UBS Global Asset Management (Japan) Ltd East Tower, Otemachi First Square, 5-1, Otemachi 1-Chome Chiyoda-Ku, Tokyo 100-0004, Japan

P R O S P E C T U S relating to the offering and issue of

NIKKO EUROPEAN CONVERGENCE EQUITY FUND

An open-ended unit trust formed under the laws of the Cayman Islands

Nikko European Convergence Equity Fund (the "Fund") is an open-ended exempted unit trust formed under the trust laws of the Cayman Islands by a trust deed dated 11th May, 2005 executed by Maples Finance Limited, as trustee, (the "Trustee") and Total Alpha Investment Fund Management Company S.A., as manager, (the "Manager"). The investment objective of the Fund is to seek long-term capital appreciation through investing primarily in equity securities of companies domiciled or doing business in Eastern European countries (mainly the Czech Republic, Hungary and Poland) and Russia. There can be no assurance that the investment objective of the Fund will be achieved.

Maples Finance Limited, As Trustee

Total Alpha Investment Fund Management Company S.A., As Manager

May 2005

NOTICE TO PROSPECTIVE PURCHASERS

THE UNITS HAVE NOT BEEN NOR WILL THEY BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE FUND WILL NOT BE REGISTERED UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940. UNITS WILL NOT BE SOLD TO U.S. PERSONS OR MEMBERS OF THE PUBLIC IN THE CAYMAN ISLANDS. THE FUND HAS, AND INTENDS TO EXERCISE, THE RIGHT OF MANDATORY REPURCHASE OR SALE OF ANY UNITS SOLD, ACQUIRED OR HELD IN CONTRAVENTION OF APPLICABLE LAW. APPLICANTS FOR UNITS WILL BE REQUIRED TO CERTIFY THAT THEY ARE NOT U.S. PERSONS NOR MEMBERS OF THE PUBLIC IN THE CAYMAN ISLANDS. THE FUND WILL BE REGULATED AS A MUTUAL FUND UNDER THE MUTUAL FUNDS LAW (2003 REVISION) OF THE CAYMAN ISLANDS ("MUTUAL FUNDS LAW") AND THE RETAIL MUTUAL FUNDS (JAPAN) REGULATIONS, 2003 OF THE CAYMAN ISLANDS (THE "REGULATIONS"). REGULATION UNDER THE MUTUAL FUNDS LAW AND THE REGULATIONS ENTAILS THE FILING OF THIS PROSPECTUS AND AUDITED ACCOUNTS ANNUALLY WITH THE CAYMAN ISLANDS MONETARY AUTHORITY. HOWEVER, THE FUND WILL NOT BE SUBJECT TO SUPERVISION IN RESPECT OF ITS INVESTMENT ACTIVITIES OR THE CONSTITUTION OF THE FUND’S PORTFOLIO BY THE CAYMAN ISLANDS MONETARY AUTHORITY OR ANY OTHER GOVERNMENTAL AUTHORITY IN THE CAYMAN ISLANDS, ALTHOUGH THE CAYMAN ISLANDS MONETARY AUTHORITY DOES HAVE POWER TO INVESTIGATE THE ACTIVITIES OF THE FUND IN CERTAIN CIRCUMSTANCES. THERE IS NO INVESTMENT COMPENSATION SCHEME AVAILABLE TO INVESTORS IN THE CAYMAN ISLANDS. UNDER THE PROCEEDS OF CRIMINAL CONDUCT LAW OF THE CAYMAN ISLANDS, THE FUND MAY IN CERTAIN CIRCUMSTANCES REPORT TO THE AUTHORITIES ANY TRANSACTIONS WHICH THE FUND SUSPECTS MAY INVOLVE THE PROCEEDS OF CRIMINAL CONDUCT. THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY REGULATORY AUTHORITIES IN ANY JURISDICTION AND ANY REPRESENTATION TO THE CONTRARY IS IMPROPER. THE UNITS REFERRED TO IN THIS PROSPECTUS ARE OFFERED SOLELY ON THE BASIS OF THE INFORMATION CONTAINED HEREIN AND IN THE REPORTS REFERRED TO IN THIS PROSPECTUS. IN CONNECTION WITH THE OFFER HEREBY MADE, NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE DOCUMENTS REFERRED TO THEREIN, AND ANY PURCHASE MADE BY ANY PERSON ON THE BASIS OF STATEMENTS OR REPRESENTATIONS NOT CONTAINED IN OR INCONSISTENT

WITH THE INFORMATION CONTAINED IN THIS PROSPECTUS SHALL BE SOLELY AT THE RISK OF THE PURCHASER. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS PROSPECTUS OR ANY PRIOR OR SUBSEQUENT COMMUNICATION FROM THE TRUSTEE, THE MANAGER, THE DISTRIBUTOR OR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES AS LEGAL OR TAX ADVICE. PRIOR TO PURCHASING THE UNITS, ANY PROSPECTIVE INVESTOR SHOULD CONSULT WITH ITS OWN ADVISERS TO DETERMINE THE CONSEQUENCES OF AN INVESTMENT IN THE UNITS AND TO ARRIVE AT AN INDEPENDENT EVALUATION OF SUCH INVESTMENT. NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUSTEE, THE MANAGER OR THE DISTRIBUTOR OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE UNITS OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS SHOULD BE READ IN ITS ENTIRETY BEFORE MAKING AN APPLICATION FOR UNITS. THIS PROSPECTUS IS NOT FOR DISTRIBUTION IN JAPAN. A SEPARATE PROSPECTUS IN JAPANESE WILL BE PREPARED AND DISTRIBUTED PURSUANT TO THE SECURITIES AND EXCHANGE LAW OF JAPAN AND WILL INCLUDE SUBSTANTIALLY ALL OF THE INFORMATION CONTAINED IN THIS PROSPECTUS. PERSONS WISHING TO MAKE AN APPLICATION FOR UNITS SHOULD SATISFY THEMSELVES AS TO THE OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY, INCLUDING THE OBTAINING OF ANY REQUISITE GOVERNMENTAL OR OTHER CONSENTS AND THE OBSERVING OF ANY OTHER FORMALITIES. IN PARTICULAR, ANY PERSONS WISHING TO APPLY FOR UNITS PURSUANT TO THIS PROSPECTUS SHOULD INFORM THEMSELVES AS TO (A) THE POSSIBLE TAX CONSEQUENCES, (B) THE LEGAL REQUIREMENTS AND (C) ANY FOREIGN EXCHANGE RESTRICTIONS OR EXCHANGE CONTROL REQUIREMENTS WHICH THEY MIGHT ENCOUNTER UNDER THE LAWS OF THE COUNTRIES OF THEIR CITIZENSHIP, RESIDENCE OR DOMICILE AND WHICH MIGHT BE RELEVANT TO THE SUBSCRIPTION, HOLDING, DISPOSAL OR REPURCHASE OF UNITS AND SHOULD CONSULT THEIR STOCKBROKER, ACCOUNTANT, SOLICITOR OR OTHER INDEPENDENT FINANCIAL ADVISERS FOR PROFESSIONAL ADVICE. POTENTIAL INVESTORS MUST RELY ON THEIR OWN PROFESSIONAL ADVISERS AS TO LEGAL, TAX, ACCOUNTING,

REGULATORY AND RELATED MATTERS CONCERNING THE FUND AND THEIR INVESTMENT THEREIN. THE OBLIGATIONS OF THE PARTIES TO THE TRANSACTIONS CONTEMPLATED HEREIN ARE SET FORTH IN AND WILL BE GOVERNED BY CERTAIN DOCUMENTS WHICH ARE LISTED UNDER THE HEADING "GENERAL – MATERIAL CONTRACTS" IN THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH DOCUMENTS. THE MANAGER IS EXEMPT FROM REGISTRATION WITH THE U.S. COMMODITY FUTURES TRADING COMMISSION ("CFTC") AS A COMMODITY POOL OPERATOR BECAUSE THIS POOL IS OPERATED PURSUANT TO THE FOLLOWING CRITERIA: (i) UNITS IN THIS POOL ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND SUCH UNITS ARE NOT OFFERED AND SOLD THROUGH A PUBLIC OFFERING IN THE UNITED STATES; AND (ii) (A) EACH NATURAL PERSON PARTICIPANT (INCLUDING SUCH PERSON’S SELF-DIRECTED EMPLOYEE BENEFIT PLAN, IF ANY), IS A "QUALIFIED ELIGIBLE PERSON", AS THAT TERM IS DEFINED IN CFTC REGULATION SECTION 4.7(a)(2); AND (B) EACH NON-NATURAL PERSON PARTICIPANT IS A "QUALIFIED ELIGIBLE PERSON", AS THAT TERM IS DEFINED IN CFTC REGULATION SECTION 4.7, OR AN "ACCREDITED INVESTOR", AS THAT TERM IS DEFINED IN SECTIONS 501(a)(1)-(3), (7) AND (8) OF REGULATION D UNDER THE SECURITIES ACT OF 1933. UNLIKE A REGISTERED COMMODITY POOL OPERATOR, THE MANAGER IS NOT REQUIRED TO DELIVER A DISCLOSURE DOCUMENT AND A CERTIFIED ANNUAL REPORT TO PARTICIPANTS IN THE FUND. THE TRUSTEE WILL, HOWEVER, DELIVER THIS PROSPECTUS AND THE PERIODIC AND AUDITED ANNUAL REPORTS DESCRIBED HEREIN. THIS OFFERING INVOLVES SUBSTANTIAL RISKS. OFFEREES SHOULD THOROUGHLY CONSIDER THIS PROSPECTUS, THEIR FINANCIAL, ACCOUNTING, REGULATORY, TAX AND OTHER CIRCUMSTANCES AND THE RISK FACTORS CONCERNING THE UNITS (WHICH ARE DISCUSSED UNDER "RISK FACTORS" IN THIS PROSPECTUS) PRIOR TO PURCHASING THE UNITS. THE PURCHASE OF UNITS IS SUITABLE ONLY FOR PURCHASERS OF SUBSTANTIAL FINANCIAL MEANS WHO HAVE NO NEED FOR LIQUIDITY OF INVESTMENT, WHO UNDERSTAND AND CAN AFFORD THE FINANCIAL, ACCOUNTING, REGULATORY, TAX AND OTHER RISKS OF AN INVESTMENT IN THE UNITS. NOT MORE THAN 5% OF AN INVESTOR’S PORTFOLIO SHOULD BE INVESTED IN THE FUND. THE FUND IS NOT A LUXEMBOURG COLLECTIVE INVESTMENT UNDERTAKING AND HAS NOT BEEN REGISTERED FOR DISTRIBUTION IN LUXEMBOURG. THE FUND IS NOT SUBJECT TO THE SUPERVISION BY ANY LUXEMBOURG SUPERVISORY AUTHORITY. THE PROTECTION OF THE INVESTORS IN A REGULATED INVESTMENT FUND THROUGH A SUPERVISORY AUTHORITY IS NOT PROVIDED TO INVESTORS OF THE FUND.

