Management, Inc. 

BlackRock, Inc. and/or any member of its group 

The members of the Board of Directors who are officers or employees of 

BlackRock or its affiliates 

UBS 

Refers to the lawful currency of the United Kingdom 

Any day on which banks are open for normal banking business in such 

jurisdiction(s) as may be determined by the Directors for any particular 

purpose 

C Shares 

The redeemable participating preference C shares of no par value in the capital 

of the Company which will be issued as C Shares of such classes as the 

Directors may determine having the rights and privileges and being subject to 

the restrictions contained in the Articles, which will convert into Shares in 

accordance with the terms of the Articles and which, together with the Shares 

constitute the authorised capital of the Company 

Calculation Period 

Each 12 month period ending on 31 December each year and the period from 

Admission to 31 December 2008 

CFTC 

United States Commodity Futures Trading Commission 

CIF Law 

The Collective Investment Funds (Jersey) Law 1988 (as amended) 

City Code 

The City Code on Takeovers and Mergers 

Collective Investment Vehicles Collective entities managed by External Investment Advisors, such as 

partnerships, limited partnerships, limited liability companies, investment 

companies, investment funds, common trusts and similar collective entities 

Combined Code 

The Principles of Good Governance and Code of Best Practice as published by 

the UK Financial Reporting Council 

Companies Law 

The Companies (Jersey) Law 1991, as amended, extended or replaced and any 

ordinance, statutory instrument or regulation made thereunder 

Companies Laws 

The Companies (Jersey) Law 1991 and every statutory modification on reenactment 

thereof for the time being in force and any other legislation from 

time to time relating to companies and affecting the Company 

Company 


Company Secretarial Agreement The secretarial services agreement entered into between the Company and the 


Document 

89

Conversion Calculation Date The last Business Day of each month commencing in June 2008 

Cornerstone Investor 

As defined on page 60 of the Security Note 

CREST 

The facilities and procedures for the time being of the relevant system of which 

Euroclear has been approved as operator pursuant to the UK Regulations 

CREST Regulations 

The Jersey Regulations and the UK Regulations 

Custodian 


Custody Agreement 

The custody agreement entered into between the Company and the Custodian, 

brief details of which are contained in Part 4 of this Registration Document 

Direct Investment 

Refers to the direct investments by the Company described in Part 1 of this 

Registration Document under the heading “Fund Investments” 

Direct Sourcing Discipline or Direct 

Sourcing 

Directors or Board or Board of 

Directors 

Disclosure and Transparency Rules 

Eligibility Date 

ERISA 

Euro or € 

Euroclear 

Euro Shares 

Event Driven Discipline or 

Event Driven 

External Investment Advisors 

Federal Reserve 

Fiscal Quarter 

Financial Interest 

FSA 

FSL 

FSMA 

FTSE 

FTSE All-Share Index 

Fund Investment 

Fundamental Long-Short Discipline or 

Fundamental Long-Short 

Global Co-ordinator 

HFRI 

HFRI Fund of Funds Conservative Index 

(HFRI Conservative Index) 

Refers to the investment discipline described in Part 1 of this Registration 

Document under the heading “Direct Sourcing Discipline” 

The members of the board of directors of the Company from time to time 

including any duly appointed committee thereof 

The UK disclosure and transparency rules made by the FSA under Part VI of 

the FSMA 

30 April and 31 October in each year commencing on 31 October 2008 and 

ending on 30 April 2013 

The US Employee Retirement Income Security Act of 1974, as amended 

Refers to the lawful single currency introduced at the start of the third stage of 

the Economic and Monetary Union, pursuant to the Treaty establishing the 

European Economic Community, as amended by the Treaty on the European 

Union 

Euroclear UK & Ireland Limited, the operator of CREST 

Shares of the Company denominated in Euro 


Document under the heading “Event Driven Discipline” 

External investment advisors (which may include, without limitation, business 

units of BlackRock and its affiliates other than BAA) pursuing a variety of 

Absolute Return Strategies, to whom the Company will allocate capital in 

accordance with its investment policy as described in Part 1 of this Registration 

Document under the heading “Asset Allocation” 

The Board of Governors of the United States Federal Reserve System 

A three month period ending 31 March, 30 June, 30 September or 31 December 

Refers to an ownership or other financial interest of an Other Client in certain 

of the External Investment Advisors of Fund Investments 

The UK Financial Services Authority 

The Financial Services (Jersey) Law 1988, as amended 

The UK Financial Services and Markets Act 2000, as amended 

FTSE Group 

Refers to a capital-weighted index published by FTSE that includes 98-99 per 

cent. of the UK main stock market capitalisation. Returns are denominated in 

GBP and include gross dividends. The index is a proxy for the performance of 

the broad UK equity market 

Refers to the investments by the Company described in Part 1 of this 

Registration Document under the heading “Fund Investments” 


Document under the heading “Fundamental Long-Short Discipline” 

UBS 

Hedge Fund Research, Inc. 

Refers to an equal-weighted index published by HFRI representing funds of 

funds that invest with multiple managers focused on consistent performance 

and lower volatility via absolute return strategies. The index includes funds of 

funds tracked by HFRI and is revised several times each month to reflect 

90

Independent Directors 

Investment Committee 

Investment Management Agreement 

updated fund return information. The index is a proxy for the performance of 

the universe of conservative funds of funds focused on absolute return 

strategies. Returns are net of fees and are denominated in US Dollars 

Members of the Board of Directors not affiliated with BlackRock 

BlackRock Alternative Advisors Investment Oversight Committee 

The investment management agreement entered into between the Company, 

the Manager and the Investment Manager, brief details of which are contained 

in Part 4 of this Registration Document 


BAA 

ISA 

Individual savings account 

Jersey Regulations The Companies (Uncertificated Securities) (Jersey) Order 1999 

JFSC 

The Jersey Financial Services Commission 

LIBOR 

London Interbank Offered Rate, being the offer side of the interest rate banks 

charge each other on short-term money, and is an average derived from 

sixteen bank rate quotations, fixed daily by the British Bankers’ Association 

Listing Rules 

The listing rules made by the UK Listing Authority under section 73A of FSMA 

London Stock Exchange 

London Stock Exchange plc 

Manager 


Management Agreement 

The management agreement entered into between the Company and the 


Document 


The fee payable to the Investment Manager, based on the net assets of the 

Company, as described in Part 1 of this Registration Document 

Management Shares 

Non-redeemable management shares of no par value in the Company 

Merrill Lynch 3-Month US Treasury Bill 

Auction Average Index (ML T-Bills) 

Merrill Lynch GBP 3-Month LIBOR 

Constant Maturity Index (ML 3-Month 

LIBOR) 

Model Code 

MSCI 

MSCI World Index 

NAV or Net Asset Value 

NAV Calculation Date 

Net Asset Value per Share 

OECD 

Offer 

Offer for Subscription 

Offer Placing Statement 

Offer Price 

Refers to an index published by Merrill Lynch that represents the auction 

average of three-month US Treasury bills. Returns are denominated in US 

Dollars. The index is a proxy for the performance of the broad US Treasury bill 

market 

Refers to an index published by Merrill Lynch that represents the GBP return 

on three month securities in the Eurodollar market invested at LIBOR 

The model code on directors’ dealings in securities as set out in Annex I of Rule 

9 of the Listing Rules 

MSCI Barra 

Refers to a capital-weighted index published by MSCI that includes the largest 

firms making up 60 per cent. of each country’s aggregate capitalisation. The 

index includes 23 developed market indices. Returns are denominated in US 

Dollars and include dividends. The index is a proxy for the performance of the 

world’s developed equity markets 

The value of the assets of the Company less its liabilities determined in 

accordance with Part 1 of this Registration Document in the section entitled 

“NAV Publication and Calculation” 

The last Business Day of each month 

The Net Asset Value of a class of Shares divided by the number of Shares of 

such class in issue at the relevant time 

Organisation for Economic Co-operation and Development 

The Placing and the Offer for Subscription 

The offer for subscription to the public in the United Kingdom of Shares on the 

terms set out in the Prospectus and the Application Form 

A statement detailing the number of Shares which are to be issued pursuant to 

the Offer (excluding the Over-allotment Option) expected to be published on or 

around 24 April 2008 

US$10 per US Dollar Share, €10 per Euro Share and £10 per Sterling Share 

91

Official List 

OTC 

Other Clients 

Over-allotment Option 

PEP 


Placing 

Placing Agreement 

Plan 

Plan Asset Regulations 

PNC 

Prohibited US Person 

Prospectus 

The official list of the UK Listing Authority 

Privately negotiated transactions that may not be registered under the relevant 

securities law; also called “over-the-counter” transactions 

Other funds or separate accounts for which the Investment Manager (and its 

affiliates, as applicable) provides investment management or investment 

advisory services 

The over-allotment option pursuant to which the Stabilising Manager may 

require the Company to issue additional Shares with a value of up to a 

maximum of 15 per cent. of the total amount to be raised in the Offer (before 

exercise of the Over-allotment Option) at the Offer Price 

Personal equity plan 


Company, as described in Part 1 of this Registration Document 

The placing of Shares as described in the Securities Note 

The placing agreement entered into between the Company, the Manager, the 

Investment Manager and the Global Co-ordinator in relation to the Placing, 


As defined on page 76 of this Registration Document 

US Department of Labor regulations promulgated under ERISA by the US 

Department of Labor and codified at 29 C.F.R. Section 2510.3-101 

PNC Financial Services Group, Inc. 

As defined on page 76 of this Registration Document 

The prospectus relating to the Offer prepared in accordance with the 

Prospectus Rules and which comprises the Summary Note, the Securities Note 

and this Registration Document 

Prospectus Directive 

Directive 2003/71/EC of the European Parliament and of the Council of the 

European Union and any relevant implementing measure in each Relevant 

Member State 

Prospectus Rules 

The prospectus rules made by the UK Listing Authority under section 73(A) of 

the FSMA 

QARS3-I 

Q-BLK ARS III – Institutional, Ltd. 

QARS3-I Investors 

Investors in QARS3-I 

QARS3-I Shares 

Shares in QARS3-I 

Qualifying Investors Investors (including financial intermediaries subscribing on behalf of 

underlying clients) who, pursuant to the Offer, subscribe for, in aggregate, US 

Dollar Shares having a minimum aggregate value at the Offer Price of 

US$2,000,000 or Euro Shares having a minimum aggregate value at the Offer 

Price of €1,500,000 or Sterling Shares having a minimum aggregate value at 

the Offer Price of £1,000,000 



Receiving Agent Agreement 

The receiving agent agreement entered into between the Company and the 

Receiving Agent, brief details of which are contained in Part 4 of this 


Redemption Date 

30 June and 31 December in each year (or such other day or days as the Board 

of Directors may determine, either generally or in any particular case) or, if 

such a date is not a Business Day, then the immediately preceding Business 

Day but does not include any date on which a resolution to wind up the 

Company has been passed; 

Redemption Facility 

The redemption facility which the Directors may, at their discretion, make 

available half yearly on the Redemption Dates as described in Part 1 of this 

Registration Document under the heading “Redemption Facility” 

Reference Amount 

With respect to each class of Shares, an amount equal to the highest Net Asset 

Value of such class of Shares as at (i) the end of any previous Calculation 

Period and (ii) the Admission Date 

Registrar 

Computershare Investor Services (Channel Islands) Limited 

92

Registrar Agreement 


Regulation S 

Regulatory Information Service or RIS 

Relative Value Discipline or Relative 

Value 

Relevant Member State 

S&P 500 Index 

SEC 

The registrar agreement entered into between the Company and the Registrar, 


This Registration Document which, together with the Summary Note and the 

Securities Note, comprises the Prospectus 

Regulation S under the US Securities Act 

A regulatory information service that is approved by the FSA as meeting the 

primary information provider criteria and that is on the list of regulatory 

information services maintained by the FSA 


Document under the heading “Relative Value Discipline” 

Each Member State of the European Economic Area which has implemented 

the Prospectus Directive or where the Prospectus Directive is applied by the 

regulator 

Refers to a capital-weighted index that includes 500 stocks representing all 

major industries. Returns are denominated in US Dollars and include 

dividends. The index is a proxy of the performance of the broad US economy 

through changes in aggregate market value 

The United States Securities and Exchange Commission 

Securities Note The securities note which, together with the Summary Note and this 

Registration Document, comprises the Prospectus 

SDRT 

Settlement Date 29 April 2008 

Shareholders 

Shares 

Sharpe Ratio 

Similar Laws 

SIPPs 

SSASs 

Stabilising Manager 

Sterling or £ 

Sterling Shares 

Sub-Administrator 

Sub-Administration Agreement 

UK stamp duty and stamp duty reserve tax 

The holders of Shares 

The unlimited number of redeemable participating shares of no par value in 

the capital of the Company, whether denominated in Euros, US Dollars or 

Sterling or such other classes as the Directors may determine, which together 

with the C Shares constitute the authorised capital of the Company 

Is a single number which typically represents both the risk and return inherent 

in a fund. Generally, high returns are associated with a high degree of volatility. 

The Sharpe Ratio is one measure of the trade-off between risk and returns. At 

the same time, it also factors in the desire to generate returns which are 

higher than risk-free returns. Mathematically, the Sharpe Ratio is the return 

generated over the risk-free rate, per unit of risk. Risk in this case is taken to 

be a fund’s standard deviation. A higher Sharpe Ratio is therefore better as it 

represents a higher return generated per unit of risk. However, it should be 

noted that the Sharpe Ratio is only meaningful as a comparative tool and may, 

at times, be misleading when, for example, a low standard deviation can unduly 

influence results 

Laws or regulations that are similar to the fiduciary responsibility or prohibited 

transaction provisions contained in Title I of ERISA or Section 4975 of the US 

Internal Revenue Code 

A self-invested personal pension as defined in Regulation 3 of the Retirement 

Benefits Schemes (Restriction on Discretion to Approve) (Permitted 

Investments) Regulations 2001 of the United Kingdom 

A small self administered scheme as defined in Regulation 2 of the Retirement 

Benefits Schemes (Restriction on Discretion to Approve) (Small Self- 

Administered Schemes) Regulations 1991 of the United Kingdom 

UBS 


Shares of the Company denominated in Sterling 


The sub-administration agreement entered into between the Company, the 

Manager and the Sub-Administrator, brief details of which are contained in 

Part 4 of this Registration Document 

93

Summary Note The summary note which, together with the Securities Note and this 


Taxes Act 

The UK Income and Corporation Taxes Act 1988, as amended 

UBS or UBS Investment Bank 

UBS Limited, UBS Investment Bank being a business unit of UBS Limited 

UK 

The United Kingdom of Great Britain and Northern Ireland 

UK Listing Authority 

The FSA as the competent authority for listing in the United Kingdom 

UK Regulations The Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755) 

Uncertificated Form or in 

uncertificated form 

United States or US 

Recorded on the register as being held in uncertificated form in CREST and 

title to which may be transferred by means of CREST 

The United States of America, its territories and possessions, any state of the 

United States of America and the district of Columbia 

US Advisers Act 

The United States Investment Advisers Act of 1940, as amended 

US BHC Act The United States Bank Holding Company Act of 1956 

US Commodity Exchange Act 

The United States Commodity Exchange Act of 1974, as amended 

US Dollar Shares 

Shares of the Company denominated in US Dollars 

US Dollars, Dollars or $ 

Refers to the lawful currency of the United States 

US Exchange Act 

The US Securities Exchange Act of 1934, as amended 

US GAAP 

Generally Accepted Accounting Principles in the United States 

US Internal Revenue Code 

The US Internal Revenue Code of 1986, as amended 

US Investment Company Act 

The US Investment Company Act of 1940, as amended 

US Person 

A person who is either (a) a “US person” within the meaning of Regulation S, or 

(b) not a “Non-United States person” within the meaning of the United States 

Commodity Futures Trading Commission Rule 4.7(a)(I)(iv) 

US Securities Act 

The US Securities Act of 1933, as amended 

Valuation Date 


All references to times are to London time unless otherwise stated. 


94

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Printed by RR Donnelley 51657

lackrock.co.uk/its



Securities Note 








SECURITIES NOTE 

This Securities Note, the Registration Document and the Summary Note together comprise a prospectus (the 





The Prospectus relates to an Offer of US Dollar Shares, Euro Shares and Sterling Shares (at US$10 per US Dollar 





Shares by any person: (i) in any jurisdiction in which such offer or invitation is not authorised; or (ii) in any jurisdiction 

in which the person making such offer or invitation is not qualified to do so; or (iii) to any person to whom it is unlawful 

to make such offer or invitation. The distribution of this Prospectus and the offering of Shares in certain jurisdictions 

may be restricted and accordingly persons into whose possession this Prospectus comes are required to inform 

themselves about and observe such restrictions. 













Option). 

This Securities Note includes particulars given in compliance with the Listing Rules and the Prospectus Rules for the 

purposes of giving information with regard to the Company. The information contained in this Securities Note should be 

read in the context of, and together with, the information contained in the Registration Document and the Summary Note 

and distribution of this Securities Note is not authorised unless accompanied by, or supplied in conjunction with, copies of 

the Registration Document and the Summary Note. 




potential investors is drawn to the Risk Factors set out in this Securities Note and in the Registration Document. 

The Directors of the Company, whose names appear in the “Directors, Managers and Advisers” section of this Securities 

Note, and the Company itself, accept responsibility for the information contained in the Prospectus, which comprises this 

Securities Note, the Registration Document and the Summary Note. The Directors and the Company have taken all 














1






A copy of this document has been delivered to the Jersey registrar of companies in accordance with article 5 of the 

Companies (General Provisions) (Jersey) Order 1992, as amended and the registrar has given, and has not withdrawn, his 

consent to its circulation. 


financial soundness of the Company or for the correctness of any statements made, or opinions expressed, with regard to 

it. 



































For additional offering and selling restrictions, see “The Offer” in Part 2 of this Securities Note and “Selling Restrictions” 

on page 38 of this Securities Note. 




Each of BlackRock Financial Management, Inc. and BlackRock (Channel Islands) Limited is acting for the Company and no 

one else in connection with the Offer and will not be responsible to anyone other than the Company in providing the 



This Securities Note, the Registration Document and the Summary Note, which together comprise the Prospectus, 


2

TABLE OF CONTENTS 

Headings 

Page 

RISK FACTORS ..................................................................................... 4 

NOTICE TO INVESTORS .............................................................................. 31 

EXPECTED TIMETABLE .............................................................................. 34 

OFFER STATISTICS ................................................................................. 35 

DIRECTORS, MANAGERS AND ADVISORS .............................................................. 36 

SELLING RESTRICTIONS ............................................................................ 38 

PART 1 THE COMPANY ............................................................................ 45 

PART 2 THE OFFER ............................................................................... 60 

PART 3 CERTAIN TAX CONSIDERATIONS ............................................................. 64 

PART 4 ADDITIONAL INFORMATION ABOUT THE COMPANY ............................................. 68 

DEFINITIONS ...................................................................................... 91 

TERMS AND CONDITIONS OF APPLICATION UNDER THE OFFER FOR SUBSCRIPTION ........................ 97 

NOTES ON HOW TO COMPLETE THE APPLICATION FORM ................................................ 101 

APPLICATION FORM FOR THE OFFER FOR SUBSCRIPTION ............................................... 111 

3

RISK FACTORS 

Investors are referred to the risks set out below. Only those risks which are believed to be material and are currently 

known to the Company have been disclosed. No assurance can be given that Shareholders will realise a profit or will avoid 

a loss on their investment. Investment in the Company is suitable only for persons who can bear the economic risk of a 

substantial or entire loss of their investment and who can accept that there may be limited liquidity in the Shares. 

Additional risks and uncertainties not currently known to the Company, or that the Company deems to be immaterial, may 

also have an adverse effect on its business. Potential investors should review the Prospectus carefully and in its entirety 

and consult with their professional advisers before making an application for Shares. 


NO OPERATING HISTORY 

The Company is a recently established investment company and has no operating history. The Company does not have any 

historical financial statements or other meaningful operating or financial data on which potential investors may evaluate 

the Company and its performance. An investment in the Company is therefore subject to all of the risks and uncertainties 

associated with a new business, including the risk that the Company will not achieve its investment objective and that the 

value of any potential investment in the Shares could decline substantially as a consequence. 

NO RELIANCE ON PAST PERFORMANCE 

The Company has presented in the Prospectus certain information with respect to the historical investment performance 

of QARS3-I, an investment vehicle managed by the Investment Manager, and its predecessor funds. Such information is 

included, among other places, under “Historical Track Record of the Investment Manager” in Part 1 of this Securities 

Note. When considering this information potential investors should bear in mind that whilst each of QARS3-I and its 

predecessor funds has an investment policy and strategy, and employs portfolio construction techniques, which are 

substantially similar to those of the Company, the historical results of QARS3-I and its predecessor funds and any other 

investment vehicles managed by the Investment Manager are not indicative of the future results that they should expect 

from the Company or their investment in the Shares. In any event, past performance is not a guide to future performance. 

Furthermore, changes in investment strategy, market conditions and the performance of particular investments, among 

other factors, may negatively affect the Company’s future performance. 

LAWS AND REGULATIONS 

The Company, the Manager and the Investment Manager are subject to laws and regulations enacted by national, regional 

and local governments and institutions. In particular, the Company will be required to comply with certain licensing and 

regulatory requirements that are applicable to a Jersey investment company whose shares are listed on the Official List 

and traded on the London Stock Exchange’s main market for listed securities, including the Listing Rules, laws and 

regulations supervised by the Jersey Financial Services Commission and various EU Financial Services Action Plan 

Directives. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and 

costly. Those laws and regulations and their interpretation and application may also change from time to time and those 

changes could have a material adverse effect on the Company’s business, investments and results of operations. In 

addition, a failure to comply with any such applicable laws or regulations, as interpreted and applied, by the relevant 

regulatory authorities may have a material adverse effect on the Company’s business, investments and results of 

operations. 

The regulatory environment for investment funds and the managers of investment funds is evolving. Any change in the 

laws and regulations affecting the Company, or any change in the regulations affecting investment funds, funds of 

investment funds or investment fund managers generally may have a material adverse effect on the Company’s and the 

Investment Manager’s ability to carry on their businesses which in turn could have a material adverse effect on the 

Company’s performance and returns to Shareholders. 

NO FORMAL CORPORATE GOVERNANCE CODE 

There is no formal corporate governance code with which the Company must comply. Although the Directors have 

indicated that the Company will comply with the Combined Code to the extent they consider appropriate, having regard to 

the Company’s size, stage of development and resources, there can be no assurance that the Company will continue to 

comply with the governance standards contained in the Combined Code as they currently exist or as they may be revised 

going forward. Furthermore, no legal sanctions would apply to the Company if it failed to comply with such standards. 

US INVESTMENT COMPANY ACT AND RELATED RULES 

The Company is not, and does not intend to become, registered as an investment company under the US Investment 

Company Act and related rules. The US Investment Company Act provides certain protections to investors and imposes 

certain restrictions on registered investment companies (including limitations on the ability of registered investment 

companies to incur debt), none of which will be applicable to the Company. The United States Commodity Exchange Act of 

1974, as amended (the “US Commodity Exchange Act”) also provides certain protections to investors by imposing certain 

disclosure, reporting and record-keeping obligations on commodity pool operators; however, pursuant to the exemption 

contained in Rule 4.13(a)(4) promulgated under the US Commodity Exchange Act, the Investment Manager is exempt from 

the requirements of a commodity pool operator with respect to the Company. Accordingly, the protective provisions of the 

4

US Investment Company Act and the US Commodity Exchange Act will not be applicable to the Company. The Investment 

Manager is registered as an investment adviser under the US Advisers Act and is consequently subject to the recordkeeping, 

disclosure and other fiduciary obligations specified in the US Advisers Act. In addition, in order to avoid being 

required to register as an investment company under the US Investment Company Act and related rules, the Company has 

implemented restrictions on the ownership and transfer of the Shares, which may materially affect any potential 

investor’s ability to hold or transfer Shares. 

DEBT FINANCE 

The Company expects to agree prior to Admission terms for a credit facility which it may use to finance its short-term 

liquidity requirements and/or share buy-backs or redemptions. The Company expects that the credit facility provider will 

take security over the Company’s assets and the agreements governing any credit facility typically will give the lender the 

right to terminate the credit facility at will or upon the occurrence of certain termination events. Such events may include, 

among others, failure to pay amounts owed when due, the failure to provide required reports or financial statements, a 

decline in the value of the Fund Investments pledged as collateral, failure to maintain sufficient collateral coverage, 

failure to comply with investment guidelines, key changes in the Company’s management or the Investment Manager’s 

personnel, a significant reduction in the Company’s assets, material violations of the terms of, or representations, 

warranties or covenants under, the facility agreements as well as other events determined by the lender. If the Company 

were to fail to meet its obligations under any such credit facility and a termination event were to occur, the lender would 

be entitled, in its sole discretion and without regard to the Company’s investment objective, to realise and liquidate the 

Fund Investments pledged as security. This could have a material adverse effect on the Company and returns to 

Shareholders. Furthermore, in selecting Fund Investments for liquidation, a lender will realise the most liquid Fund 

Investments, which could result in the remaining portfolio of Fund Investments being less diverse in terms of investment 

strategies, number of investment managers or Fund Investments, liquidity or other investment considerations than would 

otherwise be the case. 

There is no guarantee that any such credit facility will be available to the Company on acceptable terms or at all or that, in 

the event that such facility terminates, an alternative facility will be available to the Company on acceptable terms or at 

all. Furthermore, it is possible that the amount of leverage available to the Company under any such credit facility may be 

limited due to other amounts borrowed from a lender from other funds or accounts managed by the Investment Manager. 

As a result, it is possible that the Company may be restricted from borrowing when it would otherwise like to borrow, even 

though it has a credit facility in place. 

Any debt finance employed by the Company is in addition to, and is not restricted by, use of leverage by Fund Investments. 

See Risk Factors — Risks relating to Absolute Return Strategies — Leveraging by Fund Investments. 

LIMITED LIABILITY AND INDEMNIFICATION OF THE INVESTMENT MANAGER 

The Investment Management Agreement contains provisions limiting the liability of the Investment Manager and 

indemnifying the Investment Manager from liabilities incurred in connection with the performance of obligations under 

the Investment Management Agreement under certain circumstances. See Part 4 of this Securities Note for further 

information. These protections from liability may result in the Investment Manager tolerating greater risks when making 

investment-related decisions than otherwise would be the case. 

RELIANCE ON THE INVESTMENT MANAGER AND PORTFOLIO MANAGERS 

The success of the Company is dependent on the expertise of the Investment Manager. The Investment Manager is not 

required to devote its full time to the business of the Company and there is no guarantee that any investment professional 

or other employee of the Investment Manager will allocate a substantial portion of their time to the Company. The loss of 

one or more individuals involved with the Investment Manager could have a material adverse effect on the performance or 

the continued operation of the Company. In addition, if the Investment Manager is removed, resigns or otherwise no 

longer serves as the Investment Manager of the Company, a large number of Fund Investments may be required to be 

realised or otherwise become unavailable to the Company, which may have an adverse impact on the Company’s 

investment performance. 

Portfolio managers are assigned to the Company and other funds or separate accounts for which the Investment Manager 

provides investment management or investment advisory services (collectively, “Other Clients”) by the BlackRock 

Alternative Advisors Investment Oversight Committee (the “Investment Committee”) from among the Investment 

Manager’s investment professionals. Portfolio composition decisions are the responsibility of the assigned portfolio 

manager, subject to the overall oversight of the Investment Committee. As such, even when the Company and Other 

Clients share the same or similar investment objectives, their individual portfolios may differ, in part based on the 

judgments of different portfolio managers, and for other reasons, such as those discussed under “Risk Factors — Risks 

Relating to Conflicts of Interest — Allocation of investment opportunities”. 

RELIANCE ON SERVICE PROVIDERS 

The Company has no employees and the Directors have all been appointed on a non-executive basis. The Company must 

therefore rely upon the performance of third party service providers to perform its executive functions. In particular, the 

Manager, the Investment Manager, the Sub-Administrator, the Registrar, the Custodian and their respective delegates, if 

any, will perform services that are integral to the Company’s operations and financial performance. Failure by any service 

provider to carry out its obligations to the Company in accordance with the terms of its appointment, to exercise due care 

5

and skill, or to perform its obligations to the Company at all as a result of insolvency, bankruptcy or other causes could 

have a material adverse effect on the Company’s performance and returns to Shareholders. The termination of the 

Company’s relationship with any third party service provider, or any delay in appointing a replacement for such service 

provider, could materially disrupt the business of the Company and could have a material adverse effect on the Company’s 

performance and returns to Shareholders. 

MISCONDUCT OF EMPLOYEES AND OF THIRD PARTY SERVICE PROVIDERS 

Misconduct or misrepresentations by employees of the Investment Manager, External Investment Advisors or third party 

service providers could cause significant losses to the Company. Employee misconduct may include binding the Company 

or a Fund Investment to transactions that exceed authorised limits or present unacceptable risks and unauthorised 

trading activities or concealing unsuccessful trading activities (which, in any case, may result in unknown and unmanaged 

risks or losses) or making misrepresentations regarding any of the foregoing. Losses could also result from actions by 

third party service providers, including, without limitation, failing to recognise trades and misappropriating assets. In 

addition, employees and third party service providers may improperly use or disclose confidential information, which 

could result in litigation or serious financial harm, including limiting the Company’s or a Fund Investment’s business 

prospects or future marketing activities. Despite the Investment Manager’s due diligence efforts, misconduct and 

intentional misrepresentations may be undetected or not fully comprehended, thereby potentially undermining the 

Investment Manager’s due diligence efforts. As a result, no assurances can be given that the due diligence performed by 

the Investment Manager will identify or prevent any such misconduct. 

COMPANY MAY INCUR COSTS OF THE OFFER IN CERTAIN CIRCUMSTANCES 

While all of the formation and initial expenses of the Company and the fees and expenses incurred in connection with the 

Offer (including all fees, commission and expenses paid to the Bookrunner) will initially be borne by the Manager or one of 

its affiliates, the Manager or its affiliate will be entitled to be reimbursed for a proportion of these fees and expenses of 

the Offer (not expected to exceed 2.5 per cent. of the gross proceeds of the Offer, assuming the target size for the Offer of 

US$500 million is achieved) by the Company if the Management Agreement is terminated by the Company without cause in 

the period ending on the seventh anniversary of the date of Admission. 

RISKS RELATING TO AN INVESTMENT IN THE SHARES 

GENERAL 

An investment in the Shares of the Company carries the risk of loss of capital. The value of a Share can go down as well as 

up and Shareholders may receive back less than the value of their initial investment and could lose all of their investment. 

LIQUIDITY OF SHARES 

The Company has been established as a closed-ended vehicle. Accordingly, Shareholders will have no right to have their 

Shares redeemed or repurchased by the Company at any time. While the Directors retain the right to effect repurchases 

of Shares and/or periodically to consider offering Shareholders the opportunity to redeem a proportion of their Shares 

pursuant to the Redemption Facility, in each case in the manner described in this Securities Note, they are under no 

obligation to use such powers at any time and Shareholders should not place any reliance on the willingness of the 

Directors so to act. Shareholders wishing to realise their investment in the Company will therefore be required to dispose 

of their Shares on the stock market. 

There has not to date been an active market for the Shares. The Company has applied for admission of the Shares to the 

Official List and to trading on the London Stock Exchange’s main market for listed securities. The Company cannot 

predict, however, the extent to which, even if admitted to trading, investor interest will lead to the development of an active 

and liquid trading market for the Shares or, if such a market develops, whether it will be maintained. There can be no 

guarantee that a liquid market in the Shares will develop or that the Shares will trade at prices close to their underlying 

Net Asset Value. Accordingly, Shareholders may be unable to realise their investment at Net Asset Value or at all. 

The number of US Dollar Shares, Euro Shares and Sterling Shares to be issued pursuant to the Offer is not yet known, and 

there may be a limited number of holders of one or more classes of such Shares. Limited numbers and/or holders of such 

Shares may mean that there is limited liquidity in such Shares which may affect (i) an investor’s ability to realise some or 

all of its investment and/or (ii) the price at which such investor can effect such realisation and/or (iii) the price at which 

such Shares trade in the secondary market. There can be no guarantee that each class of Shares will be equally liquid and 

one class of Shares may be materially less liquid than another. 

SHARE PRICE FLUCTUATION 

The market price of the Shares may fluctuate significantly and potential investors may not be able to resell their Shares at 

or above the price at which they acquired them. Factors that may cause the price of the Shares to vary include: 

• changes in the Company’s financial performance and prospects or in the financial performance and prospects of 

companies engaged in businesses that are similar to the Company’s business; 

• changes in the underlying values and trading volumes of the Fund Investments and other investments within the 

Company’s portfolio; 

• the termination of the Management Agreement or Investment Management Agreement or the departure of some or 

all of the Investment Manager’s investment professionals or an External Investment Advisors’ key individuals; 

6

• changes in laws or regulations, including tax laws, or new interpretations or applications of laws and regulations, that 

are applicable to the Company’s business; 

• sales of Shares; 

• general economic trends and other external factors, including those resulting from war, incidents of terrorism or 

responses to such events; 

• speculation in the press or investment community regarding the Investment Manager’s business or investments, or 

factors or events that may directly or indirectly affect its business or investments; 

• a loss of a major funding source; 

• a further issuance of Shares; and 

• lack of timely information concerning the performance of the Fund Investments and other investments within the 

Company’s portfolio. 

Securities markets in general have experienced extreme volatility that has often been unrelated to the operating 

performance of particular companies or partnerships. Any broad market fluctuations may adversely affect the trading 

price of the Shares. 

THE SHARES MAY TRADE AT A DISCOUNT TO NET ASSET VALUE 

The Shares may trade at a discount to their Net Asset Value for a variety of reasons, including due to market conditions, 

liquidity concerns or the actual or expected performance of the Company. There can be no guarantee that attempts by the 

Company to mitigate any such discount will be successful or that the use of discount control mechanisms will be possible 

or advisable. 

RIGHTS OF SHAREHOLDERS AND FIDUCIARY DUTIES 

The Company is an investment company that has been formed and registered under the laws of Jersey. The rights of the 

Shareholders and the fiduciary duties that its Board of Directors owes to the Company and Shareholders are governed by 

Jersey law and the Articles of Association. Such rights and duties may differ in material respects from the rights and 

duties that would be applicable if the Company were organised under the laws of a different jurisdiction. 

US DOLLAR EXCHANGE RATE FLUCTUATIONS 

The Shares in the Company will be denominated in US Dollars, Euro and Sterling. The financial statements of the 

Company will be prepared in US Dollars and the operational and accounting currency of the Company will be the US 

Dollar. Also, Fund Investments and other investments made by the Company typically will be denominated in US Dollars. 

Therefore, non-US Dollar subscription monies received by the Company under the Offer will be converted into US Dollars 

before being invested. Consequently, the holders of Euro Shares and Sterling Shares may be subject to foreign currency 

fluctuations between the Euro or Sterling, as the case may be, and the US Dollar. 

The Investment Manager generally will seek to hedge the exposure of such non-US Dollar denominated Shares against 

currency fluctuations, but only when suitable hedging contracts, such as currency swap agreements, futures contracts, 

options and forward currency exchange and other derivative contracts, are available in a timely manner and on terms 

acceptable to the Investment Manager, in its sole and absolute discretion. The Investment Manager may determine, in its 

sole and absolute discretion, not to, or may not be able economically, or at all, to seek to hedge the currency exposure of 

redemption proceeds payable to a Shareholder in connection with the operation of the Redemption Facility, including any 

Hold-Back Amount (as described in Part 1 in the section headed “Redemption Facility”) following the applicable 

Redemption Date. In the event the Investment Manager seeks to hedge such exposure following the relevant Redemption 

Date, the profits, losses and expenses of such hedging transactions may be charged to the relevant Shareholder’s Hold- 

Back Amount. 

Furthermore, in connection with any currency hedging transactions, it is likely that the Company will be required to pledge 

all or a portion of its interests in the Fund Investments or other investments in the Company’s portfolio to the counterparty 

to such transactions as collateral. Moreover, the agreements related to the Company’s currency hedging transactions 

typically will give the counterparty the right to terminate the transactions upon the occurrence of certain termination 

events. Such events may include, among others, the failure to pay amounts owed when due, the failure to provide required 

reports or financial statements, a decline in the value of the Fund Investments or other investments pledged as collateral, 

the failure to maintain sufficient collateral coverage, the failure to comply with investment guidelines, key changes in the 

Company’s management or the Investment Manager’s personnel, a significant reduction in the Company’s assets, and 

material violations of the terms of, or representations, warranties or covenants under, the transaction agreements as well 

as other events determined by the counterparty. If a termination event were to occur, the counterparty would be entitled, 

in its sole discretion and without regard to the Company’s investment objective, to realise and liquidate the Fund 

Investments or other investments pledged as collateral, and as a result, the Company’s return could be materially 

adversely affected and the Company could incur significant losses. Furthermore, in selecting Fund Investments or other 

investments for liquidation, a counterparty will realise the most liquid investments, which could result in the remaining 

portfolio of investments being less diverse in terms of investment strategies, number of investment managers or 

investments, liquidity or other investment considerations than would otherwise be the case. 

7

In addition, as a result of currency exchange rate exposure and the profits, losses and expenses of hedging transactions 

borne by non-US Dollar denominated Shares, the performance of such Shares will differ from that of Shares that are 

denominated in US Dollars. Furthermore, while the profits, losses and expenses relating to currency hedging 

transactions, if any, will be specifically allocated to and paid by the class of Shares to which such transactions are related, 

under the laws of Jersey, were the assets of the Company attributable to such class of Shares insufficient to pay any of its 

specific liabilities, including without limitation, their specific hedging expenses, such liabilities would be borne by the 

Company as a whole. Further, the use of derivatives and other instruments to reduce risk involves costs. Consequently, 

the use of hedging transactions might result in lower performance for the hedged Shares than if the Company had not 

hedged such Shares’ exposure against foreign currency exchange risks. 

There can be no assurance that appropriate hedging transactions will be available to the Company or that any such 

hedging transactions will be successful in protecting against currency fluctuations or that the performance of the Shares 

will not be adversely affected by the currency exchange rate exposure. In addition, the Company may concentrate its 

hedging activities with one or a few counterparty(ies) and the Company is subject to the risk that a counterparty may fail to 

fulfil its obligations under a hedging contract. To the extent that a counterparty fails to fulfil its obligations, the relevant 

Share class, and potentially the Company as a whole, could suffer loss. 

Fluctuations in currency exchange rates will similarly affect the US Dollar equivalent of any interest, dividends or other 

payments made to the Company or Fund Investments denominated in a currency other than US Dollars. Among the 

factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative 

values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and 

political developments. 

TRANSFER RESTRICTIONS 

The Shares are subject to restrictions on transfers to any person located in the United States or who is a US person, which 

may impact the price and liquidity of the Shares. The Shares have not been registered in the United States under the US 

Securities Act or under any other applicable securities law and are subject to restrictions on transfer contained in such 

laws and under ERISA regulations. 

The Company intends to restrict the ownership and holding of its Shares so that none of its assets will constitute “plan 

assets” of any Plan. The Company intends to impose such restrictions based on deemed representations in the case of its 

Shares. If the Company’s assets were deemed to be “plan assets” of any Plan subject to Title I of ERISA or Section 4975 of 

the US Internal Revenue Code, pursuant to Section 3(42) of ERISA and US Department of Labour regulations promulgated 

under ERISA by the US Department of Labour and codified at 29 C.F.R. Section 2510.3-101 as they may be amended or 

modified from time to time (collectively, the “Plan Asset Regulations”), (i) the prudence and other fiduciary responsibility 

standards of ERISA would apply to investments made by the Company and (ii) certain transactions that the Company or a 

subsidiary of the Company may enter into, or may have entered into, in the ordinary course of business might constitute or 

result in non-exempt prohibited transactions under Section 406 of ERISA or Section 4975 of the US Internal Revenue Code 

and might have to be rescinded. Governmental plans and certain church plans, while not subject to Title I of ERISA or 

Section 4975 of the US Internal Revenue Code, may nevertheless be subject to other state, local or other laws or 

regulations that would have the same effect as the Plan Asset Regulations so as to cause the underlying assets of the 

Company to be treated as assets of an investing entity by virtue of its investment (or any beneficial interest) in the 

Company and thereby subject the Company or the Investment Manager (or other persons responsible for the investment 

and operation of the Company assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited 

transaction provisions contained in Title I of ERISA or Section 4975 of the US Internal Revenue Code. 

Each purchaser and subsequent transferee of the Shares will be deemed to represent and warrant that no portion of the 

assets used to acquire or hold its interest in the Shares constitutes or will constitute the assets of any Plan. The Articles 

of Association of the Company provide that the Board of Directors may refuse to register a transfer of Shares to any 

person they believe to be a Prohibited US Person or a Plan investor. If any Shares are owned directly or beneficially by a 

person believed by the Board of Directors to be a Prohibited US Person or a Plan investor, the Board of Directors may give 

notice to such person requiring him either (i) to provide the Board of Directors within 30 days of receipt of such notice with 

sufficient satisfactory documentary evidence to satisfy the Board of Directors that such person is not a Prohibited US 

Person or a Plan investor or (ii) to sell or transfer their Shares to a person qualified to own the same within 30 days and 

within such 30 days to provide the Board of Directors with satisfactory evidence of such sale or transfer. Where condition 

(i) or (ii) is not satisfied within 30 days after the serving of the notice, the person will be deemed, upon the expiration of 

such 30 days, to have forfeited their Shares. 

CHANGES IN LOCAL LAWS OR REGULATIONS 

For regulatory, tax and other purposes, the Company and the Shares may be treated differently in different jurisdictions. 

For instance, in certain jurisdictions and for certain purposes, the Shares may be treated as units in a collective 

investment scheme. Furthermore, in certain jurisdictions, the status of the Company and/or the Shares may be uncertain 

or subject to change, or it may differ depending on the availability of certain information or disclosures by the Company. 

The Company may be constrained from or may find it unduly onerous to disclose any or all of such information or to 

prepare or disclose such information in a form or manner which satisfies the regulatory, tax or other authorities in certain 

jurisdictions. Failure to disclose or make available information in the prescribed manner or format, or at all, may 

8

adversely impact investors in those jurisdictions. Changes in the status or treatment of the Company or the Shares may 

have unforeseen effects on the ability of investors to hold the Shares or the consequences of so doing. 

RISKS RELATING TO THE INVESTMENT STRATEGY 

GENERAL 

No guarantee or representation is made that the Company, any of the Absolute Return Strategy disciplines described 

herein or any Fund Investment will achieve their respective investment objectives. 

INVESTMENT DECISIONS 

The Company’s capital will be allocated primarily to External Investment Advisors and, in general and subject to the right 

of the Company and the Investment Manager to reallocate such capital, neither the Company nor the Investment Manager 

will have management discretion in respect of such capital for so long as it is allocated to such External Investment 

Advisors. 

TERMINATION OF THE INVESTMENT MANAGEMENT AGREEMENT 

In order to ensure that the capacity that the Investment Manager has negotiated with its underlying managers remains 

available for the Investment Manager’s clients, if the Company ceases to be a client of the Investment Manager the 

Company has agreed to transfer to one or more clients of the Investment Manager such of its investments as the 

Investment Manager in its reasonable discretion determines are limited as to capacity or other considerations that could 

limit access by outside investors. Any such transfer would be made at a price which is consistent with the Company’s 

valuation policies. 

CAPACITY LIMITATIONS OF EXTERNAL INVESTMENT ADVISORS 

External Investment Advisors may place limitations on the amount of, or number of persons whose, money they will 

manage. In addition, new rules and regulations may result in additional limitations or restrictions being placed by External 

Investment Advisors on the types of investors or assets that a Fund Investment may accept. Moreover, as a result of the 

convergence of the hedge fund and private equity markets and recent regulatory developments, many External Investment 

Advisors have lengthened liquidity terms, which may be more or less compatible with the liquidity requirements of the 

Company or Other Clients and therefore result in differences in portfolio composition. Any such restrictions or limitations 

could prevent the Investment Manager from allocating Company assets to certain External Investment Advisors and Fund 

Investments with which the Investment Manager would otherwise like to invest. In addition, when capacity is constrained, 

allocation decisions may be made on a non-pro rata basis among funds, for example, so as to avoid small allocations or to 

increase existing below-target allocations before building new positions. Moreover, in the case of Fund Investments that 

generally are not accepting new investments, if the Investment Manager determines, in the ordinary course of managing 

the Company’s assets, that it would be in the Company’s best interests to change the Company’s exposure to such Fund 

Investments, the Investment Manager may, in its sole and absolute discretion and subject to applicable law, reallocate 

such Fund Investments (in whole or in part) from or to, as the case may be, Other Clients. 

If the Investment Manager’s ability to make allocations to External Investment Advisors or Fund Investments is limited or 

restricted, the Company’s investment objective, and thus its returns, could be negatively impacted. Furthermore, because 

of these capacity limitations, it is likely that the Company’s portfolio and those of Other Clients will have differences in the 

specific investments held in their portfolios even when their investment objectives are the same or similar. These 

distinctions will result in differences in portfolio performance. 

MARKET RISK 

The Company is exposed to market risk. Market risk is risk associated with changes in, among other things, market prices 

of securities or commodities or foreign exchange or interest rates and there are certain general market conditions in 

which any investment strategy is unlikely to be profitable. The Investment Manager has no ability to control or predict 

such market conditions. 

The Company seeks to invest in accordance with its investment objective without specifying allocations to specific 

industries, and is not purposely diversified within maximum company and industry concentration guidelines. 

From time to time, multiple markets could move together against the Company’s investments, which could result in 

significant losses for the Company. Such movement would have a material adverse effect on the performance of the 

Company and the size of returns to Shareholders. 

General economic and market conditions, such as currency and interest rate fluctuations, availability of credit, inflation 

rates, economic uncertainty, changes in laws, trade barriers, currency exchange controls and national and international 

conflicts or political circumstances, as well as natural circumstances, may affect the price level, volatility and liquidity of 

securities. Economic and market conditions of this nature could result in significant losses for the Company, which would 

have a material adverse effect on the performance of the Company and returns to Shareholders. 

STRATEGY RISK 

Strategy risk is associated with the failure or deterioration of an entire strategy such that most or all investment 

managers employing that strategy suffer losses. Strategy specific losses may result from excessive concentration by 

9

multiple External Investment Advisors in the same investment or general economic or other events that adversely affect 

particular strategies (e.g. the disruption of historical pricing relationships). The strategies employed by the External 

Investment Advisors may be speculative and involve substantial risk of loss in the event of such failure or deterioration. 

USE OF MULTIPLE EXTERNAL INVESTMENT ADVISORS 

No assurance can be given that the collective performance of the External Investment Advisors will result in profitable 

returns or avoid losses for the Company as a whole. Positive performance achieved by one or more External Investment 

Advisors may be neutralised by negative performance experienced by other External Investment Advisors. 

EXTERNAL INVESTMENT ADVISORS’ TRADING STRATEGIES 

There can be no assurance that the trading strategies employed by an External Investment Advisor will be successful. For 

example, the proprietary models used by an External Investment Advisor may not function as anticipated during unusual 

market conditions. Furthermore, while each External Investment Advisor may have a performance record reflecting its 

prior experience, this performance cannot be used to predict future profitability. 

ACCESS TO INFORMATION FROM EXTERNAL INVESTMENT ADVISORS 

The Investment Manager will request information from External Investment Advisors regarding each External Investment 

Advisor’s historical performance and investment strategy. The Investment Manager will monitor the performance of 

underlying investments on a continuing basis as such information is made available to the Investment Manager by the 

External Investment Advisors. However, the Investment Manager may not always be provided with such information 

because certain of this information may be considered proprietary information by the particular External Investment 

Advisor or for other reasons. This lack of access to independent information is a significant investment risk. Furthermore, 

the net asset values received by, or on behalf of, the Company from each External Investment Advisor will typically be 

estimates only, subject to revision through the end of each Fund Investment’s annual audit, which may occur on a date 

other than 31 December. Revisions to the Company’s gain and loss calculations will be an ongoing process, and no 

appreciation or depreciation figure can be considered final until the Company’s annual audit is completed. 






may themselves provide market making services, including acting as a counterparty in stock and over-the-counter 

transactions. As a result, in such instances the choice of broker, market maker or counterparty and the level of 

commissions or other fees paid for such services (including the size of any mark-up imposed by a counterparty) may not 

have been made at arm’s length. 

EMERGING INVESTMENT ADVISORS 

The Company may invest in Fund Investments that are managed by investment managers that have managed ARS funds 

for a relatively short period of time (“Emerging Investment Advisors”). The previous experience of Emerging Investment 

Advisors is typically in trading proprietary accounts of financial institutions or managing unhedged accounts of 

institutional money managers or other investment firms. Because Emerging Investment Advisors may not have direct 

experience managing ARS funds, including experience with financial, legal or regulatory considerations unique to ARS 

management, and because there is generally less information available on which to base an opinion of such Emerging 

Investment Advisors’ investment and management expertise, investments with Emerging Investment Advisors may be 

subject to greater risk and uncertainty than investments with more experienced ARS advisors. 

RELIANCE ON KEY INDIVIDUALS 

The success of the investment policy of the Company will be significantly dependent upon the Investment Manager and 

External Investment Advisors and their expertise and ability to attract and retain suitable staff. The success of a particular 

Fund Investment will be dependent on the expertise of the External Investment Advisor for that Fund Investment. 

Incapacitation or loss of key people within an External Investment Advisor may adversely affect a Fund Investment and 

thereby the Company. Many External Investment Advisors may have only one or a limited number of key individuals. The 

loss of one or more individuals from an External Investment Advisor could have a material adverse effect on the 

performance of such Fund Investment which, in turn, could adversely affect the performance of the Company. 

MANAGER RISK 

Manager risk is the risk of loss due to fraud on the part of the Investment Manager or an External Investment Advisor, 

intentional or inadvertent deviations from their communicated investment strategy, including excessive concentration, 

directional investing outside pre-defined ranges or in new capital markets, excessive leverage and risk taking, or simply 

poor judgment. Although the Investment Manager will seek to allocate the Company’s assets to External Investment 

Advisors whom it believes will operate with integrity and sound operational and organisational standards, the Investment 

Manager may have no, or only limited, access to information regarding the activities of the External Investment Advisors 

and the Investment Manager cannot guarantee the accuracy or completeness of such information. As a consequence, 

although the Investment Manager will monitor the activities of the External Investment Advisors as described in this 

10

Securities Note, it may be difficult, if not impossible, for the Investment Manager to protect the Company from the risk of 

External Investment Advisor fraud, misrepresentation or material strategy alteration. The Investment Manager will have 

no control over the day-to-day operations of any of the Fund Investments managed by the External Investment Advisors. 

As a result, there can be no assurance that every such collective investment vehicle will conform its conduct to these 

standards. The failure of operations, IT systems or contingency/disaster recovery plans may result in significant losses for 

the collective investment vehicles managed by the External Investment Advisors. Shareholders themselves will have no 

direct dealings or contractual relationships with the External Investment Advisors. 

