quantum stride ltd. world’s very first gubic tm fund strategy: long equity, opportunistic,...

Quantum Stride Ltd.Quantum Stride Ltd.World’s Very First GUBICWorld’s Very First GUBICTMTM Fund FundStrategy:Strategy: Long Equity, Opportunistic, Absolute Long Equity, Opportunistic, Absolute ReturnReturn

1Quantum StrideSMTurning Millionaires into Super-MillionairesTM

Restricted DistributionRestricted Distribution

This document contains critical information about Quantum Stride Ltd. (Quantum), the Fund.

The document can not be distributed to anyone without the approval of the Directors of The Fund.

All data and information contained in or disclosed by this document is confidential and proprietary information of Quantum Stride Ltd and all rights therein are expressly reserved.

By accepting this material the recipient agrees that this material and the information contained therein is to be held in confidence and in trust and will not be used, copied, reproduced in whole or in part, nor its contents revealed in any manner to others without the express written permission of Quantum.

2Turning Millionaires into Super-MillionairesTM Quantum StrideSM

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About Quantum Stride Ltd. (Quantum)About Quantum Stride Ltd. (Quantum)

Introduction :

Quantum is a British Virgin Islands (BVI) domiciled Professional Fund focused on long equity investment in GCC, USA, Brazil, India and China (GUBICTM) Small & Mid-Cap. stocks. The Fund is expected to be launched in 2009 with $20 million under Management.

The Fund is able to invest in both Western markets and Middle Eastern & Asian stocks and is run by partners who have over 30 years combined experience in these markets. All of the founders worked together at leading firms and have developed their own Fundamental Value/GARP stock picking strategy as well as investment screening and risk management tools.

Turning Millionaires into Super-MillionairesTM Quantum StrideSM

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About Quantum Stride Ltd. (Quantum)About Quantum Stride Ltd. (Quantum)

This document explains the following: Distinguishing features of the Fund – what separates “Quantum” from the crowd? Transparency to the investors How does Quantum monitor and manage risk? Why should we invest in Small & Mid Cap stocks? Why should we invest in an Absolute Return Fund? Why should we use the Quantum Stride Ltd.? How does Quantum invest? What is the investment style? What is the investment process? How will the portfolio be constructed? Who are the founders and what are their experiences? Who are the Administrator, Investment Manager, Sub-Manager, Investment Advisor,

Custodian, Shari’a Advisor, Auditors and what are their experiences? Fund particulars Frequently asked questions


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Distinguishing Features of the Fund- Distinguishing Features of the Fund- What Separates What Separates “Quantum” from the Crowd?“Quantum” from the Crowd?

World’s very first GUBICTM fund, providing unmatched geographical diversification with investments in GCC, USA, Brazil, India and China.

Capital Protection for Investors: Quantum’s philosophy is to extract alpha using more conservative exposure than directional funds and has designed hedging techniques to minimise systematic risks including the use of disaster scenario Portfolio Insurance.

Usage of Shari’a Compliant Stocks for Better Diversification: Shari’a Compliant Stocks by their nature are in conservative businesses and have much lesser risk on their balance sheets (by limiting the debt/equity ratio) as compared to non-shari’a compliant stocks. This is why we believe Shari’a Compliant Stocks can provide an excellent way of further diversifying the portfolio. Notably, we are the first fund to understand this and apply this in practice.

Specialist Advisor/Manager for each market


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The Fund will experience a significant return enhancement and a portfolio volatility much lesser and less kurtotic than that experienced by investors using traditional diversification techniques or those who are using little diversification at all. This is particularly true for the investors who are using more than one investment companies as their vehicles.

Nimbleness: The Fund will invest in ten markets, it would have availability of enough stocks picks that it can move into and out of the positions without having any problem.

Investments in Mid & Small Cap stocks to provide maximum growth potential to the portfolio

The Fund offers a vehicle of transparent valuation and strategy, and consistent management.



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Superior Risk Management Methodology: Quantum’s risk management methodology is designed specifically to address Small and Mid Cap investing. It adjusts to reflect changing market conditions and emphasises common sense- capital preservation and liquidity are the key priorities.

100% hedging with Put Options and other derivatives, hence very little downside, which will be equal to the cost of the derivatives (expected to be <7% of the Assets Under Management).

The performance objective of the Fund is to produce pre-incentive returns between 20%-25% per annum to its investors irrespective of movement of the other asset classes.

Thus, it would give high Reward/Risk Ratio (>3.5) to the Investors (This is much better than the optimal ratio, which is around ‘2’ for most of the funds), it means the Fund would make about 75% more profit as compared to many other funds for the same amount of risk taken.

Transparency to the Investors: please see ahead


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Transparency to the InvestorsTransparency to the Investors

Clarity About the Magnitude and Timings of Fees and Expenses:

We are clear about every fee and expense that would be charged to the Fund (Please refer to “FEES AND EXPENSES” section of the Prospectus for details).