NIKKO EUROPEAN CONVERGENCE EQUITY FUND

Heading Page Number

DIRECTORY ...... 1

DEFINITIONS ...... 2

INTRODUCTION ...... 5

STRUCTURE OF THE FUND ...... 6

INVESTMENT OBJECTIVES AND POLICIES ...... 7

PRINCIPAL INVESTMENTS ...... 7 INVESTMENT PHILOSOPHY...... 8 CONSTRUCTION OF THE FUND ...... 9 INVESTMENT STRATEGIES...... 10 DERIVATIVE CONTRACTS ...... 11

INVESTMENT RESTRICTIONS...... 11 BORROWINGS ...... 12

MANAGER ...... 12 TRUSTEE ...... 14 ADMINISTRATOR AND CUSTODIAN ...... 15 INVESTMENT MANAGER...... 15 DISTRIBUTOR AND AGENT COMPANY...... 19 FEES AND EXPENSES ...... 20 OPERATING EXPENSES...... 20 FUND ORGANISATIONAL EXPENSES...... 20 SELLING COMPENSATION ...... 20 MANAGEMENT FEE ...... 21 AGENT COMPANY FEE ...... 21 DISTRIBUTOR FEE ...... 21 TRUSTEE FEE ...... 21 CUSTODIAN AND ADMINISTRATOR FEE ...... 21 INVESTMENT MANAGER FEE ...... 21

RISK FACTORS...... 21

CONFLICTS OF INTEREST ...... 26

SUBSCRIPTIONS ...... 29 INITIAL SUBSCRIPTIONS...... 29 SUBSEQUENT SUBSCRIPTIONS ...... 29 INELIGIBLE INVESTORS...... 30

DISTRIBUTION OF UNITS ...... 30

REPURCHASES...... 31

DISTRIBUTIONS...... 32

NET ASSETS ...... 33

TAXATION...... 34

MUTUAL FUNDS LAW ...... 34 ANTI-MONEY LAUNDERING REGULATIONS ...... 35

GENERAL ...... 36 MEETINGS...... 36 FISCAL AND YEAR-END REPORTS...... 36 MATERIAL CONTRACTS...... 36 PUBLICATION OF NET ASSET VALUE PER UNIT...... 37 TERMINATION ...... 37 AMENDMENT OF THE TRUST DEED...... 38 OTHER CLASSES AND SERIES OF UNITS ...... 38 RESTRICTIONS ON TRANSFER...... 38

APPENDIX 1...... 39

NIKKO EUROPEAN CONVERGENCE EQUITY FUND

DIRECTORY

FUND AGENT COMPANY Nikko European Convergence Equity Fund Nikko Cordial Securities Inc. C/o Maples Finance Limited 3-1 Marunouchi 3-chome P.O. Box 1093 GT, Chiyoda-ku, Tokyo, Japan Queensgate House, South Church Street, George Town, DISTRIBUTOR IN JAPAN Grand Cayman, Cayman Islands Nikko Cordial Securities Inc. 3-1 Marunouchi 3-chome MANAGER Chiyoda-ku, Tokyo, Japan Total Alpha Investment Fund Management Company S.A. LEGAL ADVISOR TO THE MANAGER AS TO 112 Route d’Arlon CAYMAN ISLANDS LAW L-1150 Luxembourg Maples and Calder P.O. Box 309 GT Ugland House, South Church Street TRUSTEE George Town, Grand Cayman Maples Finance Limited Cayman Islands, British West Indies P.O. Box 1093 GT, Queensgate House, South Church Street, George Town, LEGAL ADVISOR TO THE MANAGER AS TO Grand Cayman, Cayman Islands JAPANESE LAW Mori Hamada & Matsumoto Marunouchi Kitaguchi Building, ADMINISTRATOR 6-5 Marunouchi 1-chome Nikko Bank (Luxembourg) S.A. Chiyoda-ku, Tokyo 100-8222, Japan 112 route d'Arlon, L-1150 Luxembourg The Grand-Duchy of Luxembourg AUDITORS PricewaterhouseCoopers CUSTODIAN PO Box 258 GT, Nikko Bank (Luxembourg) S.A. Strathvale House, 112 route d'Arlon, L-1150 Luxembourg 90 North Church Street, George Town, The Grand-Duchy of Luxembourg Grand Cayman, Cayman Islands

INVESTMENT MANAGER UBS Global Asset Management (Japan) Ltd East Tower, Otemachi First Square, 5-1, Otemachi 1-chome Chiyoda-ku, Tokyo 100-0004, Japan

SUB-INVESTMENT MANAGER UBS AG, UBS Global Asset Management (Zurich) Gessnerallee 3, CH-8089, Zurich, Switzerland

DEFINITIONS

In this Prospectus unless the context otherwise requires:

"Administrator" means Nikko Bank (Luxembourg) S.A.

"Agent Company" means Nikko Cordial Securities Inc.

"Auditors" means PricewaterhouseCoopers.

"Business Day" means each day that is not a day (i) on which banks are authorized or required to close in New York, London, Switzerland (Zurich), Luxembourg or the Cayman Islands; (ii) on which stock exchanges in New York or London are closed; or (iii) on which securities companies in Japan are closed.

"Cayman" means the British Overseas Territory of the Cayman Islands

"Custodian" means Nikko Bank (Luxembourg) S.A.

"Distributor" means Nikko Cordial Securities Inc.

"Eligible Investor" means (a) any person, corporation or entity who or which is not (i) a U.S. person, (ii) a citizen or resident of Cayman or a person or entity domiciled in Cayman (excluding any exempted or non- resident entity incorporated in Cayman); or (iii) a custodian, nominee, or trustee for any person or entity described in (i) or (ii) above or (b) such other person or institution as may specified by the Manager in accordance with the provisions hereof from time to time.

"Initial Closing Date" means June 30, 2005.

"Investment" means any investment permitted under the investment objectives and policies.

"Investment Manager" means UBS Global Asset Management (Japan) Ltd.

"Lux GAAP" means Luxembourg generally accepted accounting principles.

"Manager" means Total Alpha Investment Fund Management Company S.A.

"Net Asset Value" means the value of the assets of the Trust Fund determined in accordance with Clause 12 of the Trust Deed less the liabilities of the Trust Fund and where the context requires means the Net Asset Value of any class or series of the Fund.

"Net Asset Value per Unit" means the Net Asset Value attributable to the relevant class of Units divided by the number of Units of such class in issue, and where the context requires means the Net Asset Value per Unit of any sub-class of Unit.

"Repurchase Request" means the form of repurchase request available from or agreed by the Manager or the Administrator.

"Repurchase Price" means the price calculated pursuant to Clause 14 of the Trust Deed.

"Sub-Investment Manager" means UBS AG, UBS Global Asset Management (Zurich).

"Subscription Order" means the form of subscription order available from or agreed by the Manager or the Administrator.

"Trust Deed" means the Trust Deed dated 11th May 2005 between the Trustee and the Manager establishing the Fund, as amended from time to time.

"Trust Fund" means an initial sum of Yen 10.000 held by the Trustee upon the trusts designated in the Trust Deed together with the proceeds of issue of the Units, all the cash and other property and assets for the time being held or deemed to be held by the Trustee upon the trusts as set forth in the Trust Deed.

"Trustee" means Maples Finance Limited.

"Unit" means one equal undivided share into which the beneficial interest in the Trust Fund shall be

divided, and where the context so requires means a Unit of any class or classes.

"United States" and "U.S." means The United States of America, its states, territories or possessions, or an enclave of the United States government, its agencies or instrumentalities.

"U.S. Persons" means (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. Person; (iv) any trust of which any trustee is a U.S. Person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (viii) any partnership or corporation if (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. Person principally for the purpose of investing in securities not registered under the U.S. Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) of the U.S. Securities Act) who are not natural persons, estates or trusts.

"Unitholder" means the registered holder for the time being of a Unit including persons jointly so registered.

"Valuation Date" means every Business Day or such other day as the Manager may determine.

"Yen" and "JPY" means the lawful currency of Japan.

INTRODUCTION

The Fund is an open-ended exempted unit trust formed under the trust laws of the Cayman Islands by a Trust Deed dated 11th May, 2005 between the Trustee and the Manager, and as such may be further amended and restated from time to time by the Trustee and the Manager. The Fund is offering its Units of beneficial interest denominated in Japanese Yen. The Fund may, in the future, issue different classes of Units denominated in other currencies, in which case this prospectus will be updated. The Fund will continue for an indefinite period, unless terminated as described herein under "General – Termination. "

All subscription proceeds received by the Trustee or the Custodian for the issue of Units, together with the assets in which such proceeds are invested, and all income, profits or gains attributable thereto shall be held for the benefit of all Unitholders of the Fund. References in this document to the Fund shall be deemed to be to the Fund, or to the Trustee or relevant service provider acting in respect of the Fund, as the context may require. References in this document to the Trust Fund are to the assets from time to time held by or on behalf of the Trustee on trust upon the terms of the Trust Deed in respect of the Fund.

The Trustee is entitled to indemnify itself out of such undivided assets of the Fund against actions, costs, claims, damages, expenses or demands to which it may be put as Trustee in connection with the Fund, in the proper performance of its duties, in the absence of willful default, gross negligence or fraud of the Trustee. The Trustee shall not be under any liability on account of anything done or omitted to be done under the directions of the Manager and shall not be liable for any loss or damage to the Fund caused by the acts or omissions of the Manager, Administrator, Custodian or any other delegate or sub-delegate. As described elsewhere in this Prospectus, the Trustee has delegated certain responsibilities to the Manager. For its services in relation to the Fund, the Trustee and the Manager will be paid fees and reimbursed expenses on the basis set out in this Prospectus out of the undivided assets of the Fund.

The Manager has appointed UBS Global Asset Management (Japan) Ltd. as investment manager for the Fund (the "Investment Manager") to manage the investment and re-investment of the assets of the Fund.

The Investment Manager has appointed UBS AG, UBS Global Asset Management (Zurich) as sub-investment manager to the Fund (the "Sub-Investment Manager") in accordance with the terms of the Sub-Investment Management Agreement.

STRUCTURE OF THE FUND

Structure Open ended, Contract type, Cayman unit trust

Initial Unit Class Denominated in Japanese Yen

The investment objective of the Fund is to seek long-term capital appreciation through investing primarily in equity securities, American depositary receipts Investment objective ("ADRs") and global depositary receipts ("GDRs") of companies domiciled or and goals doing business in Eastern European countries (mainly the Czech Republic, Hungary and Poland) and Russia. Initial Offering Period June 1, 2005 – June 29, 2005 (tentative) Fund Period no-maturity Account Period (TBC) Annual – end of October Closed / Lock-up None Period Dividend distributions may be paid annually at the discretion of the Manager Distribution of depending upon the level of Net Asset Value per Unit. Distributions may not dividend be paid depending on the performance of the Fund and other circumstances. Interim distributions may also be made if the Manager so determines.