MONITORING OF ALLOCATIONS OF COMPANY’S CAPITAL TO FUND INVESTMENTS 

Although the Investment Manager attempts to monitor the performance of all of its Fund Investments, the Investment 

Manager must ultimately rely on (i) the External Investment Advisor of a Fund Investment to operate in accordance with 

the investment guidelines governing the Fund Investment, and (ii) the accuracy of the information provided to the 

Investment Manager by the External Investment Advisor of the Fund Investment. Any failure of the External Investment 

Advisor of a Fund Investment to operate within such guidelines or to provide accurate information with respect to such 

Fund Investment could subject the Company to losses. Moreover, many of the strategies implemented by the Fund 

Investments rely on the financial information made available by the issuers in which the Fund Investments invest. The 

Investment Manager has no ability to independently verify the financial information disseminated by the issuers in which 

the Fund Investments invest and is dependent upon the integrity of both the management of these issuers and the 

financial reporting process in general. 

PRIME BROKERS AND CUSTODIANS 

Under the arrangements between the Fund Investments and their prime brokers and custodians, the prime brokers and 

custodians will have rights to identify as collateral, to rehypothecate or to otherwise use for their own purposes assets 

held by them for the Fund Investments from time to time. Legal and beneficial title to such assets may therefore be 

transferred to the relevant prime broker and custodian. Similarly, any cash of the Fund Investments held or received by or 

on behalf of a prime broker or custodian may not be treated as client money and may not be subject to the client money 

protections conferred by the client rules of the FSA or equivalent rules of other regulators to which such prime broker or 

custodian may be subject. Accordingly, the cash of the Fund Investments may also constitute collateral and may not be 

segregated from the cash of the prime brokers and custodians. Consequently, a Fund Investment may rank as an 

unsecured creditor in respect of such assets and cash on the insolvency of a prime broker and custodian and might not be 

able to recover such assets and cash in full. The inability of a Fund Investment to recover such cash could have a material 

adverse effect on the Company’s performance and returns to Shareholders. 

SIDE LETTERS AND OTHER AGREEMENTS 

External Investment Advisors and Fund Investments may enter into separate agreements with certain of their investors, 

such as those affiliated with External Investment Advisors or Fund Investments or those deemed to involve a significant or 

strategic relationship. Such agreements may provide more beneficial terms to investors other than the Company by 

waiving certain terms or allowing such investors to invest on different terms than those on which the Company has 

invested, including, without limitation, with respect to fees, liquidity, changes in redemption terms, key man provisions, 

notification upon the occurrence of certain events (in some instances including the ability to redeem upon the occurrence 

of certain events), “most favoured nation” clauses and disclosure of certain information. Under certain circumstances, 

these agreements could create preferences or priorities for such investors. For example, a Fund Investment may offer 

certain of its investors additional or different information and reporting than that offered to the Company. Such 

information may provide the recipient greater insights into the Fund Investment’s activities as compared to the Company 

in its capacity as an investor in such Fund Investment, thereby enhancing the recipient’s ability to make investment 

decisions with respect to the Fund Investment and enabling such investor to make more informed decisions than the 

Company about redeeming from the Fund Investment. Any resulting redemption could force the Fund Investment to sell 

investments at a time when it might not otherwise have done so or for a price less than it deemed fair value which will 

adversely affect the Company as a remaining investor in the relevant Fund Investment. 

The Investment Manager will in certain circumstances attempt to negotiate separate agreements with External 

Investment Advisors or Fund Investments to which it allocates the Company’s capital. No assurance can be given that any 

such agreement, if entered into, will be respected by the applicable External Investment Advisor or Fund Investment or 

that such agreement would be enforceable in accordance with its terms. Further, there may be situations in which 

regulatory requirements, investment objectives, the timing of investments, historical relationships with an External 

Investment Advisor or other considerations will result in differences between the Company and an External Investment 

Advisor’s other clients in terms of the availability of the benefits of any such agreements. Furthermore, there may be 

circumstances where the benefit provided cannot be exercised by all clients simultaneously or where one client directly or 

indirectly receives a greater benefit due to the participation by another client. In addition, although the Investment 

Manager may negotiate terms that it considers more advantageous overall, concessions may be required to obtain such 

terms. 

PERFORMANCE FEES AND MANAGEMENT FEES 

External Investment Advisors may receive compensation calculated by reference to the performance of the Fund 

Investments managed by them. Such compensation arrangements may create an incentive to make investments that are 

11

iskier or more speculative than would be the case if such arrangements were not in effect. In addition, because 

performance-based compensation is calculated on a basis that includes unrealised appreciation of a Fund Investment’s 

assets, such performance-based compensation may be greater than if such compensation were based solely on realised 

gains. Furthermore, External Investment Advisors may receive compensation calculated by reference to their assets 

under management. Such compensation arrangements may create an incentive to increase their assets under 

management regardless of their ability to effectively and optimally invest them. 

MULTIPLE LEVELS OF EXPENSE 

Both the Company and Fund Investments impose management and performance fees. In addition to a fixed management 

fee, External Investment Advisors typically will also be paid or allocated amounts based upon a share of the profits of the 

Fund Investment. External Investment Advisors of such Fund Investments may receive substantially higher payments than 

would otherwise be the case under alternative arrangements. Other service providers of Fund Investments will normally 

be compensated or will receive allocations on terms that may include fixed and/or performance-based fees or allocations. 

As a result, the Company, and indirectly Shareholders, will pay multiple investment management and other service 

provider fees. In addition to the fees paid by the Company to the Manager, fees paid in relation to Fund Investments will 

generally, for fixed fees, if applicable, range from 1 per cent. to 2 per cent. per annum of the average net asset value of the 

Fund Investments and performance fees or allocations are likely to range from 20 per cent. to 25 per cent. of the net 

capital appreciation in the Fund Investments for the relevant performance fee measurement period. Performance figures 

issued by the Company and stated performance targets will be net of these. 

When the Company holds a Fund Investment through a conduit fund as described below under “Investment in conduit 

entities”, the “high water mark” for an investment in a Fund Investment may not correspond to the Company’s holding 

period in the conduit fund. Therefore, the Company may pay a performance fee to an External Investment Advisor when it 

has not received the same positive performance as a whole and it may benefit from a “loss carry forward” where the 

conduit fund incurred the loss prior to the Company’s investment in the conduit fund. 

EFFECT OF REDEMPTIONS AND BUY-BACKS ON DIVERSIFICATION 

Although the Company plans to seek diversification in the investment of its assets, if the Directors elect to operate the 

Redemption Facility and as a result a significant number of Shares are redeemed on the relevant Redemption Date, the 

Company may not be able to satisfy such redemption requests from a variety of its Fund Investments and be required to 

make disproportionate redemptions from select Fund Investments, resulting in a temporary imbalance in its 

diversification strategy. Similarly, if the Company executes a share buy-back, raising the necessary funds may adversely 

affect the diversification of the Company’s investments. 

EFFECT OF LIQUIDATION ON INVESTMENT GUIDELINES 

If the Company is in the process of a complete liquidation pursuant to its Articles of Association, in order to effect an 

orderly liquidation of the Company’s assets, the Company may not comply with the investment guidelines described in this 

Securities Note during liquidation. 

PORTFOLIO ADJUSTMENTS 

Redemption restrictions imposed by Fund Investments or the provisions of the governing documents of Fund Investments 

that permit suspension of redemptions may delay or preclude portfolio adjustments the Investment Manager would 

otherwise implement. Fund Investments could depreciate in value during the time a redemption is delayed, and the 

Company would be precluded from redeploying its capital to more advantageous investment opportunities. 

SECONDARY MARKET 

The Company may sell Fund Investments in the secondary market. This may include, at the discretion of the Investment 

Manager, selling such Fund Investments at a discount, thereby triggering the same economic effect as a redemption 

penalty. 

PORTFOLIO VALUATION 

The Company values its Fund Investments at fair value. Interests in Fund Investments generally will be valued at 

estimated prices provided to the Company by the External Investment Advisor (or administrator) of the relevant Fund 

Investment based on interim unaudited financial statements. Such estimates may be subject to little independent 

verification or other due diligence and may not comply with generally accepted accounting practices or other valuation 

principles. In addition, these entities may not provide estimates of the value of Fund Investments, or may do so irregularly, 

with the result that the values of such investments may be estimated by and at the discretion of the Sub-Administrator. 

Certain securities or investments, particularly those for which market quotations may not be readily available, may be 

difficult to value. Because of overall size, concentration in particular markets and maturities of positions held by the 

Company through the Fund Investments, the value at which its investments can be liquidated may differ, sometimes 

significantly, from the interim valuations obtained by the Company. In addition, the timing of liquidations may also affect 

the values obtained on liquidation. Securities held by Fund Investments may routinely trade with bid-offer spreads that 

may be significant. In addition, the Fund Investments may hold loans or privately placed securities for which no public 

market exists. Accordingly, the values of Fund Investments provided to the Company may be subject to an upward or 

downward adjustment based on information reasonably available at that time or following the auditing of a Fund 

Investment’s financial records. There can therefore be no guarantee that the Company’s investments could ultimately be 

realised at the Company’s valuation of such investments. 

12

Because of the inherent uncertainty of valuation, the estimated value of Fund Investments for which no ready market 

exists may differ significantly from the value that would be used had a ready market for the security existed, and the 

differences could be material. 

In the event that a price or valuation estimate accepted by the Company in relation to an underlying investment 

subsequently proves to be incorrect or varies from the final published price, no adjustment to any previously published 

Net Asset Value will be made. 

The Company will pay redemption proceeds in connection with the operation of the Redemption Facility, as well as 

calculate fees, on the basis of these net asset valuations. As a result, if a Shareholder redeems Shares from the Company, 

subsequent valuation adjustments to Fund Investments may occur and there is a risk that the redeeming Shareholder 

may receive an amount upon redemption which is greater or less than the amount such Shareholder would have been 

entitled to receive on the basis of the adjusted valuation. In such event, the Hold-Back Amount related to such redemption 

may be adjusted accordingly. In the event that the Hold-Back Amount is insufficient to cover any adjustment, or an 

adjustment occurs subsequent to complete payment to a redeeming Shareholder, the remaining Shareholders will be 

likely to bear the risk of such valuation adjustments. More specifically, to the extent such subsequently adjusted 

valuations from a Fund Investment adversely affect the Company’s Net Asset Value, or to the extent the Company is 

required to reimburse a Fund Investment for any overpayment with respect to redemption proceeds paid by the Fund 

Investment to the Company, the Company will be adversely affected to the benefit of Shareholders who had previously 

redeemed pursuant to the Redemption Facility. Conversely, any increases in the Net Asset Value per Share resulting from 

such subsequently adjusted valuations generally will be entirely for the benefit of current Shareholders of the and to the 

detriment of Shareholders who redeemed pursuant to the Redemption Facility at a Net Asset Value per Share lower than 

the adjusted amount. Finally, the fees payable to the Investment Manager, and the management and performance fees 

payable to the External Investment Advisor of a Fund Investment, generally will not be reduced or subject to rebate unless 

adjusted as the result of an audit. 

Fund Investments may include “side pockets” which the External Investment Advisor may not mark to market, but instead 

value at cost until realisation. To the extent such investments are held in a Fund Investment but not realised until after a 

Shareholder has redeemed Shares pursuant to the Redemption Facility, the redeeming Shareholder may not benefit from 

a “side pocket’s” full realised value, or conversely, the remaining Shareholders may bear some or all of the losses on a 

“side pocket” investment. 

Transactions between the Company and Other Clients may occur on a trade date which does not correspond to a valuation 

date with respect to the Fund Investment being traded. The Investment Manager may book such transactions as occurring 

on a particular trade date even though the relevant administrator or third party manager of the Fund Investment being 

traded may not settle such transaction until a later trade date. Thus, such transactions may occur at Net Asset Values that 

are estimated by the Investment Manager, the relevant administrator or the third party manager of the securities being 

traded, and the Investment Manager will then reconcile the differences between estimated and actual net asset values at 

a later date. 

RELIANCE ON VALUATION INFORMATION FROM EXTERNAL INVESTMENT ADVISORS AND THIRD PARTIES 

In order to value the assets and liabilities of the Company, the Company and/or the Investment Manager will rely on 

information provided by External Investment Advisors, their agents and/or outside parties. Such persons may provide 

inaccurate, incomplete, not current or otherwise unreliable information. Furthermore, some investments (for example, 

certain derivatives, distressed investments and other structured instruments), and as a result some Fund Investments, 

are complex and thus difficult to value. For these Fund Investments in particular, the Company places principal reliance 

on underlying Fund Investments, their administrators, auditors, general partners or investment advisors for net asset 

value and other valuations, and may not be able to independently assess the accuracy of such valuations. The Company 

has implemented procedures that endeavour to safeguard against the use of inaccurate information, but no assurances 

can be given that those procedures will identify material inaccuracies or permit the Company to avoid consequent losses. 

To the extent the information received by the Company is inaccurate or unreliable, the valuation of the Company’s assets 

and liabilities may be inaccurate. 

Furthermore, when market quotations may not be available, investments such as complex or unique financial instruments 

may be priced pursuant to a number of methodologies, such as computer-based analytical modelling or individual 

security evaluations. These methodologies generate approximations of market values, and there may be significant 

professional disagreement about the best methodology for a particular type of financial instrument or different 

methodologies that might be used under different circumstances. In the absence of an actual market transaction, reliance 

on such methodologies is essential, but may introduce significant variances in the ultimate valuation of a Fund 

Investment. 

Furthermore, the External Investment Advisors will generally face a conflict of interest in providing valuations to the 

Company since such valuations will affect the compensation of the External Investment Advisors. 

OWNERSHIP OF UNDERLYING INVESTMENTS 

When deciding whether to invest, or continue investing in, a Fund Investment the Investment Manager carries out no 

independent investigation of the ownership of the assets of the Fund Investment or the administrator to the Fund Investment. 

13

Instead the Investment Manager relies on audited accounts and other financial information provided to it by the Fund 

Investment. In the event that a Fund Investment does not own or there is a defect in the ownership of the underlying 

investments this could have an adverse impact on the ability of the Company to achieve its investment objective. 

DISPOSITION OF FUND INVESTMENTS 

In connection with the disposition of a Fund Investment, the Company may be required to make representations about the 

business and financial affairs of the relevant Fund Investment typical of those made in connection with the sale of any 

security or business. The Company may also be required to indemnify the purchasers of such Fund Investment to the 

extent that any such representation turns out to be inaccurate. These arrangements may result in contingent liabilities, 

which may ultimately have to be funded by the Company. 

INVESTMENT IN CONDUIT ENTITIES 

A substantial portion of the Company’s assets may be invested in one or more conduit funds, in which other investment 

funds and accounts managed by the Investment Manager also may invest. The primary purpose of a conduit fund 

structure is to consolidate the investments of clients of the Investment Manager or its affiliates into a single investment in 

one or more underlying Fund Investments. The Investment Manager believes that the Company’s investment through a 

conduit fund could enhance the Investment Manager’s ability to negotiate more advantageous terms and the structure 

should provide the Company a certain degree of efficiency and other potential benefits. However, since the investments in 

a conduit fund are commingled with investments from Other Clients, the specific terms and rights, including redemption 

rights, associated with the Company’s investment in a conduit fund will be aggregated with those of Other Clients holding 

investments in that conduit fund, rather than being tracked individually for the Company and each participating Other 

Client. Certain of the terms negotiated may have inherent limitations which may not result in all investors in such conduit 

fund, depending on a variety of circumstances, benefiting equally or at all from such terms. Generally, economic 

characteristics, such as expenses specific to a conduit fund, investment returns and fee rebates, are allocated among the 

funds invested in a conduit fund on a pro rata basis. However, certain economic characteristics, such as redemption fees, 

may be applied specifically to the Company or Other Clients when investment decisions are specific to the Company or 

Other Clients rather than being a consequence of change in the relevant portfolio manager’s assessment of the 

investment merits of the conduit fund’s investment(s). It should be noted that investment terms, restrictions and returns 

may be different for a particular investor in a conduit fund were it to invest in a Fund Investment directly rather than 

participating in a conduit fund. In some cases either the Company or Other Clients may not be eligible or permitted to 

invest in any particular conduit fund. The Company’s ability to redeem or liquidate from an investment could also be 

affected by the timing of its redemptions from any such conduit fund, and the investment activities of Other Clients. For 

example, if Other Clients redeem from a conduit fund, the remaining investors in the conduit fund, which may include the 

Company, may be subject to a longer lock-up or redemption period than if such remaining investors had invested directly 

in the conduit’s Fund Investment. Similarly, each investor in a conduit fund, will bear its pro rata share of expenses of 

such conduit fund, including any extraordinary expenses incurred in such conduit fund. It is possible that investors in a 

conduit fund, including the Company, could be subject to additional expenses or liabilities as a result of their investment in 

a conduit fund, as their assets will be commingled and creditors of a conduit fund may enforce claims against all assets of 

such conduit fund. 

In addition, the Investment Manager may, through a conduit fund or otherwise, specially allocate capacity with respect to 

some Fund Investments to clients or investors who desire increased exposure to certain Fund Investments. These 

allocations may be from capacity commitments obtained by the Investment Manager on behalf of its clients, and may be 

offered on fee, liquidity and other terms different from those applicable to an investment in the Company. 

HEDGING TRANSACTIONS 

External Investment Advisors may utilise financial instruments such as forward contracts, options and interest rate 

swaps, caps and floors to seek to hedge against declines in the values of portfolio positions (measured in terms of their 

base currencies) as a result of changes in currency exchange rates, certain changes in the equity markets and market 

interest rates and other events. 

The success of an External Investment Advisor’s hedging strategy will depend, in part, upon such External Investment Advisor’s 

ability to assess correctly the relationship between the performance of the instruments used in the hedging strategy and the 

performance of the portfolio investments being hedged. Since the characteristics of many securities change as markets 

change or time passes, the success of an External Investment Advisor’s hedging strategy will also be subject to such External 

Investment Advisor’s ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. While the 

External Investment Advisors may enter into hedging transactions to seek to reduce risk, such transactions may result in a 

poorer overall performance for the Company than if they had not engaged in such hedging transactions. The External 

Investment Advisors may not seek to establish a perfect correlation between the hedging instruments utilised and the portfolio 

holdings being hedged. Such an imperfect correlation may prevent a Fund Investment (and therefore the Company) from 

achieving the intended hedge or expose the Fund Investment (and therefore the Company) to a risk of loss. The External 

Investment Advisors may not hedge against a particular risk because it does not regard the probability of the risk occurring to 

be sufficiently high as to justify the cost of the hedge, or because it does not foresee the occurrence of the risk. It may not be 

possible for the External Investment Advisors to hedge against a change or event at attractive prices or at a price sufficient to 

protect the assets of the Company from the decline in value of the portfolio positions anticipated as a result of such change. In 

addition, it may not be possible to hedge against certain risks at all. 

14

CURRENCY HEDGING 

Where a Fund Investment offers shares denominated in currencies other than the US Dollar, the Fund Investment may 

endeavour to hedge its exposure to such currency. The Company will have no control over the manner in which such Fund 

Investment accounts for the profits, losses, and expenses associated with such hedging activities. It is possible that there 

could be cross liability among all classes of shares of such Fund Investment, and thus, the costs associated with such 

hedging activities may be allocated to the class of shares held by the Company, even when such hedging activities do not 

directly relate to such class in the event that the assets of the relevant class are insufficient to meet such losses and 

expenses. As a result, the performance of such Fund Investment (and, thus, the performance of the Company) could be 

adversely affected. 

COUNTERPARTY ARRANGEMENTS 

In selecting counterparties to transactions in which the Company will engage, including but not limited to, currency 

hedging transactions and borrowings under lines of credit it may have in place, the Investment Manager has the authority 

to and will consider a variety of factors in addition to the price associated with such transactions. Considerations may 

include, but are not limited to: (a) the ability of the counterparty to (i) provide other products and services, (ii) accept 

certain types of collateral and provide multiple products or services linked to such collateral or (iii) execute transactions 

efficiently, or (b) the counterparty’s facilities, reliability and financial responsibility. Such products and services generally 

may benefit both the Company and Other Clients, although not necessarily in relation to their relative participation in a 

particular transaction. If the Investment Manager determines that the counterparty’s transaction costs are reasonable 

overall, the Company may incur higher transaction costs than it would have paid had another counterparty been used. The 

Investment Manager will periodically re-evaluate its assessment of the selected counterparty. Subject to the any 

applicable regulatory frameworks and the terms of the Company’s governing documents, counterparties to such 

transactions may be affiliates of, or service providers to, the Company or the Investment Manager, and thus such 

transactions may be subject to a number of potential conflicts of interest. 


To the extent that the Company engages in principal transactions, including, but not limited to, forward currency 

transactions, swap transactions and the purchase and sale of bonds and other fixed income securities, it must rely on the 

creditworthiness of its counterparties under such transactions. In certain instances, the credit risk of a counterparty is 

increased by the lack of a central clearing house for certain transactions including swap contracts. In the event of the 

insolvency of a counterparty, the Company may not be able to recover its assets in full or at all, during the insolvency 

process. Counterparties to investments may have no obligation to make markets in such investments and may have the 

ability to apply essentially discretionary margin and credit requirements. Similarly, Fund Investments will be subject to the 

risk of bankruptcy of, or the inability or refusal to perform with respect to such investments by, the counterparties with 

which they deal. 

MATERIAL, NON-PUBLIC INFORMATION 

From time to time, the Investment Manager may come into possession of confidential or material, non-public information 

that would limit the ability of the Company to acquire or dispose of investments held by the Company. The Company’s 

investment flexibility may be constrained as a consequence of the inability of the Investment Manager to use such 

information for investment purposes. Moreover, External Investment Advisors may acquire confidential or material, 

non-public information or be restricted from initiating transactions in certain securities or liquidating or selling certain 

investments at a time when an External Investment Advisor would otherwise take such an action. 

INTEREST RATE FLUCTUATIONS 

The prices of several securities which may be held by the Company directly or indirectly through Fund Investments tend to 

be sensitive to interest rate fluctuations and unexpected fluctuations in interest rates could cause the corresponding 

prices of the long and short portions of a position to move in directions which were not initially anticipated. Interest rates 

are highly sensitive to factors beyond the Investment Manager’s and External Investment Advisors’ control, including, 

among others, governmental monetary and tax polices and domestic and international economic and political conditions. 

In the event of a significant rising interest rate environment and/or economic downturn, loan defaults may increase and 

result in credit losses that may be expected to affect adversely the Company’s and the Fund Investments’ liquidity and 

operating results. In addition, interest rate increases generally will increase the interest carrying costs to the Company 

and Fund Investments of borrowed securities and leveraged investments or the cost of leverage for the Company and the 

Fund Investments. Furthermore, to the extent that interest rate assumptions underlie the hedging of a particular position, 

fluctuations in interest rates could invalidate those underlying assumptions and expose the Fund Investments and the 

Company to losses. 

INCREASING SIZE AND MATURITY OF HEDGE FUND MARKETS 

The identification of attractive investment opportunities is difficult and involves a high degree of uncertainty. The growth in 

the number of hedge funds and assets managed by such funds, together with the increase in other market participants 

(such as the proprietary desks of investment banks) may reduce the opportunities available for the Investment Manager 

and the External Investment Advisors to make certain investments or adversely affect the terms upon which investments 

can be made. This could reduce the ability of the Company to generate returns and/or reduce the quantum of these 

returns. Historic opportunities for some or all hedge fund strategies may be eroded over time whilst structural and/or 

15

cyclical factors may reduce opportunities for the Investment Manager and the External Investment Advisors temporarily or 

permanently. 

In addition, it is possible that the Company may have exposure to the same investment or securities through more than 

one Fund Investment. Furthermore, the applicable External Investment Advisors could take opposing positions with 

respect to such securities and thus the Company’s exposure to such underlying security or investment could move against 

each other. 

INFORMATION TECHNOLOGY SYSTEMS 

The Company is dependent on the Investment Manager and the External Investment Advisors for investment 

management, operational and financial advisory services. The Company is also dependent on the Investment Manager for 

certain management services as well as back-office functions. The Investment Manager and the External Investment 

Advisors depend on information technology systems in order to assess investment opportunities, strategies and markets 

and to monitor and control risks for the Company and Fund Investments. Information technology systems are also used to 

trade in the underlying investments of the Fund Investments. 

It is possible that a failure of some kind which causes disruptions to these information technology systems could 

materially limit the Investment Manager’s or an External Investment Advisors’ ability to adequately assess and adjust 

investments, formulate strategies and provide adequate risk control. Any such information technology related difficulty 

could harm the performance of the Company. 

Further, failure of the back office functions of the Investment Manager to process trades in a timely fashion could 

prejudice the investment performance of the Company. 

SPECIFIC RISK FACTORS RELATING TO ABSOLUTE RETURN STRATEGIES 

The Company’s capital will primarily be allocated to External Investment Advisors pursuing a range of Absolute Return 

Strategies. Such strategies may involve investment in high risk securities including low credit quality and distressed 

securities, which may be illiquid, and use of highly speculative investment techniques including short-selling, investing in 

emerging market securities, high leverage, futures, swaps and notional principal contracts, currency speculation, shortsales 

and uncovered option transactions. 

CONCENTRATION OF INVESTMENT PORTFOLIO 

Because a Fund Investment may have the ability to concentrate its investments by investing an unlimited amount of its 

assets in a single issuer, sector, market, industry, strategy, country or geographic region, the overall adverse impact on 

such Fund Investment, and correspondingly on the Company, of adverse movements in the value of the securities of a 

single issuer, sector, market, industry, strategy, country or geographic region will be considerably greater than if such 

Fund Investment were not permitted to concentrate its investments to such an extent. By concentrating in a specific 

issuer, sector, market, industry, strategy, country or geographic region, a Fund Investment will be subject to the risks of 

that issuer, sector, market, industry, strategy, country or geographic region, such as rapid obsolescence of technology, 

sensitivity to regulatory changes, minimal barriers to entry and sensitivity to overall market swings, and may be more 

susceptible to risks associated with a single economic, political or regulatory circumstance or event than a more 

diversified portfolio might be. Moreover, a number of Fund Investments might accumulate positions in the same or related 

investment at the same time, compounding such risk. In addition, the Company is permitted to make direct investments, 

including, without limitation, in single security positions. It is possible for the Company to have a portion of its assets 

concentrated in a single issuer or security, and thus be subject to a similar concentration risk. 

SHORT-SELLING 

The Fund Investments may engage in short-selling. Short-selling involves selling securities which may or may not be 

owned and borrowing the same securities for delivery to the purchaser, with an obligation to replace the borrowed 

securities at a later date. Short-selling necessarily involves certain additional risks. However, if the short seller does not 

own the securities sold short (an uncovered short sale), the borrowed securities must be replaced by securities purchased 

at market prices in order to close out the short position, and any appreciation in the price of the borrowed securities 

would result in a loss. Uncovered short sales expose the Fund Investments to the risk of uncapped losses until a position 

can be closed out due to the lack of an upper limit on the price to which a security may rise. Purchasing securities to close 

out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss. There is the 

risk that the securities borrowed by a Fund Investment in connection with a short-sale must be returned to the securities 

lender on short notice. If a request for return of borrowed securities occurs at a time when other short-sellers of the 

security are receiving similar requests, a “short squeeze” can occur, and the Fund Investment may be compelled to 

replace borrowed securities previously sold short with purchases on the open market at the most disadvantageous time, 

possibly at prices significantly in excess of the proceeds received in originally selling the securities short. 

LOW CREDIT QUALITY SECURITIES 

Fund Investments may invest in particularly risky investments that also may offer the potential for correspondingly high 

returns. As a result, a Fund Investment may lose all or substantially all of its investment in any particular instance, which 

would have an adverse effect on the Company. In addition, there is no minimum credit standard which is a prerequisite to 

a Fund Investment’s acquisition of any security, and the debt securities in which a Fund Investment is permitted to invest 

16

will be less than investment grade and may be considered to be “junk bonds”. Securities in the non-investment grade 

categories are subject to greater risk of loss of principal and interest than higher rated securities and may be considered 

to be predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. They may also be 

considered to be subject to greater risk than securities with higher ratings in the case of deterioration of general 

economic conditions. Adverse publicity and negative investor perception about these lower-rated securities, whether or 

not based on an analysis of the fundamentals with respect to the relevant issuers, may contribute to a decrease in the 

value and liquidity of such securities. In addition, because investors generally perceive that there are greater risks 

associated with non-investment grade securities, the yields and prices of such securities may fluctuate more than those 

for higher-rated securities. The market for non-investment grade securities may be smaller and less active than that for 

higher-rated securities, which may adversely affect the prices at which these securities can be sold. In addition, Fund 

Investments may invest in debt securities which may be unrated by a recognised credit rating agency which are subject to 

greater risk of loss of principal and interest than higher-rated debt securities. 

Securities in which a Fund Investment may invest may rank junior to other outstanding securities and obligations of the 

issuer, all or a significant portion of whose debt securities may be secured by substantially all of the issuer’s assets. 

Moreover, Fund Investments may invest in debt securities which are not protected by financial covenants or limitations on 

additional indebtedness. Fund Investments may therefore be subject to credit, liquidity and interest rate risks. In addition, 

evaluating credit risk for debt securities involves uncertainty because credit rating agencies throughout the world have 

different standards, making comparison across countries difficult. Also, the market for credit spreads is often inefficient 

and illiquid, making it difficult to hedge such risk or to calculate accurately discounting spreads for valuing financial 

instruments. 

DISTRESSED SECURITIES 

Fund Investments may invest in securities of issuers in weak financial condition, experiencing poor operating results, 

having substantial financial needs or negative net worth, facing special competitive or product obsolescence problems, or 

issuers that are involved in bankruptcy or reorganisation proceedings. Investments of this type involve substantial 

financial and business risks that can result in substantial or total losses. Among the problems involved in investments in 

troubled issuers is the fact that frequently there may be a lack of information as to the conditions of such issuers. Such 

investments also face the risk of the effects of applicable federal and state bankruptcy laws. The market prices of such 

securities are also subject to abrupt and erratic market movements and above average price volatility and the spread 

between the bid and offer prices of such securities may be greater than normally expected. It may take a number of years 

for the market price of such securities to reflect their intrinsic value. Such securities are also more likely to be subject to 

trading restrictions or suspensions. It is anticipated that some of the portfolio securities held by Fund Investments may 

not be widely traded, and that a Fund Investment’s position in such securities may be substantial in relation to the market 

for those securities. 

“SPECIAL SITUATIONS” AND/OR “EVENTS” 

Fund Investments may invest in companies involved in (or which are the target of) acquisition attempts or takeover or 

tender offers or mergers or companies involved in work-outs, liquidations, demergers, spin-offs, reorganisations, 

bankruptcies, share buy-backs and other capital market transactions or “special situations”. The level of analytical 

sophistication, both financial and legal, necessary for a successful investment in companies experiencing significant 

business and financial distress is unusually high. There is no assurance that the Fund Investments will correctly evaluate 

the nature and magnitude of the various factors that could, for example, affect the prospects for a successful 

reorganisation or similar action. There exists the risk that the transaction in which such business enterprise is involved 

either will be unsuccessful, take considerable time or will result in a distribution of cash or a new security the value of 

which will be less than the purchase price of the security or other financial instrument in respect of which such 

distribution is received. Similarly, if an anticipated transaction does not in fact occur, or takes more time than anticipated, 

the Fund Investment may be required to sell its investment at a loss. As there may be uncertainty concerning the outcome 

of transactions involving financially troubled companies in which Fund Investments may invest, there is potential risk of 

loss by a Fund Investment of its entire investment in such companies. In some circumstances, investments may be 

relatively illiquid making it difficult to acquire or dispose of them at the prices quoted on the various exchanges. 

Accordingly, a Fund Investment’s ability to respond to market movements may be impaired and consequently such Fund 

Investment may experience adverse price movements upon liquidation of its investments which may in turn affect 

adversely the Company. Settlement of transactions may be subject to delay and administrative uncertainties. An 

investment in securities of a company involved in bankruptcy or other reorganisation and liquidation proceedings 

ordinarily remains unpaid unless and until such company successfully reorganises and/or emerges from bankruptcy, and 

Fund Investments may suffer a significant or total loss on any such investment during the relevant proceedings. 

Investments in securities of companies in a special situation or otherwise in distress require active monitoring by the 

investment manager of such companies and may, at times, require active participation by the Fund Investments (including 

by way of board membership or corporate governance oversight), in the management or in the bankruptcy or 

reorganisation proceedings of such companies. Such involvement may restrict a Fund Investment’s ability to trade in the 

securities of such companies. It may also prevent such Fund Investment from focusing on matters relating to other 

existing investments or potential future investments of the Fund Investment. In addition, as a result of its activities, a Fund 

Investment may incur additional legal or other expenses, including, but not limited to, costs associated with conducting 

17

proxy contests, public filings, litigation expenses and indemnification payments to the investment manager or persons 

serving at the investment manager’s request on the boards of directors of companies in which such Fund Investment has 

an interest. It should also be noted that any such board representatives have a fiduciary duty to act in the best interests of 

all shareholders, and not simply the Fund Investment, and thus may be obligated at times to act in a manner that is 

adverse to the Fund Investment’s interests. The occurrence of any of the above events may have a material adverse effect 

on the performance of the Fund Investments and consequently on the performance of the Company. 

ILLIQUID INVESTMENTS AND MARKET CHARACTERISTICS 

Investments held by Fund Investments may be or become illiquid which may affect the ability of the Fund Investments to 

exit such investments, the returns made by those Fund Investments and in turn the Company. Such illiquidity may result 

from various factors, such as the nature of the instrument being traded, or the nature and/or maturity of the market in 

which it is being traded, the size of the position being traded, or because there is no established market for the relevant 

securities. Even where there is an established market, the price and/or liquidity of instruments in that market may be 

materially affected by certain factors. Securities and commodity exchanges typically have the right to suspend or limit 

trading in any instrument traded on that exchange. It is also possible that a governmental authority may suspend or 

restrict trading on an exchange or in particular securities or other instruments traded. A suspension could render it 

difficult for the Fund Investments to liquidate positions and thereby might expose the Company to losses. 

The market prices, if any, for such illiquid investments tend to be volatile and may not be readily ascertainable and the 

relevant Fund Investments may not be able to sell them when it desires to do so or to realise what it perceives to be their 

fair value in the event of a sale. Because of valuation uncertainty, the fair values of such illiquid investments reflected in 

the net asset value of a Fund Investment (and thereby in the Net Asset Value of the Company) attributable to such 

investment may not necessarily reflect the prices that would actually be obtained by the Fund Investment when such 

investments are realised. If the realisation occurs at a price that is significantly lower than the Net Asset Value 

attributable to such investment, the Company will suffer a loss. Moreover, securities in which the Fund Investments may 

invest include those that are not listed on a stock exchange or traded in an over-the-counter market. As a result of the 

absence of a public trading market for these securities, they may be less liquid than publicly traded securities. The size of 

the Fund Investments’ positions may magnify the effect of a decrease in market liquidity for such instruments. Changes in 

overall market leverage, deleveraging as a consequence of a decision by the counterparties with which the Fund 

Investments enter into repurchase/reverse repurchase agreements or derivative transactions to reduce the level of 

leverage available, or the liquidation by other market participants of the same or similar positions, may also adversely 

affect the Fund Investments’ portfolios. 

The sale of restricted and illiquid securities often requires more time and results in higher brokerage charges or dealer 

discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges 

or in the over-the-counter markets. Fund Investments may encounter substantial delays in attempting to sell non-publicly 

traded securities. Although these securities may be resold in privately negotiated transactions, the prices realised from 

these sales could be less than those originally paid by the Fund Investments. In some cases, Fund Investments may be 

contractually prohibited from disposing of investments for a specified period of time. Restricted securities may sell at a 

price lower than similar securities that are not subject to restrictions on resale. Further, companies whose securities are 

not publicly traded are not subject to the disclosure and other investor protection requirements which would be applicable 

if their securities were publicly traded. 

In addition, Fund Investments themselves may be or become illiquid, their marketability may be restricted and the 

realisation of investments from them may take a considerable time and/or be costly, in particular because Fund 

Investments may have restrictions that allow redemptions only at specific infrequent dates with considerable notice 

periods, and apply lock-ups and/or redemption fees. The Company’s ability to withdraw monies from or invest monies in 

Fund Investments with such restrictions will be limited and such restrictions will limit the Company’s flexibility to 

reallocate such assets among Fund Investments. In addition, Fund Investments may have the ability to temporarily 

suspend the right of their investors to redeem their investment during periods of exceptional market conditions. It may 

therefore be difficult for the Company to sell or realise its investments in the Fund Investments in whole or in part. In 

addition, liquidity may be subject to commitments made by the Investment Manager or the External Investment Advisors 

as to the frequency of redemptions and/or length of lock-up periods to secure capacity with such Fund Investments. 

In addition, the use of leverage by the Company may compound the risks associated with liquidity of investment assets, as 

the Company must maintain a certain degree of liquidity, based on its leveraged position, in order to service its debt. 

Failure to maintain such necessary liquidity may materially adversely affect the Company. 

NON-US EXCHANGE RISK EXPOSURE 

Although Fund Investments are typically denominated in US Dollars, certain Fund Investments may invest in securities 

denominated, and may receive a portion of their income and gains, in currencies other than the US Dollar. A reduction in 

the value of such other currencies relative to the US Dollar prior to conversion into US Dollars, as applicable, would 

adversely affect the net asset value of the Fund Investment and correspondingly, the Net Asset Value of the Company. The 

Company does not expect to hedge the exchange exposure related to any Fund Investments. To the extent that the 

External Investment Advisers themselves seek to hedge non-US exchange risk exposure, they may not be able to do so. 

See “Risks relating to the Investment Strategy — Currency hedging”. Also see “Risks relating to an investment in the 

18

Shares — US Dollar exchange rate fluctuations” for additional risks related to Shares that are not denominated in 

US Dollars. 

LEVERAGING BY FUND INVESTMENTS 

Fund Investments may engage in various forms of leverage, and the Company does not limit the use of leverage by 

individual Fund Investments or Fund Investments in the aggregate. Leverage can be employed in a variety of ways 

including direct borrowing, margining (an amount of cash or eligible securities an investor deposits with a broker when 

borrowing to buy securities), short selling and the use of futures, warrants, options and other derivative products. To the 

extent that a Fund Investment uses leverage, the value of its net assets will tend to increase or decrease at a greater rate 

than if no leverage were employed. If income and appreciation on investments made with borrowed funds are less than 

the required interest payments on the borrowings, the value of a Fund Investment’s (and therefore the Company’s) net 

assets will decrease. Accordingly, any event which adversely affects the value of an investment by a Fund Investment 

would be magnified to the extent that such investment is leveraged. Leverage has a similar effect on investments 

themselves, to the extent the issuer is leveraged, and can also affect their cash flow and operating results. 

The cumulative effect of the use of leverage by Fund Investments in a market that moves adversely to such Fund 

Investments could result in a substantial loss to the Company which would be greater than if the Fund Investments were 

not leveraged. As a result, if the Company’s losses with respect to any Fund Investment were to exceed the amount of 

capital invested in that Fund Investment, the Company could lose its entire investment. Leverage increases the risk and 

volatility of Fund Investments and, as a consequence the Company. To the extent that the External Investment Advisors or 

Fund Investments borrow funds, the rates at which they can borrow will affect their returns. In the event of a sudden, 

precipitous drop in value of a Fund Investments’ assets, the Fund Investment might not be able to liquidate assets quickly 

enough to repay its borrowings, further magnifying the losses incurred by the Fund Investment, and therefore the 

Company. 

In addition, the Company itself may enter into leverage transactions. Leverage transactions by the Company would be in 

addition to any leverage transactions of Fund Investments and is not limited by the amount, if any, by which Fund 

Investments are leveraged or by leverage incurred by the Company in connection with its currency hedging transactions, if 

any. 

USE OF FINANCING ARRANGEMENTS BY FUND INVESTMENTS 

A number of Fund Investments depend upon the availability of credit to finance their investment strategies. The prime 

brokers, banks and dealers that may provide financing to Fund Investments can apply essentially discretionary margin or 

other valuation policies. Changes by financing providers to these policies, or the imposition of other credit limitations or 

restrictions, may result in margin calls, loss of financing, forced liquidation of positions at disadvantageous prices or 

termination or cross defaults of transactions with the same or other dealers. These adverse effects may be compounded 

in the event that such limitations or restrictions are imposed suddenly and/or by multiple dealers or counterparties 

around the same time. 

COMMODITY AND FINANCIAL FUTURES CONTRACTS 

Fund Investments may invest in commodity and financial futures contracts and in options thereon. Commodity and 

financial markets are highly volatile because of the low margin deposits normally required in futures trading, and because 

a high degree of leverage is typical of a futures trading account. As a result, a relatively small price movement in a futures 

contract may result in substantial losses to the investor. In addition, commodity exchanges may limit fluctuations in 

commodity futures contract prices during a single day and thus during a single trading day no trades may be executed at 

prices beyond the “daily limit”. Once the price of a futures contract for a particular commodity has increased or decreased 

by an amount equal to the daily limit, positions in the commodity can be neither taken nor liquidated unless managers are 

willing to effect trades at or within the limit, which may hinder the ability of a Fund Investment to trade. 

The profitability of such an investment depends on the ability of the portfolio manager to analyse correctly the commodity 

markets, which are influenced by, among other things, changing supply and demand relationships, weather, changes in 

interest rates, trade policies, world political and economic events, and other unforeseen events. Such events could result 

in large market movements and volatile market conditions and create the risk of significant loss. A variety of possible 

actions by various government agencies can also inhibit profitability or can result in loss. In addition, activities by the 

major power producers can have a profound effect on spot prices which can, in turn, substantially affect derivative prices, 

as well as the liquidity of such markets. Moreover, investments in commodity and financial futures and options contracts 

involve additional risks including, without limitation, leverage (margin is usually only 5-15 per cent. of the face value of the 

contract and exposure can be nearly unlimited). The CFTC and futures exchanges have established limits referred to as 

“speculative position limits” on the maximum net long or net short position which any person may hold or control in 

particular commodity or financial futures contracts. All of the positions held by all accounts owned or controlled by a Fund 

Investment and its External Investment Advisor will be aggregated for the purposes of determining compliance with 

position limits. It is possible that positions held by the Fund Investment may have to be liquidated in order to avoid 

exceeding such limits. Such modification or liquidation, if required, could adversely affect the operations and profitability 

of the Fund Investment. 

19

FUTURES TRANSACTIONS 

Fund Investments may invest in commodity futures contracts and in options thereon in a variety of countries and 

exchanges including those in less established markets. This is the case even if the exchange is formally “linked” to a more 

established exchange, whereby a trade executed on one exchange liquidates or establishes a position on the other 

exchange. The activities of such exchanges, including the execution, delivery and clearing of transactions on such an 

exchange may be subject to a lesser degree of control and enforcement than more established markets. Moreover, such 

laws or regulations will vary depending on the country in which the transaction occurs. In addition, funds received from 

Fund Investments to margin futures transactions may not be provided the same protections as funds received to margin 

futures transactions on established exchanges. 

FAILURE OF FUTURES COMMISSION MERCHANTS 

Under the US Commodity Exchange Act, futures commission merchants are required to maintain customers’ assets in a 

segregated account. Such requirements may also be found in other jurisdictions in which Fund Investments are made. To 

the extent that a Fund Investment engages in futures and options contract trading and the futures commission merchants 

with whom the Fund Investment maintains accounts fail to so segregate the assets of the Fund Investment, the Fund 

Investment will be subject to a risk of loss in the event of the bankruptcy of any of its futures commission merchants. In 

certain circumstances, the Fund Investment might be able to recover, even in respect of property specifically traceable to 

the Fund Investment, only a pro rata share of all property available for distribution to a bankrupt futures commission 

merchant’s customers. 

OPTION TRANSACTIONS 

Fund Investments may engage in option transactions. The purchase or sale of an option involves the payment or receipt of 

a premium payment by the investor and the corresponding right or obligation, as the case may be, to either purchase or 

sell the underlying security or other instrument for a specific price at a certain time or during a certain period. Purchasing 

options involves the risk that the underlying instrument does not change price in the manner expected, so that the option 

expires worthless and the investor loses its premium. Selling options, on the other hand, involves potentially greater risk 

because the investor is exposed to the extent of the actual price movement in the underlying security in excess of the 

premium payment received. The writer of a covered call option also gives up the opportunity for gain on the underlying 

security above the exercise price of the call. The writer of a call option that is not covered assumes the additional risk that 

it will be required to satisfy its obligation to the buyer of the call option by making an open-market purchase of the 

underlying securities on unfavourable terms. Over-the-counter options also involve counterparty solvency risk. 

OFF-EXCHANGE TRANSACTIONS 

Fund Investments may enter into off-exchange transactions, including spot, forward and option contracts. They may also 

engage in swap transactions, consisting primarily of an exchange of a fixed price for an average floating price of a set 

quantity of a particular security or commodity or fixed income instrument over an agreed period of time and even 

purchase cash securities commodities if market conditions are believed to be warranted. Off-exchange contracts are not 

regulated and such contracts are not guaranteed by an exchange or clearing house. Consequently, trading in these 

contracts is subject to more risks than future or options trading on regulated exchanges, including, but not limited to, the 

risk that a counterparty will default on an obligation. The counterparties will typically not be required to post collateral. 

Off-exchange transactions are also subject to legal risks, such as the legal incapacity of counterparty to enter into a 

particular contract or the declaration of a class of contracts as being illegal or unenforceable. 

STOCK INDEX OPTIONS 

Fund Investments may purchase and sell call and put options on stock indices listed on exchanges or traded in the 

over-the-counter market for the purpose of realising their investment objectives or for the purpose of hedging their 

portfolios. Successful use by a Fund Investment of options on stock indices is subject to the relevant External Investment 

Advisor’s ability to predict correctly movements in the direction of a relevant stock market generally or of a particular 

industry or market segment. This requires different skills and techniques than predicting changes in the price of 

individual stocks. The effectiveness of purchasing or writing stock index options for hedging purposes will depend upon 

the extent to which price movements in the Fund Investment’s portfolio correlate with price movements of the stock 

indices selected. 

DERIVATIVE INSTRUMENTS 

In addition to exchange-traded commodity and financial futures contracts, options thereon and other option and index 

option transactions, certain of the risks of which are described above, Fund Investments may utilise other 

over-the-counter derivative instruments including, but not limited to, futures, forwards, swaps, options, contracts for 

differences, caps, floors, collars and other instruments which derive their value or payment streams by reference to 

commodities, currencies, interest rates or other financial instruments. These instruments can be highly volatile and 

expose investors to a high risk of loss. The low initial margin deposits normally required to establish a position in such 

instruments permit a high degree of leverage. As a result, depending on the type of instrument, a relatively small 

movement in the price of a contract or the underlying securities may result in a profit or a loss which is high in proportion 

to the amount of funds actually placed as initial margin and may result in further loss exceeding any margin deposited. 

In addition, such derivative instruments will likely be highly illiquid. Daily limits on price fluctuations and speculative 

position limits on exchanges may prevent prompt liquidation of positions resulting in potentially greater losses. It is 

20

possible that the Fund Investments will not be able to terminate derivative instruments prior to their expiration date or 

that the penalties associated with such a termination might impact the performance of a Fund Investment, and therefore 

the Company, in a material adverse manner. 

Furthermore, the use of derivative instruments involves certain special risks, including: (i) dependence on the underlying 

fund’s ability to predict movements in the price of underlying securities and movements in interest rates; (ii) when used 

for hedging purposes there may be an imperfect correlation between the returns on the derivative instruments used for 

hedging and the returns on the investments or market sectors being hedged; (iii) the fact that the skills needed to use 

these instruments may be different from those needed to select the underlying fund’s other investments and (iv) the 

possible impediments to effective portfolio management or the ability to meet repurchase requests or other short-term 

obligations attributable to the proportion of a Fund Investment’s assets segregated to cover its obligations. 

Certain derivative instruments are not traded on an exchange or subject to direct government regulation. Rather, these 

instruments, which may be bilateral and customised as to terms, are traded through an informal network of banks and 

other dealers, which have no obligation to make markets in these instruments and, in light of the unregulated nature of 

the agreements evidencing the transactions, can apply (and from time to time change) discretionary margin and credit 

requirements. Also, some instruments traded off market may have fewer market makers, wider spreads between their 

quoted bid and asked prices and lower trading volumes, resulting in comparatively greater price volatility and less liquidity 

than the securities of companies that have larger market capitalisations and/or that are traded on major stock, 

commodities, or options exchanges or the market in general. It may therefore be impossible to liquidate an existing 

position, to assess the value of a position or to assess the exposure to risk. 

Contractual asymmetries and inefficiencies can also increase risk, such as break clauses, whereby a counterparty can 

terminate a transaction on the basis of a certain reduction in net asset value of a Fund Investment, incorrect collateral 

calls or delays in collateral recovery. Derivative instruments also carry the risk of failure to perform by the counterparty to 

the transaction. The payment obligations with respect to derivative instruments are often based on a notional principal 

amount, which may result in a leveraged investment by the Fund Investments, with the attendant risks described above 

under “Leveraging by Fund Investments”. 

When a Fund Investment uses derivatives as an investment instrument rather than for hedging purposes, any loss on the 

derivative investment will not be offset by gains on another hedged investment. Therefore, such Fund Investment will be 

directly exposed to the risks of that derivative. While derivatives used for hedging purposes can reduce or eliminate 

losses, such use can also reduce or eliminate gains. 

The Fund Investments may also sell covered and uncovered options on securities and other assets. To the extent that such 

options are uncovered, a Fund Investment could incur an unlimited loss. Trading in derivatives markets may be 

unregulated or subject to less regulation than in other markets. Derivatives markets are, in general, relatively new 

markets and there are uncertainties as to how these markets will perform during periods of unusual price volatility or 

instability, market liquidity or credit distress. The Fund Investments could suffer substantial losses from their derivatives 

holdings in these or other situations. Moreover, the swaps market is a relatively new market and is largely unregulated. 

Documentation, clearance and settlement practices generally in the market have been the subject of regulatory and 

industry concerns. 

Where a Fund Investment utilises a derivative instrument on behalf of one or more classes of its shares, it is possible that 

there could be cross liability among all classes of shares of such Fund Investment. Thus, the Company may be exposed to 

counterparty risk with respect to a Fund Investment’s use of a derivative instrument even when the use of such derivative 

instrument does not directly relate to the class in which the Company has invested. 

LENDING PORTFOLIO SECURITIES 

Fund Investments may lend their portfolio securities to brokers, dealers and financial institutions. In general, these loans 

will be secured by collateral (consisting of cash, government securities or irrevocable letters of credit) maintained in an 

amount equal to at least 100 per cent. of the market value, determined daily, of the loaned securities. Fund Investments 

would be entitled to payments equal to the interest and dividends on the loaned security and could receive a premium for 

lending the securities. Lending portfolio securities would result in income to the Fund Investment, but could also involve 

certain risks in the event of the delay of return of the securities loaned or the default or insolvency of the borrower. 


Fund Investments are generally subject to counterparty risk with respect to the brokers, counterparties, clearing houses 

and exchanges with which they deal. Any default by one of these parties could result in material losses to a Fund 

Investment, and therefore the Company. The assets of Fund Investments held by brokers or counterparties are generally 

not held in segregated accounts, and accordingly, in the event of any such default a Fund Investment may only have the 

rights of a general creditor in the event any broker or counterparty dissolves or files for bankruptcy. In addition, the 

institutions, including brokerage firms and banks, with which a Fund Investment trades or invests may encounter financial 

difficulties that impair the operational capabilities or the capital position of such Fund Investment. Neither the Company 

nor the Investment Manager will have any control over the counterparties or brokers used by the Fund Investments. 

