Ha Long Bay (Vietnam)

Profile and Strategy

Investing Policy
At the Extraordinary General Meeting held on 24 May, 2012 the Shareholders approved the adoption of the following investment policy:

Investment Objective
The Company's investment objective is to achieve capital appreciation while attempting to reduce risk primarily by applying a disciplined and diversified value investing philosophy.

The Company will implement its investment objective primarily by investing through one or more of the following investment strategies:

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Corporate Activism

The Company intends to make investments in funds or companies which have a potential to turnaround or otherwise achieve recovery as a result of input from, or actions taken by, shareholders. This may require the Company to take an activist role, participate in a financial restructuring or even to take control of a fund or company if the Investment Manager's past experience in re-structuring and re-organising corporate activities can materially assist in bringing about a profitable result. The Investment Manager would require any target to have a strong discount to tangible, and normally, realisable and fungible assets. Closed-ended funds, REITS and/or holding companies are the most likely companies to meet this criterion. Companies with low levels of leverage or, preferably, net cash balances will also be sought out. Since the Investment Manager's standards for activist investments are rather strict, there may, at any given time, be few if any activist opportunities available. If so, the Company may not be invested in such opportunities; however, the Investment Manager intends to constantly monitor the market for such opportunities and take advantage of them as and when they arise.

Diversified Portfolio of Value Stocks

Alongside its activist activities, or whilst awaiting such opportunities, the Company will create a portfolio of value stocks diversified by sector and country. This strategy will concentrate on small and mid-cap companies with strong cash flows and positive dividends trading in developed, emerging, and frontier markets. Close attention will be paid to long term cash flow trends and their synchronisation with reported profit. Companies which achieve reasonable Returns on Equity (ROE) without the use of excessive leverage will be favoured. Further preference will be given to companies with strong, sustainable current dividend yields. Finding such companies in structurally complex or in emerging or frontier markets and sectors is a main tenet of the Company's targeted value investing strategy. To try and limit overall portfolio volatility, the Company will seek to create a portfolio of relatively internally uncorrelated investments, both by country, region and sector diversification. The Investment Manager intends to manage the Company on a total return basis with a goal of maximising the Company's Sharpe ratio.

Investing in Emerging and Frontier Markets

The founders of the Investment Manager have experience sourcing and performing fundamental due diligence in a variety of emerging and frontier markets that have little, or no, quality sell-side research available. In addition, either for structural reasons, information cost reasons, or market sentiment, there is usually a lack of sufficient capital in such stock markets to properly value the securities efficiently. This situation creates natural inefficiencies that reward stock-picking efforts and thorough fundamental analysis. Examples include sectors which are currently out of favour because of assumed macroeconomic trends; countries in which accounting standards differ from IFRS or information is available only in less common regional languages; or markets in which opening accounts and clearing and settling trades is procedurally more difficult. Such markets often present unusual opportunities due to various barriers to entry.

Provide Cash Flow to Investors

The Investment Manager believes that a consistent dividend stream is an important indication of a company's strength and while searching for activist transactions it will attempt to make investments in companies exhibiting high levels of corporate governance with regular dividend streams to enable the Company to declare dividends to Shareholders.

Geographical Diversification

The targeted markets will likely include many emerging and frontier markets, an area where some countries have experienced high volatility; however the Investment Manager intends to limit risk by investing in a wide geographic range of markets which have, in the past, been relatively uncorrelated to global indexes, even in situations of global financial crises.

There is no guarantee such lack of correlation will continue in the future or that it will be able to limit risk.

Another aspect of the Company's investment philosophy is that the Company expects to concentrate investments in markets where it believes that it can obtain a competitive advantage by becoming a relatively important investor through performing its own intensive, on the ground buy-side research. This policy includes, but is not limited to, seeking out markets with little research offered by Western brokerage firms and most often with no research published by the market participants.

Diversification and Asset Allocation

No more than 20 per cent of the gross asset value of the Company will, at the time of investment, be invested in, or exposed to the creditworthiness of, any single underlying investee company (or group) or collective investment undertaking. No more than 5 per cent of the gross asset value of the Company will, at the time of investment, be invested in unlisted or unquoted securities. This limitation may be increased to 10 per cent of the gross asset value of the Company with the prior approval of the Board.

While it is expected that the Company's assets will normally be predominantly invested, there are no limits to the Company's cash position.

Derivatives and Short Selling

The Company will be entitled to use derivatives, such as currency hedging, in an attempt to protect the assets of the Company but will not invest in derivatives as a means of investing. As a general policy the Company will not sell short but may, if an appropriate opportunity arises, sell short up to 15 per cent of the Net Asset Value of the Company at the time of putting on such short sale.

Borrowings

The Company intends to use leverage sparingly and will restrict borrowings to an aggregate amount not exceeding 25 per cent of the Net Asset Value of the Company at the time of drawdown.

Currency Hedging

The Company may engage in currency hedging for efficient portfolio management purposes. The Company will only hedge up to a maximum of 25 per cent of the Net Asset Value of the Company in derivatives for currency hedging purposes at the time such derivative contract is entered into.


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