Kingdom Ridge Capital Master

Fund, Ltd.

Fund Investment Objectives

Kingdom Ridge (KRC) runs a long/short equity hedge fund focused on the technology sector that tends to generate uncorrelated alpha. We focus on technology as we believe it is the best sector for stock picking given the stock dispersion caused by frequent product cycles. We primarily generate returns through bottom-up fundamental stock picking and complement this with opportunistic trading. KRC's stock picks are 'good' and 'bad' company agnostic. We also tend to avoid the momentum longs and crowded shorts favored by many others. Our best ideas portfolio takes relatively concentrated positions in high conviction long and short ideas. We expect to generate significant returns in the short book. After the market meltdown in the Fall of 2008, we reviewed our portfolio management and risk management procedures to see what we could learn from our mistakes. The resulting adjustments have worked well as we have demonstrated that our investment strategy does not require a strong or benign macro environment to make money. Since the end of 2008 through September 2011, the market (defined as the S&P 500 Total Return Index) has had a negative monthly return 12 times. The market's return during those twelve months, on a compounded basis, has been -46.0%. During these same twelve months, Kingdom Ridge generated compound returns of +16.4% which means we outperformed in down months by 6,240 bps (or 520 bps/month). We achieved these results with an average net exposure of +8%. We cannot and do not guarantee that KRC will outperform in every down market. Nonetheless, these finding are consistent with our belief that our stock picking and sizing in the short book give us a fair chance to do well when the market does not have a sustained tail wind. Although our portfolio has performed rather strongly in down months, it has also performed fairly well during up months when you adjust for our net exposure. Since the end of 2008 through September 2011, the market had a positive monthly return 19 times. Over those 19 months, Kingdom Ridge's generated a net return of +46.2% (+2.0% monthly CAGR) with a neutral net exposure averaging +2%. This performance demonstrates our focus on stock picking in order to monetize the dispersion we find in the technology sector.