PCM Asia Pioneer Fund

PCM Asia Pioneer FundPCM Asia Pioneer Fund

Sept 2008Strive for picking Strive for picking ““RISING STARSRISING STARS”” in Asiain Asia

2For Professional Investors Only

AGENDA

• Hedge Fund in Asia and Rising Star Concept• Investment Philosophy, Objective, & Process • Asset allocation & Performance Analysis• Fund Details• Company Overview

• Appendix – More on Investment Process- Biography of Key Members


HEALTHY MICRO ENVIRONMENT-Improving Fundamentals for Most Asian Corporations

• Robust Corporate Earnings Growth: 14% EPS Growth in 2007

• Stronger Balance Sheets: Lower Debt Ratio, Higher Cash Level, etc…

• Increasing Understanding of Shareholder Value, Corporate Governance & Transparency

• Improving Capital Utilization

• From Family Monopoly to Professional Management

Broaden high quality investment universe

ECONOMIC CONDITIONS IN ASIA

High GDP Growth Strong Export Growth

Low Inflation Environment

High FDI InflowsIncreasing Foreign Exchange Reserve

STRONG MACRO MOMENTUM

Increasing Domestic Consumption


ASIAN FINANCIAL MARKET

Source: World Federation of Exchanges Source: Bank of International Settlements

5,043

3,8534,955

3,997

7,524

11,838

0

2,000

4,000

6,000

8,000

10,000

12,000

200620042002200019981996

221 237

380

0

50

100

150

200

250

300

350

400

2000 2002 2006

Rising Equity Market Capitalization In Asia

(Billions US dollars)

Development of Asia Fixed Income Markets



ASIAN FINANCIAL MARKET

56,410 56,933

137,701

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2000 2002 2006

9 28

532

0

100

200

300

400

500

600

2000 2002 2006

Source: Bank of International SettlementsSource: Bank of International Settlements

Growth of Derivative Financial Instruments Traded

On Organized Exchanges - In terms of turnover value


Notional Amounts Of Outstanding of

OTC Equity-linked Derivatives



BOOST OF ASIAN HEDGE FUNDS

Asian Hedge Fund Growth Over the Years

Source: Eurekahedge, Key Trends in Asian Hedge Funds, March 2007


HUGE INVESTMENT OPPORTUNITIES FOR ASIAN HEDGE FUND MANAGERS

• Strong economic growth across Asian countries like China, India,etc…

• Relatively inefficient compared with western markets

• Improving width and depth of Asian financial markets in recent years– Creating a more favorable investment environment for hedge fund managers

• Asian hedge fund is still in the early stage of development– More and more talented traders, long-only or hedge fund managers are

entering the hedge fund business


“RISING STAR” CONCEPT (I)

LARGE IS BEAUTIFUL?

• Recent study concluded that smaller-sized hedge funds significantly outperformed larger ones

5.72%5.89%6.31%Annualized standarddeviation

11.93%12.50%15.46%Annualized return

> USD 500 millionsUSD 100 - 500 millions

! USD 100 millions

Source: “Examination of Fund Age and Size and Its Impact on Hedge Fund Performance”, Derivatives Use, Trading & Regulation, Feb 2007, PerTrac Financial Solutions


“RISING STAR” CONCEPT (II)

Young hedge funds showed superior risk adjusted return to older funds in the study

Source: “Examination of Fund Age and Size and Its Impact on Hedge Fund Performance”, Derivatives Use, Trading & Regulation, Feb 2007, PerTrac Financial Solutions

LONGER HISTORY IS SUPERIOR?

Young Funds(0-2 years) Mid-age funds

(2-4 years)

Older funds(4 years above)

0.00%

4.00%

8.00%

12.00%

16.00%

20.00%

5.90% 6.10% 6.30% 6.50%

AnnualizedStandard Deviation

Annualized Return


“RISING STAR” CONCEPT (III)

DOES A FUND’S AGE MATTER?

Sharpe ratio versus age Average monthly hedge fund returns by age & coincident average returns of the S&P500 and Lehman Aggregate Bond


INVESTMENT PHILOSOPHY

! Strong economic growth in Asia provides enormous investment opportunities, especially in emerging markets such as China, India, Indonesia, etc…

! Talented emerging hedge fund managers can extract “Alpha” in such relatively inefficient emerging market.

! Proper diversification and stringent risk management are of utmost importance for success.

