WaveStone Capital Absolute

Return Fund

Fund Investment Objectives

The WaveStone Capital Absolute Return Fund aims to provide investors with investment returns that exceed those available from comparable investments. The Fund can be best characterized as a market neutral hedge fund, with mandated hedging of at least a portion of any equity market risk. The Fund will take advantage of event-driven opportunities as they arise. The investment manager's mandate guides that between 25% and 75% of the Fund's Net Asset Value are hedged either through short position in stocks, synthetic short positions in the futures or options market, or through cash holdings. The Fund will be managed according to the overriding principles of investment that are followed by all WaterStone funds. The Manager will manage the investment conscious of the effect of capital gains tax and franking credits on the after-tax returns to investors. Hurdle Rate: Reserve Bank of Australia Cash Rate. The fund's actual inception date is September 5, 2006.