Subscription of Units: Minimum initial subscription of 50 units, incremental Subscription Unit / thereafter by 1 unit with an initial issue price of JPY 10,000 per Unit during Repurchase Unit the Initial Offering Period and thereafter with an issue price of Net Asset (TBC) Value per Unit. Repurchase of Units: Minimum repurchase of 1 whole Unit and increments of whole Units thereafter at a repurchase price of Net Asset Value per Unit Sales Commission Up to 3.0% (excluding tax) (TBC) Total 1.985% (Investment management fee 0.90%, Distribution/Agent fee 0.90%, Fees (TBC) Custody / Administrator fee 0.15%, Trustee fee 0.015% (Minimum USD 15,000 – Maximum USD 30,000) Management fee 0.02%)

INVESTMENT OBJECTIVES AND POLICIES

Principal The Investment Manager will invest the assets of the Fund primarily in a) Investments equity securities which are listed or traded on stock markets of companies domiciled or doing business in Eastern European countries (mainly the Czech Republic, Hungary and Poland) and Russia, and companies with a significant portion of business stemming from this region and/or b) American depositary receipts ("ADRs") and global depositary receipts ("GDRs") of securities described under a). The countries in which the Investment Manager may invest the assets of the Fund may increase in the sole discretion of the Investment Manager reflecting developments in future economic circumstances. The Fund may also hold related instruments including structured notes.

Under normal circumstances the stock selection by the Investment Manager for the Fund across Eastern Europe (mainly the Czech Republic, Hungary and Poland) and Russia will be based on the relative attractiveness of each market taking account of various factors including the macro economy, top down market valuations, bottom up valuations and the risks that might be associated with investments in each market. The Investment Manager periodically reviews the equity selection and adjust to reflect any changes in the markets.

The Investment Manager's stock selection is primarily driven by the differences arising between the intrinsic value as calculated by the bottom up research method on the company's fundamental valuation criteria, such as long term earning growth, product competitiveness, profit margins and the stock price of the company. The Investment Manager will invest the assets of the Fund primarily in equity securities, ADR and GDR that are expected to have significant growth potential in the long-term.

The Investment Manager will consider a diversification of geographical region, industry sector and individual stock when deciding on the holding and weighting of the equities in the Fund.

In the event of extremely unstable capital and market conditions in the relevant markets such as political change, military unrest, volatile foreign exchange rate, volatile stock market or if certain equities are considered by the Investment Manager to be overpriced, the Investment Manager may reduce its exposure in the relevant stock market and move assets into ancillary liquid assets including EUR and/or USD denominated short term money market instruments, EUR and/or USD government bonds and cash on a temporary basis for the benefit of Unitholders in the Fund.

The Investment Manager will generally not hedge foreign currency exposures to the JPY. Investment The Investment Manager’s price/intrinsic value philosophy is illustrated Philosophy in the diagram below. The intrinsic value of securities is determined by the fundamentals that drive that security’s future cash flow. Discrepancies between market price and intrinsic value arise from market behaviour and market structure providing opportunities to outperform. The Investment Manager’s performance results from a disciplined application of high quality research generated on a global basis.

Sell candidate

Price Intrinsic value

Buy candidate

Tim e

Construction of the Fund Stock selection by the Investment Manager is primarily driven by the difference between the intrinsic value calculated by the bottom up research on a company’s fundamentals such as long term earnings growth, product competitiveness, profit margin and the stock price. The Investment Manager invests the assets of the Fund in the stocks that are expected to have upside potential in the long term.

The Investment Manager invests the assets of the Fund primarily in equities of companies domiciled or doing business in Eastern Europe (mainly the Czech Republic, Hungary and Poland) and Russia. The countries in which the Investment Manager may invest the assets of the Fund may increase in the sole discretion of the Investment Manager reflecting any developments in future economic circumstances.

Bottom up research is on a company’s fundamental such as long term earnings growth, product competitiveness and profit margins. Market allocation cross the countries is decided by the Investment Manager based on the relative attractiveness taking into account macro economic factors.

Comparisons between the stock price and the intrinsic value determined by the fundamentals that drive the security’s future cash flow.

Diversification of markets, sectors and individual stocks are considered. Investment process

Invest ment Universe

Company’s fundamental valuation and macro economy analysis

Stock value / Intrinsic value

St o ck Sel ect i o n

Po r t f o l i o

Investment Strategies

The Investment Manager will attempt to seek long-term capital appreciation for the Fund by using the following investment strategies:

(1) Normally, market allocation across the countries is decided based on the relative attractiveness taking into account of macro economy, top down market valuation, bottom up valuation and various risk associated investing in each market. Such market allocation is reviewed periodically to reflect the changes in the markets.

(2) Stock selection is primarily driven by the difference between the intrinsic value calculated by the bottom up research on the company’s fundamentals, such as long term earning growth, product competitiveness, profit margin and the stock price. The Fund invests in the stocks that are expected to have upside potential in the long term. Equity research analysts make exhaustive research on fundamentals, not only studying the companies themselves but also visiting their competitors and business partners. In the research process, the Investment Manager thinks it important to make a use of a various information source i.e. retired executives, consultants and scholars.

(3) Diversification of markets, sectors and individual stocks are considered when deciding portfolio holdings and weights.

(4) In the event of extremely unstable capital and market conditions, namely the event of country risk or the fear of country risk in the invested markets such as political change of government or coup d’état or the event of extremely shaky foreign exchange and stock markets or the fear of shaky markets or the event of stocks in general are extremely overpriced, the Investment Manager may reduce the stock market exposure and shift the investments into EUR and/or USD denominated short term money market instruments, EUR and/or USD Government bonds and cash for the benefit of investors of the fund.

(5) In principle, a majority of the Fund’s assets will be invested in the above-mentioned equity securities and related instruments such as ADR/GDR and structured notes.

(6) Generally, the non JPY foreign currency exposures are not hedged into JPY.

Investment Universe

The Investment Manager will invest the assets of the Fund primarily in a) equity securities which are listed or traded on stock markets of the companies domiciled or doing business in Eastern European countries (mainly the Czech Republic, Hungary and Poland) and Russia, and the companies with a significant portion of business stemming from this region and/or b) American depositary receipts ("ADRs") and global depositary receipts ("GDRs") of securities described under a). The countries in which the Investment Manager may invest the assets of the Fund may increase in the sole discretion of the Investment Manager reflecting any developments in future economic circumstances. The Fund may also hold related instruments including structured notes.

Derivative Contracts

The Fund may in the discretion of the Investment Manager, but is not required to, use derivative contracts for any of the following purposes:

To hedge against adverse changes, caused by changing interest rates, stock market prices or currency exchange rates, in the market value of securities held by or to be bought for the Fund. As a substitute for purchasing or selling securities.

A derivative contract will obligate or entitle the Fund to deliver or receive an asset or a cash payment that is based on the change in value of a designated security, index or currency. Examples of derivative contracts are futures contracts; options; forward contracts; interest rate, currency and equity swaps; and caps, collars, floors and swaptions.

Even a small investment in derivative contracts can have a big impact on a portfolio’s interest rate, stock market and currency exposure. Therefore, using derivatives can disproportionately increase portfolio losses and reduce opportunities for gains when interest rates, stock prices or currency rates are changing. The Fund may not fully benefit from or may lose money on derivatives if changes in their value do not correspond accurately to changes in the value of the Fund’s portfolio holdings.

Counterparties to over-the-counter derivative contracts present the same types of credit risk as issuers of debt securities. Derivatives can also make the Fund’s portfolio less liquid and harder to value, especially in declining markets.

INVESTMENT RESTRICTIONS

The investment restrictions applicable to the Fund are as follows:-

(a) the Fund will not make short sales of physical securities if as a result the Fund would be required to deliver securities having a value exceeding 100% of the Net Asset Value or would be required to deliver securities issued by a single issuer having a value exceeding 10% of the Net Asset Value;

(b) the Fund will not acquire the shares of any one company if as a result of such acquisition, the total number of shares of such company held by the Fund would exceed 10% of the total number of all issued and outstanding shares of such company

(c) the total amount of the outstanding securities of the same kind of any one company held by the Fund when aggregated with the number of such securities of the same kind held by any other investment fund managed by the Manager shall not exceed 50% of the total number of outstanding securities of the same kind of such company;

(d) no more than 15% of the net assets of the Fund may be invested in illiquid assets such as securities privately placed, unlisted securities or real estate, which cannot be readily realised. The above percentage may be computed either at the time of the purchase or the current market price;

(e) the Fund will not invest in land or buildings (or any options or rights in respect thereof, except shares in real estate companies or interests in real estate investment funds);

(f) the Fund will not make a loan except to the extent that the acquisition of an investment or the making of a deposit might constitute a loan;

(g) the Fund will not assume, guarantee, endorse or otherwise become directly or contingently liable for or in connection with any obligation or indebtedness of any person in respect of borrowed money;

(h) no investment shall be purchased, made or added to if as a result thereof more than 50% of the value of the assets of the Fund would consist of assets which do not fall within the definition of "Securities" under the Securities and Exchange Law of Japan (Law No. 25 of 1948, as amended);

(i) the Fund will not invest in physical commodities, options on commodities or commodity based investments; and

(j) the Fund will not invest in any company for the purpose of exercising legal or management control thereof. The Manager may, however, exercise on behalf of the Fund, any and all rights in respect of the securities acquired by the Fund.

In addition to the foregoing restrictions, any transactions made by the Manager, whichever such transactions are for the profit of the Manager or any other third party, that would contrary to the protection of Unitholders or would be prejudicial to the proper management of the assets of the Fund shall be prohibited.

The Manager is not required to sell Investments immediately if any of the restrictions applicable to the Fund are exceeded as a result of, inter alia, changes in the value of any of the Fund 's Investments, reconstructions or amalgamations, payments out of the assets of the Fund or repurchases of Units of the Fund. However, the Manager will take such steps as are reasonably practicable having regard to the interests of Unitholders of the Fund to comply with the restrictions applicable to the Fund within a reasonable period of time after a breach is identified.

Borrowings

Money may be borrowed for the account of the Fund where the Manager deems this desirable to implement the Fund’s investment objective and policies, to pay expenses or to fund the repurchase of Units, provided that the principal amount for the time being of all borrowings of the Fund will not exceed 10% of the Net Asset Value of the preceding Valuation Date. The Manager may charge or pledge all or any part of the assets of the Fund to secure any borrowing and the interest and expenses thereof.

THE MANAGER

The Manager is a company duly incorporated, validly existing and licensed to undertake management of investment funds pursuant to the provisions of Luxembourg laws. The Manager has appointed, in relation to all of the funds which it manages, specialised

investment managers, to which it has delegated its management functions. The Manager was incorporated in Luxembourg on 27th February, 1992 under the Law of 10th August, 1915 of Luxembourg (as amended). The Law of 10th August, 1915 (as amended) prescribes the fundamental matters with regard to commercial companies, including the incorporation and management thereof and the public offering of shares. Under chapter 14 of the Law of 20th December, 2002 on collective investment undertakings, the Manager qualifies as a management company of collective investment undertakings. As of the end of March 2005, the share capital of the Manager is 446,220 Euro all being fully paid up. The Manager has issued 18,000 shares in registered form with par value of 24.79 Euro per share. The Manager manages 13 investment funds as of the end of March 2005. The Manager is a fully owned subsidiary of Nikko Bank (Luxembourg) S.A.