No Uncertainty About the Way the Portfolio will be Constructed:

We are clear about the way the portfolio will be constructed (Please refer to “PORTFOLIO CONSTRUCTION” in this document or “INVESTMENT APPROACH OF THE INVESTMENT MANAGEMENT COMPANY” section in the Prospectus).

Disclosure of Stocks Holding and Portfolio Allocation:

The Fund will disclose ten stocks positions held by it and its portfolio allocation on percentage basis in a given month. This is unlike any other “Absolute Return Fund” or a “Hedge Fund” that make its best effort to hide its stocks positions. .

Well Defined Valuation Policies and Procedures:

We have well defined and easy to understand method of calculating the NAV: “Series of Shares and Consolidation Method”. Besides this the Fund intends to invest 100% of its assets in liquid, listed securities that leaves no scope for the uncertain valuation methodology.


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Quantum: Risk Monitoring & ManagementQuantum: Risk Monitoring & Management• We define risk as: “the risk of permanent loss of capital in nominal terms”

• First rule of investing: “don’t lose money”;

• Second rule of investing: “don’t forget the first rule” – Warren Buffet

Risk Sources in Small/Mid Caps Managed By

• Market risk Put options, other derivatives and gearing v cash

• Thematic risk• Stocks specific risk • Liquidity risk

Mitigated by appropriate diversification (Geographical & Sectorial)

It is important to understand that all these sources of risk, if properly managed, can also be exploited to achieve superior portfolio returns on a risk adjusted basis

Thematic risk: Cluster analysis report / factor analysis report

Liquidity: Daily liquidity monitoring report and single-stock liquidity limits

Specific risk: Single stock concentration / liquidity limits / stop-loss limits

Market risk: Daily VAR report / stop-loss limits / gearing limit

Monitoring: Experienced risk-management team

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Quantum: Risk Monitoring & ManagementQuantum: Risk Monitoring & Management Diversification

30-40 primary positions in well researched stocks achieve diversification and liquidity while delivering superior returns

Geographical diversification: investments in 10 stock markets- GCC, USA, Brazil, India and China (GUBICTM)

Max % of fund invested in any single stock: 6% long Regular factor and cluster analysis to identify and prevent unintended thematic/market

risk in portfolio Macro risks (currency, economic, political) mitigated by country limits matrix

Stop Loss (All Trigger Levels Based from High Water Mark) Review any position that falls 15% (for longs) for non-GCC markets and falls 20% (for

longs) for GCC markets or impacts Fund NAV by 0.9% Close any position that falls (longs) 35% or negatively impacts Fund NAV by 2.0% Convene immediate investment committee meeting if Fund NAV has 4.5% drawdown

Liquidity Control Use liquidity analysis software to manage liquidity at the portfolio and stock levels Stock Liquidity - Max. Investment: 10% of the free float of the underlying listed

investment Portfolio Liquidity - in volatile periods gross exposure will be appropriately scaled down


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Quantum: Risk Monitoring & ManagementQuantum: Risk Monitoring & Management

Volatility Controls Monitor daily portfolio VAR (not to exceed 2.5% of 5 day VAR at 95% confidence

interval)

Market Exposure Leverage is unnecessary for our strategy to work successfully Net market exposure is typically <10% (managed by put options and other derivatives) Portfolio Insurance - in market stress scenarios correlations on all securities tend to

converge, allowing for effective proxy hedging

Strategy is Alpha-Driven Our Small Cap stock picking strategy is driven predominantly by company specific,

unsystematic factors – it is naturally uncorrelated with market movement


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Why Why should Weshould We Invest in Small & Mid Cap Stocks Invest in Small & Mid Cap StocksThe overwhelming reason for investing in Small and Mid Cap market stocks is that there is a genuine advantage accruing to the smaller stocks that is not available to the large cap stocks. In addition the marketplace for smaller stocks is under researched and still offers miss-pricing opportunities. We list below the major advantages of investing in this area:

Small and Mid Caps are Under Researched

There is only 10-15% analyst coverage by the major sell side houses. There are also far fewer buy-side analysts.

Huge Investment Opportunities

There is a universe of 10,000+ stocks which provides ample scope to find 30-40 suitable stocks for our portfolios in all market conditions.

High Alpha/Low Beta

The price of Small Cap stocks is driven much more by stock specific news- hence an inherently low correlation to the broad market. This is confirmed by market history.


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Why Why should Weshould We Invest in Small & Mid Cap Stocks Invest in Small & Mid Cap Stocks

Higher Growth Potential Small and Mid Caps are much more nimble in growing sales and EPS. They also have a leaner

corporate hierarchy and have greater flexibility of operations. Small and Mid Caps are also much more likely to be bid targets for private equity partnerships and large cap companies especially in a lower growth environment.

Inherent Market Benefits Trading and technical anomalies often work more strongly and consistently for Small and Mid

Caps. Such effects as EPS surprises, Stock momentum, Mean reversion and Low Price/Book effects are all more obvious in this sector

Inherent Market Protection By virtue of their size and contribution to larger fund portfolios these stocks offer genuine

protection from some market forces. They are very often excluded from Program trades and are less affected by forced equity sell downs such as occurred after 9/11.