21

NEW ISSUE INVESTMENTS 

The rules of the United States National Association of Securities Dealers, Inc. (“NASD”) regulate securities firms’ activities 

related to the sale of “new issues” (as defined under applicable NASD rules) to investment funds if “restricted” persons 

(generally, people engaged in the securities industry) hold beneficial interests in such investment funds. As a result, to 

comply with NASD Rules, where a Fund Investment participates in new issues the Company may only invest in Fund 

Investments where restricted persons’ participation in the gains or losses from such investments is limited. Alternatively, 

the Company may, in the Investment Manager’s absolute discretion, elect not to participate in new issues. As a result, all 

of the Shareholders would be unable to participate in profits attributable to investments in new issues, even where certain 

Shareholders would not otherwise be so restricted. 

BROKERAGE COMMISSIONS AND TRANSACTION COSTS 

In selecting brokers or counterparties to effect portfolio transactions, Fund Investments will be likely to consider such 

factors as price, the ability to effect the transaction, the reliability and financial responsibility and any research products 

or services provided. Such products and services generally may be of benefit to the Fund Investment in question or to 

other clients of the relevant External Investment Advisor but may not directly relate to transactions executed on behalf of 

such Fund Investment. Accordingly, if the External Investment Advisor determines in good faith that the amount of 

commissions or transaction fees charged by the entity is reasonable in relation to the value provided, the relevant Fund 

Investments may pay an amount greater than that charged by another entity. Moreover, if an External Investment Advisor 

enters into “soft dollar” arrangements, there can be no assurance that such External Investment Advisor will comply with 

the safe harbour provided by Section 28(e) of the United States Securities Exchange Act of 1934, as amended (“Section 

28(e)”), which provides parameters for the use of soft or commission dollars to obtain “brokerage and research” services. 

Although disclosure of the use of “soft dollars” is generally sufficient to avoid legal risk under US federal law, there may 

still be legal risk to the External Investment Advisor under US state law if “soft dollars” are used to pay for services not 

covered under the Section 28(e) safe harbour. 

External Investment Advisors may use “soft dollars” to acquire a variety of research, brokerage and other investmentrelated 

services, for example, research on market trends, reports on the economy, industries, sectors and individual 

companies or issuers; credit analyses; technical and statistical studies and information; accounting and tax law 

interpretations; political analyses; reports on legal developments affecting Fund Investments; information on technical 

market actions; and financial and market database services. Some may acquire goods or services outside of Section 28(e) 

that others would otherwise be considered manager overhead. The use of “soft dollars” by External Investment Advisors 

to pay for items not covered under the Section 28(e) safe harbor creates a conflict of interest between the External 

Investment Advisor and the Fund Investment to the extent that such items benefits primarily or exclusively the External 

Investment Advisor or its other clients rather than the Fund Investment. In addition, the availability of non-monetary 

benefits not covered under the Section 28(e) safe harbor may influence the selection of brokers by the External Investment 

Advisor. These conflicts of interest may have a detrimental effect on the Fund Investment and ultimately the Company. 

PORTFOLIO TURNOVER 

Fund Investments may invest and trade their portfolio securities on the basis of certain short-term market considerations. 

Fund Investments are not generally restricted in effecting transactions by any limitation with regard to their respective 

portfolio turnover rates, and the turnover rate within these Fund Investments is expected to be significant, which will 

result in significant transaction costs and thereby reduce the investment performance of such Fund Investments, and 

therefore the Company. The Investment Manager will have no control over this turnover. 

EMERGING MARKETS 

Fund Investments may invest in securities and currencies traded in various markets throughout the world, including 

emerging or developing markets, some of which are highly controlled by governmental authorities. Particularly in 

developing countries, laws governing transactions in securities, commodities, derivatives and securities indices and other 

contractual relationships are new and largely untested. Investments in emerging markets may, among other things, carry 

the risks of less publicly available information, more volatile markets, less strict securities market regulation, less 

favourable tax provisions, a greater likelihood of severe inflation, unstable currency, war and expropriation of personal 

property, inadequate investor protection, contradictory legislation, incomplete, unclear and changing laws, ignorance or 

breaches of regulations on the part of market participants, lack of established or effective avenues for legal redress, lack 

of standard practices and confidentiality customs characteristic of developed markets, and lack of enforcement of existing 

regulations. Hence, it may be difficult to obtain and enforce a judgment in certain emerging countries. In addition, the 

Fund Investments’ investment opportunities in certain emerging markets may be restricted by legal limits on foreign 

investment in local securities. There can be no assurance that this difficulty in protecting and enforcing rights will not 

have a material adverse effect on the Fund Investments and their operations, and therefore on the Company. There is also 

the possibility of nationalisation, expropriation or confiscatory taxation, imposition of withholding or other taxes on 

dividends, interest, capital gains or other income, limitations on the removal of funds or other assets of the relevant Fund 

Investment or the Company, political changes, government regulation, social instability or diplomatic developments 

(including war) which could affect adversely the economies of such countries or the value of investments in those 

countries. In addition, regulatory controls and corporate governance of companies in emerging markets confer little 

protection on minority shareholders. Anti-fraud and anti-insider trading legislation is often rudimentary. The concept of 

fiduciary duty to shareholders by officers and directors is also limited when compared to such concepts in developed 

22

markets. In certain instances management may take significant actions without the consent of shareholders and antidilution 

protection also may be limited. The typically small or relatively small size of markets for securities of issuers 

located in emerging market countries and the possibility of a low or non-existent volume of trading in those securities 

may also result in a lack of liquidity and increased price volatility of those securities, which may reduce the return on such 

investments to the Fund Investments, and therefore to the Company. 

RISK ARBITRAGE TRANSACTIONS 

Fund Investments may engage in risk arbitrage transactions in which, in connection with a proposed merger, exchange 

offer, tender offer or other similar transaction, they will purchase securities of the relevant issuer at prices slightly below 

the anticipated value of the cash, securities or other consideration to be paid or exchanged for such securities in such 

transaction. Such purchase price may be substantially in excess of the market price of the securities prior to the 

announcement of the merger, exchange offer, tender offer or other similar transaction. If the proposed merger, takeover, 

exchange offer, tender offer or other similar transaction later appears not likely to be consummated or in fact is not 

consummated or is delayed, the market price of the securities purchased by a Fund Investment in anticipation of such 

transaction may decline sharply and result in losses to such Fund Investment. In addition, a Fund Investment may not 

hedge its positions against market fluctuations. This can result in losses to a Fund Investment even if the proposed 

transaction is ultimately consummated. Securities to be issued in a merger, takeover or exchange offer may also be sold 

short by a Fund Investment in the expectation that the short position will be covered by delivery of such securities when 

issued. If the merger, takeover or exchange offer is not consummated, the Fund Investment may be forced to cover its 

short position at a higher price than its short sale price, resulting in a loss to the Fund Investment and therefore to the 

Company. 

GEOPOLITICAL RISK 

Fund Investments may invest in markets that have been created to achieve specific policy objectives and where the 

connection to policy development carries considerable risks. The value of such Fund Investments could be adversely 

affected by abrogation of international agreements and national laws which have created the market instruments in which 

such Fund Investments will be investing, failure of the designated national and international authorities to enforce 

compliance with the same laws and agreements, failure of local, national and international organisation to carry out their 

duties prescribed to them under the relevant agreements, revisions of these laws and agreements which dilute their 

effectiveness or conflicting interpretation of provisions of the same laws and agreements. Fund Investments may be 

adversely affected by uncertainties such as terrorism, international political developments, changes in government 

policies, taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and other 

developments in the laws and regulations of the countries in which they are invested. 

BUSINESS AND REGULATORY RISK OF HEDGE FUNDS 


Investments by regulators. Investor protection may be less efficient than if supervision was exercised by a regulator. 

Legal, tax, and regulatory changes, as well as judicial decisions, could adversely affect the Company. In particular, the 

regulatory environment relevant to the Company, the Investment Manager and Fund Investment activities is evolving and 

may entail increased regulatory involvement in their businesses or result in ambiguity or conflict among legal or 

regulatory schemes applicable to their businesses, all of which could adversely affect the investment or trading strategies 

pursued by the Company or Fund Investments or the value of investments held by the Company or a Fund Investment. 

In addition, many Fund Investments invest in derivative transactions, and Fund Investments may also pursue certain other 

strategies or investment types, such as private financings of public companies, bank loans and participations. Such 

investment strategies may be subject to additional legal or regulatory risks, including changing applicable laws and 

regulations, developing or differing interpretations of such laws and regulations, and increased scrutiny by regulators and 

law enforcement authorities. The regulatory and tax environment for derivative and related instruments is evolving and 

may be subject to government or judicial action which may adversely affect the value of investments held by Fund 

Investments. The effect of any future regulatory or tax change on Fund Investments is impossible to predict but could be 

substantial and adverse. 

The regulatory or tax environment for derivative and related instruments is evolving and may be subject to government or 

judicial action which may adversely affect the value of investments held by Fund Investments. The effect of any future 

regulatory or tax change on Fund Investments is impossible to predict. 

Furthermore, new SEC rules that became effective on 1 February 2006 materially increased the regulation of certain 

External Investment Advisors and are likely to increase the expenses associated with regulatory compliance. These rules 

were challenged in court and vacated and remanded in June 2006 by the United States Court of Appeals for the District of 

Columbia in Goldstein v. SEC. However, during the interim period, the rules had the effect of requiring many External 

Investment Advisors to register with the SEC as investment advisers, or adopt policies that provided exemption from 

registration, primarily by adopting lock-ups of two years or more or complying with restrictions on non-US based 

managers. As a consequence of the court’s action and the current US and international regulatory focus on hedge funds, 

the regulatory environment is uncertain. In addition, alternative US or non-US rules or legislation regulating External 

Investment Advisors may be adopted, and the possible scope of any rules or legislation is unknown. It is also unclear what 

steps External Investment Advisors may take with respect to their registration or policies they may have adopted in 

23

esponse to the rules. There can be no assurances that the Company, the Investment Manager, or any External 

Investment Advisor or Fund Investment will not in the future be subject to regulatory review or discipline. 

SYNTHETIC PARTICIPATION IN ABSOLUTE RETURN STRATEGIES 

The Investment Manager may utilise customised derivative instruments, including swaps, options, forwards, notional 

principal contracts or other financial instruments, to replicate, modify or replace the economic attributes associated with 

a Fund Investment or Direct Investment. The Company may be exposed to certain additional risks should the Investment 

Manager use derivatives as a means to synthetically implement the Company’s investment strategies. If the Company 

enters into a derivative instrument whereby it agrees to receive the return of a security or financial instrument or a basket 

of securities or financial instruments, it typically will contract to receive such returns for a predetermined period of time. 

During such period, the Company may not have the ability to increase or decrease its exposure. In addition, such 

customised derivative instruments will likely be highly illiquid, and it is possible that the Company will not be able to 

terminate such derivative instruments prior to their expiration date or that the penalties associated with such a 

termination might impact the Company’s performance in a materially adverse manner. Furthermore, derivative 

instruments typically contain provisions giving the counterparty the right to terminate the contract upon the occurrence of 

certain events. Such events may include a decline in the value of the reference securities and material violations of the 

terms of the contract or the portfolio guidelines as well as other events determined by the counterparty. If a termination 

were to occur, the Company’s return could be adversely affected as it would lose the benefit of the indirect exposure to the 

reference securities, and it may incur significant termination expenses. 

In the event the Company seeks to participate in a Collective Investment Vehicle or other similar Fund Investment through 

the use of such synthetic derivative instruments, the Company will not acquire any voting interests or other shareholder 

rights that would be acquired with a direct investment in the underlying Fund Investment. Accordingly, the Company will 

not participate in matters submitted to a vote of the investors in such Fund Investment. In addition, the Company may not 

receive all of the information and reports to investors that the Company would receive with a direct investment in such 

Collective Investment Vehicle. Further, the Company will pay the counterparty to any such customised derivative 

instrument structuring fees and ongoing transaction fees, which will reduce the investment performance of the Company. 

Finally, certain tax aspects of such customised derivative instruments are uncertain and, if the Company’s tax treatment 

of such instruments is challenged successfully by tax or other regulatory authorities in the applicable country or 

jurisdiction, a Shareholder’s return could be adversely affected. The Company has not obtained any opinion or other advice 

with respect to tax consequences in the United States or any other jurisdiction relating to the Company or an investment 

therein with respect to such derivative instruments. 

Derivative instruments generally also involve counterparty risk, i.e., the risk that the counterparty fails to fulfil its 

contractual obligations under the terms of the instrument, and such instrument may not perform in the manner expected 

by the counterparties, thereby resulting in greater loss or gain to the investor. The Investment Manager will seek to 

minimise the Company’s exposure to counterparty risk by entering into such transactions with counterparties the 

Investment Manager believes to be creditworthy at the time it enters into the transaction. Certain transactions in such 

derivative instruments may require the Company to provide collateral to secure its performance obligations under a 

contract. 


CHANGES IN TAX LAWS OR REGULATION 


invest, including, for example, the imposition of withholding or other taxes on the Company’s investments, could adversely 

affect the value of the investments held by the Company and decrease the post-tax returns to Shareholders. Statements in 

this Securities Note concerning the taxation of Shareholders are based upon current tax law and practice in the 

jurisdictions covered, which law and practice is, in principle, subject to change that could adversely affect the ability of the 

Company to meet its investment objective and which could adversely affect the taxation of Shareholders. 

CHANGES TO TAX TREATMENT OF DERIVATIVE INSTRUMENTS 

The tax environment for derivative instruments is evolving, and changes in the taxation of derivative instruments may 

adversely affect the value of derivative instruments held by the Company and its ability to pursue its investment strategies. 

In addition, the Company may take positions with respect to certain tax issues which depend on legal conclusions not yet 

resolved by the courts. Should any such positions be successfully challenged by an applicable taxing authority, there could 

be a material adverse effect on the Company. 

CHANGES IN TAX RESIDENCE 

If the Company were treated as resident, or as having a permanent establishment, or as otherwise being engaged in a 

trade or business, in any country in which it invests or in which its investments are managed, all of its income or gains, or 

the part of such gain or income as is attributable to, or effectively connected with, such permanent establishment or trade 

or business, may be subject to tax in that country, which could have a material adverse effect on its performance and 

returns to Shareholders. 

To maintain its non-UK tax resident status, the Company must be managed and controlled outside the United Kingdom. 

The composition of the Board of Directors, the place of residence of the Board’s individual members and the location(s) in 

24

which the Board of Directors makes its decisions will be important factors in determining and maintaining the non-UK tax 

resident status of the Company. While the Company is incorporated in Jersey and the majority of the Directors reside 

outside the United Kingdom, the Company must pay continued attention to ensure that its decisions are not made in the 

United Kingdom or the Company may lose its non-UK tax resident status. The Company must similarly ensure that it does 

not become resident in the United States or other jurisdictions. 

CHANGES IN TAX LAWS OR REGULATION AFFECTING THE COMPANY 

The Company is not currently subject to tax on a net income basis in any country. There can be no assurance that the net 

income of the Company will not become subject to tax in one or more countries as a result of unanticipated activities 

performed by the Investment Manager or its affiliates, adverse developments or changes in law, contrary conclusions by 

the relevant tax authorities or other causes. The imposition of any such unanticipated net income taxes could materially 

reduce the Company’s after-tax returns, which could have a material adverse effect on the performance of the Company 

and returns to Shareholders. 

RISKS RELATING TO CONFLICTS OF INTEREST 

ORGANISATIONAL, OWNERSHIP AND INVESTMENT STRUCTURE 

The Company’s organisational, ownership and investment structure involves a number of relationships that may give rise 

to conflicts of interest between the Company and its Shareholders, on the one hand, and the Investment Manager and its 

affiliates, on the other hand. In certain instances, the interests of the Investment Manager and its affiliates, in their 

capacities as Shareholders and as investment manager of the Company and otherwise, may differ from the interests of 

the Company and the Company’s other Shareholders, including with respect to the types of investments made, the timing 

and method in which investments are exited, the reinvestment of returns generated by investments, the use of leverage 

when making investments, and others. Such conflicts of interest may not always be resolved in a manner that is in the 

best interests of the Company or Shareholders. 

The Directors and the service providers to the Company may, from time to time, provide services to, or be otherwise 

involved with, other investment vehicles established by parties other than the Company which may have similar objectives 

to those of the Company. It is therefore possible that any of them may, in the course of business, have potential conflicts of 

interest with the Company. 

OTHER BUSINESS ACTIVITIES 

The Investment Manager, its affiliates and each of their respective members, partners, officers and employees spend 

substantial time and attention on other business activities, including Other Clients. The terms relating to these Other 

Clients may differ materially from those applicable to an investment in the Shares, even though certain of these Other 

Clients pursue a similar or identical investment objective and strategy as the Company. The Directors may be subject to 

similar conflicts of interest in their provision of services to the Company. 

Shareholders may invest in the Company in connection with asset allocation or other investment advice received from the 

Investment Manager or one of its affiliates (the “Allocation Advisor”). In such cases, the investment advice with respect to 

the Company will be governed by an agreement negotiated between the Shareholder and the Allocation Advisor, and may 

include the payment of investment management or performance fees in addition to those charged in connection with an 

investment in the Company. The decision by the Allocation Advisor to invest in the Company may present a potential 

conflict of interest. 

Employees of the Investment Manager may, from time to time, become members of advisory committees, boards of 

directors or similar advisory or governance bodies to Fund Investments. Matters referred to those advisory boards may 

include a number of subjects, such as conflicts of interests involving the Fund Investment’s management; investment, 

pricing, and other investment-related policies; and general sharing of investment and market information or ideas. The 

Investment Manager believes that participation on these bodies provides an opportunity to better understand the relevant 

Fund Investment and its management. However, it is also possible that participation on these bodies could require or 

result in limitations on the investment decisions of the Company; for example, knowledge of material information not 

generally known to investors could limit redemptions by the Company. When considering whether to participate on a 

particular body, the Investment Manager will balance the known positive and negative aspects and determine whether to 

participate on that basis. 

ALLOCATION OF INVESTMENT OPPORTUNITIES 







these and other factors, the Company may be precluded from making a specific investment or the Investment Manager 

may reallocate existing Fund Investments among Other Clients. Investment allocation decisions will be made by the 

Investment Manager, taking into consideration the respective investment guidelines, investment objectives, existing 

investments, liquidity, contractual commitments or regulatory obligations and other considerations applicable to the 

25

Company and Other Clients. However, there are likely to be circumstances where the Company is unable to participate, in 

whole or in part, in certain investments to the extent it would participate absent allocation of an investment opportunity 

among the Company and Other Clients. In addition, it is likely that the Company’s portfolio and those of Other Clients will 

have differences in the specific Fund Investments held in their portfolios even when their investment objectives are the 

same or similar. These distinctions will result in differences in portfolio performance between the Company and Other 

Clients. 






may themselves provide market making services, including those of counterparty in stock and OTC transactions. As a 

result, in such instances the choice of broker, market maker or counterparty and the level of commissions or other fees 

paid for such services (including the size of any mark-up imposed by a counterparty) may not have been made at arm’s 

length. 

INVESTMENT IN EXTERNAL INVESTMENT ADVISORS 

Other Clients, including those in which the Investment Manager, its affiliates and their employees may have invested, may 

acquire an ownership or other financial interest in certain of the External Investment Advisors of Fund Investments 

(a “Financial Interest”). The terms of any Financial Interest may include direct or indirect receipt of a portion of any 

management or performance-based fees paid by such Fund Investment to its External Investment Advisor. The 

Investment Manager or its affiliates will endeavour to negotiate such Financial Interest so as to permit a return to the 

Company of a share of management or performance-based fees paid by the Company with respect to such Fund 

Investment, but no assurances can be given that it will be able to do so. The Investment Manager expects to negotiate any 

such benefit within the parameters it generally uses in connection with negotiating agreements with such External 

Investment Advisors, and not based on the size or other terms related to the Financial Interest, with the proviso that any 

negotiated reduction in management or performance-based fees and allocation will be limited in terms of a stated 

maximum US Dollar amount in investments or a percentage of the capital base of a Fund Investment held by the Company 

and Other Clients, in the aggregate. To the extent Other Client investments in such a Fund Investment exceed this 

limitation, it is generally expected that the most recent investments by Other Clients would not participate in the fee 

reduction, unless the Investment Manager determines that a different allocation of the fee reduction is more reasonable 

or practicable. The Company generally would not participate in other aspects of any Financial Interest held in an External 

Investment Advisor. However, this relationship created by a Financial Interest could produce conflicts of interest as 

between the Company and the Investment Manager or Other Client that holds the Financial Interest. For example, 

withdrawing funds from a Fund Investment in which the Investment Manager, an affiliate or Other Clients hold a Financial 

Interest could adversely affect the value of such Financial Interest. The Investment Manager will endeavour to manage 

such conflicts equitably, subject to legal, regulatory, contractual or other applicable considerations. 

FEES PAID TO THE INVESTMENT MANAGER 

Fees paid to the Investment Manager at the Company level have not been established on the basis of an arm’s-length 

negotiation between the Company and the Investment Manager. Performance fees may create an incentive for the 

Investment Manager to approve and cause the Company to make more speculative investments than it would otherwise 

make in the absence of such performance-based compensation. 

ALLOCATION OF EXPENSES 

The Investment Manager and its affiliates may from time-to-time incur expenses on behalf of the Company and one or 

more Other Clients. Although the Investment Manager and its affiliates will attempt to allocate such expenses on a basis 

that they consider equitable, there can be no assurance that such expenses will in all cases be allocated appropriately. 

TRANSACTIONS BETWEEN THE COMPANY AND OTHER CLIENTS 

The Investment Manager may cause the Company to purchase securities from, or sell securities to, Other Clients when 

the Investment Manager believes such transactions are appropriate based on each party’s investment objective. Such 

transactions are expected to occur at the net asset value of such securities. 

SERVICES PROVIDED BY AFFILIATES 

Subject to the US Advisers Act, other applicable regulatory frameworks and the terms of the Company’s governing 

documents, services may be provided by entities related to the Investment Manager as described in this paragraph or 

otherwise. For example, the Investment Manager may utilise the personnel or services of one or more affiliates for 

investment advice, portfolio execution and trading and client servicing in their local or regional markets or their area of 

special expertise. Such services may include the affiliates acting as agent for the Company’s currency hedging 

transactions or derivative transactions, if any, and it may take a variety of forms, including dual employee or delegation 

arrangements or formal subadvisory or servicing agreements. In addition, affiliates of the Investment Manager may 

provide lines of credit or other forms of borrowings to the Company. It is possible that conflicts may arise in connection 

with the provision of any of these services. Where these services are provided, such affiliates may benefit from substantial 

commissions or markups from transactions with the Company and thus become subject to conflicts of interest. 

26

AFFILIATED INVESTORS; OTHER BUSINESS RELATIONSHIPS AND ACTIVITIES 

Investors in the Company may include the Investment Manager and its affiliates and employees, as well as Other Clients. 

Investments of such investors may be substantial in relation to the overall assets of the Company. To the extent that 

investments by the Investment Manager or its affiliates or employees are significant, the Company may be treated as a 

proprietary account and therefore may have different regulatory treatment than would otherwise be the case, for example 

with respect to trading with Other Client accounts. Also, External Investment Advisors, their employees or affiliates may 

be clients of the Investment Manager or its affiliates or investors in funds they manage. 

In addition, the Investment Manager or its affiliates have, and in the future may develop, business relationships that are 

independent of the investment management services provided to the Company by the Investment Manager. These may 

include, but are not limited to, lending, depository, brokerage, risk management, investment advisory, security distribution 

or banking relationships with counterparties to transactions with the Company or third parties that also provide investment 

management or other services to the Company. Any such relationships may involve potentially material conflicts of interest. 

The business activities of the Investment Manager and its affiliates are complex, and may give rise to direct or indirect 

interaction between or among the Investment Manager, External Investment Advisors, Fund Investments, Other Clients, 

and/or any of their respective affiliates, officers, directors, shareholders, members, partners or employees. The 

Investment Manager may recommend, facilitate, or otherwise assist with various investment or other business activities 

on behalf of such parties, and may receive separate compensation for such activities. Any such interaction or activities 

may involve potentially material conflicts of interest. 

PROXY VOTING POLICIES AND PROCEDURES 

The Investment Manager has policies and procedures related to the voting of proxies on behalf of the Company and other funds 

that are its clients (the “Proxy Policies and Procedures”). A summary of these policies and procedures is set forth below. 

When voting proxies for the Company, the Investment Manager’s primary objective is to make voting decisions solely in the 

best interests of the Company. In fulfilling its obligations to the Company, the Investment Manager will act in a manner 

which is intended to enhance the economic value of the underlying investments held by the Company. Thus, this process 

may include a cost-benefit analysis to determine whether the voting of a proxy on behalf of the Company is in the 

Company’s best interest. In addition, the Investment Manager will take steps to avoid material conflicts of interests 

between the interests of the Investment Manager and its affiliates on the one hand and the interests of the Company and 

Other Clients on the other and its policies and procedures include provisions to address potential conflicts of interest that 

arise in the course of voting proxies. 

The Investment Manager’s Investment Committee is responsible for approving the Proxy Policies and Procedures. The 

Proxy Policies and Procedures are implemented by the appropriate Portfolio Management Groups (“PMGs”), which are 

sub-committees of the Investment Committee. The Investment Manager’s Investment Operations Department coordinates 

the procedural aspects of the Policies and Procedures, including the communication of votes to third parties and the 

maintenance of all supporting documentation. The Investment Manager has established general voting guidelines (the 

“Proxy Voting Guidelines”), as well as procedures for identifying “exception” cases, including those for which a potential 

conflict of interest or unique circumstances exist. Such exception cases will be referred on a case-by-case basis for 

consideration and voting recommendation by the relevant portfolio manager, PMG or the Investment Manager’s legal 

department, as deemed appropriate. A portfolio manager may also recommend against the generally applicable voting 

procedure in a particular instance. In both cases, the PMG will review recommended proxy votes prior to voting. 

DIVERSE SHAREHOLDERS 

Shareholders in the Company may include persons or entities resident of or organised in various jurisdictions. As a result, 

conflicts of interest may arise in connection with decisions made by the Investment Manager that may be more beneficial 

for Shareholders from certain jurisdictions. In making such decisions, the Investment Manager intends to consider the 

investment objective of the Company as a whole, not the investment or other objectives of any Shareholder individually. 

CERTAIN CONFLICTS POTENTIALLY ARISING OUT OF BLACKROCK’S RELATIONSHIP WITH OTHER FINANCIAL 

SERVICES FIRMS 

BlackRock completed a combination with Merrill Lynch Investment Managers, LLC on 29 September 2006 (the “MLIM 

Transaction”). As a result of the MLIM Transaction, Merrill Lynch & Co., Inc. (“Merrill Lynch”) holds an approximately 

49 per cent. interest in BlackRock and The PNC Financial Services Group, Inc. (“PNC”) holds an approximately 34 per 

cent. stake in BlackRock. Both Merrill Lynch and PNC are holding companies that are affiliated with broker-dealers, 

banks, insurance companies and other subsidiaries involved in financial services. The relationship between BlackRock 

and each of Merrill Lynch and PNC may give rise to certain conflicts of interest in the ordinary course of business of each 

of Merrill Lynch, PNC, BlackRock and the investment activities of the Company and its Fund Investments. Subject to the 

US Advisers Act and other applicable laws, the Company and the Fund Investments generally will not be restricted from 

dealing through or with any Merrill Lynch or PNC affiliate because of the affiliation between the Investment Manager and 

such Merrill Lynch or PNC affiliate, and neither the Investment Manager nor any Merrill Lynch or PNC affiliate will be 

required to provide an accounting to share commission or other revenue with the Company or any Shareholder with 

respect to revenue derived from such activities. The following discussion enumerates, in a general way, certain potential 

and actual conflicts of interest arising out of the ownership interests of Merrill Lynch and PNC in BlackRock. 

27

Merrill Lynch’s ownership interest in Blackrock 

Merrill Lynch’s ownership of a significant amount of BlackRock’s outstanding common stock gives rise to a presumption 

that BlackRock is controlled by Merrill Lynch for purposes of certain laws and regulations governing BlackRock’s 

investment management activities. However, pursuant to contractual agreement between Merrill Lynch and BlackRock, 

Merrill Lynch’s right to vote BlackRock common stock is severely restricted and, among other things, Merrill Lynch is 

specifically prohibited from seeking to influence or control BlackRock. Accordingly, BlackRock does not believe that 

Merrill Lynch is in fact a controlling person of BlackRock. 

BlackRock has filed an application for an order of the US Securities and Exchange Commission determining that Merrill 

Lynch does not control BlackRock. There can be no assurance that the Commission will in fact grant such order. In the 

event that BlackRock obtains such an order, it will cease to subject client transactions with or involving Merrill Lynch to 

the restrictions and limitations applicable to client transactions with or involving BlackRock itself and BlackRock’s control 

persons to the extent permitted by law. With respect to the Company, this step will primarily have the effect of enabling 

BlackRock to trade on behalf of the Company with Merrill Lynch as a broker or dealer subject to normal principles of best 

execution and as an underwriter in public and private offerings, in each case without special consent by the Company. Due 

to the possibility that Merrill Lynch’s continuing economic interest in BlackRock would incentivise BlackRock to favour 

Merrill Lynch in some manner, BlackRock will utilise enhanced compliance procedures to govern and assess its use of 

Merrill Lynch on behalf of the Company and its other clients. 

Investment in entities advised, managed or offered by related entities 

The Company may invest in Fund Investments advised, managed or sold by the Investment Manager, Merrill Lynch, PNC 

or any of their respective affiliates. Such transactions are expected to occur at the relevant net asset value and otherwise 

in a manner substantially similar to an investment in a Fund Investment not involving an affiliate. Other than with respect 

to ARS Affiliated Funds and conduit funds, it is expected that management and/or performance fees will be charged to the 

Company by the Fund Investment and paid to the Fund Investment’s service providers, including the Investment Manager, 

Merrill Lynch, PNC or any of their respective affiliates, without offset to the management or performance fees paid to the 

Company’s Investment Manager or other service providers other than as an expense of the Company. 

Brokerage and other services and activities 

Each of Merrill Lynch and PNC may provide a variety of other services, including fund administration, valuation, research, 

advisory, brokerage or support services, to the Fund Investments or, to the extent permitted by applicable law, to the 

Company. Each of BlackRock, Merrill Lynch and PNC may also engage in proprietary investment activities from time to 

time. Subsidiaries and affiliates of BlackRock and Merrill Lynch, including Merrill Lynch Alternative Investments, LLC, 

may also sponsor and manage investment funds or other client accounts that compete directly or indirectly with the 

investment programme of the Company or the Fund Investments. Information obtained or used by the Investment 

Manager or its affiliates for proprietary investment activities, or investment activities on behalf of other client accounts, 

including investment strategies used for proprietary investing or other client accounts, may not be made available to 

persons involved in the management of the Company, nor is there an obligation to provide this information for the benefit 

of the Company. There can be no assurance that any of the foregoing arrangements will not, in whole or in part, give rise 

to conflicts of interest affecting the investment activities of the Company. 

In addition, situations may arise in which a Merrill Lynch counterparty believes that, to protect its own commercial 

interests, it may be necessary to take action with respect to the Company or a Fund Investment that may be detrimental to 

the Company (such as foreclosing on collateral in the event a Merrill Lynch counterparty is a lender or counterparty to the 

Company or a Fund Investment). The Company and each Fund Investment will not be entitled to, and may not receive, any 

special consideration or forbearance by a Merrill Lynch counterparty in the exercise of its rights as a result of the 

Investment Manager’s relationship with Merrill Lynch. 

Retail banking, investment services and other businesses of PNC 

PNC and its affiliates may provide deposit, lending, cash management, trust and investment services, brokerage, fund 

administration, valuation, financial advisory services and other commercial and private banking products to the Fund 

Investments as well as to Other Clients. PNC and its affiliates serve as investment managers and trustees for various 

employee benefit plans and charitable and endowment assets that could invest in the Fund Investments. PNC and its 

affiliates also engage in asset-based lending and real estate financing to the Fund Investments. PNC and its affiliates also 

provide fund accounting and administration, transfer agency services, global custody securities lending services, 

sub-accounting services, marketing and distribution services, managed account services, alternative investment services, 

banking transaction services and advanced output solutions. Through any of the foregoing, PNC and its affiliates may 

receive fees from the Fund Investments as well as Other Clients. 

Ownership interests in or by third party financial services firms 

In the event that BlackRock acquires an ownership interest in a third party financial services firm or acquires the business 

or operating assets of such firm or if a third party financial services firm acquires an ownership interest in BlackRock, 

each of the conflicts described above may be relevant. In addition, subject to all applicable laws, the Company may trade 

28

with funds managed by Merrill Lynch, PNC, other investment advisory subsidiaries of BlackRock or other financial 

services firms that have an ownership interest in BlackRock, or in which BlackRock has an ownership interest. Any such 

cross trades will generally be made in accordance with the Investment Manager’s cross trading policies and procedures 

and, in the case of any such cross trades of interests in Fund Investments, based on fair value information as required by 

such procedures. 

Other funds managed by Merrill Lynch, PNC, other investment advisory subsidiaries of BlackRock or other financial 

services firms that have an ownership interest in BlackRock, or in which BlackRock has an ownership interest, may also 

invest in Fund Investments on terms that are superior to the terms on which the Fund invests and may take actions that 

ultimately are prejudicial to a Fund Investment or the Company’s investment in a Fund Investment. 

Investment banking and other fees 

Merrill Lynch and its affiliates may receive investment banking fees from certain companies and other parties involved in 

transactions in which the Fund Investments may participate. Such fees could be paid for providing services in connection 

with: (i) equity or debt financings, (ii) the acquisition, disposal or sale of the securities or other assets of such companies, 

(iii) securities underwriting, (iv) prime brokerage services, (v) derivatives or (vi) other investment banking or financial 

advisory services. The Company will not participate in any such fees that may be paid by any such company and the return 

on investment in any such company may be diminished as a result. Under any of the foregoing arrangements, Merrill 

Lynch may have interests that conflict with those of the Company, the Fund Investments or the Shareholders. 

Services provided by related entities 

Subject to applicable legal and regulatory frameworks and to the Articles of Association, services may be provided by 

entities related to the Investment Manager as described in this paragraph or otherwise. For example, the Investment 

Manager may utilise the personnel or services of one or more affiliates for investment advice, portfolio execution and 

trading and client servicing in their local or regional markets or their area of special expertise. Such services may include 

the affiliates acting as agent for the Company’s currency hedging transactions or derivative transactions, if any, and it may 

take a variety of forms, including dual employee or delegation arrangements or formal subadvisory or servicing 

agreements. In addition, affiliates of the Investment Manager may provide lines of credit or other forms of borrowings to 

the Company. It is possible that conflicts may arise in connection with the provision of any of these services. Where these 

services are provided, such affiliates may benefit from substantial commissions or markups from transactions with the 

Company and thus become subject to conflicts of interest. 

In-sourcing or outsourcing 

Subject to applicable law, the Investment Manager may from time to time and without notice to the Company in-source or 

outsource to third parties certain processes or functions in connection with a variety of services that it provides to the 

Company. Such in-sourcing or outsourcing may give rise to additional conflicts of interest. 

Potential impact on the Company 

Please note that the above list is not an exhaustive list and other conflicts may arise from time to time. In addition, it is 

difficult to predict the circumstances under which one or more of the foregoing conflicts could become material, but it is 

possible that such relationships could require the Company to refrain from making all or a portion of any investment or a 

disposition in order for BlackRock to comply with its fiduciary duties, the US Advisers Act or other applicable laws. For 

example, the Investment Manager, Merrill Lynch, PNC, their affiliates and their respective investment professionals and 

other employees may come into possession of material non-public information. The possession of such information may 

potentially limit the ability of the Company to participate in an investment opportunity. Such relationships may also provide 

incentive for the Investment Manager, due to its relationship with Merrill Lynch, PNC or other firms, to allocate the 

Company’s assets to Fund Investments from which Merrill Lynch, PNC or such other firms earn fees. 

RISKS RELATING TO THE APPLICATION OF THE US BANK HOLDING COMPANY ACT OF 1956 

Each of BlackRock, the Manager and the Investment Manager is, for purposes of the US Bank Holding Company Act of 

1956, as amended (the “US BHC Act”), a subsidiary of PNC, which is subject to regulation as a “financial holding company” 

(an “FHC”) by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Because the Manager and 

the Investment Manager will exercise corporate control over the Company, each of the Company, the Manager, Investment 

Manager and BlackRock will be deemed to be controlled by PNC for purposes of the US BHC Act and must comply with 

the investment and activities restrictions applicable to PNC as an FHC. Under the US BHC Act, an FHC and its affiliates 

may engage in, and may acquire interests in, or control of, companies engaged in, among other things, a wide range of 

activities that are “financial in nature,” including certain banking, securities, investment management, merchant banking, 

and insurance activities. Other activities are prohibited or limited to activities that fall within certain defined authorisations 

(“Authorisations”). 

BlackRock is currently evaluating the status of Fund Investments in relation to various Authorisations, and currently 

anticipates that it and PNC generally will be able to treat the Company as making so-called “merchant banking” portfolio 

investments for purposes of the US BHC Act. Under the US BHC Act, an FHC or its affiliates may make a merchant 

banking investment in a non-financial portfolio company, which it may control but may not routinely manage or operate 

for such period of time as is necessary to enable disposition on a reasonable basis. The Federal Reserve’s current 

29

egulations governing the merchant banking activities of an FHC (i) restrict involvement by the Company, the Manager, the 

Investment Manager, BlackRock, or PNC in the routine management and operating of a Fund Investment through officer 

or employee interlocks, contractual provisions, or other means, (ii) impose a 15-year maximum term on the Company (or, 

if the Company fails to qualify for this 15-year term, impose a 10-year maximum holding period on each merchant banking 

portfolio investment by the Company), (iii) restrict lending by PNC’s subsidiary bank to the Company and to any Fund 

Investment, (iv) limit other transactions by PNC’s subsidiary bank with such Fund Investment, (v) limit cross-marketing 

between PNC’s subsidiary bank and such Fund Investment, and (vi) apply certain record-keeping and reporting and policy 

and procedural requirements to investments by the Company. 

To ensure compliance with the merchant banking requirements of the US BHC Act, none of the Manager, Investment 

Manager or the Company will be involved in the routine management and operation of Fund Investments. Given that the 

investment programme of the Company is anticipated to consist substantially of minority stakes, such level of 

management or control would not generally be available and no officer or employee of BlackRock, the Manager or the 

Investment Manager will be permitted to serve as an officer, manager or employee of any Fund Investment. In addition, 

the Investment Manager currently does not expect that any investment in Fund Investments would exceed the maximum 

holding periods for merchant banking investments. 

Aside from the authority to make merchant banking investments, the Manager, Investment Manager, BlackRock and the 

Company may be able to rely on other statutory and regulatory provisions in order to maintain compliance with the US 

BHC Act. The Investment Manager reserves the right to rely on any such applicable exemptions and to take all reasonable 

steps deemed necessary, advisable or appropriate to comply with the US BHC Act. The US BHC Act and Federal Reserve 

regulations and interpretations thereunder may be amended over the life of the Company. The Investment Manager does 

not expect the limitations of the merchant banking investment authority or other provisions of the US BHC Act to have a 

material adverse effect on the Company, its current investment strategy, or its operations. 

30

NOTICE TO INVESTORS 

The Prospectus has been produced for the purpose of the Offer and seeking admission of the Shares to the Official List 

and to trading of the Shares on the London Stock Exchange’s main market for listed securities. In making an investment 

decision regarding the Shares offered, investors must rely on their own examination of the Company, including the merits 

and risks involved in an investment in the Shares. The Offer is being made solely on the basis of the Prospectus. The 

Company and the Directors of the Company, whose names appear in the “Directors, Managers and Advisers” section of 

this Securities Note, accept responsibility for the information contained in the Prospectus which comprises the 

Registration Document, this Securities Note and the Summary Note. The contents of the Prospectus are not to be 

construed as legal, financial, business or tax advice. Prospective purchasers of the Shares offered should conduct their 

own due diligence on the Shares. Prospective investors should inform themselves as to: (a) the legal requirements within 

their own countries for the purchase, holding, transfer, redemption or other disposal of Shares; (b) any foreign exchange 

restrictions applicable to the purchase, holding, transfer, redemption or other disposal of Shares which they might 

encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the 

purchase, holding, transfer, redemption or other disposal of Shares. Prospective investors must rely upon their own 

representatives, including their own legal advisers and accountants, as to legal, tax, accounting, regulatory, investment or 

any other related matters concerning the Company and an investment therein. 

An investment in the Company should be regarded as a long-term investment. There can be no assurance that the 

Company’s investment objective will be achieved. 

It should be remembered that the price of the Shares, and the income from such Shares, can go down as well as up. 

The Prospectus constitutes a prospectus for the purposes of Article 3 of the Prospectus Directive. The Prospectus has 

been approved by and filed with the FSA. 

The Registration Document, this Securities Note and the Summary Note, which together comprise the Prospectus, should 

be read in their entirety before making any application for Shares. Prospective Shareholders should rely only on the 

information contained in the Prospectus of which this Securities Note forms a part. 

Neither the Shares nor the Company has been approved or disapproved by any governmental or regulatory authority of 

any country or jurisdiction, nor has any such governmental or regulatory authority passed upon or endorsed the merits of 

the Company or an investment in its Shares. The consent of the JFSC under the Control of Borrowing (Jersey) Order 1958 

(as amended) has been obtained for the issue of an unlimited number of Shares and an unlimited number of C Shares. 

The JFSC is protected by the Control of Borrowing (Jersey) Law 1947 (as amended) against liability arising from the 

discharge of its functions under that law. 

The Company has received a permit under the CIF Law to carry out its functions. The JFSC is protected by the CIF Law, 

against liability arising from its functions under that law. The Manager is licensed to conduct fund services business in 

respect of the Company under the FSL. The Commission is protected by the FSL against any liability arising from the 

discharge of its functions under the FSL. It must be distinctly understood that neither the Jersey registrar of companies 

nor the JFSC takes any responsibility for the financial soundness of the Company or for the correctness of any of the 

statements made, or opinions expressed, with regard to it. A copy of this document has been delivered to the Jersey 

registrar of companies in accordance with article 5 of the Companies (General Provisions) (Jersey) Order 1992, as 

amended and the registrar has given, and has not withdrawn, his consent to its circulation. 

Any change to the Company or amendment to this Prospectus which would not be in full compliance with the provisions 


Prospective investors should rely only on the information contained in the Prospectus. Neither the Company, the 

Investment Manager nor the Global Co-ordinator has authorised any other person to provide prospective investors with 

different information. No reliance should be placed on any different or inconsistent information provided by any person. 

Prospective investors should assume that the information appearing in the Prospectus is accurate only as of the date on 

the front cover of the Prospectus, regardless of the time of delivery of the Prospectus or of any offer or sale of Shares. The 

business, financial condition and prospects of the Company could have changed since that date. The Company expressly 

disclaims any duty to update the Prospectus except as required by applicable law. The Prospectus should be read in its 

entirety before making any application for Shares. In light of these risks, uncertainties and assumptions, the events 

described in the forward-looking statements in this Securities Note may not occur. All Shareholders are entitled 

to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Company’s Articles of Association, 

which investors should review. 

UBS is acting for the Company, and no one else, in connection with the Offer and will not be responsible to anyone other 

than the Company in providing the protections afforded to its clients nor for providing advice in connection with the Offer 

or Admission. BlackRock Financial Management, Inc. is acting for the Company and no-one else in connection with the 

Offer and will not be responsible to anyone other than the Company in providing the protections afforded to its clients nor 

for providing advice in connection with the Offer or Admission. 

31

UBS makes no representation, express or implied, nor does it accept any responsibility whatsoever for the contents of the 

Prospectus, including this Securities Note, nor for any other statement made or purported to be made by it or on its behalf 

in connection with the Company, the Shares or the Offer. UBS accordingly disclaims all and any liability (save for any 

statutory liability) whether arising in tort, contract or otherwise which it might otherwise have in respect of the 

Prospectus, including this Securities Note, or any other statement. 

Investors should note that the Global Co-ordinator and/or its affiliates are likely to have acted, and in some cases, 

continue to act, in various capacities in relation to the issuers of certain securities in which the Company invests, including 

as manager, servicer, security trustee, equity holder and/or secured lender to affiliates of the issuer of the relevant 

securities. The Global Co-ordinator and/or its affiliates, in their capacity as lenders to certain of the issuers of securities in 

which the Company or the Fund Investments invest may hold security interests in various of those issuers’ assets, some of 

which assets may also secure obligations owed to holders of the relevant issuer’s securities, which may include the 

Company. In addition, the Global Co-ordinator and/or its affiliates may act as lender to the Company, including any 

financing provided to the Company. Each role confers specific rights to, and obligations on, the Global Co-ordinator and/or 

its affiliates. In carrying out these rights and obligations, the interests of the Global Co-ordinator and/or its affiliates may 

not be aligned with the interests of a potential investor in the Shares. 




















RESTRICTIONS ON DISTRIBUTION AND SALE 

The distribution of the Prospectus, the Offer and sale of the Shares offered thereby may be restricted by law in certain 

jurisdictions. Persons in possession of the Prospectus are required to inform themselves about and to observe any such 

restrictions. The Prospectus must not be used for, or in connection with, and does not constitute any offer to sell, or a 

solicitation to purchase, any such Shares in any jurisdiction in which such an offer or solicitation would be unlawful. 

Further details are set out in “Selling Restrictions” on pages 38 to 44 below. 

The Shares have not been and will not be registered under the US Securities Act or with any securities regulatory 

authority of any state or other jurisdiction in the United States nor is such registration contemplated. The Shares may not 

be offered, sold or delivered directly or indirectly within the United States or to, or for the account or benefit of, US 

Persons. The Directors reserve the right to offer Shares and/or C Shares to US Persons in the future. The Company has 

not been and will not be registered under the US Investment Company Act and investors will not be entitled to the benefits 

of the US Investment Company Act. The Shares have not been approved or disapproved by the SEC, any state securities 

commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed 

upon or endorsed the merits of the offering of Shares or the accuracy or adequacy of this prospectus. Any representation 

to the contrary is a criminal offence in the United States and re-offer or resale of any of the Shares in the United States or 

to US Persons may constitute a violation of US law or regulation. 





Applicants for Shares in the Offer will be required to certify that they (and anyone for whose benefit or on whose behalf 

they are acting) (i) are not a “US person” within the meaning of Regulation S of the US Securities Act and (ii) are a “Non- 

United States person” within the meaning of the US Commodity Futures Trading Commission (“CFTC”) Rule 4.7(a)(I)(iv). 

Such persons failing to satisfy either of clause (i) or (ii) above are referred to herein as a “US Person”. Applicants for 

Shares will also be required to certify that they are not subscribing for Shares on behalf of a US Person. See “Selling 

32

Restrictions” on pages 38 to 44 for a further description on the restrictions on purchasers in the Offer as well as 

subsequent purchasers of the Shares. 

PRESENTATION OF INFORMATION 

Certain terms used in this Securities Note, including capitalised terms and certain technical and other terms, are 

explained in the section entitled “Definitions and Glossary”. 

33

EXPECTED TIMETABLE 

Placing opens ................................................................ 4April 2008 

Offer for Subscription opens .................................................... 14April 2008 

Latest time and date for receipt of Application Forms for 

Shares under the Offer for Subscription ........................................ 5.00 pm 22 April 2008 

Latest time and date for receipt of Placing commitments ........................... 5.00 pm 23 April 2008 

Announcement of the results of the Offer through a 

Regulatory Information Service ............................................... 24April 2008 

Conditional dealings to commence on the London Stock Exchange ................... 8.00 am 24 April 2008 

Admission and commencement of unconditional dealings on 

the London Stock Exchange .................................................. 8.00 am 29 April 2008 

CREST stock accounts expected to be credited .................................... 29April 2008 

Despatch of definitive share certificates (where applicable) .......................... week commencing 5 May 2008 

Each of the times and dates in the above timetable may be extended or brought forward without further notice. It should be noted that 

if Admission does not occur, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties 

concerned. 

34

OFFER STATISTICS 

Target size of the Offer (excluding any proceeds received pursuant to the Overallotment 

Option) 12 ....................................................... 

Offer Price ................................................................ 

Expected Opening NAV per Share ............................................. 

ISIN for US Dollar Shares ................................................... 

ISIN for Euro Shares ........................................................ 

ISIN for Sterling Shares ..................................................... 

US$500 million 

US$10 per US Dollar Share 

€10 per Euro Share 

£10 per Sterling Share 

US$10 per US Dollar Share 

€10 per Euro Share 

£10 per Sterling Share 

JE00B2PXNQ43 

JE00B2PXNC07 

JE00B2PXDB91 

1 The actual number of Shares, and the number of Shares in each class, in issue upon Admission will depend on how the demand is 

satisfied in relation to each class of Shares and the relative proportion of the Offer allocated to each class. It is expected that the Offer 

Placing Statement containing the number of US Dollar Shares, Euro Shares and Sterling Shares will be published on or about 24 April 

2008. 

2 Assuming gross proceeds of the Offer of US$500 million, additional proceeds of up to US$75 million may be received pursuant to the 

exercise of the Over-allotment Option. In any event, the total amount of the Offer will not exceed US$750 million, including any 

proceeds of the exercise of the Over-allotment Option. 

35

DIRECTORS, MANAGERS AND ADVISORS 

Directors 


Manager 

Sub-Administrator and Custodian 

Company Secretary 


Legal Advisers to the Company as to English law 

Legal Advisers to the Company as to Jersey law 

Legal Advisers to the Global Co-ordinator 

Colin Maltby — Chairman 

Frank Le Feuvre 

Jonathan Ruck Keene 

John Siska 

Philip Smith 

BlackRock Alternative Advisors 

BlackRock, Inc. 

601 Union Street, 56th floor 

Seattle 

WA 98101 

USA 

BlackRock (Channel Islands) Limited. 

Forum House 


Jersey 


JE1 0BR 


PO Box 852 

UBS House 

227 Elgin Avenue 

Grand Cayman 

KY1-1103 

Cayman Islands 


Forum House 


Jersey 


JE1 0BR 

UBS Limited 

1 Finsbury Avenue 

London 

EC2M 2PP 

Herbert Smith LLP 

Exchange House 

Primrose Street 

London EC2A 2HS 

Bedell Cristin 

26 New Street 

St Helier 

Jersey 

JE4 8PP 

Simmons & Simmons 

CityPoint 

One Ropemaker Street 

London 

EC2Y 9SS 

36


CREST Service Provider and Registrar 

Auditors 


Corporate Actions Projects 

Bristol 

BS99 6AH 


Ordnance House 

31 Pier Road 

St. Helier 

Jersey 


Lord Coutanche House 

66-68 Esplanade 

St. Helier 

Jersey 

JE4 8WA 

37

SELLING RESTRICTIONS 


Shares by any person: (i) in any jurisdiction in which such offer or invitation is not authorised; or (ii) in any jurisdiction 

in which the person making such offer or invitation is not qualified to do so; or (iii) to any person to whom it is unlawful 

to make such offer or invitation. The distribution of the Prospectus, including this Securities Note, and the offering of 

Shares in certain jurisdictions may be restricted. Accordingly, persons into whose possession this Securities Note 

comes are required to inform themselves about and observe any restrictions as to the offer or sale of Shares and the 

distribution of this Securities Note under the laws and regulations of any jurisdiction in connection with any 

applications for Shares in the Company, including obtaining any requisite governmental or other consent and 

observing any other formality prescribed in such jurisdiction. No action has been taken or will be taken in any 

jurisdiction by the Company that would permit a public offering of Shares in any jurisdiction where action for that 

purpose is required, nor has any such action been taken with respect to the possession or distribution of this 

Securities Note other than in any jurisdiction where action for that purpose is required. 

