Fraternity Fund

Fraternity Fund is a fund of hedge funds, which invests; in a variety of diversified hedge funds that are managed by world class Alternative Investment Managers including George Soros.

The Fraternity Fund is a "fund of fund" of hedge funds. The funds in our Portfolio include the Quantum Group of Funds (QGF) that are either directly or indirectly advised by George Soros or Soros Fund Management (SFM). For a period of 12 years From January 1990 to January 2001a the Fund (including its predecessor) was exclusively a fund of funds of the Quantum Group of Funds. Due to the restructuring at Soros Fund Management (SFM) and the proposed closing and recent merging of funds in the QGF, Fraternity Fund Management found it necessary to change our strategy at Fraternity Fund. The restructuring has changed the strategy of the fund to a multi-manager fund rather than just a "fund of funds" of the Quantum Group of Funds. (QGF). Our goal is to target average annual returns of 12% to18%.

Soros's flagship fund, the Quantum Fund (renamed Quantum Endowment) had an average annual return of over 30% for the 35 years (1969-2004) of its existence. The Fraternity Fund and its predecessor have had an average annual return of over 17.2% for the past 15 years to 31 December 2004. Past performance is no guarantee of future results. The Fund has been audited by KPMG (Curacao) since 1994.

Our strategy will be to only invest with successful hedge fund managers who are capable of making positive returns in either bull or bear markets. Our Portfolio will typically hold approximately 15 to 20 offshore hedge funds; with each fund in the Portfolio employing a strategy to maximize returns in bull markets and minimize returns in bear markets.

Amongst several criteria employed to make investment allocation, one of the more important for Fraternity Fund to make an investment into a particular fund is that the investment manager of the fund must have a significant portion of his personal wealth invested in his own fund. We at Fraternity Fund Management believe in it is essential that an investment manager have his own wealth invested in the same investments as his clients. Since the Investment Manager of Fraternity Fund has a significant portion of his personal wealth invested in Fraternity Fund, preservation of capital is also of the utmost importance. This also aligns his interest with other shareholders. The Investment Manager has been investing in hedge funds since 1990.

The primary objective of the Fund is to achieve growth (long-term capital appreciation) or above-average capital gains. The management of Fraternity Fund Ltd. believes that smaller institutional investors as well as smaller "sophisticated" investors should be able to easily invest in a broad portfolio of funds advised by George Soros one of the world's most successful investors and other successful hedge fund managers. Fraternity Fund was not only early in the fund of hedge fund business but Fraternity Fund was one of the first if not the first fund of hedge funds to allow the small investors to invest in hedge funds.

Fraternity Fund Ltd. (the Fund) is an open-end investment fund to enable sophisticated investors (other than "United States Persons") to participate in an internationally diversified portfolio of offshore hedge funds. The Fund is registered as a public mutual fund under the Mutual Funds Act, 1996 of the British Virgin Islands (as amended). Fraternity Fund Management Ltd organized the Fund.

Fraternity Fund Management Ltd. (FFM) is a limited liability corporation established under the laws of the British Virgin Islands in December 1993. FFM is licensed to provide management services to Fraternity Fund Ltd. under the Mutual Funds Act, 1996 of the British Virgin Islands (as amended).

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