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Why Why should Weshould We Invest in Small & Mid Cap Stocks Invest in Small & Mid Cap Stocks

Over the last century, the smallest 10 per cent of quoted companies have on average delivered 31.6% return per year. Companies in the largest 10 percent of the market could only deliver 13% during the same period (Source: London Business School)

Whilst we cannot predict that the Small and Mid Cap asset class as a whole will always outperform large caps, in any year, it is highly probable that the returns from a portfolio of the top performing 50 Small and Mid Cap stocks will substantially outperform returns from a portfolio of the 50 top performing large cap stocks.


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Why Why should Weshould We Invest in an Absolute Return Fund Invest in an Absolute Return Fund

The main benefits of investing in an Absolute Return Fund are:

Absolute Return (Mid to long-term) i.e. positive return irrespective of market direction Reasonable Volatility (Comparable to benchmark equity index) Low Correlation (With benchmark equity index) Following are figures as at Sep-08

Performance CorrelationIndex One Month (%) YTD (%) 2007(%) Annualized(%) Volatility (%) DJW 5000 DJCBIDJHFSB (Event Driven) -0.01 -2.13 5.67 5.97 4.86 0.85 0.03DJHFSB (Merger Arbitrage) 0.99 1.51 16.12 5.87 4.48 0.34 0.05DJHFSB (Distressed Securities) -0.79 -7.43 0.15 7.63 5.2 0.66 -0.11DJHFSB (Convertible Arbitrage) -0.75 -8.42 2.63 4.8 4.28 0.1 0.16DJHFSB (Long/Short) -0.63 -2.36 19.79 7.91 9.13 0.64 -0.12DJ Wilshire 5000 (DJW 5000) 1.57 -10.3 5.62 6.33 10.72 1 0.05DJ Corporate Bond Index (DJCBI) 0.79 0.38 5.24 2.98 3.59 0.05 1


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Why Why should Weshould We Invest in an Absolute Return Fund Invest in an Absolute Return Fund

Strategy 1 Month 3 Months 12 Months 2007 2006 2005 2004 2003 2002 Cumulative Annualized Inception

Distressed Securities -3.66 -16.58 -36.98 0.15 15.59 6.73 15.46 23.07 0.48 7.25 0.99 12/31/2001

Equity Long/Short 1.56 -4.75 -11.78 19.79 8.3 3 N/A N/A N/A 13.64 3.05 10/29/2004

Equity Market Neutral -0.17 -4.94 -7.47 1.54 7.12 1.72 0.79 N/A N/A 1.14 0.2 6/30/2003

Event Driven 1.23 -10 -25.55 5.67 12.65 6.52 10.36 17.92 -9.26 9.6 1.3 12/31/2001

Merger Arbitrage 1.62 2.88 -4.83 16.12 9.28 2.87 3.67 7.63 -1.07 35.12 4.34 12/31/2001

DJHFSB Returns (% ) January 30, 2009 (final)


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Why Why should Weshould We Invest in Invest in an an Absolute ReturnAbsolute Return Fund: Fund: Absolute ReturnAbsolute Return Funds- Friends of the Markets Funds- Friends of the Markets

Market Benefits of Absolute Return funds

It is accepted that Absolute Return funds contribute positively to global financial markets. They can provide portfolio diversification for investors since their returns are often less correlated with those of traditional investment funds.

Absolute Return funds contribute to innovation in financial instruments. Absolute Return funds also improve liquidity in otherwise low liquid market segments, and

therefore enhance the efficiency of financial markets. They assist counterparties to reduce or manage their own risks.

They often are activist shareholders who are quick to call for necessary business restructuring, improved shareholder value, and better corporate governance.

Last but not the least, they offer investors greater investment choice through introducing a new asset class and are important clients and counterparts for the financial services industry.

In summary, Absolute Return funds are not the one that are destroying/have destroyed the markets; they are the forces that are shaping the markets for better future.

To gain broader understanding on the issue, please also refer to the Article: “the Case for Absolute Return Investing”, provided along with.


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Why Why should Weshould We Use Quantum Stride Ltd. Use Quantum Stride Ltd.

All the three directors between them speak four languages and have a wide array of corporate and ultra high net worth individuals contacts. They have hired the investment managers and advisor with demonstrable track record of delivering absolute returns.

Quantum offers one of the most consistent and sustainable ‘Alpha Absolute Return’ fund strategies. The bottom-up fundamental Small and Mid Cap stock selection from a huge universe of 10,000+ stocks allows the fund to exploit inefficiencies at the company specific level (Alpha) and is least dependent on general stock market conditions (Beta).

Quantum is not confined to GCC or Asian stocks, it gives investors exposure to much more deeper and liquid US stocks.

