ADI ALTERNATIVE INVESTMENTS

KALLISTA ARBITRAGE STRATEGIES

Multistrategy Global - Opportunistic

IN V E S T M E N T PR O C E S S
Building on the skills and acquired experience, and at the request of investors, ADI naturally began to develop, from 2001 its multistrategy management line, with an allocation process based on different risk profiles. Having been initially invested in our own range of funds, we decided in second semester 2004 to develop the Multistrategy management process, moving from a fund of funds approach to a entirely discretionary, direct investment approach. This transition resulted in our off-shore fund (Kallista Arbitrage Strategies) in October 2004, and was further developed with the inception of the ARIA EL fund in April 2005 and our Cash Plus fund on 1st July 2005. The philosophy of ADIs Multistrategy funds is to achieve absolute performance while effectively controlling risk, by: A dual approach Top down and Bottom up based on: our medium/long-term market views (macro/directional), appropriate investment choices for arbitrage and relative value strategies, A diversified portfolio in terms of risk allocation, reflecting shared convictions on motivated management bets, Direct investments carried out for all investment strategies developed at ADI, based on various markets, techniques and instruments, Rigorous monitoring and control of risk: Pre-defined investment rules and risk levels by position, Daily control of risk allowance use (VaR calculation). ADIs Multistrategy investment process is implemented on a continuous and interactive basis between all areas of portfolio management and research at ADI, with the Investment Committee, morning meetings and internal team meetings being of central importance. It consists of four main stages: 1. Generation of investment ideas and investment themes Dual approach Top down and Bottom up 2. Investment style selection Medium or long-term Directional Short-term Arbitrage and Relative Value 3. Construction and active management of the portfolio Entirely discretionary and opportunistic portfolio allocation Optimization of each position in terms of risk/return Risk and position diversification according to investment objectives 4. Risk monitoring integrated into the investment process Definition of stop/alert levels by position Opportunistic management of market risks The investment themes may be implemented according to two styles: directional and arbitrage. Certain themes can, moreover, involve both a directional and arbitrage position being taken, thereby exploiting the identified inefficiencies in the short and long term respectively.

Each investment style may be described and implemented as follows: ARBITRAGE / RELATIVE VALUE Involves capturing a price spread between two securities, wherever such spread stems from a market anomaly or inefficiency. Capital Structure Arbitrage Credit Arbitrage Credit/volatility Arbitrage Merger Arbitrage Equity Relative value Volatility Arbitrage Macro Relative value DIRECTIONAL Involves taking advantage of opportunities detected during value analysis of instruments and expectations relative to the macro, microeconomic or technical environments. Commodities Credit Equities and stock indices FOREX Interest rates Volatiliy The strategies are implemented using several categories of instruments, principally in the following geographical regions: Europe North America Latin America Asia The implementation of investment strategies rely on the trading of financial instruments listed on a regulated market (other than over-the-counter (OTC) financial futures, involving a contract with a market maker) and on the underlying securities of temporary purchase/sale contracts, with a required listing on one of regulated markets: Standard instruments (other than derivatives) Stocks and other equity-related securities Bonds and other debt securities Shares or stocks in a mutual fund (max 10% of net assets) Certificates of deposit or commercial paper. Derivative instruments traded OTC or listed on organized markets CFD (Contract For Difference), CDS (Credit Default Swap) Asset Swap Total Return Swap Variance Swap Acquisition and temporary sale of stocks or repurchase/ reverse repurchase agreements

RI S K M ANAGEMENT
In ADI, the Risk Management department comprises 5 professionals managed by Gilles B ouffette and is independent from the trading and research teams. The head of the Risk Management department reports directly to ADIs Executive Board. The risk management policies are jointly set up by: Erich Bonnet, CEO and co-Chief Investment Officer Marie-Laure Lavenir, co-Chief Investment Officer Christophe Lepitre, Chief Operating Officer Gilles Bouffette, Head of Risk Management ADIs Risk Management aims at identifying every risk related to a specific investment process and at building the appropriate risk monitoring tools. The risk management covers all types of risk on derivatives and markets: Market risks:

Definition and evolution of risk control methods: VaR (RiskmetricsTM), sensitivity to risks of the underlying, stress scenario, Daily monitoring, reporting to portfolio managers Validation of internal models (detection of limits, backtest...) Model regularly audited

Specific risks

Operational risks

Counterparty risk and collateral management Valuation process for complex instruments (CDS, Variance swaps, First-to-Default swaps, etc) Liquidity risks (investment limits and internal rules monitored) Discussions about margin rules and use of leverage

