Prosperity Russia Domestic Fund Limited : Notice of EGM

 
TIDMPRDF 
 
Notification of Extraordinary General Meeting 
18 November 2011 
Prosperity Russia Domestic Fund Limited ("PRDF" or the "Company") 
 
Continuation Vote 
Cancellation of Admission of the Ordinary Shares to Trading on AIM 
Migration from Guernsey to the Cayman Islands 
Adoption of New Memorandum and Articles of Association 
Conversion from a Closed-Ended to an Open-Ended Company 
Conversion of the Ordinary Shares into Series A Shares 
Creation of the Series B Shares 
Issue of New Information Memorandum 
Listing of the Series A Shares and the Series B Shares on the Irish Stock 
Exchange 
Registration as an Open-Ended Mutual Fund with CIMA 
and 
Notice of Extraordinary General Meeting 
 
Summary 
Prosperity Russia Domestic Fund Limited is coming to the stage of its investment 
programme where, in accordance with its AIM admission document, a continuation 
vote is required to decide on the future of the company. 
 
The  Board is today proposing and recommending to Shareholders a continuation of 
the  company,  but  with  a  revised  capital  structure intended to address the 
liquidity and discount issues set out further below in this announcement, by way 
of  migration and conversion to  an open-ended Cayman mutual  fund listed on the 
Irish  Stock Exchange,  and with  the creation  of a  new series  of shares, the 
series B shares, which will be available for subscription. 
 
Both the Board and Prosperity Capital Management Limited ("PCM"), the manager of 
the  Company, believe that there  is continued room for  expansion in the market 
despite recent volatility.  Through the Moscow-based team of analysts and sector 
specialists  of the Prosperity  Capital Management (RF)  Limited, the adviser to 
PCM,  PCM has  access to  in-depth research  on CIS  markets and  companies, all 
indicating  a continued increase  in consumer and  government spending in Russia 
and  other  CIS  countries.   PCM  firmly  believes  that  the  Company  is well 
positioned  to  benefit  from  growth  in  the  domestic  consumer  and  capital 
investment sectors in Russia and other CIS countries. 
 
The Board is therefore calling an Extraordinary General Meeting for 2.00 p.m. on 
Wednesday  14 December 2011, at  which there  will be  three possible options to 
vote  for.  Shareholders are urged to complete and return the Proxy Form as soon 
as  possible, and in any event by  no later than 2.00 p.m. on Monday 12 December 
2011, irrespective of whether or not they intend to be present at the EGM: 
 
1. Orderly Realisation (Resolution 1) 
 
This  is a special resolution which is required to be put to Shareholders, under 
the  company's AIM admission document, to commence an orderly realisation of the 
Company's  assets with a view  to winding up the  company (which would require a 
second special resolution) within twelve months of the resolution. 
 
The Board recommends that Shareholders vote against this resolution. 
 
2. Recommended Proposals (Resolutions 2 and 3) 
 
These  are special resolutions relating to the continuation of the operations of 
the  Company as  an open-ended  Cayman mutual  fund, listed  on the  Irish Stock 
Exchange. 
 
The Board recommends that Shareholders vote in favour of these two resolutions. 
 
3. Continuation with Three Year Vote (Resolution 4) 
 
This  is an ordinary resolution for the Company to continue in its current form, 
but  with an amendment that there will be a new continuation vote in three years 
(and every three years thereafter) instead of annually. 
 
The  Board recommends that Shareholders  vote in favour of  this resolution as a 
preferred  alternative to Resolution 1 and as  a fall-back position in the event 
that Resolutions 2 and 3 are not passed. 
 
 
 
The  definitions set out at  the end of this  announcement apply throughout this 
announcement unless the context otherwise requires. 
 
Introduction 
 
As  stated in the Admission Document, the Company is required to put to the vote 
of  Shareholders, by no later than the  fifth anniversary of the Admission Date, 
the  option of realising  the Company's investments  and winding up the Company. 
 Pursuant  to this requirement, the Company is today announcing its proposals to 
Shareholders that the Company (i) cancel the admission of the Ordinary Shares to 
trading  on AIM, (ii) migrate  from Guernsey to the  Cayman Islands, (iii) adopt 
the New Memorandum and Articles, (iv) convert the Company from a closed-ended to 
an  open-ended company, (v) convert and  re-designate the issued Ordinary Shares 
into Series A Shares, (vi) create a new series of ordinary shares in the capital 
of  the  Company  designated  as  the  Series  B  Shares,  (vii)  issue  the new 
Information  Memorandum, which contains the proposed  terms on which the Company 
would  operate as  an open-ended  mutual fund  under section  4(3) of the Mutual 
Funds  Law (Revised) of  the Cayman Islands,  and the terms  of the offer of the 
Series  B Shares, (viii) list the issued Series A Shares and the Series B Shares 
to be issued on the ISE and (ix) register the Company with CIMA as an open-ended 
mutual fund. 
 
The  Board has been concerned for some  time about the discount that has existed 
between  the NAV Per Share  and the traded Ordinary  Share price, which reflects 
the fact that the Company is closed-ended.  Therefore, on 15 September 2011, the 
Company  announced  its  intention  to  propose  to  Shareholders to convert the 
Company  from a  closed-ended to  an open-ended  company.  Such  conversion also 
reflects  the  increased  liquidity  of  the  Company's portfolio of securities. 
 Given  that the Cayman Islands offer an efficient and cost-effective regulatory 
structure  for the  Company to  operate as  an open-ended  company, the Board is 
proposing  that  the  Company  be  migrated  to, and registered as an open-ended 
mutual fund in, the Cayman Islands. 
 
As a result of the proposal to convert the Company to an open-ended company, the 
Shares,  as  shares  of  an  open-ended  investment  company, would no longer be 
eligible  for admission to trading on AIM.   Therefore, the Company is seeking a 
cancellation  of admission of the Ordinary Shares to trading on AIM as the first 
step  in  implementing  the  Proposals.   Since  some  Shareholders  may  not be 
permitted  to  hold  unlisted  securities,  the  Board  is  also proposing that, 
following  Migration and Conversion, the issued Series A Shares and the Series B 
Shares  to be issued be  listed on the Irish  Stock Exchange.  Following the ISE 
Admission,  the Company will seek registration as an open-ended mutual fund with 
CIMA. 
 
Shareholders should note the Expected Timetable of Events which appears later in 
this  announcement, which sets out the timing  of various actions in relation to 
the implementation of the Proposals. 
 
Shareholders have today been sent: 
 a. A  circular intended to provide Shareholders with details of the matters set 
    out in this announcement, together with a notice of the EGM ("Circular"); 
 b. a Proxy Form in respect of the notice of the EGM; 
 c. a  draft Information Memorandum, which contains  the proposed terms on which 
    the Company would operate as an open-ended mutual fund under section 4(3) of 
    the  Mutual Funds Law (Revised) of the  Cayman Islands, and the terms of the 
    offer of the Series B Shares; and 
 d. a  draft of the New Memorandum and Articles, to be adopted by the Company on 
    Migration. 
 
Background 
 
The   Company   is  a  closed-ended  authorised  collective  investment  company 
incorporated in Guernsey on 29 December 2006.  The Ordinary Shares were admitted 
to trading on AIM on 21 February 2007. 
 
The  Board continues to believe  that the Company is  well positioned to benefit 
from  investing in a portfolio of carefully selected investments in the domestic 
sectors  of Russia  and other  CIS countries  over the  longer term, in spite of 
recent  extreme volatility in the international  and Russian markets.  This view 
is  based, in particular, on  the Board's belief that  the domestic economies of 
Russia  and  other  CIS  countries  are  likely  to continue to offer attractive 
opportunities for growth, combined with generally low financial leverage, whilst 
substantially   benefitting   from  the  on-going  corporate  restructuring  and 
consolidation  process taking place within the region.  On this basis, the Board 
believes that the investment opportunity is attractively valued. 
 