It is not enough to choose a successful strategy and investment team. Recent experience has shown that loss of capital has the most devastating impact on portfolios and this has seen the rise of Absolute Return funds dedicated to Absolute returns. Quantum is run specifically to avoid the damaging effect of capital losses and uses techniques to hedge market risk and maintain exposure to stock specific returns.


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Why Why should Weshould We Use Quantum Stride Ltd. Use Quantum Stride Ltd.

Capital Protection for Investors: Quantum’s philosophy is to extract alpha using more conservative exposure than Directional Funds and has designed hedging techniques to minimise systematic risks including the use of disaster scenario Portfolio Insurance.

Superior Risk Management Methodology: Quantum’s risk management methodology is designed specifically to address Small and Mid Cap investing. It adjusts to reflect changing market conditions and emphasises common sense- capital preservation and liquidity are the key priority.

Finally it is well worth bearing in mind that this is a niche high-return strategy and due to capacity constraints Quantum itself will close to new investors once it reaches $500 million.


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Strengths of the Quantum’s ApproachStrengths of the Quantum’s Approach

The partners in Quantum believe that the main barrier to entry into this sector is- large funds cannot access the Small Cap/Mid Cap stocks due to size and liquidity constraints.

It is also important to understand the nature of returns in this field. Investing in Small and Mid Cap stocks has something in common with private equity investing in that out of every ten investments five or six may well have very modest returns, one or two may go seriously wrong but one or two have a tremendous effect on the overall performance. There is however one very important and positive difference from Private Equity. Given that all the investments are listed and that the fund will maintain strict risk control policies the one or two disasters will not impact the overall performance as much as in a Private Equity portfolio.


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How would Quantum Invest: Investment StyleHow would Quantum Invest: Investment Style

Core Portfolio of 30-40 Long Positions 30-40 stocks = <0.4% of investable universe makes it to the live portfolio Each portfolio manager’s brief is to find 40 stocks with a min. return expectation of 20 –

30% over next 12 months Investable universe: market cap >$250mn. Our sweet-spot would be $500mn - $2,000mn

Fundamentally Driven Bottom-Up Stock Pickers Fundamentals assessed on mid/long-term horizon with catalysts to crystallise intrinsic

value within 12-24 months Technical analysis used where appropriate to optimise entry/exit points


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How would Quantum Invest: Investment StyleHow would Quantum Invest: Investment Style

Risk-Oriented and Volatility Controlled Protection of capital through rigorous risk management is at all times uppermost in our

mind Combination of Alpha (stock) and Beta (portfolio insurance) longs to control risk

Value-Oriented Free cash flow, ROIC, management quality, business model and very basics such as P/E

and PEG Ratios

Opportunistic Focus on segments (stocks, sectors, countries) where we have an informational advantage

Disciplined We stick strictly to the founders/Investment Manager’s specific areas of

expertise


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How would Quantum Invest: Investment ProcessHow would Quantum Invest: Investment Process

Historical Financial Performance and future potential

position

Understand Value-Added: Products,

Services, Distribution Channels

Knowing Management, Customers and

Suppliers

Risk Assessment:

Operational, Financial, Valuation, Liquidity

Franchise Assessment:

SWOT, Porter 5 Forces

Technical Analysis- Bar Chart, MA, MFI and other

Parameters to time the entry

Fundamental

Qualitative &

Quantitative

Stock picking


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How would Quantum Invest: Investment ProcessHow would Quantum Invest: Investment Process

Proprietary Screens

We are developing our own screening software that uses over 20 fundamental valuation,

operational, technical, liquidity and credit-scoring parameters per company to create a forensic

footprint for each stock we investigate. We have limited the number of parameters to around 20

as more just adds to complexity and creates more whiplash

Personal Contacts

Over the past years we have developed a valuable network of professional contacts

Local and specialist brokers and analysts who have proven themselves to be reliable sources

Industry sources and consultants

Specialist Sector Magazines

Company and Industry Conferences, Trade Shows, Exhibitions

Local Press, Company and Investor Websites

A great deal of information is only available in the local language;

we speak both Arabic and English fluently


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How would Quantum Invest: Portfolio ConstructionHow would Quantum Invest: Portfolio Construction

Structured and Disciplined Investment and Risk Management Process Highest Conviction Ideas Go into the Portfolio Geographical Diversification:

Investment in GCC, USA, Brazil, India and China (GUBICTM) Specialist on Each Market:

For USA, Brazil, India: Global Emerging Growth Capital For China: Gemini Asset Management Limited For GCC: Quantum Stride Investment Management Company

Benefit of three portfolio managers – ideas are double-checked – both Investment Manager/Sub-Manager & Investment Advisor must agree

Snapshot of Expected Portfolio 30 to 40 individual stock position Ten countries Average portfolio beta 0.6 to 0.8 30% to 50% of stocks investments will go into Shari’a Compliant Stocks Liquidity: 95% of positions should be capable of being liquidated within

one day, the remainder in less than three days


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How would Quantum Invest: The Long DecisionHow would Quantum Invest: The Long Decision