UNITED STATES, CANADA, AUSTRALIA AND JAPAN 

The Shares have not been and will not be registered under the US Securities Act or any other applicable law of the United 

States or under the relevant securities laws of Canada, Australia or Japan. Accordingly, unless an exemption under such 

acts or laws is applicable, the Shares may not be offered, sold or delivered, directly or indirectly, in or into the United 

States, Canada, Australia or Japan. 

MEMBER STATES OF THE EUROPEAN ECONOMIC AREA 

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (as 

defined below) or where the Prospectus Directive is applied by the regulator (each, a “Relevant Member State”), an offer of 

the Shares to the public may only be made in the Relevant Member State after the publication of a prospectus in relation 

to the Shares has been approved by a competent authority in that Relevant Member State (or approved by a competent 

authority in another Relevant Member State and passported into such jurisdictions in accordance with the Prospectus 

Directive as implemented by such jurisdiction) except that an offer of the Shares to the public in a Relevant Member State 

may be made at any time: 

• to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or 

regulated, whose corporate purpose is solely to invest in securities; 

• to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year, (ii) a 

total balance sheet of more than €43,000,000 and (iii) an annual net turnover of more than €50,000,000, as shown in its 

last annual or consolidated accounts; 

• to fewer than 100 natural or legal persons per Relevant Member State (other than qualified investors as defined in the 

Prospectus Directive); or 

• in any other circumstances which do not require the publication of a prospectus pursuant to Article 3 of the 

Prospectus Directive. 

For the purposes of this provision, the expression an “offer of the Shares to the public” in relation to any Shares in any 

Relevant Member State means the communication in any form and by any means of sufficient information on the terms of 

the offer and the Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Shares, as the 

same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that 

Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant 

implementing measure in each Relevant Member State. 

AUSTRIA 

Prospective purchasers of the Company’s Shares should note that no prospectus pursuant to the Prospectus Directive 

(Directive 2003/71/EC) has been or will be approved by the Austrian Financial Market Authority (Finanzmarktaufsicht) or 

has been or will be passported into Austria and that the Company’s Shares will be offered in the Republic of Austria under 

circumstances which will not be considered as an offer to the public under the Austrian Capital Market Act 

(Kapitalmarktgesetz — KMG). Accordingly neither this document nor any other document in connection with the Company’s 

Shares is a prospectus according to the KMG or the Austrian Stock Exchange Act (Börsegesetz — BörseG) and has 

therefore not been drawn up, audited, approved, passported and/or published in accordance with the aforesaid acts. 

Subject to and in accordance with the provisions of the KMG, the Company’s Shares may therefore not be publicly offered 

or (re)sold in the Republic of Austria without a prospectus being published, or an applicable exemption from such 

requirement being relied upon. Each purchaser of the Company’s Shares represents to the Company that such purchaser 

will (i) only (re)sell, offer or transfer the Company’s Shares in accordance with applicable Austrian securities and capital 

markets legislation and that (ii) such purchaser will only distribute or publish this document and any advertising or other 

offer materials relating to the Company’s Shares in accordance with applicable Austrian securities and capital markets 

legislation, and in any case only in circumstances in which no obligation arises for the Company or the Global 

Co-ordinator to publish a prospectus pursuant to Article 4 of the Prospectus Directive or a supplement to a prospectus 

pursuant to Article 16 of the Prospectus Directive respectively. Because of the foregoing limitations, each investor 

undertakes to inform himself/herself about and to observe any such restrictions. 

38

This document is not intended to provide a basis of any credit or other evaluation of the Company and its business and 

should not be considered as a personal recommendation for any recipient of this document to purchase the Company’s 

Shares as it does not take into account the particular investment objective, financial situation or needs of any specific 

recipient. Each investor contemplating purchasing any of the Company’s Shares therefore represents to make its own 

independent investigation of the Company and of the suitability of an investment in the Company’s Shares in light of their 

particular circumstances and represents to seek independent professional advice, including tax advice, prior to investing 

in the Company’s Shares and to consult legal counsel prior to making any (re)sale of the Company’s Shares. 

This document is confidential and is being provided to its recipients who have been individually selected and are targeted 

exclusively on the basis of a private placement solely for the information of such recipients and must not be reproduced, 

distributed to any other person (including the press and any other media) or published, in whole or in part, for any purpose. 

This document is a marketing communication and has not been prepared in accordance with legal requirements designed 

to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the 

dissemination of investment research. 

This document is distributed under the condition that the above obligations and representations are accepted by the 

recipient and that the recipient undertakes to comply with the above restrictions. 

BAILIWICK OF GUERNSEY 

Shares will not be offered directly to members of the public within the Bailiwick of Guernsey, meaning any person who is 

not regulated under any of the financial services regulatory laws of the Bailiwick of Guernsey. 

BAILIWICK OF JERSEY 

Shares will not be offered directly to members of the public within the Bailiwick of Jersey, meaning any person who is not 

regulated under any of the financial services regulatory laws of the Bailiwick of Jersey. 

BELGIUM 

The Prospectus and related documents have not been approved in Belgium and are not intended to constitute, and may 

not be construed as, a public offering in the Kingdom of Belgium. Accordingly, these documents may not be distributed or 

circulated to, and the Shares may not be offered or sold to, any member of the public in the Kingdom of Belgium other 

than qualified investors listed in article 10 of the Belgium Law of 16 June 2006 on the public offering of investment 

instruments and the admission to trading of investment instruments on a regulated market, or investors subscribing for a 

minimum amount of €50,000 each for each separate offer and, provided any such investor qualifies as a consumer within 

the meaning of article 1.7 of the Law of 14 July 1991 on consumer protection and trade practices, such offer or sale is 

made in compliance with the provisions of the Law of 14 July 1991 on consumer protection and trade practices and its 

implementing legislation. 

FRANCE 

The Prospectus and related documents have not been approved by the competent regulatory authority in France and are 

not intended to constitute, and may not be construed as, a public offer in France. The Shares have not been offered or sold 

and will not been offered or sold, directly or indirectly, to the public in France, provided that offers, sales and distributions 

may be made in France only to: (a) providers of the investment service of portfolio management for the account of third 

parties; (b) qualified investors (investisseurs qualifiés); and/or (c) to a restricted circle of investors, all as defined in, and in 

accordance with, Articles L.411-1, L.411-2, D.411-1 and D.411-4 of the French Code monétaire et financier. 

The Shares may be resold directly or indirectly only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to 

L.621-8-3 of the French Code monétaire et financier. 

HONG KONG 

The contents of the Prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to 

exercise caution in relation to the Offer. If you are in any doubt about any of the contents of the Prospectus, you should 

obtain independent professional advice. 

Please note that (i) Shares may not be offered or sold in Hong Kong by means of the Prospectus or any other document 

other than to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of 

Hong Kong (Cap. 571) and any rules made thereunder, or in other circumstances which do not result in the Prospectus 

being a “prospectus” as defined in the Companies Ordinance of Hong Kong (Cap. 32) or which do not constitute an offer or 

invitation to the public for the purposes of the Companies Ordinance, and (ii) no person shall issue or possess for the 

purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to Shares 

which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if 

permitted to do so under the securities laws of Hong Kong) other than with respect to Shares which are or are intended to 

be disposed of only to persons outside Hong Kong or only to such professional investors within the meaning of Part I of 

Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571) and any rules made thereunder. 

39

LUXEMBOURG 

In addition to the cases described above in the European Economic Area selling restrictions in which the Company and the 

Global Co-ordinator can make an offer of Shares to the public in a Relevant Member State (including the Grand Duchy of 

Luxembourg), the Company and the Global Co-ordinator can also make an offer of Shares to the public in the Grand Duchy 

of Luxembourg: 

(a) 

(b) 

(c) 

at any time, to national and regional governments, central banks, international and supranational institutions 

(such as the International Monetary Fund, the European Central Bank, the European Investment Bank) and other 

similar international organisations; 

at any time, to legal entities which are authorised or regulated to operate in the financial markets (including, 

credit institutions, investment firms, other authorised or regulated financial institutions, insurance companies, 

undertakings for collective investment and their management companies, pension and investment funds and 

their management companies, commodity dealers) as well as entities not authorised or regulated whose 

corporate purpose is solely to invest in securities; and 

at any time, to certain natural persons or small and medium-sized enterprises (as defined in the Luxembourg act 

dated 10 July 2005 on prospectuses for securities implementing the Prospectus Directive into Luxembourg law) 

recorded in the register of natural persons or small and medium-sized enterprises considered as qualified 

investors as held by the Commission de Surveillance du Secteur Financier as competent authority in Luxembourg 

in accordance with the Prospectus Directive. 

NETHERLANDS 

The Shares will not be offered or sold, directly or indirectly, in the Netherlands, other than: (i) for a minimum 

consideration of €50,000 or the equivalent in another currency per investor; (ii) to fewer than 100 individuals or legal 

entities other than qualified investors; or (iii) solely to qualified investors, all within the meaning of article 4 of the 

Financial Supervision Act Exemption Regulation (Vrijstellingsregeling Wet op het financieel toezicht). 

In respect of the Offer, the Company is not required to obtain a license as a collective investment scheme pursuant to the 

Netherlands Financial Supervision Act (Wet op het financiële toezicht) and is not subject to supervision of the Netherlands 

Authority for the Financial Markets (Stichting Autoriteit Financiële Markten). 

PORTUGAL 

No offer or sale of Shares may be made in Portugal except under circumstances that will result in compliance with the 

rules concerning marketing of such Shares and with the laws of Portugal generally. 

No notification has been made nor has any been requested from the Securities Market Commission (Commissão do 

Mercado de Valores Mobiliários) for the marketing of the Shares referred to in the Prospectus of which this document 

forms a part, therefore the same cannot be offered to the public in Portugal. 

Accordingly, no Shares have been or may be offered or sold to unidentified addressees or to 100 or more non-qualified 

Portuguese resident investors and no offer has been preceded or followed by promotion or solicitation to unidentified 

investors, public advertisement, publication of any promotional material or in any similar manner. 

In particular, the Prospectus and the offer of the Shares is only intended for Qualified Investors acting as final investors. 

Qualified Investors within the meaning of the Securities Code (Código do Valores Mobiliários) includes credit institutions, 

investment firms, insurance companies, collective investment institutions and their respective managing companies, 

pension funds and their respective pension fund-managing companies, other authorised or regulated financial 

institutions, notably securitisation funds and their respective management companies and all other financial companies, 

securitisation companies, venture capital companies, venture capital funds and their respective management companies, 

financial institutions incorporated in a state that is not a member state of the EU that carry out activities similar to those 

previously mentioned, entities trading in financial instruments related to commodities and regional and national 

governments, central banks and public bodies that manage debt, supranational or international institutions, namely the 

European Central Bank, the European Investment Bank, the International Monetary Fund and the World Bank, as well as 

entities whose corporate purpose is solely to invest in securities and any legal entity which has two or more of: (i) an 

average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and 

(iii) an annual net turnover of more than €50,000,000, all as shown in its last annual or consolidated accounts. 

REPUBLIC OF IRELAND 

The Offer is being effected in the Republic of Ireland by way of a private placement. Each addressee of the Offer in the 

Republic of Ireland shall be deemed to have acknowledged, represented and agreed that the Offer is open for acceptance 

by the offeree only and that the offeree will not pass a copy of the Prospectus and related documents on to any person 

other than the offeree’s professional advisers and that any Shares acquired by the offeree will not have been acquired with 

a view to offer or resale to persons in circumstances which may give rise to an offer to the public. The Company is not 

authorised or supervised by the Irish Financial Regulator. 

40

SINGAPORE 

The Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities 

and Futures Act, Chapter 289 of Singapore (the “Singapore Securities and Futures Act”). Accordingly, the Shares may not 

be offered or sold or made the subject of an invitation for subscription or purchase nor may the Prospectus or any other 

document or material in connection with the offer or sale or invitation for subscription or purchase of any Shares be 

circulated or distributed, whether directly or indirectly, to any person in Singapore other than: (a) to an institutional 

investor pursuant to Section 274 of the Singapore Securities and Futures Act; (b) to a relevant person, or any person 

pursuant to Section 275(1A) of the Singapore Securities and Futures Act, and in accordance with the conditions specified 

in Section 275 of the Singapore Securities and Futures Act; or (c) pursuant to, and in accordance with the conditions of, 

any other applicable provision of the Singapore Securities and Futures Act. 

Each of the following relevant persons specified in Section 275 of the Singapore Securities and Futures Act who has 

subscribed for or purchased Shares, namely a person who is: 

(a) 

(b) 

a corporation (which is not an accredited investor) the sole business of which is to hold investments and the 

entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or 

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each 

beneficiary is an accredited investor, 

should note that shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights 

and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the 

Shares under Section 275 of the Singapore Securities and Futures Act except: 

(1) to an institutional investor under Section 274 of the Singapore Securities and Futures Act or to a relevant person, 

or any person pursuant to Section 275(1A) of the Singapore Securities and Futures Act, and in accordance with 

the conditions, specified in Section 275 of the Singapore Securities and Futures Act; 

(2) where no consideration is given for the transfer; or 

(3) by operation of law. 

SPAIN 

The Shares may not be offered, sold or distributed in the Kingdom of Spain except in accordance with the requirements of 

Law 24/1988, of 28 July on the Securities Market (Ley 24/1988, de 28 de julio, del Mercado de Valores) as amended and 

restated, and Royal Decree 1310/2005, of 4 November 2005 partially developing Law 24/1988, of 28 July on the Securities 

Market in connection with listing of securities in secondary official markets, initial purchase offers, rights issues and the 

prospectus required in these cases (Real Decreto 1310/2005, de 4 de noviembre, por el que se dearrolla parcialmnete la 

Ley 24/1988, de 28 Julio, del Mercado de Valores, en material de admission a negociación de valores en mercados 

secundarios oficiales, de ofertas publicas de venta o suscripción y del folleto exigible a tales efectos) and the decrees and 

regulations made thereunder. Neither the Shares nor the Prospectus have been verified or registered in the 

administrative registries of the National Stock Exchange Commission (Comisión Nacional de Mercado de Valores). 

SWITZERLAND 

The Prospectus may only be communicated in and from Switzerland to a limited number of investors who are qualified 

investors as defined in the Swiss Federal Act on Collective Investment Schemes (the “Swiss CIS Act “). 

The Company qualifies as a foreign closed-end collective investment scheme pursuant to art. 119 para. 2 Swiss CIS Act, 

which entered into force on 1 January 2007 and replaced the Swiss Federal Act on Investment Funds of 18 March 1994. 

The Shares will not be licensed for public distribution in and from Switzerland and they may only be offered and sold to 

so-called “qualified investors” as defined in, and in accordance with, the private placement requirements set forth by the 

new law (in particular art. 10 para. 3 Swiss CIS Act and art. 6 of the ordinance to Swiss CIS Act). The Shares have not been 

licensed for public distribution with the Swiss Federal Banking Commission and the Company is not subject to the 

supervision of the Swiss Federal Banking Commission. Therefore investors in the Shares do not benefit from the specific 

investor protection provided by Swiss CIS Act and the supervision by the Swiss Federal Banking Commission. 

TAIWAN 

The offer of the Shares has not been and will not be registered with or approved by the competent authorities of the 

Taiwan pursuant to relevant securities laws and regulations and the Shares may not be offered or sold within the Taiwan 

through a public offering or in circumstances which constitute an offer within the meaning of the securities law and 

regulations of Taiwan that requires a registration or approval of the competent authorities of Taiwan. 

Purchasers of Shares within Taiwan under the global offering may not resell such Shares except in accordance with 

applicable laws in Taiwan. 

UNITED ARAB EMIRATES AND THE DUBAI INTERNATIONAL FINANCE CENTRE 

In relation to the United Arab Emirates (“UAE”) excluding the Dubai International Finance Centre (“DIFC”), the Shares 

have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and 

Commodities Authority and Market or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities 

41

Market, any other UAE exchange, the Dubai International Financial Exchange or the Dubai Financial Services Authority 

(“DFSA”). The Offer and the Shares have not been approved or licensed by the UAE Central Bank, the Emirates Securities 

and Commodities Authority, the DFSA or any other relevant licensing authorities in the UAE or the DIFC, and do not 

constitute a public offer of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 

1984 (as amended) or otherwise. The Prospectus is strictly private and confidential and is being distributed to a limited 

number of investors and must not be provided to any person other than the original recipient, and may not be reproduced 

or used for any other purpose. Neither the Shares nor any interests in the Shares may be offered, sold, promoted or 

advertised directly or indirectly to the public in the UAE or the DIFC. 

In relation to the DIFC, this document relates to an Exempt Offer in accordance with the Offered Securities Rules of the 

DFSA. This document is intended for distribution only to persons of a type specified in those Rules. It must not be 

delivered to, or relied on, by any other person. The DFSA has no responsibility for reviewing or verifying any documents in 

connection with Exempt Offers. The DFSA has not approved this document nor taken steps to verify the information set out 

in it, and has no responsibility for it. The Shares may be illiquid and/or subject to restrictions on their re-sale. Prospective 

purchasers of the Shares offered should conduct their own due diligence on the Shares. If you do not understand the 

contents of this document you should consult an authorised financial adviser. 

UNITED STATES 

The Shares may not be offered, sold, pledged or otherwise transferred to a US Person or a person acting for the account 

of a US Person. The Directors reserve the right to offer Shares and/or C Shares to US Persons in the future. The Company 

has not been and will not be registered under the US Investment Company Act and the Shares have not been and will not 

be registered under the US Securities Act. 





The Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities 

commission in the United States or any other US regulatory authority, nor have any of the foregoing passed upon or 

endorsed the merits of the offering of the Shares or the adequacy of this prospectus. Any representation to the contrary is 

a criminal offence in the United States and the reoffer or resale of the Shares in the United States may constitute a 

violation of US law or regulation. 

REPRESENTATIONS AND WARRANTIES 

Each purchaser of the Shares pursuant to the Offer, and each subsequent purchaser of Shares, will be deemed to have 

represented, acknowledged to and agreed with the Company, the Global Co-ordinator, the Manager, the Investment 

Manager and the Registrar as follows (terms used below that are defined in Regulation S under the US Securities Act have 

the meanings given to them in Regulation S): 

1. It and the person, if any, for whose account it is acquiring the Shares are not US Persons (as defined in Rule 902 

of Regulation S under the US Securities Act) and are purchasing the Shares outside the United States in an 

offshore transaction meeting the requirements of Regulation S. A “US person” under Rule 902 of Regulation S 

includes the following: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

any natural person resident in the United States; 

any partnership or corporation organised or incorporated under the laws of the United States; 

any estate of which any executor or administrator is a US person; 

any trust of which any trustee is a US person; 

any agency or branch of a non-US entity located in the United States; 

any non-discretionary account or similar account (other than an estate or trust) held by a dealer or 

other fiduciary for the benefit or account of a US person; 

any discretionary account or similar account (other than an estate or trust) held by a dealer or other 

fiduciary organised, incorporated or (if an individual) resident in the United States; and 

any partnership or corporation if: 

(i) 

(ii) 

organised or incorporated under the laws of any non-US jurisdiction; and 

formed by a US person principally for the purpose of investing in securities not registered under 

the 1933 Act, unless it is organised or incorporated, and owned, by accredited investors (as defined 

in Rule 501(a) of Regulation D under the 1933 Act) who are not natural persons, estates or trusts. 

Notwithstanding the preceding paragraph, “US person” under Rule 902 does not include: (i) any discretionary 

account or similar account (other than an estate or trust) held for the benefit or account of a non-US person by a 

42

dealer or other professional fiduciary organised, incorporated, or (if an individual) resident in the United States; 

(ii) any estate of which any professional fiduciary acting as executor or administrator is a US person, if (A) an 

executor or administrator of the estate who is not a US person has sole or shared investment discretion with 

respect to the assets of the estate, and (B) the estate is governed by non-US law; (iii) any trust of which any 

professional fiduciary acting as trustee is a US person, if a trustee who is not a US person has sole or shared 

investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is 

revocable) is a US person; (iv) an employee benefit plan established and administered in accordance with the law 

of a country other than the United States and customary practices and documentation of such country; (v) any 

agency or branch of a US person located outside the United States if (A) the agency or branch operates for valid 

business reasons, and (B) the agency or branch is engaged in the business of insurance or banking and is 

subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located; and 

(vi) certain international organisations as specified in Rule 902(k)(2)(vi) of Regulation S, including their agencies, 

affiliates and pension plans. 

2. It and the person, if any, for whose account it is acquiring the Shares are Non-United States persons as defined 

in CFTC Rule 4.7(a)(1)(iv). Under CFTC Rule 4.7(a)(1)(iv) “Non-United States person” means: 

(A) 

(B) 

(C) 

(D) 

(E) 

a natural person who is not a resident of the United States or an enclave of the US government, its 

agencies or instrumentalities; 

a partnership, corporation or other entity, other than an entity organised principally for passive 

investment, organised under the laws of a non-US jurisdiction and which has its principal place of 

business in a non-US jurisdiction; 

an estate or trust, the income of which is not subject to United States income tax regardless of source; 

an entity organised principally for passive investment such as a pool, investment company or other 

similar entity; provided, that units of participation in the entity held by persons who do not qualify as 

Non-United States persons or otherwise as qualified eligible persons, as defined in CFTC Rule 4.7(a)(2) 

or (3), represent in the aggregate less than 10 per cent. of the beneficial interest in the entity, and that 

such entity was not formed principally for the purpose of facilitating investment by persons who do not 

qualify as Non-United States persons in a pool with respect to which the operator is exempt from 

certain requirements of Part 4 of the Commission’s regulations by virtue of its participants being 

Non-United States persons; or 

a pension plan for the employees, officers or principals of an entity organised and with its principal 

place of business outside the United States. 

3. The Shares have not been and will not be registered under the US Securities Act or with any state securities 

regulatory authority in the United States and may not be offered, resold, pledged or otherwise transferred except 

to (i) the Company (upon redemption of such Shares or otherwise) or (ii) in an offshore transaction in accordance 

with Rule 903 or Rule 904 of Regulation S. 

4. The Company has not registered and will not register under the US Investment Company Act and the Company 

has put in place restrictions for transactions not involving any public offering to ensure that the Company is not 

required and will not be required to be registered under the US Investment Company Act. 

5. It understands that each Share certificate will contain a legend substantially to the following effect unless 

otherwise agreed by the Company and the holder of the Share in accordance with applicable law: 

The Company has not been and will not be registered under the United States Investment Company Act of 1940, as 

amended (the “US Investment Company Act”). In addition, the Shares have not been and will not be registered 

under the United States Securities Act of 1933, as amended (the “Securities Act”). Each holder agrees for the 

benefit of the issuer, any distributors or dealers and any such persons’ affiliates that these shares may be offered, 

resold, pledged or otherwise transferred only (a) to the issuer (upon redemption of such shares or otherwise) or 

(b) in an offshore transaction to non-US Persons in accordance with Rule 903 or 904 of Regulation S. The holder 

acknowledges that the issuer reserves the right to make enquiries of any holder of these shares or interests 

therein at any time as to such persons’ status under the US securities laws and to require any person that has not 

satisfied the issuer that such person is holding the shares or interests therein appropriately under the US 

securities laws to transfer such shares or interests therein immediately to the issuer or otherwise. The holder 

agrees to, and each subsequent holder is required to, notify any purchasers of these shares of the transfer 

restrictions referred to above. 

6. It is not, and is not holding on behalf of, an employee benefit plan (as described in Section 3(3) of the US 

Employment Retirement Income Security Act of 1974 (“ERISA”)), other than a plan maintained outside the United 

States and described in Section 4(b)(4) of ERISA. 

7. It is purchasing the Shares for its own account or for one or more investment accounts for which it is acting as a 

fiduciary or agent, in each case for investment only, and not with a view to or for sale or other transfer in 

43

connection with any distribution of the Shares in any manner that would violate the US Securities Act, the US 

Investment Company Act or any other applicable securities laws. 

8. It has received (outside the United States), carefully read and understands this Prospectus, and has not 

distributed, forwarded, transferred or otherwise transmitted this Prospectus or any other presentation or 

offering materials concerning the Shares to any persons within the United States or to any US Persons, nor will it 

do any of the foregoing and that it understands that this Prospectus is subject to the requirements of the 

Prospectus Directive and all rules promulgated thereunder and the information therein, including any financial 

information, may be materially different from the disclosure that would be provided in a US offering. 

9. It agrees that it will inform each subsequent purchaser of the Shares from it of these transfer restrictions and 

that if in the future it decides to offer, resell, pledge or otherwise transfer such Shares, any offer, resale or 

transfer will be made in compliance with the US Securities Act, the US Investment Company Act and any 

applicable US securities laws. 

10. (i) At the time the Shares are acquired, it is not an affiliate of the Company or a person acting on behalf of such 

an affiliate; and (ii) it is not acquiring the Shares for the account of an affiliate of the Company or of a person 

acting on behalf of such affiliate. 

11. It acknowledges that the Company reserves the right to make inquiries of any holder of the Shares or interests 

therein at any time as to such person’s status under US securities laws, and to require any such person that has 

not satisfied the Company that such person is holding appropriately under US securities laws to transfer such 

Shares or interests immediately under the direction of the Company. 

12. It acknowledges that the Company may receive a list of participants holding positions in its securities from one or 

more book-entry depositories. 

13. The Company may require a certification from the transferee in support of any transfer, in form and substance 

satisfactory to the Company and agrees that the Company, the Registrar or any transfer agent may reasonably 

require additional evidence or documentation supporting compliance with applicable securities laws and prior to 

the registration of any transfer the Directors may require of a proposed transferee or transferor such 

certifications, notifications, agreements and warranties and legal opinions of duly qualified counsel as they may 

reasonably require (including but not limited to that the transferees are not US Persons as defined in this 

Prospectus) to ensure the proposed transferee would be entitled to hold the same in accordance with these 

provisions and that all applicable laws will be or would have been complied with. 

14. It is entitled to subscribe for the Shares comprised in the Offer under the laws of all relevant jurisdictions which 

apply to it, that it has fully observed such laws and obtained all governmental and other consents which may be 

required thereunder and complied with all necessary formalities and it has paid any issue, transfer or other 

taxes due in connection with its acceptance in any jurisdiction and that it has not taken any action or omitted to 

take any action which will or may result in the Global Co-ordinator or the Company or any of their respective 

directors, officers, agents, employees or advisers acting in breach of the legal and regulatory requirements of 

any jurisdiction in connection with the Offer or its acceptance of participation in the Offer. 

15. The Company, the Global Co-ordinator, the Registrar, any transfer agent, any distributors or dealers or their 

affiliates and others will rely upon the truth and accuracy of the foregoing representations, acknowledgements 

and agreements and agrees that if any of the acknowledgements, representations or agreements made by it are 

no longer accurate or have not been complied with, it will immediately notify the Company and, if it is acquiring 

any Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion 

with respect to each such account and that it has full power to make such foregoing acknowledgements, 

representations and agreements on behalf of each such account. 

44

PART 1 

THE COMPANY 

INTRODUCTION 

The Company is a newly-formed Jersey incorporated and registered closed-ended investment company with an 

investment objective to generate absolute returns in excess of the yields on short-term LIBOR securities, while 

endeavouring to minimise the corresponding level of volatility. The Company has been established with an unlimited life 

and its Board of Directors is independent of the Investment Manager. 

INVESTMENT POLICY 

Investment Objective 

The Company’s investment objective will be to generate absolute returns in excess of the yields on short-term LIBOR 

securities, while endeavouring to minimise the corresponding level of volatility. The Company will seek to generate these 


Asset Allocation 



Strategies (“ARS”) include non-traditional investment strategies that utilise a variety of securities and financial 

instruments and employ sophisticated trading and portfolio management techniques, and comprise “Relative-Value”, 

“Event-Driven”, “Fundamental Long-Short” and “Direct Sourcing” disciplines. 

To participate in the returns generated by these External Investment Advisors, the Company may: (1) invest in collective 

entities managed by such External Investment Advisors, such as partnerships, limited liability companies, investment 

funds, common trusts and similar collective entities (“Collective Investment Vehicles”); (2) invest in derivative instruments 

or participate in contractual relationships (including swaps, options, forwards, notional principal contracts or other similar 

financial instruments) whereby any associated payments or receipts may be based on some or all of the change in value of 

one or more Collective Investment Vehicles; or (3) delegate investment authority over the relevant portion of its assets to 

External Investment Advisers (by establishing separate discretionary accounts to be managed by such External 

Investment Advisors or other forms of investment discretion delegation) ((1), (2) and (3) together being referred to as 

“Fund Investments”). The Company may also make direct investments in a wide range of securities, financial instruments 

or non-traditional structures (including any new financial instruments or structures which may be developed in the future) 

that provide exposure, typically, to single positions, for example through co-investments with an External Investment 

Advisor in single positions, bridge loans or other financings related to a Fund Investment (“Direct Investments”). 

The Company may invest in Fund Investments or Direct Investments alongside other BlackRock managed funds of hedge 

funds via conduit funds. The allocation of any Fund Investment or Direct Investment held by a conduit fund between the 

various BlackRock funds of hedge funds will be determined by the Investment Manager. 

Through its investment in Fund Investments and Direct Investments, the Company may invest in a wide variety of 

securities and financial instruments. These securities and financial instruments may or may not be publicly traded and 

may include shares, units, bonds, debentures, notes, preferred or preference stock, common stock, certificates of 

beneficial interest, participations, warrants, partnership interests, currencies, certificates of deposit, repurchase and 

reverse repurchase agreements, swap agreements, notional principal contracts, cap, collar and floor agreements, voting 

trust certificates, put and call options, commodity or spot commodity contracts, forward or future contracts or any option 

with respect thereto, and such other new or modified financial instruments as may be developed and introduced from 

time to time. 

Diversification 






Borrowings 

The Company may employ borrowings of up to 25 per cent. of its Net Asset Value at the time of borrowing, which may be 

used for short-term liquidity purposes and to fund share buy-backs and redemptions. 

Investment Restrictions 

The Company will not allocate more than 15 per cent. of its Net Asset Value, measured at cost at the time of investment 

(based on information received at that time), to any single Fund Investment. In the normal course, however, it is expected 


45



The foregoing investment restrictions (which will not apply to investments in cash or other cash equivalent investments) 

will be monitored on a quarterly basis, and the portfolio may be adjusted as deemed appropriate by the Investment 

Manager. To the extent the Company pursues its investment programme through indirect or synthetic exposure to 

Absolute Return Strategies (such as through derivative financial instruments), such investment restrictions will be 

measured with respect to the investments underlying such indirect or synthetic investments. Accordingly, the Company is 

not limited as to a percentage of its assets that may be committed to the derivative financial instruments through which 

the Company achieves such indirect or synthetic exposure to Absolute Return Strategies. 



CHANGES TO THE INVESTMENT POLICY 

Any material change to the Company’s investment policy will be made only with the approval of Shareholders. 


BlackRock Financial Management Inc., a Delaware corporation, serves as the Company’s investment manager. The 

Company will be managed through its business unit, BlackRock Alternative Advisors (“BAA”), which is responsible for 

investment management decisions, the selection of External Investment Advisors and the determination of the structure 

or method of investing in a Fund Investment or Direct Investment. The Investment Manager is registered as an investment 

adviser with the SEC. 

The Directors believe that the principal advantages of an investment in the Shares of the Company are as follows: 

• Strong performance track record in a variety of challenging market conditions — from inception in August 1995 to 

31 December 2007, the investment strategy to be used in managing the Company’s assets has never ended a year 

with a negative return and has delivered 12.7 per cent. annualised net performance, with a 3.5 per cent. standard 

deviation, a Sharpe Ratio greater than 2.0 and a beta to the FTSE All Share Index of 0.11. For further information see 

“Historical Track Record of the Investment Manager” below. 

• Established investment manager — BAA has a track record of more than 12 years and provides an experienced and 


• Alignment of incentives — BAA’s employees currently have invested or committed to invest, directly or indirectly, in 

excess of US$400 million across the ARS, private capital and hybrid strategy funds managed by BAA. 

• Access to External Investment Advisors — BAA has developed long-standing relationships and gained the respect of 

many External Investment Advisors and believes these relationships afford it a relative advantage in accessing 

talented External Investment Advisors. 

• History of innovation — BAA’s depth of knowledge and a broad network of industry contacts facilitate early 

identification and pursuit of investment themes. 

• Risk management and proprietary tools — BAA conducts ongoing risk assessment and External Investment Advisor 



facilitates a subjective, qualitative approach to External Investment Advisor evaluation and selection, features 

analytical tools that support qualitative and quantitative analysis. 

• Advanced process engineering — BAA has developed a comprehensive technology platform that supports the 

information-intensive nature of alternative investment fund of funds management. BAA’s proprietary technology has 

been developed to facilitate the conversion of large amounts of data into more useful information, the 

institutionalisation of knowledge and an integration of systems and processes. 

• Attractive fund structure — the closed-ended nature of the Company will provide greater flexibility to invest in 

attractive but less liquid Fund Investments than would be likely to be the case with an open-ended vehicle. Shares 

will be offered in three currency classes (denominated in US Dollars, Sterling and Euro) with at least quarterly 

conversions between currency classes permitted. 

• Discount control — the Company, the Investment Manager and its affiliates will have the ability to purchase Shares in 

the secondary market at any time the Shares trade at a discount to NAV. In addition, the Company will consider 

commencing a share buy-back programme if the Shares should trade at or below 95 per cent. of NAV. Furthermore, 

at the discretion of the Directors, the Company expects to have a Redemption Facility pursuant to which the 

Shareholders would have the opportunity periodically to redeem some or all of their Shares (subject to certain 

restrictions including a maximum redemption on any Redemption Date of 20 per cent. of the Shares of any class then 

in issue) at Net Asset Value less costs. Further details of the Redemption Facility are set out under “Redemption 

Facility” below. 

46

• The Manager will bear all fees and expenses payable in respect of the Offer — all fees and expenses payable in respect 

of the Offer (including all costs related to the establishment of the Company) will be borne by the Manager or its 

affiliates (save if the Management Agreement is terminated in certain circumstances) such that the gross proceeds of 

the Offer, net of the Company’s short-term working capital requirements, will be available to the Company for 

investment following Admission. 

TARGET RETURN 

The Company aims to generate a target net return of approximately 3-month LIBOR plus 6 per cent. per annum with a 

standard deviation of 8 per cent. Targets are not predictions or projections. 

Past or targeted performance is no indication of current or future performance or results. Return figures are targets only 

and are based over the long term. 

There is no guarantee that the target return of the Company can be achieved and it should not be seen as an indication 

of expected or actual return. Accordingly, investors should not place any reliance on such a return target in deciding 

whether to invest in Shares. 

Furthermore, the future performance of the Company may be materially detrimentally affected by the risks discussed in 

the section of this Securities Note headed “Risk Factors”. 




3.5 per cent. standard deviation, a Sharpe Ratio of approximately 2.0 and a beta to the FTSE All Share Index of 0.11. See 

“Important Information” below. 

Performance Comparison and Summary for the Period Ended 31 December 2007 — Annualised Since Inception 

Return Std. Dev. Sharpe Correl. 

QARS3-I Global (GBP blended-net) ................................. 12.7% 3.5% 2.06% 1.00 

FTSE All-Share Index (GBP) ....................................... 8.5% 12.8% 0.23 0.40 

ML GBP-3 Month LIBOR (GBP) ..................................... 5.6% 0.4% — 0.11 

QARS3-I Global (USD blended-net) ................................. 11.5% 3.6% 2.08 1.00 

S&P 500 Index (USD) ............................................. 9.9% 14.4% 0.41 0.42 

MSCI World Index (USD) .......................................... 8.4% 13.5% 0.32 0.44 

ML-T-Bills (USD) ................................................ 4.0% 0.5% — 0.31 

HFRI Conservative Index (USD) ..................................... 8.1% 3.3% 1.22 0.78 

1-Year 

Annualised 

3-Year 

Annualised 

5-Year 

Annualised 

10-Year 

Annualised 

QARS3-I Global (GBP blended-net) ................................. 12.8% 10.0% 10.3% 11.3% 

FTSE All-Share Index (GBP) ....................................... 5.6% 14.9% 15.8% 6.6% 

ML GBP-3 Month LIBOR (GBP) ..................................... 5.9% 5.2% 4.8% 5.3% 

QARS3-I Global (USD blended-net) ................................. 12.6% 9.7% 8.9% 10.0% 

S&P 500 Index (USD) ............................................. 5.5% 8.6% 12.8% 5.9% 

MSCI World Index (USD) .......................................... 9.0% 12.8% 17.0% 7.0% 

ML-T-Bills (USD) ................................................ 4.7% 4.4% 3.1% 3.7% 

HFRI Conservative Index (USD) ..................................... 7.7% 7.3% 7.4% 6.5% 

For the period ended 31 December 

2008* 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 

QARS3-I Global (GBP blended-net) . . . (0.5)% 12.8% 10.9% 6.5% 9.0% 12.6% 6.4% 8.0% 19.8% 22.8% 5.2% 

FTSE All-Share Index (GPB) ......... (7.9)% 5.6% 17.1% 22.6% 13.3% 21.3% -22.3% -12.9% -5.6% 24.4% 14.7% 

ML GBP 3-Month LIBOR (GBP) ...... 1.0% 5.9% 4.7% 4.9% 4.5% 3.8% 4.1% 5.6% 6.3% 5.7% 7.9% 

QARS3-I Global (USD blended-net) . . . (0.6)% 12.6% 11.7% 4.8% 5.8% 10.0% 4.1% 6.9% 20.1% 22.5% 3.1% 

S&P 500 Index (USD) ............... (9.0)% 5.5% 15.8% 4.9% 10.9% 28.7% -22.1% -11.9% -9.1% 21.0% 28.6% 

MSCI World Index (USD) ............ (8.2)% 9.0% 20.1% 9.5% 14.7% 33.1% -19.9% -16.8% -13.2% 24.9% 24.3% 

ML T-Bills (USD) .................. 0.4% 4.7% 5.1% 3.4% 1.4% 1.1% 1.7% 3.6% 6.4% 5.0% 5.2% 

HFRI Conservative Index (USD) ...... (0.8)% 7.7% 9.2% 5.1% 5.8% 9.0% 3.6% 3.1% 5.8% 18.9% -1.6% 

Source: QARS3-I Global (GBP blended-net)/ QARS3-I Global (USD blended-net) — BlackRock (unaudited). Indices as noted under 

the heading “Definitions”. 

* Estimated performance for 1 January 2008 to 29 February 2008 — See “Important Information” below. 

IMPORTANT INFORMATION 

The Prospectus contains performance track record and portfolio composition data relating to Q-BLK ARS III — Institutional, Ltd. 

(“QARS3-I”) and its predecessor funds, each of which has a substantially similar investment objective and strategy to that of the 

Company and seeks to generate a total annualised net return of 6 per cent. above the annual yield for 90-day US Treasury Bills, 

with an 8 per cent. annualised standard deviation. In comparing QARS3-I’s performance relative to its objectives, it should be 

noted that QARS3-I’s risk and return objectives were lowered as of 1 August 2005. 

In considering such performance track record data, potential investors in the Company should note that although the Company, 

QARS3-I and its predecessor funds have substantially similar investment objectives and strategies and may initially have similar 

47

portfolios, the portfolios and performance of the Company, QARS3-I and its predecessor funds may differ over time due to cash 

flows and other investment considerations and guidelines, including underlying fund capacity and liquidity characteristics. 

Historic returns of QARS3-I and its predecessor funds are not a guarantee of future performance of the Company. In any event, 

past performance is not a guide to future performance. Historically, funds of funds and hedge funds have produced gains and 

losses due to changes within the equity, interest rate, credit, currency, commodity and related derivative markets. Additionally, 

gains and losses are impacted to varying degrees by investment acumen, market volatility, corporate activity, securities 

selections, regulatory oversight, trading volume and money flows. These elements and/or their rate of change may not be present 

in the future, and thus future performance may be impacted. Any investment in a fund involves a high degree of risk. 

Inclusion of information concerning QARS3-I in this Prospectus does not constitute an offer or a solicitation to purchase its 

shares, which shares can only be purchased by qualified investors by way of QARS3-I’s Confidential Private Offering 

Memorandum. 

The information concerning the investment strategy to be used in managing the Company’s assets under the headings “Historical 

Track Record of the Investment Manager” and “Investment Highlights — Strong performance track record in a variety of 

challenging market conditions” is based on QARS3-I Global (GBP blended — net). 

QARS3-I — Global (USD Blended — net) performance represents the weighted average gross performance (net of expenses other 

than management and performance fees) of Q-BLK Appreciation Fund, L.P. and Q-BLK Appreciation Fund, Inc. (prior to 1 April 

1998), Q-BLK Strategic Partners, Inc. (from 1 April 1998 to 31 October 2001) and QIP, Ltd. (from 1 November 2001 to 31 July 2004) 

(all of which have substantially similar investment objectives and strategies as the Company) and QARS3-I (from 1 August 2004 to 

31 December 2007) (together the “Track Record Funds”). The gross returns are then adjusted to reflect the management fee 

(equal to 1 per cent. per annum of net asset value) and the performance fee (equal to 10 per cent. of any appreciation in net asset 

value (after deduction of the management fee and subject to a high watermark) payable in respect of QARS3-I to its investment 

manager (the “QARS3-I Fees”). Certain of the Track Record Funds may offer share classes denominated in a non-US currency 

which are not included in the calculation of such Track Record Funds’ performance; these share classes generally incur 

additional expenses to hedge against the US Dollar. All performance numbers are estimates calculated on an accrual basis 

during the accounting close process for the Track Record Funds and are based on estimated returns provided by each underlying 

fund manager. These calculations are based on estimated returns rather than final reported information in order to provide timely 

performances return information to investors. As a result, the performance numbers shown may differ from performance 

numbers based on the final financial information for each underlying fund. For the monthly returns in January and February 2008, 

performance is calculated based on estimates provided by underlying managers to the extent available for reporting on the fifth 

business day of the following month. If no estimate is available from a small number of underlying funds, a return of zero for the 

month is assumed. Actual returns may be higher or lower once the Fund Investment statements are ultimately received and 

reconciled. QARS3-I is audited annually (and since June 2007, semi-annually) by an independent public accounting firm. 

Therefore, the performance information presented herein will contain unaudited net asset value information for periods that have 

not yet been audited. Performance results reflect the inclusion of all realised and unrealised gains and losses and the 

reinvestment of earnings. Risk is computed as the annualised standard deviation of monthly returns. For this share class, the 

Sharpe Ratio measures the return earned over 3-Month US Treasury Bills per unit of risk taken. 

QARS3-I — Global (GBP Blended — net) is a share class that was first issued on 1 March 2006. For periods prior to 1 March 2006, 

performance for this share class is that of the Track Record Funds noted for QARS3-I — Global (USD Blended — net) and 

converted to GBP using relevant one month GBP/USD spot rates and then using forward rates to hedge currency risk, each as 

supplied by Bloomberg L.P. In addition, neither the costs of currency hedging nor any potential profits on hedging have been 

included in the performance calculation. Following the 1 March 2006 launch of the GBP denominated share class, actual 

performance includes hedging costs. For the period from 1 March 2006 to 31 December 2007, QARS3-I — Global (Blended — net) 

(GBP) represents the actual performance of the GBP denominated share class in QARS3-I, including hedging costs. For this share 

class, the Sharpe Ratio measures the return earned over ML GBP 3-Month LIBOR per unit of risk taken. 

In considering the performance track record data relating to the Track Record Funds, potential investors in the Company should 

bear in mind that the manager of the Company will receive from the Company a Management Fee equal to 1.5 percent. per 

annum of the net asset value of the Company (which is greater than the 1 per cent. management fee applicable to QARS3-I) and a 

Performance Fee equal to 10 per cent. of any appreciation in the Net Asset Value of the Company (after deduction of the 

Management Fee and subject to certain adjustments as described in more detail in this Part 1 under the heading “Fees and 

Expenses — Fees Payable to the Manager — Performance Fee”) subject to a high watermark. 

Performance information was prepared by BFM based on information believed to be reliable. However, no assurance of its 

completeness or accuracy can be made. Fund investments are categorised among disciplines, strategies or geographic 

allocations by BFM in accordance with its internal definitions. Minor variances in column, row and sectional totals are the result 

of rounding and have been allowed to maintain the integrity of the underlying financial data. 

Index performance is taken from Bloomberg Financial Markets or the index’s proprietary website and is included for comparison 

only, and, although useful for general observations, differences between the composition and construction of such indices and the 

Track Record Funds’ portfolios may limit their usefulness for direct comparisons. For example, it should be noted that hedge fund 

indices will vary, in some cases significantly, from the composition of the Track Record Funds’ portfolios in terms of the number 

of positions, types of hedge fund strategies included and distribution within such hedge fund strategies and other characteristics. 

Comparison of the Track Record Funds’ results to indices that represent asset classes other than hedge funds or funds of hedge 

funds are further limited by the significant inherent differences among such asset classes, for example in terms of risk/return, 

correlations and other characteristics. Moreover, index information may or may not reflect the deduction of fees and expenses 

(refer to specific definitions), which could further limit the comparative value of such information relative to the Track Record 

Fund data. 

48

Characteristics of securities included within the indices are subject to change between rebalancing periods. These characteristics 

are applicable when securities are evaluated at rebalancing points but may be higher or lower during interim periods. 

Additionally, index providers may have varying methodologies for measuring and implementing constituent changes and differing 

rebalancing periods. 

PORTFOLIO CHARACTERISTICS 

The information below relates to the composition of QARS3-I’s portfolio as at 1 January 2008. Although the Company and 

QARS3-I have substantially similar investment objectives and strategies and initially may have similar portfolios, the 

portfolios of the Company and QARS3-I may differ over time due to cash flows and other investment considerations and 

guidelines, including underlying fund capacity and liquidity characteristics. 

Investment Allocation as of 1 January 2008 

Discipline and strategy 

Volatility 

Statistical 

Rates 

1.7% 

2.7% 

5.0% 

Convergence 14.1% 

Capital 

Structure 

6.1% 

0 10 20 30 40 

% 

Relative-Value 29.7% 

Distressed 

Merger/ 

Acquisition 

6.7% 

16.0% 

Corporate 

Actions 

8.9% 

0 10 20 30 40 

% 

Event-Driven 31.6% 

Credit 

Equity Active 

Value 

Equity 

Selection 

2.8% 

6.7% 

18.2% 

0 10 20 30 40 

% 

Fundamental Long/Short 27.8% 

Insurance 

Real Estate 

Structured 

Equity 

Lending 

1.6% 

1.6% 

1.6% 

6.2% 

0 10 20 30 40 

% 

Direct Sourcing 11.0% 

Geographic Allocation as of 1 January 2008 

Western 

Europe 23.1% 

As at 1 January 2008 

Number of Investment Holdings 45 

Percentage Held by Top 15 Investment Holdings 56.4% 

Appreciation Strategy AUM 

US$10.8 billion 

Developed 

Asia 9.5% 

Emerging 

Markets 12.9% 

North America 

54.6% 

INVESTMENT PHILOSOPHY OF ABSOLUTE RETURN STRATEGIES 

One of the distinguishing features of Absolute Return Strategies is their focus on absolute performance objectives, as 

compared with more traditional investment programmes that tend to measure performance on a relative basis. As a 

result of this focus on absolute performance objectives, Absolute Return Strategies seek to generate returns that are 

uncorrelated with traditional performance benchmarks and seek to achieve positive returns even in declining market 

conditions. 

Absolute Return Strategies include investment strategies that utilise a variety of securities and financial instruments and 

employ trading and portfolio management techniques that can differ markedly from traditional investments. A 

distinguishing characteristic of Absolute Return Strategies is their flexibility to use the full range of investment tools and 

techniques, including leverage and derivatives, to seek to reduce risk and enhance returns. This flexibility sharply 

contrasts with traditional investment strategies, which may be subject to rigid investment constraints and restrictions. 

The Company anticipates allocating assets to four primary disciplines of Absolute Return Strategies: the Relative-Value 

Discipline, the Event-Driven Discipline, the Fundamental Long-Short Discipline and the Direct Sourcing Discipline, each of 

which can be further divided into a number of strategies, as shown in the diagram and described in more detail below. No 

assurance can be given that the Company’s investment objective will be achieved. 

49

Absolute Return Strategies 

Disciplines 

Relative Value 

Event Driven 

Fundamental 

Long / Short 

Direct Sourcing 

Strategies 

Capital 

Structure 

Distressed 

Equity Selection 

Lending 

Convergence 

Mergers/ 

Acquisitions 

Equity Active 

Value 

Equity Financing 

Rates 

Corporate 

Actions 

Credit 

Real Estate 

Statistical 

Insurance 

Volatility 

Relative-Value Discipline 

Investment strategies within the Relative-Value Discipline seek to profit from the mispricing of related financial 

instruments. Managers pursuing this discipline utilise quantitative and qualitative analysis to identify securities or spreads 

between securities that deviate from their theoretical fair value and/or historical norms. Relative Value strategies seek to 

profit if and when a particular instrument or spread returns to its theoretical fair value and generally avoid taking a 

directional bias with regard to the price movement of a specific company or market. Investment strategies within the 

Relative-Value Discipline include: capital structure strategies that focus on instruments issued by a single entity; 

convergence strategies such as convertible and basis arbitrage; rates strategies such as yield curve and swap spread 

positions; statistical strategies that exclusively utilise quantitative models to identify attractive positions; and volatility 

strategies such as positions across maturity and strike of a single issuer. 

To concentrate on capturing these mispricings, Relative Value strategies often attempt to eliminate exposure to general 

market risks so that profits may be realised if and when the securities or instruments converge toward their theoretical 

fair value. This strategy will typically attempt to isolate a specific mispricing by holding both long and short positions in 

related securities. In many cases, investment strategies within the Relative-Value Discipline will seek to hedge exposure 

to risks such as price movements of underlying securities, market interest rates, non-US currencies and the movement of 

broad market indices. 

Event-Driven Discipline 

Investment strategies within the Event-Driven Discipline concentrate on companies that are, or may be, subject to 

extraordinary corporate events such as restructurings, takeovers, mergers, liquidations, bankruptcies or other corporate 

actions. Investment strategies within the Event-Driven Discipline include: mergers/acquisitions strategies, including 

friendly and unfriendly takeovers; distressed strategies, including debt, equity or other obligations of distressed or 

bankrupt companies; and other corporate activity such as spin-offs, litigation, liquidations and share repurchases. The 

prices of securities of the companies involved in these events are typically influenced more by the dynamics of the 

particular event or situation. For example, the result and timing of factors such as legal decisions and deal negotiations 

play a key element in the success of any Event-Driven Discipline. Typically, these strategies rely on fundamental research 

that extends beyond the evaluation of the issues affecting a single company to include an assessment of the legal and 

structural issues surrounding the extraordinary event or transaction. In some cases, such as corporate reorganisations, 

the relevant External Investment Advisor may actually take an active role in determining the event’s outcome. 

The goal of the investment strategies within the Event-Driven Discipline is to profit when the price of a security changes to 

reflect more accurately the likelihood and potential impact of the occurrence, or non-occurrence, of the extraordinary event. 