PCM ASIA PIONEER FUND

PCM Asia Pioneer Fund strives for picking PCM Asia Pioneer Fund strives for picking ““RISING STARSRISING STARS”” in Asiain Asia

““ASIA + RISING STARASIA + RISING STAR””


! PCM Asia Pioneer Fund is a fund of funds investing in Asia (ex Japan) hedge funds. While the Fund will invest into certain conventional hedge fund strategies, it will also include some relatively aggressive strategies to capture growth opportunities and diversify further.

! The Fund seeks to FULLY capture Asian market upside with approximately HALF the volatility involved and 1/3 of the downside risk.

! Target Annual Return: 14%-18%

! Target Annual Volatility: 7%-9%


INVESTMENT OBJECTIVE


INVESTMENT PROCESS – TOP DOWN

Our investment approach is a combination of top down and bottom up approach

TOP DOWN APPROACHTOP DOWN APPROACH

MACRO ECONOMIC EVALUATION• Economic cycle• Equity market valuation• Liquidity• Yield spread

• Credit rating outlook• Corporate earnings growth• Corporate activities level

• Evaluate Suitable Strategies with Favorable Risk/Reward• Assess Potential Risk Via Scenario Analysis

STRATEGY RISK & REWARD ANALYSIS

TATICAL STRATEGY & GEOGRAPHICAL ALLOCATION


BOTTOM UP APPROACHBOTTOM UP APPROACH

Phase 1Phase 1

Manager Manager IdentificationIdentification

Phase 2Phase 2

Quantitative Quantitative & Qualitative & Qualitative AnalysisAnalysis

Phase 3Phase 3

Manager Selection Manager Selection & Portfolio & Portfolio ConstructionConstruction

Phase 4Phase 4

Risk Management Risk Management & Continuous & Continuous MonitoringMonitoring

Managers Filtering Undergo thorough due diligence process with potential Managers

Select outstanding managers that fit into our investment philosophy. Construct optimal portfolio

Perform risk analysis study, active monitoring and review of portfolio

INVESTMENT PROCESS – BOTTOM UP

No. of Funds :No. of Funds :

1000 1000 "" 350350

No. of Funds : No. of Funds :

350 350 "" 170 170 "" 5050

No. of Funds :No. of Funds :

5050 "" 20+20+


PCM PROPRIETARY SCORING SYSTEM

!

"

#

$

%

&!

Information Edge

Analysis Edge

Decision Edge

Investment Process

Risk Management

Return Profile

Scoring Criteria•People

-Assess CIO, Portfolio Manager, Research Analyst’s Investment expertise

• Process

-Evaluate the soundness & repeatability of investment methodology

• Risk Management

•Quantitative

-Numerical Analysis to show Fund’s Characteristics

NO INVESTMENT WILL BE MADE WITHOUT AN

ON-SITE DUE DILIGENCE MEETING

NO INVESTMENT WILL BE MADE NO INVESTMENT WILL BE MADE WITHOUT AN WITHOUT AN

ONON--SITE DUE DILIGENCE MEETINGSITE DUE DILIGENCE MEETING


PCM 3-Level Risk Management

INVESTMENT RISK

OPERATIONAL RISK

PORTFOLIO RISK

• On site investment due diligence

• PCM Proprietary scoring system

• Detailed operational due diligence

• Stringent risk management guidelines

• Statistical portfolio optimizer

LEVEL 1

LEVEL 2

LEVEL 3


“Rising Star” in our portfolio is generally characterized by, ! CIO has proven track record in managing asset for other institutions. ! CIO has experienced various market cycles in own specialized area. ! Risk awareness is high which translated into rigorous risk management

commitment.! Owned by a few key persons who put substantial personal wealth in the fund.! Passion in investment and strong desire to succeed. ! Relatively small in scale but properly set up infrastructure. ! AUM in the fund grows rapidly.

Key Facts

! On average CIO of each fund has over 18 years of experience in the industry.

! About 1 out of 10 funds we visited fits in with this characteristic.! Those with less than 3 years track record and AUM under USD

100m account for around 50% of our portfolio.

Key FactsKey Facts

!! On average CIO of each fund has over 18 years of experience in On average CIO of each fund has over 18 years of experience in the industry.the industry.

!! About 1 out of 10 funds we visited fits in with this characterisAbout 1 out of 10 funds we visited fits in with this characteristic.tic.!! Those with less than 3 years track record and AUM under USD Those with less than 3 years track record and AUM under USD

100m account for around 50% of our portfolio. 100m account for around 50% of our portfolio.

