First balanced fund introduced Industrial Power Securities Created

First balanced fund introduced • Industrial & Power Securities (Created by Walter L. Morgan) • Renamed in 1935 as The Wellington Fund First mutual funds Introduced in the United States • Massachusetts Investors Trust • State Street Investment Trust 1900 1924 Market Crash • Leads to Great Depression 1928 1929 First no-load Fund introduced by Scudder, Stevens & Clark Mutual fund time line: 1924 -1970 (Figure 3 -1) 共同基金发展历程1924 -1970 1940 NYSE begins The Monthly Investment Plan • Introduces dollar-cost averaging 1953 Investment Company Act of 1940 defines three types of investment companies: • Face Amount certificate Company • Unit Investment Trust • Management Company 1960 1968 1970 Mutual Fund “Go-Go Years” • “Star” portfolio managers promoted to the public • First significant investment in funds by public

Mutual fund time line: 1970 -1980. ( Figure 3 -2) 共同基金发展历程1970 -1980 First Money market mutual fund created Fidelity launches first money market mutual fund with check writing privileges. First index fund introduced • Vanguard Index Trust-tracks S&P 500 12 b-1 fees approved by the SEC 1970 -----1972 ----1973……. . 1974 ------1975 ------1976 ------1979 ------1980 Two-year severe bear market, lasts to end of 1974 • Dow loses nearly 50% of its value • Investors flee stocks and funds. Securities Act Amendments of 1975 • Deregulation of fixed commissions Tax-exempt money market funds introduced

Mutual fund time line: 1980 -today (Figure 3 -3) 共同基金发展历程1980 -2000 The longest bull market in history begins • Banks offer money market checking accounts to compete with money market mutual funds October 19 th Market Crash Dramatic increase in the number of mutual funds and cash inflow • Number of funds exceed the number of stocks listed in exchanges • Americans invest more in mutual funds than in their homes SEC approves the use of a two-page summary prospectus that mutual funds can use to sell shares 1980 ----1981 -----1982 ----1983 ----1987 ----1988 -------1990…… 1992……. 1995 ------1998 ------->2000 Tax Act of 1981 creates Individual Retirement Accounts (IRAs) Mutual funds marketed to IRA holders, transforming them from savers to investors Dual pricing introduced by Merrill Lynch • Different classes of shares (A&B) in the same fund Charles Schwab launches One. Source, its mutual funds supermarket, which enables investors to buy the no-load funds of many different companies and receive one consolidated statement Magellan fund expected to exceed $100 billion in total net assets-larger than all stock funds in 1984, and larger than the entire industry in 1979

Mutual Fund Families 共同基金家族 Return 100 Sector and Regional Growth 80 New Concept Growth 60 Growth and Income 40 Income 20 Money Market 0 10 20 30 40 50 Risk

Structure of a typical mutual fund and the basic responsibilities of the various parties. 共同基金的组织结构以及相关当事人的职责 SPONSOR • Creates the fund and registers it with the SEC • Files required reports with the SEC Board of Directors • Oversees the fund’s management • Acts as watchdog for shareholder interests • Approves annual contract for investment adviser Advises and directs Portfolio Manager investment activities Investment Adviser Investment Manager Fund Manager Hires Management Company MILLENNIUM GROWTH FUND Sub-adviser CUSTODIAN BANK Investment Portfolio • May be a division of the sponsor or an outside firm May advise and direct investment activities Stocks ---------------Bonds ----------------Cash • Safeguards the fund’s assets • Acts as a paying agent and/or transfer agent • Calculates the fund’s NAV daily • Has expertise in other types of investments (e. g. , foreign securities) or has a different investment style

Performance Statistics 共同基金业绩和史普 500的比较 Year Equally Weighted Equity Allocation 1972 26. 75 1973 7. 65 1974 -7. 63 1975 19. 09 1976 15. 81 1977 11. 26 1978 20. 70 1979 23. 57 1980 23. 08 1981 -5. 74 1982 13. 43 1983 23. 50 1984 9. 03 1985 29. 50 1986 27. 40 1987 12. 57 1988 21. 71 1989 22. 35 1990 -3. 16 1991 18. 15 1992 3. 71 1993 12. 56 1994 4. 46 1995 21. 15 1996 24. 65 1997 10. 40 1998 -1. 08 Simple average return 14. 25 Standard deviation 10. 55 Compound annual return 13. 77 Future Value of $1 $32. 53 Greater Equity Diversification 25. 53 -3. 20 -15. 79 26. 87 17. 65 8. 55 18. 79 19. 97 25. 79 -4. 03 13. 50 23. 85 8. 81 34. 26 31. 94 11. 86 21. 15 21. 94 -7. 31 21. 39 2. 69 15. 82 4. 19 23. 36 21. 71 15. 46 9. 30 14. 59 12. 28 13. 92 $33. 74 Moderate Equity Diversification 24. 98 -8. 25 -19. 91 31. 27 17. 98 5. 42 17. 09 17. 84 27. 59 -3. 79 14. 05 23. 62 8. 05 36. 47 32. 82 11. 45 20. 76 23. 18 -8. 27 2. 3. 11 2. 37 16. 39 3. 83 25. 93 20. 21 19. 11 16. 29 14. 80 13. 62 13. 96 $34. 05 Limited Equity Diversification 22. 67 -10. 78 -22. 47 33. 57 20. 25 0. 62 13. 07 18. 06 29. 44 -4. 19 16. 86 23. 21 7. 38 34. 85 27. 39 9. 06 19. 24 26. 33 -6. 37 25. 98 4. 39 13. 98 2. 87 30. 31 21. 29 24. 57 21. 01 14. 91 14. 40 13. 96 $34. 07 S&P 500 18. 98 -14. 66 -26. 47 37. 20 23. 84 -7. 18 6. 56 18. 44 32. 42 -4. 91 21. 41 22. 51 6. 27 32. 16 18. 47 5. 23 16. 81 31. 49 -3. 17 30. 55 7. 67 9. 99 1. 31 37. 43 23. 07 33. 36 28. 58 15. 09 16. 69 13. 82 $32. 92