Longs

Highly free cash flow generative: Can finance growth without reliance on

external funding Proven management: Track record of creating shareholder value Strong balance sheet: Net cash/low gearing/good tangible asset

backing High return on operating assets: Generates ROA > COC or turnaround situation Strong business franchise: High barriers to entry, niche or monopoly

Low valuation: FCF yield, PE, BV, Div. yield,

EV/EBITDA, PEG Catalysts: Identifiable catalyst to trigger revaluation


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How would Quantum Invest: Opportunistic TradingHow would Quantum Invest: Opportunistic Trading

Opportunistic Trading

High Volume Shares: High enough volume is traded, so that trades can

be entered and exited with ease

Informational Advantage: Focus on segments (stocks, sectors, countries) where we have an informational

advantage

Usage of Put Options/Derivatives: To take advantage of bearish market or to provide gearing when required

Trending Stocks: Stocks with well defined trend (as shown by technical analysis) will be chosen

Catalysts: Identifiable catalysts to trigger an up/down move


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DirectorsDirectors

• Dr Sandeep Gupta has more than seven years of experience in equity research, private equity and investments, besides this he has an MBA from number one Business School in Asia Pacific (Melbourne Business School). He also has pursued a ‘Hedge Fund Programme’ from London Business School. Dr Sandeep has worked in capacity of a Financial Analyst with Research Group at Global Investment House, which is a leading investment company in the ME region. He has diverse geographical experience having worked in Mumbai (India), Melbourne (Australia) and Kuwait. He is also working as a Chairman and MD of Quantum Stride Singapore Pte. Ltd. a company engaged in corporate finance and private equity advisory. By virtue of his MBA and working in various countries, Dr Sandeep has developed an extensive amount of networking contacts spreaded over Australasia, South East Asia and Middle East. He brings with him vision of the company.


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DirectorsDirectors

Arvind Desai has more than 15 years of experience in equity research and analysis. He has worked in capacity of Senior Financial Analyst at Global Investment House. He has vast experience of more than 10 years in technical analysis. Besides this, he set up a research division for ICP Securities Ltd. and worked there as head of research for about five years. He also established International Business Division for A&A Advisory resulting in multifold growth for the company. His experience in technical & fundamental analysis makes him astute to pick stocks in line with Quantum Stride’s strategy.

Manvinder Singh brings along with him a vast experience of over 13 years in corporate finance with expertise in debt capital markets, Islamic finance and private equity. Manvinder has headed the corporate finance practice at AFG Capital, Singapore and also held an advisory position of Associate Director at Tanmiyat Capital. His credentials include a B-Tech from Indian Institute of Technology, Kanpur followed by a dual Masters with an MBA in Finance from Melbourne Business School & Masters of Science from National University of Singapore. His expertise and networks in GCC and Asia are well regarded and will be useful for the Fund.


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Placement Agent: Quantum Stride Singapore Pte. Placement Agent: Quantum Stride Singapore Pte. Ltd. Ltd.

Quantum Stride Singapore Pte. Ltd. will act as a Placement Agent to the Fund.

Quantum Stride Singapore Pte. Ltd is an advisory firm offering advice to corporates and high net worth individuals to meet their financial goals at competitive terms in full confidentiality.

Placement Agent excels in all corporate finance transactions - including domestic and cross border mergers & acquisitions, IPO advisory, private equity, distressed assets, corporate & capital restructuring.

Its strategic alliance with Gulf banks and PE players, offer the company the unique advantage of offering corporate access to funds from opulent Middle East region to finance their growth.

The company via its representatives will act as an additional point of contact to the investors in the Fund.


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Fund Administrator: Apex Fund Services Ltd.Fund Administrator: Apex Fund Services Ltd.

Privately owned parent company, registered in Bermuda (regulated by the Bermuda

Monetary Authority (BMA)). Globally located offices in Bahrain, Bermuda, China, Cyprus, Dubai, Hong Kong, Ireland,

Isle of Man, Malta, Mauritius, Singapore and USA. 120 staff worldwide. 140 funds administered by Apex Group Companies. Over $8.0bn Assets Under Administration. Fully integrated systems combined with web-based reporting. A truly independent Administrator with no ties to other third party service providers. 2008 Hedge Funds World Awards, Middle East – Best Fund Administrator.


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Custodian: Bermuda Commercial Bank Ltd.Custodian: Bermuda Commercial Bank Ltd.

The Bank was established more than 40 years ago in 1969. The Bank follows a conservative risk management policy. It has established a policy of minimizing its own corporate risk by following an extremely conservative policy in balance sheet management.

The Bank has 71% tier 1 capital adequacy (as at year-end 2008) compared to the international standard of 10%. The Bank does not take risk positions on its own account and runs a matched-book policy with its deposits.

Ownership: The Central Bank of Netherland Antilles (CBNA) has got controlling stake (~50%) in the Bank, which guarantees stability of the Bank and safeguard to the funds of its customers.