ASSET ALLOCATION – Rising Star


100,000100,0001,000,000MINIMUM SUBSCRIPTION (USD)

--UP TO 5%SUBSCRIPTION FEE

MonthlyMonthlyMonthlySUBSCRIPTION FREQUENCY

MonthlyMonthlyMonthlyREDEMPTION FREQUENCY(With 45 days prior written notice)

PCMAPFC KY

Twice a year;4% of the NAV of Oct & Apr

5% in Year 1, reduces by 1% p.a.

15% (High Watermark)

1.75%

10,000

CLASS C

PCMAPFB KY

-

5% in Year 1, reduces by 1% p.a.

15% (High Watermark)

1.5%

10,000

CLASS B

PCMAPFA KYBloomberg Code

-DIVIDEND

-REDEMPTION FEE

10% (High Watermark)PERFORMANCE FEE

1%ANNUAL MANAGEMENT FEE

10,000MINIMUM SUBSEQUENT INVESTMENT (USD)

CLASS A

FUND DETAILS



FUND DETAILS

Fortis Prime Fund Solutions Bank (Ireland) LimitedCUSTODIAN:

PricewaterhouseCoopersAUDITOR:

PCM Capital LimitedINVESTMENT ADVISOR:

Offshore: OgierLEGAL ADVISOR:

Fortis Prime Fund SolutionsADMINISTRATOR:

PCM Capital (International Group) LimitedINVESTMENT MANAGER:

SERVICE PROVIDERS


COMPANY BACKGROUND

• PCM Capital Limited (PCM) is duly licensed with the Securities and Futures Commission (“SFC”) and is regulated primarily by the Securities and Futures Ordinance (“SFO”) in Hong Kong; to provide investment advisory and asset management services for investors with focus in alternative investment tools.

• PCM team had gained rich professional experiences and extensive knowledge in the asset management and financial service industry, which we believe to be crucial for success for investing in Global markets and accessing to information.

• We also dedicate to complement our strength by building up alliance with independent specialists in specific area to ensure that solid infrastructure and quality products can be delivered.

• PCM strives to provide professional services for clientele range from high net worth individuals to institutions who aim to diversify portfolio risk in investing in alternative asset classes targeting absolute performance under various market cycles.

• In the future, we will further expand our team in global market with focus in Asia to ensure that we can ride on the growth of the fast growing hedge fund industry for our investors.


Key Benefits for investing in PCM Asia Pioneer Fund


## Generate absolute return by investing in those creating alphaGenerate absolute return by investing in those creating alpha

! Identify talented “RISING STARS” elites

! Dedicate to Asia with emphasis on Greater China

## Manage risk under various market environmentsManage risk under various market environments

## Dividend payment (Class C) provides income alternatives for inveDividend payment (Class C) provides income alternatives for investors stors

! Control risk through stringent risk management

! Select strategies with hedging against market cycles and those can benefit from market volatility

! Diversify portfolio in funds and strategies


DISCLAIMERS

The fund of the PCM Capital (International Group) Limited (“Investment Manager”) and PCM Capital Limited (“Investment Advisor”) is an exempted company incorporated with limited liability under the law of the Cayman Islands. Applications for Shares of the Fund can only be made on the basis of the current offering memorandum of the Fund. Investing in the Shares of the Fund (“Shares”) involves certain risks, as more fully described in the offering memorandum. There can be no assurance that the investment objective of the Fund will be met or that its investment program will be successful. Shares have not been and will not be registered under any securities laws of any other countries or areas subject to its jurisdiction.

This is neither an offer to sell nor a solicitation of an offer to purchase any securities. Such offer or solicitation may only be made pursuant to the current offering memorandum of the Fund that will be provided only to qualified offerees. Any investment decision with respect to the Fund should be based upon the information contained in the offering memorandum of the Fund. Past performance is not necessarily indicative of future results.

The information and opinions contained in this document are for background purposes only and do not purport to be full or complete. No reliance may be placed for any purpose on the information or opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by the Investment Manager / Investment Advisor and no liability is accepted by the Investment Manager / Investment Advisor for the accuracy or completeness of any such information or opinions.