Prosperity  Capital Management  Limited, the  Manager, also  believes there will 
continue  to  be  substantial  growth  in  the  domestic  consumer  and  capital 
investment  sectors in Russia and other  CIS countries, which will be determined 
by, inter alia, (a) the continued increase in the disposable income of consumers 
in  such  countries  and  (b)  further  increases  in  fixed  capital investment 
following decades of under-investment during the Soviet era across many sectors. 
 Furthermore,  it  is  the  Manager's  view  that  the  ongoing modernisation of 
businesses  and consolidation within industries and  sectors in Russia and other 
CIS  countries  are  key  drivers  of  productivity  growth,  which  could be an 
important  source of shareholder  gains.  Access to  both the Manager's in-depth 
internal research and its shareholder activism are cornerstones of the Company's 
strategy for pursuing its investment objective. 
 
The  audited Net Asset  Value and the  traded Ordinary Share  price increased by 
56.4 per  cent. and  65.7 per cent.,  respectively, in  the period beginning 31 
December  2009 and ending 31 December  2010.  The unaudited Net  Asset Value and 
the  traded Ordinary Share price decreased by 28.1 per cent. and 34.3 per cent., 
respectively,  in the  period beginning  31 December 2010 and ending 11 November 
2011, the  last NAV release prior to  publication of this document.  Such period 
was  one  in  which  CIS  and  international  markets  generally  were extremely 
volatile.   As  at  11 November  2011, the  Company  had net assets of US$248.50 
million and a market capitalisation of US$194.25 million. 
 
In  light of the matters set out above  and, given the long-term track record of 
the  Manager in Russia and  other CIS countries, both  the Board and the Manager 
believe that the Proposals present an opportunity to solve the issue relating to 
the  Ordinary Shares trading at  a large discount to  NAV Per Share, referred to 
above,  and  to  provide  Shareholders  with  more liquidity in respect of their 
investment. 
 
The  Board has considered a  number of options available  to the Company, taking 
into account, inter alia, the following matters: 
 
  * the  discount that  has existed  between the  NAV Per  Share and  the traded 
    Ordinary  Share price  on AIM,  and the  preference for some Shareholders to 
    value their holdings at net asset value rather than marking them to market; 
  * the relatively low liquidity of the Ordinary Shares when compared to the 
    liquidity of the Company's underlying investments; 
  * the  cost-effective  structure  available  for  operating  as  an open-ended 
    company in the Cayman Islands.  If the Company wished to convert to an open- 
    ended  company in  Guernsey, its  current jurisdiction  of establishment, it 
    would  be required to appoint a Guernsey-based custodian, in addition to the 
    Global  Custodian  and  local  Russian  custodian  currently providing their 
    services  to the Company, which would  add to the Company's operating costs. 
     There  are no equivalent requirements for  a Cayman open-ended mutual fund; 
    and 
  * the  value to  some investors,  who may  not be  permitted to  hold unlisted 
    securities,  of  seeking  a  listing  for  the  Shares  on  the  Irish Stock 
    Exchange. 
 
Accordingly,  the Board, having taken advice from KPMG Corporate Finance and the 
Manager,  is recommending that Shareholders  approve resolutions to continue the 
operations of the Company pursuant to the Proposals. 
 
The Resolutions Being Proposed at the EGM 
 
There  are three special resolutions and  one ordinary resolution to be proposed 
at the EGM, dealing with three separate options. 
 
1.        Orderly Realisation (Resolution 1 - Special Resolution) 
 
The Board recommends Shareholders voteAGAINST Resolution 1. 
 
The  Directors  are  required  to  put  forward  Resolution 1 to comply with the 
requirements in the Admission Document. 
 
This  resolution, if  adopted, would  result in  the commencement  of an orderly 
realisation  of the  Company's assets  and, within  12 months of this resolution 
being  adopted (or such other  period as the Directors  agree), a second special 
resolution would be proposed to wind up the Company. 
 
Resolution  1 will require not less than 75 per  cent. of the votes cast to vote 
in favour, in order for it to be passed. 
 
For  the reasons given in this announcement and the Circular, the Board believes 
that  a realisation  of the  Company's assets  and, following  the passing  of a 
subsequent  special resolution, voluntarily winding up the Company, would not be 
in the best interests of Shareholders at this time. 
 
2.        Recommended Proposals (Resolutions 2 and 3 - Special Resolutions) 
 
The  Board recommends that  Shareholders voteIN FAVOUR  of BOTH Resolution 2 and 
Resolution 3. 
 
In  order to implement the Proposals, two special resolutions (Resolutions 2 and 
3, set  out  below)  will  need  to  be  passed.   The  specific  terms of these 
resolutions  are set out in the notice for  the EGM at the end of this document. 
 A summary of the contents of these resolutions is set out below: 
 
 a. in  Resolution 2, as a preliminary step  required by Cayman Islands law, the 
    Company's articles of incorporation must be amended to permit a migration of 
    the Company to the Cayman Islands; 
 
 b. in  Resolution  3, which  is  conditional  on Resolution 2 being passed (and 
    Resolution  1 not being passed), approval is  being sought for the following 
    steps forming part of the Proposals: 
 
 i. cancellation of the admission to trading of the Ordinary Shares on AIM prior 
    to Migration, to be effective on such date as the Directors decide (which is 
    anticipated to be at 7.00 a.m. GMT on Friday 17 February 2012); 
 
 ii. removal  of the Company from the Register of Companies in Guernsey pursuant 
     to  Part  VII  of  the  Companies  (Guernsey)  Law,  2008, as  amended, and 
     registration  of the Company  as an exempted  company on the Cayman Islands 
     register of companies, at the Effective Time (which is anticipated to be on 
     Friday 17 February 2012), subject to satisfying the statutory solvency test 
     and  obtaining requisite consents and approvals (other than the approval of 
     the Guernsey Registrar of Companies); 
 
 iii. adoption  of the New  Memorandum and Articles,  to become effective at the 
      Effective Time; 
 
 iv. conversion  of the Company  to a Cayman  Islands open-ended mutual fund, to 
     become effective at the Effective Time; 
 
 v. conversion  and re-designation of  the Ordinary Shares  into Series A Shares 
    (with  the  rights  and  obligations  set  out  in  the  New  Memorandum and 
    Articles), to become effective at the Effective Time; 
 
 vi. creation  of a new series of ordinary shares in the capital of the Company, 
     to  be designated the Series B Shares  (with the rights and obligations set 
     out  in  the  New  Memorandum  and  Articles),  to  become effective at the 
     Effective Time; 
 
 vii. adoption  and issuance of the new Information Memorandum (substantially in 
      the  form  of  the  draft  circulated  to Shareholders and subject to such 
      amendment  as any one or more  Directors may approve), to become effective 
      on   Monday   20 February   2012 (or  as  the  Directors  shall  otherwise 
      determine); 
 
 viii. application  for the issued Series A Shares and the Series B Shares to be 
       issued to be admitted to the Official List of, and to trading on the Main 
       Securities  Market  of,  the  Irish  Stock  Exchange  (with ISE Admission 
       anticipated on Monday 20 February 2012); 
 
 ix. application  for registration of the Company  as an open-ended mutual fund, 
     under  section 4(3)(a)(ii) of the Mutual Funds  Law (Revised) of the Cayman 
     Islands   (which   is   anticipated   on   Monday  20 February  2012, after 
     confirmation of the ISE Admission); and 
 
 x. authorisation  of the  Directors to  do such  other acts  and things  and to 
    execute  such  documents,  on  behalf  of  the  Company, deemed necessary or 
    desirable by any one or more Directors in order to implement the Proposals. 
 
Resolutions  2 and 3 will each require  not less than 75 per  cent. of the votes 
cast to vote in favour, in order for each of them to be passed. 
 
Resolution  2 must  be  passed  to  satisfy  Cayman Islands law requirements for 
Migration.   The adoption of Resolution 3, referred  to above, is conditional on 
the adoption of Resolution 2, in order to implement the Proposals. 
 
If  Resolutions 2 and 3 are passed,  the steps required to  be taken in order to 
implement  the Proposals are set  out below, in the  section headed "Other Steps 
Required if the Proposals Are Adopted". 
 