Listing: The Bank is a listed entity on the Bermuda Stock Exchange. The Bank uses platform of State Street, NY, (http://www.statestreet.com) which ensures

efficient and effective provision of services. Notably, State Street is one of the members of group of top 10 Global Custodians.


http://www.statestreet.com/

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Investment Advisor: Global Emerging Growth Investment Advisor: Global Emerging Growth Capital (GEGC) Capital (GEGC)

A holding company that has operations in various financial activities

Since 1980, the Advisor has on average doubled client money approximately every 4 to 5

years

Long proven record with savvy to pick big winners on a risk-adjusted basis

Leading performer among competitors

Cutting edge investment discipline.


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Investment Advisor: GEGCInvestment Advisor: GEGC

GEGC is managed by V. John Palicka, CFA, CMT who is a Chartered Financial Analyst and has an MBA from Columbia University.

Mr. Palicka also managed over $1.5-billion in growth stock accounts, mostly in smaller-cap stocks in his 11 years (12/31/79-1/31/91) at The Prudential Insurance Co. During his tenure , Prudential's Small-Cap funds showed a premium of about 600 basis points per annum over the Russell 2000, and also a good premium over the competition as follows: Pru accounts 18.4% p.a.; Russell 2000 12.5% p.a.; and, Lipper Small Cap funds 14.0% p.a.


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Investment Advisor: GEGCInvestment Advisor: GEGC

Turning Millionaires into Super-MillionairesTM

Low Growth Rates

High Growth Rates

Creative Judgment Required Massive Data Required

Picking Up the High Growth Stocks

Quantum StrideSM

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Investment Manager: Quantum Stride Investment Investment Manager: Quantum Stride Investment Management Company Management Company

It’s the management company promoted by the Directors of the Fund.

A Specialist Fund Manager.

Manages alternative instruments, particularly Absolute Return Funds.

Main clients will be - high net worth individuals and institutional investors in Middle East, Asia, Europe and USA.


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Team @ Quantum Stride Investment Management Team @ Quantum Stride Investment Management Company Company


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Sub-Manager: Gemini Asset Management Sub-Manager: Gemini Asset Management Limited Limited

It’s a private limited company based out of Hong Kong. The Sub-Manager is in business since 2005.

Despite a bad 2008 (-27.2%), it has had impressive returns of >700% over last four and a half years (a compound return of 59.9% p.a.).

Its objective is to obtain long term capital appreciation in both bull & bear markets with focus on the Greater China markets, including H Shares, A-Shares, B-Shares and any related China markets stocks listed on international stock exchanges.

Excellent stock-picking skills and rigorous risk management control are applied simultaneously to arrive at intelligently sound investment decision.


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Sub-Manager: Gemini Asset Management Sub-Manager: Gemini Asset Management Limited - Snapshot of Performance Limited - Snapshot of Performance

** Trading with proprietary capital

Turning Millionaires into Super-MillionairesTM

Monthly Return SinceJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Inception

2005** 6.62% 9.43% 2.01% 2.96% -2.25% 1.56% 2.32% 4.15% 3.42% -3.80% 4.01% 1.89% 36.70% 36.69%2006** 13.80% 2.63% 1.59% 7.17% 5.26% 5.49% -1.99% 1.15% 5.34% 4.54% 12.38% 11.33% 92.85% 163.61%2007** 18.33% 10.06% 5.38% 20.44% 13.38% 2.28% 9.07% 10.69% 11.59% 8.90% -3.89% 1.89% 175.39% 625.95%

2008 -0.30% 2.91% -6.73% 5.54% -0.10% -4.89% -1.74% -6.25% -14.53% -16.11% 4.82% 9.63% -27.16% 428.78%2009 -2.25% 0.70% 15.90% 11.55% 15.43% 6.36% 56.23% 726.13%

Quantum StrideSM

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Sub-Manager: Gemini Asset Management Sub-Manager: Gemini Asset Management Limited - Snapshot of Performance Limited - Snapshot of Performance


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Shari’a Advisor & Auditors: Shariyah Review Shari’a Advisor & Auditors: Shariyah Review Bureau (SRB) Bureau (SRB)

The first specialized independent entity providing Shari’a review services

Incorporated under the laws and regulations of the Kingdom of Bahrain and licensed by the Central Bank of Bahrain. Guided by a Shari'a Board and consultants including: From Saudi Arabia: Sheikh Abdullah Al Maniya, Dr. Abdullah Al Musleh and Dr. Mohammed Al Gari, Prof. Mohammad Al Jarf, Dr. Salah Al Shalhub, From Bahrain: Shekh Osama Bahar, Shekh Waleed Al Mahmood, Dr. Naji Al Arabi, Shekh Mohsen Al Asfour, Dr. Ibrahem Al Merakhi, From Egypt: Dr. Yusuf Qassim, Dr. Mhammad Baltaji, From Sudan: Dr. Hammad Mohammad Ahmad, and Shekh Ibraheem Ahmad Al Dareer, From UAE: Dr. Ahmed Al Haddad.