The Investment Manager / Investment Advisor believes that the source of this information is reliable however it cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness, merchantability or completeness of any information or data (whether prepared by the Investment Manager / Investment Advisor or by any third party) for any particular purpose or use or that the information or data will be free from error. The Investment Manager / Investment Advisor does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither the information nor any opinions expressed herein constitute a solicitation by the Investment Manager / Investment Advisor for the purchase or sale of any securities or other financial instruments. Neither the Investment Manager/ Investment Advisor, nor any of its affiliates, directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information.

The information contained herein is solely for information purposes, is current as of the date indicated above and is subject to change from time to time. None of the Fund, the Investment Manager / Investment Advisor, or other persons or entities named herein are obligated to notify you of changes to this information and none of the foregoing assume any responsibility for any loss suffered in reliance on this information. This information may not be reproduced or distributed in whole or in part nor may its contents be disclosed to any other person under any circumstance.

AppendixAppendix

More On Investment ProcessMore On Investment Process--Bottom Up ApproachBottom Up Approach

Biography of Key MembersBiography of Key Members

1.1.

2.2.


MORE ON INVESTMENT PROCESS - BOTTOM UP APPROACHPHASE 1 – MANAGER INDENTIFICATION

• Personal network• Prime brokers/ custodian• Industry database

• Financial news• Industry journals• Hedge fund manager referrals

Build up Asia Hedge Fund Universe:

1000+

Identify managers complying with our

investment mandate:

350+

Manager identification through :


PHASE 2: QUANTITATIVE & QUALITATIVE ANALYSIS

Screen managers for due diligence

and analysis: 170+

Select managers for

portfolio construction:

50+


1000+


investment mandate:

350+

$ Historical Performance$ Risk & Return Analysis$ Correlation Analysis$ VAR Analysis

$ Investment Due Diligence$ Operational Due Diligence

Quantitative Analysis Qualitative Analysis


PHASE 2: QUANTITATIVE & QUALITATIVE ANALYSIS -OPERATIONAL DUE DILIGENCE

Background % Reference check on key

personnel % Check license status and

any complaint, litigation proceedings

Valuation % Valuation policy & process% Independent pricing sources% Timeliness

Legal & Compliance% Fund structure% Registration status of the

fund companies% Service providers% Documentation checking

Internal Control% Soft dollar & personal trading

rules% Conflict of Interest% Organizational structure

5 KEY ASPECTS:

Investor Reporting% Information quality% Responsiveness% Timeliness% Transparency


PHASE 3: MANAGER SELECTION & PORTFOLIO CONSTRUCTION

• Around 50+ potential Asian Hedge Funds are selected into our “Prime-List” after PHASE 2

• PCM’s investment committee will then construct the portfolio


1000+


investment mandate:

350+

Screen managers for due diligence and analysis:

170+

Construct final

Portfolio:20+

Select managers for

portfolio construction:

50+

Portfolio Construction


PHASE 3: MANAGER SELECTION & PORTFOLIO CONSTRUCTION

TACTICAL ASSET TACTICAL ASSET ALLOCATIONALLOCATION

PCM SCORING SYSTEM

RISK MANAGEMENT GUIDELINES

PCM PROPRIETARY STATISTICAL PORTFOLIO OPTIMIZER - ARBITRAGIS

Final Portfolio About 20-50 Funds

PORTFOLIO CONSTRUCTION

OPERATIONAL DUE DILIGENCE50+ 50+

Focus Focus Fund Fund

PortfolioPortfolio


PHASE 4: RISK MANAGEMENT & CONTINUOUS MONITORING

PCM Risk Management Guidelines

PCM Risk Management Guidelines

Diversification

•No. of Sub Hedge Funds:-Minimum: 12-Maximum: 60

•3-10 Strategies

Investment Limits

•Manager Weighting Limit ! 15%

•Strategy Limit-Equity Long-Short: ! 75%-Other Strategies:! 25% each

Stop Loss Policy•Investment team will have an drawdown forecast for each underlying fund under normal market situation

•If actual drawndown"75% of Estimated drawdown "Review•If actual drawdown "100% of Estimated drawdown "Stop-loss

Liquidity & Turnover

•Target Liquidity:-50% liquid in 3-month-90% liquid in 6-month

•Target Turnover Range:-10-30%p.a

Market Limits

•Individual Asian Markets ! 33%•Greater China ! 60%•Pre-IPO and/or Private Equity! 10%

Operational Due Diligence (ODD)