Relationships with prime brokers risk management groups

The risk monitoring on Multistrategy process is based on the calculation of a Value-at-Risk (VaR) taking into consideration all the instruments and risk factors found in the different strategies. The VaR calculated is a historical simulation with a 99% confidence interval and a 1 -day holding period. Risk measurements are consolidated in each strategy (directly or through ADI funds) and, overall, within the multistrategy funds. The Risk Management team carries out, for the Multistrategy management, a detailed reporting, during the weekly Risk Committee, providing the following information: Total VaR and individual VaR by portfolio Stress test analysis Risk comments Performance allocation Portfolio managers may then be led to review the investment theme and reconsider the appropriateness of maintaining a strategy or position.

FIRM B ACKGROUND
Since 1997, ADI has developed a now widely-acknowledged expertise in convertible bond arbitrage and more generally, in many arbitrage and relative value strategies. ADI then proceeded to diversify its specialist skills to various strategies found in alternative portfolio management. ADI now offers 3 complementary investment spaces, covering most alternative strategies and 1 space dedicated to multistrategy: CREDIT AND VOLATILITY 1997 Convertible bonds arbitrage 2002 Volatility arbitrage 2003 Credit arbitrage EQUITY 2000 Merger arbitrage 2004 Equity quantitative arbitrage 2005 Long Short european equities 2005 Event Driven INTEREST RATES 1999 Euro zone and USA High Yield investment 2005 Euro Investment Grade Fixed Income MULTISTRATEGY 2001 Multistrategy (funds of funds approach) 2004 Multistrategy (direct investment approach)

PRINCIPALS
KEY PEOPLE Erich Bonnet Erich Bonnet is Chief Executive Officer and Chief Investment Officer of ADI. He founded ADI with Christophe Bourret in 1998. Prior to founding ADI, Erich was Head of the Interest Rate Options group at Banque Indosuez, before launching Transoptions Finance (1989, Crdit Agricole Group) where he was Managing Director and Partner. He developed the company to become a leading institution in the market making of fixed income options on the MATIF (Paris), LIFFE (London) and MEFF (Madrid). In 1991, he launched Transoptions Gestion, specialising in convertible bond arbitrage funds, futures funds and in structured products with innovative capital-guaranteed products, distributed mainly by Crdit Agricole. In 1996, he joined Aurel as Executive Director and Partner. He was in charge of derivatives activity and the market making of convertible bonds. Erich is a graduate of the Ecole Suprieure des Sciences Economiques et Commerciales (ESSEC)

Christophe Bourret Christophe Bourret is Deputy Chief Executive Officer and member of the Executive Board. He founded ADI with Erich Bonnet in 1998. Christophe began his career as a sales engineer at FININFO (French leader in the distribution of financial data, 1989), before becoming the Commercial Director of Dcisions Finances SA, subsidiary of the FININFO group. In 1993, he joined OFIVALMO, a financial institution o wned by the main French mutual insurance companies (MAAF, MAIF, MATMUT, MACIF) as Deputy Managing Director, where he was responsible for distribution, marketing and communication. Christophe graduated from the Ecole Suprieure de Gestion (ESG). Christophe Lepitre Christophe Lepitre is Deputy Chief Executive Officer and member of the Executive Board. Christophe joined ADI in October 2001 as head of the volatility arbitrage strategy, before becoming, in March 2004, Chief Operating Officer. He began his career at Banque Indosuez in 1988 as an option trader in Erich Bonnets team. He then became Associate Director of Transoptions Finance. He created the London branch specialised in trading futures and options on the LIFFE and he managed the company from 1992 to 1996. He then joined Aurel-Leven, an independent French securities stockbroker where he created (in 1996) and managed a team of market makers on European indices and stock options. He has 14 years experience in trading OTC and listed equity, index and interest rate options. Christophe graduated from the Ecole Polytechnique and the Ecole Nationale des Ponts et Chausses (economics and management). Alain Reinhold Alain Reinhold is Senior Vice President and member of the Executive Board Alain joined ADI in November 1999. He gained his experience at BNP where he spent fifteen years at the head office and in several branches. Alain was Company Secretary of Banque Natiotrsorerie, a subsidiary specialising in proprietary trading on capital markets, before he joined the Capital Market Department of Banque de Gestion Prive (Crdit Agricole Group). He held the position of Head of Internal Audit, and launched in 1992 the GIE Transboard - a partnership for administration and risk management between Banque de Gestion Prive and its subsidiaries, Transoptions (market making on options) and Transbourse (Stockbroker) - where he was Chairman and Chief Operating Officer. During this period, Alain was a member of the Asset and Liabilities Management Committee. In 1994, he was posted as Managing Director of Euro Pacific Advisors Limited, the Asian asset management branch of Banque de Gestion Prive in Hong Kong, where he developed the asset management methodology, the range of products and the client base by initiating a joint-venture in Taiwan (AGRI-AM) of which he was a Director and Vice Chairman. He has obtained when required several professional qualifications in Paris and in Hong Kong. He lectures on risk management and provides a full course at the University of Paris and at the University of Lyon. He is a regular speaker in seminars about risk management and asset management in Europe and Asia. Alain is a graduate of the Ecole Suprieure de Commerce de Paris.

