Fund Investment Objectives

The Prosperity Quest Fund was launched in December 1999 to provide an opportunity to investment in a diversified portfolio, with a bias towards special situations and small and medium capitalized Russian corporations. The composition of the Fund can therefore differ significantly from the broader Russian equity market. The objective of the Fund is to maximize absolute return on its assets through an approach characterized by a focus on events, fundamental value and growth. The Fund is generally overweight in industrial sectors and underweight power utilities and telecom. In the industrial sector, the Fund takes positions in mainly selected 2nd and 3rd tier companies. The Fund has also taken advantage of M&A activity in Russia. Prominent deals include the consolidation among oil & gas holding companies and their subsidiaries. The Manager actively considers direct equity deals, but has in many cases found that the price has been excessive. Instead, most of the portfolio companies are listed, but with a varying degree of liquidity.