OFFSHORE FUND 离岸避险基金的组织和管理结构 Investment Manager 20% Incentive 1% Management Services Investors Shares Fund, Limited Partnership Offshore Services Administrator Fee Assets Custodian Fee

DOMESTIC FUND 境内基金的组织和管理结构 General Partner (Portfolio Manager) 20% Incentive Carried Interests Investors Fund, Limited Partnership Limited Partner Interests Assets Custodian Services 1% Fee Management Company

FUND OF FUNDS 基金中的基金 Investor Hedge Fund of Funds Investor Hedge Fund

Hedge Fund Managers among Financial World’s Top 100 Wall Street Earners 世界前100名金融业最高收入者中的避险基金经理（1991年） Minimum 1991 Rank Earnings($M) Company Manager George Soros Julian Robertson Paul Tudor Jones Bruce Kovner Michael Steinhardt John Henry Philip Hempelman Stanley Druckenmiller George Weiss Louis Bacon Levy Jack Nash Malcolm Wiener Martin Zweig Douglas Floren Joseph Di. Menna Larry Hite Peter Matthews Mark Strome Mark Dickstein Glenn Dushay John Lattanzio Joseph Mc. Nay Monroe Trout Patrick Duff John Griffin Stephen Mandel Michael Delman J. O. Patterson 1 2 3 4 5 6 12 13 14 17 20 21 23 24 35 40 47 48 52 58 60 61 63 64 68 87 89 92 96 98 117 65 60 60 55 50 30 30 25 20 20 20 14 12 10 10 8 7 to 9 7 7 7 5 to 6 5 5 Soros Fund Management Tiger Management Tudor Investment Corp Caxton Corp. Steinhardt Partners John W. Henry & Co. Ardsley Advisory Partners Soros Fund Management George Weiss Associates Moore Capital Management Odyssey Partners Millburn Zweig-Di. Menna Associates Ardsley Advisory Partners Zweig-Di. Menna Associates Mint Investment Management Kayne Anderson] Dickstein Partners Ardsley Advisory Partners West Highland Capital Steihardt Partners Essex Investment Mgt. Trout Trading Tiger Management Mint Investment Management Falcom Partners

Hedge Fund Managers among Financial World’s Top 100 Wall Street Earners 世界前100名金融业最高收入者中的避险基金经理（1998年） 1998 Manager Steve Cohen Joseph Dimenna Jeffrey Vinik Louis Bacon Larry Bowman Martin Zweig Paul Tudor Jones Bruck Kovner Robert Raiff Brenda Earl Kenneth Lipper Lee Ainslie Richard Perry James Pallotta Mark Kingdon Rajaratnam Morris Mark Rank 5 7 11 13 19 21 23 27 28 32 33 36 42 48 50 54 59 Minimum Earnings($M) 200 150 120 103 70 70 60 50 50 45 45 40 34 30 28 25 20 Company SAC Capital Management Zweig-Di. Menna Associates Vinik Asset Management Moore Capital Management Bowman Capital Zweig-Di. Menna Associates Tudor Investment Corp. Caxton Corp. Centurion Investment Group Zweig-Di. Menna Associates Lipper & Co. Maverick Capital Perry Corp Tudor Investment Corp. Kingdon Capital Management Galleon Group Mark Asset Management

基金业绩：老虎基金和量子基金 Net Performance(%) Tiger Management 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Compound average annual return *Through first quarter. 56. 30 19. 40 42. 40 46. 70 20. 20 51. 400 16. 20 -1. 40 21. 60 49. 90 20. 50 45. 60 26. 90 64. 40 -9. 30 16. 00 38. 00 70. 00 -4. 00 -19. 00 -14. 00 24. 84 Net Performance(%) Quantum Fund NV 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000* Compound average annual return 29. 40 17. 50 20. 30 42. 20 8. 40 17. 50 27. 60 61. 90 31. 20 55. 10 59. 10 102. 60 22. 90 56. 90 24. 90 9. 40 122. 20 42. 10 14. 10 10. 10 31. 60 29. 60 53. 40 68. 60 63. 20 3. 90 39. 00 1. 50 17. 10 12. 40 35 -15. 50 32. 12

HEDGE FUND STRATEGY ASSETS/YEAR-END 1997 避险基金的管理方法及资产分布（1997） 11. 13. 12. 10. 9. 7. 8. 6. 4. 5. 3. 1. 2. 3. 4 5 6 7 8 9 10 11 12 13

HEDGE FUND SRATEGIES 避险基金的策略及其风险和收益 Return Sector(total) * Equity Hedge* Macro * Nonhedge * * Emerging Markets Distressed * * Event-Driven (total S&P 500 * 30% Annualized Geometric 25 Average 20 (%) 15 10 Equity Market* Merger Arbitrage Neutral *Fixed-income Arbitrage * * Convertible * T-Bills Arbitrage 5 0 0% 2 4 6 8 10 Annualized Standard Deviation(%) 12 14 Risk 16

Turning Point-Between $40 Million and $80 Million (I) Asset Size Distribution 业绩和资产规模：转折点在 4000万-8000万美圆I $1 Billion + 5% $100 M-$999 M 14% $50 M-$99 M 9% $50 M 72%

Turning Point-Between $40 Million and $80 Million (II) Performance versus Assets 业绩和资产规模：转折点在 4000万-8000万美圆II 70 60 50 40 30 20 10 0 Performance