Pursuant to the terms of the Trust Deed and during the continuance of its appointment as Manager, the Manager shall have authority in respect of the Fund, among other matters set out in the Trust Deed, to:

(1) manage the investment and reinvestment of the assets and investments of the Fund with a view to achieving the investment objectives of the Fund as from time to time set forth in this Prospectus;

(2) seek out and evaluate investment opportunities for investment by the Fund;

(3) analyse the performance of the Fund’s investments and advise the Trustee in relation to investment trends, market movements and all other matters likely or which might reasonably be considered to affect the investment policy of the Fund;

(4) promptly provide the Trustee with such information concerning the investments as it may from time to time request;

(5) negotiate and supervise borrowings and hedging strategies of the Fund within such limits as the Trustee may from time to time specify;

(6) at the Trustee’s request provide a representative to attend meetings of the Trustee or, in relation to the Fund, in connection with any of its duties specified above; and

(7) issue the Units on behalf of the Trustee, and arrange or effect on behalf of the Trustee the repurchase of Units and the determination of the distributions.

The Trust Deed provides, among other things, that none of the Manager, any of its affiliates, their members, officers and employees or the legal representatives of any of them, will be liable to the Trustee or the Unitholders for, and the Manager and such persons will be indemnified solely out of the assets of the Fund with respect to, any loss, cost or expense arising from mistakes of judgment or any action or inaction of such persons that did not constitute willful default, gross negligence or fraud in the performance of the Manager’s obligations and duties, or for losses due to such mistakes, action or inaction or to the willful default, gross negligence or fraud of any broker or other agent of the Manager, provided that such broker or agent was selected, engaged or retained by the Manager in accordance with the standard of care set forth in the Trust Deed.

The appointment of the Manager is for an unlimited duration. The Manager may retire upon giving no less than 30 days' prior written notice to the Trustee. Such retirement shall only take effect upon the appointment of a successor manager. The Trustee may only remove the Manager with the approval of a Unitholder Resolution and in certain exceptional circumstances as specified in the Trust Deed.

The Manager has the power to delegate all or any of its rights, privileges, powers, duties, trusts and discretions vested it to any person, institution, firm or body corporate.

For its services, the Manager will be paid a fee solely out of the Trust Fund in the amount specified in the Section entitled "Fees and Expenses".

TRUSTEE

The Trustee is a trust company duly incorporated, validly existing and licensed to undertake trust business pursuant to the provisions of the Banks and Trust Companies Law (2001 Revision) of the Cayman Islands. The Trustee is also a licensed mutual fund administrator pursuant to The Mutual Funds Law (Revised) of the Cayman Islands.

Pursuant to the Trust Deed, the Manager shall carry out the management of the Fund. The Manager has delegated the administration of the Fund to the Administrator who will be solely responsible for the administrative duties with respect to the Fund and will act as the registrar of the Fund. The Manager will appoint the Custodian to act as custodian of the Trust Fund. The Manager shall have full powers to deal in any way or dispose of the Trust Fund or any part thereof provided always that the Manager shall comply at all times with such investment restrictions and policies as are contained in this Prospectus.

The Trustee shall not be bound to supervise the conduct of any delegate or sub-delegate (including without limitation the Manager, the Administrator and the Custodian) and shall not be in any way responsible for any loss incurred by reason of any acts or omissions of any delegate or sub-delegate, including the Manager, the Administrator, and the Custodian. The Trust Deed provides for indemnification of the Trustee out of the assets of the Fund and exculpates the Trustee for acts of or omissions in respect of the Fund in the absence of wilful default, gross negligence or fraud.

The Trust Deed provides that the Unitholders shall have recourse only to the assets of the Trust Fund in respect of any claims, action, demand or right arising in respect of, or against the Trustee under the terms of the Trust Deed and the Unitholders shall in no circumstances have any recourse to any other assets or property of the Trustee unless any such claims, action, demand or right arises as a result of the willful default, gross negligence or fraud of the Trustee. Any such claim, action demand or right existing after the assets of the Trust Fund have been exhausted will be deemed to be discharged and extinguished unless any such any claims, action, demand or right arises as a result of the willful default, gross negligence or fraud of the Trustee.

The Trustee may retire upon giving not less than thirty (30) days prior written notice to all Unitholders and the Manager.

For its services, the Trustee will be paid a fee out of the Trust Fund in the amount specified in the Section entitled "Fees and Expenses".

ADMINISTRATOR AND CUSTODIAN

The Manager and the Trustee have entered into an administration agreement (the " Administration Agreement") dated on or about 11th May 2005 with respect to the Fund with Nikko Bank (Luxembourg) S.A. (the "Administrator" or "Custodian"). Nikko Bank (Luxembourg) S.A. is a bank incorporated as a société anonyme under the laws of the Grand Duchy of Luxembourg and is a subsidiary of the Distributor. The amount of capital of the Administrator and the Custodian was approximately Euro 40.2 million as of the end of March, 2005.

Pursuant to the Administration Agreement, the Administrator, under the general supervision of the Manager, will be responsible for, amongst other things, maintaining corporate and financial books and records of the Fund; preparing annual financial statements; communicating with Unitholders on a regular basis; computing and publishing the net asset value of the Units as of the Valuation Date. The Administrator will act as registrar and transfer agent of the Fund; arrange for the subscription, repurchases and transfers on the terms set forth herein and perform all other accounting and clerical services necessary in connection with the administration of the Units. Some of the administration services in Japan, including arrangements for the repurchases and transfers of the Units for investors in Japan, communicating with Unitholders in Japan on a regular basis, will be made by the Distributor pursuant to the Distribution Agreement (as defined below). The Manager and the Trustee have entered into a Custodian Agreement dated on or about 11th May 2005 with respect to the Fund with Nikko Bank (Luxembourg) S.A. (the "Custodian Agreement"). The Custodian Agreement provides that all securities and cash, other than cash held in trading accounts or held in any operating accounts (which may be maintained at other banks) of the Fund are to be held by or to the order of the Custodian on behalf of the Fund. The Custodian is also responsible for the collection of principal and income on temporary investments in interest bearing investments, and the payment for and collection of proceeds of, securities transactions.

Each of the Administration Agreement and the Custodian Agreement may be terminated without penalty by either party upon not less than 90 days' prior written notice.

The Manager will pay fees to the Administrator and the Custodian solely out of the Trust Fund for those services at the rate specified in the section entitled "Fees and Expenses" below. Nikko Bank (Luxembourg) S.A. provides custodian and/or administration services to a large number of investments funds. The Manager is a fully owned subsidiary of Nikko Bank (Luxembourg) S.A., acting as the Custodian and the Administrator

INVESTMENT MANAGER

The Manager has appointed UBS Global Asset Management (Japan) Ltd as investment manager for the Fund to manage the investment and re-investment of the assets of the Fund.

The Investment Manager has appointed UBS AG, UBS Global Asset Management (Zurich) as sub-investment manager to the Fund in accordance with the terms of the Sub-Investment Management Agreement.

UBS AG, UBS Global Asset Management (Zurich) is a division of UBS AG and belongs to the UBS Global Asset Management Group established in 1998 in the course of the merger between the Swiss Bank Corporation and the Union Bank of Switzerland. UBS AG, UBS Global Asset Management gives access to a global investment platform, strong localized institutional account management and a wide range of funds.

UBS Global Asset Management (Japan) Ltd

UBS Global Asset Management (Japan) Ltd was established in 1996 as one of the global network platforms of the UBS Global Asset Management Group. UBS Global Asset Management (Japan) Ltd provides one of the best asset management services to its clients through a globally integrated investment process and organization. As at the end of December 2004 UBS Global Asset Management (Japan) Ltd managed and/or advised total assets of JPY 2,927.3 billion.

UBS GROUP ORGANIZATION CHART: UBS Group

UBS Group

UBS UBS Wealth UBS UBS Wealth Management Investment Global Asset Management & Business Bank Management USA Banking

Asset management Private and Investment banking Financial advisory and institutional banking and corporate finance services for private in Switzerland services (formerly UBS clients (formerly UBS Warburg) PaineWebber)

UBS AG, the parent company of the Investment Manager, is the world’s leading financial institution which captures dynamically changing world based on solid financial background and reputable innovative technologies. UBS AG is one of the leading financial institutions based in Switzerland, which offers comprehensive investment services in the world. UBS AG is one of the world’s largest universal financial institution which is present in all major financial centers worldwide, with office in 50 countries and more than 67,000 employees as at the end of December, 2004.

The four business groups of UBS AG are comprised of UBS Wealth Management & Business Banking (private and corporate banking in Switzerland), UBS Global Asset Management (asset management) ("UBS Global Asset Management Group"), UBS Investment Bank (investment banking and corporate financial services) and UBS Wealth Management USA (financial advisory and services for private clients) (please see the organization chart above).

UBS AG’s asset management business has the largest market share of asset management business in Europe, by providing products for UBS’s growing Private Banking division. UBS Global Asset Management Group is one of the leading companies in the asset management business with solid reputation and superior investment performance.

Union Bank of Switzerland and Swiss Banking Corporation started business operation in Japan in 1966 and have been expanding institutional business in Japan.

After the merger in 1998, UBS provides financial services to institutions. UBS in Japan comprises UBS Global Asset Management (Japan) Ltd., UBS AG Tokyo Branch, UBS Securities, and GAM.

UBS AG has obtained high credit ratings as a global financial services provider with solid cash-flow and a rigid risk control environment.

Credit Ratings of UBS AG: by Standard & Poor's AA+ by Moody’s Aa2 by Fitch AA+ (as of the end of March 2005)

UBS Group has total assets on deposit of USD 1,975 billion under its management and advisory services as of the end of December 2004.

The amounts in following charts are converted into Japanese Yen at the rate of US$1=JPY106.35, T.T.M. rate of the Bank of Tokyo-Mitsubishi, Ltd. on 28 April, 2005.

Asset manager ranking at the end of Dec. 2003

UBS 190 JPY trillion

Allianz 141 JPY trillion

Fi d el i t y 121 JPY trillion

State Street 118 JPY trillion

Barclays Global 114 JPY trillion Investors

0 50 100 150 200 Source : Pension & Investments

Private banking asset ranking at the end of Jun. 2004

UBS 110 JPY trillion

Merrill Lynch 99 JPY trillion

Credit Suisse 42 JPY trillion

Wachovia 20 JPY trillion

Deutsche Bank 18 JPY trillion

0 20406080100120140

Source : Scorpio Partnership

UBS Global Asset Management Group

UBS Global Asset Management Group, the asset management division of UBS AG, is one of the four divisions of UBS AG. UBS Global Asset Management Group provides services to institutional investors and wholesale intermediaries.