Fundamental Long-Short Discipline 

Investment strategies within the Fundamental Long-Short Discipline involve buying and/or selling a security or financial 

instrument believed to be significantly under-priced or over-priced by the market in relation to its potential value. 

Investment strategies within the Fundamental Long-Short Discipline include: long and short equity-based or credit-based 

strategies that emphasise a fundamental valuation framework; and activist strategies where an active role is taken to 

enhance corporate value. 

50

Fundamental Long-Short managers typically employ fundamental analysis which evaluates the underlying determinants 

that affect the price of securities. Factors within such analysis include both microeconomic and macroeconomic variables 

that can influence the price of a given security or set of securities. Many investment strategies within the Fundamental 

Long-Short Discipline will incorporate elements of both fundamental and technical analysis. The actual research process 

can be based on a bottom-up approach that first examines the factors affecting a single company or marketplace, or a 

top-down approach that first analyses the macroeconomic trends affecting a market or industry. 

Direct Sourcing Discipline 

Investment strategies within the Direct Sourcing Discipline seek to profit from the increasing disintermediation of the 

financial services sector by entering into direct transactions with corporations, other institutions or individuals. The goal of 

the Direct Sourcing Discipline is to garner profits from areas of the market that are under-served by larger financial 

institutions. Investment strategies within the Direct Sourcing Discipline include: lending strategies including corporate 

and asset-backed loans; equity financing strategies such as private investment in public equity positions; real estate 

strategies; and insurance underwriting strategies. 

Typically, these strategies rely on an External Investment Advisor’s ability to source privately-structured deals, as well as 

fundamental research specific to each respective deal. Direct Sourcing deals may offer more attractive terms than similar 

investments available through financial intermediaries or through public markets. However, Direct Sourcing investments 

may also exhibit more limited liquidity and other risk relative to publicly-sourced investments. 

THE USE OF EXTERNAL INVESTMENT ADVISORS 

The Company seeks to generate investment returns primarily by participating in Absolute Return Strategies through 

investment in Fund Investments that are managed by a diverse group of External Investment Advisors. The Investment 

Manager believes that relying on multiple investment managers is a prudent way to seek to achieve the Company’s 

investment objective because the Investment Manager believes that it is unrealistic to assume that a single investment 

manager will have the resources or expertise to efficiently exploit the many worthwhile opportunities. By assembling this 

portfolio of External Investment Advisors, the Company should be able to participate with investment managers who the 

Investment Manager believes have distinct expertise. 

Manager Identification 

The first step in a multi-manager investment approach is to identify the universe of potential investment managers. 

Manager identification requires a substantial proactive effort due, in part, to the industry’s regulatory structure. Further, 

the best investment managers are often the most difficult to identify, since they are usually adequately capitalised and 

tend to focus on performance-related issues rather than marketing. To avoid any adverse selection bias, the Investment 

Manager does not rely exclusively on published databases or other information provided by marketing personnel. The 

Investment Manager seeks out and approaches ARS managers and potential ARS managers, and identifies all types of 

industry participants (investment managers, proprietary traders and investment service providers). 

The manager identification process is broadened to search actively for External Investment Advisors who fall under the 

category of “Emerging Investment Advisors”. This category of investment manager refers to those individuals who are in 

the process of establishing or have recently established their own investment firms. Generally, these managers have 

excelled on a proprietary trading desk, with another investment boutique, or as part of an institutional money 

management firm, and have elected to pursue similar activities independently. Identifying Emerging Investment Advisors 

is considerably more difficult since they are often associated with organisations that do not allow direct investment of 

outside capital. The Investment Manager believes that this expanded universe of potential managers will enable the 

Company to better pursue its investment objective. 

Manager Evaluation 

Manager evaluation focuses on the existence and sustainability of an External Investment Adviser’s investment edge, 

which provides the Investment Manager with the basis for its evaluation decisions. The Investment Manager’s ability to 

analyse and assess this investment edge is supported by: 

• an information system utilised to monitor qualitative and quantitative information about External Investment Advisors; 

• experience in the evaluation of investment decision making, research files, risk management, back-office systems 

and human resource staffing; 

• portfolio management experience in the markets and instruments utilised by the External Investment Advisors, as 

well as experience in managing multi-manager funds; and 

• an ongoing dialogue with other market participants. 

Evaluation of a manager’s investment edge is analogous to uncovering its competitive advantage. An investment edge 

might be created by the use of superior proprietary quantitative models, favourable operational cost advantages, superior 

market knowledge or the lack of formidable competition. Examining an External Investment Advisor’s current and future 

edge reduces or eliminates the need to rely on historical performance as the primary criteria for selecting or terminating 

managers. If the Investment Manager believes that changes within an External Investment Advisor’s organisation or 

51

changes in the capital markets inhibit or eliminate exploitation of the External Investment Advisor’s investment edge, the 

Investment Manager will seek to liquidate the particular Fund Investment, subject to the governing documents of such 

Fund Investment relating to redemptions or other structural terms of the Fund Investment. 

The existence of an investment edge, whether qualitative or quantitative, is not the sole determinant for allocating money 

to an External Investment Advisor. Ultimately, the task of managing money lies with people. The Investment Manager 

believes that there is no substitute for knowing the people associated with an External Investment Advisor and evaluating 

their underlying motivation, commitment, experience and integrity. Additionally, it is important to understand the 

accounting, operational and administrative controls which an External Investment Adviser has in place. 

The primary emphasis of the evaluation process is to form an opinion of an External Investment Advisor’s investment edge 

and personal character and to determine whether these can add value in the form of superior risk-adjusted returns. This 

evaluation is conducted by the Investment Manager through on-site visits, analysis of investments and/or discussions with 

the investment personnel associated with an External Investment Advisor and by maintaining a dialogue with independent 

academic and financial industry specialists worldwide. 

In addition, when evaluating External Investment Advisors, there are certain business standards that are sought in each 

External Investment Advisor. Generally, the Company will seek to allocate its assets to External Investment Advisors who: 

• invest substantial personal assets in the Absolute Return Strategy being pursued on behalf of the Fund Investment or 

have significant personal career and financial risk associated with their investment management activities; 

• utilise an investment fee that is dependent on investment performance; 

• provide annual audited financial statements from an independent public accountant; 

• devote their primary business activities to investment management and generate the majority of their business 

income from such activities; and 

• have specific and relevant experience managing assets. 

PORTFOLIO STRUCTURING 

General 

The Company will seek to allocate its assets primarily to a diversified group of External Investment Advisors. This process 

is dynamic, reflecting the Investment Manager’s view on the relative attractiveness of different strategies utilised among 

and within the four broad disciplines of ARS in which the Company invests. The allocation process is designed to allow the 

Company to maintain the flexibility to redeploy assets as investment opportunities change. The Company’s specific 

portfolio composition will be influenced by a number of factors, including, but not limited to, the Company’s investment 

guidelines, the Company’s specific terms and conditions and the investment judgment of the portfolio manager assigned 

to the Company by the BAA Investment Oversight Committee (the “Investment Committee”). Specific portfolio structuring 

decisions are affected by factors such as the availability or capacity constraints of potential Fund Investments, structural 

considerations such as the liquidity terms of potential Fund Investments alone or in the aggregate compared to the 

Company’s structural characteristics, the level of fees of potential Fund Investments, and other considerations. Such 

considerations will most likely result in differences in composition and performance among other investment fund 

portfolios or separate accounts managed by the Investment Manager, even when overall investment or performance 

objectives are similar. 


The Investment Manager and its affiliates act and intend to continue to act as investment manager, general partner, 

managing member or in a similar capacity for other investment funds with investment objectives and/or philosophies 

similar to that of the Company (the “ARS Affiliated Funds”). In pursuing the Company’s investment objective and in 

connection with the Company’s diversification guidelines, the Investment Manager may allocate a portion of the 

Company’s capital to direct and indirect investments with such ARS Affiliated Funds. 

The Investment Manager may create one or more conduit funds (together with any ARS Affiliated Funds, the “Affiliated 

Funds”) through which the Company, certain ARS Affiliated Funds and other accounts managed by the Investment 

Manager or its affiliates may invest for the primary purpose of consolidating investments by these accounts into a single 

investment in one or more underlying Fund Investments. Although consolidating the assets of the Company and those of 

other investment funds and accounts managed by the Investment Manager should provide the Company a certain degree 

of efficiency and other potential benefits, there are additional costs and risks associated with an Affiliated Fund or similar 

structure. See “Risk Factors — Risks Relating to the Investment Strategy — Investment in conduit entities”. 







52

these and other factors, the Company may be precluded from making a specific investment or the Investment Manager may 

reallocate existing Fund Investments among Other Clients. Investment allocation decisions will be made by the Investment 

Manager, taking into consideration the respective investment guidelines, investment objectives, existing investments, 

liquidity, contractual commitments or regulatory obligations and other considerations applicable to the Company and Other 

Clients. However, there are likely to be circumstances where the Company is unable to participate, in whole or in part, in 

certain investments to the extent it would participate absent allocation of an investment opportunity among the Company 

and Other Clients. In addition, it is likely that the Company’s portfolio and those of Other Clients will have differences in the 

specific Fund Investments held in their portfolios even when their investment objectives are the same or similar. These 

distinctions will result in differences in portfolio performance between the Company and Other Clients. 

MONITORING AND RISK MANAGEMENT 

A key element in the management of the Company’s portfolio of Fund Investments involves the monitoring and ongoing 

evaluation of External Investment Advisors who may be, or have been, allocated a portion of the Company’s capital. The 

goal of this ongoing analysis is to provide the Investment Manager with information to evaluate an External Investment 

Advisor’s ability to implement its strategy successfully and, when necessary, to adapt its investment programme to 

changes within the financial markets. It is this ongoing evaluation process, and not simply the External Investment 

Advisor’s performance, that will ultimately influence the Investment Manager’s decision as to when it is appropriate to 

maintain, increase or terminate an External Investment Advisor’s allocation. 

HEDGING 

As Fund Investments typically will be denominated in US Dollars, non-US Dollar denominated Shares of the Company will 

be subject to the risk of fluctuations in the exchange rates between the US Dollar and the currency in which such Shares 

are denominated. The Investment Manager generally will seek to hedge the exposure of such non-US Dollar denominated 

Shares against currency fluctuations, but only when suitable hedging contracts, such as currency swap agreements, 

futures contracts, options and forward currency exchange and other derivative contracts, are available in a timely manner 

and on acceptable terms. The profits, losses and expenses of such hedging transactions, if any, will be specifically 

allocated to and paid by the relevant non-US Dollar denominated Shares, rather than the Company as a whole, and will be 

deducted after the calculation of any applicable Management Fee and Performance Fee. Moreover, the Investment 

Manager may determine, in its sole and absolute discretion, not to seek to hedge the currency exposure of redemption 

proceeds payable to a Shareholder, including any Hold-Back Amount (as described below under the section headed 

“Redemption Facility”) following the applicable Redemption Date. In the event the Investment Manager seeks to hedge 

such exposure following the relevant Redemption Date, the profits, losses and expenses of such hedging transactions may 

be deducted from the relevant Shareholder’s redemption proceeds (or charged to the relevant Shareholder’s Hold-Back 

Amount). There can be no assurance that appropriate hedging transactions will be available to the Company or that any 

such hedging transactions will be successful in protecting against currency fluctuations or that the performance of the 

Shares will not be adversely affected by the currency exchange rate exposure. In addition, the Company may concentrate 

its hedging activities with one or a few counterparty(ies) and the Company is subject to the risk that a counterparty may 

fail to fulfill its obligations under a hedging contract. To the extent that a counterparty fails to fulfill its obligations, the 

relevant Share class, and potentially the Company, could suffer loss. 

FEES AND EXPENSES 

Formation and Initial Expenses 

All of the formation and initial expenses of the Company and the fees and expenses incurred in connection with the Offer 

(including all fees, commission and expenses paid to the Bookrunner) will be paid by the Manager or its affiliates. In 

aggregate, it is expected that such fees and expenses will not exceed 2.5 per cent. of the gross proceeds of the Offer, 

assuming the target size for the Offer of US$500 million is achieved. Where the Management Agreement is terminated on 

certain grounds during the period ending on the seventh anniversary of Admission, a proportion of such fees and expenses 

will be reimbursed to the Investment Manager by the Company. The provisions for such reimbursement are summarised 

in Part 4 of this Securities Note. 

Fees Payable to the Manager 


The Management Fee, which will be payable in respect of each class of Shares quarterly in arrear within 90 days of the 

end of each calendar quarter, will be equal to one-fourth of 1.5 per cent. of the Net Asset Value of the relevant class of 

Shares as at the last Valuation Date in the relevant quarter (prior to the deduction of the Management Fee payable in 

respect of that quarter and any accrued Performance Fee). The Management Fee will be calculated prior to any 

adjustments to the Company’s Net Asset Value for the relevant quarter related to the profits, losses and expenses of any 

currency hedging undertaken by the Company. 


In addition, the Company will pay an annual Performance Fee in respect of each class of Shares equal to 10 per cent. of 

the amount, if any, by which the Net Asset Value of such class of Shares (after deduction of the Management Fee payable, 

but before deduction of any Performance Fee accrued, in respect of the relevant period and as adjusted for any increases 

53

or decreases in Net Asset Value arising from issues, repurchases or redemptions of Shares of the relevant class or any 

conversions of Shares from one class to another) as at the last Valuation Date in each 12 month period ending on 

31 December each year and the period from Admission to 31 December 2008 (each a “Calculation Period”) exceeds the 

Reference Amount (as defined below). Any Performance Fee will be payable in arrear within 90 days of the end of each 

Calculation Period and will be calculated prior to any adjustments to the Net Asset Value of the relevant class of Shares 

for the relevant Calculation Period related to the profits, losses and expenses of any currency hedging undertaken by the 

Company. 

With respect to each class of Shares, the Reference Amount shall mean an amount equal to the highest Net Asset Value 

of such class of Shares as at (i) the end of any previous Calculation Period and (ii) the Admission Date. 

The Performance Fee will be payable on both realised and unrealised appreciation. Once a Performance Fee is paid to the 

Manager in respect of a class of Shares, it will not be rebated to the Company or to Shareholders should the Net Asset 

Value of that class of Shares (adjusted as described above) subsequently decline; however, future Performance Fees 

would be paid only in the event that the Net Asset Value of the relevant class of Shares (adjusted as described above) 

again exceeds the highest historical Net Asset Value of the relevant class as at the end of any Calculation Period. 


No management or performance-based fees will be charged to the Company directly or indirectly by any Affiliated Fund in 

which the Company invests. However, the value of the Company’s investments in any Affiliated Fund will be included in the 

calculation and assessment of the Company’s Management Fees and Performance Fees, as described above. 

Ongoing Expenses 

The Company will pay, or reimburse the Manager for, to the extent paid by it or its affiliates on behalf of the Company, all 

operating expenses incurred, paid or accrued by the Company in its ordinary and usual course of business, including, but 

not limited to, interest on borrowed funds, auditing expenses, legal expenses, insurance, licensing, accounting, brokerage 

and other commissions, margin, premium and interest expenses, fees and disbursements of Directors, administrators, 

transfer agents, registrars, custodians, sub-custodians and escrow agents, any expense or professional fees incurred in 

connection with structuring the acquisition or disposition of Fund Investments, and all other investment related expenses. 

The Company also will pay all extraordinary expenses relating to the operation of the Company, including, without 

limitation, litigation or extraordinary regulatory expenses. In addition, to the extent that it invests in an Affiliated Fund, the 

Company, along with each investor invested in such Affiliated Fund, will pay its pro rata share of the expenses of such 

Affiliated Fund, including such Affiliated Fund’s organisational, operating and investment expenses as well as its pro rata 

share of any extraordinary expenses incurred by such Affiliated Fund. Expenses that are common to the various classes of 

Shares of the Company outstanding at any time will be allocated pro rata among such classes, based upon the relative 

Net Asset Value of the Company attributable to each class of Shares as at the beginning of the relevant period; expenses 

that are specific to a particular class of Shares will be allocated to, and borne solely by, that class of Shares. 

The Manager will be responsible for paying from its own assets the fees and expenses of the Investment Manager and the 

Company Secretary. In addition, the Manager may compensate, from its own assets, an affiliate or third party for certain 

other non-advisory services which may be rendered to the Company. 


The Directors intend that all income received by the Company from its investments will be used first to meet the 

Company’s expenses, with the balance being reinvested in accordance with the Company’s investment strategy. 

Consequently, the Company is not expected to declare any dividends with respect to the Shares. This does not, however, 

prevent the Directors from declaring a dividend at any time in the future if the Directors consider payment of a dividend to 

be appropriate in the circumstances. 

GEARING 

The Company may borrow money to finance its short-term liquidity requirements and/or share buy-backs or redemptions 

provided that such borrowings shall be limited to no more than 25 per cent. of the Company’s Net Asset Value at the time 

such borrowings are incurred. The Company expects to agree prior to Admission terms for a credit facility for this 

purpose. 

NAV PUBLICATION AND CALCULATION 

Publication 

The Company currently intends to publish the Net Asset Value per Share of each class on at least a monthly basis. The 

Investment Manager intends to publish an estimated Net Asset Value per Share of each class within ten Business Days 

after the end of each month. The Company will also publish the confirmed Net Asset Value per Share of each class within, 

in normal circumstances, 30 days after the end of each month. All such announcements will be made through a 

Regulatory Information Service. Where the Company publishes the Net Asset Value per Share on a more frequently than 

monthly basis, in the event that an estimated valuation subsequently proves to be incorrect no adjustment will be made 

and no compensation will be payable by the Company. 

54

Calculation 

The Net Asset Value per Share of each class is calculated by dividing (i) the value of the Company’s assets attributable to 

the relevant class less the value of all liabilities attributable to such class by (ii) the total number of Shares of the relevant 

class in issue at the relevant time. In calculating the Net Asset Value per Share of any class that is not denominated in US 

Dollars, the costs (as well as the gains or losses) of any hedging transactions will be allocated specifically to the currency 

class to which such expense, gain or loss relates. The Net Asset Value per Share will be expressed in the currency in 

which such class is denominated. 

Suspension of Valuations 

The Directors may temporarily suspend the calculation, and publication, of Net Asset Value during a period when in the 

opinion of the Directors: 

• as a result of political, economic, military or monetary events or any circumstances outside the control, responsibility 

or power of the Board, disposal or valuation of investments held by the Company or other transactions in the ordinary 

course of the Company’s business is not reasonably practicable without this being materially detrimental to the 

interests of Shareholders or if, in the opinion of the Board, the Net Asset Value cannot be fairly calculated; 

• one or more External Investment Advisor(s) suspend their valuation of Fund Investments; 

• there is a breakdown of the means of communication normally employed in determining the calculation of Net Asset 

Value; or 

• it is not reasonably practicable to determine the Net Asset Value of the Company on an accurate and timely basis. 

Valuation of Investments 

Fund Investments, securities and other property held by the Company will be valued by either External Investment 

Advisors or other service providers contracted by a Fund Investment in accordance with generally accepted accounting 

principles and, as a general matter, according to the parameters described below, subject to the overall supervision and 

control of the Board of Directors. 

Any Fund Investment in the form of a limited partnership interest or other collective investment fund will be valued at an 

amount equal to the Company’s capital account in such limited partnership or collective investment fund, as determined 

by such limited partnership or collective investment fund and communicated to the Company, as at the close of the latest 

fiscal period of such vehicle ending immediately prior to or simultaneously with the date as at which such value is being 



Any Fund Investment in the form of a shareholder’s interest will be valued at an amount equal to the number of shares 

owned by the Company, multiplied by the net asset value ascribed to such shares as determined by such entity and 

communicated to the Company, as at the close of the latest fiscal period of such entity ending immediately prior to or 

simultaneously with the date as at which such value is being determined by the Company and for which the Company has 

received sufficient final or estimated financial information to make such a determination. 

Any Fund Investment in the form of a segregated account will be valued at an amount equal to the account equity reported 

by the investment manager or clearing broker thereof, as at the close of the latest reporting period of such investment 

manager or clearing broker ending immediately prior to or simultaneously with the date as at which such value is being 



As an alternative to the valuation for a segregated account, or for any other securities or other property held by the 

Company, the valuation will be as follows: (i) securities that are publicly traded in US Dollars will be valued at the bid price 

for long and the offer price for short, based on information obtained from an independent pricing source; (ii) securities 

that are publicly traded in non-US Dollars will be valued at the bid price for long and offer price for short, based on 

information obtained from an independent pricing source, and the value will be converted to US Dollars based on the 

mid-spot foreign exchange rate from the independent pricing source; and (iii) securities that are not listed or quoted on a 

securities, commodities or futures exchange or market will be valued at their fair value as determined by the Investment 

Manager in its sole and absolute discretion. 

Over-the-counter derivative instruments held by the Company, such as equity swaps, will be valued at fair market value 

based upon the value of the underlying investment or reference index, as provided by an independent pricing source as of 

the relevant valuation date. 

Furthermore, investments such as complex or unique financial instruments may be priced pursuant to a number of 

methodologies, such as computer-based analytical modeling or individual security evaluations. These methodologies 

generate approximations of market values, and there may be significant professional disagreement about the best 

methodology for a particular type of financial instrument or different methodologies that might be used under different 

55

circumstances. In the absence of an actual market transaction, reliance on such methodologies is essential, but may 

introduce significant variances in the ultimate valuation of a Company asset. 

The Management Fee and Performance Fee are determined on the basis of the Net Asset Value calculated using the 

foregoing methodology. This methodology is used to value Fund Investments for the purposes of the Net Asset Value of all 

Share classes. 

Where an External Investment Advisor or third party contracted by a Fund Investment cannot provide a valuation of a Fund 

Investment or if the Directors reasonably determine, in their sole and absolute discretion, that the foregoing valuation 

methodology results in an incorrect determination of fair value for a Fund Investment or security, or the otherwise 

applicable source of valuation is unavailable, the Directors, with approval of the Sub-Administrator, may utilise any other 

reasonable valuation methodology to determine the fair value of such Fund Investment. 

Expenses, including the Management Fee and Performance Fee and the costs of any borrowings, are accrued on a 

monthly basis and are taken into account for the purpose of determining the Net Asset Value. 

It should be noted that situations involving uncertainties as to the valuation of Fund Investments could have an adverse 

impact on the Company’s Net Asset Value if the Company’s judgments regarding appropriate valuations should prove 

incorrect. Because the values assigned to one or more Fund Investments may be subject to later adjustment, the 

Company’s issuance or redemption of Shares at the Net Asset Value may have the effect of reducing or increasing the 

economic interest of existing Shareholders, as well as those Shareholders who purchased and/or redeemed Shares. See 

“Risk Factors — Risks relating to the Investment Strategy — Portfolio valuation”. 

FURTHER ISSUES OF SHARES 

The Directors will have authority to allot the authorised but unissued share capital of the Company at such times as they 

may determine and to designate such Shares as US Dollar Shares, Euro Shares, or Sterling Shares, or as Shares of any 

other class. Save with the prior approval of Shareholders, or where the Directors elect to offer Shares first to existing 

Shareholders pro rata to their holdings, such authority shall only be exercised if the price at which any such Shares are 

issued is not less than the estimated prevailing Net Asset Value per Share of the relevant class. 

As an alternative to issuing further Shares, the Company’s Articles of Association empower the directors to elect to 

conduct any future fundraising by issuing C Shares. C Shares may be issued as US Dollar C Shares, Euro C Shares or 

Sterling C Shares, or C Shares of any other class corresponding to a class of Shares. The assets attributable to a class of 

C Shares will be accounted for separately from those attributable to the corresponding class of Shares (and any other 

class of C Shares) until such time as the net proceeds of the issue of such C Shares are substantially invested in 

accordance with the Company’s investment policy or a specified back stop date is reached, at which point the C Shares 

will convert into Shares of the relevant class, based on the relative NAV of the respective Shares and C Shares. The ability 

to issue C Shares therefore allows the Company to raise further funds whilst limiting the impact on the investment 

returns of existing Shareholders which would otherwise result from exposure to a portfolio containing substantial 

un-invested cash and avoiding dilution of the Net Asset Value per Share of the existing Shares by the expenses associated 

with any C Share issue which will be borne only by subscribers for C Shares. Further details of the provisions of the 

Company’s Articles of Association relating to C Shares are contained in Part 4 of this Securities Note. 

There are no requirements under Jersey law requiring any further Shares or C Shares to be issued only on a pre-emptive 

basis. However, the Articles of Association provide that the Company is not permitted to allot (for cash) equity securities 

(being Shares or C Shares or rights to subscribe for, or convert securities into, Shares or C Shares) or sell (for cash) any 

Shares held in treasury, unless it has first offered existing holders of Shares and/or C Shares the opportunity to acquire 

such equity securities on the same or more favourable terms on a pro rata basis. These pre-emption rights have been 

excluded and disapplied for the period from Admission to the Company’s first annual general meeting by special 

resolution of the subscribers to the Company’s Articles of Association and it is expected that the Company will seek 

annual disapplication of such pre-emption rights at each subsequent annual general meeting of the Company. 

SHARE PURCHASES AND DISCOUNT CONTROL 

The Directors have general shareholder authority to purchase in the market up to 14.99 per cent. of each class of Shares 

in issue immediately following admission of the Shares issued under the Offer to the Official List and to trading on the 

London Stock Exchange. The Directors intend to seek annual renewal of this authority from Shareholders at each annual 

general meeting of the Company. 

The Company may purchase Shares in the market on an ongoing basis with a view to addressing any imbalance between 

the supply of and demand for any class of Shares, thereby increasing the Net Asset Value per Share (on the basis 

described below) and assisting in controlling the discount to Net Asset Value per Share in relation to the price at which 

such Shares may be trading. 

The Company, the Investment Manager and its affiliates will have the ability to purchase Shares of any class in the aftermarket 

at any time if Shares of the relevant class trade at a discount to the estimated prevailing Net Asset Value per 

Share of such class. In addition, the Company will consider commencing a Share buy-back programme if the Shares of 

any class should trade at or below 95 per cent. of the Net Asset Value per Share of the relevant class. 

56

Purchases by the Company will only be made in the market at prices below the estimated prevailing Net Asset Value per 

Share where the Directors believe such purchases will result in an increase in the Net Asset Value per Share of the 

remaining Shares of a particular class and as a means of addressing any imbalance between the supply of, and demand 

for, such Shares. Such purchases will only be made in accordance with applicable law at the relevant time, currently 

including Article 57 of the Companies (Jersey) Law 1991, Listing Rules 12.4.1 and 12.4.2 and the Disclosure and 

Transparency Rules. Shares purchased by the Company may be cancelled or held in treasury. 

Current Listing Rule 12.4.1 provides that, unless a tender offer is made to all the holders of the relevant class of Shares, 

the maximum price to be paid per Share pursuant to a general authority granted by Shareholders (excluding any Shares of 

that class held in treasury by the Company) must not be more than the higher of (i) 5 per cent. above the average market 

value of the Shares for the five business days before the purchase is made; and (ii) the higher of the price of the last 

independent trade and the highest current independent bid on the regulated market where the purchase is carried out. 

Current Listing Rule 12.4.2 requires any repurchase by the Company of 15 per cent. or more of any class of its Shares 

(excluding Shares of that class held in treasury) to be effected by way of a tender offer to all Shareholders of that class. 

The minimum price payable by the Company for any Share buy-back will be for each US Dollar Share, US$0.01, for each 

Euro Share, €0.01, and for each Sterling Share, £0.01. 

The Company may borrow in order to finance such Share purchases. 

Shares may be repurchased by the Company out of any stated capital account without the need for a reduction of capital 

or court approval, pursuant to Article 55(7) of the Companies (Jersey) Law. 

REDEMPTION FACILITY 

It is expected that the Directors will, in their discretion, at half-yearly intervals consider making a Share redemption 

facility available to Shareholders (the “Redemption Facility”). Subject to certain limitations and the Directors exercising 

their discretion to operate the Redemption Facility on any relevant occasion, Shareholders may request the redemption of 

all or part of their holdings of Shares for cash. Redemption will be effected at the prevailing Net Asset Value of the 

relevant class of Shares on the Redemption Date (less the costs of redemption which may include early redemption 

penalties in respect of the Company’s underlying investments). Notice of intention to redeem must be delivered to the 

Company by Shareholders no later than the 95 th day prior to the Redemption Date (or such other day as the Directors may, 

in their absolute discretion, determine), or, if such 95 th day (or such other day as may be determined by the Directors) is 

not a Business Day, then the immediately preceding Business Day. 

90 per cent. (or such lower percentage as the Directors may in their absolute discretion determine to be in the best 

interests of the Company and its Shareholders as a whole) of the proceeds of any such redemptions are expected to be 

paid (at the recipient’s risk) within 30 Business Days after the completion of the calculation of the Net Asset Value per 

Share as at the Redemption Date. The remaining 10 per cent. (the “Hold-Back Amount”) will be retained by the Company 

until completion of the Company’s audit for the then current financial year, following which the Hold-Back Amount will be 

(a) increased or reduced (but not below zero) as necessary to reflect any difference between the Net Asset Value per 

Share at which such redemption was effected and the audited Net Asset Value per Share as at the Redemption Date and 

(b) where the Shares redeemed were denominated otherwise than in US Dollars, adjusted to reflect the costs, and any 

gains or losses, resulting from any currency hedging activities conducted by the Investment Manager in respect of the 

Hold-Back Amount (the resulting amount, the “Adjusted Hold-Back Amount”). The Adjusted Hold-Back Amount (if any), 

will be paid to Shareholders in the same manner as described above (together with interest accruing after 60 days at a 

rate equal to one quarter of the annualised yield for 90 day United States Treasury bills, which rate will be determined by 

the Investment Manager and fixed as of the last Business Day prior to each applicable Fiscal Quarter) within 30 Business 

Days of the completion of the Company’s audit for the relevant year (which could, in the absence of a semi-annual audit, 

be as long as ten months following the Redemption Date in the case of Shares redeemed on 30 June). 

Redemptions on any Redemption Date will be restricted to such proportion of the Shares of the relevant class as the 

Directors may decide, not exceeding 20 per cent. in aggregate of the Shares of the relevant class of Shares then in issue, 

with any redemption requests in excess of such limit being scaled back on a pro rata basis. 

Subject to the above limitations and the Directors’ discretion being exercised on any relevant occasion, the Redemption 

Facility will operate on 30 June and 31 December of each year or, if such dates are not Business Days, on the immediately 

preceding Business Day. 

Shareholders and prospective Shareholders should note that the operation of the Redemption Facility is entirely 

discretionary and they should place no expectation or reliance on the Directors exercising such discretion on any one or 

more occasions in respect of any class of Shares or the proportion of Shares that may be redeemed. 

Further details of the Redemption Facility are set out in Part 4 of this Securities Note. 

CONVERSION OF SHARES 

The Articles of Association incorporate provisions to enable Shareholders of any one class of Shares to convert all or part 

of their holding into any other class of Shares on a quarterly basis in accordance with the detailed provisions of the 

Articles of Association. 

57

At the Valuation Dates referable to the months of March, June, September and December in each year (commencing in 

June 2008) (each a “Currency Conversion Calculation Date”) Shareholders may convert Shares of any class into Shares of 

any other class (of which Shares are in issue at the relevant time) by giving not less than 10 Business Days’ notice to the 

Company in advance of such Currency Conversion Calculation Date, either through submission of the relevant instruction 

mechanism (for Shareholders holding Shares in uncertificated form) or through submission of a conversion notice and the 

return of the relevant share certificate to the Registrar. Such conversion will be effected on the basis of the ratio of the last 

reported Net Asset Value per Share of the class of Shares held (calculated in US Dollars less the costs of effecting such 

conversion and as adjusted to reflect the impact of adjusting any currency hedging arrangements), to the last reported Net 

Asset Value per Share of the class of Shares into which they will be converted (each as at the relevant Currency Conversion 

Calculation Date). Shareholders should note, however, that fractions of Shares arising on conversion will be rounded down 

and hence the aggregate Net Asset Value of those Shares held after conversion may be less than before such conversion. 

Shareholders should also note that if they elect to convert Shares they will be unable to deal in those Shares in the period 

between giving notice of conversion and the actual date of conversion which will not be until the Net Asset Value per Share 

as at the relevant Currency Conversion Date has been determined, which may take up to 30 days. 

Should the aggregate Net Asset Value of the Shares of any class as at any Valuation Date fall below US$40 million (or the 

equivalent in the relevant currency), the Directors, in accordance with the Articles of Association, have the right, in their 

discretion, to compulsorily convert the Shares of such class into Shares of the class then in issue with the greatest 

aggregate Net Asset Value in US Dollar terms as at the corresponding Valuation Date. 

A summary of the Articles of Association is contained in Part 4 of this Securities Note and includes a description of the 

mechanism for conversion of Shares from one currency class to another. 

SUBSCRIPTIONS AND PURCHASES OF SHARES BY THE OTHER FUNDS MANAGED BY THE INVESTMENT MANAGER OR 

ITS AFFILIATES 

The Investment Manager may, from time to time in its discretion, enter into transactions in relation to Shares and/or 

derivatives of Shares in the Company as principal and/or on behalf of other funds managed by the Investment Manager or 

its affiliates. 

Any such transactions would only be carried out to the extent permissible under, and in accordance with, all relevant law 

and regulations. 

SHARE CAPITAL AND RIGHTS 

Share Capital 

At the date of this Securities Note, the authorised share capital of the Company is an unlimited number of Shares of no 

par value (which upon issue the Directors may classify as US Dollar Shares, Euro Shares or Sterling Shares or Shares of 

such other classes as the Directors may determine), an unlimited number of C Shares of no par value (which may be 

classified as C Shares of such classes as the Directors may determine) and 100 Management Shares of no par value. 

Shares will be issued to investors subscribing in the Offer. Shareholders have the right to receive notice of and to attend 

and vote at general meetings of the Company. C Shares carry no right to distribution of profits or to vote at general 

meetings of the Company (although they will receive notice of such meetings). Management Shares carry no right to 

distribution of profits or, except when there are no Shares in issue, to receive notices of or vote at general meetings of the 

Company. 

The Shares and C Shares are being issued in the form of redeemable participating preference shares in order to provide 

flexibility to the Directors in relation to the conversion, repurchase and redemption of such shares. Shareholders and 

holders of C Shares have no right to have their shares redeemed. 

The Shares which are successfully subscribed under the Offer will be allotted immediately prior to the Settlement Date, 

conditional upon Admission, pursuant to a resolution of the Board of Directors in accordance with the power granted to 

the Directors by the Articles of Association. 

Any unallotted Shares will remain authorised but unissued. 

Dividends 

Shareholders are entitled to receive, and participate in, any dividends or other distributions out of the profits of the 

Company available for dividend and resolved to be distributed in respect of any accounting period or other income or right 

to participate therein. Holders of C Shares have no such entitlement. 

Voting 

Shareholders shall have the right to receive notice of and to attend and vote at general meetings of the Company. Each 

Shareholder being present in person or by proxy or by a duly authorised representative (if a corporation) at a meeting shall 

58

upon a show of hands have one vote and upon a poll each such holder present in person or by proxy or by a duly 

authorised representative (if a corporation) shall, in the case of a separate class meeting, have one vote in respect of each 

Share held by him and, in the case of a general meeting of all Shareholders, have one vote in respect of each US Dollar 

Share held by him and such number of votes (a) in respect of each Euro Share held by him as shall be equal to the Net 

Asset Value per Euro Share (calculated in US Dollars) divided by the Net Asset Value per US Dollar Share, and (b) in 

respect of each Sterling Share held by him as shall be equal to the Net Asset Value per Sterling Share (calculated in US 

Dollars) divided by the Net Asset Value per US Dollar Share, in each case either as at Admission or, with effect from 

1 January 2009, the last Valuation Date of the immediately preceding calendar year. 

All holders of Shares and C Shares will have the right to vote on all material changes to the Company’s investment policy. 

Further information is set out in section 3.4 of Part 4 of this Securities Note. 

Winding-up 

On a winding-up, the surplus assets remaining after payment of all creditors will be divided among the classes of Shares 

and C Shares on the basis described in section 3.7 of Part 4 of this Securities Note. 

Variation of Share Rights 

The rights attaching to the Shares of each class may be varied with the consent in writing of the holders of two-thirds of 

the issued Shares of the relevant class or with the sanction of a special resolution of Shareholders of the relevant class 

passed at a general meeting of that class. 

Meetings and Reports to Shareholders 

The Company will hold an annual general meeting each year, with the first meeting to be held in 2009. 

The Company’s audited annual report and accounts will be prepared to 31 December of each year, commencing with its 

first financial period ending 31 December 2008, and copies of the annual report will be made public by 30 April each year, 

or earlier if possible. Shareholders will also receive an unaudited half-yearly report each year, commencing in respect of 

the six-month period ending on 30 June 2009, despatched by 31 August each year, or earlier if possible. The Company will 

also issue interim management statements within the meaning of the Disclosure and Transparency Rules during the 

period commencing ten weeks after the beginning and six weeks before the end of the first six-month period and the 

second six-month period of each financial year. As an alternative to issuing interim management statements, the 

Company may choose (but is not obliged) to issue unaudited quarterly financial reports. The Company is not required to 

issue preliminary profit statements. 

The Company’s audited annual report and accounts will be available through a Regulatory Information Service authorised 

by the London Stock Exchange. 

The Company’s accounts will be drawn up in US Dollars in compliance with US GAAP and the Companies Laws. 

TAXATION 

Information concerning the tax status of the Company is set out in Part 3 of this Securities Note entitled “Certain Tax 

Considerations”. If any potential investor is in any doubt about the taxation consequences of acquiring, holding or 

disposing of Shares, they should seek advice from their independent professional adviser. 

59

PART 2 

THE OFFER 

OVERVIEW 

The Company is targeting a raising of US$500 million (subject to increase) through the Offer (excluding sums raised 

pursuant to any exercise of the Over-allotment Option). The quantum of the amount to be raised is indicative and will not 

exceed US$750 million (including the Over-allotment Option). The actual number of Shares of each class issued pursuant 

to the Offer will only be determined by the Company, the Investment Manager and the Global Co-ordinator after taking into 

account the demand for the Shares and the prevailing economic market conditions. If the amount to be raised does 

change, the Company does not envisage making an announcement until determination of the number of Shares of each 

class to be issued and allotted has been made, unless required to do so by law. It is expected that the Offer Placing 

Statement containing the number of US Dollar Shares, Euro Shares and Sterling Shares which are the subject of the Offer 

will be published on or about 24 April 2008. 

The Offer Price for the Shares is US$10 per US Dollar Share, €10 per Euro Share and £10 per Sterling Share. 

The ISIN for the US Dollar Shares is JE00B2PXNQ43. The ISIN for the Euro Shares is JE00B2PXNC07. The ISIN for the 

Sterling Shares is JE00B2PXDB91. 

The Offer consists of the Offer for Subscription in the United Kingdom and the Placing involving private placement in the 

United Kingdom and other countries to both professional investors and in some jurisdictions to high net worth individuals. 

It is expected that Admission and the issuance of Shares under the Offer will be on or around 29 April 2008, which is 

expected to be three Business Days after the commencement of conditional dealings in the Shares. 

THE OFFER FOR SUBSCRIPTION 

The Offer for Subscription is only being made in the United Kingdom but, subject to applicable laws, the Company may 

allot and issue Shares on a private placement basis to applicants in the United Kingdom and other jurisdictions. The Offer 

for Subscription will open on 14 April 2008 and the latest time for receipt of Application Forms under the Offer for 

Subscription will be at 5.00 pm on 22 April 2008. Multiple applications under the Offer for Subscription will be permitted. 

Applications under the Offer for Subscription must be for a minimum of £5,000 and applications should not be submitted 

for less than this amount. All application monies must be received in Sterling. The Directors may, in their absolute 

discretion after taking into account the demand for Shares under the Offer and economic and market conditions, waive 

the minimum application requirements in respect of any particular applications under the Offer for Subscription, although 

they currently have no intention of doing so. Subscriptions above the minimum subscription amount are to be in multiples 

of £1,000 unless the Directors, in their absolute discretion, determine otherwise in respect of any particular application. 

The terms and conditions of application under the Offer for Subscription and an Application Form are set out at the end of 

this Securities Note. These terms and conditions should be read carefully before an application is made. Investors should 

consult their stockbroker, bank manager, solicitor, accountant or other financial adviser if they are in any doubt as to the 

terms and conditions of the Offer for Subscription. 

THE PLACING 

The Company, the Manager, the Investment Manager and the Global Co-ordinator have entered into the Placing 

Agreement, pursuant to which the Global Co-ordinator has agreed, subject to certain conditions, to use reasonable 

endeavours to procure subscribers for the Shares made available in the Placing. 

The Offer will lapse if the Placing Agreement is terminated in accordance with its terms prior to Admission, and any funds 

received in respect of the Offer will be returned to the applicants without interest. 

Commitments under the Placing must be for a minimum subscription amount of £500,000 (or the equivalent in US Dollars 

or Euros) and commitments should not be submitted for less than this amount. The Directors may, in their absolute 

discretion after taking into account the demand for Shares under the Offer and economic and market conditions, waive 

the minimum commitment requirements in respect of any particular commitment under the Placing, although they 

currently have no intention of doing so. Subscriptions above the minimum subscription amount are to be in multiples of 

£50,000 (or the equivalent in US Dollars or Euros), unless the Directors, in their absolute discretion, determine otherwise 

in respect of any particular commitment. 

Further details of the Placing Agreement are set out in Part 4 of this Securities Note. 

The Directors reserve the right to accept subscriptions for Shares under the Placing from investors in QARS3-I (“QARS3-I 

Investors”) in consideration of the transfer to the Company of shares in QARS3-I (“QARS3-I Shares”). In particular, it is 

expected that one QARS3-I Investor (the “Cornerstone Investor”) will, depending on the final size of the Offer, subscribe 

for Shares representing up to 19.9 per cent. of the gross proceeds of the Offer (including the gross proceeds attributable 

to the Cornerstone Investor’s subscription) and that the Cornerstone Investor will fund such subscription in whole or in 

part by means of a transfer of QARS3-I Shares to the Company. There is no guarantee, however, that the Cornerstone 

Investor will make an investment of such size or at all. 

The value of any such QARS3-I Shares for these purposes will be the net asset value of the QARS3-I Shares as at 1 May 

2008. 

60

BOOKBUILDING 

Pursuant to the Placing, indications of interest in acquiring Shares will be solicited by the Global Co-ordinator from 

institutional and other sophisticated investors. Based on such indications and Application Forms received pursuant to the 

Offer for Subscription, the Global Co-ordinator will conduct a bookbuilding process pursuant to which it will endeavour to 

establish investor demand for the Shares and the number of Shares which may be sold under the Offer. 

The latest time and date for receipt of Application Forms is 5.00 pm on 22 April 2008, and for other indications of interest 

in the Offer is 5.00 pm on 23 April 2008, but that time may be accelerated or extended at the discretion of the Global 

Co-ordinator (with the agreement of the Company). 

Completion of the Offer will be subject, among other things, to the Global Co-ordinator’s decision to proceed with the 

Offer. It will also be subject to the satisfaction of conditions contained in the Placing Agreement, including Admission 

occurring and becoming effective by 8.00 am on 29 April 2008 (or such later date as the Company and the Global 

Co-ordinator may agree, not being later than close of business on 9 May 2008) and the aggregate value of the Shares 

subscribed for under the Offer (at the Offer Price) exceeding US$100 million (or such other amount as may be agreed 

between the Company and the Global Co-ordinator), and to the Placing Agreement not having been terminated. 

The Directors in consultation with the Global Co-ordinator reserve the right not to proceed with the Offer for Subscription 

and/or the Placing if the gross subscription proceeds raised under the Offer are less than the equivalent of US$250 

million. In such circumstances, subscription monies received will be returned without interest at the risk of the applicant. 

The Directors in consultation with the Global Co-ordinator reserve the right to reject any application for Shares or scale back 

any or all applications for Shares in the Offer for Subscription and/or the Placing, in such manner as they, in their absolute 

discretion, consider appropriate. In particular (but without limitation), in the event that the aggregated value of Shares of a 

particular class (at the Offer Price) subscribed for pursuant to the Offer for Subscription and/or the Placing is less than 

US$60 million (or the equivalent in the relevant currency), the Directors (in consultation with the Global Co-ordinator) reserve 

the right, in their absolute discretion, to determine not to issue Shares of such class pursuant to the Offer. In such 

circumstances, relevant subscription monies received will be returned without interest at the risk of the applicant. 

TRANSFER OF SHARES 

The transfer of Shares outside the CREST system following the Offer should be arranged directly through Computershare 

Investor Services (Channel Islands) Limited, as Registrar. However, an investor’s beneficial holding held through the 

CREST system may be exchanged, in whole or in part, only upon the specific request of a beneficial owner to 

Computershare Investor Services (Channel Islands) Limited, as Registrar, for share certificates or an uncertificated 

holding in definitive registered form. If a Shareholder or transferee requests Shares to be issued in certificated form and 

is holding such Shares outside CREST, a share certificate will be dispatched either to the Shareholder or their nominated 

agent (at the risk of the Shareholder) within 21 days of completion of the registration process or transfer, as the case may 

be, of the Shares. Shareholders holding definitive certificates may elect at a later date to hold such Shares through CREST 

or in uncertificated form provided they surrender their definitive certificates and comply with the applicable restrictions, 

set out in “Selling Restrictions” on page 38 of this Securities Note. 

LISTING AND TRADING OF THE SHARES 

The Company has applied for the admission of all of its Shares to the Official List of the UK Listing Authority and for 

trading of the Shares on the London Stock Exchange’s main market for listed securities under the symbols “BARS”, 

“BARE” and “BARU”. Dealings in the Shares issued pursuant to the Offer on the London Stock Exchange’s main market 

are expected to commence on or about 24 April 2008, on a “when-issued” basis. The Company expects that delivery of the 

Shares and Admission of the Shares to the Official List and to trading on the London Stock Exchange’s main market on an 

unconditional basis will take place on or about 29 April 2008. 

Investors that wish to enter into transactions in the Shares prior to commencement of dealings in such Shares on an 

unconditional basis, whether such transactions are effected on the London Stock Exchange’s main market or otherwise, 

should be aware that commencement of dealings on an unconditional basis may not take place on the expected date, or at 

all, if certain conditions or events referred to in the Placing Agreement are not satisfied or waived or occur on or prior to 

such date. Such conditions include the receipt by the Global Co-ordinator of officers’ certificates and legal opinions and 

such events include the absence of a suspension of trading on the London Stock Exchange’s main market or a material 

adverse change in the Company’s financial condition or business affairs or in the financial markets. If commencement of 

dealings in the Shares on an unconditional basis does not take place on the expected date, or at all, all transactions in the 

Shares on the London Stock Exchange’s main market conducted between the announcement of the Offer and the date on 

which dealings in such Shares on an unconditional basis commence are subject to cancellation by the UK Listing 

Authority. All dealings in the Shares on the London Stock Exchange’s main market prior to settlement and delivery are at 

the sole risk of the parties concerned. 






61







Exchange, and will expire no more than 30 days thereafter. Any Shares issued by the Company pursuant to the Overallotment 








Short sales involve the sale by the Stabilising Manager of a greater number of Shares than the Global Co-ordinator is 

required to purchase in the Offer. “Covered” short sales are sales made in an amount not greater than the Stabilising 

Manager’s option to purchase additional Shares pursuant to the Over-allotment Option. UBS, as Stabilising Manager, may 

close out any covered short position by either exercising its option to purchase additional Shares or purchasing Shares in 

the open market. In determining the source of Shares to close out the covered short position, UBS, as Stabilising 

Manager, will consider, among other things, the price of Shares available for purchase in the open market as compared to 

the price at which they may purchase additional Shares pursuant to the Over-allotment Option. “Naked” short sales are 

any sales of Shares by the Global Co-ordinator in excess of the number of additional Shares which may be purchased from 

the Company pursuant to the Over-allotment Option. The Stabilising Manager may sell Shares in excess of the Overallotment 

Option creating a naked short position. UBS, as Stabilising Manager, must close out any naked short position by 

purchasing shares in the open market. A naked short position is more likely to be created if the Stabilising Manager is 

concerned that there may be downward pressure on the price of the Shares in the open market after pricing that could 

adversely affect investors who purchase Shares in the Offer. Stabilising transactions consist of various bids for or 

purchases of Shares made by the Stabilising Manager in the open market during the stabilisation period. 

Purchases to cover a short position and stabilising transactions, as well as other purchases by the Stabilising Manager for 

its own account, may have the effect of preventing or retarding a decline in the market price of the Shares, and may 

stabilise, maintain or otherwise affect the market price of the Shares. As a result, the price of the Shares may be higher 

than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued 

at any time. UBS, as Stabilising Manager, is not required to engage in these activities, and may end any of these activities 

at any time. Neither the Company nor the Stabilising Manager make any representation or prediction as to the direction or 

magnitude of any effect that the stabilisation transactions described above may have on the price of the Shares. In 

addition, neither the Company nor the Stabilising Manager makes any representations that the Stabilising Manager will 

engage in such transactions or that such transactions will not be discontinued without notice, once they are commenced. 

COSTS AND EXPENSES OF THE OFFER 

The costs and expenses of the Offer (including all fees, commissions and expenses payable to the Global Co-ordinator) 

will be paid by the Manager or its affiliates. Such costs and expenses are not expected to exceed 2.5 per cent. of the gross 

proceeds of the Offer, assuming the target size of US$500 million is achieved. Save where the Management Agreement is 

terminated on certain grounds during the period ending on the seventh anniversary of Admission, the Company will not be 

responsible for such costs and expenses associated with the Offer. 

TRAIL COMMISSIONS 

The Manager has agreed with the Global Co-ordinator that, unless the Manager determines otherwise in any particular 

case, each Qualifying Investor is entitled for a period of five years from 1 May 2008 to receive a trail commission at a rate 

equivalent to 0.5 per cent. per annum of the Net Asset Value attributable to the Shares of the relevant class subscribed by 

such Qualifying Investor. Such commission will be calculated semi-annually based on the average Net Asset Value 

attributable to the relevant Shares over the six month period preceding each Eligibility Date and will be paid semi-annually 

in arrear by the Manager. 

Unless the Manager agrees otherwise with a particular Qualifying Investor, trail commissions will only be payable to 

Qualifying Investors in respect of any Shares subscribed pursuant to the Offer and must be claimed, together with such 

proof supporting the claim as the Manager may require at its discretion, within 30 calendar days of the relevant Eligibility 

Date. Trail commissions will be paid within 60 days of receipt of a valid claim and the Manager reserves the right to pay 

the trail commission in a currency of its choosing. Trail commissions not claimed within the relevant period will be 

forfeited. No trail commission will be paid to investors who are not Qualifying Investors. Unless the Manager agrees 

otherwise with a particular Qualifying Investor, the trail commission will only be paid to a Qualifying Investor in respect of 

those Shares acquired by the Qualifying Investor in the Offer and which remain held by the Qualifying Investor on the 

relevant Eligibility Date. Trail commissions will not be paid in respect of any Shares disposed of before an Eligibility Date 

even if the Shares are subsequently repurchased. Trail commissions will not be pro-rated to take account of Shares 

62

disposed of between Eligibility Dates. Separately, and in addition, a Qualifying Investor may itself direct that all or part of 

any trail fees otherwise payable to it should instead be paid to one or more third parties, including financial 

intermediaries. 

In certain circumstances the Manager may agree variations in these terms with certain investors and/or in certain 

territories. 