3.        Continuation with Three Year Vote (Resolution 4 - Ordinary Resolution) 
 
The   Board  recommends  that  Shareholders  voteIN  FAVOUR  of  Resolution  4. 
 Resolution 4 is conditional on Resolutions 1, 2 and 3 not being passed. 
 
Resolution 4, which is summarised below, is being proposed, in the event that: 
 
  * Resolution  1, for  the  commencement  of  an  orderly  realisation  of  the 
    Company's assets, is not passed 
 
  * Resolution 3, for the adoption of the Proposals, is also not passed. 
 
The  Board  is  recommending  that  you  vote  in  favour of Resolution 4 as the 
preferred  alternative to Resolution 1 in the event that Resolutions 2 and 3 are 
not passed and the Proposals are not adopted. 
 
In  proposing Resolution 4, the Board is  seeking approval from Shareholders for 
the  Company  to  continue  its  operations  pursuant to its existing structure, 
investment  objective and arrangements,  and also proposing  that a continuation 
vote  be held going forward every three years, instead of annually, as currently 
contemplated  in the Admission Document.  If adopted, this proposed amendment to 
the  provisions in the Admission Document  would mean that the next continuation 
vote would be held on the three-year anniversary of the date of the EGM and then 
every  three years after the last general meeting at which the continuation vote 
was considered. 
 
If the Company continues its operations in its current form, the Board considers 
that  the  requirement  to  hold  an  annual  continuation  vote  would  provide 
uncertainty  to Shareholders, could directly impact the investment management of 
the  Company and, ultimately, could have a negative effect on the performance of 
the  Company.  The Board, having taken advice from the Manager, considers that a 
continuation  vote every three years would allow Shareholders the flexibility to 
realise their investment should they wish to do so, while putting the Company in 
a better position to benefit from the Manager's investment management expertise, 
so as to seek to build up capital gains. 
 
Resolution  4 will require a simple majority  (being 50 per cent. plus one vote) 
of  the votes  cast to  vote in  favour, in  order for  it to  be passed.  It is 
conditional  on  Resolutions  1 and  3 not  being  passed.   Therefore,  even if 
Shareholders vote in favour of Resolution 4 with the requisite majority, it will 
not be passed if either of Resolutions 1 or 3 are passed. 
 
If  Resolution 4 is  passed and  becomes effective,  the Board  will continue to 
monitor and take steps to manage any discount that may arise between the NAV Per 
Share  and  the  traded  Ordinary  Share  price in accordance with the Admission 
Document. 
 
Position if None of the Resolutions is Passed 
 
If  none of the  resolutions proposed in  the notice for  the EGM is passed, the 
Company  will continue to operate in its current form and a further continuation 
vote  will be put  to Shareholders no  later than 21 February 2013 in accordance 
with the terms of the Admission Document. 
 
Other Steps Required if the Proposals Are Adopted 
 
If Resolutions 2 and 3 are passed, the following summarises the additional steps 
which will be required to be undertaken in order to implement the Proposals. 
 
Cancellation of Admission of the Ordinary Shares to Trading on AIM 
 
It  is intended that the admission to trading of the Ordinary Shares on AIM will 
be  cancelled  with  effect  from  7.00 a.m.  GMT  on  Friday 17 February 2012. 
 Shareholders  will be able to carry out  dealings in the Ordinary Shares on AIM 
up   to  close  of  trading  on  Thursday  16 February  2012.  At  the  time  of 
cancellation of admission to trading of the Ordinary Shares on AIM, the ISIN for 
the  Ordinary Shares  will be  disabled in  CREST and Shareholders holding their 
Ordinary  Shares  through  CREST  will  no  longer  be  able to trade them.  The 
Ordinary   Shares   will  be  moved  from  the  Uncertificated  section  to  the 
Certificated   section   of  the  Register,  maintained  by  the  Registrar,  in 
preparation for the migration of the Register to the New Administrator.  The New 
Administrator  will receive the Register from  the Registrar on or around Friday 
17 February 2012.  Shareholders will not receive a share certificate in relation 
to  their Ordinary Shares.  The New Administrator will provide to each holder of 
Series  A  Shares  a  statement  of  its  holding of Series A Shares, reconciled 
against its holding of Ordinary Shares prior to Migration and Conversion. 
 
Further  details about the procedure for moving the Ordinary Shares out of CREST 
and  their registration as Series A Shares  in the Register, once the Company is 
domiciled  in  the  Cayman  Islands,  are  given  below  in  the  section headed 
"Registration and Settlement Procedures on the AIM Cancellation". 
 
Migration 
 
If  Resolutions 2 and  3 are passed  in relation  to the Proposals, Migration is 
conditional upon, inter alia, the following approvals and consents in Guernsey: 
 
 a. the  Board being  satisfied that  the Company  is able  to satisfy the usual 
    statutory solvency test requirements under the Guernsey Law; 
 b. confirmation  from Her Majesty's Procureur and the Guernsey Administrator of 
    Income  Tax that they have  no objection to the  removal of the Company from 
    the Guernsey register of companies; 
 c. consent to Migration being obtained from the GFSC; and 
 d. revocation  by  the  GFSC  of  the  Company's authorisation as an authorised 
    closed-ended collective investment scheme. 
 
From a Cayman Islands perspective, the transfer of the Company is required to be 
approved  in accordance  with the  Company's current  memorandum and articles of 
incorporation   and,   as  noted  above,  the  Company's  existing  articles  of 
incorporation  need to be amended,  as a first step,  to permit a migration into 
the Cayman Islands. 
 
The  migration from Guernsey is expected to  occur at a point prior to 5.00 p.m. 
GMT  on Friday 17 February 2012, at which time  the Company will be removed from 
the Guernsey register of companies and will be registered as an exempted company 
in  the register of companies in the Cayman Islands on the same day.  Conversion 
will take place at the same time. 
 
Under the Guernsey Law, the removal of the Company from the Guernsey register of 
companies  does  not  create  a  new  legal  person,  or prejudice or affect the 
identity  or  continuity  of  the  legal  person constituted by the Company.  In 
addition,  inter alia, upon removal of the Company from the Guernsey register of 
companies, all property and rights to which the Company was entitled immediately 
before  removal from the Guernsey register  of companies remain its property and 
rights,  and  the  Company  remains  subject  to  all contracts, debts and other 
obligations  to which  it was  subject immediately  before its  removal from the 
Guernsey register of companies. 
 
Under Cayman Islands law, from the date of registration of the Company by way of 
continuation  (i.e.,  re-domiciliation)  as  an  exempted Cayman Islands company 
limited by shares, the Company continues as a body corporate for all purposes as 
if  incorporated  and  registered  as  an  exempted company under Cayman Islands 
companies law and has, inter alia, (i) the capacity to perform all the functions 
of  an exempted company, (ii)  the capacity to sue  and be sued, (iii) perpetual 
succession  and  (iv)  the  power  to  acquire,  hold  and  dispose of property. 
 Shareholders  will  have  such  liability  to  contribute  to the assets of the 
Company on its winding-up as is provided for under Cayman Islands companies law. 
 A  migration into the Cayman Islands does not (x) operate to create a new legal 
entity,  prejudice  or  affect  the  identity  or  continuity  of the Company as 
previously  constituted, (y) affect  the property of  the Company, or (z) affect 
any  appointment made, resolution passed or any  other thing done in relation to 
the Company pursuant to a power conferred by the constitutional documents of the 
Company or by the laws of Guernsey, the jurisdiction under which the Company was 
previously incorporated, registered, or existing. 
 
Conversion 
 
Shareholders  will not be required to do  anything in relation to the conversion 
of their Ordinary Shares into Series A Shares.  However, Shareholders' attention 
is  drawn to the steps they may need to take in relation to the registration and 
settlement   of   their  Series  A  Shares,  as  noted  in  the  section  headed 
"Registration and Settlement Procedures on the AIM Cancellation" below. 
 