An associated member of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)

Member of the General Council for Islamic Banks and Financial Institutions


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Shari’a Advisor & Auditors: Shariyah Review Shari’a Advisor & Auditors: Shariyah Review Bureau (SRB) - Clients Bureau (SRB) - Clients


Auditors: Ernst & YoungAuditors: Ernst & Young

A truly global organization with 144,000 people in 140 countries, committed to quality. A Selection of Awards

• TeleosMost Admired Knowledge Enterprise Award (Global, 2008)

• Trendence European Student Barometer Top 5 European Employer (Germany, 2008)

• FORTUNE Magazine 100 Best Companies to Work For (USA, 2009)

• LexisNexis Taxation AwardsBest Big 4 Tax Firm (UK, 2008)

• The Sunday Times Best 20 Big Companies to Work For (UK, 2008)

• Equal Opportunity for Women in the Workplace Agency Australian Employer of Choice for Women (2008)

• Financial Times & Mergermarket M&A Award 2008Financial Advisor of the Year – India 2008

Turning Millionaires into Super-MillionairesTM 43Quantum StrideSM

Auditors: Ernst & YoungAuditors: Ernst & Young

One of the big four auditors:

Turning Millionaires into Super-MillionairesTM 44

Firm Revenues Employees Fiscal Year

Deloitte Touche Tohmatsu

$27.4bn 165,000 2008

PricewaterhouseCoopers

$26.2bn 163,000 2009

Ernst & Young $24.5bn 135,000 2008

KPMG $22.7bn 135,000 2008

Quantum StrideSM

http://en.wikipedia.org/wiki/Deloitte_Touche_Tohmatsu

http://en.wikipedia.org/wiki/Deloitte_Touche_Tohmatsu

http://en.wikipedia.org/wiki/PricewaterhouseCoopers

http://en.wikipedia.org/wiki/PricewaterhouseCoopers

http://en.wikipedia.org/wiki/Ernst_&_Young

http://en.wikipedia.org/wiki/KPMG

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Listing PlanListing Plan

The Directors plan to list the Fund at Cayman Stock Exchange (CSX) in 2011. However, such listing will be subject to the regulatory approval.

Benefits of Listing:

1. Increased Liquidity: A. Investors can trade their shares in the Fund at CSX directly, little waiting period.

B. CSX has approved organization status by the London Stock Exchange (the LSE). This means that securities listed on the CSX are eligible for trading in the LSE's international equity market and for quotation on the SEAQ (Stock Exchange Automatic Quotation) international trading system.

2. Increased Transparency: Quotes are directly available from stock exchange, Fund’s operations are closely

scrutinized by Cayman’s authority.


46

Fund ParticularsFund Particulars

Professional fund incorporated as a business company in BVI; recognized by BVI Financial Services Commission

Stand alone fund Open ended fund Subscription: The “minimum initial subscription” to the Fund is US$500,000 or such other amount, as the

Directors may determine from time to time being not less than US$100,000. The minimum incremental subscription to the Fund is US$100,000.

Lockup: one and a half year to two and a half years, depending on month of subscription Liquidity: quarterly (Two months notice period) Reporting and disclosure: performance (NAV)will be reported every month;

ten stock positions and portfolio allocation on percentage basis will be disclosed with percentage gain/loss for the period defined (last month)

Number of shares: 50,000,000 of $10 each Fees:

Management fee: 2% of NAV; (To be charged every month) Performance fee: 20% of the profit above the hurdle rate (5% p.a.); (To be charged every

quarter) Number of investors at launch: 20 to 40 Fund size (Expected)

At launch: $20 million In a year: $50 to 100 million


47

Channels of DistributionChannels of Distribution

Directors: The Directors themselves have been involved in function of corporate finance and have experience of raising money to the extent of $50 to100mn for certain projects.

Placement Agents: A. Quantum Stride Singapore Pte. Ltd. B. Individuals: The Fund is hiring 10 placement agents for the purpose. These are young

professionals working in leading companies in the region and are themselves from affluent background and well connected in the GCC region.

3PM Firms: Based out of NY and London; Claude Shannon (http://www.claudeshannon.co.uk) is already engaged for the purpose.

Banks and Broking Houses: We will contact banks and broking houses mainly in Kuwait, Qatar, Bahrain, Dubai and Abu Dhabi to help us in marketing the Fund, within the regulatory limits.


http://www.claudeshannon.co.uk/

48

Frequently Asked QuestionsFrequently Asked Questions

1. Why the Fund (Quantum Stride Ltd.) is GUBICTM; Why It’s Not a Global Fund?It’s because GUBIC i.e. GCC, USA, Brazil, India and China already provide substantial geographical diversification; adding more countries would add to the operational costs and the additional costs are likely to exceed the additional benefit from whatever extra diversification may come by adding the additional countries.