UBS Global Asset Management Group is one of the leading asset management companies with about 2,600 employees in 20 countries (as of the end of December 2004), having total assets of USD 527.4 billion under its management and advisory services, of which USD 301.7 billion is for institutional investors and USD 225.7 billion for wholesale intermediaries.

Investment Philosophy of UBS Global Asset Management Group

The Investment Manager’s price/intrinsic value philosophy is illustrated in the diagram below. The intrinsic value of securities is determined by the fundamentals that drive that security’s future cash flow. Discrepancies between market price and intrinsic value arise from market behaviour and market structure providing opportunities to outperform. The Investment Manager’s performance results from a disciplined application of high quality research generated on a global basis

Sell candidate

Price Intrinsic value

Buy candidate

Tim e

Risk Management

Unintentional risks are avoided by risk dispersion and an increase of long term asset value is aimed for. In an analysis of the risk characteristics, the Investment Manager utilises the risk management system which was developed by the UBS Global Asset Management Group.

At UBS Global Asset Management Group compliance is embedded in the culture of the organization and represents the core from which all business activities are managed. Every employee is responsible for compliance. The effectiveness of the compliance function is enhanced by the level of management support and commitment. Compliance has been established as a separate function, independent of all business areas.

DISTRIBUTOR AND AGENT COMPANY

The Manager has appointed Nikko Cordial Securities Inc. as Distributor for the Units of the Fund in Japan and have entered into the Units Distribution and Repurchase Agreement on behalf of the Fund with the Distributor under which the Manager grants the Distributor the right and power to offer, sell and distribute in Japan the Units in its capacity as Distributor. The Distributor will be entitled to request the Manager to repurchase the Units registered in its name subject to the section "REPURCHASES", below.

Nikko Cordial Securities Inc. has also been appointed as Agent Company of the Fund under the Agent Company Agreement and will perform such functions as required by the rules adopted by the Japanese Securities Dealers Association (the "JSDA"). The obligations as Agent Company include, amongst other things, (i) submitting to the JSDA such prospectuses relating to the Units as may from time to time be required in accordance with the applicable laws and regulations of Japan, (ii) publishing the Net Asset Value per Unit in Japan as required by the applicable laws and regulations of Japan, (iii) reporting to the JSDA the total

Net Asset Value and the Net Asst Value per Unit as required by the rules of the JSDA, (iv) submitting to the JSDA the financial statements and other documents relating to the Fund as may from time to time be required to be prepared under the applicable laws and regulations of Japan, and (v) reporting to the JSDA, if and when the Units become disqualified under the rules adopted by the JSDA.

FEES AND EXPENSES

Operating Expenses

The Fund bears its own expenses related to its operations, including, without limitation, brokerage commissions, exchange, regulatory and user fees, interest on margin accounts and other indebtedness, borrowing charges on securities sold short, custodial fees, bank service fees, withholding and transfer fees, taxes (such as personal property taxes and state and local taxes), clearing and settlement charges, and other expenses related to the purchase, sale or transmittal of Fund investments; fees for data and software providers; research expenses; professional fees (including expenses of consultants and experts) relating to investments; travel expenses related to investments; legal, accounting, audit and tax preparation expenses; corporate licensing fees; the Management Fee; organizational expenses; expenses incurred in connection with the offer and sale of Units of the Fund; administration fees; other similar expenses related to the Fund and any extraordinary expenses related to the Fund. In the event that any services, including legal, accounting, audit and tax preparation services, are performed or paid on behalf of the Fund by the Trustee, the Manager, the Investment Manager or Sub-Investment Manager or their affiliates, the Fund will reimburse the Trustee, the Manager, the Investment Manager or Sub- Investment Manager or their affiliates therefor out of the assets of the Fund.

Fund Organizational Expenses

The Fund’s organizational expenses will be amortized by the Fund within a five year period. In the event the Fund is terminated prior to the full amortization of organizational expenses, any remaining unamortized organizational expenses will be treated as an expense for purposes of calculating net asset value. Luxembourg generally accepted accounting principles will be adopted by the Fund ("Lux GAAP").

Selling Compensation.

Investors will be required to pay a sales charge (in addition to the issue price of Units purchased) of the percentage of the issue price of Units up to 3% (excluding taxes) with respect to the purchase of the corresponding aggregate number of Units

This sales charge will be paid to or at the direction of the Distributor. Notwithstanding the above, if the Manager and the Distributor in Japan agree otherwise by a separate agreement between them, the terms of such agreement may be applicable.

Management Fee

The Manager is entitled to a Management Fee, payable quarterly in arrears out of the Trust Fund at a rate of 0.02% per annum of the average of the daily net asset value of the Fund during each calendar quarter.

Agent Company Fee

The Agent Company is entitled to a fee, payable quarterly in arrears out of the Trust Fund, at a rate of 0.10% per annum of the average of the daily net asset value of the Fund during each calendar quarter. In addition, any reasonable disbursements and out-of- pocket expenses incurred by the Agent Company for client service on behalf of the Fund with the consent of the Manager will be borne by the Fund.

Distributor Fee

The Distributor is entitled to a Distributor fee, payable quarterly in arrears out of the Trust Fund, at a rate of 0.80% per annum of the average of the daily net asset value of the Fund during each calendar quarter.

Trustee Fee

The Trustee is entitled to a fee, payable quarterly in arrears out of the Trust Fund, at a rate of 0.015% per annum of the average of the daily net asset value of the Fund during each calendar quarter, with a minimum annual amount of USD15,000 and capped at USD30,000.

Custodian and Administrator Fee

Nikko Bank (Luxembourg) S.A.; as Administrator and Custodian is entitled to a fee, payable quarterly in arrears out of the Trust Fund, at a rate of 0.15% per annum of the average of the daily net asset value of the Fund during each calendar quarter. The Administrator and the Custodian shall be entitled to be repaid out of the Trust Fund all of its reasonable out-of-pocket expenses incurred on behalf of the Fund which shall include, but not be limited to, legal fees, courier fees and telecommunication costs and expenses.

Investment Manager Fee

The Investment Manager is entitled to a fee,, payable quarterly in arrears out of the Trust Fund, at a rate of 0.90% per annum of the average of the daily net asset value of the Fund during each calendar quarter. The fees of any sub-investment manager or adviser appointed by the Investment Manager with the approval of the Manager will be paid by the Investment Manager. The reasonable travel and telecommunications expenses of the Investment Manager will be paid by the Manager out of the Trust Fund.

RISK FACTORS

The Fund engages in a business involving special considerations and risks, including those discussed below. There can be no assurance that the Fund’s investment

objective will be achieved or that there will be any return of capital, and investment results may vary substantially on a monthly, quarterly or annual basis. An investment in the Fund does not represent a complete investment program. Investors can lose money in the Fund or the Fund’s performance may fall below other possible investments. Below is a discussion of the potential risks of the Fund.

Principal Investment Risks

Management risk • The Investment Manager’s judgments about the fundamental value of securities acquired by the Fund may prove to be incorrect.

Risks of equity • The stock markets where the Fund’s investments are principally Investments traded may go down. • An adverse event, such as negative press reports about a company in the Fund’s portfolio, depresses the value of the company’s stock.

Foreign Currency ・ Generally, the non-JPY foreign currency exposures are not hedged Risk into Japanese Yen. If the currencies of Russia and Eastern Europe appreciate against JPY, the unrealised and realised gain of the currency will contribute to the appreciation of the Net Asset Value of the Fund. On the contrary, if the currencies of Russia and Eastern Europe depreciate against JPY, the unrealised and realised loss will contribute to the depreciation of the Net Asset Value of the Fund. The yen based investors are exposed to the risk of foreign exchange rate risk. ・ Although Units in the Fund will be denominated in Yen, the Fund may invest its assets in securities denominated in a wide range of currencies, some of which may not be freely convertible. The Net Asset Value of the Fund as expressed in its base currency will fluctuate in accordance with the changes in the foreign exchange rate between that currency and the currencies in which the Fund's investments are denominated. The Fund may therefore be exposed to a foreign exchange/currency risk. ・ It may not be possible or practicable to hedge against the consequent foreign exchange currency risk exposure. The Manager and Investment Manager may enter into hedging transactions at their sole discretion and solely for the purposes of efficient portfolio management.

Foreign country The values of the Fund’s foreign and emerging market investments and emerging may go down or be significantly volatile because of: market risks • A decline in the value of foreign currencies relative to the JPY, which is the base currency of the Fund. • Vulnerability to economic downturns and instability due to undiversified economies, trade imbalances, inadequate infrastructure, heavy debt loads and dependence on foreign capital inflows; governmental corruption and mismanagement of the

economy; and difficulty in mobilizing political support for economic reforms. • Adverse governmental actions such as nationalization or expropriation of property, confiscatory taxation, currency devaluations, interventions and controls, asset transfer restrictions; restrictions on investments by non-citizens, arbitrary administration of laws and regulations and unilateral repudiation of sovereign debt. • Political and social instability, war and civil unrest. • Less liquid and efficient securities markets; higher transaction costs; settlement delays; lack of accurate publicly available information and uniform financial reporting standards; difficulty in pricing securities and monitoring corporate actions; and less effective governmental supervision. • Whilst fundamental reforms relating to securities investments and regulations in emerging countries have been initiated in recent years there may still be certain ambiguities in interpretation and inconsistencies in their application. Monitoring and enforcement of applicable regulations in emerging coutries remains uncertain. • The only evidence of ownership of equity securities in some emerging countries is entry of the shareholders name on the shareholders register of the issuer. The concept of fiduciary duty is not well established in some emerging countries and shareholders may, therefore, suffer dilution or loss of investment due to the actions of management without satisfactory legal remedy. The rules regulating corporate governance are undeveloped and therefore may offer little protection to minority shareholders.

The risks described above are more severe for securities of issuers in emerging market countries such as Eastern European countries and Russia, than for other foreign investments.

Derivatives risk The risk that the Fund’s investments in derivatives may rise or fall more rapidly than other investments.

Fluctuating value The value of your investment in the Fund may fluctuate.

Risk of Loss

A Unitholder could incur substantial losses on an investment in the Fund. The Units are only suitable for sophisticated investors willing and able to accept this risk.

Limited Operating History

The Fund has no operating history.

Stock Market Risk

The price of equity securities may decline due to a general decline in the stock market.

Price Fluctuations of Structured Transferable Securities

The Fund may also invest in structured transferable securities that reflect the price fluctuation of relevant local equity of a specific country that imposes local regulatory restrictions on purchase, sale, and repatriation for foreign investors. The price of such structured transferable securities usually fluctuates with the changes in interest rates of foreign exchange between local currency and the denominated currency of the structured transferable securities which will usually be EUR or US$ and the credit quality of the issuers or of the party who assumes the obligation for the payment of the structured notes or bonds. In addition, these types of structured transferable securities reflect price fluctuations of the relevant equity. Factors including the deteriorating financial position, poor management and bankruptcy of the underlying issuer or the party who assumes the obligation for payment of the structured transferable securities may produce a risk that the principle and the interest on the structured transferable securities will not be paid by the maturity date. In the event that such a default has occurred or is likely to occur, the price of the structured transferable securities will fall.