In  due course, Shareholders  may be asked  to provide to  the New Administrator 
such  information as the New Administrator may require in relation to applicable 
laws and regulations, including in relation to anti-money laundering legislation 
and regulations. 
 
Shareholders  should note that the Registrar may be required to request identity 
verification documentation in connection with the removal of the Ordinary Shares 
from  CREST.  Also, pending verification  of a Shareholder's identity (including 
that  of any beneficial  owner(s)) to the  satisfaction of the New Administrator 
and,  if  applicable,  the  Registrar,  the  Company  and the Administrator, the 
relevant  Shareholder's  account  will  be  frozen  and  no transactions will be 
effected.   In  the  event  that  the  identification  procedures  have not been 
completed within 60 Business Days of the Effective Time, the Company may, at its 
discretion,  compulsorily redeem such  Shareholder's interest in  the Company in 
accordance  with the redemption  provisions summarised in  this document and set 
out in the Information Memorandum. 
 
ISE Admission 
 
Application has been filed with the Irish Stock Exchange for listing which is to 
be  completed  following  Migration  and  Conversion.  The ISE Admission remains 
subject  to, inter alia,  final approval of  the draft Information Memorandum by 
the  ISE (including  any further  required amendments)  and submission  of final 
ancillary documents to the ISE.  Further details of the ISE listing requirements 
are  set  out  in  the  section  headed  "Key  Changes  Following  Migration and 
Conversion and Important Considerations for Shareholders - ISE Listing" below. 
 
The  Series A  Shares and  the Series  B Shares  (issued and  to be  issued) are 
expected  to be admitted to listing on the ISE with effect from the commencement 
of  trading of the ISE  at 8.00 a.m. GMT on  or around Monday 20 February 2012. 
 However, it is not anticipated that an active secondary market will develop for 
the  Shares on the ISE and, therefore, the only method of transacting the Shares 
will  be through the  subscription and redemption  process as set  out on in the 
Information  Memorandum and summarised below in the sections headed "Key Changes 
Following Migration and Conversion and Important Considerations for Shareholders 
- Subscriptions" and " - Redemptions". 
 
Registration and Settlement Procedures on the AIM Cancellation 
 
If  the  Proposals  are  approved  and  are  implemented then, following the AIM 
Cancellation,  the Ordinary Shares will be moved from the Uncertificated section 
to  the Certificated  section of  the Register.   Share certificates will not be 
issued to Shareholders prior to Migration. 
 
From  Conversion, Series A Shares and Series B Shares will be held in registered 
form  and share  certificates will  not be  issued.  Shareholders may hold their 
Series  A  Shares  or  Series  B  Shares  through Euroclear or Clearstream.  Any 
Shareholders who currently hold Ordinary Shares in Certificated form should note 
that their share certificates will no longer be valid following Conversion. 
 
Shareholders  who  do  not  already  have,  whether  directly  or  through their 
custodian, a Euroclear or Clearstream account, and who wish to hold their Shares 
through  Euroclear  or  Clearstream,  will  have  to  apply  for an account with 
Euroclear  or Clearstream.   To open  an account  with Euroclear or Clearstream, 
Shareholders  are asked to contact Euroclear  or Clearstream, or a custodian who 
has  an  account  with  Euroclear  or  Clearstream for holding securities of its 
clients,  as soon as  possible.  The process  of opening an  account with such a 
custodian, or with Euroclear or Clearstream, may take some time. 
 
Please  note that  Shareholders who  do not  have an  existing relationship with 
Euroclear, Clearstream or a custodian referred to in the preceding paragraph (as 
applicable)   will   be   required   to   provide   identification  verification 
documentation  to  verify  their  identity  (including  that  of  any beneficial 
owner(s)  underlying the account) for anti-money laundering purposes, subject to 
any  exemptions  that  may  apply.   The  New  Administrator  will contact those 
investors   who   may   be   required  to  provide  identification  verification 
documentation to make appropriate arrangements. 
 
For  further information on registration and settlement procedures, Shareholders 
should contact: 
 a. the Client Services desk at Euroclear/FundSettle on [phone]; 
 b. the Client Services desk at Clearstream on +352 2430; or 
 c. Leon  Santos  at  Prosperity  Capital  Management  (UK)  Limited on: +44 (0) 
    207 299 6950. 
 
Shareholders  should submit their instruction at least 15 Business Days prior to 
the  Effective Time (i.e., by  no later than close  of business GMT on Wednesday 
25 January  2012), in order to enable their Series  A Shares to be received into 
their Euroclear/FundSettle or Clearstream account as of Monday 20 February 2012. 
 
Key  Changes Following Migration and Conversion and Important Considerations for 
Shareholders 
 
If  the Proposals are adopted, some of the key changes to the Company, following 
the  Proposals taking effect, are  summarised below.  Shareholders' attention is 
also  drawn to  the contents  of the  draft Information Memorandum and Circular. 
 The  information in  the draft  Information Memorandum  is subject to updating, 
completion, revision and amendment. 
 
Current Investment Objective to Continue Under the Proposals 
 
The  Company  will  continue  to  pursue  its  current  investment  objective of 
achieving  capital growth  by investing  in a  portfolio of securities issued by 
companies  in the  sectors of  the domestic  economies of  Russia and  other CIS 
countries  which are benefiting from the increase in consumer demand and capital 
investment in such countries. 
 
The  Company will continue to seek to  fulfil its investment objective by making 
investments  primarily in small  and medium-sized companies  in (i) the domestic 
consumer  sectors, such as retail and  consumer goods, (ii) sectors which enable 
domestic  consumer growth, such as banking  and (iii) sectors related to capital 
investment,  such  as  telecoms,  power,  construction, maintenance services and 
cement  manufacture.  However,  the Company  may invest  in other sectors of the 
economies  of  Russia  and  other  CIS  countries  which are benefiting from the 
increase   in   consumer  demand  and  capital  investment  in  such  countries. 
 Investment  will  be  directed  towards  companies considered attractive from a 
fundamental value and growth perspective. 
 
Current Investment Restrictions to Continue Under the Proposals 
 
The  Company will  continue to  adhere to  its current  investment restrictions, 
subject to minor amendments to comply with the requirements of the ISE. 
 
Terms and Conditions Applicable to the Company after Migration and Conversion 
 
The  terms  and  conditions  applicable  to  the Company following Migration and 
Conversion are set out in the draft Information Memorandum.  Certain key changes 
are summarised below for the benefit of Shareholders and a comparison of the key 
features of the Company before and after Migration and Conversion are set out in 
the Circular. 
 
Series A Shares and Series B Shares 
 
Upon  Migration and Conversion, including the adoption by the Company of the New 
Memorandum  and Articles, the  current issued Ordinary  Shares will be converted 
and re-designated as Series A Shares, with the rights and obligations set out in 
the New Memorandum and Articles. 
 
Once  the Company  commences operations  as an  open-ended mutual fund, Series A 
Shares may be redeemed, but no further Series A Shares will be issued. 
 
New  subscribers will be issued  with Series B Shares,  which may be redeemed on 
the  same terms as the Series A Shares.   This is to permit a fair and equitable 
manner  of  calculating  fees  between  current Shareholders and new subscribers 
following Migration and Conversion.  A separate NAV Per Share will be calculated 
for the Series A Shares and the Series B Shares. 
 
Performance Fee 
 
The  Board is also proposing that  the mechanism for calculating the Performance 
Fee  payable to the Manager  be amended to reflect  the open-ended nature of the 
Company  following  Migration  and  Conversion,  and  the fact that the Series A 
Shares  and the Series B Shares will have separate NAV Per Share and Performance 
Fee  calculations,  which  will,  however,  be  based  on  the  same calculation 
methodology, as set out below. 
 
The changes to the calculation methodology for the Performance Fee will apply as 
of  Conversion, and  the Management  Agreement will  be amended  and restated to 
reflect the new calculation methodology set out below as of such date. 
 