OTHER SERVICES PROVIDED BY THE GLOBAL CO-ORDINATOR 

The Global Co-ordinator and/or its affiliates may from time to time provide products, advisory or other services to the 

Company, the Investment Manager or other related entities. From time to time, the Global Co-ordinator and/or its 

affiliates may also engage in other transactions with the Investment Manager, the External Investment Advisors and/or 

their respective affiliates and other funds managed by the Investment Manager, the External Investment Advisors or their 

respective affiliates in the ordinary course of their businesses, including, without limitation, transactions involving the 

purchase and sale of securities, loans and other investments, derivative transactions including hedging transactions, 

valuation services and other transactions (for example, leverage against investments). 

The Global Co-ordinator and/or its affiliates may from time to time sell assets to, or acquire assets from, the Company or 

other funds managed by the Investment Manager, the External Investment Advisors or their respective affiliates. From 

time to time, the Global Co-ordinator and/or its affiliates may also hold securities of other related entities. 

Investors should note that the Global Co-ordinator and/or its affiliates may have acted, may currently act, and may in the 

future act in various capacities in relation to the issuers of certain securities in which the Company invests or may invest, 

including as manager, servicer, security trustee, equity holder and/or secured lender to the issuer or affiliates of the 

issuer of the relevant securities. Each such role would confer specific rights to and obligations on the Global Co-ordinator 

and/or its affiliates. In carrying out these rights and obligations, the interests of the Global Co-ordinator and/or its 

affiliates may not be aligned with the interests of a potential investor in the Shares. 

63

PART 3 

CERTAIN TAX CONSIDERATIONS 

The following summary discusses certain Jersey and United Kingdom tax considerations relating to the Company and the 

purchase, ownership and disposition of the Shares and certain US tax considerations relating to the Company based on 

the applicable law as in effect on the date hereof and current published revenue practice. This summary is intended as a 

general guide only and does not address all the considerations that may be relevant to purchasers of the Shares. Certain 

Shareholders, such as dealers in securities, collective investment schemes, insurance companies and persons acquiring 

their Shares in connection with their employment may be taxed differently and are not considered. Prospective 

purchasers of the Shares are advised to consult with their own tax advisers concerning the consequences of an 

investment in the Shares under the tax laws of the country in which they are resident and other relevant jurisdictions. 

JERSEY TAX CONSIDERATIONS 

THE COMPANY 

The Company is an ‘exempt company’ within the meaning of the Income Tax (Jersey) Law 1961 (as amended) and 

accordingly the Company’s total liability to Jersey tax should, in normal circumstances, be limited to the exempt company 

fee currently fixed at a rate of £600 per annum. 

The Comptroller of Income Tax in Jersey has confirmed that income of the Company arising outside Jersey (and bank 

interest arising in Jersey) is exempt from Jersey income tax and that if dividends are paid by the Company they may be paid 

to Shareholders not resident in Jersey for Jersey income tax purposes without any deductions or withholdings for any taxes. 

SHAREHOLDERS 

No death duties, capital gains tax, gift, inheritance or capital transfer taxes are levied in Jersey. No stamp duty is levied in 

Jersey on the issue, transfer or redemption of Shares, but probate stamp fees may be payable at the rate of up to 0.75 per 

cent. of the value of the Jersey estate in the event of the death of the holder of Shares. 

If dividends are declared by the Company, holders of Shares who are treated as Jersey resident for Jersey income tax 

purposes will suffer deduction of tax on payments of dividends by the Company at the standard rate of Jersey income tax 

for the time being. 

The attention of Jersey residents is drawn to the provisions of Article 134A of the Income Tax (Jersey) Law 1961 (as 

amended) which may in certain circumstances render such a resident liable to income tax on any undistributed income or 


On 3 June 2003, the European Union Council of Economic and Finance Ministers reached political agreement on the 

adoption of a Code of Conduct on Business Taxation. Jersey is not a member of the European Union (“EU”) but is a 

dependent territory of the United Kingdom. The Income Tax (Amendment No. 28) (Jersey) Law 2007 provides for the 

replacement of the Jersey exempt company regime with a general zero rate of corporate tax (subject to certain limited 

exceptions) with effect from the year of assessment 2009. 

On 3 June 2003, the European Union Council of Economic and Finance Ministers also adopted a directive on the taxation of 

savings income in the form of interest payments (the “EU Savings Tax Directive”). From 1 July 2005, each EU Member 

State is required to provide to the tax authorities of another EU Member State details of payments of interest (or other 

similar income) paid by a person within its jurisdiction to or for the benefit of an individual resident in that other EU 

Member State; however, Austria, Belgium and Luxembourg will instead apply a withholding tax system for a transitional 

period in relation to such payments. 

Jersey is not subject to the EU Savings Tax Directive. However, in keeping with Jersey’s policy of constructive international 

engagement the States of Jersey has introduced a retention tax system in respect of payments of interest (or other similar 

income) made to an individual beneficial owner resident in an EU Member State by a paying agent situate in Jersey (the 

terms “beneficial owner” and “paying agent” are defined in the EU Savings Tax Directive). The retention tax system will 

apply for a transitional period prior to the implementation of a system of automatic communication of information 

regarding such payments to EU Member States. The transitional period will end only after all EU Member States apply 

automatic exchange of information and the EU Member States unanimously agree that the United States of America has 

committed to exchange of information upon request. During this transitional period, an individual beneficial owner 

resident in an EU Member State will be entitled to request a paying agent not to retain tax from such payments but instead 

to apply a system by which the details of such payments are communicated to the tax authorities of the EU Member State 

in which the beneficial owner is resident. The proposals do not apply to interest (or other similar income) payments to 

bodies corporate or non-EU Member State residents. 

UNITED KINGDOM TAXATION 

THE COMPANY 

The Directors intend to manage the affairs of the Company so that for United Kingdom corporation tax purposes, the 

central management and control of the Company is not exercised in the United Kingdom, and so that the Company does 

not carry on a trade in the United Kingdom (whether or not through a permanent establishment situated therein). 

Accordingly, the Company should not be subject to UK corporation tax on income and capital gains arising to it other than 

on any United Kingdom source income. 

64

SHAREHOLDERS 

(i) 

Disposal of Shares 

The Directors have been advised that, under current law, the offshore fund rules in Chapter V Part XVII of the Income and 

Corporation Taxes Act 1988 (the “Taxes Act”) should not apply to Shareholders who subscribe for Shares in the Company. 

Accordingly, any disposal of Shares by a Shareholder might, depending on their circumstances, give rise to a chargeable 

gain for UK tax purposes, as described below. However, the UK government has published a consultation document on the 

reform of the offshore fund rules with the intention of changing the definition of an offshore fund in the Finance Bill 2009. 

(a) 

UK Resident Shareholders 

A disposal of Shares by a Shareholder who is resident or, in the case of an individual, ordinarily resident 

in the United Kingdom for United Kingdom tax purposes may give rise to a chargeable gain or an 

allowable loss for the purposes of UK taxation on chargeable gains, depending on the Shareholder’s 

circumstances and subject to any available exemption or relief. 

Legislation proposed to have effect from 6 April 2008 would, if enacted, abolish taper relief which 

reduces the amount of the chargeable gain according to how long, measured in years, the Shares have 

been held by an individual Shareholder. Instead, a single rate of capital gains of 18 per cent. would apply 

to a disposal (which includes a redemption) after 5 April 2008 by an individual Shareholder who is 

resident or ordinarily resident in the United Kingdom for taxation purposes. Holders of Shares who are 

bodies corporate resident in the United Kingdom for taxation purposes will benefit from indexation 

allowance which, in general terms, increases the capital gains tax base cost of an asset in accordance 

with the rise in the retail prices index. 

The conversion of Shares of one currency class into Shares of another currency class will not result in a 

disposal for the purposes of UK taxation of chargeable gains. Instead, the redesignated Shares will be 

treated as the same asset as the original holding of Shares, acquired at the same time and for the same 

chargeable gains tax base cost as the original holding. 

(b) 

Non-UK Resident Shareholders 

An individual Shareholder who is not resident in the United Kingdom for tax purposes but who carries 

on a trade in the United Kingdom through a branch or agency may be subject to UK taxation on 

chargeable gains on a disposal of Shares which are acquired for use by or for the purposes of the 

branch or agency. A Shareholder who is an individual who has ceased to be resident or ordinarily 

resident in the United Kingdom for tax purposes for a period of less than five years of assessment and 

who disposes of Shares during that period may also be liable, on his return to the United Kingdom, to 

UK taxation on chargeable gains (subject to any available exemption or relief). 

(ii) 

Distributions by the Company 

Shareholders resident in the United Kingdom for tax purposes will be liable to UK income tax or corporation tax, as 

applicable, in respect of dividend or other income distributions of the Company. However, legislation proposed to have 

effect from 6 April 2008 would, if enacted, entitle an individual Shareholder resident in the UK for tax purposes who 

receives a dividend from the Company to claim a tax credit equal to 1/9 of the cash dividend paid. This tax credit will only 

be available if the individual owns less than a 10 per cent. holding in the Company. Where investments of the Company are 

distributed in specie to Shareholders other than by way of dividend, such distributions may represent a part-disposal of 

Shares for UK tax purposes. 

(iii) 

Anti-Avoidance 

The attention of individuals ordinarily resident in the United Kingdom for UK tax purposes is drawn to the provisions of 

Chapter 2 of Part 13 of the Income Tax Act 2007. Those provisions are aimed at preventing the avoidance of income tax by 

individuals through transactions resulting in the transfer of assets or income to persons (including companies) resident or 

domiciled abroad and may render them liable to taxation in respect of undistributed income and profits of the Company on 

an annual basis. 

More generally, the attention of corporate Shareholders is drawn to the provisions of Sections 703 to 709 of the Taxes Act 

and the attention of individual Shareholders is drawn to Chapter I of Part 13 of the Income Tax Act 2007, which give powers 

to HM Revenue & Customs to cancel tax advantages derived from certain transactions in shares. 

The Taxes Act also contains provisions in Sections 747 to 756 that may subject certain UK resident companies under the 

“controlled foreign companies” rules, to UK corporation tax on the undistributed income and profits of the Company. The 

provisions may affect UK resident companies which have an interest (together with any connected or associated 

companies) such that at least 25 per cent. of the Company’s profits for an accounting period could be apportioned to them 

if, at the time, the Company is controlled by residents of the United Kingdom. The UK government has published a 

consultation document on the reform of the foreign profits of companies, including the controlled foreign companies 

65

legislation and has stated that the most likely date for the implementation of any reform would be the Finance Bill 2009. 

The UK government has indicated that it considers that it would be more appropriate to reduce the trigger for the 

application of the controlled foreign companies legislation to 10 per cent. rather than 25 per cent. 

If the ownership of the Company were to be such that it would be a close company if it were resident in the United 

Kingdom, certain adverse tax consequences could result including the chargeable gains accruing to it may be apportioned 

to a Shareholder who is resident or ordinarily resident and, if an individual, domiciled in the United Kingdom who holds, 

alone or together with associated persons, more than 10 per cent. of the Shares as a result of the provisions of Section 13 

of the Taxation of Chargeable Gains Act 1992. Legislation proposed to have effect from 6 April 2008 would, if enacted, 

mean that Section 13 will apply to Shareholders resident or ordinarily resident in the UK for tax purposes regardless of 

where they are domiciled unless: (i) they are not domiciled in the UK; (ii) the chargeable gain of the Company relates to 

non-UK assets; and (iii) they have elected for the remittance basis of taxation. 

(iv) 

Stamp Duty and Stamp Duty Reserve Tax (“SDRT”) 

The following comments are intended as a guide to the general stamp duty and SDRT position and do not relate to 

persons such as market makers, brokers, dealers or intermediaries or where the Shares are issued to a depositary, or 

clearing system, or nominees or agents. No UK stamp duty or SDRT will be payable on the issue of the Shares. On the 

basis that the Company’s register of shareholders is kept and maintained outside the United Kingdom, uncertificated 

transfers of Shares and agreements to transfer Shares within CREST will not be liable to stamp duty or stamp duty 

reserve tax and transfers of Shares in certificated form should not, in practice, be liable to stamp duty. 

(v) 

ISAs/PEPs and SIPPs/SSASs 

Investors resident in the United Kingdom are recommended to consult their tax and/or investment advisers in relation to 

the eligibility of the Shares for savings schemes (for example ISAs, SIPPs and SSASs). 

Shares allotted under the Offer for Subscription or subsequently acquired in the secondary market may be eligible for 

inclusion in a stocks and shares ISA although the account manager should be asked to confirm ISA eligibility. From 6 April 

2008, maxi- and mini-ISAs no longer exist. Instead, investors are able to invest in two separate ISAs each year, a cash ISA 

and a stocks and shares ISA. Up to half the subscription limit, currently £7,200, will be available for investment as cash. 

The remainder may be invested in a stocks and shares ISA with the same or different provider. 

From 6 April 2008, all PEPs will automatically become stocks and shares ISAs. 

The Shares acquired under the Offer for Subscription are expected to be eligible for inclusion in SIPPs and SSASs, 

although this should be confirmed independently by investors with their professional tax or financial advisers before 

investment. 

UNITED STATES TAXATION 

The discussion contained below as to US federal tax considerations is not intended or written to be used, and cannot be 

used, for the purpose of avoiding penalties. Such discussion is written to support the promotion or marketing of the 

transactions or matters addressed in this document. Each taxpayer should seek federal tax advice based on the 

taxpayer’s particular circumstances from an independent tax advisor. 

For US federal income tax purposes, the Company is treated as a corporation. The Company intends to conduct its affairs 

such that income realised by it will not be effectively connected with the conduct of a US trade or business or otherwise 

subject to regular US federal income taxation on a net income basis. As a result, it is anticipated that no gains realised by 

the Company (other than gains, if any, realised on the disposition of US real property interests) will be subject to US 

federal income taxation, but generally certain dividend and interest income may be subject to US federal withholding tax 

as discussed further below. If, contrary to the intended method of operation, the Company is considered to be engaged in 

a US trade or business, the Company’s share of any income that is effectively connected with such US trade or business 

will be subject to regular US federal income taxation (currently imposed at a maximum rate of 35 per cent.) on a net 

income basis and an additional 30 per cent. US “branch profits” tax. In addition, it is possible that the Company would be 

subject to taxation on a net income basis by state or local jurisdictions within the United States. 

Because the Company is organised under the laws of Jersey, it will be considered to be a non-US person for purposes of 

US tax laws. As a result, any dividends received by the Company from US sources will be subject to US withholding tax at a 

rate of 30 per cent. However, US source interest income received by the Company generally will be exempt from US 

federal income and withholding tax under the exemption for “portfolio interest” or under another statutory exemption. 

Interest on corporate obligations will not qualify as “portfolio interest” to a non-US person that owns (directly and under 

certain constructive ownership rules) 10 per cent. or more of the total combined voting power of the corporation paying 

the interest, or, with respect to certain obligations issued after 7 April 1993, if and to the extent the interest is determined 

by reference to certain economic attributes of the debtor (or a person related thereto). In addition, interest on US bank 

deposits, certificates of deposit and certain obligations with maturities of 183 days or less (from original issuance) will not 

be subject to withholding tax. Any interest (including original issue discount) derived by the Company from US sources not 

qualifying as “portfolio interest” or not otherwise exempt under US law will be subject to US withholding tax at a rate of 

30 per cent. 

66

Reportable Transactions 

Treasury Regulations that govern potentially tax-motivated transactions (the “Reportable Transaction Regulations”) 

provide that certain taxpayers (including certain US persons owning shares in a non-US corporation) participating, directly 

or indirectly, in a “reportable transaction” must disclose such participation to the Internal Revenue Service (the “IRS”). 

The scope and application of the Reportable Transaction Regulations is not entirely clear. If a US person invests, or if the 

Company were considered to be engaged in a US trade or business, it is possible that the Reportable Transaction 

Regulations could apply. An investment in the Company may result in a Shareholder’s participation in a “reportable 

transaction” if, for example, the Company recognises certain types of losses in the future (potentially including losses 

recognised by Company investments), or if the Company (or a Company investment) utilises certain investment strategies 

and, in each case, the Company does not otherwise meet certain applicable exemptions. If an investment in the Company 

results in participation in one or more “reportable transactions,” the Company and potentially each Shareholder may be 

required to disclose such participation to the IRS. Significant penalties may apply to taxpayers who fail to properly disclose 

a “reportable transaction.” The Company also may be required to make separate disclosures to the IRS. Significant 

penalties may apply to taxpayers who fail to properly disclose their participation in a “reportable transaction.” Prospective 

investors are urged to consult their own tax advisors regarding the applicability of these rules to an investment in the 

Fund. 

Treasury Regulations additionally require “material advisors” with respect to any “reportable transaction” to make a 

return (in such form as the IRS may prescribe) setting forth certain information regarding such “reportable transaction.” 

The IRS will issue a “reportable transaction number” to be associated with such “reportable transactions.” Material 

advisors are required to maintain lists that identify these “reportable transactions” and their participants. Material 

advisors may be required to furnish such lists to the IRS, upon request. The Company and/or its advisors may be 

considered a “material advisor” with respect to one or more “reportable transactions,” and as such, would be required to 

follow the above described procedures. To the extent the Company is involved in a “reportable transaction,” the Company 

and its Shareholders may be required to report the applicable “reportable transaction number” to the IRS as part of its 

disclosure obligation discussed above. Prospective investors are urged to consult their own tax advisors regarding their 

potential responsibility to furnish the aforementioned reportable transaction number(s) to the IRS. 

Notwithstanding anything expressed or implied to the contrary, the tax treatment and tax structure of the transaction (as 

defined in 26 CFR Sec. 1.6011-4) may be disclosed to any and all persons, without limitation of any kind. 

TAXATION OF RESIDENTS OF OTHER COUNTRIES 

The receipt of dividends by Shareholders, the redemption or transfer of Shares and any distribution on a winding-up of the 

Company may result in a tax liability for the Shareholders according to the tax regime applicable in their various countries 

of residence, citizenship or domicile. Shareholders resident in or citizens of certain countries which have anti-offshore 

fund legislation may have a current liability to tax on the undistributed income and gains of the Company. The Directors, 

the Company and each of the Company’s agents shall have no liability in respect of the individual tax affairs of 

Shareholders. Shareholders are urged to consult with their tax advisers about the implications of an investment in the 

Company in their home countries. 

67

PART 4 

ADDITIONAL INFORMATION ABOUT THE COMPANY 

1. INCORPORATION AND ADMINISTRATION 

1.1 The Company is a registered closed-ended investment company incorporated in Jersey with limited liability on 

18 March 2008 under the provisions of the Companies (Jersey) Law 1991 (as amended), with registered number 

100291. The Company continues to be registered and domiciled in Jersey. Its registered office is at Forum House, 

Grenville Street, Jersey, Channel Islands JE1 0BR and its telephone number is +44 (0)1534 600800. The Company 

operates under, and will issue Shares in accordance with, the Companies (Jersey) Law 1991 (as amended) and 

ordinances and regulations made thereunder and has no subsidiaries or employees. 

1.2 The Directors confirm that the Company has not traded and that no accounts of the Company have been made up 

since its incorporation on 18 March 2008. The Company’s accounting period will end on 31 December of each 

year, with the first set of audited accounts being for the period from incorporation to 31 December 2008. 

1.3 Save for its entry into the material contracts summarised in section 6 of this Part 4 and certain non-material 

contracts, the Company has not since its incorporation carried on business nor incurred borrowings. 

1.4 Changes in the authorised and issued share capital of the Company since incorporation are summarised in 

section 2 below. 

1.5 Deloitte and Touche LLP has been the only auditor of the Company since its incorporation. Deloitte and Touche 

LLP is a member of the Institute of Chartered Accountants in England and Wales. The annual report and 

accounts will be prepared according to US GAAP. 

1.6 There has been no significant change in the trading or financial position of the Company since its incorporation. 

2. SHARE CAPITAL 

2.1 At the date of this Securities Note, the authorised share capital of the Company is an unlimited number of Shares 

of no par value (which upon issue the Directors may classify as US Dollar Shares, Euro Shares or Sterling Shares 

or as Shares of such other classes as the Directors may determine), an unlimited number of C Shares of no par 

value (which may be classified as C Shares of such classes as the Directors may determine) and 100 

Management Shares of no par value. As at the date of this document, the issued share capital of the Company 

comprises two Management Shares which are held (one each) by Premier Circle Limited and Second Circle 

Limited (two nominee companies associated with Bedell Cristin, the Company’s Jersey counsel). It is expected 

that these two Management Shares will be transferred to the Manager following Admission. The Management 

Shares have been issued for organisational purposes only and confer no dividend or other economic rights. The 

Shares and C Shares are being issued in the form of redeemable participating preference shares in order to 

provide flexibility to the Directors in relation to the conversion, repurchase and redemption of such shares. 

Shareholders and holders of C Shares have no right to have their shares redeemed. 

2.2 The consent of the JFSC under the Control of Borrowing (Jersey) Order 1958 (as amended) has been obtained for 

the issue of an unlimited number of Shares and an unlimited number of C Shares. The JFSC is protected by the 

Control of Borrowing (Jersey) Law 1947 (as amended) against liability arising from the discharge of its functions 

under that law. 

2.3 C Shares of the relevant class will convert into Shares of the corresponding class on the relevant Conversion 

Date according to the Conversion Ratio. The net proceeds of the issue of any class of C Shares will be accounted 

for as a separate pool of assets until the Conversion Date. 

2.4 The maximum issued share capital of the Company (all of which will be fully paid) immediately following the Offer 

will consist of a maximum of two Management Shares and US$750 million worth of Shares (including Shares 

issued pursuant to the Over-allotment Option), whether issued as US Dollar Shares, Euro Shares or Sterling 

Shares. The Company will be able to effect purchases of its own Shares subject to compliance with the 

requirements of the Companies (Jersey) Law 1991 (as amended) and all other applicable laws and regulations. 

Any Shares purchased by the Company may be cancelled or held in treasury. 

2.5 The Directors are entitled to allot Shares for cash or otherwise and classify such Shares as US Dollar Shares, 

Euro Shares or Sterling Shares or as Shares of such other classes as they may determine. The Directors are 

also entitled to allot C Shares for cash or otherwise and to classify such C Shares as C Shares of such class or 

classes as the Directors may determine. However, the Articles of Association provide that the Company is not 

permitted to allot (for cash) equity securities (being Shares or C Shares or rights to subscribe for, or convert 

securities into, Shares or C Shares) or sell (for cash) any Shares held in treasury, unless it shall first have offered 

to allot to each existing holder of Shares or C Shares a proportion of those Shares or C Shares the aggregate 

value of which (at the proposed issued price) is as nearly as practicable equal to the proportion of the total Net 

Asset Value of the Company represented by the Shares and/or C Shares held by such holder on the same or 

more favourable terms. These pre-emption rights may be excluded and disapplied or modified by special 

resolution of the Shareholders. The pre-emption rights have been excluded and disapplied for the period from 

Admission to the Company’s first annual general meeting by special resolution of the subscribers to the 

68

Company’s Articles of Association and it is expected that the Company will seek annual disapplication of such 

pre-emption rights at each subsequent annual general meeting of the Company. 

2.6 Under the Articles of Association, the Directors have the right to create new classes of Shares or C Shares in the 

Company, including Shares or C Shares or other securities convertible into the existing classes of Shares or C 

Shares and to determine the assets, liabilities, costs and expenses of the Company allocable to any classes of 

Shares or C Shares or other securities convertible into the existing classes of Shares or C Shares, without 

Shareholder approval provided that such shares or securities are issued on terms which do not, and any such 

allocation does not, adversely affect the interests of existing holders of Shares or C Shares. 

2.7 Subject to the exceptions set out in section 3.13 of this Part 4 under the heading “Transfer of Shares”, Shares 

and C Shares are freely transferable. 

2.8 Holders of Shares and C Shares are entitled to participate (in accordance with the rights specified in the Articles 

of Association) in the assets of the Company attributable to their Shares and C Shares in a winding-up of the 

Company or a winding-up of the business of the Company. 

2.9 All of the Shares and C Shares will be in registered form and eligible for settlement in CREST. Temporary 

documents of title will not be issued. 

3. SUMMARY OF THE COMPANY’S MEMORANDUM AND ARTICLES OF ASSOCIATION 

The Articles of Association of the Company, copies of which are available for inspection at the addresses 

specified in section 15 of Part 4 of this Securities Note, provide (in paragraph 4 of the memorandum of 

association) that the Company has unrestricted corporate capacity. 

3.1 Definitions 

The following definitions apply for the purposes of the Company’s Articles of Association: 

Back Stop Date 

C Share Issue Date 

C Share Surplus 

Calculation Date 

Such date as determined by the Directors and set out in the Specified 

Conversion Criteria 

The date on which the Company receives the net proceeds of the issue of the 

relevant class of C Shares 

The net assets of the Company attributable to the relevant C Share class 

(including, for the avoidance of doubt, any income and/or revenue (net of 

expenses) arising from or relating to such assets) less such proportion of the 

Company’s liabilities as shall reasonably be allocated by the Directors to the 

assets of the Company attributable to that C Share class 

The earliest of: 

(a) 

(b) 

(c) 

(d) 

the close of business on a date specified by the Directors occurring on 

or after the day on which the Manager shall have given notice to the 

Directors, and the Directors agree, that the Specified Proportion of the 

assets attributable to the relevant C Share class has been invested in 

accordance with the investment policy of the Company; 

the close of business on such date as the Directors may decide is 

necessary to enable the Company to comply with its obligations in 

respect of Conversion of the relevant C Share class; 

the close of business on the Back Stop Date; and 

the close of business on the date specified by the Directors falling 

after the date on which the Directors resolve that any Early Investment 

Condition in respect of a particular class of C Shares has been 

satisfied 

For the purposes of paragraph (a) of the definition of Calculation Date, the 

assets attributable to a relevant C Share class shall be treated as having been 

“invested” if they have been expended by or on behalf of the Company in the 

acquisition or making of an investment (whether by subscription or purchase) 

or if an obligation to make such payment has arisen or crystallised (in each 

case unconditionally or subject only to the satisfaction of normal pre-issue 

conditions) in relation to which the consideration amount has been determined 

or is capable of being determined by operation of an agreed contractual 

mechanic 

69

Conversion 

Conversion Date 

Conversion Ratio 

In relation to any class of C Shares, conversion of that class of C Shares in 

accordance with the Articles of Association 

In relation to any class of C Shares, a time falling after the Calculation Date at 

which the admission of the Shares arising on Conversion to listing on the 

Official List of the UK Listing Authority becomes effective and which is the 

opening of business on such Business Day as is selected by the Directors for 

the purpose 

A divided by B calculated to four decimal places (with 0.00005 being rounded 

upwards) where: 

A = C-D 

E 

and 

B = F-G 

H 

and where: 

“C” is the aggregate of: 

(a) 

the value of any investments of the Company attributable to a relevant 

C Share class which are listed or dealt on a stock exchange or on a 

similar market: 

(b) 

(c) 

(i) 

(ii) 














all other investments of the Company attributable to a relevant C 

Share class as reflected in the most recently published audited annual 

accounts of the Company, or, at the Directors’ discretion, in such 

other audited or unaudited accounts (drawn up as at such date as may 

be specified by the Directors) as the Directors may determine subject 

to such adjustments as the Directors may deem appropriate to be 

made for any variations in the value of such investments between the 

date of acquisition and the Calculation Date; and 



attributable to a relevant C Share class (including cash and deposits 

with or balances at bank and including any accrued income and other 

items of a revenue nature less accrued expenses); 

“D” is the amount (to the extent not otherwise deduced in the calculation of “C”) 

which, in the Directors’ opinion, fairly reflects the amount of the liabilities 

attributable to a relevant C Share class at the Calculation Date (including, for 

the avoidance of doubt, the costs of acquisition of the relevant C Share class 

investments or assets referred to above); 

“E” is the number of C Shares of the relevant class in issue at the Calculation 

Date; 

70

“F” is the aggregate of: 

(d) 

the value of any investments of the Company attributable to the 

Shares of the relevant class which are listed or dealt in on a stock 

exchange or on a similar market: 

(i) 

(ii) 














(e) 

(f) 

the value of all other investments of the Company as reflected in the 

most recently published audited annual accounts of the Company or, 

at the Directors’ discretion, in such other audited or unaudited 

accounts (drawn up as at such date as may be specified by the 

Directors) as the Directors may determine, attributable to the Shares 

of the relevant class, subject to such adjustments as the Directors 

may deem appropriate to be made for any variations in the value of 

such investments between the date of acquisition and the Calculation 

Date; and 



(including cash and deposits with or balances at bank and including 

any accrued income or other items of a revenue nature less accrued 

expenses), attributable to the Shares of the relevant class; 

“G” is the amount (to the extent not otherwise deducted in the calculation of 

“F”) which, in the Directors’ opinion, fairly reflects the amount of the liabilities 

of the Company attributable to Shares of the relevant class and the full amount 

of all dividends declared but not paid on such class of the Shares, at the 

Calculation Date; and 

Disclosure Document 

Early Investment Condition 

Share Surplus 

Specified Conversion Criteria 

Specified Proportion 

“H” is the number of Shares of the relevant class in issue at the Calculation 

Date 

Any relevant disclosure document, or prospectus (as the case may be) issued 

by the Company from time to time in connection with the issue of C Shares 

Any such condition specified in the Specified Conversion Criteria 

The net assets of the Company attributable to the Shares less the C Share 

Surplus of all C Share classes 

In respect of any issue of C Shares, such criteria as may be determined by the 

Directors and announced by the Company through a RIS, setting out, among 

other things, the Specified Proportion, the Back Stop Date, any post-Conversion 

dividend limitations and any Early Investment Condition 

A specified percentage of the assets attributable to the C Shares of the relevant 

class as determined by the Directors and set out in the Specified Conversion 

Criteria 

The Articles of Association contain provisions, among others, to the following effect: 

3.2 Shares generally 

The Company’s share capital is represented by an unlimited number of Shares of no par value (which upon issue the 

Directors may classify as US Dollar Shares, Euro Shares or Sterling Shares or as Shares of such other classes as the 

71

Directors may determine), an unlimited number of C Shares of no par value (which may be classified as C Shares of such 

classes as the Directors may determine) and 100 Management Shares of no par value. 

Shareholders shall have the following rights: 

3.3 C Shares 

The Articles of Association provide as follows in relation to C Shares: 

3.3.1 General 

For the purposes of these provisions, other than in relation to “Rights as to Capital”, assets or investments 

attributable to the C Shares of a particular class or the C Share holders of a particular class shall mean the net 

cash proceeds (after all expenses relating thereto) of the issue of such C Shares as invested in or represented by 

investments or cash or other assets from time to time. 

3.3.2 Issue of C Shares 

Subject to the Companies Laws, the Directors are authorised to issue C Shares of such classes, of such number 

of tranches and on such terms as they determine provided that such terms are consistent with the provisions of 

the Articles of Association. 

If there are in issue at the same time C Shares carrying different rights, each shall be deemed to be a separate 

class of shares. The Directors may, if they so decide, designate each class of C Shares in such manner as they 

see fit in order that each class of C Shares can be separately identified. 

3.3.3 Dividends and pari passu ranking of Shares post Conversion 

Pending Conversion, the holders of C Shares of a particular class shall not be entitled to receive any dividends or 

other distributions in respect of the assets attributable to that class of C Shares. 

The new Shares of the relevant class arising on Conversion shall rank in full for all dividends and other 

distributions declared, made or paid after the Conversion Date and otherwise rank pari passu with the Shares of 

the relevant class in issue at the Conversion Date, save to the extent of any post-Conversion dividend limitation 

which may be specified by the Directors in the Specified Conversion Criteria. 

3.3.4 Rights as to Capital 


3.3.5 Voting and Transfer 

Except as provided under “Class Consents and Variation Rights”, C Shares shall not have the right to attend, but 

shall receive notices of, any general meetings of the Company. 

C Shares are transferable in the same manner as Shares. 

3.3.6 Class Consents and Variation Rights 

Until Conversion the consent of the holders of the relevant C Shares as a class shall be required for and, 

accordingly, the special rights attached to any class of C Shares shall be deemed to be varied inter alia, by: 

(a) 

(b) 

(c) 

(d) 

(e) 

any alteration to the Articles of Association; or 

any alteration, increase, consolidation, division, sub-division, cancellation, reduction or purchase by the 

Company of any share capital of the Company (other than on the issue of further C Shares of the same 

or any other class, or on Conversion or on the issue of further Shares or classes of Shares on terms 

which do not adversely affect the interests of the holders of the C Shares, or on the purchase of any 

Shares by the Company at a discount to their estimated prevailing Net Asset Value per Share); or 

the passing of any resolution to wind up the Company; or 

the selection of any accounting reference date other than that declared in the Disclosure Document; or 

any material change to the investment policy of the Company. 

In respect of such matters, holders of C Shares shall have the right to attend, receive notice of and vote at a 

separate general meeting of the holders of C Shares of all classes meeting as a single body and in respect of 

voting at such general meetings: 

(a) 

(b) 

each holder of C Shares shall, on a show of hands, have one vote; and 

on a poll, each holder of C Shares attending in person, by proxy or by corporate representative shall 

have one vote in respect of each C Share denominated in US Dollars held by him and such number of 

votes: (a) in respect of each C Share denominated in Euro held by him as shall be equal to the Net Asset 

Value of such C Share (calculated in US Dollars) divided by the Net Asset Value per C Share 

72

3.3.7 Undertakings 

denominated in US Dollars; (b) in respect of each C Share denominated in Sterling held by him as shall 

be equal to the Net Asset Value of such C Share (calculated in US Dollars) divided by the Net Asset 

Value per C Share denominated in US Dollars; and (c) in respect of a C Share denominated in any 

currency other than US Dollars, Sterling or Euro held by him as shall be equal to the Net Asset Value of 

such share (calculated in US Dollars) divided by the Net Asset Value per C Share denominated in US 

Dollars (rounded to one decimal place with 0.05 being rounded upwards), in each case as at the date of 

issue of the relevant class of C Share. 

Until Conversion, and without prejudice to its obligations under the Companies Laws, the Company undertakes in 

relation to each class of C Shares to: 

(a) 

(b) 

(c) 

procure that the Company’s records and bank accounts shall be operated so that the assets 

attributable to the C Shares of the relevant class can, at all times, be separately identified and, in 

particular but without prejudice to the generality of the foregoing, the Company shall procure that 

separate cash accounts shall be created and maintained in the books of the Company for the assets 

attributable to the C Shares of the relevant class; 

allocate to the assets attributable to the C Shares such proportion of the expenses or liabilities of the 

Company incurred or accrued between the C Share Issue Date and the Calculation Date (both dates 

inclusive) as the Directors fairly consider to be attributable to the C Shares of the relevant class 

including, without prejudice to the generality of the foregoing, those liabilities specifically identified in 

the definition of “Conversion Ratio” above; and 

give appropriate instructions to the Manager to manage the Company’s assets so that such 

undertakings can be complied with by the Company. 

3.3.8 Conversion 

The Directors shall procure that: 

(a) 

(b) 

the Sub-Administrator shall be requested to calculate, within ten Business Days after the Calculation 

Date, the Conversion Ratio as at the Calculation Date and the number of Shares of the relevant class to 

which each holder of C Shares of the relevant class shall be entitled on Conversion. For the avoidance 

of doubt C Shares designated in a particular currency shall convert into Shares of the same currency; 

and 

the Auditor, or failing which an independent accountant selected for the purpose by the Directors, shall 

be requested to report, within 15 Business Days after the date on which the Conversion Ratio has been 

calculated, that such calculations: 

(i) 

(ii) 

have been performed in accordance with the Articles of Association; and 

are arithmetically accurate, 

whereupon such calculations shall become final and binding on the Company and all holders of Shares 

of the relevant class and the relevant C Share class. 

The Directors shall further procure that, as soon as practicable following such certification, a RIS announcement 

is made advising holders of C Shares of that class of the Conversion Date, the Conversion Ratio and the 

aggregate number of new Shares of the relevant class to which holders of C Shares of that class are entitled on 

Conversion. 

The Shares of the relevant class arising upon Conversion shall be divided amongst the former holders of the C 

Shares of the relevant class pro rata according to their respective former holdings of C Shares of the relevant 

class (provided always that the Directors may deal in such manner as they think fit with fractional entitlements to 

Shares of the relevant class including, without prejudice to the generality of the foregoing, selling any such 

Shares representing such fractional entitlements and retaining the proceeds for the benefit of the Company) and 

for such purposes any Director is hereby authorised as agent on behalf of the former holders of C Shares, in the 

case of a share in certificated form, to execute any stock transfer and to do any other act or thing as may be 

required to give effect to the same including, in the case of a share in uncertificated form, the giving of directions 

to or on behalf of the former C Share holder who shall be bound by them. 

Forthwith upon Conversion, any certificates relating to the C Shares of the relevant class shall be cancelled and 

the Company shall issue to each such former C Share holder new certificates in respect of the Shares of the 

relevant class which have arisen upon Conversion unless such former C Share holder elects to hold their Shares 

of the relevant class in uncertificated form. 

The Company will use its reasonable endeavours to procure that upon Conversion the new Shares are admitted 

to the Official List of the UK Listing Authority. 

73

In connection with any issue of a C Share class, the Directors shall state the Specified Conversion Criteria in: 

(a) 

(b) 

any relevant Disclosure Document or press announcement published; and 

in a RIS release, 

3.4 Voting 

at the time of offer of such C Shares for subscription. 

Subject to any special rights, restrictions or prohibitions as regards voting for the time being attached to any Shares (e.g. 

as set out in section 3.11 below), holders of Shares shall have the right to receive notice of and to attend and vote at 

general meetings of the Company. Each Shareholder being present in person or by proxy or by a duly authorised 

representative (if a corporation) at a meeting shall upon a show of hands have one vote and upon a poll each such holder 

present in person or by proxy or by a duly authorised representative (if a corporation) shall, in the case of a separate class 

meeting, have one vote in respect of each Share held by him and, in the case of a general meeting of all Shareholders, 

have one vote in respect of each US Dollar Share held by him and such number of votes: (a) in respect of each Euro Share 

held by him as shall be equal to the Net Asset Value per Euro Share (calculated in US Dollars) divided by the Net Asset 

Value per US Dollar Share; (b) in respect of each Sterling Share held by him as shall be equal to the Net Asset Value per 

Sterling Share (calculated in US Dollars) divided by the Net Asset Value per US Dollar Share; and (c) in respect of a share 

denominated in any currency other than US Dollars, Sterling or Euro held by him as shall be equal to the Net Asset Value 

of such share (calculated in US Dollars) divided by the Net Asset Value per US Dollar Share (rounded to one decimal place 

with 0.05 being rounded upwards), in each case either as at Admission or, with effect from 1 January 2009, the last 

Valuation Date of the immediately preceding calendar year or, in respect of any class of shares not in issue as at 

Admission or such Valuation Date, as at the date of issue of such shares. 

Shareholders will have the right to vote on all material changes to the Company’s investment policy. Any such changes 

may be made only with the prior consent of the holders of the C Shares as described in section 3.3.6 above. 

Save as described in section 3.3.6 above, C Shares will not carry the right to attend and receive notice of any general 

meetings of the Company, nor will they carry the right to vote at such meetings. 

3.5 Dividends 

(a) 

(b) 

(c) 

(d) 

The Company may, by ordinary resolution, declare dividends in respect of the Shares but no dividend shall 

exceed the amount recommended by the Directors. No dividend will be paid other than out of the profits of the 

business of the Company and the declaration of the Directors as to the amount of the profits shall be conclusive. 

The Directors may at from time to time declare and pay such interim dividends as appear to be justified by the 


All unclaimed dividends may be invested or otherwise used by the Board of Directors for the benefit of the 

Company until claimed and the Company will not be constituted a trustee in respect thereof. No dividend will 

bear interest against the Company. Any dividend unclaimed after a period of 12 years from the date of declaration 

of such dividend will be forfeited and revert to the Company. 

The Board of Directors may before recommending any dividend set aside out of the profits of the Company such 

sums as they think proper as a reserve or reserves which shall at the discretion at their discretion be applicable 

for any purpose to which the profits of the Company may properly be applied and pending such application may 

at the like discretion either be employed in the business of the Company or be invested in such investments as 

the Directors may from time to time think fit. The Board of Directors may also without placing the same to 

reserve carry forward any profits which they may think prudent not to distribute. 

3.6 Capital 

On a winding-up of the Company, after paying all the debts attributable to and satisfying all the liabilities of the Company, 

Shareholders and C Share holders will be entitled to receive by way of capital any surplus assets of the Company 

attributable to the Shares and C Shares of the relevant class (as applicable) as a class in proportion to their holdings. 


3.7 Distribution on winding-up 

(a) 

On a winding-up the surplus assets remaining after payment of all creditors will be divided among the classes of 

Shares and C Shares then in issue (if more than one) on the basis that the Share Surplus shall be divided 

amongst Shareholders of the relevant classes and the C Share Surplus shall be divided amongst the holders of 

the relevant classes of C Shares in reflection of the pools of assets attributable to such Shares and C Shares in 

the books and records of the Company at the relevant winding up date as calculated by the Board of Directors or 

the liquidator in their discretion. 

Within each such class, such assets will be divided pari passu among the Shareholders and holders of C Shares 

of that class in proportion to the number of Shares or C Shares (as may be) of that class held at the 

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commencement of the winding-up, subject in any such case to the rights of any Shares or C Shares (as the case 

may be) which may be issued with special rights or privileges. Holders of the two Management Shares will be 

entitled to receive the amount of capital paid up on such shares. 

(b) 

(c) 

On a winding-up the liquidator may, with the authority of a special resolution, divide amongst the Shareholders or 

holders of C Shares, or different classes of Shareholders or holders of C Shares, in specie the whole or any part 

of the assets of the Company and may set such value as they deem fair upon any one or more class or classes of 

property and may determine the method of division of such assets between Shareholders or holders of C Shares, 

or different classes of Shareholders or holders of C Shares. The liquidator may, with like authority, vest any part 

of the assets in trustees upon such trusts for the benefit of Shareholders or holders of C Shares as they deem fit 

but no Shareholder or holder of C Shares will be compelled to accept any assets in respect of which there is any 

outstanding liability. 

Where the Company is proposed to be or is in the course of being wound-up and the whole or part of its business 

or property is proposed to be transferred or sold to another company the liquidator may, with the sanction of an 

ordinary resolution, receive in compensation or part compensation for the transfer or sale of assets, shares, 

policies or other like interests for distribution among the Shareholders or holders of C Shares or may enter into 

any other arrangements whereby the Shareholders, or holders of C Shares (as applicable), may, in lieu of 

receiving cash, shares, policies, or other like interests in the transferee, participate in the profits of or receive 

any other benefit from the transferee. 

3.8 Redemption Facility 

(a) 

(b) 

(c) 

(d) 

Each holder of Shares may, where, at the sole option of the Directors, the Directors opt to give effect to 

redemption requests on any Redemption Date in the manner and subject to the provisions of the Articles of 

Association request the redemption of the whole or any number of Shares comprised in their holding of Shares 

at the prevailing Net Asset Value of the relevant class of Shares (less the costs of redemption and, as determined 

by the Directors, any penalty charges resulting from the realisation of underlying investments in order to fund 

such redemptions) as at the Redemption Date. 

On any Redemption Date on which the Directors at their sole discretion opt to give effect to redemption requests, 

the Company will not give effect to redemption requests in respect of more than 20 per cent. in aggregate of the 

Shares of the relevant class of Shares in issue, or such lesser percentage of Shares in respect of which the 

Directors decide to give effect to redemption requests. If on any Redemption Date the number of Shares of a 

class for which valid redemption requests have been delivered (accompanied by any relevant documents) would, 

if the same were given effect to, cause the limit described in this paragraph to be exceeded, the number of 

Shares of that class to be redeemed on such Redemption Date will be reduced pro rata according to the number 

of Shares of that class to which each redemption request relates and each such redemption request will be 

deemed not to apply to the balance of the Shares of that class to which it would otherwise apply. 

The ability to redeem Shares in certificated form may be exercised by the holder delivering to the Company at its 

registered office (or to such other address or such other person as the Directors may designate for the purpose) 

a duly completed Redemption Notice no later than the 95th day prior to the relevant Redemption Date (or such 

other day as the Directors may, in their absolute discretion, determine), or, if such 95th day (or such other day as 

may be determined by the Directors) is not a Business Day, then the immediately preceding Business Day (the 

“Notification Date”), together with the certificate(s) (if any have been issued) in respect of the Shares to be 

redeemed and such other evidence as the Directors may reasonably require to prove the title of the holder and 

the due execution by him of the Redemption Notice or, if the Redemption Notice is executed by some other 

person on their behalf, the authority of that other person to do so. The ability to redeem Shares in uncertificated 

form may be exercised by delivery to the Company (or such other person as the Directors may designate for the 

purpose) of a Redemption Notice no later than the Notification Date in accordance with the procedures 

prescribed by the Directors. For the purposes of the provisions of the Articles of Association described in this 

paragraph, the expression “Redemption Notice” means a notice of redemption in such form as the Directors may 

from time to time prescribe and may in the case of Shares in uncertificated form means an instruction sent by 

means of a relevant system in such form as the Directors may from time to time prescribe. The Directors may in 

their absolute discretion reject any Redemption Notice in respect of a Redemption Date given at any time on or 

prior to the relevant Notification Date and/or given otherwise than in accordance with the Articles of Association. 

A Redemption Notice once given may not be withdrawn without the consent of the Company. The Directors may, 

at their sole discretion, give effect to any or all redemption requests received after the Notification Date and may 

set a redemption notice period which is greater or lesser than 95 days prior to a Redemption Date. 

Redemption will become effective on the Redemption Date. In the case of certificated Shares, cheques for 90 per 

cent. (or such lower percentage as the Directors may in their absolute discretion determine to be in the best 

interests of the Company and its Shareholders as a whole) of the proceeds of any such redemptions will be sent 

to the holder (or, in the case of joint holders to all holders but sent, to the holder whose name stands first in the 

register in respect of the Shares) at their own risk within 30 Business Days of the completion of the calculation of 

the Net Asset Value of the Company as at the Redemption Date (or as soon as practicable) or, if later, within five 

75

Business Days of the receipt of the certificate(s) (if any have been issued) or an indemnity in a form satisfactory to the 

Directors in lieu of the certificate(s) in respect of the Shares being redeemed. If a certificate includes Shares not 

redeemable on that occasion, a new certificate for the balance of the certificated Shares shall be issued to the holder 

without charge. If a holder whose certificated Shares are to be redeemed fails to deliver the certificate(s) (if issued) for 

those Shares to the Company, the Company may retain the redemption proceeds until such certificate is delivered. In 

the case of uncertificated Shares, 90 per cent. (or such lower percentage as the Directors may in their absolute 

discretion determine to be in the best interests of the Company and its Shareholders as a whole) of the proceeds of 

any such redemptions will be paid within 30 Business Days of the completion of the calculations of the Net Asset 

Value of the Company as at the Redemption Date (or as soon as practicable) to the holder by such method as may be 

determined by the Directors. Other than as provided below, no interest will be payable on redemption monies during 

the period from the relevant Redemption Date to the date of payment. The remaining 10 per cent. of such redemption 

proceeds (the “Hold-Back Amount”) shall be retained by the Company until completion of the Company’s audit for the 

then current financial year, following which the Hold-Back Amount will be (a) increased or reduced (but not below 

zero) as necessary to reflect any difference between the Net Asset Value per Share at which such redemption was 

effected and the audited Net Asset Value per Share as at the Redemption Date and (b) where the Shares redeemed 

were denominated otherwise than in US Dollars, adjusted to reflect the costs, and any gains or losses, resulting from 

any currency hedging activities conducted by the Investment Manager in respect of the Hold-Back Amount (the 

resulting amount, the “Adjusted Hold-Back Amount”). The Adjusted Hold-Back Amount (if any), will be paid to 

Shareholders in the same manner as described above (together with interest accruing after 60 days at a rate equal to 

one quarter of the annualised yield for 90 day United States Treasury bills, which rate will be determined by the 

Investment Manager and fixed as of the last Business Day prior to each applicable Fiscal Quarter) within 30 Business 

Days of the completion of the Company’s audit for the relevant year. The Redemption Facility is not available in 

respect of the C Shares as a whole or any class thereof. 

(e) If the calculation and publication of the Net Asset Value per Share is suspended on any Redemption Date, the 

Directors may delay any redemptions otherwise due to take place on such date until a substitute date selected by 

the Directors following the cessation of such suspension. 

(f) The Company shall not be liable for any loss or damage suffered or incurred by any holder of Shares or any other 

person as a result of or arising out of late settlement, howsoever such loss or damage may arise. 

3.9 Conversion of Shares 

(a) At the Valuation Dates referable to the months of March, June, September and December in each year 

(commencing in June 2008) (each a “Currency Conversion Calculation Date”) Shareholders may convert Shares 

of any class into Shares of any other class (of which Shares are in issue at the relevant time) by giving not less 

than 10 Business Days’ notice to the Company in advance of such Currency Conversion Calculation Date, either 

through submission of the relevant instruction mechanism (for Shareholders holding Shares in uncertificated 

form) or through submission of a conversion notice and the return of the relevant share certificate to the 

Registrars. Such conversion will be effected on the basis of the ratio of the last reported Net Asset Value per 

Share of the class of Shares held (calculated in US Dollars less the costs of effecting such conversion and as 

adjusted to reflect the impact of adjusting any currency hedging arrangements), to the last reported Net Asset 

Value per Share of the class of Shares into which they will be converted (each as at the relevant Currency 

Conversion Calculation Date). Shareholders should note, however, that fractions of Shares arising on conversion 

will be rounded down and hence the aggregate Net Asset Value of those Shares held after conversion may be 

less than before such conversion. Shareholders who elect to convert Shares will be unable to deal in those 

Shares in the period between giving notice of conversion and the actual date of conversion. 

(b) The Directors may amend the process for conversion (including the frequency of currency class conversions and 

the procedure for giving notice of conversion) in such manner as they see fit including, without limitation, for the 

purposes of facilitating conversions of Shares in uncertificated or certificated form or to facilitate electronic 

communications. Any conversion notice once given shall be irrevocable without the consent of the Directors. The 

date on which conversion shall take place shall be a date determined by the Board of Directors being not more 

than 30 days after the relevant Currency Conversion Calculation Date. 

(c) Conversion shall be effected by way of redesignation of Shares of one currency class into Shares of another 

currency class or in any such other manner as the Board of Directors may determine. Fractions of Shares arising 

on such conversion will be rounded down to the nearest whole Share. 

(d) The ability to convert Shares from one class into Shares of any other class may be suspended at any time that the 

calculation and publication of the Net Asset Value per Shares is suspended. 

(e) Should either: (i) the aggregate Net Asset Value of the Shares of any class as at any Valuation Date fall below US$40 

million, (or the equivalent in the relevant currency); or (ii) the number of Shares in any class held in public hands (as 

such phrase is used in current Listing Rule 6.1.19(4)R) fall below 25 per cent. of the total number of issued Shares of 

that class, the Directors, in accordance with the Articles of Association, have the right, at their discretion, to 

compulsorily convert the Shares of such class into Shares of the class then in issue with the greatest aggregate Net 

Asset Value in US Dollar terms as at the corresponding Valuation Date. Any such compulsory conversion will take 

place in substantially the same manner specified for voluntary conversion in paragraphs (a) to (c) above. 