Interest Rate Risk

The net asset value of the Fund will change in response to fluctuations in interest rates. Interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase. Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. A rise in interest rates generally can be expected to depress the value of the Fund’s investments.

The Investment Manager

The Fund’s performance depends on the ability of the Investment Manager to invest the Fund’s assets successfully. There can be no assurance that the Investment Manager will be able to do so.

Lack of Liquidity

There is no market for Units and no secondary market is expected to develop. Units can be repurchased daily but repurchase is subject to suspension in certain circumstances. Unitholders must exercise their right to repurchase their Units in order to realize any part of their investment in the Fund. Since Units are repurchased at the net asset value per Unit as of the relevant Valuation Date, Unitholders will not know the precise repurchase value of their Units when they submit their repurchase request. The payment of repurchase proceeds may have to be deferred due to liquidity restrictions.

The Fund has broad authority to defer accepting repurchase requests (effectively suspending repurchases) in certain unusual circumstances or if the Fund believes that accepting such requests would have adverse consequences to the remaining Unitholders.

Tax Risks

There are certain tax risk factors associated with an investment in the Fund and there can be no assurance that the positions of the Fund relating to the tax consequences of its investment transactions will be accepted by the tax authorities. See "Taxation. "

Regulatory Changes

Future regulatory changes could adversely affect the Fund.

General Economic Conditions

The success of any investment activity is affected by general economic conditions which affect the level and volatility of prices as well as the liquidity of the markets. The Investment Manager is unlikely to achieve its objectives under certain market conditions which may prevail for substantial periods of time.

Market Participant Risk

The institutions, including brokerage firms and banks, with which the Fund invests, may encounter financial difficulties that impair the operational capabilities or the capital position of such counterparty.

Illiquidity of Underlying Investments

The Fund may invest in illiquid instruments. Illiquidity increases risk and may make it impossible for the Investment Manager to close out positions against which the market is moving. The Fund invests in both listed and unlisted securities. Most securities are purchased on stock exchanges or in regulated markets located in the countries in which the respective principal offices of the issuers of the various securities are located, if that is the best available market. While growing in trading volume and liquidity, markets and exchanges other than the major markets of the United States, the United Kingdom and Japan are generally less liquid and usually have substantially less trading volume. Securities of some companies, which are traded in markets smaller than those of the United States, the United Kingdom and Japan, are less liquid and more volatile than securities of comparable companies which are traded in the larger markets or exchanges of the United States, the United Kingdom and Japan. Similarly, daily volume, liquidity and price volatility may vary substantially between different markets. Fixed commissions on non-United States exchanges are generally higher than negotiated commissions on United States exchanges. The Fund will endeavor to achieve the most favorable net results on its portfolio transactions.

No Payment of Additional Taxes or Assessments

Each Unitholder will assume and be responsible to the proper governmental or regulatory authority for any and all taxes of any jurisdiction or governmental or regulatory authority, including, without limitation, any local taxes or other like assessments or charges

that may be applicable to any payment in respect of the Units made by the Fund. The Fund will not pay any additional amounts to Unitholders to reimburse them for any tax, assessment or charge required to be withheld or deducted from payments on the Units by the Fund. The Fund will not be responsible for the payment of any additional amount of withholding tax which may become payable due to an increase in any applicable withholding tax rates.

Lack of Transparency

The Investment Manager regards information concerning its positions as confidential and proprietary and will not be required to make such information available to existing or prospective investors, other than the information provided through the Fund’s reports prepared pursuant to applicable laws and regulations.

No Representation of Investors

The business terms and structure of the Fund were not negotiated with any investor. Maples and Calder, Cayman counsel, to the Manager, rendered legal advice to the Manager in connection with this offering and may continue to advise the Manager regarding its management and dealings with the Fund. However, Maples and Calder does not represent the Fund or prospective investors. Prospective investors are advised to consult their own counsel with respect to the legal and tax implications of an investment in the Units.

Potential Loss of Investment

No guarantee or representation is made that the Fund’s investment approach will be successful. In particular, the past results of the Investment Manager are not necessarily indicative of future performance. As is true of any investment, there is a risk that an investment in the Fund will be lost entirely or in part.

Custody Risk

Brokerage firms, banks, broker-dealers and other financial institutions will safekeep the Fund’s portfolio assets and may hold such assets in "street name. " Bankruptcy or fraud at one of these entities could impair the operational capabilities or the capital position of the Fund.

UNITS ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. THEY ARE SUITABLE ONLY FOR PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION OF THE RISKS INVOLVED IN THIS OFFERING.

CONFLICTS OF INTEREST

The following inherent and potential conflicts of interest exist in respect of the Fund.

Compensation

The Trust Deed has not been negotiated at arm’s-length. The Management Fee payable to the Manager and any brokerage commissions payable to any affiliate of UBS are payable without regard to the overall success of or income earned by the Fund.

Advisory Time

The Manager and the Investment Manager, their affiliates and key personnel will devote as much of their time to the business of the Fund as in their judgment is reasonably required. However, they are presently committed to and expect to be committed in the future to providing investment advisory services and securities research and brokerage services for other clients (including other pooled accounts) of the Manager and Investment Manager and its affiliates and engage in other business ventures in which the Fund and the Unitholders have no interest. As a result of these separate business activities, the Manager and Investment Manager may have conflicts of interest in allocating management time, services, and functions among the Fund and other business ventures or clients.

Other Clients; Allocation of Investment Opportunities

The Investment Manager is responsible for the investment decisions made on behalf of the Fund. There are no restrictions on the ability of the Investment Manager to manage accounts of other clients following the same or different investment objective, philosophy, and strategy as those used for the Fund. In fact, the Investment Manager currently manages and expects to continue to manage other portfolios consisting primarily of equity securities and fixed income securities that may invest pursuant to the same or different strategies as those employed by the Fund. In the event that a determination is made that the Fund and another client of the Investment Manager should trade in the same securities on the same day, such securities will be allocated between the Fund and other accounts in a manner that the Investment Manager determines at its discretion. Circumstances may occur in which an allocation could have adverse effects on the Fund or the other client with respect to the price or size of securities positions obtainable or saleable.

Proprietary Trading

The Investment Manager and its principals, affiliates, and employees may trade in the securities and derivatives markets for their own accounts and the accounts of their clients, and in doing so may take positions opposite to, or ahead of, those held by the Fund or may be competing with the Fund for positions in the marketplace. Such trading may result in competition for investment opportunities or create other conflicts of interest on behalf of one or more such persons in respect of their obligations to the Fund. Records of this trading will not be available for inspection by Unitholders.

The proprietary activities or portfolio strategies of UBS affiliates or the activities or strategies used for accounts managed by UBS affiliates for other customer accounts could conflict with the transactions and strategies employed by the Fund and affect the prices and availability of the securities and instruments in which the Fund invests. Issuers of securities held by the Fund may have publicly or privately traded securities in which UBS affiliates are investors or make a market. The trading activities of UBS affiliates generally are carried out without reference to positions held directly or indirectly by the Fund and may

have an effect on the value of the positions so held or may result in UBS affiliates having an interest in the issuer adverse to that of the Fund.

UBS affiliates may invest in the Fund or any entity in connection with derivatives or structured products related to the Fund. Such affiliates may repurchase their investment at any time and without notice to Unitholders, although on generally the same terms as other investors. Such repurchases, which may be the result of client liquidation of such derivatives or structured products, are likely to be made without regard to the best interests of the Fund or other Unitholders and may result in sizable repurchases that impair the Fund’s operations or its net asset value.

Brokerage Placement Practices

The Fund may utilize a broker that is affiliated with the Investment Manager. The Fund’s brokerage placement practices involve certain conflicts of interest.

Portfolio Valuation

The fees payable to the Manager are based directly on the net asset value of each Class of Units as of various dates, which in turn depends directly on the valuation of the assets and liabilities of the Fund as of each such date. There may be no public market price for a portion of the Fund’s assets. The Administrator, in consultation with the Manager, will generally value the Fund’s assets. Any financial instruments for which market quotations are not readily available will be valued at fair value as reasonably determined in good faith by the Administrator, in consultation with the Manager. The Manager will have a conflict of interest in making such valuations because the valuations directly affect the net asset value of the Fund and thus the amount of compensation that the Manager receives in respect of its services.

Material Non-Public Information

By reason of the advisory, investment banking, and/or other activities of the Investment Manager and its affiliates, the Investment Manager and its affiliates may acquire confidential or material non-public information or be restricted from initiating transactions in certain securities. The Investment Manager will not be free to divulge, or to act upon, any such confidential or material non-public information and, due to these restrictions, they may not be able to initiate a transaction for the Fund’s account that they otherwise might have initiated. The Fund may be frozen in an investment position that it otherwise might have liquidated or closed out.

Credit Facilities

Certain conflicts of interest may arise should the Fund enter into repurchase or portfolio management credit facilities with the Investment Manager or its affiliates. In such situations, the Investment Manager has a conflict between its obligation to act in the best interests of the Unitholders and any interest it may have in generating fees and other revenues for itself or its affiliates.

Distributor Compensation

The Distributor and its representatives will receive sales charges and ongoing fees. Thus, they will have a conflict of interest in advising investors as to the purchase and repurchase of Units.

SUBSCRIPTIONS

Initial Subscriptions

Units will be offered during an initial offering period from June 1, 2005 to June 29, 2005 (the "Initial Offering Period"). During the Initial Offering Period, Units will be offered at ¥10,000 per Unit plus the applicable sales charge (See – "Fees and Expenses" – "Selling Compensation"). Units subscribed for during the Initial Offering Period will be issued on June 30, 2005 (the "Initial Closing Date"). Investors will also be required to pay a sales charge payable to or at the direction of the Distributor. The minimum subscription is 50 Units with amounts in excess thereof being in integral multiple of 1 Unit, or such other number of units as the Trustee, at the direction of the Manager and the Distributor, may otherwise determine in any particular case from time to time. A subscription may be for any greater number of whole Units, as fractional Units will not be issued. The minimum additional subscription during the Initial Offering Period by an investor that has submitted a subscription application for at least 50 Units, is one Unit and in integral multiples of 1 Unit. The Manager may determine to limit the number of Units issued or not to issue Units in which case the relevant subscription amounts will be returned to subscribers without interest.

Subscription applications for the purchase of Units applied for during the Initial Offering Period must be received by the Administrator in Luxembourg at its business address prior to 12:00 noon (Luxembourg time) on or before June 29, 2005. Units will be issued by the Manager provided payment is made to the Custodian not later than the close of business in Luxembourg on the Initial Closing Date. Any loss, cost or expense suffered by the Fund as a result of any failure to pay or late payment of subscription monies shall be borne by the applicant.

Subsequent Subscriptions

Following the Initial Closing Date, Units may continue to be made available for subscription as of each Valuation Date and such Units will be issued at the relevant Net Asset Value per Unit on the relevant Valuation Date plus any applicable sales charge (See – "Fees and Expenses" – "Selling Compensation").