The  Performance Fee will be calculated on  a Share by Share basis, by reference 
to the performance of each Share over each Reference Period, as follows: 
 
Series A Shares 
 
The  Performance Fee in respect  of any Series A  Share is payable in respect of 
any  Reference Period where the Total Return  Per Series A Share is greater than 
each  of (a) the Series A Share High Water Mark and (b) the 12% Hurdle Point for 
such  Series A Share.  Where  this is the case,  the Performance Fee shall be an 
amount equal to, with respect to each Series A Share: 
 
  i. if the 12% Hurdle Point has been achieved, but the 25% Hurdle Point has not 
     been  achieved,  in  respect  of  such  Series A Share, 5/13th of the Total 
     Return  Per Series A Share in excess  of the amount required to achieve the 
     12% Hurdle Point; or 
 ii. if  the 25% Hurdle  Point has  been achieved  in respect  of such  Series A 
     Share,  the sum of (x)  5/13th of the Catch-Up Proceeds  and (y) 20% of the 
     Excess Proceeds 
          provided  in either  case that  the Performance  Fee in respect of any 
Reference  Period shall be  no greater than  20% of the excess  of (A) the Total 
Return Per Series A Share over (B) the Series A Share High Water Mark. 
 
Series B Shares 
 
The  Performance Fee in respect  of any Series B  Share is payable in respect of 
any  Reference Period where the Total Return  Per Series B Share is greater than 
each  of (a) the Series B Share High Water Mark and (b) the 12% Hurdle Point for 
such  Series B Share.  Where  this is the case,  the Performance Fee shall be an 
amount equal to, with respect to each Series B Share: 
 
  i. if the 12% Hurdle Point has been achieved, but the 25% Hurdle Point has not 
     been  achieved,  in  respect  of  such  Series B Share, 5/13th of the Total 
     Return  Per Series B Share in excess  of the amount required to achieve the 
     12% Hurdle Point; or 
 ii. if  the 25% Hurdle  Point has  been achieved  in respect  of such  Series B 
     Share,  the sum of (x)  5/13th of the Catch-Up Proceeds  and (y) 20% of the 
     Excess Proceeds 
provided  in either case  that the Performance  Fee in respect  of any Reference 
Period  shall be no greater  than 20% of the excess  of (A) the Total Return Per 
Series B Share over (B) the Series B Share High Water Mark. 
 
Minimum Investment 
 
The  minimum investment in  the Series B  Shares, by way  of a subscription or a 
transfer  of Shares,  will be  US$1,000,000.  The  Company may accept an initial 
investment  of a lower  amount, in the  Company's discretion, but  not less than 
US$100,000. 
 
Shareholders  of  Ordinary  Shares  who,  upon  Migration  and  Conversion, have 
holdings of Series A Shares with an aggregate value of less than US$100,000 will 
be  permitted to continue  to hold or  transfer all (but  not a portion) of such 
Shares.   Subject to the  preceding sentence, transfers  of existing holdings of 
Series  A Shares are subject to the Series A Shares transferred having a minimum 
value of US$100,000 at the time of transfer. 
 
Subscriptions 
 
Investors  may,  on  any  Dealing  Day,  subscribe  for  Series  B Shares at the 
Subscription  Price for  the Series  B Shares.   Series A  Shares are  closed to 
further subscriptions.  Investors applying to subscribe for Series B Shares must 
submit  a Subscription  Form to  the New  Administrator and  ensure that cleared 
funds  are received  in full  by the  New Administrator,  in respect  of all the 
Series  B Shares  to be  subscribed, by  no later  than close of business on the 
Business Day falling immediately before the relevant Dealing Day.  Where cleared 
funds  are received after the  relevant time, they will  be applied to subscribe 
for  Series B Shares on the next succeeding Dealing Day.  Any interest earned on 
the subscription moneys is for the account of the Company. 
 
The  Directors may suspend the issue of Series  A Shares and Series B Shares (as 
the  case may be) in such circumstances  as they think fit.  Further explanation 
of  circumstances  where  such  suspension  may  occur  is  set out in the draft 
Information  Memorandum  in  the  section  headed  "Suspension of Subscriptions, 
Redemptions and Calculation of Net Asset Value". 
 
Subscription Forms submitted to the New Administrator shall be irrevocable other 
than with the prior consent of the Company, acting in its absolute discretion. 
 
Redemptions 
 
A Shareholder may redeem Shares of any series at the Redemption Price for Shares 
of   such   series  by  submitting  a  completed  Redemption  Form  to  the  New 
Administrator  at least  six weeks  in advance  of the  Dealing Day  on which it 
wishes to redeem such Shares, subject to the discretion of the Company to accept 
shorter notice. 
 
Where  a Shareholder submits a Redemption Form to redeem in excess of 50% of the 
Shares  it holds of any series on any Dealing Day, the Company may redeem 50% of 
such  Shares  on  such  Dealing  Day,  with  the  remainder of such Shares being 
redeemed  on the next succeeding  Dealing Day (subject to  the provisions of the 
following paragraph).  For the avoidance of doubt, the restriction on redemption 
referred  to in the  preceding sentence shall  apply in relation  to each series 
separately.   In respect of the first Dealing  Day only, being the last Business 
Day  of March  2012, Shareholders are  required to  give notice of redemption no 
later than five Business Days following the date of the Information Memorandum. 
 
In  addition to the foregoing, in respect  of each Dealing Day in 2012 only, the 
Company  will  accept  redemption  requests  in  respect  of  Shares  having, in 
aggregate,  a Redemption Price equal to not more than 20% of the Net Asset Value 
as at the Valuation Point for such Dealing Day (calculated after the application 
of the limit referred to in the preceding paragraph in respect of redemptions by 
a  Shareholder of the Shares it holds in any series on any Dealing Day).  In the 
event  that, in respect of any such Dealing Day, the Company receives redemption 
requests  in respect of Shares having, in aggregate, a Redemption Price equal to 
more  than 20% of the Net Asset Value as at the Valuation Point for such Dealing 
Day,  each such  request will  be scaled  back pro  rata such that the aggregate 
Redemption  Price  in  respect  of  the  Shares  accepted for redemption on such 
Dealing Day shall equal 20% of the Net Asset Value as at the Valuation Point for 
such  Dealing  Day.   Shares  tendered  but  not  accepted for redemption on any 
Dealing  Day  by  operation  of  the  scaling  back mechanism referred to in the 
preceding sentence will be deemed tendered for redemption at the next succeeding 
Dealing  Day and will be subject to such scaling provision (if applicable) as if 
such  Shares were the  subject of a  redemption request submitted  in respect of 
such  next succeeding Dealing Day, and the same procedure shall apply in respect 
of  any portion of Shares tendered for  redemption which are further scaled back 
on  such next succeeding Dealing Day.   Any Shares tendered for redemption which 
are  still subject to  scaling back as  at the last  Dealing Day of 2012 will be 
redeemed on the first Dealing Day of 2013, from which the scaling back mechanism 
described in this paragraph will no longer apply. 
 
For the avoidance of doubt, the redemption limits referred to in each of the two 
preceding  paragraphs may be  applied in respect  of the same redemption request 
where both limits are applicable. 
 
The  Directors may suspend the redemption of Series A Shares and Series B Shares 
(as  the  case  may  be)  in  such  circumstances  as  they  think fit.  Further 
explanation  of the circumstances where such suspension  may occur is set out in 
the   draft   Information  Memorandum  in  the  section  headed  "Suspension  of 
Subscriptions, Redemptions and Calculation of Net Asset Value". 
 
Redemption  Forms submitted to the New  Administrator shall be irrevocable other 
than with the prior consent of the Company, acting in its absolute discretion. 
 
Service Provider Agreements 
 
If  the Proposals  are adopted,  the Company  will terminate its agreements with 
certain  of its service providers and  either amend existing agreements or enter 
into  new agreements  with other  of its  current service  providers or with new 
service  providers, to reflect the  change of its structure  to that of a Cayman 
Islands  open-ended mutual fund.  Details of  the new agreements and the changes 
to  the existing arrangements,  other than in  respect of the New Administrator, 
are  set out  in the  draft Information  Memorandum enclosed with this document. 
 The identity of the New Administrator will be notified to Shareholders prior to 
Migration  and Conversion.  It is anticipated that the New Administrator will be 
appointed  in  place  of  the  Administrator,  with  effect  from Conversion, on 
substantially the same terms and conditions as apply in respect of the Company's 
current administration arrangements. 
 