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3.10 Variation of Share Rights and issue of new classes of shares 

The rights attached to any class of Shares or C Shares (unless otherwise provided by the terms of issue of the shares of 

that class) may be varied or abrogated at any time with the consent in writing of the holders of two-thirds of the issued 

shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares 

of that class. 

The Directors may create new classes of Shares or C Shares, including securities convertible into existing classes of 

Shares or C Shares, and may determine the assets or investments, liabilities, costs and expenses of the Company 

allocable to any classes of Shares or C Shares or other securities convertible into existing classes of Shares or C Shares, 

without shareholder approval provided that such shares or securities are issued on terms which do not, and any such 

allocation does not, adversely affect the interests of existing shareholders. 

The quorum for a meeting to vary or abrogate the rights attaching to any class of Shares or C Shares shall be persons 

holding or representing by proxy at least one-third in number of the issued shares of the relevant class (but so that if at 

any adjourned meeting of such holders a quorum as above defined is not present one person present holding shares of 

that class or their proxy shall be a quorum). Holders of shares of the class or their duly appointed proxies shall on a poll 

have one vote in respect of every share of that class held by them respectively. 

3.11 Notice requiring disclosure of interests in Shares or C Shares 

(a) 

(b) 

(c) 

(d) 

The Directors have power by notice in writing to require any Shareholder or holder of C Shares to disclose to the 

Company the identity of any person other than the Shareholder or holder of C Shares (an “interested party”) who 

has any interest in the Shares or C Shares held by such Shareholder or holder of C Shares and the nature of 

such interest. Any such notice shall require any information in response to such notice to be given in writing 

within such reasonable time as the Directors shall determine. 

The Directors may be required to exercise their power to require disclosure of interested parties on a requisition 

of Shareholders holding not less than 1/10 th of the total voting rights attaching to the Shares in issue at the 

relevant time. 

If any Shareholder or holder of C Shares is in default in supplying to the Company the information required by the 

Company within the prescribed period, the Directors in their absolute discretion may serve a direction notice on 

that Shareholder or holder of C Shares. 

The direction notice may direct that in relation to the Shares or C Shares in respect of which the default has 

occurred (“default shares”) and any other Shares or C Shares held by such Shareholder or holder of C Shares, 

the Shareholder or holder of C Shares will not be entitled to vote in general meetings or class meetings. Where 

the default shares represent at least 0.25 per cent. of the class of Shares or C Shares concerned, the direction 

notice may additionally direct that dividends on such Shares be retained by the Company (without interest) and 

that no transfer of the default shares (other than a transfer authorised under the Articles of Association) will be 

registered until the default is rectified. 

3.12 Commission 

The Company may pay commission in money, Shares or C Shares to any person in consideration for their subscribing or 

agreeing to subscribe whether absolutely or conditionally for any Shares or C Shares in the Company or procuring or 

agreeing to procure subscriptions whether absolute or conditional for any Shares or C Shares in the Company provided 

that the rate or amount of commission will be fixed by the Board of Directors. The Company may also pay brokerage fees. 

3.13 Transfer of Shares 

(a) 

The Articles of Association provide that the Board of Directors may permit the holding in uncertificated form of 

one or more classes of Shares and/or C Shares determined for this purpose in order than the transfer of title to 

any such Shares or C Shares may be effected by means of a computer system (including the CREST system) in 

accordance with the Jersey Regulations. If the Board of Directors implement any such arrangements, no 

provision of the Articles of Association will apply or have effect to the extent that it is in any respect inconsistent 

with: 

(i) 

(ii) 

(iii) 

the holding of Shares or C Shares of the relevant class in uncertificated form; 

the transfer of title to Shares or C Shares of the relevant class by means of the CREST system; or 

the Jersey Regulations. 

(b) 

Where any class of Shares or C Shares is, for the time being, admitted to settlement by means of the CREST 

system such securities may be issued in uncertificated form in accordance with and subject to the CREST 

Regulations. Unless the Board of Directors otherwise determine, Shares or C Shares held by the same holder or 

joint holders in certificated form and uncertificated form will be treated as separate holdings. Shares and C 

Shares may be changed from uncertificated to certificated form, and from certificated to uncertificated form, in 

accordance with and subject to the CREST Regulations. Title to such of the Shares or C Shares as are recorded 

on the register as being held in uncertificated form may be transferred only by means of the relevant system. 

77

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

Subject to such of the restrictions of the Articles of Association as may be applicable, any instrument of transfer of 

a Share or C Share shall be in writing in any form which the Board of Directors may approve (which shall specify 

the full name and address of the transferee) and shall be signed by or on behalf of the transferor (and, in the case 

of a partly paid Share or C Share, by or on behalf of the transferee) and the transferor shall be deemed to remain 

the holder of the Share or C Share until the name of the transferee is entered into the register of shareholders in 

respect thereof. Subject to the requirements of the Listing Rules, the Board of Directors may decline to register a 

transfer of any Share or C Share in certificated form or uncertificated form unless (a) it is fully paid up, (b) the 

instrument of transfer is left at the registered office of the Company, or at such other place as the Directors may 

determine, for registration, (c) the instrument of transfer is accompanied by the certificate for the Shares or C 

Shares to be transferred (if the Shares or C Shares are held in certificated form) and such other evidence (if any) 

as the Directors may reasonably require to prove the title of the intending transferor or their right to transfer the 

Shares or C Shares, (d) the instrument of transfer is duly stamped (if so required), (e) it is in respect of only one 

class of Shares or C Shares, (f) it is in favour of not more than four transferees jointly, and (g) it is not in favour of a 

minor, infant, bankrupt or person with a mental disorder, provided in each case such refusal would not prevent 

dealings from taking place on an open and proper basis on any relevant stock exchange. 

If the Directors decline to register a transfer of any Share or C Share, they shall, within two months after the date 

on which the transfer was lodged with the Company, send to the transferee notice of the refusal. 

No purchase or other acquisition of Shares or C Shares may be made by any entity that is (i) an “employee benefit 

plan” (within the meaning of Section 3(3) of ERISA) that is subject to Part 4 of Title 1 of ERISA, (ii) a plan, 

individual retirement account or other arrangement that is subject to Section 4975 of the US Internal Revenue 

Code or any other state, local laws or regulations that would have the same effect as regulations promulgated 

under ERISA by the US Department of Labor and codified at 29 C.F.R. Section 2510.3-101 to cause the underlying 

assets of the Company to be treated as assets of that investing entity by virtue of its investment (or any beneficial 

interest) in the Company and thereby subject the Company and its investment manager (or other persons 

responsible for the investment and operation of the Company’s assets) to laws or regulations that are similar to 

the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the 

US Internal Revenue Code, or (iii) an entity whose underlying assets are considered to include “plan assets” of 

any such plan, account or arrangement (each of (i), (ii) and (iii), a “Plan”) or (iv) a US Person in circumstances 

where the holding of Shares or C Shares by such person would (a) give rise to an obligation on the Company to 

register as an “investment company” under the Investment Company Act; (b) preclude the Company from relying 

on the exception to the definition of “investment company” contained in section 3(c)(7) of the Investment 

Company Act; (c) give rise to an obligation on the Company to register under the Securities Exchange Act of 1934, 

as amended; or (d) give rise to an obligation on the Manager or the Investment Manager to register as a 

commodity pool operator or commodity trading advisor under the US Commodity Exchange Act of 1974, as 

amended (each such US Person, a “Prohibited US Person”). If any Shares or C Shares are owned directly or 

beneficially by a person believed by the Board of Directors to be a Prohibited US Person or a Plan investor, the 

Board of Directors may give notice to such person requiring him either (i) to provide the Board of Directors within 

30 days of receipt of such notice with sufficient satisfactory documentary evidence to satisfy the Board of 

Directors that such person is not a Prohibited US Person or a Plan investor or (ii) to sell or transfer their Shares 

or C Shares to a person qualified to own the same within 30 days and within such 30 days to provide the Board of 

Directors with satisfactory evidence of such sale or transfer. Where condition (i) or (ii) is not satisfied within 30 

days after the serving of the notice, the person will be deemed, upon the expiration of such 30 days, to have 

forfeited their Shares or C Shares. 

The Board of Directors may, in its absolute discretion, refuse to register a transfer of any Share or C Share to any 

person it has reason to believe is a Prohibited US Person or Plan investor or, provided that the Board of Directors will 

not exercise this discretion if to do so would prevent dealings in Shares from taking place on an open and proper 

basis on the London Stock Exchange. Each person acquiring Shares and/or C Shares shall by virtue of such 

acquisition be deemed to have represented to the Company that he is not a Plan investor or a Prohibited US Person. 

If any Shares or C Shares are owned directly or beneficially by a person believed by the Board of Directors to be a 

Prohibited US Person or a Plan investor, the Board of Directors may give notice to such person requiring him 

either (i) to provide the Board of Directors within 30 days of receipt of such notice with sufficient satisfactory 

documentary evidence to satisfy the Board of Directors that such person is not a Prohibited US Person or a Plan 

investor or (ii) to sell or transfer their Shares or C Shares to a person qualified to own the same within 30 days 

and within such 30 days to provide the Board of Directors with satisfactory evidence of such sale or transfer. 

Where condition (i) or (ii) is not satisfied within 30 days after the serving of the notice, the person will be deemed, 

upon the expiration of such 30 days, to have forfeited their Shares or C Shares. 

A forfeited Share or C Share will be deemed to be the property of the Company and may be sold, re-allotted or 

otherwise disposed of on such terms as the Board of Directors thinks fit, including (if applicable) with or without 

all or any part of the amount previously paid on the Share or C Share being credited as paid. At any time before 

such a sale or disposition the forfeiture process may be cancelled. No proceeds of any forfeiture will be paid to 

any person whose Shares or C Shares have been forfeited. 

78

(i) 

(j) 

(k) 

(l) 

(m) 

A person whose Shares or C Shares have been forfeited will cease to be a shareholder in respect of the forfeited 

Shares or C Shares but will, notwithstanding the forfeiture and if applicable, remain liable to pay to the Company 

all monies which at the date of the forfeiture were payable by them to the Company in respect of the Shares or C 

Shares with interest thereon from the date of forfeiture until payment at such rate (not exceeding 15 per cent. 

per annum) as the Board of Directors determines and the Board of Directors may enforce payment without any 

allowance for the value of the Shares or C Shares at the time of forfeiture. 

The Board of Directors may accept from any shareholder on such terms as agreed a surrender of any Shares or 

C Shares in respect of which there is a liability for calls or in circumstances where a US Person determines that 

they are not qualified to hold the Shares or C Shares. Any surrendered Share or C Share may be disposed of in 

the same manner as a forfeited Share or C Share. 

The registration of transfers of Shares or C Shares or of transfers of any class of Shares or C Shares may be 

suspended at such times and for such periods as the Directors may determine provided always that such 

registration shall not be suspended, either generally or otherwise, for more than 30 days in any year. 

No fee shall be charged for the registration of any instrument of transfer or other document relating to or 

affecting the title to any Share or C Share. 

The Company shall be entitled to retain any instrument of transfer of any Share or C Share which is registered, 

but any instrument of transfer of any Share or C Share which the Directors refuse to register (except in the case 

of fraud) shall be returned to the person lodging it when notice of the refusal is given. 

3.14 Alteration of Capital 

The Company may by special resolution altering its Memorandum increase or reduce the number of Shares and/or 

C Shares which it is authorised to issue or consolidate or divide all or any of its Shares and/or C Shares (whether issued or 

not) into fewer Shares and/or C Shares. 

Subject to the provisions of the Companies Law (including confirmation by the court, if required) the Company may by 

special resolution reduce its capital account in any way. 

3.15 Notices 

(a) 

(b) 

(c) 

(d) 

A notice may be given by the Company to any holder of Shares or C Shares either personally or by sending it by 

post in a pre-paid envelope addressed to the relevant holder at their registered address. A notice sent by post 

will be deemed to have been served 24 hours after the time when the notice was posted. Any document or notice 

that may be sent by the Company by electronic communication will be deemed to be received 24 hours after the 

time at which it was sent. 

A notice may be given by the Company to the joint holders of Shares or C Shares by giving the notice to the joint 

holder first named in respect of the relevant Shares or C Shares in the register of members. 

Notice for any general meeting held to pass a special resolution and for the annual general meeting must be 

sent not less than 21 days before the meeting and notice for any other general meeting must be sent not less 

than 14 days before the meeting, provided that, with the written consent of shareholders entitled to receive notice 

of such meetings, a meeting may be convened by shorter notice or no notice at all and in any manner they think 

fit. 

The notice must specify the time and place of the general meeting and, in the case of any special business, the 

general nature of the business to be transacted. The accidental omission to give notice of any meeting or the 

non-receipt of such notice by any shareholder will not invalidate any resolution, or any proposed resolution 

otherwise duly approved, passed or proceeding at any meeting. 

3.16 Pre-emption Rights 

There are no provisions of Jersey law which confer rights of pre-emption in respect of the allotment of the Shares or 

C Shares. However, the Articles of Association provide that the Company is not permitted to allot (for cash) equity 

securities (being Shares or C Shares or rights to subscribe for, or convert securities into, Shares or C Shares) or sell (for 

cash) any Shares held in treasury, unless it shall first have offered to allot to each existing holder of Shares and/or C 

Shares on the same or more favourable terms a proportion of those Shares or C Shares the aggregate value of which (at 

the proposed issue price) is as nearly as practicable equal to the proportion of the total Net Asset Value of the Company 

represented by the Shares and/or C Shares held by such holder. These pre-emption rights may be excluded and 

disapplied or modified by special resolution of the Shareholders. 

The pre-emption rights have been excluded and disapplied for the period from Admission to the Company’s first annual 

general meeting by special resolution of the subscribers to the Company’s Articles of Association and it is expected that 

the Company will seek annual disapplication of such pre-emption rights at each subsequent annual general meeting of 

the Company. 

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4. BOARD OF DIRECTORS 

The Company’s Articles of Association provide that the Board of Directors shall be composed of at least two directors and 

shall not be subject to any maximum unless otherwise determined by a resolution of the Shareholders. The Directors 

meet on a regular basis to review and assess the investment policy and performance of the Company and generally to 

supervise the conduct of its affairs. 

4.1 Board Structure, Practices and Committees 

The structure, practices and committees of the Company’s Board of Directors, including matters relating to the size, 

independence and composition of the Board of Directors, the election and removal of directors, requirements relating to 

Board of Directors action, and the powers delegated to Board of Directors committees are governed by the Company’s 

Articles of Association and the Listing Rules. The following is a summary of certain provisions of those Articles of 

Association and the Listing Rules that affect the Company’s corporate governance. This summary is qualified in its 

entirety by reference to all of the provisions of the Articles of Association. Because this description is only a summary of 

certain of the Articles of Association, it does not necessarily contain all of the information that potential Shareholder may 

find useful. The Company therefore urges potential Shareholder to review the Articles of Association in their entirety. 

4.2 Size, Independence and Composition of the Board of Directors 

The Company’s Board of Directors, which upon completion of the Offer will have five members, shall not be subject to any 

maximum unless otherwise determined by a resolution of Shareholders. 

The first Directors have been appointed in writing by the subscribers to the Articles of Association and, in accordance with 

Jersey regulatory requirements applicable to the Company, there shall be at least two Jersey-resident Directors. 

The Listing Rules provide that the Board of Directors must be able to act independently of the Investment Manager and 

that at least a majority of the Directors holding office (including the chairman) must be independent of the Investment 

Manager and its affiliates. If the death, resignation or removal of an Independent Director results in the Board of Directors 

having less than a majority of Independent Directors, the remaining Directors will endeavour to ensure that the vacancy is 

filled promptly. Pending the filling of such vacancy, the Board of Directors may temporarily consist of less than a majority 

of Independent Directors and those Directors who do not meet the standards for independence may continue to hold 

office. 

In addition, the Company’s Articles of Association prohibit the Board of Directors from consisting either of a majority of 

Directors who are residents of the United Kingdom or a majority of Directors who are citizens or residents of the United 

States, and if, as a result of the relocation, removal, death or resignation of a Director, a majority of the Directors would be 

residents of the United Kingdom or citizens or residents of the United States, one or more Directors who is UK resident or 

a United States citizen or resident, as appropriate, shall be deemed to have resigned concurrently with such relocation, 

death or resignation in order to ensure that a majority of the Directors are neither UK residents nor United States citizens 

or residents. 

4.3 Election and Removal of Directors 

At the first annual general meeting and at each annual general meeting thereafter (a) any Director who is not an 

Independent Director must retire, (b) any Director, other than a Director who is not an Independent Director, who was 

elected or last re-elected a Director at or before the annual general meeting held in the third calendar year before the 

current year must retire by rotation; and (c) such further Directors (if any) must retire by rotation as would bring the 

number retiring by rotation up to one-third of the number of Directors in office at the date of the notice of the meeting. 

Retiring Directors may be presented for re-election at the same annual general meeting. Vacancies on the Board of 

Directors may be filled, and additional Directors may be added, by a resolution of Shareholders or a vote of the Directors 

then in office, provided that any new Director is approved by the JFSC and that following such appointment the Board of 

Directors remains in compliance with the conditions referred to in section 4.2 above. 

A Director may be removed from office for any reason by a written resolution requesting his resignation signed by all other 

Directors then holding office or by a resolution duly passed by Shareholders. A Director will be automatically removed 

from the Board of Directors if he or she becomes bankrupt, insolvent or makes any arrangements with his or her 

creditors generally, if he or she becomes resident in the United Kingdom or a citizen or resident of the United States and 

such residency or citizenship results in a majority of the Board of Directors being either resident in the United Kingdom or 

citizens or residents of the United States or if he or she becomes prohibited by law from acting as a Director. 

A Director is not required to retire upon reaching a certain age. 

4.4 Action by the Board of Directors 

The Company’s Board of Directors may take action in a duly convened meeting in which a quorum is present or by a 

written resolution signed by all Directors then holding office. When action is to be taken at a meeting of the Board of 

Directors, the affirmative vote of a majority of the Directors then holding office is required for any action to be taken. In the 

event that an equal number of votes is cast, the Chairman will have the casting vote. The Directors may exercise all the 

powers of the Company to borrow money, to give guarantees and to mortgage, pledge or charge all or part of its property 

or assets as security for any liability or obligation of the Company or any third party. 

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4.5 Transactions in which a Director has an Interest 

A Director who, directly or indirectly, has an interest in a contract, transaction or arrangement with the Company or any 

subsidiary of the Company which to a material extent conflicts or may conflict with the interests of the Company and of 

which he has actual knowledge is required to disclose the nature and extent of his or her interest to the full Board of 

Directors. Subject thereto, any such Director shall not be liable to account to the Company for any profit or gain realised 

by him on such transaction. Such disclosure may generally take the form of a general notice given to the Board of 

Directors to the effect that the Director has an interest in a specified company or firm and is to be regarded as interested 

in any contract, transaction or arrangement which may after the date of the notice be made with that company, firm or 

affiliates thereof. A Director may participate in any meeting called to discuss or any vote called to approve the transaction 

in which the Director has an interest and any transaction approved by the Board of Directors will not be void or voidable 

solely because the Director was present at or participates or votes in the meeting in which the approval was given; 

provided that the Board of Directors or a board committee authorises the transaction in good faith after the Director’s 

interest has been disclosed or the transaction is fair to the Company at the time it is approved. 

Where proposals are under consideration concerning the appointment of two or more Directors to offices or employment 

with the Company or any company in which the Company is interested, such proposals shall be divided and considered in 

relation to each Director separately, and in such case each of the Directors concerned shall be entitled to vote and be 

counted in the quorum in respect of each resolution except that concerning his own appointment. None of the Directors 

has, or has had since incorporation, any interest, direct or indirect, in any transactions which are unusual in their nature 

or significant to the business of the Company. See the section headed “Potential Conflicts of Interest”. 

4.6 Directors’ Remuneration 

The annual aggregate remuneration of the Directors shall not exceed £200,000 or such higher amount as may be 

approved by ordinary resolution of Shareholders. The Directors are entitled to be repaid by the Company all travelling and 

reasonable out-of-pocket expenses properly and necessarily incurred by them in or with a view to the performance of 

their duties or in attending meetings of the Directors or of committees of the Directors or general meetings of the 

Company’s Shareholders. If any Director, having been requested, shall render or perform extra or special services, he 

may be paid such remuneration as the Directors think fit either as a lump sum or as a salary or by way of commission or 

otherwise in addition to, or in substitution for, his ordinary remuneration as Director. 

4.7 Borrowing Powers 

The Directors may exercise all the powers of the Company to borrow money and to give guarantees, mortgage, 

hypothecate, pledge or charge all or part of its undertaking, property or assets (both present and future) and uncalled 

capital, or any part thereof, to enter into options, futures, options on futures, swaps and other synthetic or derivative 

financial instruments and/or to issue debentures, loan stock and other securities whether outright or as collateral 

security for any debt, liability or obligation of the Company or of any third party. 

4.8 Indemnities 

The Articles of Association contain provisions indemnifying every Director, the Secretary and every other servant and 

employee of the Company, save for any person employed by the Company as auditor, against all costs, charges, losses, 

liabilities, damages and expenses which any such person may incur in the course of the discharge of his duties otherwise 

than through his own fraud, wilful misconduct or gross negligence. 

The Directors are empowered to arrange for the purchase and maintenance in the name of and at the expense of the 

Company of insurance cover for the benefit of any officer or former officer of the Company. 

5. DIRECTORS’ AND OTHER INTERESTS 

5.1 No Director of the Company has in respect of the five years preceding the date of this Securities Note: 

(a) any convictions in relation to indictable offences or convictions in relation to fraudulent offences; 

(b) received any official public incrimination and/or sanctions by any statutory or regulatory authorities 

(including designated professional bodies) or ever been disqualified by a court from acting as a member 

of the administrative, management or supervisory bodies of a company or from acting in the 

management or conduct of the affairs of any company; or 

(c) been associated with any bankruptcy, receivership or liquidation in which such person acted in the 

capacity of a member of an administrative, management or supervisory body or senior manager; or 

(d) save as set out in section 5.5 below, been a member of the administrative, management or supervisory 

bodies or partner of any companies or partnership. 

5.2 There are no outstanding loans granted by the Company to Directors or principals, nor are there any guarantees 

provided by the Company for the benefit of any Director or principal. 

5.3 No Director has any potential conflicts of interests between any duties the Director owes to the Company and any 

private interests and/or other duties, except to the extent that Frank Le Feuvre and Jonathan Ruck Keene are not 

independent of BlackRock. 

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5.4 No Director or principal has had any interest, direct or indirect, in any transaction which is or was unusual in its 

nature or conditions or significant to the business of the Company and which was effected by the Company since 

its incorporation. 

The services of the Directors are provided under the terms of letters of appointment between the Company and each 

Director dated 4 April 2008 subject to termination in accordance with the Articles of Association. Each Director other than 

the Chairman and the Chairman of the Audit and Management Engagement Committee will be paid an initial annual fee of 

£25,000. The Chairman of the Audit and Management Engagement Committee will receive an initial annual fee of £27,000. 

The Chairman will receive an initial annual fee of £35,000. These fees may be waived at the discretion of each Director. 

The BlackRock Directors have each waived their entitlement to a fee. 

There are no service contracts in existence between the Company and any of its Directors, nor are any such contracts 

proposed. 

There are no arrangements between the Company and the Directors providing for benefits upon termination of 

employment. 

Pursuant to an instrument of indemnity entered into between the Company and each Director, the Company has 

undertaken, subject to certain limitations, to indemnify each Director out of the assets and profits of the Company against 

all costs, charges, losses, damages, expenses and liabilities arising out of any claims made against him in connection with 

the performance of his duties as a Director of the Company. 

5.5 Over the five years preceding the date of this Securities Note, the Directors hold or have held the following 

directorships (apart from their directorships of the Company) or memberships of administrative, management or 

supervisory bodies and/or partnerships: 


Colin Maltby Princess Private Equity Holding Limited BP Investment Management Limited 

Peter Kirk Memorial Fund 

CCLA Investment Management Limited 

Church of England Nominees Limited 

The Estate, Knightsbridge Limited 

Ropemaker Heywood Limited 


Ropemaker Properties Limited 

Ropemaker Maidenhead Limited 

Ropemaker Hams Hall Limited 

Ropemaker Gilston Limited 

Ropemaker Stockley Limited 

Ropemaker Deansgate Limited 


Ropemaker Nottingham Limited 

Frank Le Feuvre St Albans House Nominees (Jersey) Ltd 

Merrill Lynch International Investment 

Funds SICAV 

Blackrock European Equity Hedge Fund 

Limited 

Merrill Lynch Offshore Sterling Trust 

BlackRock (Luxembourg) SA 

BlackRock First Partner Limited 

Merrill Lynch Taurus 2000 UK Fund Limited 

Mercury Private Equity MUST 3 (Jersey) 

Limited 


BlackRock UK Equity Hedge Fund Limited 

BlackRock Natural Resources Hedge Fund 

BlackRock UK Emerging Companies Hedge 

Fund 

Community Care Investment Group Limited 

Community Care Holdings Limited 

Mercury World Bond Fund 

Munich London Investment Management 

(Jersey) Limited 

Mercury Balanced Fund Limited 

Merrill Lynch Fund Managers (CI) Ltd 


USD Ltd 


Euro Ltd 

Merrill Lynch Active Sterling Trust 

Merrill Lynch Specialist Investment Funds 

Merrill Lynch Fixed Income Multi Strategy 

Hedge Fund Limited 

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Premier Marinas Jersey Limited 

Premier Marinas Jersey Holdings Limited 

Merrill Lynch Master Series 

Merrill Lynch India Equities Fund 

(Mauritius) Ltd 

BlackRock European Opportunities Hedge 

Fund 

BlackRock Eurasian Frontiers Fund 

Limited 

BlackRock Second Partner Limited 

BlackRock Strategic Funds SICAV 

BlackRock Middle East & Africa 

Opportunities Fund Limited 

BlackRock Aletsch Fund Limited 

BlackRock Global Macro Hedge Fund 

Limited 

BlackRock Agriculture Fund Farm ICC 

Philip Smith Aejis Limited Deutsche International Holdings B.V. 

Deutsche Bank Overseas Pension Fund 

(trustee) 

Deutsche Asset Management Holdings B.V. 

Alpine Limited 

Novaya Investments Ltd 

Jonathan Ruck 

Keene 

John Siska 

Merrill Lynch Commodities Income 

Investment Trust plc (alternate director) 

Familyoffice Solutions SL 

Eccleston Partners SL 

5.6 Based on information provided to the Board of Directors by the individual Directors and principals, the none of 

the Directors or principals are expected to have any ownership interests in the Shares of the Company 

immediately following the Offer, save as disclosed immediately below. 

Name of Director 

Sterling value subscribed 

Colin Maltby .............................................................. £35,000 

Jonathan Ruck Keene ..................................................... £50,000 

John Siska ............................................................... £50,000 

5.7 The Company is not aware of any party that, immediately following the closing of the Offer, would, directly or 

indirectly, jointly or severally, exercise control over the Board of Directors of the Company. The Company is not 

aware of any arrangements the operation of which may at a subsequent date result in a change of control over 

the Company. 

5.8 As at the date of this document Premier Circle Limited and Second Circle limited each own 50 per cent. of the 

Company. The Management Shares currently owned by Premier Circle Limited and Second Circle Limited carry 

no right to vote at general meetings of the Company, except when there are no Shares in issue. Other than in 

relation to the Shares to be acquired by the Cornerstone Investor under the Offer as described on page 60 of this 

Securities Note, the Company is not aware of any persons that will, immediately following Admission directly or 

indirectly, have an ownership interest of 5 per cent. or more of the share capital of the Company. 

5.9 The Company will maintain Directors’ and Officers’ liability insurance on behalf of the Directors at the expense of 

the Company to the extent that the Company is able to obtain such insurance. 

6. MATERIAL CONTRACTS 

The following contracts (not being contracts entered into in the ordinary course of business) are contracts which have 

been entered into by the Company since incorporation, and which are or may be material or are contracts entered into by 

the Company which contain any provisions under which the Company has any obligation or entitlement which is or may be 

material to the Company at the date of this Securities Note: 

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6.1 Placing Agreement 

A placing agreement dated 4 April 2008 between the Company, the Manager, the Investment Manager and the Global 

Co-ordinator (the “Placing Agreement”), pursuant to which, subject to certain conditions, the Global Co-ordinator has 

agreed to procure purchasers for, failing which to purchase, the Shares, in each case at the Offer Price. 

The Placing Agreement also contains terms including: 

• The Company has appointed UBS as Global Co-ordinator, Bookrunner and Sponsor to the Offer. 

• The obligation of the Company to issue the Shares and the obligation of the Global Co-ordinator to procure subscribers 

for, or failing which to subscribe for, the Shares is conditional upon certain conditions that are typical for an agreement of 

this nature. These conditions include, amongst others: (i) the execution of a purchase memorandum between the Global 

Co-ordinator, the Investment Manager and the Company setting out the number of Shares of each class to be issued 

pursuant to the Offer; (ii) that Admission occurs not later than 8.00 am on 29 April 2008 or such later date as the Company 

and the Global Co-ordinator may agree, not being later than close of business on 9 May 2008; and (iii) the aggregate value 

of the Shares subscribed for under the Offer (at the Offer Price) exceeding US$100 million (or such other amount as may 

be agreed between the Company and the Global Co-ordinator). 

• The commission payable to the Global Co-ordinator under the Placing Agreement is payable by the Manager. 

• The Manager has agreed to pay or cause to be paid (together with any applicable value added tax) certain costs, 

charges, fees and expenses of, or in connection with, or incidental to, amongst other things, the admission of the 

Shares to the Official List of the UK Listing Authority and admission to trading on the London Stock Exchange, all of 

the Global Co-ordinator’s properly incurred out-of-pocket expenses and the fees and disbursements of the Global 

Co-ordinator’s counsel in connection with the transactions contemplated in the Placing Agreement. In addition, the 

Company has, in certain circumstances and subject to certain exceptions, agreed to pay to and reimburse the Global 

Co-ordinator in respect of all and any SDRT and any other similar tax charge or duty and any related costs, fines, 

penalties or interest. 

• The Company and the Investment Manager have given certain customary warranties to the Global Co-ordinator 

including, amongst others, warranties in relation to the business, the accounting records and the legal compliance of 

the Company and the Investment Manager and in relation to the information contained in the Prospectus. The 

Company, the Investment Manager and the Manager (severally, not jointly and severally) have agreed to indemnify the 

Global Co-ordinator against certain liabilities, including in respect of the accuracy of the information contained in this 

Prospectus, losses arising from a breach of the Placing Agreement and certain other losses suffered or incurred in 

connection with the Offer. 

• The Company, the Investment Manager and the Manager have agreed that, during the period ending 90 days after 

Admission, none of the Company’s securities or those of any subsidiary will be offered by the Company without 

consultation with, and the prior consent of, the Global Co-ordinator. 

• The Placing Agreement is governed by English law. 

6.2 Management Agreement 

A management agreement dated 4 April 2008 between the Company and the Manager (the “Management Agreement”) 

pursuant to which the Company has appointed the Manager to provide certain investment management services to the 

Company, including providing investment advice, recommendations and execution services to the Company and 

supervising the investment programme of the Company and the composition of the investment portfolio. The Manger has 

full discretion with respect to the purchase, sale or other disposition of securities, commodities, derivatives, swaps, 

forwards and all other assets of the Company. The Manager may also negotiate and implement borrowing arrangements 

on behalf of the Company (unless the Directors determine otherwise). 

The Management Agreement also contains terms including: 

• The Manager shall give the Company the benefit of its reasonable efforts and judgment, but shall not be liable to the 

Company for any act or omission, error of judgment or mistake of law or for any loss suffered by the Company in 

connection with the Management Agreement, except to the extent that the act or omission, error of judgment, mistake of 

law or loss results from the wilful misfeasance, bad faith or gross negligence of the Manager in the performance of its 

duties, or by reason of the Manager’s reckless disregard of its obligations and duties under the Management Agreement. 

• The Company indemnifies and holds harmless each “Indemnified Person” from and against any loss, expense, 

judgment, settlement cost, fee related expenses (including reasonable solicitors’ fees and expenses), costs or 

damages suffered or sustained by the Indemnified Person arising out of or in connection with any breach by the 

Company of the terms of the Management Agreement or any act or failure to act on the part of the Indemnified 

Person with respect to the Company. 

84

• The indemnity by the Company does not apply where the act or failure to act on the part of the Indemnified Person 

was the result of: (a) the wilful misfeasance, bad faith or gross negligence of the Indemnified Person; or (b) the 

reckless disregard of the Indemnified Person in relation to an Indemnified Person’s obligations and duties. 

• An “Indemnified Person” for the purposes of the indemnity provided by the Company under the Management 

Agreement means the Manager and its affiliates, and any of the Manager’s or its affiliates’ officers, directors, 

partners, employees or agents (or their legal representatives or controlling persons). 

• The Company is to promptly reimburse (or advance to the extent reasonably required) each Indemnified Person for 



However, the Indemnified Person must undertake to repay the Company for such reimbursed or advanced expenses if 


• The Manager indemnifies the Company against any loss suffered by the Company to the extent that such loss arises 

from the wilful misfeasance, bad faith or gross negligence of the Manager in the performance of its duties, or by 

reason of the Manager’s reckless disregard of its obligations and duties. 

• The Company will reimburse the Manager for, to the extent that the Manager pays on behalf of the Company, all 

operating expenses incurred, paid or accrued by the Company in the Company’s ordinary and usual course of 

business. Without limitation, such operating expenses include interest on borrowed funds, auditing expenses and all 

other investment related expenses. 

• The Management Agreement may be terminated by the Company or the Manager with not less than 24 months’ 

written notice. However, the Company may terminate the Management Agreement immediately by notice in writing 

under certain conditions, including, amongst others: any material breach by the Manager of the Management 

Agreement which, if remediable, the Manager fails to remedy within a certain period; paying to the Manager an 

amount equal to the Management Fee which would otherwise have been payable during the 24 months following the 

date on which notice to terminate the Management Agreement is provided (calculated on the basis of the Net Asset 

Value of the Company as at the Valuation Date immediately preceding termination); or if there has been fraud or 

gross negligence on the part of the Manager or any person to which the Manager has delegated any of its duties. 

• The Manager is entitled at the reasonable expense of the Company to obtain legal advice from its lawyers or the 

opinion of counsel on any matter relating to the Company or the Management Agreement. 

• If the Management Agreement is terminated without cause by the Company before the seventh anniversary of Admission, 

the Manager is entitled to be reimbursed by the Company for that portion of reasonable costs and expenses borne by the 

Manager or its associates in connection with the establishment of the Company and Admission, determined by dividing the 

unexpired portion of seven years from the date of Admission to the date of termination by 2,555 days. 

• The Management Agreement is governed by the laws of the State of Delaware. 

The Manager, subject to exercising due care and having regard to the outsourcing policies of the JFSC, is permitted to 

delegate its investment management functions under the Management Agreement to BlackRock Financial Management, 

Inc., the Investment Manager. If the Manager ceases to be authorised by the relevant authority to perform its duties, the 

Management Agreement may be terminated immediately by the Company in writing. The Management Agreement may 

also be terminated by the Company immediately by notice in writing where the Investment Manager, or another party to 

which investment management services are delegated in accordance with the Management Agreement, ceases to provide 

investment management services in respect of the Company’s assets. 

6.3 Investment Management Agreement 

An investment management agreement dated 4 April 2008 between the Manager, the Company and the Investment 

Manager (the “Investment Management Agreement”) pursuant to which the Investment Manager has been appointed to 

manage and invest the assets of the Company in accordance with the Company’s investment objective and policy. 

The Investment Management Agreement also contains terms including: 

• The Investment Manager is to give the Company and the Manager the benefit of its reasonable efforts and judgement. 

However, the Investment Manager is not liable for any act or omission, error of judgment or mistake of law or for any loss 

suffered by the Company or the Manager in connection with matters to which the Investment Management Agreement 

relates, except to the extent that the act or omission, error of judgment, mistake of law or loss results from the wilful 

misfeasance, bad faith or gross negligence of the Investment Manager in the performance of its duties, or by reason of the 

Investment Manager’s reckless disregard of its obligations and duties under the investment management Agreement. 

• The Manager indemnifies and holds harmless each “Indemnified Person” from and against any loss, expense, judgment, 

settlement cost, fee related expenses (including reasonable solicitors’ fees and expenses), costs or damages suffered or 

sustained by the Indemnified Person arising out of or in connection with any breach by the Manager of the terms of the 

85

Investment Management Agreement or any act or failure to act on the part of the Indemnified Person with respect to the 

Company. 

• The indemnity by the Manager does not apply where the act or failure to act on the part of the Indemnified Person was 

the result of: (a) the wilful misfeasance, bad faith or gross negligence of the Indemnified Person; or (b) the reckless 

disregard of an Indemnified Person in relation to the Indemnified Person’s obligations and duties. 

• An “Indemnified Person” for the purposes of the indemnity provided by the Manager under the Investment 

Management Agreement means the Investment Manager and its affiliates, the Company and any of the Company’s or 

the Investment Manager’s or its affiliates’ officers, directors, partners, employees or agents (or the legal 

representatives or controlling persons of any of them). 

• The Manager is to promptly reimburse (or advance to the extent reasonably required) each Indemnified Person for 



However, the Indemnified Person must undertake to repay the Manager for such reimbursed or advanced expenses if 


• The Investment Manager indemnifies the Manager against any loss suffered by the Manager to the extent that such 

loss arises from the wilful misfeasance, bad faith or gross negligence of the Investment Manager in the performance 

of its duties, or by reason of the Investment Manager’s reckless disregard of its obligations and duties. 

• The Manager shall reimburse to the Investment Manager all reasonable out-of-pocket expenses incurred by it in the 

performance of its services under the Investment Management Agreement and all reasonable fees, expenses, costs 

and charges properly incurred in connection with the discharge of its duties under the Investment Management 

Agreement provided that the Investment Manager shall on request from the Manager provide reasonable 

documentary evidence of such disbursements. 

• The Investment Management Agreement may be terminated by the Company, the Manager or the Investment Manager 

with not less than 24 months’ written notice. However, the Company or the Manager may terminate the Investment 

Management Agreement immediately by notice in writing under certain conditions, including, amongst others: any 

material breach by the Investment Manager of the Investment Management Agreement which if remediable the 

Investment Manager fails to remedy within a certain period; or if there has been fraud or gross negligence on the part 

of the Investment Manager or any person to which the Investment Manager has delegated any of its duties. 

• The Company may give notice immediately to terminate the Investment Management Agreement if notice of 

termination is given under the Management Agreement. However, such termination by the Company is effective not 

earlier than the effective date of termination of the Management Agreement. 

• In the event the Investment Management Agreement is terminated, the Company agrees to transfer to one or more 

clients of the Investment Manager as requested by the Investment Manager such of the Company’s investments as 

the Investment Manager in its reasonable discretion determines are limited as to capacity or other considerations 

that could limit access by outside investors. Any such transfer would be made at a price which is consistent with the 

Company’s valuation policies. 

• The Investment Management Agreement is governed by the laws of the State of Delaware. 

6.4 Administration Agreement 

An administration agreement dated 4 April 2008 between the Company and the Manager (the “Administration Agreement”) 

pursuant to which, subject to certain conditions and the overall supervision and control of the Directors, the Company has 

appointed the Manager to provide the Company with certain administrative services, including attending to regulatory 

filings and notices, the maintenance of records and accounts, the preparation of annual accounts, procuring that the 

annual report and accounts are audited and the calculation of the Net Asset Value of the Shares as well as the working 

capital of the Company. 

The Administration Agreement also contains terms including: 

• The Manager shall not be liable for any damage, loss, costs or expenses to or of the Company from any cause except 

the Manager’s or its directors’, officers’, employees’ or agents’ negligence, dishonesty, fraud or wilful default. 

• The Company indemnifies the Manager and its directors, officers and employees against any liability, actions, 

proceedings, claims, demands, costs or expenses which such a person may incur or become subject to in 

consequence of the Administration Agreement or as a result of the performance of the functions and services 

provided for under the Administration Agreement, or the performance of any functions or services delegated or subcontracted, 

except as a result of the negligence, wilful default, dishonesty or fraud of the Manager or its directors, 

officers, employees or agents. 

86

• The Manager indemnifies the Company and its directors, officers and employees for all liability, actions, proceedings, 

claims, demands, costs or expenses whatsoever which it or any of them may incur or be subject to in consequence of 

the Administration Agreement, as a result of the performance of the functions and services provided for under the 

Administration Agreement or as a result of the performance of any functions and services delegated or subcontracted 

in accordance with the Administration Agreement, to the extent that such liability, actions, proceedings, claims, 

demands, costs or expenses arise from any breach of the Administration Agreement by or from the negligence, 

willful default, dishonesty or fraud of the Manager or any of its directors, officers, employees or agents in the 

performance or non-performance of their duties under the Administration Agreement. 

• The Administration Agreement is governed by English law and may not be assigned without prior written consent. 

• The Administration Agreement may be terminated by either party upon 90 days’ notice, without prior notice if a party 

breaches its obligations under the Administration Agreement, or immediately upon notice if notice of termination is 

given under the Management Agreement. 

6.5 Sub-Administration Agreement 

A sub-administration agreement dated 4 April 2008 between the Company, the Manager and the Sub-Administrator (the 

“Sub-Administration Agreement”) pursuant to which the Sub-Administrator has agreed to perform certain of the 

administrative obligations set out under the Administration Agreement in accordance with applicable law. 

The Sub-Administration Agreement also contains terms including: 

• The Manager and the Company have agreed to indemnify the Sub-Administrator and its directors, officers, and 

employees against all liability, actions, proceedings, claims, demands, costs or expenses which the Sub- 

Administrator or its directors, officers or employees incur or are subject to in consequence of the Sub-Administration 

Agreement or as a result of the performance of the functions or services delegated or sub-contracted, unless 

resulting from the negligence, wilful default, dishonesty or fraud of the Sub-Administrator or its officers, employees, 

sub-contractors, delegates or agents. 

• The Sub-Administration Agreement may be terminated by either party upon 90 days’ notice, immediately upon notice 

if a party breaches its obligations under the Sub-Administration Agreement, or immediately upon notice if notice of 

termination is given under the Administration Agreement. 

• The Sub-Administration Agreement is governed by the laws of the Cayman Islands and may not be assigned without 

consent. 

• Fees will be payable on a sliding scale basis, based on NAV. The minimum fee under the Sub-Administration 

Agreement is US$24,000 per annum. In the first calendar quarter, based on an expected capital raising of US$500 

million, fees are expected to be US$21,000. Fees are subject to change. 

• The Manager is to reimburse the Sub-Administrator for certain fees and charges levied on or in respect of the 

Company or the business of the Company. 

6.6 Custody Agreement 

A custody agreement dated 4 April 2008 between the Company and the Custodian (the “Custody Agreement”) pursuant to 

which the Company has appointed the Custodian to provide the Company with custody services in respect of the 

Company’s assets, including the maintenance of books, records and statements relating to the transactions carried out by 

the Custodian. 

The Custody Agreement also contains terms including: 

• The Custodian shall not be liable for any damage, loss, costs or expenses to or of the Company from any cause except 

the Custodian’s negligence, dishonesty, fraud or wilful default or that of its directors, officers, employees or agents. 

• The Company indemnifies the Custodian, its directors, officers and employees against any liability, actions, 

proceedings, claims, demands, costs or expenses which such a person may incur or become subject to in consequence 

of the Custody Agreement, or as a result of the performance of the functions and services provided for under the 

Custody Agreement, except as a result of the negligence, wilful default, dishonesty or fraud of any such person. 

• The Custody Agreement may be terminated by either the Company or the Custodian giving to the other 90 days’ 

written notice, or immediately upon written notice if a party is found to be in breach of the terms of the Custody 

Agreement or if notice of termination is given under the Management Agreement. 

• The Custody Agreement is governed by the laws of the Cayman Islands and may not be assigned without prior written 

consent. 

• Fees will be payable on a sliding scale basis, based on NAV. The minimum fee under the Custody Agreement is 

US$24,000 per annum. In the first calendar quarter, based on an expected capital raising of US$500 million, fees are 

expected to be US$21,000. Fees are subject to change. 

87

• The Company is to reimburse the Custodian for certain fees and charges levied on or in respect of the Company or 

the business of the Company. 

6.7 Company Secretarial Agreement 

A secretarial services agreement dated 4 April 2008 between the Company and the Manager (the “Company Secretarial 

Agreement”) pursuant to which, subject to certain conditions, the Manager has agreed to provide such duties as are 

normally performed by a secretary of a company. These duties include preparing all necessary papers for meetings of 

Directors, ensuring the composition and proceeding of Directors’ meetings comply with the Articles, and notifications of 

appointments or resignations of the Directors to the London Stock Exchange or as requested by the Directors. 

The Company Secretarial Agreement also contains terms including: 

• The Manager shall not, in the absence of its wilful misfeasance, bad faith or negligence in the performance of its 

duties, or by reason of its reckless disregard of its obligations and duties under the Company Secretarial Agreement, 

be liable to the Company, to any Shareholder, to any other service provider who may be appointed to provide services 

to the Company from time to time or to any other third party for any act or omission in the course of or in connection 

with its obligations and duties under the Company Secretarial Agreement or for any loss or damage which the 

Company may sustain or suffer as the result or in the course of the discharge by the Manager of its duties and 

functions. 

• The Company agrees to indemnify the Manager in respect of any and all liabilities, obligations and duties, losses, 

damages, penalties, actions, judgments, law suits, costs, expenses or disbursements of any kind or nature 

whatsoever (other than those resulting from the Manager’s wilful misfeasance, bad faith or negligence in the 

performance of its duties, or by reason of its reckless disregard of its obligations and duties under the Company 

Secretarial Agreement) which may be imposed upon, incurred by or asserted against the Manager in connection with 

the proper performance of its duties or functions. 

• The Manager and its delegates are to be reimbursed by the Company for all other reasonable out-of-pocket expenses 

properly paid by the Manager or its delegate (as applicable) on the Company’s behalf in the course of the Manager 

carrying out its functions under the Company Secretarial Agreement, or a delegate carrying out the functions under 

the Company Secretarial Agreement that are delegated to it by the Manager (as the case may be). 

• The Company Secretarial Agreement may be terminated by either party on 90 days’ written notice or immediately 

upon notice where a party goes into liquidation (other than voluntary liquidation for the purpose of reconstruction or 

amalgamation), is declared bankrupt, or a receiver and administrator appointed to that party. The Company 

Secretarial Agreement may also be terminated immediately upon notice where a party commits a serious breach 

which is capable of remedy but is not remedied within a certain time period, or if notice of termination is given under 

the Management Agreement. 

• The Company Secretarial Agreement may not be assigned with prior written consent and is governed by English law. 

6.8 Registrar Agreement 

A registrar agreement between the Company and Computershare Investor Services (Channel Islands) Limited (the 

“Registrar”) dated 27 March 2008 (the “Registrar Agreement”), pursuant to which the Registrar has agreed to act as 

registrar and paying agent of the Company for a minimum annual fee payable by the Company of £5,500 per annum (plus 

out-of-pocket expenses) for registers with less than 500 members. 

The Registrar Agreement also contains terms including: 

• The Company shall pay the Registrar additional fees in respect of the performance by the Registrar of other tasks 

requested of it by the Company upon submission by the Registrar of invoices in respect of such additional fees at the 

end of each month. 

• The Registrar shall be entitled to reimbursement by the Company of any other fees and expenses reasonably 

disbursed by it in connection with the performance of its services under the Registrar Agreement. 

• Subject to earlier termination under the Registrar Agreement, the Registrar Agreement shall continue until 

terminated by the Company giving to the Registrar not less than six months’ notice, such notice not to expire prior to 

the first anniversary of Admission. 

• Further, the Registrar shall be entitled to resign its appointment: (a) by notice in writing to the Company if the 

Company goes into liquidation (subject to exceptions); (b) by notice in writing to the Company if the Company commits 

any material breach of its obligations under the Registrar Agreement (which is not made good within 30 days); (c) if 

the Registrar ceases to hold the necessary licence, authorisation or approval to provide the Services under the 

Agreement; or (d) by giving three months’ notice in writing to the Company. 

• The Company may terminate the appointment of the Registrar: (a) by notice in writing to the Registrar if the Registrar 

goes into liquidation (subject to exceptions); (b) by notice in writing to the Registrar if the Registrar commits any 

material breach of its obligations under the Registrar Agreement (which is not made good within 30 days); or (c) by 

giving six months’ notice in writing to the Registrar. 

88

• The Registrar Agreement contains an indemnity in favour of the Registrar against all claims brought by a third party 

against the Registrar in the course of carrying out its duties under the Registrar Agreement except where such 

claims arise from the negligence, fraud or wilful default of the Registrar. 

• The Registrar shall provide a web-based service to all members to enable them to view their holdings of shares in the 

Company via its agent’s service at www.computershare.com. 

• The Registrar shall take out insurance cover on a “claims made basis”. 

• The liability of the Registrar is four times the annual fees of the Registrar or £1 million (whichever is lower). 

• The Registrar may resign its appointment under the Registrar Agreement at any time by notice to the Company, if the 

Company commits a material breach and fails to make good within 30 days of receipt of notice in writing or by giving 

three months’ written notice to the Registrar. The Company may terminate the appointment of the Registrar at any 

time if the Registrar commits a material breach or by giving six months’ written notice. 

• The Registrar Agreement is governed by Jersey law. 

6.9 Receiving Agent Agreement 

A receiving agent agreement between the Company and Computershare Investor Services PLC (the “Receiving Agent”) 

dated 27 March 2008 (the “Receiving Agent Agreement”). 

The Receiving Agent Agreement also contains terms including: 

• The Receiving Agent shall provide receiving agent duties and services to the Company in accordance with the terms 

and conditions of the Receiving Agent Agreement. 

• The Company shall pay the Receiving Agent a management fee of £5,000 to include the management of the Offer and 

the initial set-up of the quarterly conversion programme. The Receiving Agent shall also receive activity fees and 

reimbursement for reasonable disbursements and out-of-pocket expenses. 

• The Receiving Agent will receive applications for shares and monies and ensure that applications comply with the 

terms of the Offer as set out in the Prospectus. The Receiving Agent will provide daily figures of acceptances and hold 

application cheques in a secure area pending instructions from the Company or its advisers. 

• The Company will indemnify the Receiving Agent against all actions, proceedings, liability, claims, damages, costs, 

losses and expenses whether brought by the Company or any third party in relation to the Receiving Agent acting 

properly upon the Company’s instructions in relation to the Offer, unless such claims arise out of or are attributable to 

the wilful default, negligence, bad faith or breach of the Receiving Agent Agreement on the part of the Receiving Agent. 

• The liability of the Receiving Agent is four times the amount of the fees payable under the Receiving Agent Agreement 

or £1 million (whichever is lower). 

• The Receiving Agent Agreement is governed by English law. 

7. RELATED PARTY TRANSACTIONS 

No member of the Company has entered into any related party transaction since incorporation. 

8. LITIGATION 

Since its incorporation the Company is not, nor has been, involved in any governmental, legal or arbitration proceedings 

nor, so far as the Company is aware, are there any governmental, legal or arbitration proceedings pending or threatened 

by or against the Company which may have, or have since incorporation had, a significant effect on the Company’s 

financial position or profitability. 

9. THIRD PARTY INFORMATION 

Where information contained in this document has been sourced from third parties, the Company confirms that such 

information has been accurately reproduced and, that as far as the Company is aware and is able to ascertain from 

information published by that third party, no facts have been omitted which would render the reproduced information 

inaccurate or misleading. 