In order to be dealt with, a subscription order must be received by the Distributor prior to 3.00 p.m. Tokyo time on the relevant Valuation Date and forwarded to the Administrator in Luxembourg within three hours..

With respect to each subscription, cleared funds in the amount of the purchase price of Units must be received by the Custodian on the fourth Business Day following the relevant Valuation Date. Units not paid for by such time will be cancelled. The Trustee may determine to suspend offering of Units at any time. The minimum subscription in the ongoing offering is 50 Units with amounts in excess thereof being in integral multiple of 1

Unit or such other number of units as the Trustee, at the direction of the Manager and the Distributor, may otherwise determine in any particular case from time to time. The Manager may determine to limit the number of Units issued or not to issue Units in which case the relevant subscription amounts will be returned to subscribers without interest.

The Fund reserves the right to reject any subscription for any reason. Short- term or excessive trading into and out of the Fund, particularly in larger amounts, may harm performance by disrupting portfolio management strategies and by increasing expenses. Accordingly, the Fund will reject subscriptions from market timers or other investors if the Manager has determined that such orders are short-term or excessive, and will be disruptive to the Fund. For these purposes, the Manager may consider an investor’s trading history in the Fund or other funds distributed by the Distributor. The Manager may not, however, be able to determine that a specific order, particularly with respect to orders made through omnibus accounts, is short-term or excessive, and will be disruptive to the Fund and so makes no representation that all such orders can or will be rejected. The Distributor in Japan has agreed to use its reasonable efforts to reject orders to purchase Units if the purchaser has, in the sole judgment of the Distributor, a history of engaging in excessive trading. There can be no assurance that all short-term trading in Units can be prevented.

Certificates for Units will not be issued, except upon request and at cost and expenses of the Unitholder requesting issue of certificate. A written confirmation will be issued to each subscriber confirming his, her or its holding and registration in the register of Unitholders. Confirmations will be posted to successful applicants within twenty-one days of the relevant Valuation Date at the Unitholder’s risk.

Ineligible Investors

U.S. Persons and members of the public in the Cayman Islands may not purchase Units and subscribers will be required to certify that they are not acquiring Units for, directly or indirectly, U.S. Persons. The Manager may (a) reject, at its discretion, any subscription for Units in whole or in part; and (b) cause the Fund to repurchase at any time all Units held by any Unitholder who is excluded from purchasing or holding Units.

DISTRIBUTION OF UNITS

The Manager has appointed Nikko Cordial Securities Inc. as Distributor in Japan pursuant to a Units Distribution and Repurchase Agreement made on 12th May 2005 ( the "Distribution Agreement").

The Manager and the Distributor in Japan shall comply, with respect to the issuing of Units, with the laws and regulations of the countries where the Units are offered. The Manager may, at its discretion, limit the issue of Units at any time to persons or corporate bodies resident or established in certain countries or territories. The Manager may prohibit certain persons or corporate bodies from acquiring Units, if such a measure is necessary for the protection of the Unitholders as a whole and the Fund.

The Manager may reject at its discretion any application for purchase of Units or repurchase at any time the Units held by Unitholders who are excluded from purchasing or holding Units. More specifically, the Manager will not promote the sale of the Units to the

public within the European Union, or any part of it. None of the Units is registered under the Securities Act of 1933, as amended, of the United States of America. The Units are prohibited from being offered, sold or transferred, directly or indirectly, in the United States or to any U.S. Person.

REPURCHASES

Any number of whole Units may be repurchased on any Valuation Date, subject to the restrictions described below. In order to be dealt with, a repurchase order must be received by the Distributor prior to 3.00 p.m. Tokyo time on the relevant Valuation Date and forwarded to the Administrator in Luxembourg within three hours . Except during a period of repurchase suspension, payment of repurchase proceeds will generally be made on the fourth Business Day following the relevant Valuation Date.

Units shall be repurchased at the applicable repurchase price, which shall be the relevant Net Asset Value per Unit on the relevant Valuation Date on which repurchase is effected.

The Trustee may, at its discretion, based on the direction of the Manager, establish reserves for contingencies in accordance with the Fund’s internal accounting and valuation policies and consistent with industry best practices (even if such reserves are not in accordance with Lux GAAP). Providing for such reserves would reduce the amount of a distribution upon repurchase. Amounts withheld may be invested in the same manner as the Fund, placed in an interest bearing account or dealt with in such other manner as the Trustee deems appropriate.

The Trustee, by written notice to the Unitholders, based on the direction of the Manager, may suspend repurchase rights and the calculation of net asset value (i) during any period when any stock exchange on which any of the Fund’s investments are quoted is closed, other than for ordinary holidays and weekends, or during periods in which dealings are restricted or suspended, (ii) during the existence of any state of affairs which, in the opinion of the Trustee, constitutes an emergency or other circumstance as a result of which the valuation or disposal of investments by the Fund would not be reasonably practicable or would significantly prejudice the Unitholders of the Fund, (iii) during any breakdown in the means of communication normally employed in determining the price or value of any of the Fund’s investments, or of current prices in any stock market as aforesaid, or when for any other reason the prices or values of any investments owned by the Fund cannot reasonably be promptly and accurately ascertained, (iv) during any period when the transfer of funds involved in the realization or acquisition of any investments cannot, in the opinion of the Trustee, be effected at normal rates of exchange, or (v) during any period the Trustee deems it necessary to do so to comply with the anti-money laundering regulations applicable to the Fund, the Manager, or their affiliates, subsidiaries, or associates or any of the Fund’s other service providers.

In the absence of directions as to payment from a Unitholder, the Administrator shall remit repurchase proceeds by wire transfer sent to the bank account of the Unitholder appearing on the Register. The Trustee, the Manager or the Administrator shall not be liable for any loss resulting from following this procedure. No repurchase proceeds shall carry interest before distribution.

The Administrator may withhold the whole or any part of any repurchase payment to any Unitholder and set it off against any unpaid amounts due from that Unitholder to the Trustee or the Manager under any other provision of the Trust Deed. The Administrator may also deduct from any repurchase payment or any other payment for any Unit, any other amounts that the Trustee or the Manager must or may make by law for any duties or other taxes, charges or other assessments of any kind.

The Manager may temporarily and by way of exception, suspend the repurchase of Units in the interest of all Unitholders as provided for in the Trust Deed and under the following exceptional circumstances: a) if, owing to exchange controls or restrictions on other asset transfers, the Fund can no longer transact its business; b) in the case of large-scale repurchase requests that could, in the opinion of the Manager, significantly affect the interests of the remaining Unitholders.

In case of large-scale repurchase requests, the Manager may delay the calculation of the repurchase price of the Units of the Fund until the Fund has sold the corresponding assets (which it will endeavour to do without unnecessary delay). In such event, the Net Asset Value shall be calculated on the basis of prices at which it sold investments to meet the repurchase requests.

If the Trustee or Manager shall, in their sole discretion, determine that (a) the Net Asset Value of the Fund is insufficient for the purposes of pursuing the investment program; (b) any of the representations given by a Unitholder were not true and accurate or have ceased to be true and accurate or that the continuing ownership of Units by a Unitholder would cause an undue risk of adverse tax consequences to the Fund or any of its Unitholders; or (c) the continuing ownership of Units by such Unitholder may be prejudicial to the Fund or any of its Unitholders, then the Trustee or Manager may repurchase Units at the Net Asset Value per Unit (less a pro rata share of any unamortised organisational and offering expenses). In the event of a proposed mandatory repurchase by the Trustee or Manager, written notice of the proposed mandatory repurchase will be given not more than five (5) Business Days, nor less than one (1) Business Day in advance to any Unitholder whose Units are to be repurchased. Alternatively, the Trustee or Manager may direct the Unitholder to sell such Units, and upon receipt of such notice the Unitholder shall promptly sell such Units to an Eligible Investor and provide to the Trustee or Manager evidence of such sale.

DISTRIBUTIONS

The Manager may declare annual distributions from the investment income and realized and unrealized capital gains and may deduct such amounts as the Manager may consider, in its sole discretion, as necessary in respect of any expenses, remuneration or other payments (including, without limitation, administration expenses, disbursements and the fees payable to the Manager), accrued during a fiscal year and properly payable out of the income or capital of the Fund and, if considered necessary to maintain reasonable level of distributions, out of any other funds available for distribution. The Manager may also declare any interim distributions.

NET ASSETS

The Net Asset Value of the Fund will be expressed in Yen and calculated by the Administrator as of the relevant Valuation Date by deducting from the value of the assets of the Fund on the relevant Valuation Date all the liabilities of the Fund (including, at the discretion of the Manager, a provision for Duties and Charges).

To the extent feasible, expenses, fees and other liabilities are accrued using Lux GAAP as a guideline. Reserves may be taken for estimated or accrued expenses, liabilities or contingencies.

The Administrator, in consultation with the Manager, will value the assets of the Fund in accordance with the Trust Deed which sets out, inter alia, the following general provisions: • securities which are traded on a securities exchange shall be valued at their latest available price as more fully detailed in the Trust Deed on such securities exchange as shall be selected by the Manager in consultation with the Administrator; • securities not traded on a securities exchange but traded over-the-counter shall be valued as determined from any reliable source selected by the Manager in consultation with the Administrator; • "swaps" and other over-the-counter instruments held by the Fund shall be valued in the good faith discretion of the Manager based on quotations received from dealers deemed appropriate by the Manager in consultation with the Administrator; • short-term money market instruments and bank deposits shall be valued at the cost plus accrued interest, and mutual funds shall be valued at their net asset value on the date as of which their value is being determined; • if on the date as of which any valuation is being made, the exchange or market herein designated for the valuation of any given assets is not open for business, the valuation of such assets shall be determined as of the last preceding date on which such exchange or market was open for business; • all other assets and liabilities shall be valued in the good faith discretion of the Manager in consultation with the Administrator, including assets and liabilities for which there is no identifiable market value; • the foregoing valuations may be modified by the Manager, at its discretion, in consultation with the Administrator, if and to the extent that it shall determine that modifications are advisable in order to reflect the market value of any assets; and • the Manager in consultation with the Administrator may reduce the valuation of any asset by reserves established to reflect contingencies, liabilities, uncertain valuations or other factors, which the Manager determines, at its discretion, in consultation with the Administrator reduce or might reduce, the value of such asset (or the Fund as a whole in the case of reserves related to any of the foregoing factors not specifically attributable to any particular asset).

All matters concerning valuation of securities, as well as accounting procedures, not expressly provided for in policies adopted by the Administrator may be determined by the Manager, whose determination is final and conclusive as to all Unitholders. The Trustee shall not be bound to supervise the conduct of the Administrator or the Manager in valuing the assets of the Fund or the calculation of the Net Asset Value and the Trustee shall not be in any way responsible for any loss incurred by reason of any miscalculations thereof made by the Manager or the Administrator.