If  the Proposals are not adopted, the Company will in any event appoint the New 
Global Custodian in place of the Global Custodian, which appointment the Company 
would expect to make in 2012. 
 
Taxation 
 
A  discussion  of  certain  Guernsey,  United  Kingdom and United States federal 
income tax considerations relating to Migration and Conversion and an investment 
in the Company following Migration and Conversion is set out in the Circular. 
 
In  addition, information about certain other tax considerations relevant in the 
United  Kingdom,  the  Cayman  Islands,  Russia,  the  United  States and Cyprus 
following  Migration  and  Conversion  is  set  out  in  the  draft  Information 
Memorandum. 
 
 
ISE Listing 
 
Following the ISE Admission, the Company will be required to comply with the ISE 
Investment  Funds Listing  Requirements and  Procedures.  Shareholders  may view 
these on the ISE's website (www.ise.ie). 
 
Corporate Governance 
 
The  Company  intends  that  the  independent  Board,  together  with  the  duly 
constituted  committees  thereof,  will  remain  as currently constituted for at 
least one year following the date of Migration and Conversion.  However, certain 
of  the corporate governance principles that currently apply to the Company will 
change as a result of Migration, as follows: 
 
City Code 
 
The  City Code currently applies to the Company.  Shareholders should note that, 
if  the Shareholders approve  the continuation of  the operations of the Company 
and  its current investment objective and  strategy as an open-ended mutual fund 
domiciled  in the Cayman Islands at the EGM, on implementation of the Migration, 
the  Company will  no longer  apply the  City Code,  in accordance  with general 
practice  for  Cayman  Islands'  companies.   Shareholders  will not receive the 
protections  afforded by the City  Code in the event  that there is a subsequent 
offer to acquire their Shares on and from Migration. 
 
UK Corporate Governance Code 
 
The  Board  has  voluntarily  applied  appropriate  parts  of  the  UK Corporate 
Governance Code (formerly the Combined Code) in accordance with the terms of the 
Admission Document. Shareholders should note that, if the Company operates as an 
open-ended  mutual fund  domiciled in  the Cayman  Islands, the  Company will no 
longer  apply  those  parts  of  such  code  as are referred to in the Admission 
Document  and,  therefore,  from  Migration,  Shareholders  will not receive the 
protections afforded by the voluntary application of such code. 
 
Risk Factors 
 
The  risk factors and  uncertainties which the  Company believes are material to 
its  operations  following  Migration  are  set  out  in  the  draft Information 
Memorandum,  but  these  risks  may  not  be  the  only  ones the Company faces. 
 Shareholders   are   strongly  recommended  to  review  the  draft  Information 
Memorandum  and, in particular,  the section headed  "Risk Factors" in the draft 
Information Memorandum. 
 
Expenses of the Proposals 
 
The  costs and  expenses of  calling the  Extraordinary General  Meeting and any 
adjourned  extraordinary  general  meeting,  and  the  costs and expenses of the 
preparation and implementation of the Proposals (except for any foreign taxes or 
duties) will be met from the resources of the Company.  These costs and expenses 
are not expected to exceed US$675,000. 
 
EGM 
 
The  Board  is  convening  the  Extraordinary  General  Meeting for 2.00 p.m. on 
Wednesday  14 December 2011 in  order to  permit Shareholders  to vote on, inter 
alia, the Proposals. 
 
As  specified  in  the  Company's  articles  of  incorporation, the quorum for a 
meeting of Shareholders is two or more persons present in person or by proxy. 
 
In  view of the importance of the  resolutions to be proposed, the Chairman will 
ask for a poll to be taken. 
 
If,  within ten  minutes from  the appointed  time for the Extraordinary General 
Meeting,  a  quorum  is  not  or,  during  a meeting, ceases to be, present, the 
Extraordinary  General Meeting will stand adjourned to  the same day in the next 
week,  at the same time and  place, or to such other  day and at such other time 
and  place as the Directors may determine.  If at the adjourned meeting a quorum 
is  not present within ten minutes from  the appointed time thereof, the meeting 
will be dissolved. 
 
To  avoid the  inconvenience of  calling an  adjourned meeting, Shareholders are 
asked  to complete the Proxy Form and return it so that it is received by Capita 
Registrars  at PXS, 34 Beckenham Road,  Beckenham, Kent, BR3 4TU, United Kingdom 
not  later than 48 hours  before the time  of the Extraordinary General Meeting, 
that  is, by no  later than 2.00 p.m.  on Monday 12 December 2011.  As mentioned 
above,  this will not preclude Shareholders  from attending and voting in person 
at the Extraordinary General Meeting. 
 
Options for Shareholders if the Proposals are Adopted and Become Binding 
 
If  the special resolutions to approve the Proposals (i.e., Resolutions 2 and 3 
in  the EGM  notice) are  adopted at  the Extraordinary  General Meeting and the 
requisite  regulatory and  other consents  and approvals  are obtained, then the 
Proposals  will be  binding on  all Shareholders,  whether or  not they voted in 
favour of those resolutions, or voted at all. 
 
If  the Proposals are adopted  at the EGM, Shareholders  will have the following 
options: 
 
 a. to take no further action and remain shareholders in the Company.  Following 
    the  implementation  of  the  Proposals,  Shareholders  who  previously held 
    Ordinary  Shares  will  hold  Series  A  Shares,  which will be eligible for 
    redemption  (subject to the terms set out  above) if a Shareholder no longer 
    wishes to maintain its holding in the Company; and/or 
 b. to  sell  all  or  some  of  their  Ordinary  Shares  in the market prior to 
    Migration  and Conversion  up to  close of  business on Thursday 16 February 
    2012 (when the AIM Cancellation will take effect). 
If  the resolutions relating to the Proposals are not passed, the Proposals will 
not become effective. 
 
Recommendation 
 
The  Board recommends that Shareholders vote AGAINST Resolution 1 (a realisation 
of  assets now and a subsequent winding-up  of the Company following the passing 
of a further special resolution). 
 
The  Board recommends that  Shareholders vote IN  FAVOUR of Resolutions 2 and 3 
(approval for the Proposals). 
 
The  Board recommends that Shareholders vote IN FAVOUR of Resolution 4 (approval 
for  the continuation of the Company  under its current structure and investment 
objective,  but with continuation votes every  three years thereafter), to allow 
for the possibility that Resolutions 2 and 3 are not passed. 
 
In  the event that none of the resolutions  to be proposed at the EGM is passed, 
the  Company  will  continue  to  operate  in  its  current  form  and a further 
continuation vote will be put to Shareholders no later than 21 February 2013, in 
accordance with the terms of the Admission Document. 
 
The  Board has received financial advice from KPMG Corporate Finance in relation 
to the Proposals. 
 
The  Directors intend  to vote  in favour  of Resolutions 2, 3 and 4 and against 
Resolution  1 at  the  EGM  in  respect  of  their  entire beneficial holding of 
Ordinary   Shares  which,  in  aggregate,  amount  to  400,000 Ordinary  Shares, 
representing approximately 0.11 per cent. of the Company's issued share capital. 
 The  Directors understand that the  Manager intends to vote  in the same way in 
respect of its entire holding of Ordinary Shares. 
 