•All the underlying funds must pass the ODD test


CONTINUOUS MONITORING

Onsite due diligence visitsYearly

Communications with the service providers On-going

Formal Conference Call to keep updates of investment views & market comments

Monthly~Quarterly

Review performance of existing managers ( Risk & Return, Investment strategy, Inter-strategies/ market correlation)

Weekly~Monthly

CONTINUOUS

MONITORING

RISK

MANAGEMENT


PORTFOLIOBOTTOM UP TOP DOWN

PHASE 4: RISK MANAGEMENT & CONTINUOUS MONITORING


KEY MEMBERS

Norman Chan, Chief Investment Officer

• Norman Chan is the Chief Investment Officer of PCM and is responsible for daily portfolio management for Fund of Hedge Funds. He leads the investment research team in macro research, asset and strategy allocation, and fund manager selection. Mr. Chan has 14 years of professional experience and has been conducting research work on hedge fund including performing due diligence on global hedge funds since 1998.

• Prior to PCM, Norman was the Investment Director and Responsible Officer for Altruist Financial Group, leading the investment team to perform macro economic research and asset allocation for the group. During the four years he was with the company, he was responsible for the strategic allocation and portfolio management of its clients’ assets and proprietary assets totalling approximately USD 270 million.

• Prior to Altruist Financial Group, Norman was the Head of Investment Research at Allen Perkins Ltd., and was responsible for building up its hedge-fund research division in 1998. During the six years with Allen Perkins Ltd., Mr. Chan personally performed on-site due diligence on over 150 hedge funds in the United Kingdom and the United States.

• Norman graduated from Golden Gate University in San Francisco, California, U.S. with a Bachelor of Art Degree in Business Economics. Norman has been serving as part-time lecturer for financial related professional courses for associations and academic institutions in Hong Kong such as Hong Kong Polytechnic University since years ago.


KEY MEMBERS

Ivy Chow Wing, Chief Operating Officer

• Chow Wing (Ivy) is the Chief Operation Officer of PCM, oversees the compliance, operation and finance functions of the PCM. Ms. Chow gained extensive and rich professional experiences in fund management and investment advisory service in the last fifteen years, covering mutual fund, unit trust, fund of funds/hedge funds, hedge fund and alternative investment.

• Prior to joining the PCM Capital Ltd., Ivy was the Head of Operation & Compliance of a leading hedge fund company, MCP Asset Management Co., Ltd. until the beginning of August 2006, the company managed the assets of funds of hedge funds and hedge funds over USD 4 billion.

• She also worked at a number of international corporations including Yamatane Investment Management (HK) Co. Ltd., Dean Witter Reynolds (HK) Ltd. and Standard Chartered Bank HK Trustee Ltd. where she was principally involved in accounting, finance, operation, business & budgetary planning, compliance, trading of financial instruments, financial asset management, investment adviser and fund administration.

• Ivy holds a Master degree in Finance and a Bachelor degree in Commerce Accounting. She is a qualified CPA.


KEY MEMBERS

Florence Lo, Senior Hedge Fund Analyst

• Florence Lo is the Senior Hedge Fund Analyst in PCM and is responsible for executing hedge fund due diligence and research process. Florence has over 9 years of experience in financial industry and has been involved in many research roles including hedge funds, alternative investments and equity markets in her careers.

• Prior to PCM, Florence worked as a Hedge Funds Research Manager in the Alternative Investment Division in SHK Fund Management Limited, responsible for identifying potential hedge fund managers, conducting manager due diligence and generating specialized fund of hedge funds research.

• Florence graduated from University of Toronto, Canada and holds a Bachelor of Commerce and Finance, specialist in Commerce and Finance, major in Economics and minor in East Asian Studies.

Andrew Li, Research Analyst

• Andrew Li is the Research Analyst in PCM and is responsible for executing hedge fund due diligence and research process. Andrew has 3 years of experience in the financial industry in research roles, portfolio management and business development.

• Prior to PCM, Andrew was an Equity Research Associate with Lightyear Capital, a Canadian small-caps brokerage company, supporting the analyst team in research by building financial models and writing earnings notes. Subsequently, he became an Associate Portfolio Manager with Hemisphere Capital Management, a Canadian investment counselor, where he conducted due diligence on companies.

• Andrew graduated from the University of Toronto, Canada and holds a Bachelor of Applied Science (electrical engineering) and graduated from INSEAD, France with a MBA. He is a FRM, CAIA and CFA Charter holder.

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PCM Asia Pioneer Fund

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