10. NO SIGNIFICANT CHANGE 

There has been no significant change in the trading or financial position of the Company since its incorporation. 

11. EFFECT OF THE OFFER ON THE COMPANY 

As at the date hereof the Company’s issued and fully paid share capital is nil representing the issue of two Management 

Shares of no par value. The Company is targeting to raise US$500 million through the Offer (excluding the Over-allotment 

Option) but in any event the total amount raised under the Offer will not exceed US$750 million (including the Overallotment 

Option). The gross proceeds of the Offer, less an amount reflecting the Company’s short-term working capital 

requirements, will be invested in accordance with the Company’s investment policy. 

89

12. WORKING CAPITAL 

The Company is of the opinion that it has sufficient working capital for its present requirements, that is for at least the 

next 12 months from the date of the Prospectus. 

13. CITY CODE ON TAKEOVERS AND MERGERS 

The City Code on Takeovers and Mergers applies to the Company. 

14. INVESTMENT RESTRICTIONS 

For so long as the Listing Rules require, the Company will: 

(a) 

(b) 

(c) 

at all times, invest and manage its assets in a way which is consistent with its object of spreading investment risk 

and in accordance with the investment policy set out on pages 45 to 46; 

not conduct any trading activity which is significant in the context of the Company and its group as a whole; and 

not invest more than 10 per cent., in aggregate, of the value of its total assets, at the time of investment, in other 

listed closed-ended investment funds (other than other listed closed-ended investment funds which themselves 

have published investment policies to invest no more than 15 per cent. of their total assets in other listed closedended 

investment funds). 

15. DOCUMENTS AVAILABLE FOR INSPECTION 

Copies of the following documents will be available for inspection at the offices of Herbert Smith LLP, legal counsel to the 

Company, during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted), until the date 

of Admission: 

(a) 

(c) 

the Memorandum and Articles of Association of the Company; and 

the Prospectus. 

In addition, copies of the Prospectus are available free of charge from the registered office of the Company and the 

registered office of BlackRock Investment Management (UK) Limited. Copies of the Prospectus are also available from the 

Document Viewing Facility, UK Listing Authority, The Financial Services Authority, 25 The North Colonnade, Canary Wharf, 

London E14 5HS. 

90

Absolute Return Strategies or ARS 

Administration Agreement 


Admission 

Application Form 

ARS Affiliated Funds 

Articles of Association or Articles 

Auditor 

BAA 

BlackRock 

BlackRock Directors 

Bookrunner 

British Pounds, Sterling or £ 

Business Day 

C Shares 

Calculation Period 

CFTC 

CIF Law 

City Code 

DEFINITIONS 

Refers to the non-traditional investment strategies described in Part 1 of this 

Securities Note (including the Relative-Value, Event-Driven, Fundamental 

Long-Short and Direct Sourcing disciplines) 

The administration agreement entered into between the Company and the 

Manager, brief details of which are contained in Part 4 of this Securities Note 

As defined on in Part 1 of this Securities Note under the heading “Affiliated 

Funds” 

Admission of the Shares to the Official List of the UK Listing Authority and to 

trading on the London Stock Exchange’s main market for listed securities 

becoming effective, which is expected to occur on 29 April 2008 

The application form accompanying this Securities Note for use, where 

permissible, in connection with the Offer for Subscription 

As defined on in Part 1 of this Securities Note under the heading “Affiliated 

Funds” 

The memorandum and/or articles of association of the Company in force from 

time to time as the context requires 


BlackRock Alternative Advisors, a business division of BlackRock Financial 

Management, Inc. 

BlackRock, Inc. and/or any member of its group 

The members of the Board of Directors who are officers or employees of 

BlackRock or its affiliates 

UBS 


Any day on which banks are open for normal banking business in such 

jurisdiction(s) as may be determined by the Directors for any particular 

purpose 

The redeemable participating preference C shares of no par value in the capital 

of the Company which will be issued as C Shares of such classes as the 

Directors may determine having the rights and privileges and being subject to 

the restrictions contained in the Articles, which will convert into Shares in 

accordance with the terms of the Articles and which, together with the Shares 

constitute the authorised capital of the Company 

Each 12 month period ending on 31 December each year and the period from 

Admission to 31 December 2008 

United States Commodity Futures Trading Commission 

The Collective Investment Funds (Jersey) Law 1988 (as amended) 

The City Code on Takeovers and Mergers 

Collective Investment Vehicles Collective entities managed by External Investment Advisors, such as 

partnerships, limited partnerships, limited liability companies, investment 

companies, investment funds, common trusts and similar collective entities 

Combined Code 

Companies Law 

Companies Laws 

Company 

Company Secretarial Agreement 

The Principles of Good Governance and Code of Best Practice as published by 

the UK Financial Reporting Council 

The Companies (Jersey) Law 1991, as amended, extended or replaced and any 

ordinance, statutory instrument or regulation made thereunder 

The Companies (Jersey) Law 1991 and every statutory modification on 

re-enactment thereof for the time being in force and any other legislation from 

time to time relating to companies and affecting the Company 


The secretarial services agreement entered into between the Company and the 


91

Conversion Calculation Date The last Business Day of each month commencing in June 2008 

Cornerstone Investor 

As defined on page 60 of this Securities Note 

CREST 

The facilities and procedures for the time being of the relevant system of which 

Euroclear has been approved as operator pursuant to the UK Regulations 

CREST Regulations 

The Jersey Regulations and the UK Regulations 

Custodian 


Custody Agreement 

The custody agreement entered into between the Company and the Custodian, 

brief details of which are contained in Part 4 of this Securities Note 

Direct Investment 

Refers to the direct investments by the Company described in Part 1 of this 

Securities Note under the heading “Fund Investments” 

Direct Sourcing Discipline or Direct 

Sourcing 

Directors or Board or Board of 

Directors 

Disclosure and Transparency Rules 

Eligibility Date 

ERISA 

Euro or € 

Euroclear 

Euro Shares 

Event Driven Discipline or Event Driven 

External Investment Advisors 

Federal Reserve 

Fiscal Quarter 

Financial Interest 

FSA 

FSL 

FSMA 

FTSE 

FTSE All-Share Index 

Fund Investment 

Fundamental Long-Short Discipline or 

Fundamental Long-Short 

Global Co-ordinator 

HFRI 

HFRI Fund of Funds Conservative Index 

(HFRI Conservative Index) 

Refers to the investment discipline described in Part 1 of this Securities Note 

under the heading “Direct Sourcing Discipline” 

The members of the board of directors of the Company from time to time 

including any duly appointed committee thereof 

The UK disclosure and transparency rules made by the FSA under Part VI of 

the FSMA 

30 April and 31 October in each year commencing on 31 October 2008 and 

ending on 30 April 2013 

The US Employee Retirement Income Security Act of 1974, as amended 

Refers to the lawful single currency introduced at the start of the third stage of the 

Economic and Monetary Union, pursuant to the Treaty establishing the European 

Economic Community, as amended by the Treaty on the European Union 

Euroclear UK & Ireland Limited, the operator of CREST 

Shares of the Company denominated in Euro 


under the heading “Event Driven Discipline” 

External investment advisors (which may include, without limitation, business 

units of BlackRock and its affiliates other than BAA) pursuing a variety of 

Absolute Return Strategies, to whom the Company will allocate capital in 

accordance with its investment policy as described in Part 1 of this Securities 

Note under the heading “Asset Allocation” 

The Board of Governors of the United States Federal Reserve System 

A three month period ending 31 March, 30 June, 30 September or 31 December 

Refers to an ownership or other financial interest of an Other Client in certain 

of the External Investment Advisors of Fund Investments 

The UK Financial Services Authority 

The Financial Services (Jersey) Law 1988, as amended 

The UK Financial Services and Markets Act 2000, as amended 

FTSE Group 

Refers to a capital-weighted index published by FTSE that includes 98-99 per 

cent. of the UK main stock market capitalisation. Returns are denominated in 

GBP and include gross dividends. The index is a proxy for the performance of 

the broad UK equity market 

Refers to the investments by the Company described in Part 1 of this Securities 

Note under the heading “Fund Investments” 


under the heading “Fundamental Long-Short Discipline” 

UBS 

Hedge Fund Research, Inc. 

Refers to an equal-weighted index published by HFRI representing funds of 

funds that invest with multiple managers focused on consistent performance 

and lower volatility via absolute return strategies. The index includes funds of 

funds tracked by HFRI and is revised several times each month to reflect 

92

Independent Directors 

Investment Committee 

Investment Management Agreement 

updated fund return information. The index is a proxy for the performance of 

the universe of conservative funds of funds focused on absolute return 

strategies. Returns are net of fees and are denominated in US Dollars 

Members of the Board of Directors not affiliated with BlackRock 

BlackRock Alternative Advisors Investment Oversight Committee 

The investment management agreement entered into between the Company, 

the Manager and the Investment Manager, brief details of which are contained 

in Part 4 of this Securities Note 


BAA 

ISA 

Individual savings account 

Jersey Regulations The Companies (Uncertificated Securities) (Jersey) Order 1999 

JFSC 

The Jersey Financial Services Commission 

LIBOR 

London Interbank Offered Rate, being the offer side of the interest rate banks 

charge each other on short-term money, and is an average derived from 

sixteen bank rate quotations, fixed daily by the British Bankers’ Association 

Listing Rules 

The listing rules made by the UK Listing Authority under section 73A of FSMA 

London Stock Exchange 

London Stock Exchange plc 

Manager 


Management Agreement 

The management agreement entered into between the Company and the 




Company, as described in Part 1 of this Securities Note 

Management Shares 

Non-redeemable management shares of no par value in the Company 

Merrill Lynch 3-Month US Treasury Bill 

Auction Average Index (ML T-Bills) 

Merrill Lynch GBP 3-Month LIBOR 

Constant Maturity Index (ML 3-Month 

LIBOR) 

Model Code 

MSCI 

MSCI World Index 

NAV or Net Asset Value 

NAV Calculation Date 

Net Asset Value per Share 

OECD 

Offer 

Offer for Subscription 

Offer Placing Statement 

Offer Price 

Refers to an index published by Merrill Lynch that represents the auction 

average of three-month US Treasury bills. Returns are denominated in US 

Dollars. The index is a proxy for the performance of the broad US Treasury bill 

market 

Refers to an index published by Merrill Lynch that represents the GBP return 

on three month securities in the Eurodollar market invested at LIBOR 

The model code on directors’ dealings in securities as set out in Annex I of Rule 

9 of the Listing Rules 

MSCI Barra 

Refers to a capital-weighted index published by MSCI that includes the largest 

firms making up 60 per cent. of each country’s aggregate capitalisation. The 

index includes 23 developed market indices. Returns are denominated in US 

Dollars and include dividends. The index is a proxy for the performance of the 

world’s developed equity markets 

The value of the assets of the Company less its liabilities determined in 

accordance with Part 1 of this Securities Note in the section entitled “NAV 

Publication and Calculation” 


The Net Asset Value of a class of Shares divided by the number of Shares of 

such class in issue at the relevant time 

Organisation for Economic Co-operation and Development 

The Placing and the Offer for Subscription 

The offer for subscription to the public in the United Kingdom of Shares on the 

terms set out in the Prospectus and the Application Form 

A statement detailing the number of Shares which are to be issued pursuant to 

the Offer (excluding the Over-allotment Option) expected to be published on or 

around 24 April 2008 

US$10 per US Dollar Share, €10 per Euro Share and £10 per Sterling Share 

93

Official List 

OTC 

Other Clients 

Over-allotment Option 

PEP 


Placing 

Placing Agreement 

Plan 

Plan Asset Regulations 

PNC 

Prohibited US Person 

Prospectus 

Prospectus Directive 

Prospectus Rules 

QARS3-I 

QARS3-I Investors 

QARS3-I Shares 

Qualifying Investors 


Receiving Agent Agreement 

Redemption Date 

Redemption Facility 

Reference Amount 

Registrar 

The official list of the UK Listing Authority 

Privately negotiated transactions that may not be registered under the relevant 

securities law; also called “over-the-counter” transactions 

Other funds or separate accounts for which the Investment Manager (and its 

affiliates, as applicable) provides investment management or investment 

advisory services 

The over-allotment option pursuant to which the Stabilising Manager may 

require the Company to issue additional Shares with a value of up to a 

maximum of 15 per cent. of the total amount to be raised in the Offer (before 

exercise of the Over-allotment Option) at the Offer Price 

Personal equity plan 


Company, as described in Part 1 of this Securities Note 

The placing of Shares as described in this Securities Note 

The placing agreement entered into between the Company, the Manager, the 

Investment Manager and the Global Co-ordinator in relation to the Placing, 



US Department of Labor regulations promulgated under ERISA by the US 

Department of Labor and codified at 29 C.F.R. Section 2510.3-101 

PNC Financial Services Group, Inc. 


The prospectus relating to the Offer prepared in accordance with the 

Prospectus Rules and which comprises the Summary Note, this Securities 

Note and the Registration Document 

Directive 2003/71/EC of the European Parliament and of the Council of the 

European Union and any relevant implementing measure in each Relevant 

Member State 

The prospectus rules made by the UK Listing Authority under section 73(A) of 

the FSMA 

Q-BLK ARS III — Institutional, Ltd. 

Investors in QARS3-I 

Shares in QARS3-I 

Investors (including financial intermediaries subscribing on behalf of underlying 

clients) who, pursuant to the Offer, subscribe for, in aggregate, US Dollar 

Shares having a minimum aggregate value at the Offer Price of US$2,000,000 or 

Euro Shares having a minimum aggregate value at the Offer Price of €1,500,000 

or Sterling Shares having a minimum aggregate value at the Offer Price of 

£1,000,000 


The receiving agent agreement entered into between the Company and the 

Receiving Agent, brief details of which are contained in Part 4 of this Securities 

Note 

30 June and 31 December in each year (or such other day or days as the Board 

of Directors may determine, either generally or in any particular case) or, if 

such a date is not a Business Day, then the immediately preceding Business 

Day but does not include any date on which a resolution to wind up the 

Company has been passed; 

The redemption facility which the Directors may, at their discretion, make 

available half yearly on the Redemption Dates as described in Part 1 of this 

Securities Note under the heading “Redemption Facility” 

With respect to each class of Shares, an amount equal to the highest Net Asset 

Value of such class of Shares as at (i) the end of any previous Calculation 

Period and (ii) the Admission Date 


94

Registrar Agreement 


Regulation S 

Regulatory Information Service or RIS 

Relative Value Discipline or Relative 

Value 

Relevant Member State 

S&P 500 Index 

SEC 

The registrar agreement entered into between the Company and the Registrar, 


The Registration Document which, together with the Summary Note and this 

Securities Note, comprises the Prospectus 

Regulation S under the US Securities Act 

A regulatory information service that is approved by the FSA as meeting the 

primary information provider criteria and that is on the list of regulatory 

information services maintained by the FSA 


under the heading “Relative Value Discipline” 

Each Member State of the European Economic Area which has implemented 

the Prospectus Directive or where the Prospectus Directive is applied by the 

regulator 

Refers to a capital-weighted index that includes 500 stocks representing all 

major industries. Returns are denominated in US Dollars and include 

dividends. The index is a proxy of the performance of the broad US economy 

through changes in aggregate market value 

The United States Securities and Exchange Commission 

Securities Note This securities note which, together with the Summary Note and the 


SDRT 

Settlement Date 29 April 2008 

Shareholders 

Shares 

Sharpe Ratio 

Similar Laws 

SIPPs 

SSASs 

Stabilising Manager 

Sterling or £ 

Sterling Shares 

Sub-Administrator 

Sub-Administration Agreement 

UK stamp duty and stamp duty reserve tax 

The holders of Shares 

The unlimited number of redeemable participating shares of no par value in 

the capital of the Company, whether denominated in Euros, US Dollars or 

Sterling or such other classes as the Directors may determine, which together 

with the C Shares constitute the authorised capital of the Company 

Is a single number which typically represents both the risk and return inherent 

in a fund. Generally, high returns are associated with a high degree of volatility. 

The Sharpe Ratio is one measure of the trade-off between risk and returns. At 

the same time, it also factors in the desire to generate returns which are 

higher than risk-free returns. Mathematically, the Sharpe Ratio is the return 

generated over the risk-free rate, per unit of risk. Risk in this case is taken to 

be a fund’s standard deviation. A higher Sharpe Ratio is therefore better as it 

represents a higher return generated per unit of risk. However, it should be 

noted that the Sharpe Ratio is only meaningful as a comparative tool and may, 

at times, be misleading when, for example, a low standard deviation can unduly 

influence results 

Laws or regulations that are similar to the fiduciary responsibility or prohibited 

transaction provisions contained in Title I of ERISA or Section 4975 of the US 

Internal Revenue Code 

A self-invested personal pension as defined in Regulation 3 of the Retirement 

Benefits Schemes (Restriction on Discretion to Approve) (Permitted 

Investments) Regulations 2001 of the United Kingdom 

A small self administered scheme as defined in Regulation 2 of the Retirement 

Benefits Schemes (Restriction on Discretion to Approve) (Small Self- 

Administered Schemes) Regulations 1991 of the United Kingdom 

UBS 


Shares of the Company denominated in Sterling 


The sub-administration agreement entered into between the Company, the 

Manager and the Sub-Administrator, brief details of which are contained in 

Part 4 of this Securities Note 

95

Summary Note The summary note which, together with this Securities Note and the 


Taxes Act 

The UK Income and Corporation Taxes Act 1988, as amended 

UBS or UBS Investment Bank 

UBS Limited, UBS Investment Bank being a business unit of UBS Limited 

UK 

The United Kingdom of Great Britain and Northern Ireland 

UK Listing Authority 

The FSA as the competent authority for listing in the United Kingdom 

UK Regulations The Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755) 

Uncertificated Form or in 

uncertificated form 

United States or US 

Recorded on the register as being held in uncertificated form in CREST and 

title to which may be transferred by means of CREST 

The United States of America, its territories and possessions, any state of the 

United States of America and the district of Columbia 

US Advisers Act 

The United States Investment Advisers Act of 1940, as amended 

US BHC Act The United States Bank Holding Company Act of 1956 

US Commodity Exchange Act 

The United States Commodity Exchange Act of 1974, as amended 

US Dollar Shares 

Shares of the Company denominated in US Dollars 

US Dollars, Dollars or $ 

Refers to the lawful currency of the United States 

US Exchange Act 

The US Securities Exchange Act of 1934, as amended 

US GAAP 

Generally Accepted Accounting Principles in the United States 

US Internal Revenue Code 

The US Internal Revenue Code of 1986, as amended 

US Investment Company Act 

The US Investment Company Act of 1940, as amended 

US Person 

A person who is either (a) a “US person” within the meaning of Regulation S, or 

(b) not a “Non-United States person” within the meaning of the United States 

Commodity Futures Trading Commission Rule 4.7(a)(I)(iv) 

US Securities Act 

The US Securities Act of 1933, as amended 

Valuation Date 


All references to times are to London time unless otherwise stated. 


96

TERMS AND CONDITIONS OF APPLICATION UNDER THE OFFER FOR SUBSCRIPTION 

The Company has been established in Jersey as a listed fund under a fast-track authorisation process. It is suitable 

therefore only for professional or experienced investors, or those who have taken appropriate professional advice. 

Regulatory requirements which may be deemed necessary for the protection of retail or inexperienced investors do not 

apply to listed funds. By investing in the Company you will be deemed to be acknowledging that you are a professional or 

experienced investor, or have taken appropriate professional advice, and accept the reduced requirements accordingly. 

You are wholly responsible for ensuring that all aspects of the Company are acceptable to you. Investment in listed funds 

may involve special risks that could lead to a loss of all or a substantial portion of such investment. 

Unless you fully understand and accept the nature of the Company and the potential risks inherent in the Company you 

should not invest in the Company. 

The Shares are only suitable for investors who understand that there is a potential risk of capital loss, that there may be 

limited liquidity in the Shares, for whom an investment in the Shares is part of a diversified investment programme and 

who fully understand and are willing to assume the risks involved in such an investment programme. In the case of a joint 

Application, references to you in these terms and conditions of Application are to each of you, and your liability is joint and 

several. Please ensure you read the Prospectus consisting of the Registration Document, this Securities Note and the 

Summary, including these terms and conditions, in full, before completing the Application Form. 

Words defined in this Securities Note shall have the same meaning in these terms and conditions and in the notes on how 

to complete the Application Form, and: 

“Applicant” means a person or persons (in the case of joint applicants) whose name(s) appear(s) on the registration 

details (Box 2A) of an Application Form; 

“Application” means the offer made by an Applicant by completing an Application Form and posting (or delivering) it to the 

Receiving Agent as specified in this Securities Note; 

“Proceeds of Crime Laws” means the Drug Trafficking Offences (Jersey) Law 1988, the Prevention of Terrorism (Jersey) 

Law 1996 and the Proceeds of Crime (Jersey) Law 1999, all as amended from time to time; 

“Prospectus” means the prospectus comprising the Summary Note, this Securities Note and the Registration Document 

dated 4 April 2008 published by the Company; 

“Receiving Agent” means Computershare Investor Services PLC; and 

“Securities Note” means this securities note, of which these terms and conditions of Application under the Offer for 

Subscription form part, which together with the Summary Note and the Registration Document, comprises the 

Prospectus. 

TERMS AND CONDITIONS 

(a) 

The contract created by the acceptance of an Application under the Offer for Subscription will be conditional on: 

(i) 

(ii) 

Admission becoming effective by not later than 8.00 am on 29 April 2008 (or such later date as may be 

provided for in accordance with the terms of the Placing Agreement); and 

the Placing Agreement becoming otherwise unconditional in all respects, and not being terminated in 

accordance with its terms before Admission becomes effective. 

(b) 

(c) 

The right is reserved by the Company to present all cheques and banker’s drafts for payment on receipt and to 

retain application monies and refrain from delivering an Applicant’s Shares into CREST or issuing an Applicant’s 

Shares in certificated form (as the case may be), pending clearance of the successful Applicant’s cheques and 

banker’s drafts. The Company also reserves the right to reject in whole or part, or to scale back or limit, any 

Application. The Company may treat Applications as valid and binding if made in accordance with the prescribed 

instructions and the Company may, in its discretion, accept an Application in respect of which payment is not 

received by the Company prior to the closing of the Offer for Subscription. If any Application is not accepted in full 

or if any contract created by acceptance does not become unconditional, the application monies or, as the case 

may be, the balance thereof, will be returned (without interest) by returning each relevant Applicant’s cheque or 

banker’s draft or by crossed cheque in favour of the first named Applicant, through the post at the risk of the 

person(s) entitled thereto. In the meantime, application monies will be retained by the Receiving Agent in a 

separate account. 

To ensure compliance with the Proceeds of Crime Laws the Receiving Agent, in its absolute discretion, may 

require verification of identity from any Applicant and, without prejudice to the generality of the foregoing, in 

particular from any person who either (i) tenders payment by way of a cheque, building society cheque or 

banker’s draft drawn on an account in the name of a person or persons other than the Applicant or (ii) appears to 

the Receiving Agent to be acting on behalf of some other person. This may involve verification of his/her name 

and address through a reputable agency. The Company is entitled to treat as invalid and reject an Application 

97

Form if the Receiving Agent determines pursuant to procedures maintained under the Proceeds of Crime Laws 

that satisfactory evidence as to identity has not been and is unlikely to be received within a reasonable period of 

time in respect of the Application Form in question. 

The following is provided by way of guidance to reduce the likelihood of difficulties, delays and potential rejection 

of an Application Form (but without limiting the Receiving Agent’s right to require verification of identity as 

indicated above): 

(d) 

(i) 

(ii) 

Applicants should make payment by a cheque drawn on an account in their own name and write their 

name and address on the back of the banker’s draft or cheque and, in the case of an individual, record 

his date of birth against their name; and 

if an Applicant makes the Application as agent for one or more persons, he should indicate on the 

Application Form whether he is a UK or EU regulated person or institution (for example a bank or 

stockbroker) and specify his status. If an Applicant is not a UK or EU regulated person or institution, 

they should contact the Receiving Agent. 

By completing and delivering an Application Form, you, as the Applicant (and, if you sign the Application Form on 

behalf of somebody else or a corporation, that person or corporation, except as referred to in paragraph 

(viii) below): 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

(viii) 

offer to subscribe for the number of Shares specified in your Application Form (or such lesser number 

for which your Application is accepted) on the terms of and subject to the Prospectus, including these 

terms and conditions, and subject to the Articles of Association of the Company; 

agree that, in consideration of the Company agreeing to process your Application, your Application 

cannot be revoked until after 8 May 2008 (or such later time and date as the Directors may determine in 

accordance with the Placing Agreement if they postpone the closing of the Offer for Subscription) and 

that this paragraph shall constitute a collateral contract between you and the Company which will 

become binding upon despatch by post to, or (in the case of delivery by hand) on receipt by, the 

Receiving Agent of your Application Form; 

agree and warrant that your cheque or banker’s draft may be presented for payment on receipt and will 

be honoured on first presentation and agree that if it is not so honoured you will not be entitled to 

receive the Shares until you make payment in cleared funds for the Shares and such payment is 

accepted by the Company in its absolute discretion (which acceptance shall be on the basis that you 

indemnify it and the Receiving Agent against all costs, damages, losses, expenses and liabilities arising 

out of or in connection with the failure of your remittance to be honoured on first presentation) and you 

agree that, at any time prior to the unconditional acceptance by the Company of such late payment, the 

Company may (without prejudice to its other rights) avoid the agreement to subscribe such Shares and 

may issue or allot such Shares to some other person, in which case you will not be entitled to any 

payment in respect of such Shares other than the refund to you at your risk of the proceeds (if any) of 

the cheque or banker’s draft accompanying your Application, without interest; 

agree that (A) any monies returnable to you may be retained pending clearance of your remittance and 

the completion of any verification of identity required by the Proceeds of Crime Laws; and (B) monies 

pending allocation will be retained in a separate account and that such monies will not bear interest; 

undertake to provide satisfactory evidence of your identity within such reasonable time (in each case to 

be determined in the absolute discretion of the Company and the Receiving Agent) to ensure 

compliance with the Proceeds of Crime Laws; 

agree that, in respect of those Shares for which your Application has been received and is not rejected, 

acceptance of your Application shall be constituted, at the election of the Company, either (i) by 

notification to the UK Listing Authority and the London Stock Exchange of the basis of allocation (in 

which case acceptance shall be on that basis) or (ii) by notification of acceptance thereof to the 

Receiving Agent; 

authorise the Receiving Agent to procure that your name (together with the name(s) of any other joint 

Applicant(s)) or your nominee (e.g. CREST) is/are placed on the register of members of the Company in 

Jersey in respect of such Shares and to send a crossed cheque for any monies returnable by post 

without interest, at the risk of the persons entitled thereto to the address of the person (or in the case of 

joint holders, the first named person) named as an Applicant in the Application Form; 

warrant that, if you sign the Application Form on behalf of somebody else or on behalf of a corporation, 

you have due authority to do so on behalf of that other person or corporation, and such person or 

corporation will also be bound accordingly and will be deemed also to have given the confirmations, 

warranties and undertakings contained herein, and undertake to enclose your power of attorney or a 

copy thereof duly certified by a solicitor or bank with the Application Form; 

98

(ix) 

(x) 

(xi) 

(xii) 

(xiii) 

agree that all Applications, acceptances of Applications and contracts resulting therefrom shall be 

governed by and construed in accordance with Jersey law, and that you submit to the jurisdiction of the 

Jersey courts and agree that nothing shall limit the right of the Company to bring any action, suit or 

proceeding arising out of or in connection with any such Applications, acceptances of Applications and 

contracts in any other manner permitted by law or in any court of competent jurisdiction; 

confirm that, in making such Application, neither you, nor any person on whose behalf you are applying, 

are relying on any information or representation in relation to the Company other than the information 

contained in the Prospectus and, accordingly, you agree that no person responsible solely or jointly for 

the Prospectus or any part thereof or involved in the preparation thereof shall have any liability for any 

such information or representation; 

irrevocably authorise the Company or any person authorised by it, as your agent, to do all things 

necessary to effect registration of any Shares subscribed by or issued to you into your name(s) or into 

the name(s) of any person(s) in whose favour the entitlement to any such Shares has been transferred 

and authorise any representative of the Company to execute any document required therefor; 

agree that, having had the opportunity to read the Prospectus, you shall be deemed to have had notice 

of all information and representations concerning the Company and the Shares contained therein; 

confirm that you have reviewed the restrictions contained in these terms and conditions; 

(xiv) warrant that, if you are an individual, you are not under the age of 18; 

(xv) 

(xvi) 

(xvii) 

(xviii) 

(xiv) 

agree that all documents and cheques sent by post to, by or on behalf of the Company or the Receiving 

Agent, will be sent at the risk of the person(s) entitled thereto; 

warrant that in connection with your Application you have observed the laws of all relevant territories, 

obtained any requisite governmental or other consents, complied with all requisite formalities and paid 

any issue or transfer or other taxes due in connection with your Application in any territory and that you 

have not taken any action which will or may result in the Company acting in breach of the regulatory or 

legal requirements of any territory in connection with the Offer for Subscription or your Application; 

represent and agree that you (i) are not a US Person (meaning any person who is a US Person within the 

meaning of Regulation S) and are not acting on behalf of a US Person, that you are not purchasing with 

a view to re-sale in the US or to or for the account of a US Person and that you are not an employee 

benefit plan as defined in section 3(3) of ERISA (whether or not subject to the provisions of Title 1 of 

ERISA) or an individual retirement account as defined in section 408 of the US Internal Revenue Code or 

(ii) are not a resident of Canada, Australia or Japan; 

agree, on request by the Company, or the Receiving Agent on behalf of the Company to disclose 

promptly in writing to the Company or the Receiving Agent any information which the Company, or the 

Receiving Agent, may reasonably request in connection with your Application and authorise the 

Company or the Receiving Agent on behalf of the Company, to disclose any information relating to your 

Application as it considers appropriate; and 

warrant that in connection with your Application that you are not (i) a resident in the Bailiwick of Jersey 

to whom the Company has offered Shares directly or (ii) a business regulated under the financial 

services regulatory laws of the Bailiwick of Jersey. 

(e) 

(f) 

No person receiving a copy of this document and/or an Application Form in any territory other than the UK may 

treat the same as constituting an invitation or an offer to them, nor should they in any event use an Application 

Form unless, in the relevant territory, such an invitation or offer could lawfully be made to them or the 

Application Form could lawfully be used by them, without contravention of any legal or regulatory requirements 

or without compliance with any unfulfilled registration requirements. It is the responsibility of any person outside 

the UK wishing to apply for Shares under the Offer for Subscription to satisfy themselves as to full observance of 

the laws of any relevant territory in connection with any such Application, including obtaining any requisite 

governmental or other consents, observing any other formalities requiring to be observed in any such territory 

and paying any issue, transfer or other taxes required to be paid in any such territory. 

The Shares have not been and will not be registered under the US Securities Act nor with any securities 

regulatory authority of any State or other jurisdiction of the United States and, subject to certain exceptions, may 

not be offered or sold within the United States or to, or for the account or benefit of, US Persons. The Company 

has not been and will not be registered as an “investment company” under the US Investment Company Act, and 

investors will not be entitled to the benefits of the US Investment Company Act. In addition, relevant clearances 

have not been, and will not be, obtained from the US Securities and Exchange Commission of any province of 

Canada, Australia or Japan and, accordingly, unless an exemption under any relevant legislation or regulations is 

applicable, none of the Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in 

Canada, Australia or Japan. Unless the Company has expressly agreed otherwise in writing or unless an 

99

exemption under relevant legislation or regulation is applicable (the applicability of which you hereby represent 

and warrant) you represent and warrant to the Company that you are not a US Person or a resident of Canada, 

Australia or Japan and that you are not subscribing for such Shares for the account of any US Person or resident 

of Canada, Australia or Japan and that you will not offer, sell, renounce, transfer or deliver, directly or indirectly, 

Shares subscribed for by you in the United States, Canada, Australia or Japan or to any US Person or resident of 

Canada, Australia or Japan. No Application will be accepted if it bears an address in the United States, Canada, 

Australia or Japan unless an appropriate exemption is available as referred to above. 

(g) 

(h) 

(i) 

(j) 

(k) 

(l) 

(m) 

Pursuant to the Data Protection (Jersey) Law 2005, as amended (the “DP Law”), the Company, the Manager, the 

Sub-Administrator, the Receiving Agent and/or the Registrar may hold personal data (as defined in the DP Law) 

relating to past and present Shareholders. 

Such personal data held is used by the Company, the Manager, the Sub-Administrator, the Receiving Agent and/ 

or the Registrar to maintain the Company’s register of Shareholders and mailing lists and this may include 

sharing such data with third parties in one or more of the countries or territories mentioned below when 

(i) effecting the payment of dividends and redemption proceeds to Shareholders and the payment of commissions 

to third parties and (ii) filing returns of Shareholders and their respective transactions in Shares with statutory 

bodies and regulatory authorities. Personal data shall not be retained on record for longer than is necessary to 

satisfy the purpose(s) for which it was obtained. 

The countries or territories referred to above include, but need not be limited to, those in the European Economic 

Area and any of their respective dependent territories overseas, and any country or territory ensuring an 

adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal 

data. 

By becoming registered as a holder of Shares in the Company, a person becomes a data subject (as defined in 

the DP Law) and is deemed to have consented to the processing by the Company, the Manager, the 

Sub-Administrator, the Receiving Agent and/or the Registrar of any personal data relating to them in the manner 

described above. 

The basis of allocation will be determined by the Directors after consultation with the Investment Manager and 

the Global Co-ordinator in their absolute discretion. The right is reserved to reject in whole or in part and/or 

scale down and/or ballot any Application or any part thereof. The right is reserved to treat as valid any Application 

not in all respects completed in accordance with the instructions relating to the Application Form, including if the 

accompanying cheque or banker’s draft is for the wrong amount. 

An Applicant’s entitlement to Euro Shares and/or US Dollar Shares will be determined by applying the mid-spot 

foreign exchange rate (from an independent pricing source selected by the Company) on 22 April 2008 to the 

amount in Sterling of the application monies accompanying each Application. Allotments of Euro Shares and US 

Dollar Shares will be scaled back to the nearest whole Share following such determination and the Company 

reserves the right to retain for its own benefit application monies representing any fractional entitlements to 

Shares that would otherwise have arisen, where any fractional values are less then £5.00. Where any fractional 

value is equal to or greater than £5.00, application monies representing the fractional entitlement will be 

returned (without interest) by crossed cheque in favour of the first named Applicant, through the post at the risk 

of the person(s) entitled thereto. In the meantime, application monies will be retained by the Receiving Agent in a 

separate account. 

Save where the context otherwise requires, words and expressions defined in this Securities Note have the same 

meanings when used in these terms and conditions and in the Application Form and explanatory notes in relation 

thereto. 

100

NOTES ON HOW TO COMPLETE THE APPLICATION FORM 

Applications should be returned so as to be received no later than 5.00 pm on 22 April 2008. 

HELP DESK: If you have a query concerning completion of this Application Form please call Computershare Investor 

Services PLC on 0870 707 1716 or from outside the UK +44 870 707 1716. For legal reasons Computershare Investor 

Services PLC will not be able to give advice on the merits of the Offer or to provide legal, financial or taxation advice, and 

accordingly for such advice you should consult your stockbroker, solicitor, accountant, bank manager or other 

independent professional adviser. Please note that calls may be monitored or recorded. 

1A. APPLICATION 

Where Sterling Shares are being subscribed fill in (in figures) in Box 1A the number in Sterling of Shares being 

subscribed. The number of Sterling Shares being subscribed must be a minimum of 500 Sterling Shares and thereafter in 

multiples of 100 Sterling Shares. 

The value of Shares being subscribed must be a minimum of £5000 and subscriptions above the minimum subscription 

amount must be in multiples of £1000. Financial intermediaries who are investing on behalf of clients should make 

separate Applications for each client. 

1B, 1C AND 1D. SUBSCRIPTION MONIES 

Fill in (in figures) in Box 1B, 1C or 1D, as applicable, the amount of subscription monies accompanying this Application 

being either i) where an Application is for Sterling Shares, the number of Sterling Shares inserted in Box 1A multiplied by 

£10 per Sterling Share; or ii) where an Application is for Euro Shares or US Dollar Shares, an amount in Sterling not less 

than £5000. 

2A. HOLDER DETAILS 

Fill in (in block capitals) the full name and address of the first holder and the names only of any joint holders. Applications 

may only be made by persons aged 18 or over. In the case of joint holders only the first named may bear a designation 

reference. A maximum of four joint holders is permitted. All holders named must sign the Application Form in Box 3. 

2B. CREST 

If you wish your Shares to be deposited in a CREST account in the name of the holders given in Box 2A, enter in Box 2B the 

details of that CREST account. Where it is requested that Shares be deposited into a CREST account please note that 

payment for such Shares must be made prior to the day such Shares might be allotted and issued. It is not possible for an 

applicant to request that Shares be deposited in their CREST account on a delivery against payment basis. Any Application 

Form received containing such a request will be rejected. 

3. SIGNATURE 

All holders named in Box 2A must sign Box 3 and insert the date. The Application Form may be signed by another person 

on behalf of each holder if that person is duly authorised to do so under a power of attorney. The power of attorney (or a 

copy duly certified by a solicitor or a bank) must be enclosed for inspection (which originals will be returned by post at the 

addressee’s risk). A corporation should sign under the hand of a duly authorised officer whose representative capacity 

should be stated and a certified copy of a notice issued by the corporation authorising such person to sign should 

accompany the Application Form. 

4. CHEQUE/BANKER’S DRAFT, PAYMENT DETAILS 

Payment must be made by a cheque or banker’s draft accompanying your Application and must be for the exact amount. 

Your cheque or banker’s draft must be made payable to “The Royal Bank of Scotland Re: BARS LTD” and crossed “A/C 

Payee”. If you use a banker’s draft or a building society cheque you should ensure that the bank or building society issuing 

the payment enters the name, address and account number of the person whose account is being debited on the reverse 

of the banker’s draft or cheque and adds its stamp. Your cheque or banker’s draft must be drawn in Sterling on an 

account at a bank branch in the UK or the Channel Islands which is either a member of the Cheque and Credit Clearing 

Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques or bankers drafts to be 

cleared through the facilities provided for members of either of those companies. Your cheque or banker’s draft must 

bear a UK bank sort code number in the top right hand corner. Cheques must be drawn on the personal account of the 

individual investor where they have sole or joint title to the funds. Third party cheques will not be accepted with the 

exception of building society cheques or banker’s drafts where the building society or bank has confirmed the name of the 

account holder by stamping or endorsing the cheque or banker’s draft to such effect. The account name should be the 

same as that shown on the Application. Where an Application is accompanied by a cheque or banker’s draft drawn by 

someone other than the holder(s), any monies returned will be sent by the Receiving Agent to the person named as holder 

in Box 2A. Your payment must relate solely to this Application. No receipt will be issued. 

101

5. CONTACT DETAILS 

To ensure the efficient and timely processing of your Application Form, please provide contact details of a person that the 

Receiving Agent may contact with all enquiries concerning your Application. Ordinarily this contact person should be the 

person signing in Box 3 on behalf of the first named holder. If no details are entered here and the Receiving Agent 

requires further information, any delay in obtaining that additional information may result in your Application being 

rejected or revoked. 

6. MONEY LAUNDERING (JERSEY) ORDER 2008 AND THE PROCEEDS OF CRIME (JERSEY) LAW 1999 

Applications will be subject to Jersey’s verification of identity requirements. This will involve you providing the verification 

of identity documents listed below. 

The Jersey Financial Services Commission (JFSC) has imposed new legislative changes for financial services businesses 

in accordance with the Money Laundering (Jersey) Order 2008 and the Proceeds of Crime (Jersey) Law 1999. 

BlackRock (Channel Islands) Limited, as the Manager of the Company, is required to comply with the new laws and 

regulations. One of the requirements of such laws and regulations is that it obtains evidence of identity of each investor 

and verifies the identity of such investors. 

The Appendix forms which follow illustrate the information and the documents that are now required to comply with the 

Jersey laws and regulations. 

Please note that the documents and information requested are the minimum requirement and additional information 

and /or documents may be requested depending on specific circumstances. If satisfactory evidence of identity has not 

been obtained within a reasonable time your Application may be rejected or revoked. 

Certification of Documents 

Where certified copies of documents are requested below: 

A *suitable certifier must: 

• certify that he has seen the original documentation verifying identity and/or residential address; 

• certify that the copy of the document (which he certifies) is a complete and accurate copy of that original; 

• sign and date the copy document; and 

• provide adequate information so that he may be contacted in the event of a query, to include: name — position or 

capacity — address and telephone number or email address. 

A *suitable certifier may include: 

• a member of the judiciary, a senior civil servant, or a serving police or customs officer; 

• an officer of an embassy, consulate or high commission of the country of issue of documentary evidence of identity; 

• a lawyer or notary public who is a member of a recognised professional body; 

• an actuary who is a member of a recognised professional body; 

• an accountant who is a member of a recognised professional body; 

• a tax advisor who is a member of a recognised professional body; 

• an individual that is qualified to undertake certification services under authority of the Certification and International 

Trade Committee (in Jersey this service is available through the Jersey Chamber of Commerce); and 

• a director, officer, or manager of a regulated financial services business which is operating in a well regulated 

jurisdiction, or of a branch or subsidiary of a group headquartered in a well regulated jurisdiction which applies group 

standards to subsidiaries and branches worldwide, and tests the application of and compliance with such standards. 

The following wording must be included on each document to be certified which must also be stamped and signed by the 

certifier: 

For documents providing photographic evidence of identity: 

“I………………………………………………………………………………” 

CERTIFY that I have seen the original of this document, that this copy is an accurate copy of that original document 

and that the photograph contained in the document bears a true likeness to the named individual. 

For documents without a photograph: (a utility bill — Memorandum and Articles etc) 

“I …………………………………………………………….………………” 

CERTIFY that I have seen the original of this document, that this copy is an accurate copy of that original document. 

102

APPENDIX A 

PUBLICLY TRADED COMPANY — Trading on a well regulated market (“well regulated” applies to 

countries that are considered to be equivalent for anti-money laundering purposes — please see 

attached) 

INFORMATION TO BE PROVIDED: 

Name of Exchange: 

DOCUMENTATION TO BE PROVIDED: 

Please tick the box to confirm that you have enclosed the required documents: 

‘ Copy of latest audited report and accounts of the publicly traded company 

and 

‘ Documentation establishing that the company has been admitted to trading on a regulated market — which may 

be obtained from independent data sources including electronic sources e.g. business information services 

103

APPENDIX B 

WHOLLY OWNED or MAJORITY OWNED SUBSIDIARY OF A PUBLICLY TRADED COMPANY — where 

that company prepares audited accounts. If NOT wholly and majority owned please complete 

Appendix E — Private Company 

INFORMATION TO BE PROVIDED 

Please tick the box(s) to confirm that you have provided the requested information and enclosed the required 

documents: 

‘ Wholly owned 

or 

‘ Majority owned — If majority owned please state % of ownership and details of majority shareholders 

If wholly and majority owned: 

‘ Copy of latest audited report and accounts of the publicly traded company 

and 

‘ Documentation establishing that the company has been admitted to trading 

and 

‘ Showing that the company is wholly owned for majority owned subsidiary 

If not wholly owned: 

‘ The identification and verification form Appendix F — Private Company must be completed 

104

APPENDIX C 

INVESTMENT VEHICLE/PARTNERSHIP 


Name of entity: 

Trading name: 

Date and country of registration: 

Official identification number: 

Registered address: 

Post code: 

Mailing address (if different): 

Post code: 

Principal place of business/operations (if different): 

Post code: 

Name of regulator: 

Ownership and control structure: 

Nature of activities undertaken: 

Geographical sphere of the legal body’s activities and assets: 

Name of all directors: (Please attach a separate list if necessary): 

Identification information of: 

(1) directors who have authority to operate a relationship or to give instructions 

and 

(2) individuals ultimately holding a 25% or more interest in the capital of the 

company. 

(Please attach a separate list if necessary) 

105


2 methods from the following list as a *certified copy as applicable: 

*Please refer to the attached notes on Certification of Documents 

Please tick box/s to confirm which documents you are enclosing: 

‘ Certificate of registration 

‘ Registry search (if possible) 

‘ Partnership agreement 

‘ Latest audited financial statements 

‘ Company registry search including confirmation that it is not in the process of being dissolved struck off wound 

up or terminated 

‘ Independent data sources including electronic sources e.g. business information services 

BENEFICIAL OWNERS/CONTROLLERS 

INFORMATION/DOCUMENTATION TO BE PROVIDED: 

Please tick box(s) to confirm which documents you are providing: 

‘ In respect of an individual shareholder/partner/director the identification and verification form for an individual 

should be completed 

‘ In respect of a legal body shareholder please complete the identification and verification form for a private 

company a publicly traded company or a subsidiary of a publicly traded company as applicable 

106

APPENDIX D 

TRUST OR SETTLEMENT 


The Trust is the applicant for business — beneficial owner — controller: 

Name of Trust: 

Date of establishment: 


(e.g. tax identification number or registered charity number) 

Mailing address of Trustee(s): 

(Please attach a separate sheet if necessary) 

Post code: 

Name of Trustee’s regulator (if applicable): 


(1) Trustee(s) (2) Settlor(s) and (3) Protectors 

Please complete the form for an Individual 

Type of Trust (fixed interest discretionary testamentary): 

Structure of any underlying companies (if applicable) and nature of activities undertaken by the Trust and any underlying 

companies — having regard for sensitive activities and trading activities 


Classes of beneficiaries including any charitable causes named in the Trust Instrument: 


Settlor(s) and Provider(s) of Trust Funds — Beneficiary(s) and Protector(s) of the Trust: 

Please tick box(s) to confirm which documents you are providing: 

‘ Where they are natural persons please complete the form for an individual 

‘ Where they are legal bodies please complete the form(s) for a Private Company or Investment Vehicle/ 

Partnership as applicable 

107

APPENDIX E 

PRIVATE COMPANY — beneficially owned by individuals 


Name of entity: 

Trading name: 

Date and country of Incorporation: 


Registered address: 

Post code: 

Mailing address (if different): 

Post code: 

Principal place of business/operations (if different): 

Post code: 

Name of regulator: 

Ownership and control structure: 

Nature of activities undertaken: 

Geographical sphere of the legal body’s activities and assets: 

Name of all directors: (Please attach a separate list if necessary): 


and 


(1) directors who have authority to operate a relationship or to give 

instructions 

(2) individuals ultimately holding a 25% or more interest in the capital of the 

company. 


2 methods from the following list *certified as applicable 


Please tick box(s) to confirm which documents you are enclosing: 

‘ Certificate of incorporation (or other appropriate certificate of registration or licensing) 

‘ Memorandum and articles of association (or equivalent) 

‘ Company registry search including confirmation that it is not in the process of being dissolved struck off wound 

up or terminated 

‘ Latest audited financial statements 

‘ Independent data sources including electronic sources e.g. business information services 

108

BENEFICIAL OWNERS/CONTROLLERS 



‘ For individual beneficial owners and directors please complete Appendix F 

‘ For legal bodies which are the beneficial owners and controllers the identification and verification as appropriate 

should be followed 

109

APPENDIX F 

INDIVIDUAL 

Please complete the following: 

Legal name: 

Any former names (such as maiden name and any other names used): 

Date of birth: 

Place of birth: 

Principal residential address: 

Post Code: 

Nationality: 

Gender: 


1 of the following as a *certified copy providing photographic evidence of identity: 



‘ your current passport 

or 

‘ current national identity card 

or 

‘ current driving licence 

and 2 originals from the following list to verify your residential address and dated within the last three months: 

‘ a utility bill 

‘ a bank, credit card or building society statement 

‘ correspondence from a central or local government department or agency 

‘ a letter confirming residential address from a regulated financial services business which is operating in a wellregulated 

jurisdiction 

‘ one of the identification sources listed above — if it states your address details and it has not been used to verify 

your identity 

110

APPLICATION FORM FOR THE OFFER FOR SUBSCRIPTION 

INSTRUCTIONS FOR DELIVERY OF COMPLETED APPLICATION FORMS 

Completed Application Forms should be returned, by post (during normal business hours only) to Computershare Investor 

Services PLC, Corporate Actions Projects, Bristol BS99 6AH, or by hand to Computershare Investor Services PLC, The 

Pavilions, Bridgwater Road, Bristol BS99 6ZZ so as to be received no later than 5.00 pm on 22 April 2008, together in each 

case with payment in full in respect of the Application. If you post your Application Form, you are recommended to use 

first class post and to allow at least two days for delivery. Application Forms received after this date may be returned. 

FOR OFFICE USE ONLY 

Log No. 

Important. 

Before completing this Application Form, you should read the accompanying Notes on How to Complete the Application 

Form. 

To: Computershare Investor Services PLC, acting as agent for BlackRock Absolute Return Strategies Ltd 

1. APPLICATION 

I/We the person(s) detailed in Box 2A below offer to subscribe the amount shown in Box 1 for Shares subject to the terms 

and conditions set out in the Securities Note forming part of the Prospectus dated 4 April 2008 and subject to the Articles 

of Association of the Company. 

Box 1A Number of Sterling Shares (minimum 500) 

Box 1B Subscription monies for Sterling Shares (number in 

Box 1A multiplied by £10 per Sterling Share) (minimum 

£5000) 

Box 1C Subscription monies for Euro Shares (minimum 

£5000) 

Box 1D Subscription monies for US Dollar Shares 

(minimum £5000) 

2A. DETAILS OF HOLDER(S) IN WHOSE NAME(S) SHARES WILL BE ISSUED (BLOCK CAPITALS) 

Mr, Mrs, Miss or Title 

Surname/Company Name: 

Address (in full): 









Forenames (in full): 

Postcode: 

Designation (if any): 





2B. CREST DETAILS 

(Only complete this box if Shares allotted are to be deposited in a CREST account which must be in the same name as 

the holder(s) given in Box 2A.) 

CREST Participant ID: 

CREST Member Account ID: 

111

3. SIGNATURE(S) — ALL HOLDERS MUST SIGN 

First holder signature: 

Name (print): 

Dated 

Third holder signature: 

Name (print): 

Dated 

Second holder signature: 

Name (print): 

Dated: 

Fourth holder signature: 

Name (print): 

Dated: 

4. CHEQUES/BANKER’S DRAFT DETAILS 

Pin or staple to this form your cheque or banker’s draft for the exact amount shown in Box 1 made payable to “The Royal 

Bank of Scotland Re: BARS LTD”. Cheques and banker’s payments must be drawn in Sterling on an account at a bank 

branch in the UK or the Channel Islands and must bear a UK bank sort code number in the top right hand corner. See 

note (4) of the Notes on How to Complete the Application Form. 

5. CONTACT DETAILS 

To ensure the efficient and timely processing of this Application please enter below the contact details of a person the 

Receiving Agent may contact with all enquiries concerning this Application. Ordinarily this contact person should be the 

(or one of the) person(s) signing in Box 3. If no details are entered here and the Receiving Agent requires further 

information, any delay in obtaining that additional information may result in your Application being rejected or revoked. 

Contact name: 

Contact address: 

Name of Company: 

Company stamp/Signature of Authorised Representative: 

E-mail address: 

Postcode: 

Telephone No: 

Fax No: 

112

lackrock.co.uk/its

Prospectus (4.96 Mb) - BlackRock International

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