TAXATION

The following summary of certain Cayman Islands tax consequences applicable to the Fund is based upon interpretations of existing laws in effect on the date of this Prospectus and no assurance can be given that courts or fiscal authorities responsible for the administration of such laws will agree with the interpretations or that changes in such laws will not occur. The following summary is not intended as legal or tax advice.

Cayman Islands

The Government of the Cayman Islands will not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the Fund or the Unitholders. The Cayman Islands are not party to any double taxation treaties. There are, at the date of this Prospectus, no exchange controls in the Cayman Islands.

The Fund has applied for and is expected to receive an undertaking from the Governor in Cabinet of the Cayman Islands that, in accordance with Section 81 of the Trusts Law (2001 Revision) of the Cayman Islands, for a period of 50 years from the date of the creation of the Fund no laws of the Cayman Islands thereafter enacted imposing any tax or duty to be levied on income or on capital assets, gains or appreciation or any tax in the nature of estate duty or inheritance tax shall apply to any property comprised in or income arising under the Fund or to the Trustee or Unitholders in respect of any such property or income. No stamp duty is levied in the Cayman Islands on the transfer or repurchase of Units.

Other Countries

The Fund may be subject to withholding or other taxes on certain income sourced in other countries.

Prospective purchasers should consult legal and tax advisors in the countries of their citizenship, residence and domicile to determine the possible tax or other consequences of purchasing, holding and repurchasing Units under the laws of their respective jurisdictions.

MUTUAL FUNDS LAW

The Fund falls within the definition of a "regulated mutual fund" in terms of the Mutual Funds Law (2003 Revision) of the Cayman Islands (the "Law") by virtue of the fact that it is the holder of a mutual fund license under the Law. The Fund has also sought to comply with The Retail Mutual Funds (Japan) Regulations, 2003 of the Cayman Islands (the "Regulations"). Part VIII of the Regulations sets out minimum disclosure requirements for the Prospectus. The Prospectus has been filed with the Cayman Islands Monetary Authority (the "Authority") in accordance with the Law and the Regulations.

A MUTUAL FUND LICENSE ISSUED BY THE CAYMAN ISLANDS MONETARY AUTHORITY DOES NOT CONSTITUTE AN OBLIGATION OF THE

AUTHORITY TO ANY INVESTOR AS TO THE PERFORMANCE OR CREDITWORTHINESS OF THE FUND.

FURTHERMORE, IN ISSUING SUCH A LICENSE THE AUTHORITY SHALL NOT BE LIABLE FOR ANY LOSSES OR DEFAULT OF THE FUND OR FOR THE CORRECTNESS OF ANY OPINIONS OR STATEMENTS EXPRESSED IN ANY PROSPECTUS.

As a regulated mutual fund, the Fund is subject to the supervision of the Authority and the Authority may at any time instruct the Fund to have its accounts audited and to submit them to the Authority within such time as the Authority specifies. In any event the Fund must file its audited accounts annually with the Authority. In addition, the Authority may ask the Trustee to give the Authority such information or such explanation in respect of the Fund as the Authority may reasonably require to enable it to carry out its duty under the Law. The Authority may take certain actions if it is satisfied that: a regulated mutual fund is or is likely to become unable to meet its obligations as they fall due; is carrying on or is attempting to carry on business or is winding up its business voluntarily in a manner that is prejudicial to its investors or creditors; a regulated mutual fund, in the case of a licensed mutual fund such as the Fund, is carrying on or attempting to carry on business without complying with any condition of its license contrary to the Law; the direction and management of the regulated mutual fund, has not been conducted in a fit and proper manner; or a person holding a position as a manager of a regulated mutual fund is not a fit and proper person to hold the position. The powers of the Authority include, inter alia, the power to require the substitution of the Trustee, to appoint a person to advise the Fund on the proper conduct of its affairs or to appoint a person to assume control of the affairs of the Fund. There are other remedies available to the Authority including the ability to apply to court for approval of other actions.

Anti-Money Laundering Regulations

In order to comply with regulations aimed at the prevention of money laundering in any applicable jurisdictions, the Administrator will require prospective investors to provide evidence to verify their identity. Accordingly, the Trustee, the Manager and the Administrator reserve the right to request such information as they consider necessary to verify the identity of a prospective investor. The Administrator may refuse to accept any subscription application if a prospective investor delays in producing or fails to produce any information required by the Administrator for the purpose of verification and, in that event, any funds received will be returned without interest to the account from which the moneys were originally debited. The Administrator may also refuse to process any repurchase request if a Unitholder submitting Units for repurchase delays in producing or fails to produce any information required by the Administrator. The Manager, Trustee or the Administrator may decline to repurchase or suspend the repurchase of Units of a Unitholder if any of the representations, warranties or covenants made by such Unitholder to the Manager, Trustee or Administrator ceases to be true or if the Manager, Trustee or Administrator no longer reasonably believes that the Manager or Administrator has satisfactory evidence as to their truth, notwithstanding any other agreement to the contrary.

If any person resident in the Cayman Islands knows or suspects that another person is engaged in money laundering and the information for that knowledge or suspicion

came to his attention in the course of his trade, profession, business or employment he is required to report such belief or suspicion to the relevant authorities pursuant to the Proceeds of Criminal Conduct Law (2004 Revision) of the Cayman Islands, and such report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.

GENERAL

Meetings

The Trustee or the Manager may convene a meeting of Unitholders at any time. The Trustee must convene such a meeting if requested to do so by the holders of not less than 50% in aggregate of the Units in issue. Notice of every meeting must be sent by mail to Unitholders at least 14 calendar days prior to the date of the meeting.

The requirement as to attendance, quorum and majorities at all meetings of Unitholders and voting rights of Unitholders are those laid down in the Trust Deed. Subject to any rights or restrictions attached to any Units, on a poll every Unitholder shall have one vote for every Unit of which he is the holder provided that in any meeting which includes holders of different series of Units, on a poll the voting rights attributable to each Unit shall be based on the Net Asset Value per Unit (calculated as of the record date (but if such record date is not a Valuation Date, the Valuation Date immediately preceding the record date)) and not on the basis of one Unit, one vote.

Fiscal and Year-End Reports

The Fiscal Year of the Fund shall end each year on the last day of October. Audited annual reports and unaudited half-yearly reports will be mailed to Unitholders within four months after the end of the fiscal year and within two months from the end of the half- yearly period (ending on the last day of April in each year), respectively, and will be made available for inspection and may be obtained from the Manager. The first audited report will be dated as of 31st October 2005. The material contracts listed below together with a copy of the Trust Deed are also available for inspection at the business address of the Manager.

Material Contracts

The following contracts, not being contracts entered into in the ordinary course of business, have been entered into and are or may be material and may be inspected upon reasonable written notice during normal business hours at the business office of the Manager: (1) The Trust Deed; (2) The latest annual and semi-annual reports of the Fund (if issued); (3) The Distribution Agreement between the Distributor and the Manager dated 12th May 2005; and

(4) The Agent Company Agreement between Nikko Cordial Securities Inc. and the Manager dated 12th May 2005.

Publication of net asset value per Unit

Except where the calculation of the net asset value of the Fund has been suspended, in the circumstances described under the heading "Repurchase" the net asset value per Unit will be published on each Business Day, and will be available at the business office of the Manager and the Agent Company in Japan.

Termination

The Fund shall be terminated on the happening of the first to occur of any of the following events: (1) If it becomes illegal or, in the reasonable opinion of the Trustee or the Manager, impractical or inadvisable to continue the Fund or to remove the Fund to another jurisdiction. (2) If the net asset value of the Fund falls below YEN 3 billion or such other amount as the Manager or the Trustee may determine from time to time. (3) If the Unitholders by Extraordinary Unitholders Resolution shall so determine. (4) Upon the termination of the period which shall commence on the date of the Trust Deed and terminate one hundred and fifty years after the date thereof. (5) If the Trustee gives written notice of its intention to retire, or if the Trustee is placed in compulsory or voluntary liquidation, and the Manager is unable to appoint or procure the appointment of another corporation ready to accept the office of trustee as a replacement for the Trustee within 90 days after the giving of such notice or placement in liquidation. (6) If the Manager gives written notice of its intention to retire, or if the Manager is placed in compulsory or voluntary liquidation, and the Trustee is unable to appoint or procure the appointment of another corporation ready to accept the office of manager as a replacement for the Manager within ninety days after the giving of such notice or placement in liquidation. (7) If the Trustee in its absolute discretion so determines.

If the Fund shall be terminated, the Trustee will give notice of such termination to all Unitholders.

After termination of the Fund, the Trustee shall procure the sale of the assets of the Fund and shall within a reasonable period after termination distribute to the Unitholders, pro rata, to the number of Units of each class held by them all net cash proceeds derived from the realization of the assets of the Fund attributable to such class. The Trustee may deduct any expenses it incurs in relation to the termination of the Fund.

Amendment of the Trust Deed

The Manager and the Trustee shall be entitled by supplemental deed to amend the provisions of the Trust Deed in such manner and to such extent as they consider expedient for any purpose other than one which would cause the Fund to cease to be a Unit Trust; provided that unless the Trustee certifies in writing that in its opinion such amendment does not materially prejudice the interests of the Unitholders and does not operate to release the Manager or the Trustee from any responsibility to the Unitholders, the sanction of an extraordinary resolution of a meeting of Unitholders shall be required and provided further no amendment shall impose upon any Unitholder any obligation to make any further payment in respect of his or accept any liability in respect thereof.

Amendment of the material matters prescribed in the Trust Deed shall be published or notified to the Unitholders.

Other Classes and Series of Units

The Trustee at the direction of the Manager shall have the power to designate and issue Units from time to time by reference to a separate series and determine the manner in which Units of any series differ from Units of any other series, including without limitation the manner in which (a) Units of any series shall participate in the assets comprised within the Trust Fund and liabilities properly payable from the Trust Fund and the net asset value of each such series shall be calculated; (b) fees (including without limitation management fees, performance fees and repurchase fees) payable to any service provider appointed by the Trustee or the Manager may be levied or charged against the holders of Units of any series; (c) the costs of, and any profits and/or losses arising from, any currency hedging may be levied or charged against the holders of Units of any series; and (d) any other assets or liabilities of or incurred in relation to the Fund shall be attributed to or borne by any series of Units.

Restrictions on Transfer

Every Unitholder may, subject to the provisions of the Trust Deed, transfer any Unit held by it by an instrument in writing in such form as the Administrator may from time to time approve in its absolute discretion, provided that the transferee shall first supply such information as may be required by the Administrator in order to comply with any statutory provision or governmental or other requirement or regulation of any relevant or applicable jurisdiction or policy of the Administrator for the time being in force or otherwise as may be required by the Administrator and provided also that the Trustee or Administrator shall first give its prior written consent to such transfer. Further the transferee will be required to represent to the Trustee in writing that the transfer of Units is (i) to an Eligible Investor and (ii) that the transferee is acquiring the Units for its own account and (iii) as to such other matters as the Trustee may require in its absolute discretion.

APPENDIX I