INVESTMENT MANAGEMENT TEAM 4 experienced investment managers dedicated to multistratgie:

An experienced team with both specific and complementary profiles A structure favouring an analysis and collective decision-making process A strong interaction between the individual portfolio management and research teams Erich Bonnet Chief Executive and Head of Investment Co-founder of ADI with Christophe Bourret, in 1998 Head of Multistrategy team 12 years experience in market finance (market-making on equity and interest rate derivatives, structuring, proprietary trading) 8 years experience in alternative management ESSEC Yann Couvet Senior portfolio manager in the Multistrategy team 4 years experience at Socit Gnrales General Audit Department 3 years experience in Risk Management 1 year in Multistrategy management investment at ADI Ecole Polytechnique, ENSAE, Actuary

Cyril Ndlec, CFA Senior portfolio manager in Multistrategy team 2 years experience in quantitative analysis at FP Consult (emerging markets) 4 years experience in quantitative research at HSBC AM 2 years in Multistrategy Management at ADI DEA (Masters) in Mathematics applied to Financial markets (Paris -Dauphine/ENSAE) Cyril Castelli Senior portfolio manager in the Multistrategy team 5 years experience in options on futures markets (interest rates and indices) at Finacor 2 years experience in structured and derivative products on the FOREX and precious metals at AIG (American International Group) 4 years of management and analysis in the Global Macro team, identifying macro trends and carrying out technical analysis at ADI ISG (Paris)

G E N E R A L FU N D INFORMATION
Contact Information
Name: Address: Main Phone: Standard : Fax: E-Mail: Vronique Cherret 24/32 rue Jean Goujon F-75008 Paris - France +33 (0) 1 56 88 85 12 +33 (0) 1 56 88 84 00 +33 (0) 1 56 88 85 05 vcherret@adi-gestion.com 3.49 billion EUR as of 31 December 2005 68.3 millions EUR as of 31 December 2005 30 June 1997 st (1) 1 May 2003 Master/Feeder structure with EUR and USD denominated share classes. Master is in USD Global Cayman Islands 500,000 EUR or 500,000 USD Monthly All redemption requests must be forwarded to the administrator no later than 2:00pm (Dublin time) on the 30th business day prior to the NAV calculation update at which the redemption would be carried out. 1% max. if units held less than 12 months. None if units held more than 12 months Monthly None 1.5% net of assets 20% of the return with equalization factors None Yes CITCO Fund Services Limited (Dublin) Tel : +353 1 636 7300 Fax : +353 1 636 7301 Irish Stock Exchange (Dublin)

Fund Information
Firm AUM (as of date): Fund AUM (as of date): Firm Inception Date: Fund Launch Date: Valuation Currency: Geographic Focus: Domicile: Minimum Investment: Redemptions:

Redemption Notice:

Redemption Penalty Additions: Lock Up: Management Fee: Performance Fee: Hurdle Rate: High Water Mark: Fund Administrator (Onshore/Offshore): Listed:

Auditor(s): Prime Broker(s): Legal Counsel: Regulated (If applicable):

(1)

Ernst & Young (Dublin) Credit Suisse First Boston (London) Bear Stearns International Limited (London) Simmons & Simmons (London) Maples and Calder (Cayman Islands) No

KALLISTA FUND MANAGMENT has delegated portfolio management for this fund to ADI. In accordance with applicable regulatory measures and investment conditions referred to in its prospectus, any mention or reference to this type of investment does not in any way constitute an invitation to purchase shares nor an offer for sale, in any country in which commercialization of this fund has not been previously authorized.

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