2. How is Quantum Stride Ltd. Different/Better from the Rest?

This is covered in detail in slide no. 5 to 8. A few of them are as follows: World’s very first GUBICTM fund, providing unmatched geographical diversification with

investments in GCC, USA, Brazil, India and China. Capital Protection for Investors 100% hedging with Put Options and other derivatives, hence very little downside, which will

be equal to the cost of the derivatives (expected to be <7% of the Assets under Management). Usage of Shari’a Compliant Stocks for Better Diversification: High Reward/Risk Ratio (>3.5) to the Investors Investments in Mid & Small Cap stocks to provide maximum growth potential to the portfolio Specialist Advisor/Manager for each market The Fund offers a vehicle of transparent valuation and strategy, and consistent

management.


49

Frequently Asked QuestionsFrequently Asked Questions

3. The Fund is Long Only; Wouldn’t It Lose Opportunity to Reap Profit in a Bear (Falling) Market?No, it’s not so. The Fund is free to buy Put Options that allows it to reap benefit from the bearish market (without the risk of unlimited losses as might occur with shorting of securities).

4. The Lock-up Period is 1.5 to 2.5 Years, isn’t It on High Side?Yes, it is. It’s mainly to safeguard investor’s interest. We have introduced a long lock-up period to prevent panic withdrawal on fund that is possible when market would tumble again. We don't want all the investors to get hurt because of a few panicky one (as we know we'll be safe because of 100% hedging we will undertake; though, this point can be difficult to explain to a few individual investors when market start coming down thick and fast). Nevertheless, lock-up can always be shortened depending on stature and quality of investor.

5. Do You Have Front Load?No, we don’t.

6. Is the Fund Open/Close ended?It’s open ended.

For further clarifications/queries, please contact Dr. Sandeep Gupta –[email protected]


mailto:[email protected]

50

GlossaryGlossary

GUBIC: It’s an acronym that stands for “GCC Countries, USA, Brazil, India and China”; it refers to a niche diversification strategy used by Quantum Stride (first time ever by any fund).

3 PM Firms: Third Party Marketing Firms, engaged in marketing of funds to the investors. Absolute Return Fund: It encompasses all funds that are not benchmarked against any index

such as S&P 500, FTSE 100 etc. It’s also a commonly used term to describe ‘Hedge Funds’. Beta of a Stock: It’s the measure of how the expected return of a stock/portfolio is correlated

to the return of whole stock market(s). It measures sensitivity of the stock price to the market movements.

Alpha of a Stock: A measure of performance on a risk-adjusted basis. Alpha takes the volatility of a stock/portfolio and compares its risk-adjusted performance to a benchmark index. The excess return of the stock relative to the return of the benchmark index is a stock's alpha.

P/E of a Stock: It’s a ratio of price of the stock/earnings per share. PEG: It’s a ratio of P/E of the stock to growth in earnings (in %) on annual basis. ROIC: Return on Invested Capital


51

GlossaryGlossary

Volatility: It’s measured as Standard Deviation for a given period ranging from days to years; usually one year to five years period. It’s also a way to quantify the risk in a portfolio.

Correlation: Statistically, it indicates the strength and direction of a linear relationship between two variables. For investor’s purpose, it’s a measure of dependence of price of one asset class on the price of the other asset class; though, a lower correlation among the asset class or stocks in the portfolio is considered a favourable characteristics in terms of riskiness of the portfolio.

GCC: Gulf Co-operation Council, consisting of six countries, namely: UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman.

Mid Cap Stocks: Stocks with Market Capitalization of US$ 1 billion to 5 billion. Small Cap Stocks: Stocks with Market Capitalization of US$ 0.25 billion to 1 billion


52

Important NoticesImportant Notices

This document has been written for illustrative purposes and as such is neither a recommendation with respect to the purchase or sale of any securities nor does it contain the necessary information to form the basis of a decision to invest in any investment product (this document should be read in conjunction with ‘Prospectus’ of the Fund). Quantum Stride, its affiliates, their respective officers, directors, agents nor employees recommend any investment to readers of this document. The material contained herein is based upon proprietary information and is provided purely for reference and as such is confidential and intended solely for those to whom it has been provided by Quantum Stride. Quantum Stride has not had the information contained herein independently verified, nor does it represent it as necessarily accurate or complete. Quantum Stride makes no warranty, express or implied, regarding this information and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, completeness or use for any purpose. Readers should not rely upon this document to make any investment decisions, and should note that past performance is not an indication of future performance. The material contained herein is for private use only. Its text, statistical data and graphs or any portion thereof may not be stored in a computer, published, rewritten for broadcast or publication or redistributed in any medium, except with the express written permission of Quantum Stride. Quantum Stride will not be liable for any inaccuracies, errors or omissions in the material or in the transmission or delivery of all or any part thereof or for any damage arising from any of the foregoing.

For further details, please contact:Dr. Sandeep Gupta, Chairman,[email protected]


mailto:[email protected]

54Quantum StrideTM 2008Wednesday, April 19, 2023

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