 
EXPECTED TIMETABLE OF EVENTS 
 
+-----------------------------------------+------------------------------------+ 
|Latest time for lodging Forms of Proxy   |2.00 p.m. on Monday 12 December 2011| 
+-----------------------------------------+------------------------------------+ 
|Extraordinary General Meeting            |2.00 p.m. on Wednesday 14 December  | 
|                                         |2011                                | 
+-----------------------------------------+------------------------------------+ 
|The following events assume that the Proposals are adopted at the EGM:        | 
+-----------------------------------------+------------------------------------+ 
|Last day of dealing in the Ordinary      |Thursday 16 February 2012           | 
|Shares                                   |                                    | 
+-----------------------------------------+------------------------------------+ 
|Closure of the Company's share register  |5.00 p.m. on Thursday 16 February   | 
|                                         |2012                                | 
+-----------------------------------------+------------------------------------+ 
|Cancellation of admission of the Ordinary|7.00 a.m. on Friday 17 February 2012| 
|Shares to trading on AIM                 |                                    | 
+-----------------------------------------+------------------------------------+ 
|Migration of the Company to the Cayman   |On or around close of business on   | 
|Islands, adoption of the New Memorandum  |Friday 17 February 2012             | 
|and Articles, conversion from a closed-  |                                    | 
|ended to an open-ended company,          |                                    | 
|conversion of the Ordinary Shares to     |                                    | 
|Series A Shares and creation of the      |                                    | 
|Series B Shares                          |                                    | 
+-----------------------------------------+------------------------------------+ 
|Listing of the issued Series A Shares and|8.00 a.m. on Monday 20 February 2012| 
|Series B Shares to be issued on the ISE  |                                    | 
+-----------------------------------------+------------------------------------+ 
|Application for registration of the      |Monday 20 February 2012             | 
|Company with CIMA as a regulated mutual  |                                    | 
|fund                                     |                                    | 
+-----------------------------------------+------------------------------------+ 
All times are GMT.  The events are conditional upon obtaining Shareholder 
consents and regulatory and other approvals and consents. 
 
DEFINITIONS 
 
12% Hurdle  Point        in respect of any  Series A Share or Series B Share (as 
applicable)  as at any date of determination, an  amount equal to the sum of (i) 
the  opening NAV Per Series A Share or  Series B Share (as applicable) as at the 
first  day of the Reference Period in which such date of determination falls and 
(ii)  an  amount  sufficient,  when  taken  together  with the aggregate amounts 
distributed  in respect of such Series A Share or Series B Share (as applicable) 
for  such Reference Period, to provide a preferred return equal to 12% per annum 
on  such opening NAV Per  Series A Share or  Series B Share (as applicable) from 
the first day of such Reference Period to such date of determination 
 
25% Hurdle  Point        in respect of any  Series A Share or Series B Share (as 
applicable)  as at any date of determination, an  amount equal to the sum of (i) 
the  opening NAV Per Series A Share or  Series B Share (as applicable) as at the 
first  day of the Reference Period in which such date of determination falls and 
(ii)  an  amount  sufficient,  when  taken  together  with the aggregate amounts 
distributed  in respect of such Series A Share or Series B Share (as applicable) 
for  such Reference Period, to provide a preferred return equal to 25% per annum 
on  such opening NAV Per  Series A Share or  Series B Share (as applicable) from 
the first day of such Reference Period to such date of determination 
 
Administrator        Kleinwort Benson (Channel Islands) Fund Services Limited 
 
Admission Date        the date of admission of the Ordinary Shares to trading on 
AIM, being 21 February 2007 
 
Admission  Document            the  admission  document of the Company dated 15 
February  2007, setting out the terms of the admission of the Ordinary Shares to 
trading on AIM 
 
AIM        the AIM Market operated by the London Stock Exchange 
 
AIM Cancellation        the cancellation of the admission of the Ordinary Shares 
to trading on AIM 
 
Board  or Directors        the directors  of the Company or any duly constituted 
committee of such directors 
 
Business  Day        (i) with reference to subscriptions, redemptions or Dealing 
Days,  any  day  (other  than  a  Saturday,  Sunday  or public holiday) on which 
clearing  banks are open for business  in Moscow, the Russian Federation, Dublin 
and  the Cayman Islands and (ii) other than  as specified in (i), any day (other 
than  a Saturday, Sunday or public holiday) on which clearing banks are open for 
business in England, the Cayman Islands and Guernsey 
 
Capita Registrars        a trading name of Capita Registrars Limited 
 
Catch-Up Proceeds        in respect of each Series A Share or Series B Share (as 
applicable)  as at  any date  of determination,  the excess  (if any) of (i) the 
Total  Return Per Series A Share or Series B Share (as applicable) that would be 
required to achieve the 25% Hurdle Point over (ii) the Total Return Per Series A 
Share  or Series B Share  (as applicable) that would  be required to achieve the 
12% Hurdle  Point, in each  case in respect  of such Series  A Share or Series B 
Share (as applicable) as at such date of determination 
 
Certificated         an Ordinary Share recorded on the Register as being held in 
certificated form 
 
CIMA        the Cayman Islands Monetary Authority 
 
CIS          the  Commonwealth of  Independent States,  comprising former Soviet 
Republics, as at the date of this document 
 
City  Code        the UK City Code  on Takeovers and Mergers published by the UK 
Panel on Takeovers and Mergers 
 
Clearstream            Clearstream  Banking,  société  anonyme, or any successor 
securities clearing agency thereto 
 
Company        Prosperity Russia Domestic Fund Limited 
 
Conversion            upon  Migration  taking  effect,  the  adoption of the New 
Memorandum and Articles, the conversion of the Company to a Cayman Islands open- 
ended mutual fund and the conversion of the issued Ordinary Shares into Series A 
Shares 
 
CREST         the  facilities and procedures for  the time being of the relevant 
system of which Euroclear UK & Ireland has been approved as operator pursuant to 
the CREST Regulations 
 
CREST  Regulations            the Uncertificated Securities Regulations 2001 (SI 
2001 No. 3755) 
 
Dealing  Day          a day  on which  Shares of  any series  which are open for 
subscription  may be subscribed for or on  which Shares may be redeemed, in each 
case  in accordance  with the  New Memorandum  and Articles  and the Information 
Memorandum,  being the  last Business  Day of  each calendar quarter.  The first 
Dealing  Day shall be  the last Business  Day in March  2012.  The Directors may 
determine  to change  the Dealing  Day, not  to have  a Dealing  Day or  to have 
additional Dealing Days 
 
Effective  Time        such time  on Friday 17 February 2012, or such other date 
as  the Directors, in their absolute discretion, determine, when Migration takes 
effect 
 
Euroclear            Euroclear  Bank  S.A./N.V.,  as  operator  of the Euroclear 
clearance system, or any successor clearing agency thereto 
 
Excess  Proceeds        in respect of each  Series A Share or Series B Share (as 
applicable)  as at any date  of determination, the excess  (if any) of (i) Total 
Return  Per Series A Share or Series B Share (as applicable) over (ii) the Total 
Return  Per  Series  A  Share  or  Series  B Share (as applicable) that would be 
required to achieve the 25% Hurdle Point, in each case in respect of such Series 
A Share or Series B Share (as applicable) as at such date of determination 
 
Extraordinary General Meeting or EGM        the extraordinary general meeting of 
the Company convened for 2.00 p.m. on Wednesday 14 December 2011 
 
Form  of Proxy         the  form of proxy  accompanying this document for use by 
Shareholders at the EGM 
 
GFSC        the Guernsey Financial Services Commission 
 
Global  Custodian            State  Street  Custodial Services (Ireland) Limited 
(formerly known as Investors Trust & Custodial Services (Ireland) Limited) 
 
GMT        Greenwich mean time 
 
Guernsey Law        the Companies (Guernsey) Law, 2008, as amended 
 
Information  Memorandum          the document  expected to  be published  by the 
Company on or around Monday 20 February 2012 relating to the Series A Shares and 
the Series B Shares 
 
Irish Stock Exchange or ISE        The Irish Stock Exchange Limited 
 
ISE  Admission        the  admission of the issued Series  A Shares and Series B 
Shares  to be issued to the Official List of  the ISE and to trading on the Main 
Market of the ISE after Migration and Conversion 
 
KPMG  Corporate Finance         a  division of KPMG  LLP which is authorised and 
regulated  by  the  UK  Financial  Services  Authority  for  investment business 
activities.   KPMG LLP is registered in England with number OC301540 and has its 
registered office at 15 Canada Square, London E14 5GL 
 
London Stock Exchange        The London Stock Exchange plc 
 
Management  Agreement            the  amended and restated agreement between the 
Company  and  the  Manager,  whereby  the  Manager  agrees to provide investment 
management services to the Company 
 
Manager         Prosperity Capital Management Limited, a Cayman Islands exempted 
company  subject to Cayman Islands laws and  regulations, in its capacity as the 
manager of the Company 
 
Migration            the  removal  of  the Company from the Guernsey register of 
companies  and the  registration of  the Company  as an  exempted company on the 
Cayman Islands register of companies 
 
NAV Per Series A Share and NAV Per Series B Share 
         in relation to each of the Series A Shares and the Series B Shares, the 
meaning  given in  the Information  Memorandum and,  in relation to the Ordinary 
Shares,  the Net  Asset Value  divided by  the number  of Shares in issue at the 
relevant Valuation Point 
 
Net Asset Value or NAV        in relation to each of the Series A Shares and the 
Series  B  Shares,  the  meaning  given  in  the  Information Memorandum and, in 
relation  to  the  Ordinary  Shares,  determined  in the manner described in the 
Admission Document 
 
New  Administrator        the entity, the  identity of which will be notified to 
Shareholders  prior to Migration and Conversion,  which will be appointed as the 
administrator  in place  of the  Administrator, with  effect from Conversion, on 
substantially the same terms and conditions as apply in respect of the Company's 
current administration arrangements 
 
New  Global  Custodian            ING  Bank  N.V., a company incorporated in the 
Netherlands, acting through its Prague branch 
 
New  Memorandum and Articles          the new memorandum  of association and new 
articles of association to be adopted at the Effective Time 
 
Ordinary  Share        an ordinary share  of US$0.01 par value in the capital of 
the Company prior to Conversion 
 
Performance  Fee        the performance fee payable to the Manager and described 
in  the  section  headed  "Key  Changes  Following  Migration and Conversion and 
Important Considerations for Shareholders - Performance Fee" in this document 
 
Proposals         the proposals set out  in this document and recommended by the 
Board,  including the AIM Cancellation, Migration, Conversion, the ISE Admission 
and  the Registration, and which will  be implemented if Resolutions 2 and 3, as 
set  out in the section headed "The  Resolutions Being Proposed at the EGM", are 
passed 
 
Redemption  Form          the form  which investors  applying to redeem Series A 
Shares or Series B Shares must complete and submit to the New Administrator 
 
Redemption Price        the price at which Shares may be redeemed by the Company 
on any given Dealing Day 
 
Reference  Period        the period by reference to which the Performance Fee is 
payable  with respect to any  Series A Share or  Series B Share (as applicable), 
which  shall be (i) the period beginning on the first day and ending on the last 
day  of the financial  year of the  Company, provided that  (a) if such Series A 
Share or Series B Share (as applicable) is issued other than on the first day of 
the  financial year, the  relevant reference period  shall begin on  the date of 
issuance  of such Series A Share or Series  B Share (as applicable), (b) if such 
Series  A Share or Series B Share (as  applicable) is redeemed other than on the 
last  day of the financial year, the  relevant reference period shall end on the 
redemption date of such Series A Share or Series B Share (as applicable) and (c) 
in  the financial year in which the  Company is wound up, the relevant reference 
period  shall  end  on  the  winding-up  date;  or (ii) such other period as the 
Directors may determine 
 
Register        the register of Shareholders 
 
Registrar        Capita Registrars (Guernsey) Limited 
 
Registration        following the ISE Admission, the registration of the Company 
as  an open-ended  mutual fund  under section  4(3) of the Cayman Islands Mutual 
Funds Law (Revised) with CIMA 
 
RTS        the Russian Trading System 
 
Russia        the Russian Federation 
 
Series A Share High Water Mark 
and Series B Share High Water Mark        in respect of any Series A or Series B 
Share  (as applicable)  as at  any date  of determination,  the highest  NAV Per 
Series  A or Series B Share  (as applicable) as at the  date of issuance of such 
Series  A or Series  B Share (as  applicable) and all  prior Valuation Points in 
respect  of which a Performance Fee was payable on such Series A Share or Series 
B  Share (as  applicable), net  of any  such Performance  Fee; provided that the 
first  Series A  Share High  Water Mark  shall mean  the high water mark for the 
Ordinary  Shares prior to their re-designation  as Series A Shares following the 
migration of the Company from Guernsey to the Cayman Islands 
 
Series  A Share        an ordinary share  of US$0.01 par value in the capital of 
the  Company converted and  re-designated from an  Ordinary Share to  a Series A 
Share as part of the Conversion 
 
Series  B Share        an ordinary share  of US$0.01 par value in the capital of 
the Company to be designated as a Series B Share 
 
Share          an  ordinary share  of US$0.01  par value  in the  capital of the 
Company, whether before or after Conversion (as applicable) 
 
Shareholder        a holder of one or more Shares 
 
Subscription  Form          the form  which investors  applying to subscribe for 
Series B Shares must complete and submit to the New Administrator 
 
Subscription  Price        in respect of the Shares of any series which are open 
for  subscription, the  price at  which such  Shares may  be purchased  from the 
Company on any given Dealing Day 
 
Total Return Per Series A Share and 
Total  Return Per Series  B Share         in  respect of each  Series A Share or 
Series  B Share (as applicable) as at any date of determination, an amount equal 
to  the sum  of (i)  the closing  NAV Per  Series A  Share or Series B Share (as 
applicable)  as at the  last day of  the Reference Period  in which such date of 
determination falls (gross of any Performance Fee (if any) payable in respect of 
such Series A Share or Series B Share (as applicable) for such Reference Period) 
and  (ii) the aggregate amounts distributed in respect of such Series A Share or 
Series B Share (as applicable) for such Reference Period 
 
Uncertificated         an Ordinary Share  recorded on the Register as being held 
in  uncertificated form  in CREST  and title  to which,  by virtue  of the CREST 
Regulations, may be transferred by means of CREST 
 
United  Kingdom or UK          the United Kingdom  of Great Britain and Northern 
Ireland 
 
United  States            the  United  States  of  America,  its territories and 
possessions,  any state  of the  United States  of America  and the  District of 
Columbia 
 
US$ or dollar        United States Dollars 
 
Valuation  Point         the point  at which the  Net Asset Value is calculated, 
being  as at the  last close of  business on the  relevant markets on the day on 
which  the  valuation  is  effected,  and  such  other  valuation  points as the 
Directors shall determine from time to time. 
 
A copy of the documents circulated to Shareholders will be made available on the 
Company's website, www.russiadomesticfund.com 
 
Enquiries: 
 
Prosperity Capital Management (UK) Limited 
 
Elly Wordsworth / Leon Santos 
 
Tel: [phone] 
 
Kleinwort Benson (Channel Islands) Fund Services Limited 
 
Company Secretary 
 
Tel: [phone] 
 
KPMG Corporate Finance (Nominated Adviser) 
 
Tom Franks / Helen Roxburgh 
 
Tel: [phone] 
 
KPMG Corporate Finance, a division of KPMG LLP which is authorised and regulated 
by  the  Financial  Services  Authority  for  investment business activities, is 
acting  for PRDF as nominated adviser in relation to the matters set out in this 
announcement  and  is  not  acting  for  any  other  person in relation to these 
matters.  KPMG Corporate  Finance will  not be  responsible to anyone other than 
PRDF  for providing  the protections  afforded to  its clients  or for providing 
advice in relation to the contents of this announcement. 
 
The Company is an authorised closed-ended collective investment scheme domiciled 
in  Guernsey.  Neither the Guernsey Financial Services Commission nor the States 
of  Guernsey Policy Council takes any responsibility for the financial soundness 
of  the Company or for the correctness of any of the statements made or opinions 
expressed with regard to it. 
 
 
 
 
 
 
 
 
 
This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
 
Source: Prosperity Russia Domestic Fund Limited via Thomson Reuters ONE 
 
[HUG#1565187]